<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[Mark one]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------- ----------
Commission File Number: 0-26482
TRIKON TECHNOLOGIES, INC.
--------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-4054321
-------------- --------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) number)
9255 Deering Avenue, Chatsworth, California 91311
-------------------------------------------------------------------------
(Address of principle executive offices) (Zip Code)
(818) 886-8000
-----------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
-----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicated by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
- --
As of June 30, 1997, the total number of outstanding shares of the Registrant's
common stock was 15,112,863.
<PAGE>
<TABLE>
<CAPTION>
Page
INDEX Number
- --------------------------------------------------------------------------------------------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets at June 30, 1997
(unaudited) and December 31, 1996 3
Unaudited Condensed Consolidated Statements of Operations for
the Three Months ended June 30, 1997 and 1996 and for
the Six Months ended June 30, 1997 and 1996 4
Unaudited Condensed Consolidated Statements of Cash Flows for
the Six Months ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
PART II. OTHER INFORMATION 17
Item 2. Changes in Securities 17
Item 3. Defaults upon Senior Securities 17
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURE PAGE 19
EXHIBITS 20
</TABLE>
2
<PAGE>
Trikon Technologies, Inc.
ITEM I - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996 (1)
------------------ ------------------
(UNAUDITED)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents............................. $ 18,354,030 $ 20,187,662
Short-term investments................................ 3,111,807 1,464,165
Accounts receivable, net of reserves.................. 29,419,655 27,229,806
Inventories........................................... 41,635,493 53,837,131
Other current assets.................................. 3,875,395 4,723,449
------------- -------------
Total current assets........................... 96,396,380 107,442,213
Property, equipment and leasehold improvements,
net of accumulated depreciation and amortization...... 31,845,748 28,743,886
Demonstration systems, net of accumulated
depreciation.......................................... 7,039,400 6,080,431
Intangible assets, net of accumulated amortization...... 38,327,413 40,484,079
Other assets............................................ 1,687,933 429,596
------------- -------------
Total assets............................................ $ 175,296,874 $ 183,180,205
============= =============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued expenses................. $ 14,844,719 $ 24,114,756
Bank credit line...................................... 20,684,858 14,151,000
Other current liabilities............................. 11,085,978 12,661,580
------------- -------------
Total current liabilities...................... 46,615,555 50,927,336
Convertible subordinated notes.......................... 86,250,000 86,250,000
Other non-current liabilities........................... 13,796,174 14,754,721
Commitments and contingencies
Shareholders' equity:
Preferred Stock 3,125,000 are designated as
"Series G Preferred Stock"
Authorized shares -- 20,000,000
$6.75 per share liquidation preference
Issued and outstanding -- 2,444,442 at June 30,
1997............................................. 15,775,000 --
Common Stock, no par value:
Authorized shares -- 50,000,000
Issued and outstanding -- 15,112,863 at June 30,
1997 and 14,310,410 at December 31, 1996......... 137,697,751 131,873,023
Cumulative translation................................ (220,414) 1,412,200
Accumulated deficit................................... (124,617,192) (102,037,075)
------------- -------------
Total shareholders' equity.............................. 28,635,145 31,248,148
------------- -------------
Total liabilities and shareholders' equity.............. $ 175,296,874 $ 183,180,205
============= =============
</TABLE>
(1) The Balance Sheet at December 31, 1996 has been derived from the audited
consolidated financial statements at that date, but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
Trikon Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------ ------------------------------------
JUNE 30, June 30, June 30, June 30,
1997 (1) 1996 1997 (1) 1996
----------------- ---------------- ----------------- ----------------
Revenues:
<S> <C> <C> <C> <C>
Product sales................... $ 19,111,370 $10,193,030 $ 31,063,241 $17,946,259
Contract revenues............... -- 459,600 -- 848,678
------------ ----------- ------------ -----------
19,111,370 10,652,630 31,063,241 18,794,937
Costs and expenses:
Cost of goods sold.............. 12,617,521 5,379,194 22,466,847 9,127,436
Research and development........ 4,251,144 1,814,097 9,154,695 3,559,796
Selling, general and
administrative................. 8,345,151 2,445,614 15,379,942 4,266,702
In-process technology.......... 2,974,410 -- 2,974,410 --
Amortization of intangibles..... 903,948 -- 1,807,898 --
------------ ----------- ------------ -----------
29,092,174 9,638,905 51,783,792 16,953,934
------------ ----------- ------------ -----------
Income (loss) from operations.... (9,980,804) 1,013,725 (20,720,551) 1,841,003
Other:
Interest income (expense), net.. (2,421,507) 354,622 (4,765,869) 792,818
------------ ----------- ------------ -----------
Income (loss) before income tax
provision....................... (12,402,311) 1,368,347 (25,486,420) 2,633,821
Income tax provision (benefit)... (1,441,100) 4,509 (2,906,303) 12,482
------------ ----------- ------------ -----------
Net income (loss)................ $(10,961,211) $ 1,363,838 $(22,580,117) $ 2,621,339
============ =========== ============ ===========
Net income (loss) per share:
Primary......................... ($0.76) $0.15 ($1.57) $0.29
============ =========== ============ ===========
Average common shares and
equivalents 14,433,291 9,170,201 14,378,116 9,131,432
============ ============ ============ ===========
</TABLE>
(1) Includes the results of operations of Electrotech Equipments Limited and
Electrotech Limited (collectively, "Electrotech"), which was acquired on
November 15, 1996 (see Note A of Notes to Condensed Consolidated Financial
Statements).
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
Trikon Technologies, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
----------------------------------------------
June 30, June 30,
1997 (1) 1996
--------------------- ----------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss)................................. $(22,913,606) $ 2,621,339
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization of plant,
equipment, leasehold improvements and
demonstration systems...................... 3,358,900 754,158
Amortization of intangibles................... 1,807,898 --
Amortization of financing costs............... 348,768 --
In-process technology......................... 2,974,410 --
Deferred income taxes......................... (3,048,428) --
Changes in operating assets and liabilities:
Accounts receivable......................... (2,339,431) (8,168,284)
Inventories................................. 11,883,141 (7,431,141)
Demonstration systems....................... (1,629,336) (1,710,425)
Prepaid expenses............................ 797,499 (362,483)
Accounts payable, other accrued expenses
and other current liabilities........... (11,041,893) 5,204,226
Other liabilities........................... 2,370,430 --
------------ ---------------------
Net cash used in operating activities............. (17,431,648) (9,092,610)
INVESTING ACTIVITIES
Purchases of property, equipment and leasehold
improvements..................................... (6,175,294) (4,818,233)
Proceeds from sales of short-term investments..... 824,309 12,450,129
Purchases of short-term investments............... (2,471,951) (13,556,678)
Other assets...................................... (867,232) (1,115,477)
------------ ------------
Net cash used in investing activities............. (8,690,168) (7,040,259)
FINANCING ACTIVITIES
Net borrowing (repayments) under bank
credit lines.................................. 6,533,858 --
Proceeds from sale of preferred stock............. 15,775,000 --
Proceeds from sale of common stock and warrants... 2,259,875 89,273
Payments on capital lease obligations............. (280,549) (252,140)
------------ ------------
Net cash used in financing activities............. 24,288,184 (162,867)
------------ ------------
Net decrease in cash and cash equivalents......... (1,833,632) (16,295,736)
Cash and cash equivalents at beginning of
period.......................................... 20,187,662 24,770,363
------------ ------------
Cash and cash equivalents at end of period........ $ 18,354,030 $ 8,474,627
============ ============
</TABLE>
(1) Includes the cash flows of Electrotech, which was acquired on November 15,
1996 (see Notes A of Notes to Condensed Consolidated Financial Statements).
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
Trikon Technologies, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The operating results for the six months ended June 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Trikon Technologies,
Inc.'s (the "Company") Annual Report on Form 10-K for the year ended December
31, 1996.
On November 15, 1996, the Company acquired all the issued and outstanding shares
of Electrotech Limited and Electrotech Equipments Limited (collectively,
"Electrotech"). Electrotech develops, manufactures, markets and services
semiconductor fabrication equipment for the worldwide semiconductor
manufacturing industry. The aggregate purchase price paid by the Company,
excluding approximately $7,976,000 in acquisition costs, was $145,700,000
consisting of $75,000,000 paid in cash and the issuance of 5,600,000 shares of
Common Stock of the Company with the estimated fair market value of $70,700,000,
based on the quoted market price on the last day prior to the public
announcement of the parties' agreement to the acquisition terms. The acquisition
was accounted for as a purchase and, accordingly, the acquired assets and
liabilities were recorded at their estimated fair market values at the date of
acquisition. The Company's consolidated assets, liabilities and results of
operations include the assets, liabilities, and operating results of Electrotech
after, but not prior to, the November 15, 1996 acquisition date.
NOTE B - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. The components of inventory consist of the following:
<TABLE>
<CAPTION>
JUNE 30, December 31,
1997 1996
------------------ ------------------
<S> <C> <C>
Components........................... $23,096,208 $17,754,456
Work in process...................... 18,446,091 32,993,125
Finished goods....................... 93,194 3,089,550
----------- -----------
$41,635,493 $53,837,131
=========== ===========
</TABLE>
NOTE C - DEMONSTRATION SYSTEMS
Demonstration Systems represent completed systems at certain strategic customer
sites, "Beta Sites". The Company provides these demonstration systems at no
charge for a specified evaluation period. All operating costs incurred during
the evaluation period are paid by the customer. At the conclusion of the agreed
upon evaluation period, provided that the equipment performs to specifications,
management expects that the customer will purchase the system, though they are
not obligated to do so. Demonstration Systems are stated at the lower of cost or
estimated net realizable value and are depreciated on a straight line method
over four years, if they are not sold after one year.
6
<PAGE>
Trikon Technologies, Inc.
NOTE D - PMT CVD PARTNERS, L.P. AGREEMENT
In the first quarter of fiscal 1997, the Company determined that certain
characteristics of the CVD technology of Electrotech known as "Flowfill" were
superior to the high density plasma CVD processes then being pursued by a
limited partnership sponsored by the Company (the "Limited Partnership")
pursuant to the R&D Agreement (the R&D Agreement) entered into as of March 29,
1996 between the Limited Partnership and the Company (under which the Company
performs all research and development work for the Limited Partnership). The
Company decided to discontinue further research and development work under the
R&D Agreement and instead focus its consolidated efforts, on its own behalf and
not on behalf of the Limited Partnership, upon the Flowfill CVD technology used
in the Electrotech equipment. Accordingly, a settlement of any and all rights
and claims by the limited partners of the Limited Partnership was made on June
30, 1997 to terminate the R&D agreement and all related agreements, and purchase
the Limited Partnership for 679,680 shares of common stock. The assets acquired
included approximately $2.2 million of cash and approximately $3.0 million of
in-process research and development which was recorded as a one-time charge in
research and development expense for the quarter ended June 30, 1997.
NOTE E - IMPACT ON FINANCIAL STATEMENTS OF RECENTLY ISSUED ACCOUNTING
STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings Per Share, which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded and the calculation will be referred to as basic
earnings per share. Basic earnings (loss) per share under Statement 128 would
have been $0.16 and $0.30 per share for the three and six months ending June 30,
1996 and would be the same as primary loss per share for the three and six
months ending June 30, 1997. The impact of Statement 128 on the calculation of
fully diluted earnings per share for these quarters is not expected to be
material.
NOTE F - NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed using the weighted average number of
shares of Common Stock outstanding. Common equivalent shares from stock options
and warrants (using the treasury stock method) have been included in the
computation when dilutive. The weighted average number of shares used in the
computation for the three and six months ended June 30, 1997 excludes common
equivalent shares from options and warrants because they would be antidilutive.
NOTE G - LINE OF CREDIT AND LONG-TERM DEBT
On November 15, 1996 the Company entered into a senior secured credit agreement
with certain banks in the United States and United Kingdom (the "Working Capital
Facility") that permits the Company and its U.K. subsidiary to borrow up to an
aggregate of $35.0 million, subject to certain borrowing base limitations based
on eligible accounts receivable and,as noted below, subject to the provisions of
a recent waiver from the lending banks. As of June 30, 1997, the Company had
$16.3 million in outstanding borrowings under the Working Capital Facility.
The Working Capital Facility places certain restrictions on the Company, which
among other things, prohibit the Company from paying cash dividends, limit the
amount of capital expenditures and require the Company to comply with certain
financial ratios and covenants. At December 31, 1996 and March 31, 1997, the
Company was not in compliance with certain financial ratio requirements which
were waived by its lenders as of December 31, 1996 and March 31, 1997 and for
the year and quarter then ended, which waivers expired May 31, 1997, provided
that the Company meet certain financial obligations. Various amendments were
made to the Working Capital Facility, effective June 30, 1997, including the
revision of its financial ratio requirements and covenants for its duration. At
June 30, 1997, the Company was again out of compliance with certain financial
ratios and covenants established under the amended Working Capital
7
<PAGE>
Trikon Technologies, Inc.
NOTE G - LINE OF CREDIT AND LONG-TERM DEBT (CONTINUED)
Facility. Its lenders have granted the Company a waiver of such financial ratio
and covenant violations through August 31, 1997. This waiver suspends the
obligations of the lending banks to advance any further funds under the Working
Capital Facility.
In connection with the acquisition of Electrotech, the Company issued
$86,250,000 of Convertible Subordinated Notes (the "Convertible Notes"). The
Convertible Notes bear interest at 7 1/8% which is payable in semi-annual
installments beginning on April 15, 1997. Since January 1997, the Convertible
Notes have borne an additional 0.5% interest per annum due to the Company's
noncompliance with certain registration rights of the Convertible Notes.
The convertible Notes contain certain provisions which, upon the occurrence of
an "Event of Default", as defined, could cause the Convertible Notes to become
due and payable immediately. Such an event of Default would occur if, among
other things, the Company were to default on the Working Capital Facility or any
other secured indebtedness, as defined, caused by the failure to pay principal
and interest payments when due or resulting from the acceleration of any such
indebtedness prior to its express maturity in excess of $10.0 million. The
Convertible Notes have been classified as long-term debt under the presumption
that non-compliance with the Working Capital Facility will be waived by the
lending banks such that the indebtedness under the Working Capital Facility will
not be in default or accelerated over the coming year.
NOTE H - PREFERRED STOCK
During the quarter ended June 30, 1997, the Company commenced a private offering
(the "Private Placement") of shares of its newly-authorized Series G Preferred
Stock together with three-year warrants to purchase Common Stock at an exercise
price of $8.00 per share (the "Warrants"). Investors in the Private Placement
received Warrants exercisable for a number of shares of Common Stock equal to
30% of the number of shares of Series G Preferred Stock purchased, at a total
price of $6.75 per share of Series G Preferred Stock. The Series G Preferred
Stock has a liquidation preference of $6.75 per share which is generally
applicable to any liquidation or acquisition of the Company, such that the
Series G Preferred Stock receives the first $6.75 per share of available
proceeds, the shares of Common Stock then receive the next $6.75 per share, and
thereafter the Series G Preferred Stock and the Common Stock share any remaining
proceeds pro rata (on an as-converted basis assuming conversion of all of the
Series G Preferred Stock into Common Stock). The Series G Preferred Stock is
convertible at the option of the holders on a share-for-share basis into Common
Stock commencing September 30, 1997 (subject to anti-dilution adjustments),
bears no dividend, (except as may be paid on the Common Stock into which it is
convertible) and will be automatically converted into Common Stock on June 30,
2000.
The Articles of Incorporation of the Company provide that, except for any
amendment, alteration or repeal of the preferences, privileges, special rights
or other powers of the Series G Preferred Stock or the authorization of any
other preferred stock (all of which require the approving vote of a majority of
the Series G Preferred Stock voting as a separate class), the Series G Preferred
Stock and the Common Stock vote together as a single class, with each share of
Series G Preferred Stock being entitled to that number of votes equal to the
number of shares of Common Stock into which it is then convertible (presently,
one vote per share). Additionally, the purchasers of the Series G Preferred
Stock have entered into a ten-year Voting Agreement with the Company pursuant to
which they have agreed that, if a separate class vote of the Series G Preferred
Stock is required by law (rather than by the Articles of Incorporation of the
Company), and if the proposal being presented to the shareholders has been
approved by the Board of Directors and approved by the vote of the holders of
the Common Stock and Series G Preferred Stock voting as a single class as
described above, they will vote their shares of Series G Preferred Stock in
favor of such proposal when voting the Series G Preferred Stock as a separate
class.
At a first closing of the Private Placement on June 30, 1997, the Company sold
an aggregate of 2,444,442 shares of Series G Preferred Stock (together with
Warrants to purchase an aggregate of 733,332 shares of
8
<PAGE>
Trikon Technologies, Inc.
Common Stock) with gross proceeds to the Company of approximately $16,500,000.
Subsequent to the close of the quarter, an additional 499,999 shares of Series G
Preferred Stock (together with warrants to purchase an aggregate of 149,999
shares of Common Stock) were sold with additional gross proceeds to the Company
of approximately $3,375,000.
9
<PAGE>
Trikon Technologies, Inc.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations set forth below contains forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are subject to certain risks
and uncertainties, including challenges from the Company's competition that
could cause actual results to differ materially from those projected. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof.
OVERVIEW
The Company develops, manufactures, markets and services semiconductor
equipment for the worldwide semiconductor manufacturing industry. These products
are used for etch, chemical vapor deposition (CVD), and physical vapor
deposition (PVD) applications. The etch systems consist of the PINNACLE 8000R
and PINNACLE 8000R(TM) systems (selling price between $1,800,000 for a standard
two-module system to $3,400,000 for a four-module system), the Omega(TM) 201-2
system (selling price between $700,000 and $1,400,000, depending on the
configuration of the system), and a stand-alone MORI(TM) plasma source process
module which lists for approximately $500,000. The Company's CVD products
consist of the Delta 201 (selling price approximately $600,000), and the Planar
200 Flowfill(TM) system, selling price ranging between $1,400,000 and
$2,500,000, depending on the configuration of the system. The Company's PVD
products are the Sigma system (selling price ranges from $1,500,000 to
$2,500,000) and the Sigma Forcefill(TM) whose selling price ranges from
$3,500,000 to $4,000,000, depending on the configuration of the system.
The Omega(TM) 201-2 system, the Delta 201, the Planar 200 Flowfill(TM) and the
Sigma and Sigma Forcefill(TM) products were obtained with the acquisition of
Electrotech on November 15, 1996.
ELECTROTECH ACQUISITION. On November 15, 1996, the Company acquired (the
"Acquisition") Electrotech Limited and Electrotech Equipments Limited
(collectively, "Electrotech"), privately-owned United Kingdom companies founded
in 1968, for an aggregate consideration of $75.0 million in cash and 5,600,000
shares of Common Stock, with an estimated fair market value of $70.7 million,
based on the closing sales price of a share of Common Stock on the Nasdaq
National Market on the last day prior to the public announcement of the parties'
agreement to the terms of the Acquisition. Electrotech develops, manufactures,
markets and services semiconductor fabrication equipment with products and
technologies for etch, CVD and PVD applications. The Acquisition expanded the
Company's product lines and its sales and service organization which has enabled
the Company to have a greater presence throughout the United States, Europe and
Asia.
10
<PAGE>
Trikon Technologies, Inc.
RESULTS OF OPERATIONS
The following table sets forth the statement of operations data of the Company
expressed as a percentage of revenues for the period indicated. Results for the
periods ended June 30, 1996 do not reflect the Acquisition and therefore do not
include the results of Electrotech.
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------------------------- ---------------------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Product revenues.................... 100.0% 95.7% 100.0% 95.5%
Contract revenues................... --% 4.3% --% 4.5%
------ ----- ------ -----
Total revenues...................... 100.0% 100.0% 100.0% 100.0%
Cost of sales....................... 66.0% 50.5% 72.3% 48.6%
------ ----- ------ -----
Gross profit....................... 34.0% 49.5% 27.7% 51.4%
Operating expenses:
Research and development........... 22.2% 17.0% 29.4% 18.9%
Selling, general and
administrative................... 43.7% 23.0% 49.5% 22.7%
In-process technology.............. 15.6% --% 9.6% --%
Amortization of intangibles........ 4.7% --% 5.8% --%
------ ----- ------ -----
Total operating expenses........... 86.2% 40.0% 94.3% 41.6%
------ ----- ------ -----
Income (loss) from operations....... (52.2)% 9.5% (66.6)% 9.8%
Interest income (expense), net...... (12.7)% 3.3% (15.3)% 4.2%
------ ----- ------ -----
Income (loss) before income tax
provision.......................... (64.9)% 12.8% (81.9)% 14.0%
Income tax provision (benefit)...... (7.5)% --% (9.4)% .1%
------ ----- ------ -----
Net income (loss)................... (57.4)% 12.8% (72.5)% 13.9%
====== ===== ====== =====
</TABLE>
Product Sales. Product sales for the second quarter of fiscal 1997 increased 87%
to $19.1 million compared to $10.2 million for the second quarter of fiscal
1996. These increases were attributable to revenue derived from products
acquired in the Company's acquisition of Electrotech. Shipments during the
second quarter
11
<PAGE>
Trikon Technologies, Inc.
of fiscal 1997 included ten of the Company's systems, as compared to five
systems shipped during the second quarter of fiscal 1996. Product sales for the
six month period ending June 30, 1997 increased 73% to $31.1 million as compared
to $17.9 million for the six month period ending June 30, 1996. Product sales
increased as a result of the shipment of fourteen systems for the six months
ended June 30, 1997 as compared to nine systems for the six months ended June
30, 1996.
Sales outside of the United States accounted for approximately 28% and 80% of
total revenue in the second quarters of fiscal years 1997 and 1996,
respectively. Sales outside of the United States accounted for 30% and 76% of
total revenue for the six months ending June 30, 1997 and 1996 respectively. The
quantity of product shipped will fluctuate significantly from quarter to quarter
and the individual customers to which these products are sold can also change
from quarter to quarter. Given the significance of each individual sale, the
percentage of sales made outside of the United States will fluctuate
significantly from quarter to quarter.
Contract Revenue. The Company received no contract revenue for the second
quarter and six month period of fiscal 1997 as compared to $459,600 and $848,678
for the second quarter and six month period of fiscal 1996 respectively. The
contract revenue received in fiscal 1996 was due to the March 1996 agreement
between the Company and PMT CVD Partners, L.P. which the Company discontinued in
the first quarter of 1997. (See Note D to Notes to Unaudited Condensed
Consolidated Financial Statements). Because of the termination of this
agreement, the Company will not receive any additional contract revenue
associated with this agreement for the remainder of fiscal 1997 or otherwise.
Gross Margin on Product Sales. The Company's gross margin on product sales for
the second quarter of fiscal 1997 was 34% as compared to 50% for the second
quarter of fiscal 1996. For the six months ended June 30, 1997, gross margin on
product sales was 28% as compared to 51% for the six months ended June 30, 1996.
The decrease in gross margin was due in part to a low gross margin on
Electrotech's products shipped in the first quarter of fiscal 1997 due to the
write-up of Electrotech's inventory on hand, as of November 15, 1996, to the
fair market value of such inventory resulting from the allocation of the
Electrotech purchase price as required under Accounting Principles Board Opinion
No. 16 ("APB No. 16"). The write-up increased cost of goods sold by
approximately $1.4 million in the three months ended June 30, 1997 and $3.8
million in the six months ended June 30, 1997 as the related products were
shipped. Excluding the charge to cost of goods sold relating to the APB No. 16
adjustment, gross profit margins on product sales for the three months and six
months ended June 30, 1997 would have been 41% and 40% respectively. There is
approximately $3.8 million in inventory that, as on June 30, 1997, relates to
the write-up of inventory to the fair market value at the Acquisition date,
based on APB No. 16. The $3.8 million write-up will increase cost of goods sold
and continue to adversely affect gross margins as products are shipped from
Electrotech in fiscal year 1997. Gross margins have also been negatively
impacted due to issues related to the weakened product demand noted above, such
as unabsorbed manufacturing overhead associated with the reduced units sold, and
will continue to be adversely affected in 1997.
Research & Development Expenses. Research and development expenses for the
second quarter of fiscal 1997 were $4.3 million, or 22% of total revenues
compared to $1.8 million, or 17% of total revenues for the second quarter of
fiscal 1996. Included in research and development expenses during the second
quarter of fiscal 1997 is $2.3 million related to Electrotech. For the six
months ended June 30, 1997, research and development expenses were $9.2
million, or 29.4% of total revenues as compared to $3.6 million, or 19% of total
revenues for the six months ended June 30, 1996. The major focus of the
Company's research and
12
<PAGE>
Trikon Technologies, Inc.
development efforts during the first six months of fiscal 1997 was on the
development of new processes in further advancing its proprietary PVD, CVD and
etch technologies as well as adding enhancements to its existing products.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the second quarter of fiscal 1997 were $8.3 million
or 44% of total revenues, compared to $2.4 million, or 23% of total revenues in
the second quarter of fiscal 1996. Included in the fiscal 1997 second quarter
expenses is $3.8 million in selling, general and administrative expenses related
to Electrotech. The dollar increases were primarily due to the continued
expansion of the Company's foreign operations, expenses incurred in the
construction of a new facility in Newport, South Wales, and marketing support
charges directed at communicating the organizations' developments to the
marketplace. For the six months ended June 30, 1997, selling, general and
administrative expenses were $15.4 million, or 50% of total revenues as compared
to $4.3 million, or 23% of total revenues for the six months ended June 30,
1996.
Income (Loss) From Operations. The Company realized a $10.0 million loss from
operations, or 52% of total revenues, in the second quarter of fiscal 1997, as
compared with a $1.0 million gain from operations, or 10% of total revenues, in
the second quarter of fiscal 1996. The loss from operations in the second
quarter of fiscal 1997 was due primarily to reduced sales in addition to the
allocated cost of inventory charged through cost of goods sold during the second
quarter of fiscal 1997 of $1.4 million related to the Electrotech inventory
write-up. Also, as noted above, a $3.0 million charge was incurred in connection
with the purchase of PMT CVD Partners, L.P., and lower margins were recognized
for the shipments of the systems. For the six months ended June 30, 1997, the
Company realized a $20.7 million loss from operations, or 67% of total revenues,
compared with a $1.8 million gain from operations, or 10% of total revenues, for
the six months ended June 30, 1996. The Company anticipates that operating
results will continue to be unfavorably impacted by continued weak product
demand, as discussed above, and also approximately $3.8 million in the remaining
two quarters of fiscal 1997 due to the write-up of Electrotech's inventory
required by APB No. 16 as discussed above.
Interest Income/Expense. Interest income decreased to $0.1 million in the second
quarter of fiscal 1997 from $0.4 million in the second quarter of fiscal 1996.
For the six months ended June 30, 1997 interest income was $0.5 million as
compared to $0.9 million for the six months ended June 30, 1996. This was due to
lower cash balances during the 1997 periods.
Interest Expense increased to $2.5 million in the second quarter of fiscal 1997
from $0.1 million in the second quarter of fiscal 1996. For the six months ended
June 30, 1997 interest expense increased to $5.1 million as compared to $0.1
million for the six months ended June 30, 1996. This was due to the accrual of
interest payable to the holders of the $86.3 million of convertible debt raised
to fund part of the purchase price of the Acquisition. In addition, interest
expense was recorded for the utilization of the purchase price of the Working
Capital Facility during the first half of fiscal 1997.
Income Taxes. The Company recorded a $1.4 million tax benefit in the second
quarter of fiscal 1997 compared to the recording of a nominal income tax
provision in the second quarter of fiscal 1996. For the six months ended June
30, 1997, the Company has recorded a $2.9 million tax benefit as compared to the
recording of a nominal income tax provision for the six months ended June 30,
1996. The tax benefit represents the combination of a foreign tax benefit
associated with Electrotech's operating loss and the reversal of deferred tax
credits established at November 15, 1996 for the difference in the tax basis and
financial reporting basis of the Electrotech assets acquired. The effective tax
rate differs from the statutory Federal tax rate due to certain one-time
nondeductible charges and losses for which no benefit has been provided. The
Company's ability to use its domestic and foreign net operating losses and
credit
13
<PAGE>
Trikon Technologies, Inc.
carryforwards will depend upon future income and will be subject to an annual
limitation, required by the Internal Revenue Code of 1986 and similar state
provisions.
The Company has operating subsidiaries in several countries, and each subsidiary
is taxed based on the laws of the jurisdiction in which it operates. Because
taxes are incurred at the subsidiary level, and one subsidiary's tax losses
cannot be used to offset the taxable income of subsidiaries in other
jurisdictions, the Company's consolidated effective tax rate may increase to the
extent it reports tax losses for some subsidiaries and taxable income for
others. The subsidiaries are subject to taxation in countries where they
operate, and such operations generally are taxed at rates similar to or higher
than tax rates in the United States. The payment of dividends or distributions
by the subsidiaries to the United States would be subject to withholding taxes
in the country of domicile and may be mitigated under the terms of relevant
double tax treaties.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997 the Company had $21.5 million in cash, cash equivalents and
short-term investments, compared to $21.7 million at December 31, 1996. The
slight decrease in cash, cash equivalents and short-term investments resulted
from the use of cash in operating activities of $17.4 million, and $8.7 million
of cash used in investing activities, offset by $24.3 million of cash provided
from financing activities, including the Private Placement of $16.5 million of
Series G Preferred Stock and Warrants. (See Note H to Notes to Unaudited
Condensed Consolidated Financial Statements).
On November 15, 1996 the Company entered into a three-year senior secured credit
facility with certain domestic and U.K. lenders (the "Working Capital Facility")
that permits the Company and its subsidiaries to borrow an aggregate of up to
$35.0 million, subject to borrowing base limitations, based upon eligible
accounts receivable (and subject to the recent suspension of the banks future
lending obligations discussed below). As of June 30, 1997, the Company had
approximately $16.3 million in outstanding borrowings under the Working Capital
Facility. The Working Capital Facility places certain restrictions on the
Company, which among other things prohibits the Company from paying cash
dividends, limits the amount of capital expenditures and requires the Company to
comply with certain financial ratios and covenants.
At December 31, 1996, and March 31, 1997, the Company was out of compliance with
certain financial ratios and covenants established under the Working Capital
Facility. The lenders had granted the Company a waiver of such covenant
violations as of December 31, 1996 and March 31, 1997 and for the year and
quarter then ended, which waivers expired June 30, 1997. Concurrent with the
June 30, 1997 first closing of the Private Placement, the Company entered into
an amendment agreement with its lending banks (the "Amendment") to amend its
secured bank credit facility (the "Working Capital Facility") which Amendment,
among other things, revised certain financial ratios and covenants as to which
the Company had previously been in default. In connection with and as
consideration for the Amendment, the Company issued to the lending banks and
their administrative agent, warrants to purchase an aggregate of 178,182 shares
of Common Stock at an exercise price of $6.75 per share.
As a result of the substantial loss incurred during the June 30, 1997 quarter,
the Company is now out of compliance with the amended financial ratio and
covenants requirements set forth in the Amendment, but has received a waiver
from its lending banks which extends through August 31, 1997. This waiver
suspends the obligation of the lending banks to advance any further funds under
the Working Capital Facility. In light of the limited time period of the bank
waiver and the fact that there can be no assurance that the Company will be able
to comply with the amended bank covenants for any subsequent quarterly periods,
the continued cooperation of its lending banks in granting waivers of covenant
non-compliance will be critical to the Company's ability to maintain its
operations in the ordinary course, and there can be no assurance that the banks
will continue to grant such waivers.
As previously disclosed, in early 1997 the Company determined that certain
characteristics of the chemical vapor deposition ("CVD") technology of
Electrotech known as "Flowfill" are superior to the high density
14
<PAGE>
Trikon Technologies, Inc.
plasma CVD processes which were being pursued by PMT CVD Partners, L.P. (the
"Limited Partnership"), a limited partnership sponsored by the Company for
MORI(TM) CVD development pursuant to an R&D agreement (the "R&D Agreement")
entered into as of March 29, 1996 between the Limited Partnership and the
Company (under which the Company agreed to perform all research and development
work for the Limited Partnership). Accordingly, during the first quarter of
1997, the Company decided to discontinue further research and development work
under the R&D Agreement and instead focus its consolidated efforts, on its own
behalf and not on behalf of the Limited Partnership, upon the FlowFill CVD
technology used in the Electrotech equipment. Certain of the limited partners of
the Limited Partnership asserted that this decision was inconsistent with the
R&D Agreement and representations made by the Company in connection with the
Limited Partnership and that, accordingly, a settlement of any and all claims
that the limited partners of the Limited Partnership might have in connection
with such discontinuation was appropriate.
Effective June 30, 1997 the Company acquired all of the outstanding limited
partnership interests of the Limited Partnership and all of the share interests
in the Limited Partnership's corporate general partner, in consideration of the
Company's issuance of an aggregate of 679,680 shares of Common Stock of the
Company pro rata to the limited partners of the Limited Partnership (excluding
the Company). Pursuant to this transaction, all CVD technology which had been
developed by the Limited Partnership prior to such discontinuation, together
with approximately $2.2 million of unspent funds of the Limited Partnership, are
now owned solely by the Company, and any and all claims that the limited
partners of the Limited Partnership may have had in connection with the
termination of the research and development project thereunder or otherwise
relating to the Limited Partnership have been resolved.
During the quarter ended June 30, 1997, the Company commenced a private offering
(the "Private Placement") of shares of its newly-authorized Series G Preferred
Stock together with three-year warrants to purchase Common Stock at an exercise
price of $8.00 per share (the "Warrants"). Investors in the Private Placement
received Warrants exercisable for a number of shares of Common Stock equal to
30% of the number of shares of Series G Preferred Stock purchased, at a total
price of $6.75 per share of Series G Preferred Stock. The series G Preferred
Stock has a liquidation preference of $6.75 per share which is generally
applicable to any liquidation or acquisition of the Company, such that the
Series G Preferred Stock receives the first $6.75 per share of available
proceeds, the shares of Common Stock then receive the next $6.75 per share, and
thereafter the Series G Preferred Stock and the Common Stock share any remaining
proceeds pro rata (on an as-converted basis assuming conversion of all of the
Series G Preferred Stock into Common Stock). The Series G Preferred Stock is
convertible at the option of the holders on a share-for-share basis into Common
Stock commencing September 30, 1997 (subject to customary anti-dilution
adjustments), bears no dividend, and will be automatically converted into Common
Stock on June 30, 2000. The Company received gross proceeds of approximately
$19,500,000 during and after the second quarter of 1997 from the Private
Placement.
In connection with the acquisition of Electrotech, the Company issued
$86,250,000 of Convertible Subordinated Notes (the "Convertible Notes"). The
Convertible Notes contain certain provisions which provide that, upon the
occurrence of an "Event of Default", as defined, could cause the Convertible
Notes to become due and payable immediately. Such an Event of Default would
occur if, among other things, the Company were to default on the Working Capital
Facility or any other secured indebtedness, as defined, caused by the failure to
pay principal and interest payments when due or resulting in the acceleration of
any such indebtedness prior to its express maturity in excess of $10.0 million.
Electrotech has leased a 102,000 square foot facility into which it moved
certain of its sales, customer support and financing operations in January 1996.
Most of the facility is currently in use, and the remaining space is being built
out with a view to full occupancy towards the end of 1997.
The Company anticipates that it will spend approximately $9.0 million for
capital expenditures for the months remaining in fiscal 1997. This is expected
to include investments in demonstration and test equipment, information systems,
leasehold improvements and other capital items that should enable the
15
<PAGE>
Trikon Technologies, Inc.
Company to expand its ability to support and develop new products and services.
In addition, the Company expects to increase its investment in inventory of
evaluation systems at customer sites.
The Company believes that cash provided or available from operations, current
borrowings under the Working Capital Facility, funds generated by the Private
Placement, and other sources, including cash, cash equivalents and short-term
investments on hand, will be sufficient to support the Company's liquidity needs
over the next twelve months, subject to the continued cooperation of the
Company's lending banks in granting waivers of non-compliance with the financial
ratio requirements of the Working Capital Facility. There can be no assurance
that the banks will continue to grant such waivers.
16
<PAGE>
Trikon Technologies, Inc.
PART II - OTHER INFORMATION
---------------------------
ITEM 2 CHANGES IN SECURITIES
During the quarter ended June 30, 1997, the Company commenced a private offering
(the "Private Placement") of shares of its newly-authorized Series G Preferred
Stock (Series A through F having been previously issued and automatically
converted into Common Stock upon the Company's initial public offering) together
with three-year warrants to purchase Common Stock at an exercise price of $8.00
per share (the "Warrants"). Investors in the Private Placement received Warrants
exercisable for a number of shares of Common Stock equal to 30% of the number of
shares of Series G Preferred Stock purchased, at a total price of $6.75 per
share of Series G Preferred Stock. The Series G Preferred Stock has a
liquidation preference of $6.75 per share which is generally applicable to any
liquidation or acquisition of the Company, such that the Series G Preferred
Stock receives the first $6.75 per share of available proceeds, the shares of
Common Stock then receive the next $6.75 per share, and thereafter the Series G
Preferred Stock and the Common Stock share any remaining proceeds pro rata (on
an as-converted basis assuming conversion of all of the Series G Preferred Stock
into Common Stock). The Series G Preferred Stock is convertible at the option of
the holders on a share-for share basis into Common Stock commencing September
30, 1997 (subject to anti-dilution adjustments), bears no dividend (except as
may be paid on the Common Stock into which it is convertible), and will be
automatically converted into Common Stock on June 30, 2000.
