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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
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TRIKON TECHNOLOGIES, INC.
(NAME OF ISSUER)
TRIKON TECHNOLOGIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
7-1/8% CONVERTIBLE SUBORDINATED NOTES DUE 2001
SERIES G PREFERRED STOCK
WARRANTS TO PURCHASE COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
72753MAA7 (7-1/8% CONVERTIBLE SUBORDINATED NOTES DUE 2001)
(CUSIP NUMBER OF CLASS OF SECURITIES)
CHRISTOPHER D. DOBSON
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
TRIKON TECHNOLOGIES, INC.
RINGLAND WAY
NEWPORT, GWENT NP6 2TA
UNITED KINGDOM
011 441 633 414 115
(NAME, ADDRESS AND TELEPHONE NUMBER OF A PERSON AUTHORIZED TO RECEIVE NOTICES
ANDCOMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
COPIES TO:
MICHAEL J. KENNEDY, ESQ.
BROBECK, PHLEGER & HARRISON LLP
SPEAR STREET TOWER
ONE MARKET
SAN FRANCISCO, CA 94105
(415) 442-0900
APRIL 14, 1998
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDER)
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CALCULATION OF FILING FEE
Transaction Valuation/1/ Amount of Filing Fee/2/
$35,712,869 $7,142.57
1. Only for purposes of calculating this filing fee in accordance with Rule
0-11(b)(2) and Rule 0-11(a)(4) under the Securities Exchange Act of 1934, as
amended. There is no public market for the securities being exchanged and the
Company has an accumulated capital deficit. Accordingly, the transaction value
is based upon the sum of (i) one-third of the aggregate principal amount of
the outstanding 7-1/8% Convertible Subordinated Notes Due 2001, (ii) one-third
of the liquidation preference of $6.75 per share of the Series G Preferred
Stock, multiplied by 2,962,032 (the number of shares outstanding) and (iii)
one-third of the fair market value of the Common Stock, multiplied by 888,610
(the number of shares subject to the Warrants to Purchase Common Stock).
2. The amount of the filing fee equals 1/50 of one percent of the value of
the securities to be exchanged.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount Previously
Paid: N/A
Form or Registration
No.: N/A
Filing Party: N/A
Date Filed: N/A
Item 1. Security and Issuer.
(a) The issuer of the securities to which this Statement relates is Trikon
Technologies, Inc., a California corporation (the "Company"). The principal
executive offices of the Company are located at Ringland Way, Newport, Gwent
NP6 2TA, United Kingdom.
(b) As of the date hereof, there were $86,250,000 aggregate principal amount
of the Company's 7-1/8% Convertible Subordinated Notes Due 2001 (the "Notes")
outstanding, 2,962,032 shares of its Series G Preferred Stock (the "Series G
Preferred Stock") outstanding, and Warrants (the "Warrants") to purchase
888,610 shares of its Common Stock, no par value per share (the "Common
Stock"), outstanding. Upon the terms and subject to the conditions set forth
in the Offering Circular dated April 14, 1998 (as the same may be amended or
supplemented from time to time, the "Offering Circular") and the related
Letters of Transmittal, copies of which are filed herewith as Exhibits (a)(1),
(a)(2), (a)(6) and (a)(7), respectively, the Company is: (i) offering to
exchange each $1,000 principal amount of Notes outstanding into 262.7339
shares of the Common Stock, 34.7826 shares of the Company's Series H Preferred
Stock, $10 stated amount per share (the "Series H Preferred Stock"), and
0.3393 shares of the Company's Series I Junior Participating Preferred Stock,
no par value per share (the "Series I Preferred Stock"); (ii) soliciting the
conversion of each share of Series G Preferred Stock into one share of Common
Stock in exchange for a conversion payment of 1.1251 shares of Common Stock
and 0.0027 shares of Series I Preferred Stock; and (iii) offering to exchange
each Warrant into one share of Common Stock (collectively, the "Exchange
Offer"). The information under the captions "The Offering Summary," "The
Exchange Offer -- General" and "-- Terms of the Exchange Offer" in the
Offering Circular is incorporated herein by reference. To the knowledge of the
Company, no officer, director or affiliate of the Company beneficially owns
any of the Notes, Series G Preferred Stock or Warrants other than (i) Dawson-
Samberg Capital Management, Inc., which, as an investment adviser to certain
investment funds and managed accounts, beneficially owns approximately
$4,000,000 principal amount of the Notes, 1,481,481 shares of Series G
Preferred Stock and 444,445 Warrants; (ii) SBIC Partners L.P., which
beneficially owns 296,296 shares of Series G Preferred Stock and 88,889
Warrants; and (iii) Brian D. Jacobs, a director of the Company, who is a
general partner and Executive Vice President of St. Paul Venture Capital,
Inc., which beneficially owns 185,185 shares of Series G Preferred Stock and
55,556 Warrants. Any such Notes, Series G Preferred Stock or Warrants owned by
the parties mentioned above at the time of the Exchange Offer are eligible for
exchange, or conversion, as applicable, if properly tendered pursuant to the
Exchange Offer on the same basis as all other Notes, Series G Preferred Stock
and Warrants.
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(c) The Notes have been approved for trading in the PORTAL Market. For
further information, see "Description of the Notes--General," which is
incorporated herein by reference. The Common Stock is listed on the Nasdaq
National Market under the symbol "TRKN." For further information, see
"Description of Capital Stock--Market Price of Common Stock," which is
incorporated herein by reference. There currently is no established trading
market for the Series G Preferred Stock or the Warrants.
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
(a) The information under the captions "Offering Summary--The Terms of the
Series H Preferred Stock and the Series I Preferred Stock," "The Exchange
Offer--General" and "--Consideration Being Offered" in the Offering Circular
is incorporated herein by reference.
(b) Not applicable.
Item 3. Purpose of the Exchange Offer and Plans or Proposals of the Issuer
or Affiliate.
The information under the captions "Offering Summary--The Company/Background
of the Exchange Offer," "--The Exchange Offer" and "The Exchange Offer--
General" and "--Purpose" in the Offering Circular is incorporated herein by
reference. The Notes and the Warrants are to be cancelled upon consummation of
the Exchange Offer. The Series G Preferred Stock will be restored to the
status of authorized but unissued preferred stock of an undesignated series.
(a) The information under the captions "Offering Summary--The Exchange
Offer," "The Exchange Offer--General" and "--Consideration Being Offered" in
the Offering Circular is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
(d) The information under the captions "Offering Summary--The Terms of the
Series H Preferred Stock and the Series I Preferred Stock" and "The Exchange
Offer--Consideration Being Offered" in the Offering Circular is incorporated
herein by reference.
(e) The information under the caption "Pro Forma Financial Data of Trikon"
in the Offering Circular is incorporated herein by reference.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
Item 4. Interest in Securities of the Issuer.
Neither the Company nor, to the knowledge of the Company, any person
referred to in Instruction C of this Schedule or any subsidiary or associate
of any such person, including any director or executive officer of any such
subsidiary, has effected any transaction in the Notes, Series G Preferred
Stock or Warrants during the 40 business days prior to the date hereof.
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Item 5. Contracts, Arrangements, Understandings or Relationships with
Respect to the Issuer's Securities.
The information under the captions "Offering Summary--The Company/Background
of the Exchange Offer" and "Contracts, Arrangements, Understandings or
Relationships with Respect to the Notes, Series G Preferred Stock or Warrants"
in the Offering Circular is incorporated herein by reference.
Item 6. Persons Retained, Employed or to be Compensated.
There have been no persons employed, retained or to be compensated to make
solicitations or recommendations in connection with the Exchange Offer.
Item 7. Financial Information.
(a)(1) The information set forth in Annex D to the Offering Circular is
incorporated herein by reference.
(a)(2) Not applicable.
(a)(3) The information under the caption "Selected Consolidated Financial
Data of Trikon" in the Offering Circular is incorporated herein by reference.
(a)(4) See response to Item 7(a)(3) above.
(b)(1)-(3) The information under the caption "Pro Forma Financial Data of
Trikon" in the Offering Circular is incorporated herein by reference.
Item 8. Additional Information.
(a) The information under the captions "Offering Summary--The
Company/Background of the Exchange Offer" and "Contracts, Arrangements,
Understandings or Relationships with Respect to the Notes, Series G Preferred
Stock or Warrants" in the Offering Circular is incorporated herein by
reference.
(b) The Common Stock, Series H Preferred Stock and Series I Preferred Stock
issued upon exchange or conversion of Notes, Series G Preferred Stock and
Warrants will be issued by the Company in reliance on the exemption from the
registration requirements of the Securities Act of 1933, as amended, provided
in Section 3(a)(9) thereof.
(c) Not applicable.
(d) Not applicable.
(e) Additional material information is set forth in the Offering Circular
and related Letters of Transmittal which are attached hereto as Exhibits
(a)(1), (a)(2), (a)(6) and (a)(7) and such material information is
incorporated herein by reference.
Item 9. Material to be Filed as Exhibits.
(a)(1) Offering Circular dated April 14, 1998.
(a)(2) Form of Note Consent and Letter of Transmittal.
(a)(3) Form of Letter from the Company to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5) Form of Notice of Guaranteed Delivery.
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(a)(6) Form of Series G Conversion Notice and Letter of Transmittal.
(a)(7) Form of Warrant Letter of Transmittal.
(a)(8) Form of Letter to Holders of Series G Preferred Stock and Warrants.
(a)(9) Press Release, dated April 2, 1998.
(a)(10) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
SIGNATURE
After due inquiry and to the best of the Company's knowledge and belief, the
undersigned certifies that the information set forth in this Statement is
true, complete and correct.
Dated: April 14, 1998
TRIKON TECHNOLOGIES, INC.
By: /s/ Christopher D. Dobson
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Name:Christopher D. Dobson
Title: Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
(a)(1) Offering Circular dated April 14, 1998.
(a)(2) Form of Note Consent and Letter of Transmittal.
(a)(3) Form of Letter from the Company to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(4) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5) Form of Notice of Guaranteed Delivery.
(a)(6) Form of Series G Conversion Notice and Letter of Transmittal.
(a)(7) Form of Warrant Letter of Transmittal.
(a)(8) Letter to Holders of Series G Preferred Stock and Warrants.
(a)(9) Press Release, dated April 2, 1998.
(a)(10) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
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EXHIBIT (A)(1)
OFFERING CIRCULAR
TRIKON TECHNOLOGIES, INC.
OFFER TO EXCHANGE EACH $1,000 PRINCIPAL AMOUNT OF ITS 7 1/8% CONVERTIBLE
SUBORDINATED NOTES DUE OCTOBER 15, 2001 INTO (I) 262.7339 SHARES OF ITS COMMON
STOCK, (II) 34.7826 SHARES OF ITS SERIES H PREFERRED STOCK AND (III) 0.3393
SHARES OF ITS SERIES I PREFERRED STOCK
AND
SOLICITATION OF CONVERSION OF EACH SHARE OF ITS SERIES G PREFERRED STOCK INTO
ONE SHARE OF COMMON STOCK IN EXCHANGE FOR A CONVERSION PAYMENT OF 1.1251
SHARES OF COMMON STOCK AND 0.0027 SHARES OF SERIES I PREFERRED STOCK
AND
OFFER TO EXCHANGE EACH WARRANT TO PURCHASE ITS COMMON STOCK ISSUED IN
CONNECTION WITH THE ISSUANCE OF ITS SERIES G PREFERRED STOCK INTO ONE SHARE OF
ITS COMMON STOCK
Trikon Technologies, Inc., formerly Plasma & Material Technologies, Inc.