The Company's Articles of Incorporation provide that, except for any amendment,
alteration or repeal of the preferences, privileges, special rights or other
powers of the Series G Preferred Stock or the authorization of any other
preferred stock (all of which require the approving vote of a majority of the
Series G Preferred Stock voting as a separate class), the Series G Preferred
Stock and the Common Stock vote together as a single class, with each share of
Series G Preferred Stock being entitled to that number of votes equal to the
number of shares of Common Stock into which it is then convertible (presently,
one vote per share). Additionally, the purchasers of the Series G Preferred
Stock have entered into a ten-year Voting Agreement with the Company pursuant to
which they have agreed that, if a separate class vote of the Series G Preferred
Stock is required by law (rather than by the Articles of Incorporation of the
Company), and if the proposal being presented to the shareholders has been
approved by the Board of Directors and approved by the vote of the holders of
the Common Stock and Series G Preferred Stock voting as a single class as
described above, they will vote their shares of Series G Preferred Stock in
favor of such proposal when voting the Series G Preferred Stock as a separate
class.
At a first closing of the Private Placement on June 30, 1997, the Company sold
an aggregate of 2,444,442 shares of Series G Preferred Stock (together with
Warrants to purchase an aggregate of 733,332 shares of Common Stock) with gross
proceeds to the Company of approximately $16,500,000. Subsequent to the close of
the quarter, an additional 499,999 shares of Series G Preferred Stock (together
with warrants to purchase an aggregate of 149,999 shares of Common Stock) were
sold with additional gross proceeds to the Company of approximately $3,375,000.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
At June 30, 1997, the Company was out of compliance with certain financial
ratios and covenants established under its amended three-year senior secured
credit facility with certain domestic and U.K. lenders entered into on November
15, 1996 (the "Working Capital Facility") and amended June 30, 1997. The Company
has obtained from its lending banks waivers of such covenant violations until
August 31, 1997. The Company has not defaulted in respect of the payment of any
principal or interest on the Working Capital Facility. As of June 30, 1997,
outstanding borrowings on the Working Capital Facility were approximately $16.3
million.
17
<PAGE>
Trikon Technologies, Inc.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1 Seventh Restated Articles of Incorporation of the Company
3.2 Certificate of Ownership of Plasma & Materials Technologies, Inc.
amending the Company's Seventh Restated Articles of Incorporation
to effect the change of its name to "Trikon Technologies, Inc."
3.4 Certificate of Determination of the Company's Series G Preferred
Stock, as amended to date
4.6 Form of Common Stock Purchase Warrant issued under the Stock
Purchase Agreement (as defined below) as of June 27, 1997
4.7 Form of Common Stock Purchase Warrant issued under the Stock
Purchase Agreement as of June 27, 1997
4.8 Form of Common Stock Purchase Warrant issued to the lenders under
First Amendment to the Credit Agreement (as defined below)
10.23 Stock Purchase Agreement dated as of June 27, 1997 (the "Stock
Purchase Agreement"), by and among the Company and the persons
listed on Schedule 1 thereto
10.24 Form of Voting Agreement dated as of June 27, 1997 by and among the
Company and the investors under the Stock Purchase Agreement
10.25 First Amendment (Waiver and Consent) dated as of June 27, 1997
among the Company, Trikon Technologies Limited, Trikon Equipments
Limited, NationsBank of Texas, N.A., Lloyds Bank Plc and the
lenders listed therein, relating to the Credit Agreement dated as
of November 15, 1996 among the same parties
10.26 Partnership Interest and Share Purchase Agreement dated as of June
__, 1997 by and among the Company, SBIC Partners, L.P., Norwest
Equity Partners, V and R&M Partners/CVD, G.P.
11.1 Computation of Per Share Earnings
27.1 Financial Statement Data
</TABLE>
(b) Reports on Form 8-K:
None.
18
<PAGE>
Trikon Technologies, Inc.
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 thereunto duly authorized.
TRIKON TECHNOLOGIES, INC.
Date August 14, 1997 /s/ Dr. Gregor A. Campbell
--------------- ----------------------------------------
Dr. Gregor A. Campbell
Chief Executive Officer
Vice President and Principal
Financial Officer
19
<PAGE>
Trikon Technologies, Inc.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C>
3.1 Seventh Restated Articles of Incorporation of the Company......................
3.2 Certificate of Ownership of Plasma & Materials Technologies, Inc. amending the
Company's Seventh Restated Articles of Incorporation to effect the change of
its name to "Trikon Technologies, Inc."........................................
3.4 Certificate of Determination of the Company's Series G Preferred Stock, as
amended to date................................................................
4.6 Form of Common Stock Purchase Warrant issued under the Stock Purchase
Agreement (as defined below) as of June 27, 1997...............................
4.7 Form of Common Stock Purchase Warrant issued under the Stock Purchase
Agreement as of June 27, 1997..................................................
4.8 Form of Common Stock Purchase Warrant issued to the lenders under First
Amendment to the Credit Agreement (as defined below)...........................
10.23 Stock Purchase Agreement dated as of June 27, 1997 (the "Stock Purchase
Agreement"), by and among the Company and the persons listed on Schedule 1
thereto........................................................................
10.24 Form of Voting Agreement dated as of June 27, 1997 by and among the Company
and the investors under the Stock Purchase Agreement...........................
10.25 First Amendment (Waiver and Consent) dated as of June 27, 1997 among the
Company, Trikon Technologies Limited, Trikon Equipments Limited, NationsBank
of Texas, N.A., Lloyds Bank Plc and the lenders listed therein, relating to
the Credit Agreement dated as of November 15, 1996 among the same parties......
10.26 Partnership Interest and Share Purchase Agreement dated as of
June __, 1997 by and among the Company, SBIC Partners, L.P.,
Norwest Equity Partners, V and R&M Partners/CVD, G.P...........................
11.1 Computation of Per Share Earnings..............................................
27.1 Financial Statement Data.......................................................
</TABLE>
20
<PAGE>
EXHIBIT 3.1
SEVENTH RESTATED ARTICLES OF INCORPORATION
OF
PLASMA & MATERIALS TECHNOLOGIES, INC.
Gregor A. Campbell and John La Valle hereby certify as follows:
1. They are the President and Secretary, respectively, of Plasma &
Materials Technologies, Inc., a California corporation.
2. The Articles of Incorporation of the corporation, as amended to
the date of the filing of this Certificate, are amended and restated to read as
follows:
I
The name of the Corporation is Plasma & Materials Technologies, Inc.
II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
III
Upon the amendment of this Article III pursuant to the filing of these
Seventh Restated Articles of Incorporation with the California Secretary of
State, each outstanding share of the Corporation's common stock (the "Common
Stock") is converted into 1/3 of a share of Common Stock.
IV
The Corporation is authorized to issue two classes of shares
designated "Common Stock" and "Preferred Stock", respectively. The number of
shares of Common Stock authorized to be issued is 50,000,000 and the number of
shares of Preferred Stock authorized to be issued is 20,000,000.
Subject to Section 4(c) of this Article IV, the Board of Directors of
the Corporation is authorized to determine the number of series into which
shares of Preferred Stock may be
<PAGE>
divided and the designation of any such series; and except with respect to the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock and the Series
F Preferred Stock which are described below, the Board of Directors is
authorized to determine the rights, preferences, privileges and restrictions
granted to or imposed upon the Preferred Stock or any series thereof or any
holders thereof, to determine and alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly-unissued series of Preferred
Stock or the holders thereof, to fix the number of shares constituting any
series prior to the issue of shares of that series, and to increase or decrease,
within the limits stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series (but
not below the number of shares of such series then outstanding), the number of
shares of any such series subsequent to the issue of shares of that series.
The Corporation is authorized to issue 2,100,000 shares of Series A
Preferred Stock, 800,000 shares of Series B Preferred Stock, 1,400,000 shares of
Series C Preferred Stock, 5,000,000 shares of Series D Preferred Stock,
2,625,000 shares of Series E Preferred Stock and 2,500,000 shares of Series F
Preferred Stock. The rights, preferences, privileges and restrictions of each
such series of Preferred Stock and the Common Stock, as well as of the holders
of such stock, are as set forth below in this Article IV.
The Corporation has effected a one-for-three reverse stock split,
effective on the date of filing of these Seventh Restated Articles of
Incorporation. All of the following prices set forth below have not been
adjusted to reflect such reverse stock split.
Section 1. Definitions
-----------
For purposes of Sections 1 through 6 of this Article IV the following
definitions shall apply:
(a) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Corporation after the filing of these Seventh
Restated Articles of Incorporation, whether or not subsequently reacquired
or retired by the Corporation, other than:
(i) Shares issuable upon conversion of the Convertible Preferred
Stock;
(ii) Shares of Common Stock issued to employees or directors of
(or consultants to) the Corporation, or
2
<PAGE>
issuable upon exercise of stock options granted to such employees,
directors or consultants, pursuant to stock-based compensation plans
approved by the Board; and
(iii) Shares issued or issuable by way of stock split or stock
dividend.
(b) "Board" shall mean the Board of Directors of the Corporation.
(c) "Common Stock" shall mean the Common Stock of the Corporation.
(d) "Conversion Price" shall have the meaning set forth in Section
5(a) of this Article IV.
(e) "Convertible Preferred Stock" shall mean the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock and the Series F
Preferred Stock.
(f) "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are at any time directly or
indirectly convertible into or exchangeable for Additional Shares of Common
Stock.
(g) "Corporation" shall mean this corporation.
(h) "Ratchet Adjustment Period" shall mean the period commencing upon
the filing of these Seventh Restated Articles of Incorporation and ending
on such date thereafter as the Corporation has received cumulative
consideration, for the issuance and sale of Additional Shares of Common
Stock (excluding any Series F Preferred Stock) after such date of filing,
aggregating at least $3,500,000.
(i) "Redeemable Preferred Stock" shall mean the Series D Preferred
Stock, the Series E Preferred Stock and the Series F Preferred Stock;
(j) "Series A Preferred Stock" shall mean the Series A Preferred Stock
of the Corporation.
(k) "Series B Preferred Stock" shall mean the Series B Preferred Stock
of the Corporation.
(l) "Series C Preferred Stock" shall mean the Series C Preferred Stock
of the Corporation.
3
<PAGE>
(m) "Series D Preferred Stock" shall mean the Series D Preferred Stock
of the Corporation.
(n) "Series E Preferred Stock" shall mean the Series E Preferred Stock
of the Corporation.
(o) "Series F Preferred Stock" shall mean the Series F Preferred Stock
of the Corporation.
Section 2. Dividends
---------
In each fiscal year of the Corporation, the holders of shares of
Convertible Preferred Stock shall be entitled to receive, before any cash
dividends shall be paid or declared and set aside for the Common Stock in such
fiscal year, when and as declared by the Board, out of funds legally available
for that purpose, dividends payable in an amount per share for such fiscal year
equal to the per share amount, if any, of any cash dividend declared, paid or
set aside for the Common Stock during such fiscal year, multiplied by the number
of shares of Common Stock into which each such share of Convertible Preferred
Stock is then convertible. Dividends for the Convertible Preferred Stock
declared by the Board of Directors but not paid shall accrue.
Section 3. Liquidation, Dissolution or Winding Up
--------------------------------------
(a) In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, including a merger, acquisition or
other reorganization in which the Corporation is not the surviving entity, all
assets or surplus funds of the Corporation shall be distributed to the holders
of the Common Stock and the Convertible Preferred Stock on a pro rata basis
according to the number of shares of Common Stock (i) then held, with respect to
the Common Stock, and (ii) into which the shares of Convertible Preferred Stock
then held are then convertible, in the case of the Convertible Preferred Stock;
provided, however, that if such distribution would result in a distribution of
- -------- -------
less than $3.50 per share of Common Stock, then the assets and funds of the
Corporation shall be distributed in the following order of priority:
(i) First, ratably among the holders of the Series E Preferred
-----
Stock and the Series F Preferred Stock until such holders have
received $2.10 per share;
(ii) Second, ratably among the holders of the Series D Preferred
------
Stock until such holders have received $1.50 per share;
4
<PAGE>
(iii) Third, ratably among the holders of the Series C Preferred
-----
Stock until such holders have received $1.00 per share;
(iv) Fourth, ratably among the holders of the Series A Preferred
------
Stock and the Series B Preferred Stock in proportion to the respective
preferential amounts to which the shares of each such series are
entitled (which shall be $1.00 per share for the Series A Preferred
Stock and $1.30 per share for the Series B Preferred Stock) until such
holders have received such respective preferential amounts;
(v) Fifth, ratably among the holders of the Common Stock until
-----
such holders have received $0.50 per share; and
(vi) Sixth, to the holders of the Common Stock and the Convertible
-----
Preferred Stock on a pro rata basis according to the number of shares
of Common Stock (A) then held, with respect to the Common Stock, and
(B) into which the shares of Convertible Preferred Stock then held are
convertible, in the case of the Convertible Preferred Stock.
No adjustment to the Conversion Price pursuant to these Articles of
Incorporation shall alter the above liquidation preference dollar amounts.
(b) The provisions of Section 3(a) shall be subject to the rights of
any series of Preferred Stock with preference or priority over or on a parity
with the Convertible Preferred Stock with respect to the right to receive
distributions upon liquidation, dissolution or winding up.
(c) The dollar amounts specified in Section 3(a) shall be equitably
adjusted in the event of any stock splits, stock dividends or similar capital
modifications affecting the Common Stock or the Convertible Preferred Stock
after the filing of these Seventh Restated Articles of Incorporation.
(d) Insofar as any distribution pursuant to Section 3(a) consists of
property other than cash, the value thereof shall, for purposes of the
provisions of Section 3(a), be the fair value at the time of such distribution,
as determined in good faith by the Board.
5
<PAGE>
Section 4. Voting
------
(a) At all meetings of the stockholders of the Corporation and in the
case of any actions of stockholders in lieu of a meeting, each share of Common
Stock shall be entitled to one vote, and each share of Convertible Preferred
Stock shall be entitled to that number of votes equal to the number of whole
shares of Common Stock into which such share is then convertible (in accordance
with Section 5 hereof) on the record date set for the meeting or action or, if
no record date is set, on the date of such meeting or the date such action is
taken. Except as otherwise expressly provided in Sections 4(b), 4(c), 4(d),
4(e) and 4(f) below or as required by law, the holders of Common Stock and
Convertible Preferred Stock shall vote together as a single class in accordance
with the preceding sentence, and neither the Common Stock nor any series of
Convertible Preferred Stock shall be entitled to vote as a separate class on any
matter to be voted on by shareholders of the Corporation.
(b) The Corporation shall not amend, alter or repeal the preferences,
privileges, special rights or other powers of any series of Convertible
Preferred Stock, as set forth herein, in a manner adverse to the holders
thereof, (i) with respect to the Series A Preferred Stock, Series B Preferred
Stock and/or Series C Preferred Stock, without the affirmative vote of the
holders of a majority of the then outstanding shares of such affected series,
and (ii) with respect to the Series D Preferred Stock, the Series E Preferred
Stock and/or the Series F Preferred Stock, without the affirmative vote of the
holders of at least two-thirds of the then outstanding shares of such affected
series. For this purpose, the authorization or issuance of any series of
Preferred Stock, pursuant to a Certificate of Determination executed and filed
pursuant to Section 401 of the California Corporations Code, with preference or
priority over or on a parity with any series of Convertible Preferred Stock as
to the right to receive either dividends or amounts distributable upon
liquidation, dissolution or winding up, voting rights, conversion rights or the
right to consent to certain transactions of the Company, shall not be deemed to
alter the preferences and privileges of such series of Convertible Preferred
Stock and is herein expressly authorized by action of the Board of Directors
pursuant to this Article IV, subject to the provisions of Section 4(c) below.
(c) The Corporation shall not authorize or issue, or obligate itself
to issue, any other preferred equity security, whether junior or senior to or on
a parity with any series of the Convertible Preferred Stock as to dividend
rights, redemption or sinking fund rights, liquidation, preferences, conversion
rights, voting rights or otherwise, without (i) the affirmative vote of
6
<PAGE>
the holders of a majority of the then outstanding shares of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting
for this purpose as a single class of stock, and (ii) the affirmative vote of
the holders of a majority of the then outstanding shares of the Series D
Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock,
with each such series voting for this purpose as a separate class of stock.
(d) The Corporation shall not effect any sale, lease, assignment,
transfer or other conveyance of all or substantially all of the assets of the
Corporation, or any merger or reorganization (as this term is defined in Section
181 of the California Corporations Code) involving the Corporation, or any
dissolution, liquidation or winding up of the Corporation, without the
affirmative vote of the holders of a majority of the then outstanding shares of
the Series D Preferred Stock, the Series E Preferred Stock and the Series F
Preferred Stock, with each such series voting for this purpose as a separate
class of stock.
(e) During such time as there exists and is continuing an "Event of
Default" (as defined in that certain Stock Purchase Agreement, dated as of
November 17, 1993, by and among the Corporation and the original purchasers of
the Series D Preferred Stock, that certain Stock Purchase Agreement, dated as of
August 26, 1994, by and among the Corporation and the original purchasers of the
Series E Preferred Stock, or that certain Stock Purchase Agreement dated as of
the date of the filing of these Seventh Restated Articles of Incorporation, by
and among the Corporation and the original purchasers of the Series F Preferred
Stock, such that an "Event of Default" as defined under any of such agreements
shall constitute an "Event of Default" for purposes of this Section 4(e) of
these Seventh Restated Articles of Incorporation), then (i) the holders of the
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and
Series F Preferred Stock, voting together for this purpose as a single class of
stock, shall be entitled to elect five members of the Board, (ii) if at least
fifty percent (50%) of the shares of Series A Preferred Stock and Series B
Preferred Stock (as a group) theretofore issued remain outstanding, the holders
of the Common Stock, Series A Preferred Stock and Series B Preferred Stock,
voting together for this purpose as a single class of stock, shall be entitled
to elect two members of the Board, and (iii) the remaining members of the Board
shall be elected by the holders of the Common Stock and Convertible Preferred
Stock, voting together for this purpose as a single class of stock. Such right
of the holders of the Series C Preferred Stock, Series D Preferred Stock, Series
E Preferred Stock and Series F Preferred Stock to elect five directors shall
continue until such
7
<PAGE>
Event of Default shall no longer exist, at which point the directors shall again
be elected in accordance with Section 4(a) of these Seventh Restated Articles of
Incorporation. At any time after the right to elect five directors is so vested
in the Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock and Series F Preferred Stock, and at any time after such right terminates,
the holders of 5% or more of the outstanding shares of either the Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock, as a group, the Common Stock, Series A Preferred Stock and
Series B Preferred Stock, as a group, or the Common Stock and Convertible
Preferred Stock, as a group, shall have the right to call a special meeting of
shareholders for the purpose of electing all members of the Board, such right to
be exercisable by delivering a request in writing for the calling of the special
meeting to the President or Secretary, or to the Chairman of the Board or a Vice
President, if there be such. The officer receiving the request shall forthwith
cause notice to be given to the shareholders entitled to vote that a meeting
will be held at a time requested by the person or persons calling the meeting,
which time shall be not less than 35 nor more than 60 days after the receipt of
the request. If the notice is not given within 20 days after receipt of the
request, the shareholders calling the meeting shall have the rights accorded to
them pursuant to subdivision (c) of Section 601 of the California Corporations
Code. Upon the election of directors at any such special meeting, the terms of
all persons who were directors immediately prior thereto shall terminate, and
the directors elected at such special meeting shall constitute the directors of
the Corporation until the next annual meeting (or, if earlier, until another
special meeting is convened in accordance with the foregoing provisions of this
paragraph).
(f) In the case of any vacancy in the office of a director occurring
among the directors elected by the holders of the Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock
pursuant to Section 4(e) above, the remaining director or directors so elected
by such holders may, by affirmative vote of a majority of such remaining
directors (or the remaining director so elected if there is only one such
director), elect a successor or successors to hold the office for the unexpired
term of the director or directors whose place or places shall be vacant. In the
case of any vacancy in the office of a director occurring among the directors
elected by the holders of the Common Stock, Series A Preferred Stock and Series
B Preferred Stock pursuant to Section 4(e) above, the remaining director or
directors so elected by such holders may, by affirmative vote of a majority
thereof (or the remaining director so elected if there is only one such
director), elect a successor or successors to hold the office for
8
<PAGE>
the unexpired term of the director or directors whose place or places shall be
vacant. In the case of any vacancy in the office of a director occurring among
the directors elected by the holders of the Common Stock and Convertible
Preferred Stock pursuant to Section 4(e) above, the remaining director or
directors so elected by such holders may, by affirmative vote of a majority
thereof (or the remaining director so elected if there is only one such
director), elect a successor or successors to hold the office for the unexpired
term of the director or directors whose place or places shall be vacant.
Additionally, the holders of the Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock (voting together as
a single class of stock for this purpose) may elect a director at any time to
fill any vacancy in the office of a director elected by them pursuant to Section
4(e) above and which has not been filled by the directors in accordance with the
foregoing, the holders of the Common Stock, Series A Preferred Stock and Series
B Preferred Stock (voting together as a single class of stock for this purpose)
may elect a director at any time to fill any vacancy in the office of a director
elected by them pursuant to Section 4(e) above and which has not been filled by
the directors in accordance with the foregoing, and the holders of the Common
Stock and Convertible Preferred Stock (voting together as a single class of
stock for this purpose) may elect a director at any time to fill any vacancy in
the office of a director elected by them pursuant to Section 4(e) above and
which has not been filled by the directors in accordance with the foregoing.
Section 5. Conversion
----------
The holders of the Convertible Preferred Stock shall have the
following conversion rights (the "Conversion Rights"):
(a) Optional Conversion. Each share of Convertible Preferred Stock
-------------------
shall be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the Corporation or any transfer
agent for the Common Stock, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing (i) $1.00, in the case of
the Series A Preferred Stock and the Series C Preferred Stock, (ii) $1.30, in
the case of the Series B Preferred Stock, (iii) $1.50, in the case of the Series
D Preferred Stock and (iv) $2.10, in the case of the Series E Preferred Stock
and the Series F Preferred Stock, by the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. The Conversion Price
at which shares of Common Stock shall be deliverable upon conversion without the
payment of any additional consideration by the holder thereof
9
<PAGE>
(the "Conversion Price") shall at the time of the filing of these Seventh
Restated Articles of Incorporation initially be (i) $1.00, in the case of the
Series A Preferred Stock and the Series C Preferred Stock, (ii) $1.30, in the
case of the Series B Preferred Stock, (iii) $1.50, in the case of the Series D
Preferred Stock and (iv) $2.10, in the case of the Series E Preferred Stock and
the Series F Preferred Stock. Each such initial Conversion Price shall be
subject to adjustment, in order to adjust the number of shares of Common Stock
into which the Convertible Preferred Stock is convertible, as hereinafter
provided.
(b) Automatic Conversion.
--------------------
(i) Each share of the Convertible Preferred Stock shall automatically
be converted into shares of Common Stock upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of the
Corporation's Common Stock if (A) if such closing occurs on or prior to December
31, 1995, the per share price is not less than $2.50 (as adjusted in the event
of stock dividends, stock splits and similar capital modifications) and the
aggregate purchase price of the Common Stock sold pursuant to such registration
equals or exceeds $15,000,000, or (B) if such closing occurs after December 31,
1995, the per share price is not less than $5.00 (as adjusted in the event of
stock dividends, stock splits and similar capital modifications) and the
aggregate purchase price of the Common Stock sold pursuant to such registration
equals or exceeds $10,000,000.
(ii) Additionally, any of the series of the Convertible Preferred
Stock, other than the Series D Preferred Stock, the Series E Preferred Stock and
the Series F Preferred Stock, shall be automatically converted into shares of
Common Stock upon either (x) the optional conversion into Common Stock of a
cumulative number of shares of such series representing a majority of the
aggregate number of shares of such series theretofore issued by the Corporation,
or (y) the affirmative vote (approving such automatic conversion) of the holders
of a majority of the shares of such series then outstanding. The shares of
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock
(treated as separate series) shall be automatically converted into shares of
Common Stock upon either (xx) the optional conversion into Common Stock of a
cumulative number of shares of such series representing at least two-thirds of
the aggregate number of shares of such series theretofore issued by the
Corporation, or (yy) the affirmative vote (approving such automatic conversion)
of the holders of at least two-thirds of the shares of such series then
outstanding.
10
<PAGE>
(c) Fractional Shares. No fractional shares of Common Stock shall be
-----------------
issued upon conversion of the Convertible Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(d) Mechanics of Optional Conversion. Before any holder of
--------------------------------
Convertible Preferred Stock shall be entitled to convert the same into full
shares of Common Stock, he or it shall surrender the certificate or certificates
therefor, endorsed or accompanied by written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or by his attorney duly authorized in writing, at the office
of the Corporation or of any transfer agent for the Convertible Preferred Stock,
and shall give written notice to the Corporation at such office that such holder
elects to convert the same and shall state therein such holder's name or the
names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of Convertible Preferred Stock, or to his or its nominee or nominees, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Convertible Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. From and after such date, all rights of the holder
with respect to the Convertible Preferred Stock so converted shall terminate,
except only the right of such holder, upon the surrender of his or its
certificate or certificates therefor, to receive certificates for the number of
shares of Common Stock issuable upon conversion thereof and cash for fractional
shares.
(e) Mechanics of Automatic Conversion. All holders of record of
---------------------------------
shares of Convertible Preferred Stock will be given at least 30 days' prior
written notice of the anticipated date of any automatic conversion referenced in
Section 5(b) and four days' written notice of the actual date of such
conversion. The Corporation shall also exercise best efforts to provide four
days telephonic notice of such actual conversion date to said holders. Each
such notice shall designate a place for automatic conversion of all of the
shares of such Convertible Preferred Stock pursuant to Subsection 5(b). Such
notice will be sent by mail, first class, postage prepaid, to each record holder
of Convertible
11
<PAGE>
Preferred Stock at such holder's address appearing on the stock register. On or
before the date fixed for conversion, each holder of shares of Convertible
Preferred Stock shall surrender his or its certificate or certificates for all
such shares to the Corporation at the place designated in such notice, and shall
thereafter receive certificates for the number of shares of Common Stock or
other securities to which such holder is entitled. On the date fixed for
conversion, all rights with respect to the Convertible Preferred Stock will
terminate, except only the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock or other securities into which such Convertible
Preferred Stock has been converted and cash for fractional shares. If so
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
by his or its attorney duly authorized in writing. All certificates evidencing
shares of Convertible Preferred Stock which are required to be surrendered for
conversion in accordance with the provisions hereof shall, from and after the
date such certificates are so required to be surrendered, be deemed to have been
retired and cancelled and the shares of Convertible Preferred Stock represented
thereby converted into Common Stock for all purposes, notwithstanding the
failure of the holder or holders thereof to surrender such certificates on or
prior to such date. As soon as practicable after the date of such automatic
conversion and the surrender of the certificate or certificates for Convertible
Preferred Stock as aforesaid, the Corporation shall cause to be issued and deliv
ered to such holder, or to his or its written order, a certifi cate or
certificates for the number of full shares of Common Stock or other securities
issuable on such conversion in accordance with the provisions hereof and cash as
provided in Subsection 5(c) in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion.
(f) Certain Adjustments to Conversion Price Applicable to all
---------------------------------------------------------
Convertible Preferred Stock.
- ---------------------------
(i) Adjustment for Stock Splits, Stock Dividends and Combinations of
----------------------------------------------------------------
Common Stock. In the event the outstanding shares of Common Stock shall, after
- ------------
the filing of these Seventh Restated Articles of Incorporation, be further
subdivided (split), or combined (reverse split), by reclassification or
otherwise, or in the event of any dividend or other distribution payable on the
Common Stock in shares of Common Stock, the applicable Conversion Price in
effect immediately prior to such subdivision, combination, dividend or other
distribution shall, concurrently with the effectiveness of such subdivision,
12
<PAGE>
combination or dividend or other distribution, be proportionately adjusted.
(ii) Adjustment for Merger or Reorganization, Etc. In case of a
---------------------------------------------
reclassification, reorganization or exchange (other than described in Subsection
(i) above) or any consolidation or merger of the Corporation with another
corporation (other than a merger, acquisition or other reorganization in which
the Corporation is not the surviving entity, any of which shall be considered a
liquidation pursuant to Section 3 of this Article IV), each share of Convertible
Preferred Stock shall thereafter be convertible into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Corporation deliverable upon conversion of such
Convertible Preferred Stock would have been entitled upon such reclassification,
reorganization, exchange, consolidation, merger or conveyance; and, in any such
case, appropriate adjust ment (as determined by the Board) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Convertible Preferred Stock, to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the applicable Conversion Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Convertible Preferred Stock.
(iii) Adjustments for Other Dividends and Distributions. In the
-------------------------------------------------
event the Corporation at any time or from time to time after the filing of these
Seventh Restated Articles of Incorporation makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Company other than shares of
Common Stock, then and in each such event provision shall be made so that the
holders of Convertible Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which they would have received had their
Convertible Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the conversion date, retained such securities receivable by them
as aforesaid during such period, subject to all other adjustments called for
during such period under this Section 5 with respect to the rights of the
holders of the Convertible Preferred Stock.
13
<PAGE>
(g) Adjustment to Conversion Price of Series C Preferred Stock, Series
------------------------------------------------------------------
D Preferred Stock, Series E Preferred Stock and (after the Ratchet Adjustment
- -----------------------------------------------------------------------------
Period) Series F Preferred Stock for Issue or Sale of Additional Shares of
- --------------------------------------------------------------------------
Common Stock. In case at any time or from time to time on or after the filing
- ------------
of these Seventh Restated Articles of Incorporation the Corporation shall issue
or sell Additional Shares of Common Stock for a consideration per share less
than the Conversion Price of the Series C Preferred Stock, the Series D
Preferred Stock, the Series E Preferred Stock or the Series F Preferred Stock,
as the case may be, then in effect, then and in each such case the then
Conversion Price of the Series C Preferred Stock, the Series D Preferred Stock
or the Series E Preferred Stock, as the case may be, or the Series F Preferred
Stock if such issuance or sale occurs after the Ratchet Adjustment Period, shall
be reduced to an adjusted Conversion Price (computed to the nearest cent, a half
cent being treated as a full cent) by dividing
(A) the sum of (X) the result obtained by multiplying the number of
shares of Common Stock outstanding immediately prior to such issue or sale by
the Conversion Price then in effect, and (Y) the consideration, if any, received
by the Corporation upon such issue and sale, by
(B) the number of shares of Common Stock outstanding immediately
after such issue or sale.
For purposes of adjusting the Conversion Price pursuant to the
foregoing clauses (A) and (B), Common Stock shall be deemed to be outstanding at
a particular time if it is outstanding at such time or if at such time (I) it
can be acquired upon the conversion of any then outstanding shares of
Convertible Preferred Stock or (II) it can be purchased upon the exercise of any
outstanding rights or options, or acquired upon the conversion of any
outstanding Convertible Securities, or acquired upon the conversion of any
Convertible Securities which can be purchased upon the exercise of any
outstanding rights or options.
No adjustment to the Conversion Price of the Series F Preferred Stock
shall be made pursuant to this Section 5(g) upon the issue or sale of Additional
Shares of Common Stock during the Ratchet Adjustment Period; rather, any such
issue or sale during the Ratchet Adjustment Period shall, with respect solely to
the Series F Preferred Stock, be subject to the adjustment provisions of Section
5(h) below.
(h) Adjustment to Conversion Price of Series F Preferred Stock for
--------------------------------------------------------------
Issue or Sale of Additional Shares of Common Stock During Ratchet Adjustment
- ----------------------------------------------------------------------------
Period. In case at any time or
- ------
14
<PAGE>
from time to time during the Ratchet Adjustment Period the Corporation shall
issue or sell Additional Shares of Common Stock for a consideration per share
less than the Conversion Price of the Series F Preferred Stock then in effect,
then and in each such case the then Conversion Price of the Series F Preferred
Stock shall be reduced to a price equal to the consideration per share for which
such Additional Shares of Common Stock are issued.
(i) Further Provisions for Adjustment of Conversion Price of Series C
-----------------------------------------------------------------
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F
- --------------------------------------------------------------------------------
Preferred Stock. For the purpose of Sections 5(g) and 5(h) above (applicable
- ---------------
solely to the Series C Preferred Stock, the Series D Preferred Stock, the Series
E Preferred Stock and the Series F Preferred Stock), the following provisions
shall be applicable:
(A) Issuance or Sale of Convertible Securities. In case at any time
------------------------------------------
on or after the filing of these Seventh Restated Articles of Incorporation, the
Corporation shall issue or sell any Convertible Securities, there shall be
determined as of the date of issue the price per share for which Additional
Shares of Common Stock are issuable upon the conversion or exchange thereof,
such determination to be made by dividing (X) the total amount received or
receivable by the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (Y) the maximum number of Additional Shares of Common Stock
issuable upon conversion or exchange of all of such Convertible Securities; and
such issue or sale shall be deemed to be an issue or sale for cash (as of the
date of issue or sale of such Convertible Securities) of such maximum number of
Additional Shares of Common Stock at the price per share so determined.
If such Convertible Securities shall by their terms provide for an
increase or increases, with the passage of time, in the amount of additional
consideration, if any, payable to the Corporation, or in the rate of exchange,
upon the conversion or exchange thereof, the adjusted Conversion Price shall,
forthwith upon any such increase becoming effective, be readjusted (but to no
greater extent than originally adjusted) to reflect the same.
If any rights of conversion or exchange evidenced by such Convertible
Securities shall expire without having been exercised, the adjusted Conversion
Price shall forthwith be readjusted to be the adjusted Conversion Price which
would have been in effect had an adjustment been made on the
15
<PAGE>
basis that the only Additional Shares of Common Stock issued or sold were those
actually issued upon the conversion or exchange of such Convertible Securities,
and that they were issued or sold for the consideration actually received by the
Corporation upon such conversion or exchange, plus the consideration, if any,
actually received by the Corporation for the issue or sale of such Convertible
Securities as were actually converted or exchanged.
(B) Grant of Rights or Options for Common Stock. In case at any time
-------------------------------------------
on or after the filing of these Seventh Restated Articles of Incorporation, the
Corporation shall grant any rights or options to subscribe for, purchase or
otherwise acquire Additional Shares of Common Stock, there shall be determined
as of the date of issue the price per share for which Additional Shares of
Common Stock are issuable upon the exercise of such rights or options, such
determination to be made by dividing (X) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such rights
or options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of such rights or options, by (Y)
the maximum number of Additional Shares of Common Stock of the Corporation
issuable upon the exercise of such rights or options; and the granting of such
rights or options shall be deemed to be an issue or sale for cash (as of the
date of the granting of such rights or options) of such maximum number of
Additional Shares of Common Stock at the price per share so determined.
If such rights or options shall by their terms provide for an increase
or increases, with the passage of time, in the amount of additional
consideration payable to the Corporation upon the exercise thereof, the adjusted
Conversion Price shall, forthwith upon any such increase becoming effective, be
readjusted (but to no greater extent than originally adjusted) to reflect the
same.
If any such rights or options shall expire without having been
exercised, the adjusted Conversion Price shall forthwith be readjusted to be the
adjusted Conversion Price which would have been in effect had an adjustment been
made on the basis that the only Additional Shares of Common Stock so issued or
sold were those actually issued or sold upon the exercise of such rights or
options and that they were issued or sold for the consideration actually
received by the Corporation upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting of all such rights or
options, whether or not exercised.
16
<PAGE>
(C) Grant of Rights or Options for Convertible Securities. In case at
-----------------------------------------------------
any time on or after the filing of these Seventh Restated Articles of
Incorporation the Corporation shall grant any rights or options to subscribe
for, purchase or otherwise acquire Convertible Securities, such Convertible
Securities shall be deemed, for the purposes of such Section 5, to have been
issued and sold (as of the date of the granting of such option or rights) for
the total amount received or receivable by the Corporation as consideration for
the granting of such rights or options plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the exercise
of such rights or options.
If such rights or options shall by their terms provide for an increase
or increases, with the passage of time, in the amount of additional
consideration payable by the Corporation upon the exercise thereof, the adjusted
Conversion Price shall, forthwith upon any such increase becoming effective, be
readjusted (but to no greater extent than originally adjusted) to reflect the
same.