(together with its subsidiaries, the "Company" or "Trikon"), hereby offers
(the "Note Exchange Offer"), upon the terms and subject to the conditions set
forth in this Offering Circular (as it may be amended or supplemented from
time to time, the "Offering Circular"), and in the accompanying Note Consent
and Letter of Transmittal by holders of the Notes (the "Note Consent and
Letter of Transmittal"), to exchange each $1,000 principal amount of its 7
1/8% Convertible Subordinated Notes Due October 15, 2001 (the "Notes") into
(i) 262.7339 shares of its Common Stock, no par value per share (the "Common
Stock"), (ii) 34.7826 shares of the Company's Series H Preferred Stock, $10
stated amount per share (the "Series H Preferred Stock"), and (iii) 0.3393
shares of the Company's Series I Junior Participating Preferred Stock, no par
value per share (the "Series I Preferred Stock") (collectively, the "Note
Exchange Consideration"). In connection with the Note Exchange Offer, the
Company hereby solicits consents (the "Consents") to the execution and
delivery of a supplemental indenture (the "Supplemental Indenture") that would
have the effect of amending the Indenture (as defined herein) pursuant to
which the Notes were issued and to the amendment of the Registration Agreement
(as defined herein) to provide for the termination of the Registration
Agreement upon the consummation of the Exchange Offer (collectively, the
"Proposals"). The completion, execution and delivery of a Note Consent and
Letter of Transmittal by a holder tendering a Note pursuant to the Note
Exchange Offer will be deemed to constitute the Consent of such tendering
holder to the Proposal with respect to such Notes.
As of the date of this Offering Circular, there are Notes in the aggregate
principal amount of $86,250,000 outstanding. The Note Exchange Offer is being
made for the entire outstanding principal amount of the Notes. The Notes
currently provide that the holder may convert such securities into Common
Stock at a conversion price of $15.635. Notes may be tendered and will be
accepted for exchange only in denominations of $1,000 principal amount and
integral multiples thereof. No fractional shares of Common Stock or Series H
Preferred Stock will be issued in the Note Exchange Offer. Fractional shares
of Common Stock and Series H Preferred Stock will be rounded to the nearest
whole shares of Common Stock or Series H Preferred Stock. Fractional shares of
Series I Preferred Stock will be rounded to the nearest one thousandth of a
share of Series I Preferred Stock. Interest accrued but not paid on the Notes
through the expiration date will be cancelled by the Company upon acceptance
of the Note for exchange. On April 15, 1998, an interest payment is due on the
Notes. The Company does not intend to make such interest payment when due.
In addition, the Company hereby solicits (the "Series G Exchange Offer"),
upon the terms and subject to the conditions set forth in this Offering
Circular, and in the accompanying Conversion Notice and Letter of Transmittal
by holders of Series G Preferred Stock (the "Series G Conversion Notice and
Letter of Transmittal"), each holder of its Series G Preferred Stock, no par
value per share (the "Series G Preferred Stock"), to convert each share of
Series G Preferred Stock into one share of Common Stock in exchange for a
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conversion payment of (i) 1.1251 shares of Common Stock and (ii) 0.0027 shares
of Series I Preferred Stock (collectively, the "Conversion Payment" and
together with the converted share, the "Series G Exchange Consideration"). As
of the date of this Offering Circular, there are 2,962,032 shares of Series G
Preferred Stock outstanding. The Series G Exchange Offer is being made to
holders of all of the outstanding shares of Series G Preferred Stock. The
Certificate of Determination of the Company which sets forth the rights,
preferences and privileges of the Series G Preferred Stock currently provides
that a holder may convert such securities into Common Stock on a share-for-
share basis. It further provides that, if holders of two-thirds of the shares
of Series G Preferred Stock elect to convert the Series G Preferred Stock into
Common Stock, then all of the outstanding Series G Preferred Stock shall
convert into shares of Common Stock on a share-for-share basis. No fractional
shares of Common Stock will be issued in the Series G Exchange Offer.
Fractional shares of Common Stock will be rounded to the nearest whole shares
of Common Stock. Fractional shares of Series I Preferred Stock will be rounded
to the nearest one thousandth of a share of Series I Preferred Stock.
In addition, the Company hereby offers (the "Warrant Exchange Offer" and
together with the Note Exchange Offer and the Series G Exchange Offer,
collectively referred to as the "Exchange Offer" and each is sometimes
individually referred to as an "Exchange Offer"), upon the terms and subject
to the conditions set forth in this Offering Circular, and in the accompanying
Letter of Transmittal by holders of Warrants (as defined below) (the "Warrant
Letter of Transmittal" and together with the Note Content and Letter of
Transmittal and the Series G Conversion Notice and Letter of Transmittal, the
"Exchange Letters of Transmittal"), to exchange each warrant to purchase
Common Stock issued in connection with the issuance of the Series G Preferred
Stock (the "Warrants") for one share of its Common Stock (referred to as the
"Warrant Exchange Consideration" and together with the Note Exchange
Consideration and the Series G Exchange Consideration, referred to as the
"Exchange Consideration"). As of the date of this Offering Circular, there are
Warrants to purchase up to 888,610 shares of Common Stock outstanding. The
Warrant Exchange Offer is being made to holders of all of the outstanding
Warrants.
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MAY
11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH TIME AND
DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). NOTES, SERIES G
PREFERRED STOCK AND WARRANTS TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE. AFTER THE EXPIRATION DATE, NOTES,
SERIES G PREFERRED STOCK AND WARRANTS TENDERED IN THE EXCHANGE OFFER MAY NOT
BE WITHDRAWN UNLESS THE EXCHANGE OFFER IS TERMINATED OR EXPIRES WITHOUT
CONSUMMATION THEREOF. See "The Exchange Offer--Expiration; Extensions;
Termination; Amendment."
For purposes of this Offering Circular, the use of the term "exchange" (and
all derivatives thereof) when used to collectively describe the Note Exchange
Offer, the Series G Exchange Offer and/or the Warrant Exchange Offer, shall
also mean "convert" (and all derivatives thereof), as applicable.
Notwithstanding any other provision of the Exchange Offer, the Company's
obligation to accept for exchange, and to exchange, Notes and Warrants
properly tendered and not withdrawn, and to make the Conversion Payment in
connection with the conversion of tendered Series G Preferred Stock, pursuant
to the Exchange Offer is conditioned upon certain conditions set forth under
"The Exchange Offer--Conditions to the Exchange Offer." If the conditions of
the Exchange Offer are satisfied or waived and the Notes, Series G Preferred
Stock and Warrants are accepted by the Company for exchange, the Exchange
Consideration will be exchanged on or promptly after the date on which the
Notes, Series G Preferred Stock and Warrants are accepted for exchange (the
"Exchange Offer Acceptance Date"). Under no circumstances will any additional
interest be payable because of any delay in the transmission of the Exchange
Consideration to holders of Notes, Series G Preferred Stock or Warrants.
Subject to applicable securities laws and the terms set forth in this Offering
Circular, the Company reserves the right (i) to waive any and all conditions
to the Exchange Offer, (ii) to extend the Exchange Offer or (iii) otherwise to
amend the Exchange Offer in any respect.
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The Notes trade in the Private Offerings, Resales and Trading through the
Automatic Linkage ("PORTAL") Market. Price information regarding the Notes in
the PORTAL Market is not publicly available. The Series G Preferred Stock and
the Warrants are not publicly traded. The Common Stock is traded on the Nasdaq
National Market, the symbol of which is "TRKN." On April 13, 1998, the last
reported sales price of the Common Stock on the Nasdaq National Market was
$0.78.
As reported in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, the Company reported a net loss of $99.3 million for the
year then ended and an accumulated deficit of $201.3 million. In its Auditors'
Report accompanying the Company's audited consolidated financial statement in
the 1997 Form 10-K, the Company's independent auditors, Ernst & Young LLP,
included an explanatory paragraph stating that the Company had experienced
significant losses from operations and negative cash flow from operating
activities, and its Working Capital Facility (as defined herein) has been
terminated. In addition, concerns exist as to the Company's ability to
restructure its debt evidenced by the outstanding Notes, which could become in
default in 1998. These and other factors raise a substantial doubt about the
Company's ability to continue as a going concern. The Company believes that so
long as the Notes remain outstanding, the obligation to pay interest will
continue to deplete its limited cash resources which should be preserved for
working capital and research and development efforts, and the obligation to
repay the Notes at maturity will represent a substantial and, possibly
insurmountable, impediment for the Company to successfully pursue its business
objectives. Accordingly, if the Company is unable, and within a short period
of time, to successfully restructure its obligations in accordance with the
terms of the Exchange Offer, the Company will likely have no alternative but
to seek protection under the United States bankruptcy laws. In order to
expedite any such bankruptcy proceeding, if the minimum tender condition
(i.e., 90% of the principal amount of the Notes and 66 2/3% of the Series G
Preferred Stock) is not satisfied, but a majority in number of the holders of
the Notes holding more than two-thirds of the outstanding principal amount of
the Notes tender such Notes, the Company intends to enter into a
reorganization plan with its creditors and then have such reorganization plan
confirmed by a bankruptcy court under Chapter 11 of the United States
Bankruptcy Code. Such a reorganization plan would bind dissenting creditors
and holders of equity securities of the Company to the reorganization plan.
See "Risk Factors" beginning on page 24 for a discussion of certain factors
that should be carefully considered in connection with the Exchange Offer.
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IMPORTANT
Any beneficial holder of Notes desiring to tender all or any portion of his
Notes should either (i) complete and sign the Note Consent and Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Note Consent and Letter of Transmittal and mail or deliver it, together
with the certificates representing tendered Notes and any other required
documents, to U.S. Trust Company of California, N.A. (the "Exchange Agent") or
tender such Notes pursuant to the procedure for book-entry transfer set forth
in "The Exchange Offer--Procedures for Tendering Notes" or (2) request his
broker, dealer, commercial bank, trust company or nominee to effect the
transaction for him. BENEFICIAL HOLDERS WHOSE NOTES ARE REGISTERED IN THE NAME
OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST
CONTACT SUCH PERSON IF THEY DESIRE TO TENDER THEIR NOTES. Holders who wish to
tender Notes and whose certificates representing such Notes are not
immediately available or who cannot comply with the procedures for book-entry
transfer on a timely basis may tender such Notes by following the procedures
for guaranteed delivery set forth in "The Exchange Offer--Procedures for
Tendering Notes."
The close of business on April 21, 1998 has been fixed as the "Record Date"
for the Consent. Only holders of Notes who are registered on the books of the
registrar for the Notes are able to tender their Notes and are authorized to
provide Consents to the Proposals with respect to the Indenture. The
procedures by which Notes may be tendered will depend upon the manner in which
the Notes are held and are set forth below and in "The Exchange Offer--
Procedures for Tendering Notes."
Any beneficial holder of Series G Preferred Stock desiring to tender all or
any of his Series G Preferred Stock should complete and sign the Series G
Conversion Notice and Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Series G Conversion Notice and Letter
of Transmittal and mail or
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deliver it, together with the certificates representing tendered Series G
Preferred Stock and any other required documents, to the Exchange Agent.
Any beneficial holder of Warrants desiring to tender all or any of his
Warrants should complete and sign the Warrant Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Warrant Letter
of Transmittal and mail or deliver it, together with the certificates
representing tendered Warrants and any other required documents, to the
Exchange Agent.
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The date of this Offering Circular is April 14, 1998.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER ANY HOLDER OF NOTES, SERIES G PREFERRED STOCK OR
WARRANTS SHOULD TENDER NOTES, SERIES G PREFERRED STOCK OR WARRANTS PURSUANT TO
THE EXCHANGE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS
CONTAINED IN THIS OFFERING CIRCULAR AND IN THE EXCHANGE LETTERS OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATIONS, INFORMATION OR
REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS OFFERING CIRCULAR NOR ANY DISTRIBUTION
OF SECURITIES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH
HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
This Offering Circular does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the securities
covered by this Offering Circular, nor does it constitute an offer to sell or
a solicitation of an offer to buy any such securities by any person in any
jurisdiction in which such offer or solicitation would be unlawful.
The Exchange Offer is being made by the Company in reliance on the exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), afforded by Section 3(a)(9) thereof. The Company
therefore will not pay any commission or other remuneration to any broker,
dealer, salesman or other person for soliciting tenders of Notes, Series G
Preferred Stock or Warrants. Officers, directors and regular employees of the
Company may solicit tenders of Notes, Series G Preferred Stock and Warrants
but they will not receive additional compensation therefor.
IN DECIDING WHETHER TO ACCEPT THE EXCHANGE OFFER, HOLDERS OF NOTES, SERIES G
PREFERRED STOCK AND WARRANTS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY
AND THE TERMS OF THE EXCHANGE OFFER, INCLUDING THE MERITS AND RISKS INVOLVED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE
FOREGOING AUTHORITIES HAVE NOT PASSED UPON THE FAIRNESS OF SUCH TRANSACTION
NOR CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Offering Circular: (i)
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 which is attached as Annex D hereto (the "1997 Form 10-K"); (ii) the
Indenture (the "Indenture") dated October 7, 1996, between the Company and
U.S. Trust Company of
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California, N.A., as trustee (the "Trustee"), contained in Exhibit 4.1 of the
Company's Current Report on Form 8-K dated November 27, 1996; (iii) the
Seventh Restated Articles of Incorporation of the Company (the "Restated
Articles"), contained in Exhibit 3.1 of the Company's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1997; (iv) the Certificate of
Determination of the Company establishing the rights, preferences and
privileges of the Series G Preferred Stock, as amended (the "Certificate of
Determination"), contained in Exhibit 3.4 of the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997; (v) two forms of
Common Stock Purchase Warrant contained in Exhibits 4.6 and 4.7, respectively,
of the Company's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1997; and (vi) the Registration Agreement (the "Registration
Agreement") dated as of October 7, 1996 among the Company, Salomon Brothers
Inc and Unterberg Harris contained in Exhibit 10.20 of the Company's Current
Report on Form 8-K dated November 27, 1996; all of which have been filed with
the Securities and Exchange Commission (the "Commission") (File No. 0-26482).
The Company also incorporates herein by reference all documents and reports
subsequently filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") after the date of this Offering Circular and prior to
termination of this offering. Such documents and reports shall be deemed to be
incorporated by reference in this Offering Circular and to be a part hereof
from the date of filing of such documents or reports. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Offering
Circular to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded, except as so modified or superseded, shall not be
deemed to constitute a part of this Offering Circular.
The Company will provide without charge to each person to whom a copy of
this Offering Circular has been delivered, on the written or oral request of
such person, a copy of any or all of the documents incorporated herein by
reference, other than exhibits to such documents unless they are specifically
incorporated by reference into such documents. Requests for such copies should
be directed to: Jeremy Linnert, Acting Chief Financial Officer and Secretary,
Trikon Technologies, Inc., Ringland Way, Newport, Gwent NP6 2TA, United
Kingdom, telephone 44 1633 414 000.
AVAILABLE INFORMATION
The Company has filed with the Commission an Issuer Tender Offer Statement
on Schedule 13E-4, which term shall encompass any amendments thereto, under
the Exchange Act with respect to the Exchange Offer. This Offering Circular
does not contain all the information set forth in the Schedule 13E-4 and the
exhibits thereto, to which reference is hereby made for further information
about the Company and the Exchange Offer.
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy and information
statements, and other information with the Commission. The Schedule 13E-4 and
all reports, proxy and information statements, and other information filed by
the Company with the Commission may be inspected at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, New York, New York 10048, and Suite 1400, Citicorp Center, 700
West Madison Street, Chicago, Illinois 60661-2511. Copies of such material may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Additionally, the
Commission maintains an electronic Web Site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, the address of such Web Site being
(http://www.sec.gov).
The Company will provide without charge to each person to whom a copy of
this Offering Circular has been delivered, on the written and oral request of
such person, a copy of the Schedule 13E-4. Requests for such copies should be
directed to: Jeremy Linnert, Secretary, Trikon Technologies, Inc. Ringland
Way, Newport, Gwent NP6 2TA, United Kingdom, telephone 44 1633 414 000.
The Common Stock is quoted on the Nasdaq National Market, and all reports,
proxy and information statements, and other information filed with the
Commission also may be inspected at the offices of the Nasdaq Stock Market,
Inc., Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.
----------------
5
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information...................................................... 5
Offering Summary........................................................... 6
Selected Consolidated Financial Data of Trikon............................. 15
Summary Unaudited Pro Forma Consolidated Data as of December 31, 1997 and
for the Year Then Ended................................................... 17
Selected Combined Financial Data of Trikon Limited......................... 18
Unaudited Pro Forma Consolidated Financial Data of Trikon.................. 19
Risk Factors............................................................... 24
The Exchange Offer......................................................... 34
The Company................................................................ 51
Description of the Notes................................................... 56
Description of Capital Stock............................................... 65
Certain Federal Income Tax Considerations.................................. 69
Interest in Notes, Series G Preferred Stock and Warrants................... 71
Contracts, Arrangements, Understandings or Relationships with Respect to
the Notes, Series G Preferred Stock or Warrants........................... 71
Annex A--The Proposed Amendment to the Indenture........................... A-1
Annex B--Terms of Series H Preferred Stock................................. B-1
Annex C--Terms of Series I Junior Participating Preferred Stock............ C-1
Annex D--Annual Report on Form 10-K for the Year Ended December 31, 1997... *
</TABLE>
- --------
* Enclosed herewith.
OFFERING SUMMARY
The following is a summary of certain information included in this Offering
Circular or in documents incorporated by reference herein. It is not intended
to be complete and is qualified in its entirety by the more detailed
information found elsewhere in this Offering Circular or in such documents,
which should be read with care. As used herein, unless the context otherwise
requires, the "Company" or "Trikon" refers to Trikon Technologies, Inc. and
its subsidiaries, including Trikon Limited (as defined herein). As used
herein, the term "Offering Circular" shall mean this Offering Circular and all
appendices, annexes and exhibits hereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time. References to
the Company's fiscal year shall refer to the calendar year in which the
Company's fiscal year ends (e.g., fiscal year 1997 refers to the Company's
fiscal year ended December 31, 1997).
THE COMPANY/BACKGROUND OF THE EXCHANGE OFFER
Trikon Technologies, Inc., formerly Plasma & Materials Technologies, Inc.
(together with its subsidiaries, the "Company" or "Trikon"), develops,
manufactures, markets and services semiconductor processing equipment for the
worldwide semiconductor manufacturing industry. The Company's corporate
headquarters is located at Ringland Way, Newport, Gwent NP6 2TA, United
Kingdom, telephone 44 1633 414 000.
As discussed in more detail below at "The Exchange Offer--Purpose" in 1997
the Company had over $99,000,000 of losses and, absent the Exchange Offer,
will be unable to meet its obligations in the ordinary course of business and
will be forced to seek protection under the federal bankruptcy laws.
Furthermore, because the Company's total shareholders' deficiency was
approximately $65,794,000 as of December 31, 1997, the Company was out of
compliance with the Nasdaq National Market continued listing requirement that
Nasdaq National Market listed companies maintain "net tangible assets" in
excess of $4,000,000. If the Exchange Offer is not consummated, the Common
Stock will likely be delisted from the Nasdaq National Market. If the Company
is delisted from the Nasdaq National Market and is unable to list for trading
on a United States national securities exchange or the Nasdaq SmallCap Market
and the Indenture has not been amended as proposed in the Proposals, a
Designated Event under the terms of the Indenture will have occurred. The
occurrence of a Designated Event enables each holder of Notes to elect to have
the Company repurchase such holder's Notes at a purchase price equal to 101%
of the principal amount thereof, together with accrued and unpaid interest
thereon. The Company
6
<PAGE>
does not currently have, and will not have in the foreseeable future, the
financial resources necessary to repurchase the Notes in such circumstances.
In early 1998, after implementation of a restructuring of its operations and
in light of the Company's significant losses from operations, negative cash
flow from operating activities and the termination of the Company's Working
Capital Facility, the Company determined that a restructuring of its balance
sheet was required in order for it to successfully continue its operations.
Commencing in mid-February, the Company began negotiations with certain
holders of Notes with regard to the terms of a possible restructuring.
Negotiations continued throughout March. During March the Company also
commenced negotiations with certain holders of the Series G Preferred Stock.
During these negotiations the Company emphasized that, in its view, a
liquidation of the Company would yield a minimal recovery (less than 15%) to
the holders of Notes and no recovery to the holders of Series G Preferred
Stock.
In light of the considerations set forth above and elsewhere in this
Offering Circular, the Board of Directors approved the Exchange Offer. On
April 2, the Company announced its intention to commence the Exchange Offer.
In addition, the Company announced that it does not intend to make the
interest payment due on the Notes on April 15, 1998. The Exchange Offer
represents the outcome of the Company's negotiations with holders of Notes in
excess of $51,000,000 and holders of in excess of 66 2/3% of the Series G
Preferred Stock. Although the Company has not entered into any agreement with
these holders regarding the Exchange Offer, it believes such holders support
the Exchange Offer and intend to tender their Notes and Series G Preferred
Stock, respectively.
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED DATA AS OF DECEMBER 31, 1997 (1)
The following summary unaudited pro forma consolidated balance sheet data
gives effect to the Exchange Offer, assuming 100% participation in the
Exchange Offer, as if it had occurred as of December 31, 1997. The unaudited
pro forma balance sheet data should be read in conjunction with the unaudited
pro forma consolidated financial statements included elsewhere herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------
ACTUAL PRO
(1) FORMA (2)
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital (deficiency), actual includes the Notes..... $(65,794) $21,498
Credit liabilities, actual includes the Notes............... 119,388 31,596
Total assets................................................ 79,690 76,892
Long-term debt less current portion......................... 5,245 5,245
Shareholders' equity (deficiency)........................... (44,943) 40,051
Book value per common share (3)............................. (2.97) 0.43
</TABLE>
- --------
(1) Amounts derived from the December 31, 1997 consolidated balance sheet
included the Company's Form 10-K.
(2) Balance sheet data reflecting the Exchange Offer, assuming 100%
participation, as if it had occurred at December 31, 1997. See the
unaudited pro forma financial statements and notes thereto included
elsewhere herein.
(3) Book value per share on December 31, 1997 and pro forma book value per
share giving effect to the Exchange Offer, assuming 100% participation, as
if it occurred on December 31, 1997 is computed by dividing the
shareholder's equity (deficiency) and pro forma shareholder's equity by
the actual number of outstanding shares of Common Stock and pro forma
number of outstanding shares of Common Stock, respectively. The pro forma
number of shares of Common Stock includes 51.9 million shares of Common
Stock to be issued to the holders of the Notes, 15.3 million shares of
Common Stock to be issued to the holders of the Series G Preferred Stock
and the Warrants and 11.5 million shares of restricted Common Stock to be
issued to the Chairman of the Board and Chief Executive Officer of the
Company. The pro forma number of Common Shares to be issued assumes the
Series I Preferred Stock to be issued in the transaction and subsequently
converted into Common Stock, upon shareholder approval of the Company's
Charter Amendment (as defined herein), has been converted into Common
Stock as of December 31, 1997 since shareholders' approval is expected.
THE EXCHANGE OFFER
The Note Exchange Offer...... The Company is offering to exchange each $1,000
principal amount of Notes tendered to the
Company prior to the Expiration Date and
accepted by the Company for the Note Exchange
Consideration which consists of (i) 262.7339
shares of Common Stock, (ii) 34.7826 shares
7
<PAGE>
of Series H Preferred Stock and (iii) 0.3393
shares of Series I Preferred Stock. The Note
Exchange Offer is being made for the entire
outstanding principal amounts of the Notes. In
connection with the Note Exchange Offer, the
Company hereby solicits Consents to the
Proposals. The completion, execution and
delivery of a Note Consent and Letter of
Transmittal by a holder tendering Notes
pursuant to the Note Exchange Offer will be
deemed to constitute the Consent of such
tendering holder to the Proposals with respect
to such Notes. The Notes currently provide that
the holders may convert such securities into
Common Stock at a conversion price of $15.635.
See "The Exchange Offer--Terms of the Exchange
Offer." If all the conditions to the Exchange
Offer have been met or waived, and the Company
accepts Notes in exchange for the Note Exchange
Consideration, but fewer than 100% of the Notes
and more than 90% of the Notes (the difference
being referred to as the "Stub Notes") have
been accepted, in the Note Exchange Offer, the
Company will also deliver, as part of the Note
Exchange Consideration, pro rated to each
holder of Notes that duly tendered Notes, the
amount of Common Stock and Series I Preferred
Stock that would have been distributed to the
holders of Stub Notes had they duly tendered
their Stub Notes in the Note Exchange Offer.