If any such rights or options shall expire without having been
exercised, the adjusted Conversion Price shall forthwith be readjusted to be the
adjusted Conversion Price which would have been in effect had an adjustment been
made on the basis that the only Convertible Securities so issued or sold were
those actually issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received by the
Corporation upon such exercise, plus the consideration, if any, actually
received by the Corporation for the granting of all such rights or options,
whether or not exercised.
(D) Determination of Consideration. Upon any issuance or sale for a
------------------------------
consideration other than cash, or a consideration part of which is other than
cash, of any Additional Shares of Common Stock or Convertible Securities or any
rights or options to subscribe for, purchase or otherwise acquire any Additional
Shares of Common Stock or Convertible Securities, the amount of the
consideration other than cash received by the Corporation shall be deemed to be
the fair value of such consideration as determined in good faith by the Board.
In case any Additional Shares of Common Stock or Convertible Securities or any
rights or options to subscribe for, purchase or otherwise acquire any Additional
Shares of Common Stock or Convertible Securities shall be issued or sold
together with other stock or securities or other assets of the Corporation for a
consideration which covers two or more thereof, the consideration for the issue
or sale of such Additional Shares of Common Stock or Convertible Securities or
such rights or options shall be deemed to be the
17
<PAGE>
portion of such consideration allocated thereto in good faith by the Board.
(E) Shares Considered Outstanding. The number of shares of Common
-----------------------------
Stock outstanding at any given time shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock.
(F) Duration of Adjusted Conversion Price. Following each computation
-------------------------------------
or readjustment of an adjusted Conversion Price as provided above in this
Section 5, the new adjusted Conversion Price shall remain in effect until a
further computation or readjustment thereof is required by this Section 5.
(G) Other Action Affecting Common Stock. In case after the filing of
-----------------------------------
these Seventh Restated Articles of Incorporation the Corporation shall take any
action affecting its shares of Common Stock, other than an action described
above in this Section 5, which in the good faith opinion of the Board would have
a materially adverse effect upon the conversion rights of the Series C Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock or the Series
F Preferred Stock, as the case may be, granted herein, the Conversion Price
shall be adjusted in such manner and at such time as the Board may in good faith
determine to be equitable in the circumstances.
(j) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Convertible Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in reasonable detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request, at any time, of any holder of Convertible Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the applicable Conversion Price at the time
in effect; and (iii) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of the Convertible Preferred Stock.
(k) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, any capital reorganization of
18
<PAGE>
the Corporation, any reclassification or recapitalization of the Corporation's
capital stock, any consolidation or merger with or into another corporation, any
transfer of all or substantially all of the assets of the Corporation or any
dissolution, liquidation or winding up of the Corporation, the Corporation shall
mail to each holder of Convertible Preferred Stock at least ten (10) days prior
to the date specified for the taking of a record, a notice specifying the date
on which any such record is to be taken for the purpose of such dividend or
distribution.
(l) Common Stock Reserved. The Corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Convertible Preferred Stock.
(m) Payment of Taxes. The Corporation will pay all taxes (other than
----------------
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Convertible Preferred Stock, other than any tax or other charge
imposed in connection with any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the shares of
Convertible Preferred Stock so converted were registered.
Section 6. Mandatory Redemption of Series C Preferred Stock.
------------------------------------------------
In the event of any merger or other reorganization in which the
Corporation is the surviving entity, and in the event of any acquisition by the
Corporation of any corporation or other business entity in which the Corporation
is the surviving entity, then unless such merger, reorganization or acquisition
has been approved by the affirmative vote of the holders of a majority of the
outstanding shares of the Series C Preferred Stock voting as a separate class
(it being acknowledged that such separate class approval by the Series C
Preferred Stock shall not be required, pursuant to Section 4 hereof, in order to
effect such merger, reorganization or acquisition), the Corporation shall, prior
to or concurrent with the effective date of such merger, reorganization or
acquisition, redeem all of those shares of Series C Preferred Stock which were
voted against such merger, reorganization or acquisition at a price of $1.00 per
share. The Corporation shall submit any such merger, reorganization or
acquisition to the separate class vote of the Series C Preferred Stock in order
to implement the foregoing. If, on or prior to such date of redemption, the
Corporation deposits with any bank or trust company in this state as a trust
fund a sum sufficient to so redeem such shares of Series C Preferred Stock, with
19
<PAGE>
irrevocable instructions and authority to the bank or trust company to pay, on
or after the date fixed for redemption, the redemption price of such shares of
Series C Preferred Stock to the holders thereof upon surrender of the share
certificates therefor, then from and after the date fixed for redemption such
shares of Series C Preferred Stock shall be deemed redeemed. The deposit shall
constitute full payment of the redemption price of such shares of Series C
Preferred Stock and from and after the date fixed for redemption such shares of
Series C Preferred Stock shall no longer be deemed outstanding and the holders
thereof shall cease to be shareholders with respect to such shares and shall
have no rights with respect thereto except only the right to receive from the
bank or trust company payment of the redemption price of the shares without
interest, upon surrender of their certificates therefor. If any such shares of
Series C Preferred Stock are converted into Common Stock pursuant to these
Seventh Restated Articles of Incorporation prior to such date fixed for
redemption, the bank or trust company forthwith shall return to the Corporation
funds deposited for shares so converted. After one year following the date
fixed for redemption, the bank or trust company shall return to the Corporation
funds deposited and not claimed and thereafter the holder of a share certificate
for Series C Preferred Stock so redeemed shall look solely to the Corporation
for payment.
Section 7. Redemption of Redeemable Preferred Stock.
----------------------------------------
(a) Mandatory Redemption at Election of Holders. The Corporation
-------------------------------------------
shall, at the election of the holders of the Redeemable Preferred Stock, redeem
such of the Redeemable Preferred Stock as such holders elect, in the manner and
at the Redemption Price hereinafter specified. In the event the Corporation
does not have sufficient funds legally available to redeem all such Redeemable
Preferred Stock which the holders thereof so elect to have redeemed, the
Corporation shall redeem pro rata (based upon the number of shares as to which
each holder elects to have redeemed) the number of shares of Redeemable
Preferred Stock it can legally redeem, and shall redeem the remainder elected
for redemption as soon as the Corporation has funds legally available therefor.
(b) Price. The redemption price (the "Redemption Price") for the
-----
Redeemable Preferred Stock shall be an amount per share equal to (i) in the case
of the Series D Preferred Stock, $1.50 plus any dividends declared but unpaid
thereon and (ii) in the case of the Series E Preferred Stock and the Series F
Preferred Stock, $2.10 plus any dividends declared but unpaid thereon.
(c) Election Procedure. The Corporation shall be required to redeem
------------------
the Redeemable Preferred Stock only if it receives at its principal place of
business from any holder of
20
<PAGE>
the Redeemable Preferred Stock written notice (an "Election Notice"), within the
first 120 days of the fiscal year of the Corporation commencing in 1999 or
within the first 120 days of any subsequent fiscal year, that such holder elects
to require the Corporation to redeem a specified number of shares (or all
shares) of such holder's Redeemable Preferred Stock in accordance with the
provisions hereof. Within ten (10) days after its first receipt of an Election
Notice during any such 120-day period, the Corporation shall mail written
notice, postage prepaid, to each holder of record of the Redeemable Preferred
Stock notifying each such holder that the Corporation has received such Election
Notice. The Corporation shall redeem such of the Redeemable Preferred Stock as
any holder of the Redeemable Preferred Stock elects to have redeemed by
delivering an Election Notice to the Corporation, at its principal place of
business, within such 120-day period; provided, however, that any such 120-day
period shall be extended solely to the extent necessary to provide that the
holders of the Redeemable Preferred Stock shall have a period of at least 30
days, following the Corporation's mailing of written notice of its first receipt
of an Election Notice, to deliver Election Notices to the Corporation in
accordance with this sentence.
(d) Redemption Notice by Company. The Corporation shall, not less
----------------------------
than thirty (30) days after the expiration of any applicable 120-day period
referred to in paragraph (c) above (or, if extended pursuant to the proviso to
the last sentence of paragraph (c), not less than thirty (30) days after the
expiration of such extension), mail written notice ("Redemption Notice"),
postage prepaid, to each holder of record of Redeemable Preferred Stock which
has delivered an Election Notice in accordance with paragraph (c) above, at the
holder's post office address last shown on the records of the Corporation. The
Redemption Notice shall state:
(i) the number of the outstanding shares of the Redeemable
Preferred Stock to be redeemed;
(ii) the number of shares of the Redeemable Preferred Stock held
by the holder which the Corporation shall redeem in accordance with
the provisions hereof;
(iii) that the shares of Redeemable Preferred Stock held by the
holder which the Corporation shall so redeem shall be redeemed in four
equal lots of 25% each on four separate dates (each a "Redemption
Date" and collectively the "Redemption Dates"), the first of which
shall be a specified date not later than sixty (60) days after the
giving of the Redemption Notice, and the other three of which shall be
each of the dates
21
<PAGE>
90, 180 and 270 days subsequent to such first Redemption Date;
(iv) the Redemption Price; and
(v) the time and manner in, and place at, which the holder is to
surrender to the Corporation on each of the four Redemption Dates the
certificate or certificates representing the shares of Redeemable
Preferred Stock to be redeemed on each such date.
(e) Surrender of Stock. On or before each Redemption Date, each
------------------
holder of Redeemable Preferred Stock to be redeemed pursuant to this Section 7
shall surrender to the Corporation the certificate or certificates representing
the shares to be redeemed on such Redemption Date, in the manner and at the
place designated in the Redemption Notice, and upon each such Redemption Date
the Redemption Price for such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof, or
to such payee as such owner may designate in writing to the Corporation prior to
each such Redemption Date, and each surrendered certificate shall be cancelled
and retired.
(f) Termination of Rights. If the Redemption Notice is duly given and
---------------------
if, on or prior to a Redemption Date, the Redemption Price is paid, then
notwithstanding that the certificates evidencing any of the shares of Redeemable
Preferred Stock so called for redemption on such Redemption Date have not been
surrendered, all rights with respect to such shares shall forthwith after such
Redemption Date cease.
(g) Number of Redemption Procedures. The Corporation shall be
-------------------------------
required to redeem the Redeemable Preferred Stock in accordance with this
Section 7 on four annual occasions only (with each such annual occasion
including four separate quarterly redemptions in accordance with this Section
7), and all redemption rights of the holders of the Redeemable Preferred Stock
under this Section 7 shall terminate after the Corporation has redeemed any of
the Redeemable Preferred Stock in accordance with this Section 7 on four
separate annual occasions.
Section 8. Reissuance of Preferred Stock.
-----------------------------
Any shares of Convertible Preferred Stock which may be redeemed,
purchased or acquired by the Corporation or converted into Common Stock shall
return to the status of authorized and unissued Preferred Stock of an
undesignated series.
22
<PAGE>
V
The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law. The
Corporation is authorized to provide indemnification of agents (as defined in
Section 317 of the California Corporations Code) for breach of duty to the
Corporation and its stockholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the California Corporations Code, subject to the limits on
such excess indemnification set forth in Section 204 of the California
Corporations Code.
3. The amendments and restatement set forth herein have been duly
approved and adopted by the Board of Directors of this Corporation.
4. The amendments set forth herein have been duly approved by the
required vote of the shareholders in accordance with Sections 902 and 903 of the
California Corporations Code. The Corporation has outstanding 2,865,171 shares
of Common Stock, 2,027,307 shares of Series A Preferred Stock, 796,530 shares of
Series B Preferred Stock, 1,400,000 shares of Series C Preferred Stock,
4,869,999 shares of Series D Preferred Stock, 2,619,049 shares of Series E
Preferred Stock and 1,624,334 shares of Series F Preferred Stock. The number of
shares voting in favor of the amendments equaled or exceeded the vote required
for approval. The percentage vote required for the approval of the amendments
was more than 50% of the Common Stock, more than 50% of the Series A Preferred
Stock, more than 50% of the Series B Preferred Stock, more than 50% of the
Series C Preferred Stock, at least two-thirds (66-2/3%) of the Series D
Preferred Stock, at least two-thirds (66-2/3%) of the Series E Preferred Stock,
and at least two-thirds (66-2/3%) of the Series F Preferred Stock, each voting
as a separate class.
The undersigned each further declares under penalty of perjury under
the laws of the State of California that the matters set forth in this
certificate are true and correct of his own knowledge.
Dated: July 31, 1995.
/s/ Gregor A. Campbell
-----------------------------
Gregor A. Campbell, President
/s/ John LaValle
-----------------------------
John LaValle, Secretary
23
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF OWNERSHIP
OF
PLASMA & MATERIALS TECHNOLOGIES, INC.
Gregor A. Campbell and John W. La Valle certify that:
1. They are the President and the Secretary, respectively, of Plasma
& Materials Technologies, Inc., a California corporation.
2. This corporation owns all the outstanding shares of Trikon
Technologies, Inc., a California corporation.
3. The Board of Directors of this corporation duly adopted the
following resolution:
RESOLVED, that this corporation merge Trikon Technologies, Inc.,
its wholly-owned subsidiary corporation, into itself and assume all
its obligations pursuant to Section 1110 of the California
Corporations Code; and
RESOLVED FURTHER, that, pursuant to and effective upon such
merger, Article I of the Articles of Incorporation of this corporation
shall be amended to provide as follows:
"The name of the Corporation is Trikon Technologies, Inc."
4. Article I of the Articles of Incorporation of this corporation is
amended to read as follows:
"The name of this corporation is Trikon Technologies, Inc."
5. The foregoing amendment of the Articles of Incorporation of this
corporation provides only for the change of the name of the surviving
corporation in a merger pursuant to Section 1110 of the California Corporations
Code, and requires no shareholder approval.
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge.
DATE: March 19, 1997
--------
/s/ Gregor A. Campbell
-----------------------------
Gregor A. Campbell, President
/s/ John W. LaValle
--------------------------
John W. LaValle, Secretary
<PAGE>
CERTIFICATE OF DETERMINATION
OF
TRIKON TECHNOLOGIES, INC.
Gregor A. Campbell and John La Valle hereby certify as follows:
1. They are the President and Secretary, respectively, of Trikon
Technologies, Inc., a California corporation (the "Corporation").
2. The number of shares of Preferred Stock which the Corporation is
authorized to issue is 20,000,000 shares, none of which is issued and
outstanding.
3. The Board of Directors of the Corporation has duly adopted the
following resolution:
"WHEREAS, the Articles of Incorporation of the Corporation authorize
the Board of Directors to determine the number of series into which shares of
Preferred Stock may be divided and the designation of any such series and,
except with respect to the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock and the Series F Preferred Stock (collectively, the "Prior
Preferred"), which are described therein (and none of the shares of which are
presently issued and outstanding), the Board of Directors is further authorized
to determine the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and to fix the number
and shares and designation of any such series; and
WHEREAS, all of the shares of Prior Preferred were automatically
converted into shares of Common Stock upon the closing of the Corporation's
initial public offering of securities registered with the Securities and
Exchange Commission at the closing of such offering on August 29, 1995, which
shares have, pursuant to the Articles of Incorporation of the Corporation,
returned to the status of authorized and unissued Preferred Stock of an
undesignated series and which shares can no longer be issued as shares of Prior
Preferred in light of the automatic conversion terms thereof, as described above
in this paragraph;
NOW, THEREFORE, IT IS RESOLVED, that the Board of Directors does
hereby establish a series of Preferred Stock as follows:
(a) The designation of such series of Preferred Stock is the Series G
Preferred Stock, and the number of shares of such Series G Preferred Stock is
3,125,000, none of which has been issued.
<PAGE>
(b) The rights, preferences, privileges and restrictions granted to
and imposed upon the Series G Preferred Stock and the holders thereof shall be
as set forth below.
Section 1. Definitions
-----------
For purposes of Sections 1 through 5 below, the following definitions
shall apply:
(a) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Corporation after the filing of this Certificate of
Determination, whether or not subsequently reacquired or retired by the
Corporation, other than:
(i) Shares issuable upon conversion of the Series G Preferred
Stock;
(ii) Shares of Common Stock issued to employees or directors of
(or consultants to) the Corporation, or issuable upon exercise of
stock options granted to such employees, directors or consultants,
pursuant to stock-based compensation plans approved by the Board;
(iii) Shares issued or issuable by way of stock split or stock
dividend; and
(iv) Shares issued or issuable to, or issuable upon the exercise
or conversion of warrants or Convertible Securities issued to,
investors in the Corporation pursuant to and in connection with
strategic business relationships between the Corporation and such
investors, which business relationships and issuances of securities
have been unanimously approved by the Board.
(b) "Board" shall mean the Board of Directors of the Corporation.
(c) "Common Stock" shall mean the Common Stock of the Corporation.
(d) "Conversion Price" shall have the meaning set forth in Section
5(a) below.
(e) "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are at any time directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
(f) "Corporation" shall mean this corporation.
2
<PAGE>
Section 2. Dividends
---------
In each fiscal year of the Corporation, the holders of shares of
Series G Preferred Stock shall be entitled to receive, before any cash dividends
shall be paid or declared and set aside for the Common Stock in such fiscal
year, when and as declared by the Board, out of funds legally available for that
purpose, dividends payable in an amount per share for such fiscal year equal to
the per share amount, if any, of any cash dividend declared, paid or set aside
for the Common Stock during such fiscal year, multiplied by the number of shares
of Common Stock into which each such share of Series G Preferred Stock is then
convertible. Dividends for the Series G Preferred Stock declared by the Board
but not paid shall accrue. No dividends shall accrue upon the Series G
Preferred Stock unless declared by the Board in its sole discretion in
accordance with the foregoing provisions of this Section 2.
Section 3. Liquidation, Dissolution or Winding Up
--------------------------------------
(a) In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, including a merger, acquisition or
other reorganization in which the Corporation is not the surviving entity, all
assets or surplus funds of the Corporation shall be distributed to the holders
of the Common Stock and the Series G Preferred Stock in the following manner and
order of priority:
(i) First, ratably among the holders of the Series G Preferred
-----
Stock until such holders have received $6.40 per share;
(ii) Second, ratably among the holders of the Common Stock until
------
such holders have received $6.40 per share; and
(iii) Third, to the holders of the Common Stock and the Series G
-----
Preferred Stock on a pro rata basis according to the number of shares
of Common Stock (A) then held, with respect to the Common Stock, and
(B) into which the shares of Series G Preferred Stock then held are
convertible, in the case of the Series G Preferred Stock.
No adjustment to the Conversion Price pursuant to this Certificate of
Determination shall alter the above liquidation preference dollar amounts.
(b) The dollar amounts specified in Section 3(a) shall be equitably
adjusted in the event of any stock splits, stock dividends or similar capital
modifications affecting the Common Stock or the Series G Preferred Stock after
the filing of this Certificate of Determination.
3
<PAGE>
(c) Insofar as any distribution pursuant to Section 3(a) consists of
property other than cash, the value thereof shall, for purposes of the
provisions of Section 3(a), be the fair value at the time of such distribution,
as determined in good faith by the Board.
Section 4. Voting
------
(a) At all meetings of the stockholders of the Corporation and in the
case of any actions of stockholders in lieu of a meeting, each share of Common
Stock shall be entitled to one vote, and each share of Series G Preferred Stock
shall be entitled to that number of votes equal to the number of whole shares of
Common Stock into which such share is then convertible (in accordance with
Section 5 hereof) on the record date set for the meeting or action or, if no
record date is set, on the date of such meeting or the date such action is
taken. Except as otherwise expressly provided in Sections 4(b) and 4(c) below
or as required by law, the holders of Common Stock and Series G Preferred Stock
shall vote together as a single class in accordance with the preceding sentence,
and neither the Common Stock nor the Series G Preferred Stock shall be entitled
to vote as a separate class on any matter to be voted on by shareholders of the
Corporation.
(b) The Corporation shall not amend, alter or repeal the preferences,
privileges, special rights or other powers of the Series G Preferred Stock, as
set forth herein, in a manner adverse to the holders thereof, without the
affirmative vote of the holders of a majority of the then outstanding shares of
the Series G Preferred Stock, voting for this purpose as a single class of
stock.
(c) The Corporation shall not authorize or issue, or obligate itself
to issue, any other preferred equity security, whether junior or senior to or on
a parity with the Series G Preferred Stock as to dividend rights, redemption or
sinking fund rights, liquidation preferences, conversion rights, voting rights
or otherwise, without the affirmative vote of the holders of a majority of the
then outstanding shares of the Series G Preferred Stock, voting for this purpose
as a single class of stock.
Section 5. Conversion
----------
The holders of the Series G Preferred Stock shall have the following
conversion rights (the "Conversion Rights"):
(a) Optional Conversion. Each share of Series G Preferred Stock
-------------------
shall be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after the
date which is 90 days after the first issuance of shares of Series G Preferred
Stock by the Corporation, at the office of the Corporation or any transfer agent
for the Common Stock, into such number of fully
4
<PAGE>
paid and nonassessable shares of Common Stock as is determined by dividing $6.40
by the Conversion Price, determined as hereinafter provided, in effect at the
time of conversion. The Conversion Price at which shares of Common Stock shall
be deliverable upon conversion without the payment of any additional
consideration by the holder thereof (the "Conversion Price") shall at the time
of the filing of this Certificate of Determination initially be $6.40 in the
case of the Series G Preferred Stock. Such initial Conversion Price shall be
subject to adjustment, in order to adjust the number of shares of Common Stock
into which the Series G Preferred Stock is convertible, as hereinafter provided.
(b) Automatic Conversion.
--------------------
(i) Each share of Series G Preferred Stock shall automatically
be converted into shares of Common Stock on that date which is three
years after the first issuance of shares of Series G Preferred Stock
by the Corporation.
(ii) Additionally, the Series G Preferred Stock shall be
automatically converted into shares of Common Stock upon the optional
conversion into Common Stock, pursuant to Section 5(a) above, of at
least sixty six and two-thirds percent (66-2/3%) of the cumulative
number of shares of Series G Preferred Stock theretofore issued by the
Corporation.
(c) Fractional Shares. No fractional shares of Common Stock shall be
-----------------
issued upon conversion of the Series G Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(d) Mechanics of Optional Conversion. Before any holder of Series G
--------------------------------
Preferred Stock shall be entitled to convert the same into full shares of Common
Stock, he or it shall surrender the certificate or certificates therefor,
endorsed or accompanied by written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
by his attorney duly authorized in writing, at the office of the Corporation or
of any transfer agent for the Common Stock, and shall give written notice to the
Corporation at such office that such holder elects to convert the same and shall
state therein such holder's name or the names of the nominees in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. The Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Series G Preferred Stock, or to his or
its nominee or nominees, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid, together
with cash in lieu of any fraction of a share. Such conversion shall be deemed
to have been made
5
<PAGE>
immediately prior to the close of business on the date of such surrender of the
shares of Series G Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. From and after such date, all rights of the holder
with respect to the Series G Preferred Stock so converted shall terminate,
except only the right of such holder, upon the surrender of his or its
certificate or certificates therefor, to receive certificates for the number of
shares of Common Stock issuable upon conversion thereof and cash for fractional
shares.
(e) Mechanics of Automatic Conversion. All holders of record of
---------------------------------
shares of Series G Preferred Stock will be given at least 30 days' prior written
notice of the anticipated date of any automatic conversion referenced in Section
5(b) and four days' prior written notice of the actual date of such conversion.
The Corporation shall also exercise best efforts to provide four days telephonic
notice of such actual conversion date to said holders. Each such notice shall
designate a place for automatic conversion of all of the shares of such Series G
Preferred Stock pursuant to Section 5(b). Such notice will be sent by mail,
first class, postage prepaid, to each record holder of Series G Preferred Stock
at such holder's address appearing on the stock register. On or before the date
fixed for conversion, each holder of shares of Series G Preferred Stock shall
surrender his or its certificate or certificates for all such shares to the
Corporation at the place designated in such notice, and shall thereafter receive
certificates for the number of shares of Common Stock or other securities to
which such holder is entitled. On the date fixed for conversion, all rights
with respect to the Series G Preferred Stock will terminate, except only (1) any
rights to receive declared but unpaid dividends with a record date preceding the
date of conversion, and (2) the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock or other securities into which such Series G
Preferred Stock has been converted and cash for fractional shares. If so
required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
by his or its attorney duly authorized in writing. All certificates evidencing
shares of Series G Preferred Stock which are required to be surrendered for
conversion in accordance with the provisions hereof shall, from and after the
date such certificates are so required to be surrendered, be deemed to have been
retired and cancelled and the shares of Series G Preferred Stock represented
thereby converted into Common Stock for all purposes, notwithstanding the
failure of the holder or holders thereof to surrender such certificates on or
prior to such date. As soon as practicable after the date of such automatic
conversion and the surrender of the certificate
6
<PAGE>
or certificates for Series G Preferred Stock as aforesaid, the Corporation shall
cause to be issued and delivered to such holder, or to his or its written order,
a certificate or certificates for the number of full shares of Common Stock or
other securities issuable on such conversion in accordance with the provisions
hereof and cash as provided in Section 5(c) in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion.
(f) Certain Adjustments to Conversion Price for Stock Splits,
---------------------------------------------------------
Dividends, Mergers, Reorganizations, Etc.
- -----------------------------------------
(i) Adjustment for Stock Splits, Stock Dividends and Combinations
-------------------------------------------------------------
of Common Stock. In the event the outstanding shares of Common Stock
---------------
shall, after the filing of this Certificate of Determination, be
further subdivided (split), or combined (reverse split), by
reclassification or otherwise, or in the event of any dividend or
other distribution payable on the Common Stock in shares of Common
Stock, the applicable Conversion Price in effect immediately prior to
such subdivision, combination, dividend or other distribution shall,
concurrently with the effectiveness of such subdivision, combination,
dividend or other distribution, be proportionately adjusted.
(ii) Adjustment for Merger or Reorganization, Etc. In case of a
---------------------------------------------
reclassification, reorganization or exchange (other than described in
Subsection (i) above) or any consolidation or merger of the
Corporation with another corporation (other than a merger, acquisition
or other reorganization in which the Corporation is not the surviving
entity, any of which shall be considered a liquidation pursuant to
Section 3 above), each share of Series G Preferred Stock shall
thereafter be convertible into the number of shares of stock or other
securities or property to which a holder of the number of shares of
Common Stock of the Corporation deliverable upon conversion of the
Series G Preferred Stock would have been entitled upon such reclassi
fication, reorganization, exchange, consolidation, merger or
conveyance; and, in any such case, appropriate adjustment (as
determined by the Board) shall be made in the application of the
provisions herein set forth with respect to the rights and interests
thereafter of the holders of the Series G Preferred Stock, to the end
that the provisions set forth herein (including provisions with
respect to changes in and other adjustments of the applicable
Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Series G
Preferred Stock.
7
<PAGE>
(iii) Adjustments for Other Dividends and Distributions. In the
-------------------------------------------------
event the Corporation at any time or from time to time after the
filing of this Certificate of Determination makes, or fixes a record
date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event
provision shall be made so that the holders of Series G Preferred
Stock shall receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable thereupon, the amount of
securities of the Company which they would have received had their
Series G Preferred Stock been converted into Common Stock on the date
of such event and had they thereafter, during the period from the date
of such event to and including the conver sion date, retained such
securities receivable by them as aforesaid during such period, subject
to all other adjustments called for during such period under this
Section 5 with respect to the rights of the holders of the Series G
Preferred Stock.
(g) Adjustment to Conversion Price for Issue or Sale of Additional
--------------------------------------------------------------
Shares of Common Stock. In case at any time or from time to time on or after
- ----------------------
the filing of this Certificate of Determination the Corporation shall issue or
sell Additional Shares of Common Stock for a consideration per share less than
the Conversion Price of the Series G Preferred Stock then in effect, then and in
each such case the then Conversion Price of the Series G Preferred Stock shall
be reduced to an adjusted Conversion Price (computed to the nearest cent, a half
cent being treated as a full cent) by dividing
(A) the sum of (X) the result obtained by multiplying the number
of shares of Common Stock outstanding immediately prior to such issue
or sale by the Conversion Price then in effect, and (Y) the
consideration, if any, received by the Corporation upon such issue and
sale, by
(B) the number of shares of Common Stock outstanding immediately
after such issue or sale.
For purposes of adjusting the Conversion Price pursuant to the
foregoing clauses (A) and (B), Common Stock shall be deemed to be outstanding at
a particular time if it is outstanding at such time or if at such time (I) it
can be acquired upon the conversion of any then outstanding shares of Series G
Preferred Stock or (II) it can be purchased upon the exercise of any outstanding
rights or options, or acquired upon the conversion of any outstanding
Convertible Securities, or acquired upon the conversion of any Convertible
Securities which can be purchased upon the exercise of any outstanding rights or
options; provided, however, that for purposes of clause (II), the number of
shares
8
<PAGE>
deemed outstanding shall be limited to such number of shares deemed outstanding
in respect of such rights, options and Convertible Securities under generally
accepted accounting principles for purposes of computing fully diluted earnings
per share.
(h) Further Provisions for Adjustment of Conversion Price. For the
-----------------------------------------------------
purpose of Section 5(g) above, the following provisions shall be applicable:
(A) Issuance or Sale of Convertible Securities. In case at any
------------------------------------------
time on or after the filing of this Certificate of Determination, the
Corporation shall issue or sell any Convertible Securities, there
shall be determined as of the date of issue the price per share for
which Additional Shares of Common Stock are issuable upon the
conversion or exchange thereof, such determination to be made by
dividing (X) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion
or exchange thereof, by (Y) the maximum number of Additional Shares of
Common Stock issuable upon conversion or exchange of all of such
Convertible Securities; and such issue or sale shall be deemed to be
an issue or sale for cash (as of the date of issue or sale of such
Convertible Securities) of such maximum number of Additional Shares of
Common Stock at the price per share so determined.
If such Convertible Securities shall by their terms provide for
an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Corporation, or in
the rate of exchange, upon the conversion or exchange thereof, the
adjusted Conversion Price shall, forthwith upon any such increase
becoming effective, be readjusted (but to no greater extent than
originally adjusted) to reflect the same.
If any rights of conversion or exchange evidenced by such
Convertible Securities shall expire without having been exercised, the
adjusted Conversion Price shall forthwith be readjusted to be the
adjusted Conversion Price which would have been in effect had an
adjustment been made on the basis that the only Additional Shares of
Common Stock issued or sold were those actually issued upon the
conversion or exchange of such Convertible Securities, and that they
were issued or sold for the consideration actually received by the
Corporation upon such conversion or exchange, plus the consideration,
if any, actually received by the
9
<PAGE>
Corporation for the issue or sale of such Convertible Securities as
were actually converted or exchanged.
(B) Grant of Rights or Options for Common Stock. In case at any
-------------------------------------------
time on or after the filing of this Certificate of Determination, the
Corporation shall grant any rights or options to subscribe for,
purchase or otherwise acquire Additional Shares of Common Stock, there
shall be determined as of the date of issue the price per share for
which Additional Shares of Common Stock are issuable upon the exercise
of such rights or options, such determination to be made by dividing
(X) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such rights or
options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of such rights or
options, by (Y) the maximum number of Additional Shares of Common
Stock of the Corporation issuable upon the exercise of such rights or
options; and the granting of such rights or options shall be deemed to
be an issue or sale for cash (as of the date of the granting of such
rights or options) of such maximum number of Additional Shares of
Common Stock at the price per share so determined.
If such rights or options shall by their terms provide for an
increase or increases, with the passage of time, in the amount of
additional consideration payable to the Corporation upon the exercise
thereof, the adjusted Conversion Price shall, forthwith upon any such
increase becoming effective, be readjusted (but to no greater extent
than originally adjusted) to reflect the same.
If any such rights or options shall expire without having been
exercised, the adjusted Conversion Price shall forthwith be readjusted
to be the adjusted Conversion Price which would have been in effect
had an adjustment been made on the basis that the only Additional
Shares of Common Stock so issued or sold were those actually issued or
sold upon the exercise of such rights or options and that they were
issued or sold for the consideration actually received by the
Corporation upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting of all such
rights or options, whether or not exercised.
(C) Grant of Rights or Options for Convertible Securities. In
-----------------------------------------------------
case at any time on or after the filing of this Certificate of
Determination the Corporation shall grant any rights or options to
subscribe for, purchase or otherwise acquire Convertible Securities,
such Convertible Securities shall be deemed, for the purposes of such
Section 5, to have been issued and sold
10
<PAGE>
(as of the date of the granting of such option or rights) for the
total amount received or receivable by the Corporation as
consideration for the granting of such rights or options plus the
minimum aggregate amount of additional consideration, if any, payable
to the Corporation upon the exercise of such rights or options.
If such rights or options shall by their terms provide for an
increase or increases, with the passage of time, in the amount of
additional consideration payable by the Corporation upon the exercise
thereof, the adjusted Conversion Price shall, forthwith upon any such
increase becoming effective, be readjusted (but to no greater extent
than originally adjusted) to reflect the same.
If any such rights or options shall expire without having been
exercised, the adjusted Conversion Price shall forthwith be readjusted
to be the adjusted Conversion Price which would have been in effect
had an adjustment been made on the basis that the only Convertible
Securities so issued or sold were those actually issued or sold upon
the exercise of such rights or options and that they were issued or
sold for the consideration actually received by the Corporation upon
such exercise, plus the consideration, if any, actually received by
the Corporation for the granting of all such rights or options,
whether or not exercis
(D) Determination of Consideration. Upon any issuance or sale
------------------------------
for a consideration other than cash, or a consideration part of which
is other than cash, of any Additional Shares of Common Stock or
Convertible Securities or any rights or options to subscribe for,
purchase or otherwise acquire any Additional Shares of Common Stock or
Convertible Securities, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value
of such consideration as determined in good faith by the Board. In
case any Additional Shares of Common Stock or Convertible Securities
or any rights or options to subscribe for, purchase or otherwise
acquire any Additional Shares of Common Stock or Convertible
Securities shall be issued or sold together with other stock or
securities or other assets of the Corporation for a consideration
which covers two or more thereof, the consideration for the issue or
sale of such Additional Shares of Common Stock or Convertible
Securities or such rights or options shall be deemed to be the portion
of such consideration allocated thereto in good faith by the Board.
(E) Shares Considered Outstanding. The number of shares of
-----------------------------
Common Stock outstanding at any given time
11
<PAGE>
shall include shares issuable in respect of scrip certificates issued
in lieu of fractions of shares of Common Stock.
(F) Duration of Adjusted Conversion Price. Following each
-------------------------------------
computation or readjustment of an adjusted Conversion Price as
provided above in this Section 5, the new adjusted Conversion Price
shall remain in effect until a further computation or readjustment
thereof is required by this Section 5.
(G) Other Action Affecting Common Stock. In case after the
-----------------------------------
filing of this Certificate of Determination the Corporation shall take
any action affecting its shares of Common Stock, other than an action
described above in this Section 5, which in the good faith opinion of
the Board would have a materially adverse effect upon the conversion
rights of the Series G Preferred Stock granted herein, the Conversion
Price shall be adjusted in such manner and at such time as the Board
may in good faith determine to be equitable in the circumstances.
(i) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series G Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in reasonable detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request, at any time, of any holder of Series G Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the applicable Conversion Price at the time
in effect; and (iii) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of the Series G Preferred Stock.
(j) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, any capital reorganization of the
Corporation, any reclassification or recapitalization of the Corporation's
capital stock, any consolidation or merger with or into another corporation, any
transfer of all or substantially all of the assets of the Corporation or any
dissolution, liquidation or winding up of the Corporation, the Corporation shall
mail to each holder of Series G Preferred Stock at least ten (10) days prior to
the date specified for the taking of a record, a notice specifying the date on
which any such record is to be taken for the purpose of such dividend or
distribution.
12
<PAGE>
(k) Common Stock Reserved. The Corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Series G Preferred Stock.
(l) Payment of Taxes. The Corporation will pay all taxes (other than
----------------
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series G Preferred Stock, other than any tax or other charge imposed
in connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series G Preferred
Stock so converted were registered.
4. The number of shares designated as Series G Preferred Stock is
3,125,000, and none of such shares has been issued.
The undersigned each further declares under penalty of perjury under
the laws of the State of California that the matters set forth in this
certificate are true and correct of his own knowledge and that this certificate
has been executed on June 3, 1997 in Chatsworth, California.
/s/ Gregor A. Campbell
------------------------------
Gregor A. Campbell, President
/s/ John LaValle
------------------------------
John LaValle, Secretary
164174.2
13
<PAGE>
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF OWNERSHIP
OF
TRIKON TECHNOLOGIES, INC.
(formerly Plasma & Materials Technologies, Inc.)
Gregor A. Campbell hereby certifies as follows:
1. He is the Vice President and Assistant Secretary of Trikon
Technologies, Inc., a California corporation, formerly named Plasma & Materials
Technologies, Inc. (the "Corporation"). He is also the Chief Executive Officer
of the Corporation.
2. The certificate being hereby corrected by the filing of this
Certificate of Correction is the Certificate of Ownership of the Corporation
filed with the California Secretary of State on March 31, 1997 (the "Certificate
of Ownership").
3. The execution of the Certificate of Ownership was defective in
that, at the time of executing the Certificate of Ownership (and at the
present), Gregor A. Campbell was not and is not the President of the
Corporation. However, John LaValle, who signed the Certificate of Ownership as
Secretary, was also a Vice President of the Corporation at the time of signing.
4. This Certificate of Correction of Certificate of Ownership does
not alter the wording of the resolutions set forth in the Certificate of
Ownership which were in fact adopted by the Board of Directors of the
Corporation. The Board of Directors of the Corporation duly adopted each and
all of the resolutions set forth in the Certificate of Ownership being hereby
corrected and all other matters set forth in the Certificate of Ownership
(except only as specified in paragraph (3) above) were true and correct when
filed.
The undersigned further declares under penalty of perjury under the
laws of the State of California that the matters set forth in this Certificate
are true and correct of his own knowledge and that this Certificate has been
executed on June 19, 1997 in Chatsworth, California.
/s/ Gregor A. Campbell
___________________________________
Gregor A. Campbell, Vice President
and Assistant Secretary
<PAGE>
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DETERMINATION
OF
TRIKON TECHNOLOGIES, INC.
Gregor A. Campbell hereby certifies as follows:
1. He is the Vice President and Assistant Secretary of Trikon
Technologies, Inc., a California corporation (the "Corporation"). He is also
the Chief Executive Officer of the Corporation.
2. The certificate being hereby corrected by the filing of this
Certificate of Correction is the Certificate of Determination of Trikon
Technologies, Inc. filed with the California Secretary of State on June 5, 1997
(the "Certificate of Determination").
3. The execution of the Certificate of Determination was defective
in that, at the time of executing the Certificate of Determination (and at the
present), Gregor A. Campbell was not and is not the President of the
Corporation. However, John LaValle, who signed the Certificate of
Determintation as Secretary, was also a Vice President of the Corporation at
such time of signing.
4. This Certificate of Correction does not alter the wording of the
resolutions set forth in the Certificate of Determination which were in fact
adopted by the Board of Directors of the Corporation. The Board of Directors of
the Corporation duly adopted each and all of the resolutions set forth in the
Certificate of Determination being hereby corrected and all other matters set
forth in the Certificate of Determination (except only as specified in paragraph
(3) above) are true and correct.
The undersigned further declares under penalty of perjury under the
laws of the State of California that the matters set forth in this Certificate
are true and correct of his own knowledge and that this Certificate has been
executed on June 19, 1997 in Chatsworth, California.
/s/ Gregor A. Campbell
___________________________________
Gregor A. Campbell, Vice President
and Assistant Secretary
<PAGE>
AMENDMENT TO CERTIFICATE OF DETERMINATION
OF
TRIKON TECHNOLOGIES, INC.
Gregor A. Campbell hereby certifies as follows:
1. He is the Vice President and Assistant Secretary of Trikon
Technologies, Inc., a California corporation (the "Corporation").
2. On June 5, 1997, the Corporation filed a Certificate of
Determination with the California Secretary of State setting forth certain
resolutions adopted by the Board of Directors of the Corporation establishing
the Series G Preferred Stock of the Corporation (the "Certificate of
Determination"). Subsequent to the filing of the Certificate of Determination,
the Corporation filed a Certificate of Correction correcting the defective
execution of the Certificate of Determination.
3. Subsequent to the filing of the Certificate of Determination, but
before the issuance of any shares of Series G Preferred Stock, the Board of
Directors of the Corporation duly adopted the following resolutions:
RESOLVED, that Section 3(a) (including the Section identification
thereof) of the resolutions establishing the rights, preferences,
privileges and restrictions granted to and imposed upon the Series G
Preferred Stock and the holders thereof as set forth in the Certificate of
Determination filed with the California Secretary of State on June 5, 1997
(the "Series G Resolutions") is hereby amended in full to read as follows:
"Section 3. Liquidation, Dissolution or Winding Up
--------------------------------------
(a) In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, including a merger,
acquisition or other reorganization in which the Corporation is not the
surviving entity, all assets or surplus funds of the Corporation shall be
distributed to the holders of the Common Stock and the Series G Preferred
Stock in the following manner and order of priority:
(i) First, ratably among the holders of the Series G Preferred
-----
Stock until such holders have received a dollar amount per share equal
to the cash purchase price for which the first share of Series G
Preferred Stock is issued and sold by the Corporation (the "Original
Issue Price");
(ii) Second, ratably among the holders of the Common Stock until
------
such holders have received an
<PAGE>
amount per share equal to the Original Issue Price; and
(iii) Third, to the holders of the Common Stock and the Series G
-----
Preferred Stock on a pro rata basis according to the number of shares
of Common Stock (A) then held, with respect to the Common Stock, and
(B) into which the shares of Series G Preferred Stock then held are
convertible, in the case of the Series G Preferred Stock.
No adjustment to the Conversion Price pursuant to this Certificate of
Determination shall alter the above liquidation preference dollar amounts."
RESOLVED FURTHER, that Section 5(a) of the Series G Resolutions
(including the Section identification and lead-in language thereto) is
hereby amended in full to read as follows:
"Section 5. Conversion
----------
The holders of the Series G Preferred Stock shall have the following
conversion rights (the "Conversion Rights"):
(a) Optional Conversion. Each share of Series G Preferred Stock
-------------------
shall be convertible, without the payment of any additional consideration
by the holder thereof and at the option of the holder thereof, at any time
after the date which is 90 days after the first issuance of shares of
Series G Preferred Stock by the Corporation, at the office of the
Corporation or any transfer agent for the Common Stock, into such number of
fully paid and nonassessable shares of Common Stock as is determined by
dividing the Original Issue Price by the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. The Conversion
Price at which shares of Common Stock shall be deliverable upon conversion
without the payment of any additional consideration by the holder thereof
(the "Conversion Price") shall at the time of the filing of this
Certificate of Determination initially be the Original Issue Price in the
case of the Series G Preferred Stock. Such initial Conversion Price shall
be subject to adjustment, in order to adjust the number of shares of Common
Stock into which the Series G Preferred Stock is convertible, as
hereinafter provided."
4. None of the Series G Preferred Stock has been issued.
2
<PAGE>
The undersigned further declares under penalty of perjury under the
laws of the State of California that the matters set forth in this Certificate
are true and correct of his own knowledge and that this Certificate has been
executed on June 20, 1997 in Chatsworth, California.
/S/ GREGOR A. CAMPBELL
----------------------------------
Gregor A. Campbell, Vice President
and Assistant Secretary
3
<PAGE>
EXHIBIT 4.6
The following form of Common Stock Purchase Warrant was issued
by the Registrant in connection with the Stock Purchase Agreement relating to
the sale of the Registrant's Series G Preferred Stock (Exhibit 10.23 hereto) to
the following parties in the following amounts:
Shares to
Name Purchase Upon Exercise
---- ----------------------
[ to come ]
<PAGE>
THE SECURITIES EVIDENCED BY THIS WARRANT OR ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE BLUE SKY LAWS AND ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS.
THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH APPLICABLE BLUE
SKY LAWS OR AN EXEMPTION THEREFROM.
Warrant No. 97-___ June 27, 1997
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, __________________________,
and permitted assigns ("Warrantholder"), is entitled to purchase from Trikon
Technologies, Inc., a California corporation (the "Company"), on the terms and
conditions contained herein, ___________________________________ (______) shares
of the Company's Common Stock, no par value per share (the "Common Stock"), at a
price of Eight Dollars ($8.00) per share (the "Warrant Price"). This Warrant is
issued pursuant to that certain Stock Purchase Agreement dated as of June 27,
1997 among the Company, Warrantholder and the other Investors parties thereto
(the "Stock Purchase Agreement").
1. Exercisability of Warrant. This Warrant shall be immediately
-------------------------
exercisable for all or any portion of the shares of Common Stock set forth
above.
2. Method of Exercise; Payment; Issuance of New Warrant; Transfer
--------------------------------------------------------------
and Exchange. This Warrant may be exercised by Warrantholder, in whole or in
- ------------
part, by the surrender of this Warrant, properly endorsed, at the principal
office of the Company at 9255 Deering Avenue, Chatsworth, California 91311, and
by (a) the payment to the Company of the then applicable Warrant Price of the
Common Stock being purchased, which Warrant Price may be paid, in whole or in
part, by the delivery of cash or check in an amount equal to such Warrant Price,
and (b) delivery to the Company of a customary investment letter executed by
Warrantholder, confirming that the shares of Common Stock being purchased are
being acquired for Warrantholder's own account and not with a view to or for
sale in connection with any distribution of such shares, acknowledging
securities law restrictions applicable to such shares, and agreeing that
certificates evidencing such shares shall bear a legend accordingly restricting
the transfer of such shares. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to Warrantholder within a reasonable time after the
rights represented by this Warrant shall have been so exercised, and unless this
Warrant has expired, a new Warrant representing the number of shares of Common
Stock, if any, with respect to which this Warrant shall not then have been
exercised or that may become exercisable after such date, shall also be issued
to Warrantholder within such time. In lieu of exercising this Warrant for a
specified number of shares of Common Stock (the "Exercised Shares") and
<PAGE>
paying the aggregate Warrant Price therefor (the "Exercise Price"),
Warrantholder may elect, at any time prior to the expiration of this Warrant, to
receive a number of shares of Common Stock equal to the number of Exercised
Shares minus that number of shares of Common Stock having an aggregate Fair
Market Value equal to the Exercise Price. Following such election, the number of
shares of Common Stock covered by this Warrant shall be deemed automatically
reduced by the number of Exercised Shares. For purposes of this Warrant, the
"Fair Market Value" shall mean the closing sales prices of Common Stock quoted
on the NASDAQ National Market or, if then traded on a national securities
exchange, the closing prices of Common Stock on the principal national
securities exchange on which listed or, if quoted on the NASDAQ over-the-counter
system, the average of the mean of the closing bid and asked prices of Common
Stock quoted on such system, in any such case on each of the ten (10) trading
days immediately preceding the date of such exercise.
3. Stock Fully Paid; Reservation of Shares. The Company covenants
---------------------------------------
and agrees that all shares of Common Stock that may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all liens. The Company covenants and agrees that,
during the period within which the rights represented by this Warrant may be
exercised, it shall reserve for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, at least the maximum number of shares
of Common Stock as are issuable upon the exercise of the rights represented by
this Warrant.
4. Restrictions on Transferability of Securities; Compliance with
--------------------------------------------------------------
Securities Act.
- --------------
(a) Restrictions on Transferability. This Warrant and the shares of
-------------------------------
Common Stock issuable hereunder shall not be transferable except upon the
conditions specified in this Section 4, which conditions are intended to insure
compliance with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"). Each holder of this Warrant or the Common Stock issuable
hereunder will cause any proposed transferee of the Warrant or such Common Stock
to agree to take and hold such securities subject to the provisions and upon the
conditions specified in this Section.
(b) Restrictive Legend. Each certificate representing (i) this
------------------
Warrant, (ii) the shares of Common Stock issued upon exercise of the Warrant and
(iii) any other securities issued in respect of such shares of Common Stock upon
any stock split, stock dividend or similar event (collectively, the "Restricted
Securities"), shall (unless otherwise permitted by the provisions of Section
4(c) below or unless such securities have been registered under the Securities
Act) be imprinted with the following legend, in addition to any legend required
under applicable state securities laws:
2
<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS, AND ARE
SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY
NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER THE ACT AND SUCH APPLICABLE BLUE SKY LAWS
OR AN EXEMPTION THEREFROM.
Upon request of a holder of a certificate with such legend imprinted
thereon, the Company shall remove the foregoing legend therefrom or, if
appropriate, issue to such holder a new certificate therefor free of any
transfer legend, if, with such request, the Company shall have received either
the opinion referred to in Section 4(c)(i) or the "no-action" letter referred to
in Section 4(c)(ii) to the effect that any transfer by such holder of the
securities evidenced by such certificate will be exempt from the registration
and/or qualification requirements of, and that such legend is not required in
order to establish compliance, with the Securities Act, and if applicable, any
state securities laws under which transfer restrictions on such securities had
been previously imposed.
(c) Notice of Proposed Transfers. The holder of each certificate
----------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4(c). Prior to any proposed
transfer of any Restricted Securities, the holder thereof shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the proposed transfer
in sufficient detail, and shall be accompanied by either (i) an unqualified
written legal opinion addressed to the Company from counsel who shall be
reasonably satisfactory to the Company, which opinion shall be reasonably
satisfactory in form and substance to the Company's legal counsel, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act and any applicable state securities laws,
or (ii) a "no-action" letter from the Securities and Exchange Commission (and
any necessary state securities administrator) to the effect that the proposed
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission (or such administrators) that
action be taken with respect thereto, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the Company.
Each certificate evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth in Section 4(b)
above, unless the legal opinion or "no-action" letter, as applicable, states
that the restrictive legend may be removed upon consummation of the proposed
transfer.
5. Adjustment of Purchase Price and Number of Shares of Common
-----------------------------------------------------------
Stock. The number and kind of securities purchasable upon the exercise of this
Warrant and
3
<PAGE>
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(a) Consolidation, Merger, Reorganization, Etc. If the Company at any
-------------------------------------------
time while this Warrant remains outstanding and unexpired shall consolidate with
or merge into any other corporation, reorganize, reclassify, or in any manner
change the securities then purchasable upon the exercise of this Warrant, then
upon consummation thereof this Warrant shall thereafter represent the right of
Warrantholder to receive, to the extent this Warrant is exercisable as provided
above in Section 1, in lieu of shares of Common Stock, the cash or such number
of securities to which Warrantholder would have been entitled upon consummation
thereof if Warrantholder had exercised this Warrant immediately prior thereto.
Upon any such event, an appropriate adjustment shall also be made to the Warrant
Price, if necessary in the good faith judgment of the Board of Directors of the
Company, to preserve the economic benefit intended to be conferred upon
Warrantholder in accordance with the terms hereof.
(b) Subdivision or Combination of Shares; Dividends and Distribution
----------------------------------------------------------------
of Common Stock. If the Company at any time shall subdivide or combine its
- ---------------
Common Stock, or take a record of the holders of its Common Stock for the
purpose of entitling them to receive without payment a dividend payable in, or
other distribution of, Common Stock or other securities, then the number of
shares of Common Stock purchasable hereunder shall be adjusted to that number
determined by multiplying the number of shares purchasable upon the exercise of
this Warrant immediately prior to such adjustment by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately after such subdivision, combination, dividend or
distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately prior to such subdivision,
combination, dividend or distribution. Additionally, the Warrant Price shall be
adjusted to that price determined by multiplying the Warrant Price in effect
immediately prior to such subdivision, combination, dividend or distribution by
a fraction (x) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such subdivision, combination,
dividend or distribution, and (y) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such subdivision,
combination, dividend or distribution.
(c) Weighted Average Price Protection. Reference is made to the
---------------------------------
Certificate of Determination of the Company filed with the California Secretary
of State on June 5, 1997, as amended by the Amendment to Certificate of
Determination of the Company filed with the California Secretary of State on
June 20, 1997, copies of which are attached collectively to the Stock Purchase
Agreement as Exhibit A (collectively, the "Certificate of Determination").
Capitalized terms used in this paragraph shall, unless otherwise specifically
defined in this Warrant, have the meanings ascribed to them in the Certificate
of Determination. If, after the issuance of this Warrant, the Company shall at
4
<PAGE>
any time or from time to time issue (or be deemed under Section 5 of the
resolutions set forth in the Certificate of Determination to have issued) any
Additional Shares of Common Stock (excluding the Series G Preferred Stock issued
pursuant to the Stock Purchase Agreement) at a price less than the Warrant Price
and such issuance or deemed issuance would result in an adjustment to the
Conversion Price of the Series G Preferred Stock, pursuant to Sections 5(g) or
5(h) of the Certificate of Determination, assuming hypothetically solely for
purposes of this paragraph that the initial Conversion Price of the Series G
Preferred Stock is $8.00 (which the parties acknowledge is not the case), the
Warrant Price shall forthwith be adjusted (in each case of any such issuance or
deemed issuance) to the adjusted Conversion Price which would have been
applicable to the Series G Preferred Stock under such Sections 5(g) or 5(h) by
reason of such issuance or deemed issuance if the Conversion Price of the Series
G Preferred Stock had been initially $8.00.
(d) Statement Regarding Adjustments. When any adjustment is required
-------------------------------
to be made in the Warrant Price, either initially or as further adjusted
hereunder, the Company shall forthwith determine the adjusted number of shares
of Common Stock purchasable hereunder and the new Warrant Price and shall (i)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the adjusted number of shares of Common Stock
purchasable hereunder and the new Warrant Price; and (ii) cause a copy of such
statement to be mailed to Warrantholder as of a date within ten (10) days after
the date when the circumstances giving rise to the adjustment occurred.
6. Fractional Shares. No fractional shares of Common Stock will be
-----------------
issued in connection with any exercise hereunder but in lieu of such fractional
shares, the Company shall make a cash payment therefor upon the basis of the
fair market value of the Common Stock on the date of such exercise.
7. Registration Rights. The Warrant Shares shall have registration
-------------------
rights provided for in the Stock Purchase Agreement.
8. Governing Law. This Warrant shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.
9. Expiration of Warrant. This Warrant shall terminate and expire
---------------------
and shall no longer be exercisable on or after June 28, 2000.
5
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed and issued by
a duly authorized officer of the Company as of this ____ day of June, 1997.
TRIKON TECHNOLOGIES, INC.,
a California corporation
By: ______________________________________
Gregor A. Campbell
Chief Executive Officer,
Vice President and Assistant Secretary
6
<PAGE>
EXHIBIT 4.7
THE SECURITIES EVIDENCED BY THIS WARRANT OR ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE BLUE SKY LAWS AND ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS.
THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH APPLICABLE BLUE
SKY LAWS OR AN EXEMPTION THEREFROM.
Warrant No. 97-___ June 27, 1997
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, __________________________,
and permitted assigns ("Warrantholder"), is entitled to purchase from Trikon
Technologies, Inc., a California corporation (the "Company"), on the terms and
conditions contained herein, ___________________________________ (______) shares
of the Company's Common Stock, no par value per share (the "Common Stock"), at a
price of Eight Dollars ($8.00) per share (the "Warrant Price"). This Warrant is
issued pursuant to that certain Stock Purchase Agreement dated as of June 27,
1997 among the Company, Warrantholder and the other Investors parties thereto
(the "Stock Purchase Agreement").
1. Exercisability of Warrant. This Warrant shall be exercisable for
-------------------------
all or any portion of the shares of Common Stock set forth above, provided that
this Warrant shall not be exercisable unless and until (1) the Warrantholder has
given prior written notice to the Company that this Warrant shall become
exercisable on and after a specified date (the "Exercise Commencement Date")
which must be at least sixty-one (61) days following the giving of such written
notice, and (2) this Warrant may not be exercised at any time when the Fair
Market Value (as defined and determined in Section 2 of this Warrant) is not
equal to or greater than the Warrant Price.
2. Method of Exercise; Payment; Issuance of New Warrant; Transfer
--------------------------------------------------------------
and Exchange. This Warrant may be exercised by Warrantholder, in whole or in
- ------------
part, upon written notice of exercise delivered by Warrantholder to the Company
at any time on or after the Exercise Commencement Date and otherwise subject to
the provisions of Section 1 above, accompanied by the surrender of this Warrant,
properly endorsed, at the principal office of the Company at 9255 Deering
Avenue, Chatsworth, California 91311, and by (a) the payment to the Company of
the then applicable Warrant Price of the Common Stock being purchased, which
Warrant Price may be paid, in whole or in part, by the delivery of cash or check
in an amount equal to such Warrant Price, and (b) delivery to the Company of a
customary investment letter executed by Warrantholder, confirming that the
shares of Common Stock being purchased are being acquired for Warrantholder's
own account and not with a view to or for sale in connection with any
distribution of such shares, acknowledging securities law restrictions
applicable to such shares, and agreeing that certificates evidencing
<PAGE>
such shares shall bear a legend accordingly restricting the transfer of such
shares. In the event of any exercise of the rights represented by this Warrant,
certificates for the shares of Common Stock so purchased shall be delivered to
Warrantholder within a reasonable time after the rights represented by this
Warrant shall have been so exercised, and unless this Warrant has expired, a new
Warrant representing the number of shares of Common Stock, if any, with respect
to which this Warrant shall not then have been exercised or that may become
exercisable after such date, shall also be issued to Warrantholder within such
time. In lieu of exercising this Warrant for a specified number of shares of
Common Stock (the "Exercised Shares") and paying the aggregate Warrant Price
therefor (the "Exercise Price"), Warrantholder may elect, at any time on or
after the Exercise Commencement Date and prior to the expiration of this Warrant
(and otherwise subject to the provisions of Section 1 above), to receive a
number of shares of Common Stock equal to the number of Exercised Shares minus
that number of shares of Common Stock having an aggregate Fair Market Value
equal to the Exercise Price. Following such election, the number of shares of
Common Stock covered by this Warrant shall be deemed automatically reduced by
the number of Exercised Shares. For purposes of this Warrant, the "Fair Market
Value" shall mean the closing sales prices of Common Stock quoted on the NASDAQ
National Market or, if then traded on a national securities exchange, the
closing prices of Common Stock on the principal national securities exchange on
which listed or, if quoted on the NASDAQ over-the-counter system, the average of
the mean of the closing bid and asked prices of Common Stock quoted on such
system, in any such case on each of the ten (10) trading days immediately
preceding the date of such exercise.
3. Stock Fully Paid; Reservation of Shares. The Company covenants
---------------------------------------
and agrees that all shares of Common Stock that may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all liens. The Company covenants and agrees that,
during the period within which the rights represented by this Warrant may be
exercised, it shall reserve for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, at least the maximum number of shares
of Common Stock as are issuable upon the exercise of the rights represented by
this Warrant.
4. Restrictions on Transferability of Securities; Compliance with
--------------------------------------------------------------
Securities Act.
- --------------
(a) Restrictions on Transferability. This Warrant and the shares
-------------------------------
of Common Stock issuable hereunder shall not be transferable except upon the
conditions specified in this Section 4, which conditions are intended to insure
compliance with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"). Each holder of this Warrant or the Common Stock issuable
hereunder will cause any proposed transferee of the Warrant or such Common Stock
to agree to take and hold such securities subject to the provisions and upon the
conditions specified in this Section.
2.
<PAGE>
(b) Restrictive Legend. Each certificate representing (i) this
------------------
Warrant, (ii) the shares of Common Stock issued upon exercise of the Warrant and
(iii) any other securities issued in respect of such shares of Common Stock upon
any stock split, stock dividend or similar event (collectively, the "Restricted
Securities"), shall (unless otherwise permitted by the provisions of Section
4(c) below or unless such securities have been registered under the Securities
Act) be imprinted with the following legend, in addition to any legend required
under applicable state securities laws:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS, AND ARE
SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY
NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER THE ACT AND SUCH APPLICABLE BLUE SKY LAWS
OR AN EXEMPTION THEREFROM.
Upon request of a holder of a certificate with such legend imprinted
thereon, the Company shall remove the foregoing legend therefrom or, if
appropriate, issue to such holder a new certificate therefor free of any
transfer legend, if, with such request, the Company shall have received either
the opinion referred to in Section 4(c)(i) or the "no-action" letter referred to
in Section 4(c)(ii) to the effect that any transfer by such holder of the
securities evidenced by such certificate will be exempt from the registration
and/or qualification requirements of, and that such legend is not required in
order to establish compliance, with the Securities Act, and if applicable, any
state securities laws under which transfer restrictions on such securities had
been previously imposed.
(c) Notice of Proposed Transfers. The holder of each certificate
----------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4(c). Prior to any proposed
transfer of any Restricted Securities, the holder thereof shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the proposed transfer
in sufficient detail, and shall be accompanied by either (i) an unqualified
written legal opinion addressed to the Company from counsel who shall be
reasonably satisfactory to the Company, which opinion shall be reasonably
satisfactory in form and substance to the Company's legal counsel, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act and any applicable state securities laws,
or (ii) a "no-action" letter from the Securities and Exchange Commission (and
any necessary state securities administrator) to the effect that the proposed
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission (or such administrators) that
action be taken with respect thereto, whereupon the holder of such Restricted
Securities shall be entitled to transfer such
3.
<PAGE>
Restricted Securities in accordance with the terms of the notice delivered by
the holder to the Company. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear the appropriate restrictive
legend set forth in Section 4(b) above, unless the legal opinion or "no-action"
letter, as applicable, states that the restrictive legend may be removed upon
consummation of the proposed transfer.
5. Adjustment of Purchase Price and Number of Shares of Common
-----------------------------------------------------------
Stock. The number and kind of securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
(a) Consolidation, Merger, Reorganization, Etc. If the Company at
-------------------------------------------
any time while this Warrant remains outstanding and unexpired shall consolidate
with or merge into any other corporation, reorganize, reclassify, or in any
manner change the securities then purchasable upon the exercise of this Warrant,
then upon consummation thereof this Warrant shall thereafter represent the right
of Warrantholder to receive, to the extent this Warrant is exercisable as
provided above in Section 1, in lieu of shares of Common Stock, the cash or such
number of securities to which Warrantholder would have been entitled upon
consummation thereof if Warrantholder had exercised this Warrant immediately
prior thereto. Upon any such event, an appropriate adjustment shall also be made
to the Warrant Price, if necessary in the good faith judgment of the Board of
Directors of the Company, to preserve the economic benefit intended to be
conferred upon Warrantholder in accordance with the terms hereof.
(b) Subdivision or Combination of Shares; Dividends and
---------------------------------------------------
Distribution of Common Stock. If the Company at any time shall subdivide or
- ----------------------------
combine its Common Stock, or take a record of the holders of its Common Stock
for the purpose of entitling them to receive without payment a dividend payable
in, or other distribution of, Common Stock or other securities, then the number
of shares of Common Stock purchasable hereunder shall be adjusted to that number
determined by multiplying the number of shares purchasable upon the exercise of
this Warrant immediately prior to such adjustment by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately after such subdivision, combination, dividend or
distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately prior to such subdivision,
combination, dividend or distribution. Additionally, the Warrant Price shall be
adjusted to that price determined by multiplying the Warrant Price in effect
immediately prior to such subdivision, combination, dividend or distribution by
a fraction (x) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such subdivision, combination,
dividend or distribution, and (y) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such subdivision,
combination, dividend or distribution.
4.
<PAGE>
(c) Weighted Average Price Protection. Reference is made to the
---------------------------------
Certificate of Determination of the Company filed with the California Secretary
of State on June 5, 1997, as amended by the Amendment to Certificate of
Determination of the Company filed with the California Secretary of State on
June 20, 1997, copies of which are attached collectively to the Stock Purchase
Agreement as Exhibit A (collectively, the "Certificate of Determination").
Capitalized terms used in this paragraph shall, unless otherwise specifically
defined in this Warrant, have the meanings ascribed to them in the Certificate
of Determination. If, after the issuance of this Warrant, the Company shall at
any time or from time to time issue (or be deemed under Section 5 of the
resolutions set forth in the Certificate of Determination to have issued) any
Additional Shares of Common Stock (excluding the Series G Preferred Stock issued
pursuant to the Stock Purchase Agreement) at a price less than the Warrant Price
and such issuance or deemed issuance would result in an adjustment to the
Conversion Price of the Series G Preferred Stock, pursuant to Sections 5(g) or
5(h) of the Certificate of Determination, assuming hypothetically solely for
purposes of this paragraph that the initial Conversion Price of the Series G
Preferred Stock is $8.00 (which the parties acknowledge is not the case), the
Warrant Price shall forthwith be adjusted (in each case of any such issuance or
deemed issuance) to the adjusted Conversion Price which would have been
applicable to the Series G Preferred Stock under such Sections 5(g) or 5(h) by
reason of such issuance or deemed issuance if the Conversion Price of the Series
G Preferred Stock had been initially $8.00.
(d) Statement Regarding Adjustments. When any adjustment is
-------------------------------
required to be made in the Warrant Price, either initially or as further
adjusted hereunder, the Company shall forthwith determine the adjusted number of
shares of Common Stock purchasable hereunder and the new Warrant Price and shall
(i) prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the adjusted number of shares of Common Stock
purchasable hereunder and the new Warrant Price; and (ii) cause a copy of such
statement to be mailed to Warrantholder as of a date within ten (10) days after
the date when the circumstances giving rise to the adjustment occurred.
6. Fractional Shares. No fractional shares of Common Stock will be
-----------------
issued in connection with any exercise hereunder but in lieu of such fractional
shares, the Company shall make a cash payment therefor upon the basis of the
fair market value of the Common Stock on the date of such exercise.
7. Registration Rights. The Warrant Shares shall have registration
-------------------
rights provided for in the Stock Purchase Agreement.
8. Governing Law. This Warrant shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.
5.
<PAGE>
9. Expiration of Warrant. This Warrant shall terminate and expire
---------------------
and shall no longer be exercisable on or after June __, 2000.
6.
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed and issued by
a duly authorized officer of the Company as of this ____ day of June, 1997.
TRIKON TECHNOLOGIES, INC.,
a California corporation
By: ____________________________
Gregor A. Campbell
Chief Executive Officer,
Vice President and Assistant Secretary
7.
<PAGE>
FORM OF SUBSCRIPTION
--------------------
(To be signed only upon exercise of Warrant)
To Trikon Technologies, Inc.:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, __________________________ (______) of the number of shares
of Common Stock purchasable under this Warrant and herewith makes payment of
____________ Dollars ($______) therefor, and requests that a certificate(s) for
such shares be issued in the name of, and delivered to,
__________________________, whose address is ___________________________________
____________________________.
The undersigned represents that it is acquiring such shares of Common
Stock for its own account for investment purposes only and not with a view to or
for sale in connection with any distribution thereof.
DATED:_________________ ____________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
____________________________________________
____________________________________________
(Address)
8.
<PAGE>
EXHIBIT 4.8
The following form of Common Stock Purchase was issued by the Registrant in
connection with First Amendment to Credit Agreement dated as of June 27, 1997
(Exhibit 10.25 hereto) to the following parties in the following amounts:
<TABLE>
<CAPTION>
Number of
Shares to
Name Purchase on Exercise
---- --------------------
<S> <C>
NATIONSBANK OF TEXAS, N.A. 64,815
NATIONSBANK OF TEXAS, N.A. 50,000
LLOYDS BANK PLC 50,000
SILICON VALLEY BANK 16,667
</TABLE>
<PAGE>
EXHIBIT G
---------
FORM OF WARRANT
---------------
THE SECURITIES EVIDENCED BY THIS WARRANT OR ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE BLUE SKY LAWS AND ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS.
THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH APPLICABLE
BLUE SKY LAWS OR AN EXEMPTION THEREFROM.
WARRANT NO. 97-____________ DATE: JUNE 27, 1997
COMMON STOCK PURCHASE WARRANT
-----------------------------
THIS CERTIFIES THAT, for value received, _________________________________
__________________________, and permitted assigns ("WARRANT HOLDER"), is
entitled to purchase from TRIKON TECHNOLOGIES, INC., a California corporation
(the "COMPANY"), on the terms and conditions contained herein, _______ shares of
the Company's Common Stock, no par value per share (the "COMMON STOCK"), at a
price of $6.75 per share (the "WARRANT PRICE").
1. EXERCISABILITY; METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT;
---------------------------------------------------------------------
TRANSFER AND EXCHANGE. All of the shares of Common Stock subject hereto (the
- ---------------------
"WARRANT SHARES") shall be immediately exercisable by Warrant holder, in whole
or in part, by the surrender of this Warrant, properly endorsed, at the
principal office of the Company at 9255 Deering Avenue, Chatsworth, California
91311, and by:
(a) the payment to the Company of the then applicable Warrant Price of the
Common Stock being purchased, which Warrant Price may be paid, in whole or in
part, by the delivery of cash or check in an amount equal to such Warrant Price;
and
(b) delivery to the Company of a customary investment letter executed by
Warrant holder, confirming that the shares of Common Stock being purchased are
being acquired for Warrant holder's own account and not with a view to or for
sale in connection with any distribution of such shares, acknowledging
securities law restrictions applicable to such shares, and agreeing that
certificates evidencing such shares shall bear a legend accordingly restricting
the transfer of such shares.
In the event of any exercise of the rights represented by this Warrant,
certificates for the shares of Common Stock so purchased shall be delivered to
Warrant holder within a reasonable time after
<PAGE>
the rights represented by this Warrant shall have been so exercised, and, unless
this Warrant has expired, a new Warrant representing the number of shares of
Common Stock, if any, with respect to which this Warrant shall not then have
been exercised shall also be issued to Warrant holder within such time. In lieu
of exercising this Warrant for a specified number of shares of Common Stock (the
"EXERCISED SHARES") and paying the aggregate Warrant Price therefor (the
"EXERCISE PRICE"), Warrant holder may elect, at any time prior to the expiration
of this Warrant, to receive a number of shares of Common Stock equal to the
number of Exercised Shares minus that number of shares of Common Stock having an
aggregate Fair Market Value equal to the Exercise Price. Following such
election, the number of shares of Common Stock covered by this Warrant shall be
deemed automatically reduced by the number of Exercised Shares. For purposes of
this Warrant, the "FAIR MARKET VALUE" means the closing sales prices of Common
Stock quoted on NASDAQ National Market or, if then traded on a national
securities exchange, the closing prices of Common Stock on the principal
national securities exchange on which listed or, if quoted on the NASDAQ over-
the-counter system, the average of the mean of the closing bid and asked prices
of Common Stock quoted on such system, in any such case on each of the ten
trading days immediately preceding the date of such exercise.
2. STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants and
---------------------------------------
agrees that all shares of Common Stock that may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable and free from all liens. The Company covenants and agrees that,
during the period within which the rights represented by this Warrant may be
exercised, it shall reserve for the purpose of the issuance upon exercise of the
purchase rights evidenced by this Warrant, at least the maximum number of shares
of Common Stock as are issuable upon the exercise of the rights represented by
this Warrant.
3. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH
--------------------------------------------------------------
SECURITIES ACT.
- --------------
(a) RESTRICTIONS ON TRANSFERABILITY. This Warrant and the shares of Common
-------------------------------
Stock issuable hereunder shall not be transferable except upon the conditions
specified in this SECTION 3, which conditions are intended to insure compliance
with the provisions of the Securities Act of 1933, as amended (the "SECURITIES
ACT"). Each holder of this Warrant or the Common Stock issuable hereunder shall
cause any proposed transferee of the Warrant or such Common Stock to agree to
take and hold such securities subject to the provisions and upon the conditions
specified in this SECTION 3.
(b) RESTRICTIVE LEGEND. Each certificate representing (i) this Warrant,
------------------
(ii) the shares of Common Stock issued upon exercise of the Warrant, and (iii)
any other securities issued in respect of such shares of Common Stock upon any
stock split, stock dividend, or similar event (collectively, the "RESTRICTED
SECURITIES"), shall -- unless otherwise permitted by the provisions of SECTION
3(c) below or unless such securities have been registered under the Securities
Act -- be imprinted with the following legend, in addition to any legend
required under applicable state securities laws:
2
<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS, AND ARE SUBJECT TO
CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
UNDER THE ACT AND SUCH APPLICABLE BLUE SKY LAWS OR AN EXEMPTION THEREFROM.
Upon request of a holder of a certificate with such legend imprinted thereon,
the Company shall remove the foregoing legend therefrom or, if appropriate,
issue to such holder a new certificate therefor free of any transfer legend, if,
with such request, the Company shall have received either the opinion referred
to in SECTION 3(c)(i) or the "no-action" letter referred to in SECTION 3(c)(ii)
to the effect that any transfer by such holder of the securities evidenced by
such certificate will be exempt from the registration or qualification
requirements of, and that such legend is not required in order to establish
compliance, with the Securities Act, and if applicable, any state securities
laws under which transfer restrictions on such securities had been previously
imposed.
(c) NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
----------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this SECTION 3(c). Prior to any proposed
transfer of any Restricted Securities, the holder thereof shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the proposed transfer
in sufficient detail, and shall be accompanied by either (i) a written legal
opinion addressed to the Company from counsel who shall be reasonably
satisfactory to such parties, which opinion shall be reasonably satisfactory in
form and substance to the Company's legal counsel, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act and any applicable state securities laws,
or (ii) a "no-action" letter from the Securities and Exchange Commission (and
any necessary state securities administrator) to the effect that the proposed
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission (or such administrators) that
action be taken with respect thereto, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the Company.
Each certificate evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth in SECTION 3(b)
above, unless the legal opinion or "no-action" letter, as applicable, states
that the restrictive legend may be removed upon consummation of the proposed
transfer. Notwithstanding the foregoing, no legal opinion or "no-action" letter
shall be required in connection with any proposed transfer to an affiliate of
any holder, if the holder certifies to the Company that such affiliate
constitutes an "accredited investor" within the meaning of Regulation D under
the Securities Act.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK.