Effect of the Proposals...... Notes not purchased pursuant to the Note
Exchange Offer will remain outstanding. If the
Exchange Offer is consummated and the Proposals
become operative as a result thereof, certain
covenants, provisions and "events of default"
contained in the Indenture and all rights of
holders of Notes under the Registration
Agreement will be eliminated (or, in certain
cases, amended) with respect to any Notes that
remain outstanding after the consummation of
the Note Exchange Offer, and non-tendering
holders thereof will no longer be entitled to
the benefit of (or, in the case of amendments,
the same benefit under) such covenants,
provisions, "events of default" and rights. The
elimination (or, in certain cases, amendment)
of these covenants, provisions, "events of
default" and rights would permit the Company to
take action that could increase credit risks
with respect to the Company faced by the non-
tendering holders, adversely affect the market
price of the Notes that remain outstanding or
otherwise be adverse to the interest of non-
tendering holders. If the Proposals with
respect to the Indenture and the Registration
Agreement do not become operative, the non-
tendering holders of Notes would continue to
have the benefit of these covenants,
provisions, "events of default" and rights. See
"The Exchange Offer--The Proposals" and Annex A
which is attached to this Offering Circular.
The Series G Exchange Offer.. The Company is soliciting each holder of Series
G Preferred Stock to convert each share of
Series G Preferred Stock into one share of
Common Stock in exchange for a Conversion
Payment of (i) 1.1251 shares of Common Stock
and (ii) 0.0027 shares of Series I Preferred
Stock. The Series G Exchange Offer is being
made to holders of all of the outstanding
shares of Series G Preferred Stock. The
Certificate of Determination of the Company
which sets forth the rights, preferences and
privileges of the Series G Preferred Stock
currently provides that a holder may convert
such securities into Common
8
<PAGE>
Stock on a share-for-share basis. It further
provides that, if holders of two-thirds of the
shares of Series G Preferred Stock elect to
convert the Series G Preferred Stock into
Common Stock, then all of the outstanding
Series G Preferred Stock shall convert into
shares of Common Stock on a share-for-share
basis. Shares of Series G Preferred Stock
exchanged pursuant to the Series G Exchange
Offer shall be deemed to have been converted
into Common Stock pursuant to the Certificate
of Determination. As described in this Offering
Circular and the Series G Conversion Notice and
Letter of Transmittal, the conversion notice
contained in the Series G Conversion Notice and
Letter of Transmittal shall not be effective
until, and the Company shall not become
obligated to make the Series G Conversion
Payment until, the Company has accepted the
tender of Notes and Warrants validly tendered
for exchange in the Note Exchange Offer and the
Warrant Exchange Offer. See "Exchange Offer--
Terms of the Exchange Offer."
The Warrant Exchange Offer... The Company is offering to exchange each
Warrant for the Warrant Exchange Consideration
which is one share of Common Stock. The Warrant
Exchange Offer is being made to holders of all
of the outstanding Warrants. See "Exchange
Offer--Terms of the Exchange Offer."
The Company believes that restructuring of its
Purpose of Exchange Offer.... capital structure as proposed by the Exchange
Offer is essential to its viability and will
provide the following benefits to the Company,
among others:
(i) The Company's "net tangible assets"
should increase to a level sufficient to
satisfy the Nasdaq National Market net
tangible assets continued listing
requirement and thereby avoid having the
Common Stock delisted from the Nasdaq
National Market for being in violation of
such requirements. See "Risk Factors--
Nasdaq National Market Listing
Requirements."
(ii) The Company will be relieved of a
significant portion of its debt service
obligations.
(iii) The Company will have an improved
debt/equity ratio which will enhance the
likelihood that it can enter into a line of
credit with a financial institution to fund
its working capital needs.
(iv) The Company will have improved
operating prospects by assuring customers
and employees of its long term viability.
Expiration Date.............. 12:00 midnight, New York City time, on May 11,
1998, unless extended by the Company. See "The
Exchange Offer--Expiration; Extensions;
Termination; Amendment."
Withdrawal of Tenders........ Tenders of Notes, Series G Preferred Stock and
Warrants may be withdrawn at any time prior to
the expiration of the Exchange Offer.
Thereafter, such tenders are irrevocable,
except that they may be withdrawn after the
expiration of 40 business days from the
commencement of the Exchange Offer, unless
accepted for exchange prior to that date. See
"The Exchange Offer--Withdrawal of Tenders."
Accrued Interest on the
Notes.......................
The Company made a late payment of the semi-
annual interest due on October 15, 1997 on the
Notes on November 12, 1997. Holders
9
<PAGE>
of the Notes tendered and purchased pursuant to
the Offer will not be entitled to any interest
payments in respect of any later interest
periods (or any portion thereof). The Company
is required to make the next interest payments
on the Notes on April 15, 1998 to holders of
record on April 1, 1998. The Company does not
intend to make its scheduled April 15, 1998
interest payment when due.
Acceptance of Notes, Series
G Preferred Stock and
Warrants and Delivery of
Exchange Consideration...... Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Company
will accept for exchange any and all Notes,
Series G Preferred Stock and Warrants that are
properly tendered prior to the Expiration Date.
The Exchange Consideration to be issued
pursuant to the Exchange Offer will be
delivered promptly following the Expiration
Date. The Exchange Agent (as defined herein)
will act as agent for tendering holders for the
purpose of issuing the Exchange Consideration.
See "The Exchange Offer--Acceptance of Notes,
Series G Preferred Stock and Warrants; Delivery
of Common Stock, Series H Preferred Stock and
Series I Preferred Stock."
Conditions to the Exchange The obligation of the Company to consummate the
Offer....................... Exchange Offer, including becoming obligated to
make the Conversion Payment with respect to
tendered Series G Preferred Stock, is subject
to certain conditions including, among others,
there being validly tendered and not withdrawn
on or prior to the Expiration Date at least
$77,625,000 in principal amount of the Notes
and sixty-six and two-thirds percent (66 2/3%)
of the Series G Preferred Stock. See "The
Exchange Offer--Conditions to the Exchange
Offer."
Procedures for Tendering Each holder of Notes wishing to accept the Note
Notes....................... Exchange Offer must complete and sign the Note
Consent and Letter of Transmittal, in
accordance with the instructions contained
herein and therein, and forward or hand deliver
such Note Consent and Letter of Transmittal,
together with any signature guarantees and any
other documents required by the Note Consent
and Letter of Transmittal, including
certificates representing the tendered Notes or
confirmations of, or an Agent's Message (as
defined below) with respect to book entry
transfers of such Notes, to the Exchange Agent
at its address set forth on the back cover page
of this Offering Circular. Any beneficial owner
of Notes whose securities are registered in the
name of a broker, dealer, commercial bank,
trust company or other nominee is urged to
contact the registered holder(s) of such
securities promptly to instruct the registered
holder(s) whether to tender such beneficial
owner's securities. Beneficial Holders whose
certificates representing their Notes are not
immediately available or who cannot deliver
their certificates or any other required
documents to the Exchange Agent prior to the
Expiration Date may tender their Notes pursuant
to the guaranteed delivery procedure set forth
herein. See "The Exchange Offer--Procedures for
Tendering Notes--Guaranteed Delivery."
Procedures for Tendering
Series G Preferred Stock.... Each holder of Series G Preferred Stock wishing
to accept the Series G Exchange Offer must
complete and sign the Series G Conversion
Notice and Letter of Transmittal, in accordance
with the
10
<PAGE>
instructions contained herein and therein, and
forward or hand deliver such Series G
Conversion Notice and Letter of Transmittal,
together with any signature guarantees and any
other documents required by the Series G
Conversion Notice and Letter of Transmittal,
including certificates representing the
tendered Series G Preferred Stock, to the
Exchange Agent at its address set forth on the
back cover page of this Offering Circular. See
"The Exchange Offer--Procedures for Tendering
Series G Preferred Stock."
Procedures for Tendering
Warrants.................... Each holder of Warrants wishing to accept the
Warrant Exchange Consideration must complete
and sign the Warrant Letter of Transmittal, in
accordance with the instructions contained
herein and therein, and forward or hand deliver
such Warrant Letter of Transmittal, together
with any signature guarantees and any other
documents required by the Warrant Letter of
Transmittal, including certificates
representing the tendered Warrants, to the
Exchange Agent at one of its addresses set
forth on the back cover page of this Offering
Circular. See "The Exchange Offer--Procedures
for Tendering Warrants."
Certain Federal Income Tax
Consequences................ For a discussion of certain federal income tax
consequences of the Exchange Offer to holders
of Notes, Series G Preferred Stock and
Warrants, see "Certain Federal Income Tax
Considerations."
The Notes, the Common Stock
and the Preferred Stock..... The Company issued and has outstanding
$86,250,000 in principal amount of Notes. The
Notes bear interest at 7 1/8% which is payable
in semi-annual installments beginning on April
15, 1997. The Notes mature on October 15, 2001.
As of the date of this Offering Circular, there
were approximately 15,140,115 shares of Common
Stock issued and outstanding and 2,400,000
shares of Common Stock reserved for issuance in
connection with employee stock options. In
addition, the Company has the authority to
issue up to 20,000,000 shares of preferred
stock in one or more series, of which 3,125,000
shares have been designated Series G Preferred
Stock and 2,962,032 are issued and outstanding.
The Company also has outstanding warrants to
purchase an aggregate of 1,391,892 shares of
Common Stock, including the Warrants. Assuming
that all of the holders of the outstanding
Notes, the Series G Preferred Stock and the
Warrants accept the Exchange Offer, there would
be additional 33,971,275 shares of Common
Stock, 3,000,000 shares of Series H Preferred
Stock and 43,867.628 shares of Series I
Preferred Stock outstanding upon consummation
of the Exchange Offer. See "The Exchange
Offer--Consideration Being Offered,"
"Description of the Notes" and "Description of
Capital Stock."
Trading...................... The Notes trade in the PORTAL Market. For
further information, see "Descriptions of the
Notes--General."The Common Stock is listed on
the Nasdaq National Market under the symbol
"TRKN." For further information, see
"Description of Capital Stock--Market Price of
Common Stock."
Exchange Agent............... U.S. Trust Company of California, N.A. See "The
Exchange Offer--Exchange Agent."
11
<PAGE>
Risk Factors................. See "Risk Factors" beginning on page 24 for a
discussion of certain factors that should be
carefully considered in connection with
deciding whether to tender Notes, Series G
Preferred Stock or Warrants in the Exchange
Offer.
Arrangements with
Christopher D. Dobson....... In connection with the Exchange Offer, the
Board of Directors of the Company has reached
certain agreements with Christopher D. Dobson,
Chairman of the Board, Chief Executive Officer
and Chief Science Officer of the Company. The
Company and Mr. Dobson agreed that upon
consummation of the Exchange Offer, the Company
will grant Mr. Dobson 11,492,806 shares of
restricted Common Stock, which restrictions
shall lapse on the earlier of 5 years after the
closing of the Exchange Offer or the sale of
the Company. In addition, Mr. Dobson would also
receive a contingent variable interest of up to
3% of the net proceeds received upon the sale
of the Company for an amount in excess of $250
million. The Company and Mr. Dobson also agreed
upon the terms of his continued employment at
the Company. Finally, the Board approved a
bonus for Mr. Dobson, the payment of which is
conditioned on the future earnings before
interest, taxes, depreciation and amortization
("EBITDA") of the Company reaching certain
levels. See "Contracts, Arrangements,
Understandings or Relationships with Respect to
the Notes, Series G Preferred Stock or
Warrants."
THE TERMS OF THE SERIES H PREFERRED STOCK AND THE SERIES I PREFERRED STOCK
Series H Preferred Stock. The following summary description of the Series H
Preferred Stock, $10 stated amount per share (the "Stated Amount"), is
necessarily incomplete and is thus qualified in its entirety by reference to
the more detailed description of the terms of the Series H Preferred Stock
which is attached as Annex B to this Offering Circular and incorporated herein
by reference.