-----------------------------------------------------------------
The number and kind of securities purchasable upon the exercise of this Warrant
and the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
3
<PAGE>
(a) CONSOLIDATION, MERGER, REORGANIZATION, ETC. If the Company at any time
-------------------------------------------
while this Warrant remains outstanding and unexpired shall consolidate with or
merge into any other corporation, reorganize, or reclassify, or in any manner
change the securities then purchasable upon the exercise of this Warrant, then
upon consummation thereof this Warrant shall thereafter represent the right of
Warrant holder to receive, in lieu of shares of Common Stock, the cash or such
number of securities to which Warrant holder would have been entitled upon
consummation thereof if Warrant Holder had exercised this Warrant immediately
prior thereto. Upon any such event, an appropriate adjustment shall also be
made to the Warrant Price, if necessary in the good faith judgment of the Board
of Directors of the Company, to preserve the economic benefit intended to be
conferred upon Warrant holder in accordance with the terms hereof.
(b) SUBDIVISION OR COMBINATION OF SHARES; DIVIDENDS AND DISTRIBUTION OF
-------------------------------------------------------------------
COMMON STOCK. If the Company at any time shall subdivide or combine its Common
- ------------
Stock, or take a record of the holders of its Common Stock for the purpose of
entitling them to receive without payment a dividend payable in, or other
distribution of, Common Stock or other securities, then the number of shares of
Common Stock purchasable hereunder shall be adjusted to that number determined
by multiplying the number of shares purchasable upon the exercise of this
Warrant immediately prior to such adjustment by a fraction (i) the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately after such subdivision, combination, dividend, or distribution, and
(ii) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately prior to subdivision, combination, dividend, or
distribution. Additionally, the Warrant Price shall be adjusted to that price
determined by multiplying the Warrant Price in effect immediately prior to such
subdivision, combination, dividend, or distribution by a fraction (x) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such subdivision, combination, dividend, or
distribution, and (y) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such subdivision,
combination, dividend, or distribution.
(c) STATEMENT REGARDING ADJUSTMENTS. When any adjustment is required to be
-------------------------------
made in the Warrant Price, either initially or as further adjusted hereunder,
the Company shall forthwith determine the adjusted number of shares of Common
Stock purchasable hereunder and the new Warrant Price and shall (i) prepare and
retain on file a statement describing in reasonable detail the method used in
arriving at the new adjusted number of shares of Common Stock purchasable
hereunder and the Warrant Price, and (ii) cause a copy of such statement to be
mailed to Warrant holder as of a date within ten days after the date when the
circumstances giving rise to the adjustment occurred.
(d) NOTICES. Unless a longer period is required under applicable statute,
-------
if either (i) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company, any transfer of all or substantially all of the
assets of the Company to any other entity or person, or any voluntary or
involuntary dissolution, liquidation, or winding up of the Company is proposed
to occur, or (ii) the Company establishes a record date to determine the
holders of any class of securities who are entitled to receive any dividend or
other distribution, then, in either case, the Company shall mail
4
<PAGE>
to Warrant holder, at least 20 days before that occurrence or that record date,
as applicable, a notice specifying, as applicable (x) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation, or winding up is expected to become effective, (y) the time, if
any, when the holders of record of Common Stock (or other securities) will be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon that reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation, or
winding up, or (z) the date of that record date for the purpose of that dividend
or distribution and a description of that dividend or distribution.
5. REGISTRATION RIGHTS.
-------------------
(a) INCIDENTAL REGISTRATION. Each time the Company shall determine to
-----------------------
proceed with the actual preparation and filing of a registration statement under
the Act in connection with the proposed offer and sale for money by the Company
of any of its securities by it or any of its security holders (other than a
registration statement on Form S-4, S-8, or other limited purpose form), the
Company will give written notice of its determination to Warrant holder. Upon
written request of Warrant holder given within 30 days after receipt of any such
notice from the Company, the Company will, except as herein provided, cause all
Warrant Shares for which that request is made to be included in such
registration statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Warrant Shares to be so
registered, PROVIDED THAT nothing herein shall prevent the Company from, at any
time, abandoning or delaying any registration. If any registration pursuant to
this SECTION 5 shall be underwritten in whole or in part, the Company may
require that the Warrant Shares requested for inclusion pursuant to this SECTION
5 be included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters. However, if in the
good faith judgment of the managing underwriter of such public offering the
inclusion of all of the Warrant Shares requested for inclusion would reduce the
number of securities to be offered by the Company (or if the registration is the
demand registration of a selling shareholder, by such selling shareholder) or
interfere with the successful marketing of the securities offered by the Company
(or if the registration is the demand registration of a selling shareholder, by
such selling shareholder), the number of Warrant Shares to be included in the
underwritten public offering may, at the election of the managing underwriter,
be reduced pro rata among the holders thereof (but if the registration is the
demand registration of a selling shareholder, excluding such demanding selling
shareholder) requesting such registration (based on the respective numbers of
shares for which such registration was requested). Those shares of Warrant
Shares which are not included in the underwritten public offering shall be
withheld from the market by the holders thereof for a period, not to exceed 180
days, which the managing underwriter reasonably determines is necessary in order
to effect the underwritten public offering.
(b) REGISTRATION PROCEDURES. If and whenever the Company is required to
-----------------------
effect the registration of Warrant Shares under the Act, the Company shall:
(i) prepare and file with the Commission a registration statement with
respect to such securities, and use its best efforts to cause such
registration statement to become
5
<PAGE>
and remain effective for such period as may be reasonably necessary to effect
the sale of such securities, not to exceed six months;
(ii) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for the
period referred to above;
(iii) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters
may reasonably request in order to facilitate the public offering of such
securities;
(iv) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as such participating holders may reasonably
request prior to the original filing of such registration statement, except
that the Company shall not for any purpose be required to execute a general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(v) notify the security holders participating in such
registration, promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a supplement to
any prospectus forming a part of such registration statement has been
filed;
(vi) notify such holders promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(vii) prepare and file with the Commission, promptly upon the
request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for
such holders (and concurred in by counsel for the Company), is required
under the Act or the rules and regulations thereunder in connection with
the distribution of the Warrant Shares by such holder;
(viii) prepare and promptly file with the Commission and promptly
notify such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus
as then in effect would 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 in which they were made, not misleading;
6
<PAGE>
(ix) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued; and
(x) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements
of the Act or the rules and regulations thereunder, after having been
furnished with a copy thereof at least two business days prior to the
filing thereof, unless in the opinion of counsel for the Company the filing
of such amendment or supplement is reasonably necessary to protect the
Company from any liabilities under any applicable federal or state law and
such filing will not violate applicable law.
(c) EXPENSES. With respect to each inclusion of Warrant Shares in a
--------
registration statement pursuant to SECTION 8(a), the Company shall bear the
following fees, costs, and expenses: All registration, filing and NASD fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company, and all legal fees and disbursements and other expenses of complying
with the state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security holders,
underwriting discounts and commissions and transfer taxes for selling security
holders, and any other expenses incurred by the selling security holders not
expressly included above shall be borne by the selling security holders
(d) INDEMNIFICATION.
---------------
(i) THE COMPANY SHALL INDEMNIFY AND HOLD HARMLESS WARRANT HOLDER, ANY
UNDERWRITER (AS DEFINED IN THE ACT) FOR WARRANT HOLDER, AND EACH PERSON, IF
ANY, WHO CONTROLS WARRANT HOLDER OR SUCH UNDERWRITER WITHIN THE MEANING OF
THE ACT, FROM AND AGAINST ANY AND ALL LOSS, DAMAGE, LIABILITY, COST, AND
EXPENSE TO WHICH WARRANT HOLDER OR ANY SUCH UNDERWRITER OR CONTROLLING
PERSON MAY BECOME SUBJECT UNDER THE ACT OR OTHERWISE, INSOFAR AS SUCH
LOSSES, DAMAGES, LIABILITIES, COSTS, OR EXPENSES ARE CAUSED BY ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OF ANY MATERIAL FACT CONTAINED IN ANY
REGISTRATION STATEMENT INCLUDING ANY WARRANT SHARES, ANY PROSPECTUS
CONTAINED THEREIN OR ANY AMENDMENT 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, IN LIGHT OF THE CIRCUMSTANCES IN WHICH THEY WERE MADE,
NOT MISLEADING, PROVIDED THAT THE COMPANY WILL NOT BE LIABLE IN ANY SUCH
CASE TO THE EXTENT THAT ANY SUCH LOSS, DAMAGE, LIABILITY, COST, OR EXPENSE
ARISES OUT OF OR IS BASED UPON AN UNTRUE STATEMENT OR ALLEGED UNTRUE
STATEMENT OR OMISSION OR ALLEGED OMISSION SO MADE IN CONFORMITY WITH
7
<PAGE>
INFORMATION FURNISHED BY WARRANT HOLDER, SUCH UNDERWRITER OR SUCH
CONTROLLING PERSON IN WRITING SPECIFICALLY FOR USE IN THE PREPARATION
THEREOF.
(ii) WARRANT HOLDER SHALL INDEMNIFY AND HOLD HARMLESS THE COMPANY,
ANY CONTROLLING PERSON, AND ANY UNDERWRITER FROM AND AGAINST ANY AND ALL
LOSS, DAMAGE, LIABILITY, COST, OR EXPENSE TO WHICH THE COMPANY OR ANY
CONTROLLING PERSON OR ANY UNDERWRITER MAY BECOME SUBJECT UNDER THE ACT OR
OTHERWISE, INSOFAR AS SUCH LOSSES, DAMAGES, LIABILITIES, COSTS, OR EXPENSES
ARE CAUSED BY ANY UNTRUE OR ALLEGED UNTRUE STATEMENT OF ANY MATERIAL FACT
CONTAINED IN ANY REGISTRATION STATEMENT INCLUDING ANY WARRANT SHARES, ANY
PROSPECTUS CONTAINED THEREIN OR ANY AMENDMENT OR SUPPLEMENT THERETO, OR
ARISE OUT OF OR ARE BASED UPON THE OMISSION OR THE ALLEGED OMISSION TO
STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO
MAKE THE STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES IN WHICH THEY
WERE MADE, NOT MISLEADING, IN EACH CASE TO THE EXTENT, BUT ONLY TO THE
EXTENT, THAT SUCH UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION
OR ALLEGED OMISSION WAS SO MADE IN RELIANCE UPON AND IN STRICT CONFORMITY
WITH WRITTEN INFORMATION FURNISHED BY WARRANT HOLDER SPECIFICALLY FOR USE
IN THE PREPARATION THEREOF AND ONLY TO THE EXTENT OF PROCEEDS FROM THE SALE
OF WARRANT SHARES.
(iii) Promptly after receipt by an indemnified party pursuant to the
provisions of SECTION 5(d)(i) OR (ii) of notice of the commencement of any
action involving the subject matter of the foregoing indemnity provisions,
such indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of SECTION 5(d)(i) OR (ii),
promptly notify the indemnifying party of the commencement thereof, but the
omission to so notify the indemnifying party will not relive it from any
liability which it may have to any indemnified party otherwise than
hereunder, except to the extent such failure shall have materially
prejudiced the indemnifying party. In case such action is brought against
any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, provided that if
the defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select
separate counsel to participate in the defense of such action on behalf of
such indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
pursuant to the provisions of SECTION 5(d)(i) OR (ii) for any legal or
other expense subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation,
unless (A) the indemnified party shall have employed counsel in accordance
8
<PAGE>
with the proviso of the preceding sentence, (B) the indemnifying party
shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice
of the commencement of the action, or (C) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
(e) EXCEPTION TO REGISTRATION OBLIGATIONS. The Company shall not be
-------------------------------------
obligated to honor a demand to register any Warrant Shares if all of the Warrant
Shares which could be registered pursuant to this SECTION 5 are otherwise
eligible for immediate sale by the holder thereof under paragraph (k) of Rule
144.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be
-----------------
issued in connection with any exercise hereunder, but, in lieu of such
fractional shares, the Company shall make a cash payment therefor upon the basis
of the fair market value of the Common Stock on the date of such exercise.
7. GOVERNING LAW. This Warrant shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.
8. EXPIRATION OF WARRANT. This Warrant shall terminate and expire and
---------------------
shall no longer be exercisable on or after November 16, 1999.
9
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed and issued by a
duly authorized officer of the Company as of June 27, 1997.
TRIKON TECHNOLOGIES, INC., a California
corporation
By
------------------------------------------------
Gregor A. Campbell,
Chief Executive Officer
Signature Page to Form of Warrant
10
<PAGE>
FORM OF SUBSCRIPTION
--------------------
(To be signed only upon exercise of Warrant)
TO: Trikon Technologies, Inc.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _____ of the number of shares of Common Stock purchasable
under this Warrant and herewith makes payment of $_____________ therefor, and
requests that a certificate(s) for such shares be issued in the name of, and
delivered to,___________________________, whose address is ___________________
______________________________________________________________________________.
The undersigned represents that it is acquiring such shares of Common Stock
for its own account for investment purposes only and not with a view to or for
sale in connection with any distribution thereof.
DATE: _________________ _____________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant.)
_____________________________________
_____________________________________
(Address)
11
<PAGE>
EXHIBIT 10.23
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of this
____ day of June, 1997, by and among Trikon Technologies, Inc., a California
corporation (formerly known as Plasma & Materials Technologies, Inc.) (the
"Company"), and the persons listed on Schedule 1 attached hereto (collectively,
----------
the "Investors").
RECITALS:
The Company proposes to authorize, issue and sell to the Investors the number
of shares of Series G Preferred Stock, no par value (the "Preferred Stock"),
together with warrants (the "Warrants") to purchase shares of the Company's
common stock, no par value (the "Common Stock"), all as specified on Schedule 1.
----------
The Preferred Stock shall be entitled to the preferences, rights and benefits,
including without limitation conversion and liquidation privileges, as are set
forth in the capital stock provisions of the Certificate of Determination
(together with the amendment thereto) amending the Company's Seventh Restated
Articles of Incorporation (collectively, the "Certificate of Determination"),
which has been filed with the California Secretary of State in the form set
forth in Exhibit A attached hereto. Further, the Company proposes to authorize
and reserve a sufficient number of its previously authorized but unissued shares
of Common Stock to satisfy the conversion rights and exercise rights of the
holders of the Preferred Stock and Warrants, respectively. Any shares of Common
Stock issuable upon conversion of the Preferred Stock, when issued shall be
referred to as the "Conversion Shares." Any shares of Common Stock issuable
upon exercise of the Warrants, when issued shall be referred to as the "Warrant
Shares." The Preferred Stock, the Warrants, the Warrant Shares and the
Conversion Shares are referred to collectively herein as the "Securities."
Holders of the Securities have the registration rights described in Section 9.
AGREEMENT:
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Investors agree as follows:
1. SALE AND PURCHASE OF SHARES OF SECURITIES
In reliance upon the representations, warranties, covenants and agreements
contained herein and subject to the terms and conditions of this Agreement, the
Company agrees to sell to the Investors, and each of the Investors severally
agrees to purchase from the Company, on the terms set forth herein, the number
of shares of Preferred Stock and a Warrant to purchase the number of shares of
Common Stock set forth opposite such Investor's name on Schedule 1 attached
----------
hereto (the "Purchase Commitment") at a purchase price of Six Dollars and
75/100s Dollars (6.75) per share, which shall constitute the "Original Issue
Price" for purposes of the Certificate of Determination. The Preferred Stock
shall be entitled to the preferences, rights and benefits are set forth in the
Certificate of Determination. The Preferred Stock shall be convertible into
shares of Common Stock and shall have certain liquidation preferences, as
provided for in the Certificate of Determination.
<PAGE>
2. CLOSING
2.1. Closings. The execution of this Agreement and the initial closing of
--------
the transactions contemplated hereby shall take place simultaneously
at the offices of Oppenheimer Wolff & Donnelly, 45 South Seventh
Street, Suite 3400, Minneapolis, Minnesota 55402, at 11 a.m.,
Minneapolis time, on or about June 27, 1997, or as soon as practical
thereafter (the "First Closing") or at such other place or different
time or day as may be mutually acceptable to the Investors and the
Company, provided that a minimum of $15 million of Securities are
purchased at the First Closing and all other conditions to Closing as
set forth in this Agreement have been met to the reasonable
satisfaction of, or waived by, the Investors or the Company, as the
case may be. Thereafter, a second closing of the purchase of
additional shares of Preferred Stock may be held, up to a maximum
aggregate amount (including the amount sold in the First Closing) of
$20 million, with one or more investors provided such transaction is
completed on substantially the same terms set forth in this Agreement
and that such closing occurs prior to July 1, 1997, or such other date
as may be mutually agreed upon by the Investors and the Company (the
"Second Closing"). The date and time on which the First Closing and
Second Closing occur each shall be a "Closing Date" and the First
Closing and Second Closing each may be referred to hereinafter as a
"Closing."
2.2. Deliveries. At each Closing, the Company will deliver the Preferred
----------
Stock and Warrants purchased at such Closing and any other documents
required by this Agreement against delivery by the Investors of their
respective Purchase Commitment in payment for such Securities.
3. USE OF PROCEEDS
The Company shall use the proceeds from the transactions contemplated hereby
as working capital for general corporate purposes.
4. REPRESENTATIONS AND WARRANTIES BY THE COMPANY
To induce the Investors to enter into this Agreement and to purchase the
Securities, the Company hereby represents and warrants to the Investors the
following, except as disclosed in the Schedule 4 attached hereto, which
----------
exceptions shall be set forth in reasonable detail and reference the appropriate
subsection(s) of this Section 4:
4.1. Organization, Standing, Etc. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the
State of California and has the requisite corporate power and
authority to own or lease its properties and to carry on its business
as it is now being conducted. The Company has the requisite corporate
power and authority to issue the Securities and to perform its
obligations under this Agreement.
4.2. Governing Instruments. The copies of the articles of incorporation and
---------------------
bylaws of the Company, and all amendments thereto (collectively, the
"Charter Documents"), as contained in the SEC Filings (as defined in
Section 4.26 hereof), are true and complete
2
<PAGE>
copies of the duly and legally adopted Charter Documents in effect as
of the date of this Agreement and as of the Closing Date.
4.3. Subsidiaries, Etc. Except for (i) the Company's wholly-owned
-----------------
subsidiary, Plasma & Materials Technologies (Korea) Co. Ltd. ("PMT
Korea"), (ii) Electrotech Limited and Electrotech Equipment Limited
(collectively, "Electrotech") and the direct and indirect subsidiaries
thereof and (iii) Energy Transfer Systems, Inc., a Delaware
corporation ("ETS"), the Company does not have any direct or indirect
ownership interest in any corporation, partnership, joint venture,
association or other business enterprise. For purposes of this
Section, references to the Company shall include PMT Korea,
Electrotech and ETS. Notwithstanding the foregoing, the Company has
formed (but not capitalized or perfected the organization of) various
other subsidiary entities in connection with its overall tax and
business planning; provided, however, that the ultimate capitalization
and organization of such additional subsidiary entities will maintain
the Company's full ownership, directly or indirectly, of all existing
subsidiaries and all existing business operations of the Company,
Electrotech, PMT Korea (except that 10% ownership of PMT Korea may be
allocated to a manager of PMT Korea) and ETS.
4.4. Qualification. The Company has not failed to qualify, be licensed or
-------------
domesticated in any jurisdiction in which the failure to so qualify,
be licensed or domesticated would have a material adverse effect upon
its business, properties, operations or financial condition ("Material
Adverse Effect").
4.5. Financial Statements. The (i) audited financial statements of the
--------------------
Company for the fiscal years ended December 31, 1996 and 1995, and
(ii) unaudited interim financial statements for the period ended March
31, 1997, together with the notes thereto, complete and correct copies
of which are included in the SEC Filings (collectively, the "Financial
Statements"), present fairly the financial position of the Company, as
of such dates and the results of operations for the periods covered
thereby (subject, in the case of such unaudited interim financial
statements, to year-end audit adjustments) and have been prepared in
accordance with generally accepted accounting principles consistently
applied. Except as set forth in the Financial Statements or described
in the Notes thereto, the Company does not have any liabilities,
contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to the date of such quarterly
Financial Statements; (ii) obligations under real and personal
property leases disclosed in the Notes to the Financial Statements or
not required, under generally accepted accounting principles, to be so
disclosed, and (iii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the
Financial Statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the
Company. Except as disclosed in the Financial Statements, since the
date of the interim Financial Statements, (i) there has been no
material adverse change in the business or condition, financial or
otherwise, operations or prospects of the Company; (ii) to the
Company's knowledge, neither the business, condition or operations of
the Company nor any of its properties or assets have been materially
adversely affected as the result of any legislative or regulatory
change, any revocation or
3
<PAGE>
change in any franchise, permit, license, or right to do business, or
any other event or occurrence, whether or not insured against; (iii)
the Company has not entered into any material transaction other than
in the ordinary course of business, made any distribution on its
capital stock, or redeemed or repurchased any of its capital stock;
and (iv) there has been no lien or encumbrance placed upon any
property of the Company. Notwithstanding and in modification of the
immediately preceding sentence, various risk factors and various facts
and uncertainties attendant to the Company's current operations and
financial condition have been disclosed in the SEC Filings.
4.6. Valid Issuance. The Securities, when issued and delivered pursuant to
--------------
the terms of this Agreement, will be duly authorized, validly issued
and enforceable in accordance with their respective terms and the
terms of this Agreement, except as such enforceability may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and to
judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies. The Conversion Shares and
Warrant Shares have been reserved for issuance and, when issued upon
the conversion of the Preferred Stock or exercise of the Warrants,
will be duly authorized, validly issued and outstanding, fully paid,
nonassessable and free and clear of all pledges, liens, encumbrances
and restrictions, except as set forth in Section 5 or the Charter
Documents.
4.7. Corporate Acts and Proceedings. Each of this Agreement and the
------------------------------
Certificate of Determination has been duly authorized by all necessary
corporate action on behalf of the Company, has been duly executed and
delivered by authorized officers of the Company, is a valid and
binding agreement on the part of the Company and is enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and to judicial limitations on the
enforcement of the remedy of specific performance and other equitable
remedies. All corporate actions necessary to the authorization,
creation, issuance and delivery of the Securities and the reservation
of the Conversion Shares and Warrant Shares contemplated hereunder
have been taken by the Company.
4.8. Tax Returns and Audits. The Company has prepared and timely filed all
----------------------
federal, state and other tax returns required by law to be filed, 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 the Financial Statements to the extent required
by generally accepted accounting principles for all current taxes and
other charges to which the Company is subject and which are not
currently due and payable. None of the income tax returns of the
Company have been audited by the Internal Revenue Service or the state
taxing authority in such a manner to bring such audit to the attention
of the Company. The Company does not know of any additional
assessments or adjustments pending or threatened against the Company
or its assets for any period, nor of any basis for any such assessment
or adjustment, which would have a Material Adverse Effect.
4
<PAGE>
4.9. Title to Properties and Encumbrances. Except with respect to real and
------------------------------------
personal property leased pursuant to lease agreements disclosed in the
manner set forth in Section 4.17, the Company has good and marketable
title to all of its properties and assets, including all properties
and assets used in the conduct of its business, except for property
disposed of in the ordinary course of business since the date of the
quarterly Financial Statements, which properties and assets are not
subject to any mortgage, pledge, lease, lien, charge, security
interest, encumbrance or restriction, except (i) those which are shown
and described in the Financial Statements or disclosed in Schedule 4
or (ii) liens for taxes and assessments or governmental charges or
levies not at this time due or in respect of which the validity
thereof shall currently be contested in good faith by appropriate
proceedings.
4.10. Condition of Properties. The plant, offices, equipment, inventory and
-----------------------
other assets of the Company have been kept in good condition and
repair in the ordinary course of business, and are reasonably fit and
suitable for the purposes for which they are being used and conform in
all material respects with applicable ordinances, regulations and
laws.
4.11. Litigation; Governmental Proceedings. Except as disclosed in the Notes
------------------------------------
to the Financial Statements, there are no legal actions, suits,
arbitrations or other legal, administrative or governmental
proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company, or its properties or business
or any executive officer or director of the Company, and neither the
Company nor any executive officer or director of the Company is aware
of any facts which are probable to result in or form the reasonable
basis for any such action, suit or other proceeding. The Company is
not in default with respect to any judgment, order or decree of any
court or any governmental agency or instrumentality. To the best of
its knowledge, the Company has not been threatened with any action or
proceeding under any business or zoning ordinance, law or regulation.
4.12. Compliance with Applicable Laws and Other Instruments. The properties,
-----------------------------------------------------
business and operations of the Company have been and are being
conducted in all material respects in accordance with all applicable
laws, rules and regulations of all governmental authorities. Neither
the execution nor delivery of, nor the performance of or compliance
with this Agreement, the Certificate of Determination, the Shares or
the Conversion Shares, nor the consummation of the transactions
contemplated hereby or thereby will, with or without the giving of
notice or passage of time, result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance
upon any asset or property of the Company pursuant to, any agreement
or other instrument to which the Company is a party or by which it or
any of its properties, assets or rights is bound or affected, and will
not violate the Charter Documents. The Company is not in violation of
its Charter Documents and, except as disclosed in the SEC Filings, it
is not in violation of, or in default under, any lien, indenture, loan
or credit agreement, mortgage, lease, agreement, instrument,
commitment or arrangement in any material respect.
4.13. Environmental and Safety Laws. The Company is not, in any material
-----------------------------
respect, in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and no
material expenditures are or are reasonably
5
<PAGE>
anticipated to be required in order to comply with any such existing
statute, law or regulation.
4.14. Securities Laws. Based in part upon the representations of the
---------------
Investors in Section 5, no consent, authorization, approval, permit or
order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the
execution and delivery of this Agreement or the offer, issuance, sale
or delivery of the Securities, other than the filing of a Form D
pursuant to Regulation D under the Securities Act of 1933, as amended
(the "Securities Act"), the filing of a copy thereof (or a
substantially equivalent notice) with the State of California and any
other state whose securities laws require such filing, and the
qualification thereof, if required, under other applicable state
securities laws which qualification has been or will be effected as a
condition of this sale. Under the circumstances contemplated by this
Agreement, the offer, issuance, sale and delivery of the Securities
will not, under current laws and regulations, require compliance with
the prospectus delivery or registration requirements of the Securities
Act.
4.15. Patents and Other Intangible Rights. Except as disclosed in the SEC
-----------------------------------
Filings, the Company (i) owns or has the right to use, free and clear
of all liens, claims and restrictions, 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 and as proposed to be conducted, to the Company's
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; (ii) is not contractually or, to the Company's
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, trademark, service mark, trade name,
copyright, trade secret or other intangible asset, with respect to the
use thereof or in connection with the conduct of its business or
otherwise; (iii) has not received any notice of conflict with the
asserted rights of others with respect to such matters; (iv) to the
Company's knowledge, 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 the
Company in the development, operation and sale of all products and
services sold by it, free and clear of any rights, liens or claims of
others; and (v) to the Company's knowledge, is not using any
confidential information or trade secrets of others.
4.16. Capital Stock.
-------------
(a) The authorized and issued capital stock of the Company as of the
date hereof is correctly set forth in the Financial Statements.
All of the outstanding shares of the Company were duly authorized
and validly issued and are fully paid and nonassessable.
(b) Except as described in the SEC Filings, there are no outstanding
subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or
arrangements of any character or nature whatever, other
6
<PAGE>
than this Agreement, pursuant to which the Company is obligated
to issue any securities of any kind representing an ownership
interest in the Company. Neither the offer nor the issuance or
sale of the Securities constitutes an event under any anti-
dilution provisions of any securities issued (or issuable
pursuant to outstanding rights, warrants or options) by the
Company or any agreements with respect to the issuance of
securities by the Company, which will either increase the number
of shares issuable pursuant to such provisions or decrease the
consideration per share to be received by the Company pursuant to
such provisions.
(c) No holder of any securities of the Company is entitled to any
preemptive or similar rights to purchase any securities of the
Company from the Company.
4.17. Assets and Contracts.
--------------------
(a) The Company has included (or incorporated by reference) in the
SEC Filings all material agreements and contracts, has provided
in the SEC Filings a true and complete list of such agreements
and contracts required to be so filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and has
not entered into any such material agreements since the date of
its most recent filing under the Exchange Act.
(b) Except as disclosed in the SEC Filings, the Company has in all
material respects substantially performed its obligations
required to be performed by it to date and is not in default in
any material respect under any contracts, agreements, leases,
documents, commitments or other arrangements to which it is a
party or by which it is otherwise bound. Except as disclosed in
the SEC Filings, there is not under any of such agreements, any
existing material default or event of default or event which,
with notice or lapse of time or both, would constitute an event
of default by the Company thereunder.
4.18. Outstanding Debt. The Company does not have any indebtedness incurred
----------------
as the result of a direct borrowing of money, including, but not
limited to, indebtedness with respect to trade accounts, except as set
forth in the Financial Statements or pursuant to the Indenture for the
7 1/8% convertible subordinated notes due 2001 and other than
indebtedness incurred in the ordinary course of business. Except as
set forth in Schedule 4, the Company is not in default in the payment
of the principal of or interest or premium on any such indebtedness,
and, except as disclosed in the SEC Filings, no event has occurred or
is continuing under the provisions of any instrument, document or
agreement evidencing or relating to any such indebtedness which with
the lapse of time or the giving of notice, or both, would constitute
an event of default by the Company thereunder. The Company is not
committed or obligated to make any loan or advance to any person or
entity, nor does the Company own any capital stock, securities or
other equity, except for the stock of its subsidiaries described in
Section 4.3.
4.19. Accounts Receivable. To the extent that they exceed the reserves for
-------------------
doubtful accounts set forth in the interim Financial Statements, the
accounts receivable reflected therein and
7
<PAGE>
all accounts receivable of the Company that have arisen since March
31, 1997 (except such accounts receivable as have been collected since
such date) are valid and enforceable claims, and the goods and
services sold and delivered which gave rise to such accounts were sold
and delivered in conformity with the applicable purchase orders,
agreements and specifications. To the Company's knowledge, such
accounts receivable are subject to no valid defense or offsets except
routine customer complaints or warranty demands of an immaterial
nature. The Company does not believe that its uncollectable accounts
will exceed the reserve for doubtful accounts set forth in the latest
balance sheet included in the Financial Statements.
4.20. Insurance Coverage. The Company has in full force policies of
------------------
insurance issued by insurers of recognized responsibility insuring the
Company and its properties and business against such losses and risks,
and in such amounts, as in the Company's judgment, are acceptable for
the nature and extent of such business and its resources. The Company
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 material existing claims it has under its insurance policies in a
timely fashion.
4.21. Licenses. The Company possesses from the appropriate agency,
--------
commission, board and government body and authority, whether state,
local or federal, all licenses, permits, authorizations, approvals,
franchises and rights which (i) are necessary for it to engage in the
business currently conducted by it, and (ii) if not possessed by the
Company, would have a Material Adverse Effect.
4.22. Employees. To the Company's knowledge, except as set forth in
---------
Schedule 4, no officer of the Company or employee of the Company
----------
(whose annual compensation is in excess of $125,000) has any present
plans to terminate his or her employment with the Company. Each
officer and other employee of the Company having access to the
confidential and proprietary information of the Company has executed
an agreement with the Company regarding confidentiality and
proprietary information.
4.23. Absence of Restrictive Agreements. To the Company's knowledge, no
---------------------------------
employee of the Company is subject to any secrecy or noncompetition
agreement or any agreement or restriction of any kind that would
impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the business of the
Company. To the Company's knowledge, no former employer of any
employee of the Company has any claim of any kind whatsoever in
respect of any of the patents or other intangible rights of the
Company described in Section 4.15 of this Agreement.
4.24. Retirement Plans. The Company does not have any retirement plan in
----------------
which any employee of the Company participates that is subject to any
provisions of the Employee Retirement Income Security Act of 1974 and
of the regulations adopted pursuant thereto.
4.25. No Brokers or Finders. No person, firm or corporation has or will
---------------------
have, as a result of any contractual undertaking by the Company, any
right, interest or valid claim against the Company or the Investors
for any commission, fee or other compensation as a finder
8
<PAGE>
or broker, or in any similar capacity, in connection with the
transaction contemplated by this Agreement. The Company will indemnify
and hold each of the Investors harmless against any and all liability
with respect to any such commission, fee or other compensation which
may be payable or determined to be payable.
4.26. Company SEC Filings. The Company has furnished, or made available
-------------------
through the EDGAR internet web site of the Securities and Exchange
Commission, to the Investors true and complete copies of its Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 and
its quarterly report on Form 10-Q for the quarter ended March 31,
1997, in each case as filed with the Securities and Exchange
Commission (such documents are collectively referred to herein as the
"SEC Filings"). As of their respective filing dates, the SEC Filings
complied in all material respects with the applicable requirements of
the Exchange Act, and none of the SEC Filings contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading.
4.27. Full Disclosure. The Company has not knowingly withheld from the
---------------
Investors any material facts relating to the assets, business,
operations, financial condition or prospects of the Company. No
representation or warranty in this Agreement or in any written
certificate, schedule, statement or other document prepared by or on
behalf of the Company and furnished by the Company to any Investor
pursuant hereto, including without limitation Schedule 4 to this
Agreement, and none of the SEC Filings, as of the date furnished to
the Investor or filed under the Exchange Act, as the case may be,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated herein or therein necessary to
make the statements herein or therein not misleading.
5. REPRESENTATIONS OF THE INVESTORS
Each of the Investors hereby severally represents and warrants to the
Company that:
5.1. Investment Intent. The Investor is purchasing the Securities for
-----------------
investment for such Investor's own account and not with the view to,
or for resale in connection with, any distribution or public offering
thereof. The Investor has no current plan or intention to engage in a
sale, exchange, transfer, distribution, redemption, reduction in any
way of the Investor's risk of ownership by short sale or otherwise, or
other disposition, directly or indirectly of the Securities pursuant
to this Agreement.
5.2. Knowledge and Experience. The Investor has substantial experience in
------------------------
evaluating and investing in private placement transactions of
securities in companies similar to the Company and has the knowledge
and experience in financial and business matters such that the
Investor is capable of evaluating the merits and risks of an
investment in the Company and has the capacity to protect such
Investor's own interests.
5.3. Location of Principal Office, Qualification as an Accredited Investor,
----------------------------------------------------------------------
Etc.
---
The state of domicile of the Investor is the state set forth in the
Investor's address on Schedule 1.
9
<PAGE>
The Investor, by execution of this Agreement, hereby represents that
such Investor qualifies as an "accredited investor" for purposes of
Regulation D promulgated under the Securities Act. The Investor can
bear the loss of the entire investment in the Securities without any
Material Adverse Effect on such Investor's assets, net worth,
business, operations or prospects.
5.4. Acts and Proceedings. This Agreement has been duly authorized by all
--------------------
necessary action on the part of the Investor, has been duly executed
and delivered by the Investor, and is a valid and binding agreement of
the Investor and enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditor's rights generally and to judicial
limitations on the remedy of specific enforcement and other equitable
remedies.
5.5. Disclosure of Information. The Investor acknowledges that the Company
-------------------------
has made available to the Investor at a reasonable time prior to the
execution of this Agreement the opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Securities and to obtain any additional information (which the
Company possesses or can acquire without unreasonable effort or
expense) as may be necessary to verify the accuracy of information
furnished to the Investor. Such opportunity has been presented at one
or more sessions, at which the Investor has been invited to be
physically present or participate by telephone conference call, with
appropriate officers of the Company and in connection with which
confidential and non-public information regarding the current
financial condition, operations and prospects has been presented and
discussed (the "Due Diligence Meetings"). The foregoing, however, does
not limit or modify the representations and warranties of the Company
in this Agreement or the right of the Investor to rely thereon. The
Investor acknowledges that in making the decision to invest in the
Company, Investor is not relying on any person, firm or company, other
than the Company and its officers, employees and/or directors.
5.6. Exculpation Among Investors. Each Investor acknowledges that in making
---------------------------
its decision to invest in the Company, it is not relying on any other
Investor or upon any person, firm or company, other than the Company
and its officers, employees and/or directors. Each Investor agrees
that no other Investor, nor the partners, employees, officers or
controlling persons of any other Investor shall be liable for any
actions taken by such Investor, or omitted to be taken by such
Investor, in connection with such investment.
5.7. No Brokers or Finders. No person, firm or corporation has or will
---------------------
have, as a result of any contractual undertaking by the Investor, any
right, interest or valid claim against the Investor for any
commission, fee or other compensation as a finder or broker, or in any
similar capacity, in connection with the transactions contemplated by
this Agreement. The Investor will indemnify and hold the Company
harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or
determined to be payable in connection with such Investor's purchase
hereunder.
5.8. Restrictions on Resale; Rule 144. The Investor understands that (i)
--------------------------------
none of the Securities have been registered under the Securities Act
or any state securities laws
10
<PAGE>
because they are being issued in transactions exempt from such
registration requirements, pursuant to Section 4(2) of the Securities
Act and applicable state securities laws, and (ii) that the reliance
of the Company and others upon these exemptions is predicated in part
upon this representation by the Investor. The Investor acknowledges
that the Securities must be held indefinitely unless subsequently
registered under the Securities Act and any applicable state
securities act or unless exemptions from such registration are
available. The Investor understands that none of the Securities may be
transferred or resold without (i) registration under the Securities
Act and any applicable state securities laws, or (ii) an exemption
from the requirements of the Securities Act and applicable state
securities laws. The Investor understands that an exemption from such
registration is not presently available pursuant to Rule 144 ("Rule
144") promulgated under the Securities Act by the Securities and
Exchange Commission (the "Commission") and that the Investor may not
currently sell any securities acquired hereunder in full compliance
with Rule 144. Nothing in the Section is intended to limit the
registration requirements set forth in Section 8.
5.9. Public Market. The Investor understands that no public market now
-------------
exists for the Securities.
5.10. Legend; Stop Transfer. The Preferred Stock and Warrants shall bear the
---------------------
following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS, AND
ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER THE ACT, AND SUCH APPLICABLE BLUE SKY
LAWS OR AN EXEMPTION THEREFROM.
The Conversion Shares and the Warrant Shares, if and when issued,
shall bear a similar legend. In addition, the Company shall make a
notation regarding the restrictions on transfer of the Securities in
its books and the Securities shall be transferred on the books of the
Company only if transferred or sold pursuant to an effective
registration statement under the Securities Act covering the
securities to be transferred or an opinion of counsel satisfactory to
the Company that such registration is not required.
5.11. Conflict Waiver. Any Investor which is now or at any time has been
---------------
represented by Riordan & McKinzie ("R&M") in any matter understands,
acknowledges and agrees that R&M is general counsel to the Company and
has represented solely the Company in connection with this Stock
Purchase Agreement. The Investors have been represented by Oppenheimer
Wolff & Donnelly and such other counsel of their individual choice,
exlcuding R&M, in connection with this Stock Purchase Agreement. As
required by Rule 3-310 of the California Rules of Professional
Conduct, any Investor which is or has at any time been represented by
R&M in any capacity hereby consents to R&M's sole representation of
the Company in conneciton with this Stock Purchase Agreement.
11
<PAGE>
6. CONDITIONS OF THE INVESTORS' OBLIGATIONS.
The obligations of each of the Investors hereunder are subject to the
fulfillment or waiver by such Investor prior to or on each Closing Date of the
conditions set forth in this Section.
6.1. Representations and Warranties. The representations and warranties of
------------------------------
the Company under this Agreement shall be true in all material
respects as of each Closing Date with the same effect as though made
on and as of such date.
6.2. Compliance with Agreement. The Company shall have performed and
-------------------------
complied with all covenants, agreements or conditions required by this
Agreement to be performed and complied with by it prior to or as of
the relevant Closing Date.
6.3. Certificate of Officers. The Company shall have delivered to the
-----------------------
Investors a certificate, dated as of the relevant Closing Date,
executed by the President and Chief Financial Officer of the Company,
certifying to the satisfaction of the conditions specified in Sections
6.1 and 6.2.
6.4. Termination of Loan Commitment. The obligation of certain of the
------------------------------
Investors to loan money to the Company pursuant to the Note Purchase
and Loan Agreement, dated as of December 16, 1996 (the "Loan
Agreement"), shall have been terminated effective on or prior to the
relevant Closing Date. The Company hereby agrees that, concurrent with
a Closing hereunder, it releases each and every Investor party to the
Loan Agreement from any obligation to loan money pursuant to the Loan
Agreement, thus satisfying the condition set forth in this Section 6.4
automatically by effecting such Closing. The warrants to purchase
Common Stock issued in connection with the Loan Agreement shall remain
outstanding.
6.5. Supporting Documents. Legal counsel for the Investors shall have
--------------------
received the following:
(a) a copy of the Charter Documents and resolutions of the Board of
Directors authorizing and approving the issuance of the Shares
and the authorization and reservation of the Conversion Shares
and authorizing and approving the execution, delivery and
performance of this Agreement, all such resolutions to be
certified by the Secretary of the Company;
(b) a Certificate of Incumbency, dated as of the relevant Closing
Date and executed by the Secretary of the Company certifying the
names, titles and signatures of the officers authorized to
execute this Agreement, and the Shares.
(c) a copy of the Certificate of Determination, certified by the
Secretary of State of California;
(d) a legal opinion of Company's counsel, dated as of the relevant
Closing Date and covering such matters typical in transactions of
this type as may be reasonably requested by legal counsel for the
Investors; and
12
<PAGE>
(e) such additional supporting documentation and other information
as the Investors or legal counsel for the Investors may
reasonably request.
6.6. Qualification under State Securities Laws. All registrations,
-----------------------------------------
qualifications, permits and approvals required under applicable state
securities laws for the lawful execution and delivery of this
Agreement and the offer, sale, issuance and delivery of the securities
to the Investors at the closing shall have been obtained or will be
obtained by the Company in compliance with such laws.
6.7. Amendment to Credit Agreement. The Company shall have entered into the
-----------------------------
First Amendment to the Credit Agreement, dated as of November 15, 1996
on terms and conditions satisfactory to the Investors.
7. CONDITIONS OF THE COMPANY'S OBLIGATION
The obligations of the Company to the Investors under this Agreement are
subject to the fulfillment prior to or on each Closing Date of the following
conditions:
7.1. Representations and Warranties. The representations and warranties of
------------------------------
the Investors contained in Section 5 shall be true and correct on and
as of each Closing Date with the same effect as though made on and as
of such date.
7.2. Qualification under State Securities Laws. All registrations,
-----------------------------------------
qualifications, permits and approvals required under applicable state
securities laws for the lawful execution and delivery of this
Agreement and the offer, sale, issuance and delivery of the securities
to the Investors at the closing shall have been obtained or will be
obtained in compliance with such laws.
8. REGISTRATION RIGHTS
8.1. Required Registration.
---------------------
(a) If at any time after December 30, 1997, the Company receives a
written request from the record holder or holders of an aggregate
of at least a majority of the Securities (collectively, the
"Registrable Shares") not registered under the Securities Act and
sold, the Company shall prepare and file a registration statement
under the Securities Act covering the Registrable Shares;
provided, however, that (i) all Shares covered by such
registration statement shall either be converted prior to
inclusion in such registration statement or the holders thereof
shall execute and deliver a written commitment to the Company to
convert such Shares simultaneously within the effective date of
such registration statement, (ii) the Company will not be
obligated to effect more than two registrations (other than
incidental registrations pursuant to Section 8.1(b) hereof and
not including registration statements that are withdrawn) under
these demand right provisions and shall not be required to cause
a second registration statement to be effective earlier than the
date which is twelve (12) months from the date of effectiveness
of the first registration statement filed pursuant to this
Section 8.1(a); and (iii) the Company shall not be obligated to
file any such
13
<PAGE>
registration statement if the anticipated aggregate offering
price, based upon the public offering price per share proposed by
the underwriters, net of underwriting discounts and commissions,
would be less than $1,500,000. In addition, upon the receipt of
such request, the Company shall promptly give written notice to
all other record holders of the Registrable Shares that such
registration is to be effected. The Company shall include in such
registration statement such Registrable Shares for which it has
received written requests to register by such other record
holders within thirty (30) days after the Company's written
notice to such other record holders.
(b) In the event that the holders of a majority of the Registrable
Shares, for which registration has been requested pursuant to
this section determine for any reason not to proceed with a
registration at any time before the registration statement has
been declared effective by the Commission, and such holders
request the Company to withdraw such registration statement with
respect to the Registrable Shares covered thereby, and the
holders of such Registrable Shares agree to bear their own
expenses incurred in connection therewith and to reimburse the
Company for the expenses incurred by it attributable to the
registration of such Registrable Shares, then the holders of such
Registrable Shares shall not be deemed to have exercised a demand
right pursuant to Section 8.1(a).
(c) In addition to the foregoing, the record holder or record holders
of a majority of the Registrable Shares not registered under the
Securities Act and sold pursuant to such registration may require
the Company to file any number of registration statements on Form
S-3 (or any successor form subsequently promulgated by the
Commission as a replacement for Form S-3) if such form is then
available for use by the Company and such record holder or
holders, provided that the Company shall not be obligated to
register securities under this Section 8.1(c) more frequently
than once during any period of twelve calendar months and the
total amount of securities registered in each such registration
shall not be less than $500,000.
(d) The Company and any other holder of securities of the Company may
include securities in any registration pursuant to this Section
8.1; provided that such additional securities may be excluded, in
whole or in part if in the good faith judgment of the managing
underwriter of such public offering, the inclusion of such
securities would interfere with the successful marketing of the
Registrable Shares.
8.2. Incidental Registration.
-----------------------
(a) Each time the Company shall determine to proceed with the actual
preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for
money of any of its Securities by it or any of its security
holders (other than a registration statement on Form S-4, S-8 or
other limited purpose form), the Company will give written notice
of its determination to all record holders of Registrable Shares.
Upon the written request of a record
14
<PAGE>
holder of any Registrable Shares given within thirty (30) days
after receipt of any such notice, the Company will, except as
herein provided, cause all such Registrable Shares, the record
holders of which have so requested registration thereof, to be
included in such registration statement, all to the extent
requisite to permit the sale or other disposition by the
prospective seller or sellers of the Registrable Shares to be so
registered; provided, however, that (i) all Shares intended to be
registered shall be converted prior to any sale pursuant to such
registration statement; (ii) nothing herein shall prevent the
Company from, at any time, abandoning or delaying any such
registration initiated by it; and (iii) if the Company determines
not to proceed with a registration after the registration
statement has been filed with the Commission and the Company's
decision not to proceed is primarily based upon the anticipated
public offering price of the securities to be sold by the
Company, the Company shall promptly complete the registration for
the benefit of those selling security holders who wish to proceed
with a public offering of their securities; provided, however,
that in such event, such registration shall be deemed a
registration under Section 8.1(a) hereof; and provided further,
that the Company shall be required to proceed with such
registration only if such registration meets the criteria
established for a registration upon demand as set forth in
Section 8.1(a) hereof.
(b) If any registration pursuant to this Section 8.1(b) shall be
underwritten, in whole or in part, the Company may require that
the Registrable Shares requested for inclusion hereunder be
included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters.
However, if in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of the
Registrable Shares originally covered by a request for
registration would reduce the number of securities to be offered
by the Company (or if the registration is the demand registration
of a selling shareholder, by such selling shareholder) or
interfere with the successful marketing of the securities offered
by the Company (or if the registration is the demand registration
of a selling shareholder, by such selling shareholder), the
number of shares of Registrable Shares to be included in the
underwritten public offering may, at the election of the managing
underwriter, be reduced pro rata among the holders thereof (but
if the registration is the demand registration of a selling
shareholder, excluding such demanding selling shareholder)
requesting such registration (based on the respective numbers of
shares for which registration was requested). Those shares of
Registrable Shares which are not included in the underwritten
public offering shall be withheld from the market by the holders
thereof for a period, not to exceed one hundred eighty (180)
days, which the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering.
Registration Procedures. In connection with any registration pursuant to
- -----------------------
Section 8.1 or 8.2, the Company will:
(a) prepare and file with the Commission the registration statement
with respect to the Registrable Shares and use its best efforts
to cause such registration
15
<PAGE>
statement to become and remain effective for such period as may
be reasonably necessary to effect the sale of such securities,
not to exceed six (6) months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective for the period referred to above;
(c) furnish to the security holders participating in such
registration and to any underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such
other documents as such security holders and underwriters may
reasonably request in order to facilitate the public offering of
such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such
participating holders may reasonably request prior to the
original filing of such registration statement, except that the
Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it
is not so qualified;
(e) notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement
has been filed;
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) prepare and file with the Commission, promptly upon the request
of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of
counsel for such holders (and concurred in by counsel for the
Company), is required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the
Registrable Shares by such holder;
(h) prepare and promptly file with the Commission and promptly notify
such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other
prospectus as then in effect would 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 in
which they were made, not misleading;
16
<PAGE>
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such
holders shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or the rules and
regulations thereunder, after having been furnished with a copy
thereof (in substantially final form) at least two business days
prior to the filing thereof, unless in the opinion of counsel for
the Company the filing of such amendment or supplement is
reasonably necessary to protect the Company from any liabilities
under any applicable federal or state law and such filing will
not violate applicable law; and
(k) at the request of any such holder, furnish on the effective date
of the registration statement and, if such registration includes
an underwritten public offering, at the closing provided for in
the underwriting agreement: (i) opinions, dated such respective
dates, of the counsel representing the Company for the purposes
of such registration, addressed to the underwriters, if any, and
to the holder or holders making such request, covering such
matters as such underwriters and holder or holders may reasonably
request, in which opinion such counsel shall state (without
limiting the generality of the foregoing) that (a) such
registration statement has become effective under the Securities
Act; (b) to the best of such counsel's knowledge no stop order
suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending
or contemplated under the Securities Act; (c) the registration
statement and each amendment or supplement thereto comply as to
form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no
opinion as to financial statements and statistical data contained
therein); (d) to the best of the knowledge of such counsel, the
description in the registration statement or any amendment or
supplement thereto of legal and governmental proceedings and
contracts are summarized accurately in all material respects; and
(e) such counsel does not know of any material legal or
governmental proceedings, pending or threatened, required to be
described in the registration statement or any amendment or
supplement thereto which are not described as required nor of any
contracts or documents or instruments of the character required
to be described in the registration statement or amendment or
supplement thereto or to be filed as Exhibits to the registration
statement, which are not described or filed as required; and,
which opinion shall include the statement that without
guaranteeing the accuracy and completeness of the statements
contained in the registration statements or any amendment or
supplement thereto, and based upon such records, certificates and
other documents specifically cited in such opinion,
17
<PAGE>
including certificates and representations by Company officers,
no facts have come to counsel's attention which cause it to
believe that the registration statement or any amendment nor
supplement thereto contains any 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 (except that such counsel need express no opinion as
to financial statements and statistical data contained therein);
and (ii) letters, dated such respective dates, from the
independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request, in
which letters such accountants shall state (without limiting the
generality of the foregoing) that they are independent certified
public accountants within the meaning of the Securities Act and
that in the opinion of such accountants the financial statements
and schedules of the Company included in the registration
statement or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of
the Securities Act.
8.4. Expenses. The Company shall bear the following fees, costs and
--------
expenses in connection with any registration pursuant to this
Agreement: all registration, filing and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, all
internal Company expenses, the premiums and other costs of policies of
insurance against liability arising out of the public offering, and
all legal fees and disbursements and other expenses of complying with
state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security
holders, underwriting discounts and commissions and transfer taxes for
selling security holders and any other expenses incurred by the
selling security holders not expressly included above shall be borne
by the selling security holders.
8.5. Indemnification. In the event that any Registrable Shares are included
---------------
in a registration statement under Section 8.1 or 8.2:
(a) The Company will indemnify and hold harmless each holder of
Registrable Shares that are included in a registration statement
pursuant to the provisions of this Agreement and any underwriter
(as defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter
within the meaning of the Securities Act, from and against any
and all loss, damage, liability, cost and expense to which such
holder or any such underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus
contained therein or any amendment 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, in light of the
circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable as to any holder in
any such case to the extent that any such loss, damage,
liability, cost or
18
<PAGE>
expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made
in conformity with information furnished by such holder, such
underwriter or such controlling person for use in the preparation
thereof.
(b) Each holder of Registrable Shares that are included in a
registration pursuant to the provisions of this Agreement
severally will indemnify and hold harmless the Company, any
controlling person and any underwriter from and against any and
all loss, damage, liability, cost or expense to which the Company
or any controlling person and/or any underwriter may become
subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any
untrue or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with written information
furnished by such holder specifically for use in the preparation
thereof and only to the extent of proceeds from the sale of
Registrable Shares.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of Section 8.5(a) or (b) of notice of the commencement
of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to
the provisions of such Section, promptly notify the indemnifying
party of the commencement thereof; but the omission to so notify
the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
hereunder except to the extent such failure shall have materially
prejudiced the indemnifying party. In case such action is brought
against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and
the indemnifying party and there is a conflict of interest which
would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to
participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of Section
8.5(a) or (b) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i)
the indemnified party shall have
19
<PAGE>
employed counsel in accordance with the proviso of the preceding
sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of
the commencement of the action, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
8.6. Registration Rights of Transferees. The registration rights granted to
----------------------------------
the holders of Securities pursuant to this Agreement shall also be for
the benefit of, and enforceable by, any subsequent holder of such
securities (excluding any subsequent holder who acquires such
securities in a public sale, such that such securities are no longer
deemed "restricted securities" within the meaning of Rule 144),
whether or not any express assignment of such rights to any such
subsequent holder is made.
8.7. Exception to Registration Obligations. The Company shall not be
-------------------------------------
obligated to honor a demand to register its capital stock under this
Agreement if all of the capital stock which could be registered
pursuant to such demand is otherwise eligible for immediate sale by
the holder of such capital stock under paragraph (k) of Rule 144.
9. DEFAULT.
9.1. Events of Default. Each of the following events shall be an event of
-----------------
default (an "Event of Default") for purposes of this Agreement:
(a) if (i) any representation or warranty made by or on behalf of the
Company in this Agreement or in any certificate, report or other
instrument delivered under or pursuant to any term hereof shall
prove to have been untrue or incorrect in any material respect as
of the date of this Agreement, or (ii) any report, certificate,
financial statement or financial schedule or other instrument
prepared or purported to be prepared by the Company or any
officer of the Company hereafter furnished or delivered under or
pursuant to this Agreement shall prove to be untrue or incorrect
in any material respect as of the date it was made, furnished or
delivered, provided, however, that an Event of Default shall not
be deemed to have occurred unless (aa) the facts or circumstances
causing such representation, warranty or document to be untrue or
incorrect materially may adversely affect the business or
financial condition of the Company or the value of any of the
Shares, and (bb) if such facts or circumstances are susceptible
of correction by the Company without materially and adversely
affecting the business or financial condition of the Company or
the value of the Shares, if such facts or circumstances continue
for a period of thirty (30) days after written demand for
correction to the Company by the holder of any of the Securities;
or
(b) if the Company defaults in the due and punctual performance or
observance of any covenant contained in this Agreement, and such
default continues for a period of ten (10) days after written
notice thereof to the Company by the holder of any of the
Securities; provided, however, that an Event of Default shall not
be deemed to have occurred if, at the end of such 10-day period,
the Company is
20
<PAGE>
diligently attempting to cure such default and the existence of
such default is not materially adversely affecting the business
or financial condition of the Company.
9.2. Remedies upon Events of Default. Upon the occurrence of an Event of
-------------------------------
Default, unless such Event of Default shall have been waived in the
manner provided in Section 10.1, each Investor, at its sole option,
shall have the right to pursue any and all legal and equitable
remedies available to such Investor, including, without limitation,
rescission of this Agreement or the repurchase of the Securities.
9.3. Notice of Defaults. When, to its knowledge, any Event of Default has
------------------
occurred or exists, the Company shall give written notice within three
(3) business days of such Event of Default to the holders of all
outstanding Securities. If the holder of any Securities shall give any
notice in respect of a claimed Event of Default, the Company shall
forthwith give written notice thereof to all other holders of
Securities at the time outstanding, describing such notice and the
nature of the claimed Event of Default.
9.4. Suits for Enforcement. In case any one or more Events of Default shall
---------------------
have occurred and be continuing, unless such Events of Default shall
have been waived in the manner provided in Section 10.1, the holders
of a majority in interest of the Securities outstanding may proceed to
protect and enforce their rights under this Section by suit in equity
or action at law. It is agreed that in the event of such action, such
holders of the Securities shall be entitled to receive all reasonable
fees, costs and expenses incurred, including without limitation such
reasonable fees and expenses of attorneys (whether or not litigation
is commenced) and reasonable fees, costs and expenses of appeals, in
the event such holders prevail or a settlement and resolution of the
dispute is achieved.
9.5. Remedies Cumulative. No right, power or remedy conferred upon any
-------------------
holder of Securities shall be exclusive, and each such right, power or
remedy shall be cumulative and in addition to every other right, power
or remedy, whether conferred hereby or by any such security or now or
hereafter available at law or in equity or by statute or otherwise.
9.6. Remedies Not Waived. No course of dealing between the Company and any
-------------------
Investor or the holder of any of the Securities, and no delay in
exercising any right, power or remedy conferred hereby or by any such
security or now or hereafter existing at law or in equity or by
statute or otherwise, shall operate as a waiver of or otherwise
prejudice any such right, power or remedy; provided, however, that
this section shall not be construed or applied so as to negate the
provisions and intent of any statute which is otherwise applicable.
10. MISCELLANEOUS
10.1. Waivers, Amendments and Approvals. In each case in which approval of
---------------------------------
the Investors is required by the terms of this Agreement and unless
otherwise expressly provided, such requirement shall be satisfied by a
vote or the written action of Investors owning sixty-six and two-
thirds percent (66-2/3%) in interest of the Securities then owned by
the Investors (on an as-if-converted basis). With the written consent
of Investors owning sixty-six and two-thirds percent (66-2/3%) in
interest of the Securities then owned by the Investors (on an as-if-
converted basis), the obligations of the Company under this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) and with the written approval of
Investors owning sixty-six and two-thirds percent (66-2/3%) in
interest of the Securities then owned by the
21
<PAGE>
Investors (on an as-if-converted basis), the Company may enter into a
supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Agreement or of any supplemental agreement or modifying in any manner
the rights and obligations of the holders of the Securities; provided,
however, that no such waiver or supplemental agreement shall (a) amend
the terms of the Preferred Stock as set forth in the Company's
articles of incorporation (any such amendment to the terms of the
shares of Preferred Stock shall require the vote of the holders of
shares of Preferred Stock, called for by the articles of incorporation
or applicable law) or (b) reduce the aforesaid proportions of
Securities the holders of which are required to consent to any waiver
or supplemental agreement, without the consent of all of the record
holders of Securities whose rights would be affected by such
reduction. Written notice of any such waiver, consent or agreement of
amendment, modification or supplement shall be given to the record
holders of the Securities who have not previously consented thereto in
writing.
10.2. Changes, Waivers, Etc. Neither this Agreement nor any provision hereof
---------------------
may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
10.3. Notices. All notices, requests, consents and other communications
-------
required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, registered or
certified mail, as follows:
(a) if to the Investors, to the addresses listed on Schedule 1; and
(b) if to the Company, to:
Trikon Technologies, Inc.
9255 Deering Avenue
Chatsworth, California 91311
Attention: Chief Financial Officer
and such notices and other communications shall for all purposes of
this Agreement be treated as being effective or having been given if
delivered personally, or, if sent by mail, when received. Any party
may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
10.4. Survival of Representations, Warranties, Agreements, Etc. All
--------------------------------------------------------
representations, warranties, covenants and agreements contained herein
or in any certificate delivered pursuant to this Agreement shall
survive the execution and delivery of this Agreement or such
certificate, as the case may be, any investigation at any time made by
the Investors or on their behalf, and the closing of the transactions
contemplated by this Agreement.
22
<PAGE>
All statements contained in any certificate, instrument or other
writing prepared by or on behalf of the Company and delivered by the
Company pursuant to this Agreement or in connection with or in
contemplation of the transactions herein contemplated shall constitute
representations and warranties by the Company hereunder.
10.5. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon and be enforceable
by the successors and assigns of the parties hereto, including the
holder or holders from time to time of any of the Securities.
10.6. Entire Agreement. This Agreement, the schedules hereto, the documents
----------------
referenced herein and the exhibits thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior and
contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties
with respect hereto and thereto. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent
with any of the terms hereof.
10.7. Other Remedies. Any and all remedies herein expressly conferred upon a
--------------
party shall be deemed cumulative with, and not exclusive of, any other
remedy conferred hereby or by law on such party, and the exercise of
any one remedy shall not preclude the exercise of any other.
10.8. Delays or Omissions. Except as expressly provided herein, no delay or
-------------------
omission to exercise any right, power or remedy accruing to any party
under this Agreement shall impair any such right, power or remedy of
such party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence thereto, or of a similar breach or
default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party hereto of
any breach of default under the Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must
be in writing and shall be effective only to the extent specifically
set forth in such writing.
10.9. Attorneys' Fees. Should suit be brought to enforce any provision of
---------------
this Agreement, the prevailing party shall be entitled to recover, as
an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including, without
limitation, costs, expenses and fees on any appeal). The prevailing
party shall be the party entitled to recover its costs of suit,
regardless of whether such suit proceeds to final judgment. A party
not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in
calculating the amount of a judgment for purposes of determining if a
party is entitled to recover costs or attorneys' fees.
10.10. Payment of Fees and Expenses of the Investors. The Company agrees to
---------------------------------------------
reimburse the Investors for their out-of-pocket expenses, including
reasonable legal expenses incurred for one special legal counsel to
the Investors, Oppenheimer, Wolff & Donnelly
23
<PAGE>
in connection with the transactions contemplated by this Agreement, up
to a maximum of $25,000.
10.11. Construction of Agreement. This Agreement has been negotiated by the
-------------------------
respective parties hereto and their attorneys and the language hereof
shall not be construed for or against any party. A reference in this
Agreement to any section shall include a reference to every section
the number of which begins with the number of the section to which
reference is specifically made (e.g. a reference to Section 10 shall
include a reference to Section 10.1 through 10.15 inclusive). The
titles and headings herein are for reference purposes only and shall
not in any manner limit the construction of this Agreement which shall
be considered as a whole. A reference to a section means a section of
this Agreement, unless the context expressly otherwise requires.
10.12. Governing Law. This Agreement shall be governed by and construed under
-------------
the laws of the State of California.
10.13. Counterparts. This Agreement may be executed concurrently in two or
------------
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
10.14. Severability. Should any one or more of the provisions of this
------------
Agreement or of any agreement entered into pursuant to this Agreement
be determined to be illegal or unenforceable, all other provisions of
this Agreement and of each other agreement entered into pursuant to
this Agreement, shall be given effect separately from the provision or
provisions determined to be illegal or unenforceable and shall not be
affected thereby.
10.15. Rights of Investors Inter Se. Except as provided for in Section 10.1
----------------------------
regarding actions under the Agreement requiring a vote or consent of
sixty-six and two-thirds percent (66-2/3%) in interest of the
Securities (on an as-if-converted basis), each Investor shall have the
absolute right to exercise or refrain from exercising any right or
rights which such Investor may have by reason of this Agreement or any
security, including, without limitation, the right to consent to the
wavier of any obligation of the Company under this Agreement and to
enter into an agreement with the Company for the purpose of modifying
this Agreement or any agreement effecting any such modification, and
such Investor shall not incur any liability to any other or with
respect to exercising or refraining from exercising any such right or
rights.
[balance of page intentionally left blank]
24
<PAGE>
IN WITNESS WHEREOF, the Company and each of the Investors has caused this
Agreement to be executed by its duly authorized representatives in counterpart.
COMPANY: TRIKON TECHNOLOGIES, INC.
By:
--------------------------------
Its:
----------------------------
INVESTORS: PEQUOT PRIVATE EQUITY FUND, L.P.
By:
--------------------------------
Its:
----------------------------
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By:
--------------------------------
Its:
----------------------------
PEQUOT PARTNERS FUND, L.P.
By:
--------------------------------
Its:
----------------------------
PEQUOT INTERNATIONAL FUND, INC.
By:
--------------------------------
Its:
----------------------------
ST. PAUL VENTURE CAPITAL IV, LLC
By:
--------------------------------
Brian Jacobs
Its General Partner
25
<PAGE>
DIMENSIONAL PARTNERS LTD.
By:
-------------------------------
Joseph D. Samberg
Director
SBIC PARTNERS, L.P.
a Texas limited partnership
By: Forrest Binkley & Brown, L.P.,
a Texas limited partnership
By: Forrest Binkley & Brown Venture Co.,
a Texas corporation
General Partner
By:
----------------------------
Jeffrey J. Brown
Office of the President
By: SL-SBIC Partners, L.P.,
a Texas limited partnership
By: FW-SBIC, Inc.
a Texas corporation
General Partner
By:
-----------------------------
Peter Sterling
Chairman
PAW PARTNERS OFFSHORE FUND, L.P.
By:
--------------------------------
Its:
----------------------------
PAW PARTNERS, L.P.
By:
--------------------------------
Its:
----------------------------
26
<PAGE>
-----------------------------------
J. BRUCE LLEWELLYN
UH PRIVATE EQUITY PARTERS, L.P.
By:
--------------------------------
Its:
----------------------------
UH PRIVATE EQUITY PARTNERS C.V.
By:
--------------------------------
Its:
----------------------------
MARJORIE & CLARENCE E. UNTERBERG FOUNDATION
By:
--------------------------------
Its:
----------------------------
------------------------------------
THOMAS I. UNTERBERG
THOMAS I. UNTERBERG FBO ELLEN UNTERBERG CELLI
By:
--------------------------------
Its:
----------------------------
THOMAS I. UNTERBERG FBO EMILY SATLOFF
By:
--------------------------------
Its:
----------------------------
27
<PAGE>
UNTERBERG HARRIS TECH PTNRS, LDC
---------------------------------
By:
--------------------------------
Its:
----------------------------
UH CAPITAL PARTNERS I, LP
By:
--------------------------------
Its:
----------------------------
UH CAPITAL PARTNERS, INT'L, LDC
By:
--------------------------------
Its:
----------------------------
-----------------------------------
BURTON R. RUBIN
JF CO. INC AS NOMINEE 1997-35
By:
--------------------------------
Its:
----------------------------
-----------------------------------
EUGENE MERCY, JR.
KARFUNKEL FAMILY FOUNDATION
By:
--------------------------------
Its:
----------------------------
DUCK PARTNERS, L.P.
By:
--------------------------------
Its:
----------------------------
28
<PAGE>
SCHEDULE 1
NAMES AND ADDRESSES OF INVESTORS; PURCHASE COMMITMENTS
<TABLE>
<CAPTION>
===================================================================================================
Number of Shares Number of
Name and Address of Investor of Preferred Stock Warrant Shares Purchase Price
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pequot Private Equity Fund, L.P. 690,650 207,195 $4,661,887.50
Pequot Offshore Private Equity Fund, Inc. 87,445 26,234 $ 590,253.75
Pequot Partners Fund, L.P. 351,693 105,508 $2,373,927.75
Pequot International Fund, Inc. 351,693 105,508 $2,373,927.75
c/o Dawson Samberg Capital Management
354 Pequot Avenue
Southport, Connecticut 06490
Attention: Amil Peretz
- ---------------------------------------------------------------------------------------------------
Dimensional Partners Ltd. 74,074 22,222 $ 499,999.50
New York, NY
Attention: Joseph Samberg
- ---------------------------------------------------------------------------------------------------
St. Paul Venture Capital IV, LLC 185,185 55,556 $1,249,998.75
c/o St. Paul Venture Capital
8500 Normandale Lake Boulevard, Suite
1940
Bloomington, Minnesota 55437
Attention: Brian Jacobs
- ---------------------------------------------------------------------------------------------------
SBIC Partners, L.P. 296,296 88,889 $1,999,998.00
c/o Forrest Binkley & Brown
800 Newport Center Drive, Suite 725
Newport Beach, CA 92660
Attention: Jeff Brown
- ---------------------------------------------------------------------------------------------------
PAW Partners Offshore Fund, L.P. 192,592 57,763 $1,299,996.00
Windermere House
404 East Day Street
P.O. SS623
Nassau, Bahamas
Attention:
- ---------------------------------------------------------------------------------------------------
PAW Partners, L.P. 148,148 44,444 $ 999,999.00
10 Glenville Street
Greenwich, CT 06831
Attention:
- ---------------------------------------------------------------------------------------------------
J. Bruce Llewellyn 37,037 11,111 $ 249,999.75
272 Ash Street
Englewood Cliffs, NJ 07632
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
UH Private Equity Partners, L.P. 122,074 36,622 $ 823,999.50
c/o Unterberg Harris, L.P.
10 East 50th Street
New York, New York 10022
Attention: Jody Owens
- ---------------------------------------------------------------------------------------------------
UH Private Equity Partners C.V. 26,074 7,822 $ 175,999.50
c/o Administrator N.V.
N.V. Fides - P.O. Box 4905
Curacao
Attention:
- ---------------------------------------------------------------------------------------------------
Marjorie & Clarence E. Unterberg
Foundation
Thomas I. Unterberg
Thomas I. Unterberg FBO Ellen Unterberg
Celli Family Trust
Thomas I. Unterberg FBO Emily Satloff
Family Trust
c/o Unterberg Harris, L.P. 74,074 22,222 $ 499,999.50
10 East 50th Street
New York, New York 10022
Attention:
- ---------------------------------------------------------------------------------------------------
Unterberg Harris Tech Ptnrs, LDC 55,555 16,667 $ 374,996.25
c/o Olympia Capital Partners
Williams House
20 Reid Street.
Hamilton, Bermuda HM11
Attention:
- ---------------------------------------------------------------------------------------------------
UH Capital Partners I, LP 31,852 9,556 $ 215,001.00
c/o Unterberg Harris, L.P.
10 East 50th Street
New York, New York 10022
Attention: Jody Owens
- ---------------------------------------------------------------------------------------------------
UH Capital Partners, Int'l, LDC 23,703 7,111 $ 159,995.25
c/o Olympia Capital Int'l
Williams House
20 Reid Street.
Hamilton, Bermuda HM11
Attention:
- ---------------------------------------------------------------------------------------------------
Burton R. Rubin 18,518 5,555 $ 124,996.50
980 Fifth Avenue, #12A
New York, NY 10021
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
JF Shea Co. Inc as Nominee 1997-35 88,889 26,667 $ 600,000.75
655 Brea Canyon Road
Walnut, CA 91789
Attention:
- ---------------------------------------------------------------------------------------------------
Eugene Mercy, Jr. 14,815 4,445 $ 100,001.25
126 East 56th Street, 25th Floor
New York, NY 10022
- ---------------------------------------------------------------------------------------------------
Duck Partners, L.P. c/o Hull Capital 74,074 22,222 $ 499,999.50
152 West 57th Street, 11th Floor
New York, NY 10019
Attention:
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
TOTAL: 2,944,441 883,331 $19,874,976.00
===================================================================================================
</TABLE>
<PAGE>
EXHIBIT A
CERTIFICATE OF DETERMINATION
Filed concurrently herewith as Exhibit 3.3.
<PAGE>
EXHIBIT 10.24
The following form of Voting Agreement dated as of June __, 1997 was
executed by the following parties to the Stock Purchase Agreement relating to
the sale of the Registrant's Series G Preferred Stock (Exhibit 10.23 hereto):
[TO COME]
<PAGE>
VOTING AGREEMENT
The undersigned, __________________________________ (the
"Shareholder"), in the Shareholder's capacity as the holder of _______ shares of
the Series G Preferred Stock (the "Series G Stock") of Trikon Technologies,
Inc., a California corporation (the "Company"), and as an inducement to the
Company to enter into that certain Stock Purchase Agreement dated as of June
___, 1997 and to issue shares of the Series G Stock of the Company pursuant
thereto, hereby agrees with the Company as follows:
1. Agreement to Vote Series G Stock on Certain Matters. At any and
---------------------------------------------------
all meetings of the shareholders of the Company (or with respect to any written
consent solicited in lieu thereof), the Shareholder agrees to vote (or give its
written consent in lieu thereof with respect to) all of the Series G Stock held
by the Shareholder in favor of any proposal approved by the Board of Directors
of the Company (the "Board") and submitted to the holders of the Common Stock of
the Company for their approval; provided, however, that the Shareholder shall be
-------- -------
so obligated to vote in favor of any such proposal only (a) in connection with a
vote, required by the California Corporations Code or otherwise by law, of the
holders of the Series G Stock voting alone as a separate class, and (b) if such
proposal is additionally subject (or specifically made subject by the Board) to
approval (and is in fact approved) by the outstanding shares of Common Stock and
Series G Stock voting together as if a single class (with the Series G Stock
voting on an as-converted basis), in which case this Voting Agreement shall not
be applicable to such vote of the Series G Stock when so voting together with
the Common Stock as if a single class (but shall only be applicable to such
separate class vote of the Series G Stock alone), and provided, further, that
-------- -------
this Voting Agreement shall not be applicable to any separate class vote of the
Series G Stock required pursuant to the Certificate of Determination, as filed
with the California Secretary of State, setting forth the rights, preferences,
privileges and restrictions of the Series G Stock, and shall only be applicable
----
in connection with a vote required by the California Corporations Code or
otherwise by law and not required by such Certificate of Determination.