Dividend..................... 8 1/8% of the stated amount per annum, payable
semiannually on October 15 and April 15 (each,
a "Dividend Payment Date"). On each Dividend
Payment Date, the dividend may be paid, at the
Company's option, with either cash, additional
shares of Series H Preferred Stock ("Pik
Preferred") or a combination thereof. If the
Company's consolidated EBITDA for the two most
recently completed fiscal quarters exceeds
$7,500,000 and the Company elects to pay all or
a portion of dividends in Series H Preferred
Stock, then the dividend rate shall increase to
9 1/8% on all outstanding Series H Preferred
Stock (including any outstanding Pik
Preferred). In addition, if the holders of
Series H Preferred Stock are entitled to elect
a majority of the Board of Directors as
described in the voting rights section below,
the dividend payable on the Series H Preferred
Stock shall increase to 12%.
Liquidation Preference....... The Stated Amount per share plus accrued but
unpaid dividends. After payment of such
liquidation preference, the holders of Series H
Preferred Stock shall not be entitled to share
in any assets or funds remaining for
distribution.
Ranking...................... Because the tender of sixty-six and two-thirds
of the Series G Preferred Stock is a condition
to the Exchange Offer, if this
12
<PAGE>
condition is satisfied, all nontendered Series
G Preferred Stock will by the terms of the
Series G Preferred Stock automatically convert
to Common Stock, and the Series H Preferred
Stock will by its terms rank senior to all
other equity securities of the Company then
outstanding. Holders of Common Stock or any
other class of capital stock shall not be
entitled to receipt of dividends unless and
until all accrued and unpaid dividends on the
Series H Preferred Stock have first been paid
and all shares of Pik Preferred have been
redeemed in cash. No equity security senior to
or on parity with the Series H Preferred stock
can be issued without the consent of holders of
a majority of the Series H Preferred Stock.
Conversion................... Each share of Series H Preferred Stock shall
automatically convert into 1.4285 shares of
Common Stock if and when the closing price of
the Common Stock on a United States national
securities exchange or on an established
automated over-the-counter trading market in
the United States is at a price in excess of
$7.00 for a period of 30 consecutive trading
days.
Optional Redemption.......... The Series H Preferred Stock is subject to
redemption in whole or in part at the option of
the Company for a cash amount per share equal
to the Stated Amount plus accrued and unpaid
dividends to the date of such redemption.
Voting Rights................ The holders of Series H Preferred Stock shall
not be entitled to vote except to the extent
required by applicable law and as provided
below. The Series H Preferred Stock, voting as
a class, shall be entitled to elect one
director if the Board of Directors is
constituted of five members or fewer, and two
directors if the Board of Directors is
constituted of more than five members (each a
"Series H Designated Director"). If the Company
has not redeemed all of the outstanding Series
H Preferred Stock on or prior to June 30, 2001
or if, at the end of any fiscal quarter of the
Company, the Company's Consolidated Free Cash
exceeds $30,000,000 and the Company shall not
have offered to redeem Series H Preferred Stock
with a stated amount equal to such excess, then
the holders of Series H Preferred Stock shall
be entitled to elect the number of directors
that will constitute a majority of the Board of
Directors. "Consolidated Free Cash" means cash
and cash equivalents minus (i) debt and (ii)
projected capital expenditures budgeted for the
succeeding twelve months following the date of
determination.
Restrictive Covenants........ Without the affirmative vote or written consent
of holders of a majority of the outstanding
shares of Series H Preferred Stock, or without
the consent of the Series H Designated
Director(s), the Company may not incur funded
debt, other than ordinary course debt utilized
for working capital purposes and purchase money
debt.
Dilution..................... The Series H Preferred Stock is entitled to
customary antidilution protection in the event
of stock splits and recapitalizations.
13
<PAGE>
Series I Preferred Stock. The Series I Preferred Stock, no par value per
share, is designed to be the functional equivalent of approximately 43,867,628
shares Common Stock. There are approximately 43,867.628 shares of Series I
Preferred Stock to be issued in the Exchange Offer; accordingly, each share is
convertible into 1,000 shares of Common Stock, has 1,000 votes and receives
dividends if declared at 1,000 times the rate declared on the Common Stock.
The Company intends to call a special meeting of its shareholders as soon as
possible after the consummation of the Exchange Offer for the purpose of
approving an amendment to the Restated Articles of the Company to provide for
an increase in the number of authorized shares of Common Stock from 50,000,000
to 110,000,000 and a decrease in the number of authorized shares of preferred
stock from 20,000,000 to 5,000,000 (the "Charter Amendment"). Upon approval of
the Charter Amendment, the Series I Preferred Stock will automatically convert
into Common Stock as provided below. See the description of the conversion
rights of the Series I Preferred Stock below. The following summary
description of the Series I Preferred Stock is necessarily incomplete and is
thus qualified in its entirety by reference to the more detailed description
of the terms of the Series I Preferred Stock which is attached as Annex C to
this Offering Circular and incorporated herein by reference.
Conversion................... Each share of Series I Preferred Stock shall
automatically convert into 1,000 shares of the
Common Stock (the "Conversion Ratio")
immediately upon effectiveness of the Charter
Amendment. The Conversion Ratio shall be
decreased (i.e., the number of shares of Common
Stock to be received per share of Series I
Preferred Stock shall be decreased) by one
percent (1%) for each six month period that
elapses after the date of the first issuance of
the Series I Preferred Stock prior to the
shareholders approving the Charter Amendment.
Dividend..................... The Series I Preferred Stock shall receive
dividends, whenever the Company pays dividends
on its Common Stock, in such amount as if the
outstanding shares of Series I Preferred Stock
were converted into shares of Common Stock at
the applicable Conversion Ratio.
Liquidation Preference....... Subject to the liquidation preference of the
Series H Preferred Stock, $0.001 per share.
After payment of such liquidation preference,
the holders of Series I Preferred Stock shall
share any assets and funds remaining for
distribution with holders of Common Stock on an
as converted basis.
Ranking...................... The Series I Preferred Stock ranks junior to
the Series H Preferred Stock as to dividends
and liquidation, pari passu with the Common
Stock as to dividends and senior to the Common
Stock as to liquidation.
Voting Rights................ The holders of Series I Preferred Stock are
entitled to vote as a class with the Common
Stock on an as converted basis, except that the
Series I Preferred Stock is not entitled to
vote on the Charter Amendment.
Dilution..................... The Series I Preferred Stock is entitled to
customary antidilution protection in the event
of stock splits and recapitalizations.
14
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF TRIKON
The following selected consolidated financial data of Trikon is qualified by
reference to and should be read in conjunction with the consolidated financial
statements and notes thereto of Trikon and "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Trikon," which
are included in the Company's 1997 Form 10-K, which is attached hereto as
Annex D and incorporated by reference herein. The selected consolidated
financial data set forth below as of December 31, 1997 and 1996 and for the
years ended December 31, 1997, 1996 and 1995 have been derived from the
audited financial statements of Trikon included in the Company's 1997 Form 10-
K. The selected consolidated financial data set forth below as of December 31,
1995 and 1994 and as of and for the year ended February 28, 1994 and the ten
months ended December 31, 1994, have been derived from audited financial
statements of Trikon not included in the Company's 1997 Form 10-K. The
selected consolidated financial data for the twelve months ended December 31,
1994, and the ten months ended December 31, 1993, have been derived from
unaudited financial statements of Trikon, but include all adjustments
(consisting only of normal recurring adjustments) which Trikon considers
necessary for a fair presentation of the results of operations for the periods
presented.
<TABLE>
<CAPTION>
TEN MONTHS
ENDED TWELVE
YEAR ENDED DECEMBER 31 DECEMBER 31(1) MONTHS ENDED YEAR ENDED
---------------------------- ---------------- DECEMBER 31, FEBRUARY 28,
1997 1996(3) 1995(2) 1994 1993 1994(1) 1994
--------- -------- ------- ------- ------- ------------ ------------
OPERATING DATA: (IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product sales......... $ 55,609 $ 39,386 $20,890 $ 8,005 $ 4,435 $ 9,813 $ 6,244
License revenues...... 29,500 -- 400 700 1,900 700 1,900
Contract revenues..... -- 2,841 -- -- -- -- --
--------- -------- ------- ------- ------- ------- -------
Total revenues...... 85,109 42,227 21,290 8,705 6,335 10,513 8,144
--------- -------- ------- ------- ------- ------- -------
Costs and expenses:
Cost of goods sold.... 61,974 24,597 11,144 5,404 3,218 6,444 4,259
Research and
development.......... 17,033 10,145 4,567 3,584 2,186 4,210 2,812
Selling, general and
administrative....... 34,734 16,592 5,943 3,382 1,688 3,917 2,224
Amortization of
intangibles.......... 3,116 482 -- -- -- -- --
Purchased in-process
technology........... 2,975 86,028 -- -- -- -- --
Restructuring costs... 18,273 -- -- -- -- -- --
Impairment write-
downs................ 44,135 -- -- -- -- -- --
--------- -------- ------- ------- ------- ------- -------
Total costs and
expenses........... 182,240 137,844 21,654 12,370 7,092 14,571 9,295
--------- -------- ------- ------- ------- ------- -------
Loss from operations.... (97,131) (95,617) (364) (3,665) (757) (4,058) (1,151)
Interest:
Interest expense...... (12,068) (1,821) (294) (146) (213) (159) (227)
Interest income....... 674 1,628 777 125 15 143 32
--------- -------- ------- ------- ------- ------- -------
Income (loss) before
income tax provision
(benefit).............. (108,525) (95,810) 119 (3,686) (955) (4,074) (1,346)
Income tax provision
(benefit).............. (9,248) (1,335) 1 54 51 54 51
--------- -------- ------- ------- ------- ------- -------
Net income (loss)....... $ (99,277) $(94,475) $ 118 $(3,740) $(1,006) $(4,128) $(1,397)
========= ======== ======= ======= ======= ======= =======
Net income (loss) per
share(4):
Basic................. $ (6.71) $ (10.03) $ 0.02 $ (0.94) $ (1.04)
Diluted............... (6.71) (10.03) 0.02 (0.94) (1.04)
========= ======== ======= ======= =======
Number of shares used in
per share
computation(4):
Basic................. 14,800 9,420 5,614 3,960 3,960
Diluted............... 14,800 9,420 6,025 3,960 3,960
========= ======== ======= ======= =======
Ratio of earnings to
fixed charges(6)...... -- -- 1.29 -- --
========= ======== ======= ======= =======
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------- FEBRUARY 28,
1997 1996(3) 1995(2) 1994 1994
-------- -------- ------- ------- ------------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficiency)(5)............. $(65,794) $ 58,071 $47,670 $ 6,171 $ 5,926
Total assets................. 79,690 183,180 59,293 16,631 12,080
Long-term debt (including
capital lease and pension
obligations and excluding
deferred taxes, redeemable
convertible preferred stock
and convertible subordinated
notes), less current
portion..................... 5,245 6,651 686 733 145
Convertible Subordinated
Notes, less amounts
classified as current at
December 31, 1997........... -- 86,250 -- -- --
Redeemable convertible
preferred stock............. -- -- -- 14,205 8,705
Shareholders' equity
(deficit), excluding
redeemable convertible
preferred stock............. (44,943) 31,248 53,413 (4,419) (646)
</TABLE>
- --------
(1) During 1994, Trikon changed its fiscal year end from the last day of
February to December 31. Information for the twelve months ended December
31, 1994 (unaudited) is provided for comparison to the information for the
years ended December 31, 1995 and February 28, 1994. Information for the
ten months ended December 31, 1993 (unaudited) is provided for comparison
to the information for the ten months ended December 31, 1994.
(2) On August 29, 1995, Trikon completed its initial public offering,
resulting in approximately $40,093,235 of net proceeds to Trikon. The
funds were used to cover Trikon's working capital needs, its investment in
evaluation systems and capital expenditures, and to continue to expand its
research and development and operational activities. The remaining funds
were used to finance the cash portion of the Acquisition and related
transaction costs and expenses.