---
2. Term. The term of this Agreement shall commence upon the date
----
hereof and shall expire on that date which is ten years thereafter.
3. Legend. All certificates representing the Common Stock shall be
------
endorsed with substantially the following legend:
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A VOTING AGREEMENT DATED AS OF JUNE ___, 1997
EXECUTED BY THE HOLDER OF THIS CERTIFICATE IN FAVOR OF THE COMPANY.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. "
4. Transfers. This Voting Agreement shall be binding upon any
---------
transferee(s) of the Series G Stock. The Company may require any such
transferee(s) to execute a counterpart of this Voting Agreement as a condition
to the issuance of a new share certificate upon transfer.
5. Enforceability/Severability. The parties hereto agree that each
---------------------------
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision of this Agreement
shall nevertheless be held to be prohibited by or invalid under applicable law,
(a) such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement, and (b) the parties shall, to the extent
permissible by applicable law, amend this Agreement, to the extent in good faith
practicable, so as to make effective and enforceable to the maximum extent
possible the intent of this Agreement.
6. Amendments and Waivers. Any term hereof may be amended and the
----------------------
observance of any term hereof may be waived only with the written consent of the
Company and the holders of at least two-thirds (2/3) of the Company's Series G
Stock at the time outstanding.
IN WITNESS WHEREOF, this Voting Agreement has been executed by the
undersigned to be effective as of June __, 1997.
TRIKON TECHNOLOGIES, INC.
By: ______________________________
Gregor A. Campbell,
Chief Executive Officer
__________________________________
_____________________, Shareholder
2
<PAGE>
EXHIBIT 10.25
FIRST AMENDMENT
---------------
(AND WAIVER AND CONSENT)
THIS DOCUMENT is entered into as of June 27, 1997, between the following
parties:
. TRIKON TECHNOLOGIES, INC., a California corporation formerly known as
Plasma & Materials Technologies, Inc. ("US BORROWER").
. TRIKON TECHNOLOGIES LIMITED, a corporation (registered No. 1373344)
organized under the laws of England formerly known as Electrotech
Limited, and TRIKON EQUIPMENTS LIMITED, a corporation (registered No.
939289) organized under the laws of England formerly known as
Electrotech Equipments Limited (collectively, "UK BORROWERS").
. Lenders under the Credit Agreement described below.
. NATIONSBANK OF TEXAS, N.A., as Administrative Agent for Lenders
("ADMINISTRATIVE AGENT").
. LLOYDS BANK PLC, UK-Collateral Agent for Lenders ("UK-COLLATERAL
AGENT").
A. US Borrower, UK Borrowers, Lenders, Administrative Agent, and UK-
Collateral Agent are party to the Credit Agreement (as renewed, extended, and
amended before the date of this document, the "CREDIT AGREEMENT") dated as of
November 15, 1996, providing for the extension of credit to (1) US Borrower in a
total outstanding principal amount of up to $11,000,000 and (2) UK Borrowers in
a total outstanding principal amount of up to $24,000,000. US Borrower, UK
Borrowers, Lenders, Administrative Agent, and UK-Collateral Agent have agreed to
amend the Credit Agreement and other Loan Documents in respect of the matters
described in PARAGRAPHS 2 and 3 below.
B. US Borrower's name was changed to Trikon Technologies, Inc., effective
as of March 31, 1997, UK Borrowers' names have changed to Trikon Technologies
Limited and Trikon Equipments Limited, and other Companies names may have also
changed as reflected on the attached AMENDED SCHEDULE 8.3 (the "NAME CHANGES"),
and Borrowers have requested that Lenders waive any defaults resulting from US
Borrower's failure to give Administrative Agent 30-days written notice of the
Name Changes as required by the Security Agreement (as renewed, extended, and
amended before the date of this document, the "SECURITY AGREEMENT") dated as of
November 15, 1996, executed by US Borrower and Administrative Agent.
C. US Borrower has proposed a modification to the ownership structure of
UK Borrowers that would result in the structure more particularly described in
the definitions in PARAGRAPH 2(B) below of the terms Restructure Phase I and
Restructure Phase II and as reflected in the organizational chart and table on
the attached AMENDED SCHEDULE 8.3. Borrowers have requested that Lenders
consent to that restructure.
D. It is proposed that Plasma & Materials Technologies (Korea) Co. Ltd.
issue 10% of its capital stock (the "KOREAN STOCK") to Mr. Tae Soo Kim upon his
agreement, at US Borrower's option upon
<PAGE>
termination of Mr. Kim's employment, to exchange the Korean Stock with US
Borrower for shares of US Borrower's stock of substantially the same value in
the future (the "ISSUANCE AND REPURCHASE"), and Borrowers have requested that
Lenders consent to the Issuance and Repurchase.
E. Lenders have agreed, subject to the terms and conditions of this
document, to the proposed amendments to the Loan Documents, the waiver of
certain provisions of the Security Agreement in respect of the Name Changes and
the other matters described in PARAGRAPH 4 below, and the consent to the
restructure described above, the Issuance and Repurchase, and the other matters
described in PARAGRAPH 5 below.
ACCORDINGLY, for adequate and sufficient consideration, US Borrower, UK
Borrowers, Lenders, Administrative Agent, and UK-Collateral Agent agree as
follows:
1. TERMS AND REFERENCES. Unless otherwise stated in this document (A) terms
--------------------
defined in the Credit Agreement have the same meanings when used in this
document and (B) references to "SECTIONS," "SCHEDULES," and "EXHIBITS" are to
the Credit Agreement's sections, schedules, and exhibits.
2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is amended as
------------------------------
follows:
(A) The following definitions in SECTION 1.1 are amended as follows:
(1) The following sentence is added to the end of the definition of
APPLICABLE MARGIN:
From the effective date of the First Amendment through the date that
Administrative Agent receives the Current Financials and Compliance
Certificate for the quarter ending March 31, 1998, the Applicable
Margin is deemed to be 3.00% for Euro-Rate Borrowings and 1.00% for
Base-Rate Borrowings.
(2) The introductory phrase in the definition of EBITDA is entirely
amended as follows:
"EBITDA" means (for any Person, for any period, without
duplication, and after excluding -- EXCEPT ONLY for the purposes of
the calculation of the ratio in SECTION 13.3 for the three quarters
ended December 31, 1997 -- the effects of Opinion 16 of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and excluding the charge off of intangibles in connection
with the CVD Transaction to the extent that those intangibles cannot
be amortized) the SUM of:
(3) CLAUSE (a) in the definition of ELIGIBLE ACCOUNTS is entirely
amended as follows:
(a) the portion of any account not paid within 120 days after the
respective invoice's issue date and, regardless of its aging, any
account charged off for accounting purposes,
(4) The following sentence is added to the end of the definition of
OVERDRAFT EXPOSURE:
2
<PAGE>
Notwithstanding the above, for purposes of calculating the UK-
Facility-Commitment Usage, the Overdraft Exposure may never be less
than zero.
(5) In the definition of PERMITTED INVESTMENTS, CLAUSE (l) is entirely
amended as follows, CLAUSE (k) (where it erroneously appears the second
time, after CLAUSE (l)) is relettered as CLAUSE (m), and a new CLAUSE (n)
is entirely added as follows:
(l) (i) The Rate-Protection Arrangement entered into by US
Borrower with NationsBank of Texas, N.A., in the form of the U.S.
Dollar Interest Rate Swap Transaction dated February 12, 1997, in a
notional amount of $86,250,000 and all renewals, extensions,
amendments, and replacements to or for that transaction (PROVIDED THAT
any extension of the term or increase of notional amount must be first
approved by Lenders); (ii) the Rate-Protection Arrangement entered
into by US Borrower with NationsBank of Texas, N.A., in the form of
the U.S. Dollar Interest Rate Swap Transaction entered into in June
1997, in a notional amount of $64,687,500 and all renewals,
extensions, amendments, and replacements to or for that transaction;
(PROVIDED THAT any extension of the term or increase of notional
amount must be first approved by Lenders); (iii) any one or more Rate-
Protection Arrangements entered into by any Borrower to convert any of
its floating-rate obligations to fixed-rate obligation and all
renewals, extensions, amendments, and replacements to or for those
transactions that continue only to involve converting floating-rate
obligations to fixed-rate obligations; (iv) any one or more Rate-
Protections Arrangements required by Majority Lenders under SECTION
9.13(a) and all renewals, extensions, amendments, and replacements to
or for those transactions (PROVIDED THAT any extension of the term or
increase of notional amount must be first approved by Majority
Lenders); (v) any one or more Rate-Protections Arrangements required
by Lenders under SECTION 9.13(b) and all renewals, extensions,
amendments, and replacements to or for those transactions (PROVIDED
THAT any extension of the term or increase of notional amount must be
first approved by Lenders); and (vi) Foreign-Exchange Arrangements
that are spot trades involving no ongoing risk or liability to any
Company.
(n) The CVD Transaction SO LONG AS promptly following the
consummation of that transaction PMT CVD Partners, L.P., and CVD,
Inc., are liquidated and dissolved with all of their respective assets
and properties (including, without limitation, all cash and cash
equivalents) being distributed to US Borrower.
(6) The parenthetical clause at the end of the definition of TANGIBLE-
NET WORTH is entirely deleted.
(B) SECTION 1.1 is amended to entirely amend or to add the following
definitions among the definitions in that section in alphabetical order:
"BORROWING BASE" means -- at any time, for any Borrower, and
without duplication -- the SUM of the Dollar Equivalent of (a) 80% of
Eligible Accounts owed to that Borrower by Domestic Persons and
certain Foreign Subsidiaries of Domestic Persons designated by
agreement of all Lenders from time to time, PLUS (b) 50% of Eligible
3
<PAGE>
Accounts owed to that Borrower by Foreign Persons (including any
Foreign Subsidiary of any Domestic Person that has not been designated
by Lenders as being included in CLAUSE (A) preceding), PLUS (c)
through September 29, 1997, 50% of Eligible-Dated Accounts owed to
that Borrower by any Person, and after September 29, 1997, none of
those Eligible-Dated Accounts, PLUS (d) 100% of Eligible Accounts,
whether owed by Domestic or Foreign Persons, to the extent not already
included under any of the preceding clause and to the extent supported
by one or more letters of credit that are in form and substance and
issued by one or more financial institutions acceptable to
Administrative Agent in its sole discretion, PLUS (e) 25% of Eligible-
Demonstration Systems owned by that Borrower (SO LONG AS the portion
of Eligible-Demonstration Systems included in this clause for both
Borrowing Bases under this agreement may never exceed $2,000,000),
MINUS (f) Foreign-Exchange Exposure under all Foreign-Exchange
Arrangements for each of the Companies, MINUS (g) the total Rate-
Protection Exposure under all Rate-Protection Arrangements for each
of the Companies. The Borrowing Base for the US Facility is the
Borrowing Base applicable to US Borrower and, in respect of CLAUSES
(f) and (g) above, the Domestic Companies; and the Borrowing Base for
the UK Facility is the Borrowing Base applicable to UK Borrowers and,
in respect of CLAUSES (f) and (g) above, the Foreign Companies.
"CVD TRANSACTION" means the acquisition by US Borrower, for a
total consideration consisting of 637,200 shares of newly-issued
common stock of US Borrower, of (a) all of the outstanding limited
partnership interests of PMT CVD Partners, L.P., a California limited
partnership, that are not already owned by US Borrower, and (b) all of
the outstanding shares of capital stock of CVD, Inc., a California
corporation, that are not already owned by US Borrower.
"ELECTROTECH GMBH" means Electrotech Equipments Gmbh, a
corporation formed under the laws of Germany and a wholly owned
Subsidiary of Trikon Equipments Limited.
"ELECTROTECH SARL" means Electrotech Equipments SARL, a
corporation formed under the laws of France and a wholly owned
Subsidiary of Trikon Equipments Limited.
"FIRST AMENDMENT" means the First Amendment to Credit Agreement
dated as of June 27, 1997, and entered into by Borrowers, Lenders, and
Agents in respect of this agreement.
"FOREIGN-EXCHANGE ARRANGEMENT" means any arrangement for foreign-
currency-exchange protection.
"FOREIGN-EXCHANGE EXPOSURE" means, for any Foreign-Exchange
Arrangement and at any time, the amount, if any, that would be payable
to the Foreign-Exchange Party in that Foreign-Exchange Arrangement if
that Foreign-Exchange Arrangement were terminated at that time, in
each case, determined by Administrative Agent in good faith in
reliance upon any information (including any information provided by
the Foreign-Exchange Party) that Administrative Agent believes (with
no obligation to verify accuracy) to be accurate.
4
<PAGE>
"FOREIGN-EXCHANGE PARTY" means, at any time, any party that has
entered into a Foreign-Exchange Arrangement with any Company.
"HEDGING AGREEMENT" means, for any Person, any present or future,
whether master or single, agreement, document, or instrument providing
for or constituting an agreement to enter into (a) commodity hedges in
the normal course of business in accordance with prior practices of
that Person before the date of this agreement for purposes of hedging
material purchases, (b) Foreign-Exchange Arrangements, (c) Rate-
Protection Arrangements, and (d) interest-rate-hedging products
involving a payment premium for which that Person has no future
liability.
"HOLDING COMPANIES" means US Holdings, UK Holdings, Trikon
Investments, and Trikon Lux.
"INVESTMENT," in respect of any Person, means any (a) loan,
advance, extension of credit, or capital contribution to that Person,
(b) investment in that Person, (c) purchase or commitment to purchase
any equity securities or Debt issued by that Person or substantially
all of the assets or a division or other business unit of that Person,
and (d) any Hedging Agreement binding upon that Person.
"LENDER LIEN" means any present or future Lien (subject only to
any applicable Permitted Lien) securing the US Obligation, the UK
Obligation, or both and assigned, conveyed, or granted to or created
in favor of either Agent for the benefit of any Lender or any
Affiliate of any Lender who is a Foreign-Exchange Party or Rate-
Protection Party.
"LENDER WARRANTS" is defined in SECTION 5.7.
"MAJORITY LENDERS" means, at any time, any combination of Lenders
holding (directly or indirectly) at least EITHER (a) before the
Termination Date, 51% of the SUM of the total US-Facility Commitments
PLUS the total UK-Facility Commitments, OR (b) on or after the
Termination Date, 51% of the SUM of the US-Facility-Commitment Usage
PLUS the UK-Facility-Commitment Usage.
"PMT/FSC" means PMT Foreign Sales Corporation and a wholly owned
Subsidiary of US Borrower.
"RATE-PROTECTION ARRANGEMENT" means any interest-rate swap, cap,
collar, or similar arrangement.
"RATE-PROTECTION EXPOSURE" means, for any Rate-Protection
Arrangement and at any time, the amount, if any, that would be payable
to the Rate-Protection Party in that Rate-Protection Arrangement for
any "agreement value" as though that Rate-Protection Arrangement were
terminated at that time, in each case (a) calculated as provided in
the International Swap Dealers Association Inc. Code of Standard
Wording, Assumptions, and Provisions for SWAPS and (b) determined by
Administrative Agent in good faith in reliance
5
<PAGE>
upon any information (including any information provided by the Rate-
Protection Party) that Administrative Agent believes (with no
obligation to verify accuracy) to be accurate.
"RATE-PROTECTION PARTY" means, at any time, any party that has
entered into a Rate-Protection Arrangement with any Company.
"RESTRUCTURE NOTES" means the promissory notes created as part of
the Restructure Phase I and the Restructure Phase II.
"RESTRUCTURE PHASE I" means the restructure of the ownership of
UK Borrowers whereby (a) US Borrower transfers 1% of the outstanding
shares of capital stock of each UK Borrower to US Holdings in exchange
for all of the issued and outstanding capital stock of US Holdings,
(b) US Holdings transfers that 1% ownership in each UK Borrower to UK
Holdings in exchange for (i) 1% of the outstanding shares of capital
stock of UK Holdings and (ii) UK Holdings' promissory note payable to
US Holdings in the stated amount of $843,200, and (c) US Borrower
transfers the remaining 99% of the outstanding shares of capital stock
of each UK Borrower to UK Holdings in exchange for (i) 99% of the
outstanding shares of capital stock of UK Holdings and (ii) UK
Holdings' promissory note payable to US Borrower in the stated
principal amount of $83,456,800.
"RESTRUCTURE PHASE II" means the restructure of the ownership of
the Restructure Notes payable to US Borrower and US Holdings as part
of the Restructure Phase I whereby (a) US Holdings as general partner
and US Borrower as limited partner form Trikon Investments and
contribute to Trikon Investments both of those Restructure Notes, (b)
Trikon Investments enters into an asset purchase agreement with Trikon
Lux under which it transfers those Restructure Notes to Trikon Lux in
exchange for (i) all of the outstanding equity of Trikon Lux, (ii)
Trikon Lux's promissory note payable to Trikon Investments promissory
note approximately in the stated principal amount of
(Pounds)26,397,388 (or the Dollar Equivalent of that amount) with a
ten-year maturity and 7.4% interest rate, and (iii) Trikon Lux's
promissory note payable to Trikon Investments promissory note
approximately in the stated principal amount of (Pounds)26,397,388 (or
the Dollar Equivalent of that amount) with a five-year maturity and
7.2% interest rate, and (c) Trikon Lux and UK Holdings enter into a a
modification of the Restructure Notes created as part of the
Restructure Phase I whereby those Restructure Notes are combined into
a single promissory note approximately in the stated principal amount
of (Pounds)53,101,693 (or the Dollar Equivalent of that amount).
"SERIES G ISSUE" means the issuance of US Borrower's Series G
Preferred Stock, no par value, under the Stock Purchase Agreement
entered into in June 1997, between US Borrower and certain investors.
"SUBORDINATED DEBT," at any time, means (a) the Subordinated
Notes, and (b) Debt SO LONG AS that Debt (i) is subject to
subordination, payment blockage, and standstill provisions at least as
favorable to Lenders as applicable to the Subordinated Notes, (ii) is
subject to representations, covenants, events of default, and other
provisions
6
<PAGE>
not significantly more onerous to US Borrower than the Subordinated
Notes, (iii) does not have any scheduled or mandatory principal or
sinking fund payment due before December 31, 1999, and (iv) is upon
terms and conditions otherwise reasonably acceptable to Required
Lenders.
"TRIKON INVESTMENTS" means Trikon (U.K.) Investments, L.P., a
limited partnership formed under the laws of England.
"TRIKON JAPAN" means Trikon Technologies KK, a corporation formed
under the laws of Japan and a wholly owned Subsidiary of US Borrower.
"TRIKON KOREA" means Plasma & Materials Technologies (Korea) Co.,
Ltd., a corporation formed under the laws of South Korea and a
Subsidiary of US Borrower.
"TRIKON LUX" means Trikon (Lux) Investments, SARL, a limited
liability company formed under the laws of Luxembourg.
"UK HOLDINGS" means Trikon Holdings Limited, a corporation
organized under the laws of England.
"UK OBLIGATION" means all present and future (a) Debts,
liabilities, and obligations of any Company to either Agent, any
Lender under the UK Facility, Overdraft Lender, or the Issuer under
the BG/LC Subfacility and related to the UK Facility and any Loan
Document, whether principal, interest, fees, costs, attorneys' fees,
or otherwise, (b) Debts, liabilities, or obligations owed by any
Foreign Company to any Lender or any Affiliate of any Lender who, in
either case, is also a Foreign-Exchange Party or a Rate-Protection
Party, in each case under any Foreign-Exchange Arrangement or Rate-
Protection Arrangement, and (c) renewals, extensions, and
modifications of any of the foregoing.
"US HOLDINGS" means PMT U.S. Holdings, Inc., a California
corporation and wholly owned Subsidiary of US Borrower.
"US OBLIGATION" means all present and future (a) Debts,
liabilities, and obligations of any Domestic Company to Administrative
Agent, any Lender, the Issuer under the LC Subfacility, or Arranger
and related to the US Facility and any Loan Document, whether
principal, interest, fees, costs, attorneys' fees, or otherwise, (b)
Debts, liabilities, or obligations owed by any Company to any Lender
or any Affiliate of any Lender who, in either case, is also a Foreign-
Exchange Party or a Rate-Protection Party, in each case under any
Foreign-Exchange Arrangement or Rate-Protection Arrangement, and (c)
renewals, extensions, and modifications of any of the foregoing.
7
<PAGE>
(C) The last sentence of SECTION 4.11(b) is entirely amended as follows:
Notwithstanding the foregoing (A) payments between counterparties
pursuant to the terms of any Hedging Agreement between any Company
and any Lender or Affiliate of any Lender shall be applied first in
accordance with that agreement, (B) payments between counterparties
pursuant to the terms of multiple Hedging Agreement between any
Company and any Lender or Affiliate of any Lender shall be netted
against each other in accordance with those agreements, (C) upon any
Event of Default, Overdraft Lender (1) is entitled and instructed to
first set off against any of the Overdraft Balances all amounts
outstanding under the Overdraft Subfacility (including without
limitation, the Overdraft Differential) before the foregoing
provisions become applicable, (2) is entitled to retain for its own
account the amount of that set off up to but not in excess of the
Overdraft Differential, and (3) shall otherwise share that set off
with Lenders under SECTION 4.12(b).
(D) A new SECTION 5.7 is added to read as follows:
5.7 FIRST AMENDMENT FEE. In consideration for Lenders'
-------------------
execution of, and as a condition precedent to the effectiveness of,
the First Amendment, US Borrower shall issue to Lenders warrants (the
"LENDER WARRANTS"), substantially in the form of EXHIBIT G. The
Lender Warrants shall be for the purchase of 116,667 shares of US
Borrower's Common Stock. The exercise price in the Lender Warrants
shall be $6.75 per share. The Lender Warrants shall be issued ratably
to each Lender based upon its Commitment Percentage in respect of the
combined US Facility and UK Facility with the number of shares for
each Lender rounded upward to the nearest number of full shares.
(E) SECTION 6.1 is amended by adding the following clause at the end of the
last sentence in it:
OTHER THAN (for so long as the representations in SECTION 8.22 remain
true and correct in respect of each of them, respectively) PMT/FSC,
Trikon Japan, Trikon Korea, Trikon Investments, Trikon Lux,
Electrotech Gmbh, and Electrotech SARL.
(F) SECTION 6.3(a) is amended by adding the following parenthetical clause
at the end of it:
OTHER THAN (for so long as the representations in SECTION 8.22 remain
true and correct in respect of each of them, respectively) PMT/FSC,
Trikon Japan, Trikon Korea, Trikon Investments, Trikon Lux,
Electrotech Gmbh, and Electrotech SARL.
(G) A new SECTION 6.6 is added as follows:
6.6 RESTRUCTURE NOTES. Notwithstanding any contrary provision
-----------------
in this SECTION 6 or otherwise, Borrowers shall cause all Restructure
Notes now or in the future executed and delivered by any Company to be
pledged (a) if held by a Domestic Company, to
8
<PAGE>
Administrative Agent to secure the US Obligation and the UK
Obligation, and (b) if held by a Foreign Company, to UK Collateral
Agent to secure the UK Obligation.
(H) A new SECTION 8.22 is added as follows:
8.22 CERTAIN COMPANIES' OPERATIONS AND ASSETS.
----------------------------------------
(a) PMT/FSC, Trikon Japan, and Trikon Korea conduct foreign
sales operations for US Borrower, generate accounts receivable in
US Borrower's name, conduct no other operations, and have as
their sole respective assets their corporate names and furniture,
fixtures, inventory, and miscellaneous other assets having a
total fair-market value of less than $__________ each.
(b) Electrotech Gmbh and Electrotech SARL conduct foreign
sales operations for UK Borrowers, generate accounts receivable
in a UK Borrower's name, conduct no other operations, and have as
their sole respective assets their corporate names and furniture,
fixtures, inventory, and other miscellaneous assets having a
total fair-market value of less than $__________ each.
(c) Trikon Investments and Trikon Lux, when formed, will
conduct no operations (OTHER THAN those contemplated pursuant to
Restructure Phase II) and will have as their sole respective
assets their own names and (i) in the case of Trikon Investments,
its ownership of Trikon Lux, and (ii) in the case of Trikon Lux,
its ownership of the Restructure Notes delivered as part of the
Restructure Phase II.
(d) Neither US Holdings nor ETS owns any patents,
trademarks, copyrights, or trade names.
(I) SECTION 9.1(b) is entirely amended as follows:
(b) QUARTERLY FINANCIALS. Promptly after preparation but no
--------------------
later than 30 days after the last day of each of the first three
fiscal quarters of the Companies each year, Financials showing the
Companies' consolidated and consolidating financial condition and
results of operations for that fiscal quarter and for the period from
the beginning of the current fiscal year to the last day of that
fiscal quarter, accompanied by a Compliance Certificate.
(J) SECTION 9.1(c) is entirely amended as follows:
(c) BORROWING-BASE REPORTS. Borrowing-Base Reports for the US
----------------------
Facility and for the UK Facility (i) as required on SCHEDULE 7.1 and
7.2 and (ii) otherwise, promptly after preparation but no later than
30 days after the last day of each calendar month with respect to the
Borrowing Bases as of that last day.
9
<PAGE>
(K) New SECTIONS 9.1(j), (k), and (l) are added as follows:
(j) MONTHLY REPORTS. Promptly after preparation but no later
---------------
than 30 days after the last day of each calendar month (i) a summary
form, reasonably acceptable to Administrative Agent, of the Companies'
accounts-receivable aging and (ii) a report of revenues of the
Companies for that calendar month on a business-segment basis.
(k) POST-AMENDMENT INFORMATION. By no later than July 31, each
--------------------------
document and other item listed in PARTS B and D on ANNEX A attached to
the First Amendment.
(l) RESTRUCTURE INFORMATION. Within ten days after the formation
-----------------------
of Trikon Investments and Trikon Lux and the completion of the
Restructure Phase II, each document and other item listed in PART C on
ANNEX A to the First Amendment.
(L) A new SECTION 9.13 is added as follows:
9.13 RATE-PROTECTION ARRANGEMENTS. Promptly upon the reasonable
----------------------------
request of:
(a) Majority Lenders (i) US Borrower shall enter into such
Rate-Protection Arrangements with respect to the US Obligation or
any other Debt it may have as Majority Lenders require in order
to convert floating-rate obligations to fixed-rate obligations,
and (ii) UK Borrowers shall each enter into such Rate-Protection
Arrangements with respect to the UK Obligation or any other Debt
it may have as Majority Lenders require in order to convert
floating-rate obligations to fixed-rate obligations.
(b) Lenders (i) US Borrower shall enter into such Rate-
Protection Arrangements with respect to the US Obligation or any
other Debt it may have as Lenders require in order to convert
fixed-rate obligations to floating-rate obligations, and (ii) UK
Borrowers shall each enter into such Rate-Protection Arrangements
with respect to the UK Obligation or any other Debt it may have
as Lenders require in order to convert fixed-rate obligations to
floating-rate obligations.
(M) SECTION 10.2(f) is entirely amended as follows:
(f) Hedging Agreements (to the extent the same constitute
Permitted Investments); trade payables, accrued taxes, and other
liabilities that do not constitute Funded Debt; and endorsements of
negotiable instruments in the ordinary course of business.
10
<PAGE>
(N) SECTION 10.3(d) is entirely deleted and SECTION 10.3(e) is amended as
follows:
and (d) prepayment of Subordinated Debt with the proceeds of common
stock issued by US Borrower (OTHER THAN any of the proceeds of the CVD
Transaction or the Series G Issue whether received before or after the
date of the First Amendment).
(O) SECTION 10.4(b) is entirely amended as follows:
(b) the applicable representations, covenants, events of default, and
other provisions are significantly more onerous to the obligor than exists for
the Subordinated Notes on the date of this agreement,
(P) A new SECTION 10.16 is entirely added as follows:
10.16 HOLDING COMPANIES. Notwithstanding any contrary provision
-----------------
in this SECTION 10, no Holding Company may (a) have any assets, OTHER
THAN, (i) the capital stock of their respective direct Subsidiaries as
reflected on SCHEDULE 8.3, (ii) their corporate names and franchises,
(iii) Restructure Notes they may now or in the future hold in
connection with the Restructure Phase I or the Restructure Phase II),
and (iv) deposit accounts into which payments on the Restructure Notes
may be deposited and withdrawn, (b) have any separate employees or
operations, (c) have any Debt, OTHER THAN its obligations in respect
of (i) the UK Obligation or the US Obligation, as the case may be, and
(ii) the Restructure Notes, (d) make any expenditures for the
acquisition, construction, improvement, or replacement of land,
buildings, equipment, or other fixed or capital assets or leaseholds,
(e) make any Investment, OTHER THAN (i) ownership of its respective
Subsidiaries as reflected on SCHEDULE 8.3, (ii) ownership of the
Restructure Notes, as applicable, and (iii) Investments in UK
Borrowers of the proceeds of the Restructure Notes directly or through
UK Holdings,(f) be party to or bound by any Employee Plans, or (g)
enter into any transactions with any of its Affiliates OTHER THAN the
transactions contemplated as part of the Restructure Phase I or the
Restructure Phase II.
(Q) A new SECTION 11.4 is entirely added as follows:
11.4 DOMESTIC HOLDING COMPANY. Notwithstanding any contrary
------------------------
provision in this SECTION 11, US Holdings may not (a) sell, assign,
lease, transfer, or otherwise dispose of any of its assets OTHER THAN
as contemplated as part of the Restructure Phase I or the Restructure
Phase II, (b) create, incur, or suffer or permit to be created or
incurred or to exist any Lien except Lender Liens upon any of its
assets, or (c) merge or consolidate with any other Person or dissolve.
(R) A new SECTION 12.4 is entirely added as follows:
12.4 FOREIGN HOLDING COMPANIES. Notwithstanding any contrary
-------------------------
provision in this SECTION 12, none of UK Holdings, Trikon Investments,
and Trikon Lux, may (a) sell,
11
<PAGE>
assign, lease, transfer, or otherwise dispose of any of its assets
OTHER THAN as contemplated as part of the Restructure Phase I or the
Restructure Phase II, (b) create, incur, or suffer or permit to be
created or incurred or to exist any Lien except Lender Liens upon any
of its assets, or (c) merge or consolidate with any other Person or
dissolve.
(S) SECTION 13.1 is entirely amended as follows:
13.1 TANGIBLE-NET WORTH. The Companies' Tangible-Net Worth ever
------------------
to be less than:
(a) On June 30, 1997, and September 30, 1997, a negative
$14,500,000; and
(b) On December 31, 1997, and on the last day of each
subsequent quarter, the SUM of (i) a negative $14,500,000, PLUS
(only to reduce and not further increase the previous negative
number) (ii) 75% of the Companies' cumulative net income (without
deduction for losses) after September 30, 1996, PLUS (only to
reduce and not further increase the previous negative number),
and (iii) 75% of the net (I.E., gross less usual and customary
underwriting, placement, and other related costs and expenses)
proceeds of the issuance of any equity securities (OTHER THAN in
connection with the CVD Transaction and the Series G Issue) by US
Borrower after the date of the First Amendment.
(T) SECTION 13.2 is entirely amended as follows:
13.2 QUICK RATIO. The RATIO of (a) the sum of the Companies'
-----------
cash and accounts receivable TO (b) the Companies' current liabilities
(inclusive of all Principal Debt, LC Exposure, BG/LC Exposure, and
Overdraft Exposure, regardless of maturity) ever to be LESS THAN 0.90
to 1.00 on June 30, 1997, and on the last day of each subsequent
quarter.
(U) SECTION 13.3 is entirely amended as follows:
13.3 EBITDA. The Companies' EBITDA to ever be less than the
------
amount for the corresponding period described in the table below:
<TABLE>
<CAPTION>
============================================================
PERIOD EBITDA
============================================================
<S> <C>
Quarter ended 6/30/97 -$1,500,000
------------------------------------------------------------
Quarter ended 9/30/97 $ 1.00
------------------------------------------------------------
Three Quarters ended 12/31/97 $ 1.00
------------------------------------------------------------
Four Quarters ended 3/31/98 $ 21,000,000
------------------------------------------------------------
Four Quarters ended 6/30/98 $ 30,000,000
------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
============================================================
PERIOD EBITDA
============================================================
<S> <C>
Four Quarters ended 9/30/98 $ 37,000,000
------------------------------------------------------------
Four Quarters ended 12/31/98 $ 38,000,000
------------------------------------------------------------
Four Quarters ended 3/31/99 and thereafter $ 40,000,000
============================================================
</TABLE>
(V) SECTION 13.4 is entirely amended as follows:
13.4 SENIOR DEBT/EBITDA. The RATIO of the Companies' Senior
------------------
Debt as of the last day of each fiscal quarter TO the Companies'
EBITDA to ever exceed the ratio for the corresponding period described
in the table below:
<TABLE>
<CAPTION>
=============================================================
PERIOD EBITDA
=============================================================
<S> <C>
Four Quarters ended 3/31/98 1.75 to 1.00
-------------------------------------------------------------
Four Quarters ended 6/30/98 1.20 to 1.00
-------------------------------------------------------------
Four Quarters ended 9/30/98 and thereafter 1.00 to 1.00
=============================================================
</TABLE>
(W) SECTION 13.5 is entirely amended as follows:
13.5 INTEREST COVERAGE. The ratio of the Companies' EBITDA to
-----------------
the Companies' Interest Expense ever to be less than the ratio for
the corresponding period described in the table below:
<TABLE>
<CAPTION>
=============================================================
PERIOD EBITDA
=============================================================
<S> <C>
Four Quarters ended 3/31/98 2.50 to 1.00
-------------------------------------------------------------
Four Quarters ended 6/30/98 3.25 to 1.00
-------------------------------------------------------------
Four Quarters ended 9/30/98 and thereafter 3.50 to 1.00
=============================================================
</TABLE>
(X) A new SECTION 14.11 is entirely added as follows:
14.11 OTHER AGREEMENTS. The occurrence of a default or an event
----------------
of default under (after expiration of all notices and grace periods
required by) any Foreign-Exchange Agreement or any Rate-Protection
Agreement between any one or more Companies and any Lender or
Affiliate of any Lender.
(Y) SCHEDULE 8.3 and EXHIBITS D-7 and D-9 are entirely amended in the form
of, and all references in the Credit Agreement to SCHEDULE 8.3 and EXHIBITS D-7
and D-9 are changed to, the attached AMENDED SCHEDULE 8.3 and AMENDED EXHIBITS
D-7, D-8, and D-9, respectively.
13
<PAGE>
(Z) A new EXHIBIT G is added in the form of the attached EXHIBIT G.
3. AMENDMENTS TO LOAN DOCUMENTS. Each Loan Document is hereby amended where
----------------------------
necessary to (A) amend all references to Plasma & Materials Technologies, Inc.,
to be references to Trikon Technologies, Inc., (B) amend all references to
Electrotech Limited to be references to Trikon Technologies Limited, (C) amend
all references to Electrotech Equipments Limited to be references to Trikon
Equipments Limited, and (D) change all references to the laws of the State of
Texas (other than in any guaranties) as the governing law to be references to
the laws of the State of California.
4. WAIVER. Upon Borrowers' previous request, Lenders waive any Potential
------
Default or Event of Default that may exist solely as a result of (A) errors in
the Borrowing-Base Reports (UK Facility) delivered for the months ending
December 31, 1996, and March 31, 1997, (B) US Borrower's failure to give
Administrative Agent 30-days written notice of the Name Changes in violation of
PARAGRAPH 7(a)(ii) of the Security Agreement, (C) the Rate-Protection
Arrangements described in PARAGRAPH 2(A)(5) above, or (D) any of the events
described in PARAGRAPH 5 of this document to the extent that those events have
occurred prior to the effective date of this document. Except as expressly
stated, this paragraph is not a waiver of existing or future Potential Defaults
or Events of Default or a waiver of Lenders' rights to insist upon compliance by
all other relevant parties with each Loan Document.
5. CONSENTS. Upon Borrowers' previous request, Lenders consent to the
--------
following:
(A) The transfers of capital stock and Restructure Notes as part of the
Restructure Phase I and the Restructure Phase II, which transfer would, without
the consent of Required Lenders, violate SECTIONS 11.1 and 12.1.
(B) The issuance of the Korean Stock to Mr. Tae Soo Kim in connection with
the possible future Issuance and Repurchase, which issuance would, without the
consent of Required Lenders, violate SECTION 11.1.
(C) US Borrower's possible future repurchase of the Korean Stock in
connection with the Issuance and Repurchase, which repurchase would, without the
consent of Required Lenders, violate SECTION 10.6.
This paragraph is not a consent to any transactions, events, or circumstances
other than those expressly stated above and does not affect Lenders' rights to
insist upon compliance with the applicable provisions of the Loan Documents.
6. CONDITIONS PRECEDENT. Notwithstanding any contrary provision, the foregoing
--------------------
paragraphs in this document are not effective unless and until (A) the
representations and warranties in this document are true and correct, (B) US
Borrower has received since June 1, 1997, at least $15,000,000 of cash from any
combination of the Series G Issue and the CVD Transaction (including, for
purposes of this condition, the cash and cash equivalents received from PMT CVD
Partners, L.P.), and furnished Administrative Agent evidence of that receipt and
issuance that is acceptable to Administrative Agent, and (C) Administrative
Agent receives (1) counterparts of this document executed by each party on the
signature
14
<PAGE>
page or pages of this document, and (2) each document and other item listed in
PART A on the attached ANNEX A, each of which must be in form, substance, and
number of counterparts as may be acceptable to Agents and their respective
counsel.
7. RATIFICATIONS. Each Borrower (A) ratifies and confirms all provisions of
-------------
the Loan Documents applicable to that Borrower, (B) ratifies and confirms that
all guaranties, assurances, and Liens granted, conveyed, or assigned to
Administrative Agent or UK-Collateral Agent under the Loan Documents by that
Borrower are not released, reduced, or otherwise adversely affected by this
agreement and continue to guarantee, assure, and secure full payment and
performance of the present and future US Obligation or UK Obligation, as
applicable, and (C) agrees to perform such acts and duly authorize, execute,
acknowledge, deliver, file, and record such additional documents and
certificates as Administrative Agent or UK-Collateral Agent may request in order
to create, perfect, preserve, and protect those guaranties, assurances, and
Liens.
8. REPRESENTATIONS. Each Borrower represents and warrants to Administrative
---------------
Agent, UK-Collateral Agent, and Lenders that as of the date of this document (A)
each Company named on the signature pages of this document has all requisite
authority and power to execute, deliver, and perform its obligations under this
document, which execution, delivery, and performance have been duly authorized
by all necessary corporate action, require no action by or filing with any
Governmental Authority, do not violate any of its Organizational Documents or
(except where not a Material-Adverse Event) violate any Governmental Requirement
applicable to it or any material agreement to which it or its assets are bound,
(B) upon execution and delivery by all parties to it, this document will
constitute the legal and binding obligation of each Company named on the
signature pages of this document, enforceable against it in accordance with this
document's terms except as that enforceability may be limited by Debtor Laws and
general principles of equity, (C) all representations and warranties made by
that Borrower in the Loan Documents are true and correct in all material
respects except to the extent that (1) any of them speak to a different specific
date or (2) the facts on which any of them were based have been changed by
transactions contemplated or permitted by the Credit Agreement, and (D) except
as waived (temporarily or otherwise) by this agreement, no Material-Adverse
Event, Event of Default, or Potential Default exists.
9. EXPENSES. Borrowers shall pay all costs, fees, and expenses paid or
--------
incurred by Administrative Agent and UK-Collateral Agent incident to this
document, including, without limitation, the reasonable fees and expenses of
Administrative Agent's and UK-Collateral Agent's respective counsel in
connection with the negotiation, preparation, delivery, and execution of this
document and any related documents.
10. MISCELLANEOUS. This document is a "Loan Document" referred to in the
-------------
Credit Agreement, and the provisions relating to Loan Documents in SECTIONS 1
and 17 of the Credit Agreement are incorporated in this document by reference.
Unless stated otherwise (A) the singular number includes the plural and vice
versa and words of any gender include each other gender, in each case, as
appropriate, (B) headings and captions may not be construed in interpreting
provisions, (C) this document must be construed, and its performance enforced,
under California law, (D) if any part of this document is for any reason found
to be unenforceable, all other portions of it nevertheless remain enforceable,
and (e) this document may be executed in any number of counterparts with the
same effect as if all signatories had signed the same document, and all of those
counterparts must be construed together to constitute the same document.
15
<PAGE>
11. ENTIRETIES. THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
----------
PARTIES ABOUT THE SUBJECT MATTER OF THIS DOCUMENT AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
12. PARTIES. This document binds and inures to US Borrower, UK Borrowers,
-------
Administrative Agent, UK-Collateral Agent, Lenders, and their respective
successors and assigns.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGE FOLLOWS.
16
<PAGE>
EXECUTED as of the date first stated above.
TRIKON TECHNOLOGIES, INC., NATIONSBANK OF TEXAS, N.A.,
formerly known as Plasma & Materials as Administrative Agent and a
Technologies, Inc., as US Borrower Lender
By By
----------------------------------- ----------------------------------
Gregor A. Campbell, Chief Executive Stan W. Reynolds, Vice President
Officer
TRIKON TECHNOLOGIES LIMITED, LLOYDS BANK PLC, as UK-Collateral
formerly known as Electrotech Limited, Agent and a Lender
as a UK Borrower
By By
----------------------------------- ----------------------------------
Name: Peter J. Cannon, Director
------------------------------
Title:
-----------------------------
TRIKON EQUIPMENTS LIMITED, formerly SILICON VALLEY BANK, as a Lender
known as Electrotech Equipments Limited,
as a UK Borrower
By By
----------------------------------- ----------------------------------
Name: Doug Rosenthal, Senior Vice
------------------------------ President
Title:
-----------------------------
First Amendment Signature Page
One of Two Pages
<PAGE>
To induce Administrative Agent, UK-Collateral Agent, and Lenders to enter into
this document, the undersigned consent and agree (a) to its execution and
delivery, (b) that this document in no way releases, diminishes, impairs,
reduces, or otherwise adversely affects any Liens, charges, guaranties,
assurances, or other obligations or undertakings of any of the undersigned under
any Loan Documents, and (c) waive notice of acceptance of this consent and
agreement, which consent and agreement binds each of the undersigned and their
respective successors and permitted assigns and inures to Administrative Agent,
UK-Collateral Agent, Lenders, and their respective successors and permitted
assigns.
E.T. EQUIPMENTS LIMITED ELECTROTECH (ASIA) LIMITED
By By
---------------------------- ----------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
---------------------- ----------------------
E.T. FABRICATIONS LIMITED VACUUM CONTROL SYSTEMS LIMITED
By By
---------------------------- ----------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
---------------------- ----------------------
E.T. ELECTROTECH RESEARCH ELECTROTECH INTERNATIONAL
LIMITED LIMITED
By By
---------------------------- ----------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
---------------------- ----------------------
First Amendment Signature Page
One of Two Pages
<PAGE>
EXHIBIT 10.26
PARTNERSHIP INTEREST AND SHARE PURCHASE AGREEMENT
THIS PARTNERSHIP INTEREST AND SHARE PURCHASE AGREEMENT (this
"Agreement") is entered into as of June 20, 1997 by and among Trikon
Technologies, Inc., a California corporation (the "Company"), SBIC Partners,
L.P., a Texas limited partnership, Norwest Equity Partners, V, a Minnesota
Limited Liability Partnership, and R&M Partners/CVD, G.P., a California general
partnership (collectively, the "Sellers").
R E C I T A L S:
- - - - - - - -
A. CVD, Inc., a California corporation, as general partner (the "General
Partner"), and the Company and each of the Sellers, as limited partners,
constitute all of the partners of PMT CVD Partners, L.P., a California limited
partnership (the "Partnership").
B. In connection with the formation of the Partnership, the Partnership
entered into an R&D Agreement with the Company (the "R&D Agreement") pursuant to
which the Partnership engaged the Company to use commercially reasonable best
efforts to develop and refine CVD technology for commercial use in connection
with the production of integrated circuits (the "Project"). The Company desires
to terminate the Project and, in connection therewith, has proposed to acquire
all interests in the Partnership and the General Partner from the Sellers, on
the terms and subject to the conditions set forth below.
C. The Sellers have agreed to such proposal of the Company to acquire all
interests of the Sellers in the Partnership and the General Partner.
D. The parties hereto wish to implement such purchase and sale pursuant
to the terms and conditions set forth in this Agreement.
A G R E E M E N T:
- - - - - - - - -
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF THE INTERESTS
1.1 Purchase and Sale of the Interests. Upon the terms and subject to the
----------------------------------
conditions contained herein and in reliance on the representations and
warranties set forth below, at the Closing (as defined below), the Company
agrees to purchase from each Seller and each Seller agrees to sell to the
Company, the following limited partnership interests in
<PAGE>
the Partnership and shares of common stock of the General Partner (collectively,
the "Interests") held thereby:
<TABLE>
<CAPTION>
Limited Shares of
Partnership General Partner
Seller Interests Common Stock
- ------ ------------ ---------------
<S> <C> <C>
SBIC Partners, L.P. 37.44% 378
Norwest Equity Partners, V 37.44% 378
R&M Partners/CVD, G.P. 4.64% 47
</TABLE>
1.2 Purchase Price. The aggregate purchase price to be paid by the
--------------
Company to the Sellers for the Interests shall be 679,680 shares (the "Shares")
of newly-issued common stock, no par value, of the Company ("Common Stock"), to
be issued to the Sellers in the following respective amounts set forth opposite
the Sellers' names:
<TABLE>
<CAPTION>
Number of
Seller Shares
- ------ ---------
<S> <C>
SBIC Partners, L.P. 320,000
Norwest Equity Partners, V 320,000
R&M Partners/CVD, G.P. 39,680
</TABLE>
1.3 Closing. Following satisfaction of the conditions set forth in
-------
Article 4, the closing of the sale of the Interests (the "Closing") shall occur
at the offices of the Company at 10:00 a.m. Pacific Standard Time on the fifth
business day following the date of this Agreement or at such other place or on
such other date as the parties hereto may designate (the "Closing Date"). At
the Closing, each Seller shall deliver all certificate(s) and other
instrument(s), if any, representing the Interests held by such Seller (duly
endorsed in blank) in exchange for the delivery by the Company to such Seller of
a certificate or certificates registered to such Seller, representing the number
of shares of Common Stock set forth opposite such Seller's name in Section 1.2
hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to each Seller that, except
as set forth in Schedule 2 attached hereto:
2.1 Organization. The Company is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of California.
2
<PAGE>
2.2 Authorization and Enforceability. This Agreement has been duly
--------------------------------
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
2.3 Shares Validly Issued. On issuance pursuant to the terms hereof, the
---------------------
Shares will be duly authorized and validly issued, fully paid and nonassessable,
free of any preemptive or other similar rights to subscribe for or to purchase
any shares of capital stock of the Company.
2.4 Company SEC Filings. The Company has furnished, or made available
-------------------
through the EDGAR internet web site of the Securities and Exchange Commission
(the "Commission"), to the Sellers true and complete copies of its Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 and its quarterly
report on Form 10-Q for the quarter ended March 31, 1997, in each case as filed
with the Commission (such documents are hereinafter collectively referred to as
the "SEC Filings"). As of their respective filing dates, the SEC Filings
complied in all material respects with the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and none of
the SEC Filings contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
2.5 Full Disclosure. The Company has not knowingly withheld from the
---------------
Sellers any material facts relating to the assets, business, operations,
financial condition or prospects of the Company. No representation or warranty
in this Agreement or in any written certificate, schedule, statement or other
document prepared by or on behalf of the Company and furnished by the Company to
any Seller pursuant hereto and none of the SEC Filings as of the date furnished
to the Seller or filed under the Exchange Act, as the case may be, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated herein or therein necessary to make the statements herein
or therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller, severally and not jointly, represents and warrants to the
Company on its own behalf as follows:
3.1 Investment Intent. Such Seller is acquiring its portion of the Shares
-----------------
for investment purposes only, for its own account, and not as nominee or agent
for any other
3
<PAGE>
person, firm or corporation and not for resale in connection with any
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended (the "Securities Act").
3.2 Unregistered Securities. Such Seller understands that the Shares have
-----------------------
not been registered under the Securities Act, and that, accordingly, such
securities will not be transferable except pursuant to an exemption from the
registration and prospectus delivery requirement of the Securities Act or upon
satisfaction of such requirement. Such Seller further acknowledges and agrees
that the certificates evidencing such Shares and each certificate issued in
exchange thereof shall bear substantially the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER EITHER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR APPLICABLE BLUE SKY LAWS, AND ARE SUBJECT TO CERTAIN
INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY NOT BE
SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER THE ACT, AND SUCH APPLICABLE
BLUE SKY LAWS, OR AN EXEMPTION THEREFROM."
3.3 Sophistication and Knowledge. Such Seller represents to the Company
----------------------------
that it is an "accredited investor" (as such term is defined in Rule 501 of
Regulation D under the Securities Act) and that, by reason of its business and
financial experience, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of an investment in the Shares and is able to bear the economic risk of
such investment. Such Seller acknowledges that it has been given the reasonable
opportunity to ask questions and receive answers from the Company concerning the
terms and conditions of the transactions contemplated hereby and the accuracy of
the information contained in any document provided to such Seller by the
Company.
3.4 Authorization and Enforceability. This Agreement has been duly
--------------------------------
executed and delivered by such Seller and constitutes a legal, valid and binding
obligation thereof, enforceable against it in accordance with its terms, except
to the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
3.5 Brokers. Such Seller has not paid or become obligated to pay, nor has
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such Seller obligated the Company to pay, any fee or commission to any broker,
finder, investment banker or other intermediary in connection with the
transactions contemplated by this Agreement.
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3.6 Title to Interests. Such Seller has good and marketable title to the
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Interests set forth opposite such Seller's name in Section 1.1 hereof and has no
other interest of any nature whatsoever in either the Partnership or the General
Partner. Except with respect to (i) the Share Subscription and Shareholders
Agreement dated as of March 29, 1996 among the General Partner and the persons
listed on the signature page thereto (the "Subscription Agreement"), (ii) the
Agreement of Limited Partnership of PMT CVD Partners, L.P. dated as of March 29,
1996 by and among the General Partner and the parties executing the signature
page thereto (the "Partnership Agreement"), and (iii) the Option Agreement dated
as of March 29, 1996 by and among the Company, the Partnership and the parties
executing the signature page thereto (the "Option Agreement"), all of the
Interests held by such Seller are, and on the Closing Date will be, free and
clear of all liens, claims, security interests, pledges, encumbrances, rights of
first refusal, options or other preemptive rights of any kind (collectively,
"Encumbrances"). Each of the parties hereto hereby waives any and all
provisions of the Subscription Agreement, the Partnership Agreement, the Option
Agreement and any other applicable document or instrument to the extent
requisite to consent to and permit the transactions contemplated by this
Agreement. On the Closing, upon delivery of and payment for the Interests held
by such Seller under this Agreement, the Company will acquire good and
marketable title to such Interests, free and clear of any and all Encumbrances,
and the Sellers will no longer be subject to the restrictions or obligations
contained in the Subscription Agreement, the Partnership Agreement, and the
Option Agreement.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Conditions to Each Party's Obligations. The respective obligations of
--------------------------------------
each party to effect the transactions contemplated by this Agreement shall be
subject to the conditions that no federal or state governmental authority or
other agency or commission or federal or state 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.
4.2 Conditions to the Obligations of the Company. The obligation of the
--------------------------------------------
Company to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the additional
condition that the representations and warranties of the Sellers 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 in all material
respects as of such date.
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<PAGE>
4.3 Conditions to the Obligations of the Sellers. The obligations of the
--------------------------------------------
Sellers to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the additional
condition that the representations and warranties of the Company 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 in all material
respects as of such date.
ARTICLE 5
REGISTRATION RIGHTS
5.1 Required Registration.
---------------------
(a) The Company shall, promptly after the Closing Date, prepare and
file a registration statement under the Securities Act covering all of the
Shares to be issued hereunder at the Closing and use its best efforts to cause
such registration statement to become effective as soon as possible thereafter.
Such registration statement is herein referred to as the "First Registration."
Additionally, if at any time thereafter the Company shall receive a written
request from a holder or holders of at least 45% of the Shares not previously
registered under the Securities Act and sold (the "Registrable Shares"), the
Company shall prepare and file one further registration (the "Second
Registration") under the Securities Act covering the Registered Shares;
provided, however, that (i) the Company will not be obligated to effect more
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than two registrations (other than incidental registrations pursuant to Section
5.2 hereof, registrations on Form S-3 pursuant to Section 5.1(c), and not
including registration statements that are withdrawn) under this Section 5.1,
and (ii) the Company shall not be obligated, in respect of the Second
Registration, to file such registration statement if the anticipated aggregate
offering price, based upon the public offering price per share proposed by the
underwriters, net of underwriting discounts and commissions, would be less than
$1,500,000. In addition, upon the receipt of such request for the Second
Registration, the Company shall promptly give written notice to all other record
holders of the Registrable Shares that such registration is to be effected. The
Company shall include in the Second Registration such Registrable Shares for
which it has received written requests to register by such other record holders
within thirty (30) days after the Company's written notice to such other record
holders. The Company shall be obligated to prepare, file and cause to become
effective only two (2) registration statements pursuant to this Section 5.1(a),
consisting of the First Registration and the Second Registration; provided, that
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the Company shall not be required to cause the Second Registration to be
effective earlier than the date which is six (6) months from the date of
effectiveness of the First Registration.
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<PAGE>
(b) In the event that the holder or holders of a majority of the
Registrable Shares, for which registration is required pursuant to this Section
5.1, determine for any reason not to proceed with a registration at any time
before the registration statement has been declared effective by the Commission,
and such holders request the Company to withdraw such registration statement
with respect to the Registrable Shares covered thereby, and the holders of such
Registrable Shares agree to bear their own expenses incurred in connection
therewith and to reimburse the Company for the expenses incurred by it
attributable to the registration of such Registrable Shares, then the holders of
such Registrable Shares shall not be deemed to have exercised a demand right
pursuant to Section 5.1(a).
(c) In addition to the foregoing, after the date which is six months
after the Closing Date but no later than the date which is two years after the
Closing Date, the holder or holders of at least 45% of the Registrable Shares
may require the Company to file any number of registration statements on Form S-
3 (or any successor form subsequently promulgated by the Commission as a
replacement for Form S-3) if such form is then available for use by the Company;
provided, that the Company shall not be obligated to register securities under
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this Section 5.1(c) more frequently than twice during any period of twelve (12)
calendar months and the total amount of securities registered in each such
registration shall not be less than $500,000.
(d) The Company and any other holder of securities of the Company may
include securities in any registration pursuant to this Section 5.1; provided,
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that such additional securities may be excluded, in whole or in part, if in the
good faith judgement of any managing underwriter of such public offering (if the
offering is underwritten), the inclusion of such securities would interfere with
the successful marketing of the Registrable Shares.
(e) If the First Registration does not become effective on or prior to
September 1, 1997 (the "Default Date"), the Company agrees to pay directly to
the holders of the Shares, which payments shall be allocated pro rata among such
holders, a one time payment of $75,000, payable within fifteen (15) days of the
Default Date, and an amount equal to $2,500 per day for each day after the
Default Date that the First Registration is not effective, with such amount
payable within fifteen (15) days after the close of any calendar month during
which such amount accrues. The parties agree that the sole damages payable for
a violation of the terms of this Agreement with respect to the effectiveness of
such First Registration shall be the liquidated damages set forth in this
Section 5.1(e). Nothing shall preclude a holder of Shares, however, from
pursuing or obtaining specific performance or other equitable relief with
respect to any violation of this Agreement. The parties hereto agree that the
liquidated damages provided for in this Section 5.1(e) constitute a reasonable
estimate of the damages that may be incurred by holders of Shares by reason of
the failure of the First Registration to be declared effective no later than the
Default Date.
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5.2 Incidental Registration.
-----------------------
(a) Each time the Company shall determine to proceed with the actual
preparation and filing of a registration statement under the Securities Act in
connection with the proposed offer and sale for money of any of its securities
by it or any of its security holders (other than a Registration Statement on
Form S-4, S-8 or other limited purpose form, or any successor forms thereto
subsequently promulgated by the Commission as replacements for such forms), the
Company will give written notice of its determination to all record holders of
Registrable Shares. Upon the written request of a record holder of any
Registrable Shares given within thirty (30) days after receipt of any such
notice, the Company will, except as herein provided, cause all such Registrable
Shares, the record holders of which have so requested registration thereof, to
be included in such registration statement, all to the extent requisite to
permit the sale or other disposition by the holder or holders of the Registrable
Shares to be so registered; provided, however, that (i) nothing herein shall
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prevent the Company from, at any time, abandoning or delaying any such
registration initiated by it, and (ii) if the Company determines not to proceed
with a registration after the registration statement has been filed with the
Commission and the Company's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by the Company,
the Company shall promptly complete the registration for the benefit of those
selling security holders who wish to proceed with a public offering of their
securities; provided, further, that in such event, such registration shall be
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deemed a registration under Section 5.1(a) hereof, and provided further, that
the Company shall be required to proceed with such registration only if such
registration meets the criteria established for a registration upon demand as
set forth in Section 5.1(a) hereof.
(b) If any registration pursuant to Section 5.2(a) shall be
underwritten, in whole or in part, the Company may require that the Registrable
Shares requested for inclusion thereunder be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters. However, if in the good faith judgement of the managing
underwriter of such public offering the inclusion of all of the Registrable
Shares originally covered by a request for registration would reduce the number
of securities to be offered by the Company (or if the registration is the demand
registration of a selling shareholder, by such selling shareholder) or interfere
with the successful marketing of the securities offered by the Company (or if
the registration is the demand registration of a selling shareholder, by such
selling shareholder), the number of shares of Registrable Shares to be included
in the underwritten public offering may be reduced pro rata among the holders
thereof (but if the registration is the demand registration of a selling
shareholder, such demanding selling shareholder shall not be subject to such pro
rata reduction) requesting such registration (based on the respective numbers of
shares for which registration was requested).
8
<PAGE>
5.3 Registration Procedures. In connection with any registration
-----------------------
statement filed pursuant to Article 5 hereof (the "Registration Statement"), the
Company will:
(a) prepare and file with the Commission the Registration Statement
and use its best efforts to cause such Registration Statement to become and
remain effective for such period as may be reasonably necessary to effect the
sale of such securities, not to exceed six (6) months;
(b) prepare and file with the Commission such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for such period
referred to above;
(c) furnish to the holders of Registrable Shares participating in such
registration and to any underwriters of the securities being registered, such
reasonable number of copies of the Registration Statement, preliminary
prospectus, final prospectus and such other documents as such security holders
and underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the Registrable Shares
covered by such Registration Statement under such state securities or blue sky
laws of such jurisdictions as such participating holders may reasonably request
prior to the original filing of such Registration Statement, except that the
Company shall not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(e) notify the holders of Registrable Shares participating in such
registration, promptly after it shall receive notice thereof, of the time when
such Registration Statement has become effective or a supplement to any
prospectus forming a part of such Registration Statement has been filed;
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such Registration Statement or prospectus or
for additional information;
(g) prepare and file with the Commission, promptly upon the request of
any such holders, any amendment or supplement to such Registration Statement or
prospectus which, in the opinion of counsel for such holders (and concurred in
by counsel for the Company), is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of the
Registrable Shares by such holder;
(h) prepare and promptly file with the Commission and promptly notify
such holders of the filing of such amendment or supplement to such Registration
9
<PAGE>
Statement or prospectus as may be necessary to correct any statement or omission
if, at the time when a prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred as the result
of which any such prospectus or any other prospectus as then in effect would
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
in which they were made, not misleading;
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(j) not file any amendment or supplement to such Registration
Statement or prospectus to which a majority in interest of such holders shall
have reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities Act
or the rules and regulations thereunder, after having been furnished with a copy
thereof (in substantially final form) at least two (2) business days prior to
the filing thereof, unless in the opinion of counsel for the Company, the filing
of such amendment or supplement is reasonably necessary to protect the Company
from any liabilities under any applicable federal or state law and such filing
will not violate applicable law; and
(k) at the request of any such holder, furnish on the effective date
of the Registration Statement and, if such registration includes an underwritten
public offering, at the closing provided for in the underwriting agreement: (i)
opinions, dated such respective dates, of the counsel representing the Company
for the purposes of such registration, addressed to the underwriters, if any,
and to the holder or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request, in which opinion such
counsel shall state (without limiting the generality of the foregoing) that (a)
such Registration Statement has become effective under the Securities Act; (b)
to the best of such counsel's knowledge, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Securities Act; (c) the
Registration Statement and each amendment or supplement thereto comply as to
form in all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder (except that
such counsel need express no opinion as to financial statements and statistical
data contained therein); (d) to the best of the knowledge of such counsel, the
description in the Registration Statement or any amendment or supplement thereto
of legal and governmental proceedings and contracts are summarized accurately in
all material respects; and (e) such counsel does not know of any material legal
or governmental proceedings, pending or threatened, required to be described in
the Registration Statement or
10
<PAGE>
any amendment or supplement thereto which are not described as required, nor of
any contracts, documents or instruments of the character required to be
described in the Registration Statement or amendment or supplement thereto or to
be filed as Exhibits to the Registration Statement, which are not described or
filed as required, and, which opinion shall include the statement that, without
guaranteeing the accuracy and completeness of the statements contained in the
Registration Statements or any amendment or supplement thereto, and based upon
such records, certificates and other documents specifically cited in such
opinion, including certificates and representations by Company officers, no
facts have come to such counsel's attention which cause it to believe that the
Registration Statement or any amendment nor supplement thereto contains any
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
(except that such counsel need express no opinion as to financial statements and
statistical data contained therein); and (ii) letters, dated such respective
dates, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the holder or holders making such
request, covering such matters as such underwriters and holder or holders may
reasonably request, in which letters such accountants shall state (without
limiting the generality of the foregoing) that they are independent certified
public accountants within the meaning of the Securities Act and that in the
opinion of such accountants the financial statements and schedules of the
Company included in the Registration Statement or any amendment or supplement
thereto comply in all material respects with the applicable accounting
requirements of the Securities Act.
5.4 Expenses. The Company shall bear the following fees, costs and
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expenses in connection with any registration pursuant to this Agreement: all
registration, filing and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, the fees and disbursements of one
counsel for the selling security holders, all internal Company expenses, the
premiums and other costs of policies of insurance against liability arising out
of a public offering, and all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of any jurisdictions in which
the securities to be offered are to be registered or qualified. Underwriting
discounts and commissions and transfer taxes for selling security holders and
any other expenses incurred by the selling security holders not expressly
included above shall be borne by the selling security holders.
5.5 Registration Rights of Transferees. The registration rights granted
----------------------------------
to the holders of Registrable Shares pursuant to this Agreement shall also be
for the benefit of, and enforceable by, any subsequent holder of such securities
(excluding any subsequent holder who acquires such securities in a public sale,
such that such securities are no longer deemed "restricted securities" within
the meaning of Rule 144 under the Securities Act), whether or not any express
assignment of such rights to any such subsequent holder is made.
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<PAGE>
5.6 Exception to Registration Obligations. The Company shall not be
-------------------------------------
obligated to honor a demand to register any Registrable Shares under this
Agreement which are otherwise eligible for immediate sale by the holder thereof
under paragraph (k) of Rule 144.
ARTICLE 6
INDEMNIFICATION AND CONTRIBUTION
6.1 Indemnification and Contribution. In connection with any Registration
--------------------------------
Statement:
(a) The Company will indemnify and hold harmless each holder of
Registrable Shares that are included in the Registration Statement and any
underwriter (as defined in the Securities Act) for such holder and each person,
if any, who controls such holder or such underwriter within the meaning of the
Securities Act, from and against any and all loss, damage, liability, cost and
expense to which such holder or any such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such Registration
Statement, any prospectus contained therein or any amendment 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, in light of the circumstances in which they were made,
not misleading; provided, however, that the Company will not be liable in any
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such case to the extent that any such loss, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
by such holder, such underwriter or such controlling person for use in the
preparation thereof.
(b) Each holder of Registrable Shares that are included in the
Registration Statement, severally, will indemnify and hold harmless the Company
and any underwriter (as defined in the Securities Act) for such holder and each
person, if any, who controls the Company or such underwriter within the meaning
of the Securities Act, from and against any and all loss, damage, liability,
cost and expense to which the Company or any such underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue or
alleged untrue statement of any material fact contained in such Registration
Statement, any prospectus contained therein or any amendment or supplemental
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only
12
<PAGE>
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was so made in reliance upon and in strict
conformity with written information furnished by such holder specifically for
use in the preparation thereof and only to the extent of proceeds from the sale
of Registrable Shares.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of Section 6.1(a) or (b) of notice of the commencement of any action
involving the subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of such Section, promptly notify
the indemnifying party of the commencement thereof, but the omission to so
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than hereunder, except to the extent
such failure shall have materially prejudiced the indemnifying party. In case
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any action include both the
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indemnified party and the indemnifying party and there is a conflict of interest
which would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties shall have the right to
select separate counsel to participate in the defense of such action on behalf
of such indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of Section 6.1(a) or (b) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation, unless (i) the indemnified party shall
have employed counsel in accordance with the proviso of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action, or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
ARTICLE 7
MISCELLANEOUS
7.1 Mutual Release. In consideration of the purchase and sale of the
--------------
Interests hereunder, each Seller, on behalf of such Seller and all of its
owners, partners, officers, directors, employees, shareholders, affiliates,
related entities, assigns and successors, and each and every agent, insurer and
attorney of any of the foregoing, and all persons acting by, through, under or
in concert with any of them (collectively, the "Seller
13
<PAGE>
Parties"), hereby irrevocably, finally and unconditionally releases, relieves,
acquits and forever discharges each of the Company and the Company's
subsidiaries (direct and indirect), officers, directors, employees,
shareholders, affiliates, related entities, assigns and successors, and each and
every agent, insurer, and attorney of any of the foregoing, and all persons
acting by, through, under or in concert with any of them (collectively, the
"Company Parties"), and each of the Company Parties hereby irrevocably, finally
and unconditionally releases, relieves, acquits and forever discharges each of
the Seller Parties, from and against any and all liabilities, claims, demands,
obligations, damages, expenses (including attorneys' fees and costs actually
incurred) and causes of action at law or in equity, of any nature, known or
unknown, which such Seller Party or Company Party, as applicable, now owns or
holds, has at any time heretofore owned or held, or may any time hereafter own
or hold, by reason of any agreement, representation, warranty, statement, act,
event or omission which existed or occurred, or failed to occur (collectively,
"Claims"), prior to the date of this Agreement, arising from or relating in any
way whatsoever to (i) the operations of the Partnership or the Company's
determination to terminate the Project, including without limitation any breach
or default by the Company under the R&D Agreement, or (ii) any Seller's
ownership of or investment in its Interests, including, without limitation, any
Claims arising from or relating in any way to the original purchase of such
Interests or otherwise arising from or relating in any way to the Partnership
Agreement, any Subscription Agreement, any Option Agreement, any Common Stock
Purchase Warrant (the "Warrant") dated March 29, 1996 issued by the Company to
each Seller (all of which Warrants are hereby terminated pursuant to this
Release), or any Partnership Subscription Agreement dated March 29, 1996 by and
among the Partnership and each Seller.
7.2 Waiver of Unknown Claims. Each Seller and the Company expressly
------------------------
waives and relinquishes all rights and benefits afforded by Section 1542 of the
Civil Code of the State of California ("Section 1542"), and any statute, rule or
regulation of any other relevant jurisdiction similar in nature to Section 1542,
and do so understanding and acknowledging the significance of such specific
waiver of Section 1542 and such other statute, rule or regulation. Section 1542
of the Civil Code of the State of California states as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
Thus, notwithstanding the provisions of Section 1542 and any statute,
rule or regulation of any other relevant jurisdiction similar in nature to
Section 1542, and for the purpose of implementing a full and complete release
and discharge of all those released by this Agreement, each of the Sellers and
the Company expressly acknowledges that this
14
<PAGE>
Agreement is intended to include in its effect, without limitation, all claims
which such party does not know or suspect to exist in its favor at the time of
execution hereof, and that this Agreement contemplates the extinguishment of any
such claims.
Each of the parties hereto acknowledge that they have expressly bargained
for the foregoing waiver of the provisions of Section 1542 and any statute, rule
or regulation of any other relevant jurisdiction similar in nature to Section
1542.
7.3 Notices. Unless otherwise provided, any notice required or permitted
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under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or, if sent by
telecopier, upon receipt of confirmation of transmission, or three (3) days
after the deposit with the United States Post Office, by registered or certified
mail, or one (1) day after the deposit with a recognized overnight air courier,
in each case postage prepaid and addressed to the party to be notified at the
address, or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties.
7.4 Expenses. The Company shall pay all costs and expenses that it incurs
--------
with respect to the negotiation, execution, delivery and performance of the
Agreement and any related agreements. The Company shall, at the Closing,
reimburse the reasonable fees and expenses of the Sellers, including, without
limitation, the fees and expenses of Cooley Godward LLP (special counsel for the
Sellers) incurred in connection with the negotiation, execution, delivery and
performance of this Agreement.
7.5 Survival. The representations and warranties set forth herein
--------
shall survive the Closing.
7.6 Attorneys' Fees. The prevailing party in any action brought with
---------------
respect to this Agreement, or the interpretation hereof, shall be entitled to
collect from the other party all reasonable attorneys' fees and expenses
incurred by such prevailing party.
7.7 Waiver and Amendment. No amendment, modification, termination or
--------------------
waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by each party hereto.
7.8 Parties in Interest. All of the terms and provisions of this
-------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto.
7.9 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California.
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<PAGE>
7.10 Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding of the parties hereto in respect of the subject matter contained
herein and supersedes all prior negotiations, agreements and understandings
among the parties with respect to such subject matter.
7.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts with the same effect as if all parties hereto had signed the same
document. All counterparts so executed shall be deemed to be an original, shall
be construed together and shall constitute one agreement.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
COMPANY: TRIKON TECHNOLOGIES, INC.
9255 Deering Avenue
Chatsworth, California 91311
Fax: (818) 886-8098
By:
-----------------------------
John W. LaValle
Chief Financial Officer
SELLERS: SBIC PARTNERS, L.P.
201 Main Street, Suite 2302
Fort Worth, Texas 76102
Fax: (817) 338-2047
By: Forrest Binkley & Brown L.P.,
General Partner
By: Forrest Binkley & Brown Venture Co.,
General Partner
By:
-------------------------
Jeffrey J. Brown
Office of the President
[Signatures continued on following page]
17
<PAGE>
[Signatures continued from previous page]
NORWEST EQUITY PARTNERS, V
3000 Sand Hill Road
Building 3, Suite 105
Menlo Park, California 94025
Fax: (415) 854-6652
By: Itasca Partners V, L.L.P.,
General Partner
By:
---------------------------
Kevin G. Hall
Partner
R&M PARTNERS/CVD, G.P.
300 South Grand Avenue, Suite 2900
Los Angeles, California 90071
Fax: (213) 229-8550
By:
---------------------------
Jeffrey L. DuRocher
Partner
18
<PAGE>
EXHIBIT 11.1 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended Six months ended
-------------------------------------------- --------------------------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
----------------------- ------------------ ----------------------- ------------------
<S> <C> <C> <C> <C>
Primary:
Average Common shares outstanding..... 14,433,291 8,685,142 14,378,116 8,675,835
Net effect of dilutive stock options-
based on the treasury stock
method using average fair market
price............................. -- 429,006 -- 401,435
Net effect of dilutive warrants -
based on the treasury stock method
using average fair market price... -- 56,053 -- 54,162
------------ ---------- ------------ ----------
Total shares.......................... 14,433,291 9,170,201 14,378,116 9,131,432
============ ========== ============ ==========
Net income (loss)..................... $(10,961,211) $1,363,838 $(22,580,117) $2,621,339
============ ========== ============ ==========
Per share amount...................... $ (0.76) $ 0.15 $ (1.57) $ 0.29
============ ========== ============ ==========
Fully diluted:
Average Common shares outstanding..... 14,433,291 8,685,142 14,378,116 8,675,835
Net effect of dilutive stock options-
based on the treasury stock
method using average fair market
price at the end of the period.... -- 429,018 -- 419,092
Net effect of dilutive warrants -
based on the treasury stock method
using average fair market price
at the end of the period.......... -- 56,053 -- 56,000
------------ ---------- ------------ ----------
Total shares.......................... 14,433,291 9,170,213 14,378,116 9,150,927
============ ========== ============ ==========
Net income (loss)..................... $(10,961,211) $1,363,838 $(22,580,117) $2,621,339
============ ========== ============ ==========
Per share amount...................... $ (0.76) $ 0.15 $ (1.57) $ 0.29
============ ========== ============ ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 18,354
<SECURITIES> 3,112
<RECEIVABLES> 33,222
<ALLOWANCES> (3,802)
<INVENTORY> 41,635
<CURRENT-ASSETS> 96,396
<PP&E> 41,138
<DEPRECIATION> (9,292)
<TOTAL-ASSETS> 175,297
<CURRENT-LIABILITIES> 46,616
<BONDS> 86,250
0
15,775
<COMMON> 137,698
<OTHER-SE> (124,838)
<TOTAL-LIABILITY-AND-EQUITY> 175,297
<SALES> 31,063
<TOTAL-REVENUES> 31,063
<CGS> 22,467
<TOTAL-COSTS> 51,784
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,766
<INCOME-PRETAX> (25,486)
<INCOME-TAX> (2,906)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (22,580)
<EPS-PRIMARY> (1.57)
<EPS-DILUTED> (1.57)
</TABLE>