(3) Includes the assets and liabilities, as of December 31, 1996, and the
results of operations from November 15, 1996 to December 31, 1996 of
Electrotech Limited and Electrotech Equipments Limited acquired on
November 15, 1996. See Note 2 of the Notes to the Consolidated Financial
Statements.
(4) See Note 1 of Notes to Consolidated Financial Statements in the Company's
1997 Form 10-K for an explanation of the method used to determine the
number of shares used to compute per share amounts.
(5) Working capital deficiency for 1997 includes the convertible subordinated
notes.
(6) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consists of income (loss) before income taxes plus fixed
charges, and "fixed charges" consists of interest expense plus an
allocation of a portion of rent representative of interest. For the year
ended February 28, 1994, the ten months ended December 31, 1994, and the
years ended December 31, 1996 and 1997 the ratio of earnings to fixed
charges are negative ratios and therefore not presented. For the year
ended February 28, 1994, the ten months ended December 31, 1994, and the
years ended December 31, 1996 and 1997, the Company's earnings were
inadequate to cover fixed charges in the amounts of $1,346,000,
$3,686,000, $95,810,000 and $108,525,000, respectively.
16
<PAGE>
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED DATA AS OF DECEMBER 31, 1997
AND FOR THE YEAR THEN ENDED(1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------------
EXCHANGE OFFER
RESTRUCTURING(1A) AND RESTRUCTURING(1B)
----------------- ---------------------
(IN THOUSANDS)
<S> <C> <C>
OPERATING DATA:
Revenues............................... $ 46,806 $ 46,806
Loss from operations................... (16,517) (18,817)
Net loss............................... (25,097) (19,889)
Net loss per share basic and diluted... (1.70) (0.26)
Pro forma ratio of earnings to fixed
charges (3)........................... -- --
<CAPTION>
DECEMBER 31, 1997
---------------------------------------
ACTUAL PRO FORMA(1C)
----------------- ---------------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)(2)........ $(65,794) $ 21,498
Total assets........................... 79,690 76,892
Long-term debt less current portion.... 5,245 5,245
Shareholders' equity (deficiency)...... (44,943) 40,051
Book value per common share (4)........ (2.97) 0.43
</TABLE>
- --------
(1) The unaudited pro forma data should be read in conjunction with the
unaudited pro forma financial statements included elsewhere herein. The
unaudited pro forma operating data reflects the following:
(A) The accompanying unaudited operating data for the year ended December
31, 1997 gives effect to the 1) repayment and termination of the
Working Capital Facility, 2) closure of the Company's Etch operations
at its Chatsworth, California location and related asset impairment
charges and 3) certain other restructuring costs, including the write-
down of intangible assets/values, as a result of recent and projected
revenues, continuing losses and negative cash flows, which indicate the
intangible assets have become impaired, as if they all had occurred as
of January 1, 1997. Accordingly, the unaudited pro forma operating data
excludes the results of operations of the Company's Etch operations,
includes certain adjustments to reduce amortization expense related to
the write-off of intangible assets and the related tax effect, and
reduced interest expense reflecting the pay off of the Working Capital
Facility. Following the completion of the restructuring of the
Company's operations, the remaining business will consist primarily of
the worldwide operations of Trikon Limited, the business acquired by
Trikon on November 15, 1996 with headquarters located in the United
Kingdom.
(B) Operating data reflecting the Exchange Offer, assuming 100%
participation, and the restructuring and other events (see Note 1(A))
as if they had occurred as of January 1, 1997, and, accordingly,
includes the above adjustments and compensation expense resulting from
the issuance of Common Stock to the Company's Chairman of the Board and
Chief Executive Officer, reduced interest expense associated with the
exchange of the Notes and additional outstanding shares of Common Stock
for purposes of computing net loss per share.
(C) Balance sheet data reflecting the Exchange Offer, assuming 100%
participation, as if it had occurred at December 31, 1997.
(2) Actual working capital deficiency includes the Notes.
(3) For purposes of computing the pro forma ratio of earnings to fixed
charges, "earnings" consists of pro forma income (loss) before income
taxes plus fixed charges, and "fixed charges" consists of interest expense
plus an allocation of a portion of rent representative of interest. The
pro forma ratios of earnings to fixed charges for the year ended December
31, 1997 were negative ratios and therefore not presented. The loss for
the year ended December 31, 1997 on a pro forma basis reflecting the
restructuring and on a pro forma basis reflecting the restructuring and
Exchange Offer were inadequate to cover fixed charges in the amount of
$24,805,000 and $19,597,000, respectively.
(4) Book value per share on December 31, 1997 and pro forma book value per
share giving effect to the Exchange Offer, assuming 100% participation, as
if it occurred on December 31, 1997 is computed by dividing the
shareholder's equity (deficiency) and pro forma shareholder's equity by
the actual number of outstanding shares of Common Stock and pro forma
number of outstanding shares of Common Stock, respectively. The pro forma
number of shares of Common Stock includes 51.9 million shares of Common
Stock to be issued to the holders of the Notes, 15.3 million shares of
Common Stock to be issued to the holders of the Series G Preferred Stock
and the Warrants and 11.5 million shares of restricted Common Stock to be
issued to the Chairman of the Board and Chief Executive Officer of the
Company. The pro forma number of Common Shares to be issued assumes the
Series I Preferred Stock to be issued in the transaction and subsequently
converted into Common Stock, upon shareholder approval of the Company's
Charter Amendment, has been converted into Common Stock as of December 31,
1997 since shareholders' approval is expected.
17
<PAGE>
SELECTED COMBINED FINANCIAL DATA OF TRIKON LIMITED
The selected combined financial data presented below for the fiscal year
ended June 30, 1993, and as of and for each of the three fiscal years ended
June 30, 1994, 1995, and 1996 are derived from audited combined financial
statements of Trikon Limited (which was acquired by Trikon in November of
1996), which have been audited by Ernst & Young Chartered Accountants,
independent auditors, and, except with respect to the financial statements for
the year ended June 30, 1993 and as of June 30, 1994, are contained in the
Company's 1997 Form 10-K. The selected combined financial data presented below
as of June 30, 1993 and for the three months ended September 30, 1995 and 1996
and as of September 30, 1996 is derived from unaudited combined financial
statements of Trikon Limited, which are not contained in the Company's 1997
Form 10-K. The combined financial statements below are presented in British
pounds sterling. For reference purpose, the average of the closing selling and
buying rates was U.S.$1 to 1.6454 British Pounds Sterling on December 31,
1997. All of the selected combined financial data below is prepared under
accounting principles generally accepted in the United Kingdom ("UK GAAP"),
which differ in certain respects from United States generally accepted
accounting principles ("US GAAP"). The selected combined financial data set
forth below is qualified in its entirety by, and should be read in conjunction
with, Trikon Limited's unaudited condensed combined financial statements
included in the Company's 1997 Form 10-K and with Trikon Limited's combined
financial statements and related notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations of
Trikon Limited," which are included in the Company's 1997 Form 10-K.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30 YEAR ENDED JUNE 30
----------------------------- --------------------------------------------------------------
1996 1995 1996 1995 1994 1993
-------------- ------------- -------------- -------------- -------------- --------------
(IN THOUSANDS OF BRITISH POUNDS)
<S> <C> <C> <C> <C> <C> <C>
COMBINED PROFIT AND LOSS
ACCOUNTS DATA:
Sales................... (Pounds)10,197 (Pounds)7,761 (Pounds)49,012 (Pounds)34,496 (Pounds)23,807 (Pounds)16,547
Cost of sales........... 5,218 3,760 23,406 17,014 11,496 7,967
-------------- ------------- -------------- -------------- -------------- --------------
Gross profit............ 4,979 4,001 25,606 17,482 12,311 8,580
Operating expenses:
Research and development
costs.................. 1,702 1,239 6,674 4,421 3,332 2,365
Administrative expenses. 2,321 1,861 8,295 8,615 7,161 4,659
-------------- ------------- -------------- -------------- -------------- --------------
Total operating
expenses............... 4,023 3,100 14,969 13,036 10,493 7,024
-------------- ------------- -------------- -------------- -------------- --------------
Operating profit........ 956 901 10,637 4,446 1,818 1,556
Profit on disposal of
businesses(1).......... -- -- -- 5,040 -- --
-------------- ------------- -------------- -------------- -------------- --------------
Profit on ordinary
activities before
interest............... 956 901 10,637 9,486 1,818 1,556
Interest payable, net... (211) (146) (609) (438) (255) (95)
-------------- ------------- -------------- -------------- -------------- --------------
Profit on ordinary
activities before
taxation............... 745 755 10,028 9,048 1,563 1,461
Tax on profit on
ordinary activities.... 332 344 3,721 3,530 574 627
-------------- ------------- -------------- -------------- -------------- --------------
Profit for the period... (Pounds) 413 (Pounds) 411 (Pounds) 6,307 (Pounds) 5,518 (Pounds) 989 (Pounds) 834
============== ============= ============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF JUNE 30
SEPTEMBER 30, -----------------------------------------------------------
1996 1996 1995 1994 1993
-------------- -------------- -------------- -------------- --------------
(IN THOUSANDS OF BRITISH POUNDS)
<S> <C> <C> <C> <C> <C>
COMBINED BALANCE SHEET
DATA:
Working capital......... (Pounds)15,847 (Pounds)16,422 (Pounds)14,035 (Pounds)10,547 (Pounds)10,075
Total assets............ 47,427 51,030 38,339 28,005 22,093
Long-term obligations... 977 948 1,339 1,932 2,559
Total shareholders'
equity................. 27,013 26,621 20,401 14,844 13,836
</TABLE>
- --------
(1) Represents the profit, before taxes, recognized on the sales of Surface
Technology Systems Limited during the fiscal year ended June 30, 1995.
18
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF TRIKON
DECEMBER 31, 1997
(IN THOUSANDS OF U.S. DOLLARS)
The unaudited pro forma financial information presented below should be read
in conjunction with the notes thereto, as set forth below, and the separate
financial statements of Trikon and Trikon Limited included in the Company's
1997 Form 10-K attached hereto as Annex D.
The accompanying unaudited pro form financial data includes the following
unaudited pro forma financial statements:
1. Statement of operations reflecting the restructuring and related
events ("Statement of Operations No. 1")
2. Statement of operations reflecting the restructuring and related
events and the Exchange Offer ("Statement of Operations No. 2"); and
3. Balance sheet reflecting the pro forma effects of the Exchange Offer.
The accompanying unaudited Statement of Operations No. 1 for the year ended
December 31, 1997 gives effect to the 1) repayment and termination of the
Working Capital Facility, 2) closure of the Company's Etch operations in its
Chatsworth, California location and related asset impairment charges and 3)
certain other restructuring costs including the write-down of intangible
assets/values, as a result of recent and projected revenues, continuing losses
and negative cash flows, which indicate the intangible assets have become
impaired, as if they had occurred as of January 1, 1997. Accordingly, the
unaudited pro forma statement of operations excludes the results of operations
of the Company's Etch operations, includes certain adjustments to reduce
amortization expense related to the write-off of intangible assets and the
related tax effect, and reduces interest expense reflecting the pay off of the
Working Capital Facility.
Following the completion of the restructuring of the Company's operations,
the remaining business will consist primarily of the worldwide operations of
Trikon Limited, the business acquired by Trikon on November 15, 1996 with
headquarters located in the United Kingdom.
The following unaudited pro forma condensed consolidated balance sheet of
Trikon, as of December 31, 1997 and the audited pro forma condensed
consolidated Statement of Operations No. 2 for the year ended December 31,
1997 have been prepared to illustrate the effect of the proposed Exchange
Offer assuming 100% participation in the Exchange Offer. The financial
statements have been prepared as though the Exchange Offer had occurred on
December 31, 1997 for purposes of the pro forma balance sheet and as of
January 1, 1997 for purposes of the pro forma Statement of Operations No. 2.
The pro forma adjustments and the assumptions on which they are based are
described in the accompanying notes to the unaudited pro forma financial
statements.
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the consolidated financial position or condensed results of operations of
Trikon that would have been reported had the restructuring and related events
or the Exchange Offer occurred on the dates indicated, nor do they represent a
forecast of the consolidated financial position of Trikon at any future date
or the consolidated results of operations of Trikon for any future period.
Amounts representing the number of shares and fair market value of common
and preferred stock, and the amount of transaction fees and other assumptions
as reflected in the accompanying pro forma financial statements, are
preliminary and subject to the consummation of the Exchange Offer and 100%
participation in the Exchange Offer.
19
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NO. 1 OF TRIKON
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
REMOVE SHUT DOWN
ETCH ETCH PRO FORMA
CONSOLIDATED(1) OPERATIONS(2) DIVISION CONSOLIDATED(7)
--------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Total revenues.......... $ 85,109 $(8,803) $(29,500)(3) $ 46,806
Costs and expenses
Cost of goods sold..... 61,974 (8,095) (20,735)(3) 33,144
Research and
development........... 17,033 (7,847) -- 9,186
Selling, general and
administrative........ 34,734 (13,741) -- 20,993
Amortization of
intangibles........... 3,116 -- (3,116)(4) --
Purchased in-process
technology............ 2,975 (2,975) -- --
Restructuring costs.... 18,273 -- (18,273)(3) --
Impairment write-downs. 44,135 -- (44,135)(3) --
--------- ------- -------- --------
182,240 (32,658) (86,259) 63,323
--------- ------- -------- --------
Loss from operations... (97,131) 23,855 56,759 (16,517)
Interest expense, net.. (11,394) -- 3,106 (5) (8,288)
--------- ------- -------- --------
Loss before income tax
provision (benefit)... (108,525) 23,855 59,865 (24,805)
Income tax provision
(benefit)............. (9,248) -- 9,540 (6) 292
--------- ------- -------- --------
Net loss............... $ (99,277) $23,855 $ 50,325 $(25,097)
========= ======= ======== ========
Net loss per share
basic and diluted..... $ (6.71) $ (1.70)
========= ========
Number of shares used
in per share
computation........... 14,800 14,800
========= ========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NO. 1 OF
TRIKON
(1) As presented in the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K.
(2) Removes the operations of the Company's Etch operations in Chatsworth,
California, except for ongoing corporate cost of approximately $750,000.
(3) Removes the restructuring cost and asset impairment write-downs and the
license revenue from the sale of the MORI(TM) source and Forcefill(R) PVD
technologies licenses.
(4) Represents a reduction in amortization expense related to the write-down
of intangible assets discussed above.
(5) Represents a reduction in interest expense resulting from the assumed
repayment of the Working Capital Facility as of January 1, 1997 and the
removal of financing cost written off calculated as follows:
<TABLE>
<S> <C>
Working Capital Facility paid off................ $14,261
Interest rate in effect during period............ 10%
-------
Reduced interest expense......................... 1,426
Write off of financing cost...................... 1,680
-------
$ 3,106
=======
</TABLE>
(6) Represents the tax effect of the amortization adjustment and write-off of
a deferred tax liability which was established when the Company acquired
Trikon Limited in November 1996, for the difference in the book and tax
basis of the assets primarily consisting of intangible assets.
Accordingly, the write-off of such intangible assets directly impacts the
deferred tax liability and creates a deferred income tax benefit.
(7) Includes approximately $5.2 million effect (charged to cost of goods sold)
associated with the APB No. 16 write-up of Trikon Limited inventory.
20
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NO. 2 OF TRIKON
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
EXCHANGE PRO FORMA
CONSOLIDATED(1) OFFER CONSOLIDATED
--------------- -------- ------------
<S> <C> <C> <C>
Total revenues........................ $ 46,806 $ -- $ 46,806
Costs and expenses
Cost of goods sold................... 33,144 -- 33,144
Research and development............. 9,186 -- 9,186
Selling, general and administrative.. 20,993 2,300 (2) 23,293
-------- ------- --------
63,323 2,300 65,623
-------- ------- --------
Loss from operations................. (16,517) (2,300) (18,817)
Interest expense, net................ (8,288) 7,508 (3) (780)
-------- ------- --------
Loss before income tax provision..... (24,805) 5,208 (19,597)
Income tax provision................. 292 -- 292
-------- ------- --------
Net loss............................. $(25,097) $ 5,208 $(19,889)
======== ======= ========
Net loss per share basic and diluted
(4)................................. $ (1.70) $ (0.26)
======== ========
Number of shares used in per share
computation......................... 14,800 69,569 (4) 84,369
======== ======= ========
</TABLE>
- --------
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NO. 2 OF
TRIKON
(1) Represents Unaudited Pro Forma Statement of Operations reflecting the
effects of the restructuring and related events derived from the Unaudited
Pro Forma Statement of Operations No. 1 of Trikon.
(2) Represents compensation expense recognized based on the vesting of the
restricted Common Stock to be issued to the Company's Chairman of the
Board and Chief Executive Officer. The Common Stock issued to the Chairman
of the Board and Chief Executive Officer becomes 100% vested after five
years. This amount represents 20% of the total fair market value, based on
recent quoted market prices (i.e., $1.00 per share) of the Common Stock
(i.e., 20% of $11.5 million).
(3) Adjustment to interest expense to give effect to Exchange Offer at the
beginning of period presented computed as follows:
<TABLE>
<S> <C>
Notes................................ $86,250
Interest rate........................ 7.625%
-------
6,577
Amortization of financing cost....... 931
-------
$ 7,508
=======
</TABLE>
(4) Loss per share and weighted average shares outstanding are presented as if
the 51.9 million shares of common stock to be issued to the holders of the
Notes in the Exchange Offer, 11.5 million shares of restricted Common
Stock to be issued to the Chairman of the Board and Chief Executive
Officer of the Company in the Exchange Offer and 15.3 million shares of
Common Stock to be issued to the holders of the Series G Preferred Stock
and the Warrants in the Exchange Offer were issued as of January 1, 1997.
The net loss has been increased by $2.4 million, representing one year of
dividends on the Series H Preferred Stock, for purposes of calculating the
basic and diluted net loss per share. Only 20% (i.e. one year of vesting)
of the 11.5 million shares of Common Stock issued to the Company's
Chairman of the Board and Chief Executive Officer are included in the
number of shares used in the per share computation in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per
Share." The remaining 80% of the 11.5 million shares of Common Stock have
been excluded from diluted loss per share because it is anti-dilutive.
The Unaudited Pro Forma Statement of Operations No. 2 of Trikon does not
reflect a bonus payable to the Company's Chairman of the Board and Chief
Executive Officer in the amount of $1.5 million payable upon the achievement
of certain profitability levels and the occurrence of certain other events.
This bonus will be reflected as a charge to earnings when it is probable that
the profitability levels will be achieved and the other events will occur.
The above Unaudited Pro Forma Statement of Operations No. 2 of Trikon
assumes 100% participation in the Exchange Offer. Assuming only 90% of the
holders of the Notes participate in the Exchange Offer, the Company's net loss
and net loss per share on a pro forma basis would have been $20.6 million and
$0.27 per share, respectively.
21
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET OF TRIKON
DECEMBER 31, 1997
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
EXCHANGE PRO FORMA
CONSOLIDATED(1) OFFER CONSOLIDATED(5)
ASSETS --------------- -------- ---------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents....... $ 9,260 $ (500)(4) $ 8,760
Accounts receivable, net........ 18,842 -- 18,842
Inventories, net................ 23,870 -- 23,870
Other current assets............ 1,622 -- 1,622
--------- -------- ---------
Total current assets.......... 53,594 (500) 53,094
Property, equipment and leasehold
improvements, net................ 22,140 -- 22,140
Demonstration systems, net........ 1,227 -- 1,227
Intangible assets, net:
Financing costs................. 2,298 (2,298)(2) --
Other intangibles............... 15 -- 15
Other assets...................... 416 -- 416
--------- -------- ---------
Total assets.................. $ 79,690 $ (2,798) $ 76,892
========= ======== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Convertible subordinated notes.. $ 86,250 $(86,250)(2) $ --
Accounts payable................ 6,501 -- 6,501
Accrued expenses................ 3,264 -- 3,264
Warranty and related expenses... 1,439 -- 1,439
Accrued salaries and related
liabilities.................... 573 -- 573
Income tax payable.............. 1,606 -- 1,606
Interest payable................ 1,542 (1,542)(2) --
Restructuring cost.............. 3,952 -- 3,952
Sales returns payable........... 11,468 -- 11,468
Deferred revenue................ 1,923 -- 1,923
Current portion of long-term
debt and capital lease
obligations.................... 870 -- 870
--------- -------- ---------
Total current liabilities..... 119,388 (87,792) 31,596
Long-term debt and capital lease
obligations, less current
portion.......................... 127 -- 127
Other............................. 1,544 -- 1,544
Pension obligations............... 3,574 -- 3,574
SHAREHOLDERS' EQUITY (DEFICIENCY)
Preferred stock................. 19,349 (19,349)(2) 30,000
30,000(2)
Common stock.................... 137,767 71,299(2) 220,567
11,501(3)
Cumulative translation
adjustments.................... (745) -- (745)
Deferred compensation........... (11,501)(3) (11,501)
Accumulated deficit............. (201,314) 3,044(2) (198,270)
--------- -------- ---------
Total shareholders' equity
(deficiency)................. (44,943) 84,994 40,051
--------- -------- ---------
Total liabilities and
shareholders' equity
(deficiency)................. $ 79,690 $ (2,798) $ 76,892
========= ======== =========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
- --------
(1) As presented in the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K.
(2) To give effect to the issuance of Common Stock and Series H Preferred
Stock, payment of estimated transaction fees, conversion of the Notes and
Series G Preferred Stock, forgiveness of interest payable and recording of
the related gain on the transaction, under SFAS No. 15 "Troubled Debt
Restructuring," pursuant to the Exchange Offer, assuming the holders of
100% of the outstanding Notes and Series G Preferred Stock and Warrants
accept the Exchange Offer. In accordance with SFAS No. 15, the Series H
Preferred Stock is stated at the full liquidation value. No dividends are
accrued on the Series H Preferred Stock since the Company has the option
to pay such dividends with additional preferred stock, cash or any
combination thereof. The Common Stock amount includes approximately 15.3
million shares of Common Stock to be issued to the holders of the Series G
Preferred Stock and the Warrants. The excess of the $19.3 million of
22
<PAGE>
Series G Preferred Stock over the fair market value of the Common Stock of
$15.3 million, based on $1.00 per share quoted market prices, has been
recorded as an addition to Common Stock. The Common Stock amount also
includes approximately 51.9 million shares of Common Stock to be issued to
the holders of the Notes at an estimated fair market value of $1.00 per
share based on recent quoted market prices of the Company's Common Stock,
resulting in a gain computed as follows:
<TABLE>
<CAPTION>
AMOUNT
-------
(000'S)
<S> <C>
Carrying amount of the Notes........................................ $86,250
Accrued interest.................................................... 1,542
-------
87,792
Less:
Series H Preferred Stock at liquidation value....................... 30,000
Common Stock at current market value................................ 51,950
Write-off capitalized financing cost................................ 2,298
Estimated transaction cost.......................................... 500
-------
84,748
-------
Gain................................................................ $ 3,044
=======
</TABLE>
The pro forma Common Stock amounts assume the Series I Preferred Stock to
be issued in the transaction and subsequently converted into Common Stock,
upon shareholder approval of the Company's Charter Amendment, has been
converted to Common Stock as of December 31, 1997, since shareholder
approval is expected.
(3) Represents the recording of deferred compensation expense associated with
the issuance of 11.5 million shares of Common Stock to the Company's
Chairman of the Board and Chief Executive Officer valued at an estimated
fair market value of $1.00 based on recent quoted market prices.
(4) Represents estimated transaction fees of $500,000.
(5) The above Unaudited Pro Forma Consolidated Balance Sheet assumes 100%
participation in the Exchange Offer. Assuming only 90% of holders of the
Notes participate in the Exchange Offer, the Company's working capital and
shareholders equity on a pro forma basis would be $12.7 million and $31.3
million, respectively.
23
<PAGE>
RISK FACTORS
Prior to deciding whether to exchange Notes, Series G Preferred Stock or
Warrants in the Exchange Offer, holders of the Notes, Series G Preferred Stock
and Warrants should carefully consider all of the information contained or
incorporated by reference in this Offering Circular, especially the risk
factors described or referred to in the following paragraphs.
This Offering Circular contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Words such as "expects," "anticipates, "intends," "plans," "believes,"
"seeks," "estimates" and other similar expressions or variations of such words
are intended to identify these forward-looking statements. Additionally,
statements concerning the consummation or failure of the Exchange Offer and of
the future matters such as the development of new products, enhancements or
technologies, and other statements regarding matters that are not historical
fact are forward-looking statements. The forward-looking statements involve
risks and uncertainties. Actual results could differ materially from those
projected in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, availability
of financial resources adequate for short-, medium- and long-term needs,
product demand and market acceptance, uncertainty about the effectiveness of
the Exchange Offer and the adequacy of the provisions made in connection with
the restructuring, exposure to the economic downturn in Asia and continued
overcapacity in the DRAM market.
Change in Priority. The Notes are debt obligations of the Company and,
accordingly, have priority over the equity securities of the Company with
respect to payment in the event of a liquidation, dissolution or winding-up of
the Company. Upon exchange pursuant to the Note Exchange Offer, the Notes
tendered and accepted will be exchanged for Series H Preferred Stock, Series I
Preferred Stock and Common Stock. In any liquidation or reorganization of the
Company under the United States Bankruptcy Code, the Series H Preferred Stock,
Series I Preferred Stock and the Common Stock, as equity securities of the
Company, would rank below all debt claims, and claims of holders of Notes not
tendered pursuant to the Exchange Offer. However, the Notes do not mature
until October 15, 2001 and the Series H Preferred Stock may be redeemed at the
option of the Company at any time.
The Series G Preferred Stock has preferences over the Common Stock in the
event of liquidation, dissolution or winding-up of the Company, as well as
with regard to the payment or declaration of cash dividends. Upon exchange
pursuant to the Series G Exchange Offer, the Series G Preferred Stock tendered
and converted will be converted into Common Stock and the holders thereof will
receive a Conversion Payment comprised of Series I Preferred Stock and Common
Stock. Upon adoption of the Charter Amendments, the Series I Preferred Stock
will automatically convert into Common Stock. See "The Exchange Offer--
Consideration Being Offered--The Series I Preferred Stock." Holders of Common
Stock will not be entitled to receive any payment or other distribution of
assets upon the liquidation or dissolution of the Company until after the
holders of Series H Preferred Stock, if any, have received the entire
preferential amounts to which they may be entitled. See "The Exchange Offer--
Consideration Being Offered" and "Description of Capital Stock."
Effect of Exchange Offer on Unconverted Notes. In connection with the Note
Exchange Offer, the Company is soliciting Consents to the Proposals. If the
Proposals become operative, certain covenants, provisions and "events of
default" pursuant to the Indenture and all rights pursuant to the Registration
Agreement will be eliminated (or, in certain cases, amended) with respect to
any Notes that remain outstanding after consummation of the Note Exchange
Offer, and holders thereof will no longer be entitled to the benefit of (or,
in the case of amendments, the same benefit under) such covenants, provisions,
"events of default" and rights. The elimination (or, in certain cases,
amendment) of these covenants, provisions, "events of default" and rights
would permit the Company to take action that could increase credit risks with
respect to the Company faced by the non-tendering holders, adversely affect
the market price of the Notes that remain outstanding or otherwise be adverse
to the interest of non-tendering holders.
Absence of Dividends on Common Stock. The Company has not paid any dividends
on the Common Stock in the past and does not anticipate paying dividends on
the Common Stock at any time in the foreseeable future.
24
<PAGE>
Nasdaq National Market Listing Requirements. On August 22, 1997, the
Commission approved a strengthening of both the quantitative and qualitative
requirements for issuers listing on the Nasdaq National Market. The new
continued listing requirements became effective February 23, 1998. Under the
new rules, among other things, the common stock of a company listed on the
Nasdaq National Market must have a minimum price of $1. If the common stock
price of a company falls below $1 for 30 consecutive days, its common stock
must close at or above $1 for ten consecutive days within 90 days of the date
on which the price fell below $1. Otherwise it is subject to delisting. In
addition, a company must maintain net tangible assets in excess of $4 million
under the new Nasdaq National Market continued listing requirements. Net
tangible assets means total assets (excluding goodwill) minus total
liabilities. For purposes of the continued listing requirements on the Nasdaq
National Market, the Company had a deficiency in tangible net assets of $44.9
million at December 31, 1997. The Company believes that the cancellation of
Notes tendered in the Exchange Offer will allow the Company to satisfy the net
tangible assets test. There can be no assurance that the Company's Common
Stock will continue to trade at or above $1, that the Company will succeed in
sufficiently increasing or maintaining its net tangible assets or that the
Company will remain in compliance with the other quantitative continued
listing requirements. If the Exchange Offer is not consummated, the Common
Stock will likely be delisted from the Nasdaq National Market. If the
Company's Common Stock is delisted, it would significantly impair the
liquidity of the market for the Company's Common Stock.
If the Company is delisted from the Nasdaq National Market and is unable to
list for trading on a United States national securities exchange or the Nasdaq
SmallCap Market and the Indenture has not been amended as proposed in the
Proposals, a Designated Event under the terms of the Indenture will have
occurred. The occurrence of a Designated Event enables each holder of Notes to
elect to have the Company repurchase such holder's Notes at a purchase price
equal to 101% of the principal amount thereof, together with accrued and
unpaid interest thereon. The Company does not currently have, and will not
have in the foreseeable future, the financial resources necessary to
repurchase the Notes in such circumstances.
Repurchase of Notes upon Designated Event. If the Indenture is not amended
as proposed in the Proposals, upon a Designated Event, which includes a Change
of Control or a Termination of Trading (each as defined herein), each holder
of Notes will have the right, at the holder's option, to require the Company
to repurchase all or a portion of such holder's Notes. If a Designated Event
were to occur, the Company would not in the forseeable future have sufficient
funds to pay the repurchase price for all Notes tendered by the holders
thereof. In addition, it is possible that the terms of future indebtedness or
lease obligations incurred by the Company may prohibit the Company from
purchasing any Notes and may also provide that a Designated Event, as well as
certain other change of control events with respect to the Company, would
constitute an event of default thereunder. If the Company were prohibited from
purchasing Notes tendered, this failure would constitute an "event of default"
under the Indenture, which, in turn, may also constitute an "event of default"
under other indebtedness or long-term leases that the Company currently has or
may enter into from time to time.
Tax Consequences. The Exchange Offer will have tax consequences for holders
of Notes, Series G Preferred Stock or Warrants, each of whom is urged to
consult his or her tax advisor as to the particular tax consequences
associated with such holder. The Company will recognize significant
cancellation of indebtedness ("COD") income upon the consummation of the
Exchange Offer. However, while such COD income will reduce the amount of the
Company's net operating loss carryovers, the Company does not anticipate that
such COD income will result in material current tax liabilities.
Securities Laws Considerations. The Exchange Offer is being made by the
Company in reliance on the exemption from the registration requirements of the
Securities Act afforded by Section 3(a)(9) thereof. Because neither the Notes,
Series G Preferred Stock or the Warrants have been registered under the
Securities Act, the Common Stock, Series H Preferred Stock and Series I
Preferred Stock that will be issued pursuant to the Exchange Offer will be
"restricted securities" as such term is defined under Rule 144 of the
Securities Act. Consequently, the certificates that represent the Common
Stock, Series H Preferred Stock and Series I Preferred Stock will bear
appropriate legends referring to restrictions on transfer and sale of the
Securities as provided in Rule 144. However, the holders of such Common Stock,
Series H Preferred Stock and Series I Preferred Stock
25
<PAGE>
should be able to "tack" the holding period of the original security to their
Common Stock, Series H Preferred Stock and Series I Preferred Stock for
purposes of Rule 144. In general, Rule 144 as currently in effect provides
that any person who has beneficially owned "restricted securities" for one
year (including any permissible tacking period) is entitled to sell such
"restricted securities" subject to certain volume and manner of sale
limitations. If "restricted securities" have been held for two years
(including any permissible tacking period), a holder thereof who is not an
affiliate of the Company and has not been an affiliate within the three months
prior to the sale is entitled to sell "restricted securities" without regard
to the above limitations pursuant to Rule 144(k). Accordingly, since the Notes
were sold by the Company on October 7, 1996, sales of Common Stock received in
the Note Exchange Offer by holders of Notes may be made in compliance with
Rule 144 commencing upon the consummation of the Exchange Offer. Since the
Series G Preferred Stock and Warrants were sold by the Company on June 30,
1997, sales of Common Stock received in the Series G Exchange Offer and
Warrant Exchange Offer by holders of Series G Preferred Stock or Warrants may
be made in compliance with Rule 144 commencing June 30, 1998.
Voting Rights of Common Stock. The voting rights of holders of Common Stock
for which the Notes are exchangeable pursuant to the Exchange Offer are
entitled to one vote per share. Except as is provided below and as required by
law, shares of Series H Preferred Stock are not entitled to vote. With respect
to the election of directors, the holders of shares of Series H Preferred
Stock, voting as a separate class, are entitled to elect one director if the
Board of Directors is constituted of five or fewer members and two directors
if the Board of Directors is constituted of more than five directors The
holders of Common Stock, voting as a separate class, are entitled to elect the
remaining directors. Holders of the Series I Preferred Stock are entitled to
vote as a class with the Common Stock on an as converted basis, except with
respect to the Charter Amendment. The Company intends to call a special
meeting of its shareholders as soon as possible after the consummation of the
Exchange Offer to approve the Charter Amendment which will provide for an
increase in authorized shares of Common Stock from 50,000,000 to 110,000,000
and a decrease in authorized shares of preferred stock from 20,000,000 to
5,000,000. Upon the effectiveness of the Charter Amendment, the Series I
Preferred Stock will automatically convert into Common Stock. If the Charter
Amendment is not approved by the holders of Common Stock within six months of
the closing of the Exchange Offer and for each six months thereafter that such
approval is not obtained, then the conversion ratio of the Series I Preferred
Stock will be reduced by one percent (1%) (i.e., the number of shares of
Common Stock into which each share of Series I Preferred is convertible shall
be decreased for each such six-month period). See "The Exchange Offer--
Consideration Being Offered--The Series H Preferred Stock," "--The Series I
Preferred Stock" and "Description of Capital Stock--Common Stock."
Losses and Accumulated Deficit; Ability to Continue as a Going Concern. For
the year ended December 31, 1997, the Company had reported a net loss of $99.3
million, including an operating loss of $97.1 million. As of December 31,
1997, the Company had an accumulated deficit of $201.3 million. In light of
the sale of non-exclusive licenses of its MORI(TM) source and Forcefill(R) PVD
technologies, the restructuring of the Etch Division, the Company's history of
significant losses from operations, negative cash flow from operating
activities and the termination of the senior secured facility entered into in
preparation of the Acquisition (the "Working Capital Facility") in November
1997, there is substantial doubt with respect to the Company's ability to
continue as a going concern. There can be no assurance that the Company will
operate profitably in the future and that the Company will not continue to
sustain losses. Continued losses would materially and adversely affect the
Company's business. Absent consummation of the Exchange Offer, and even
assuming the Company is successful in restructuring its Etch business, there
is significant doubt that the Company has adequate resources to fund its
operations during 1998.
Uncertainty of Restructuring. In the second half of 1997, in response to
continuing losses, the Company began to restructure its business. In October
1997, the Company reduced its global work force by 20%. In November 1997, the
Company sold non-exclusive licenses of its MORI(TM) source and Forcefill(R)
PVD technologies to Applied Materials, Inc. ("Applied Materials"). At the same
time, Trikon initiated the restructuring of its Etch Division. In connection
with the restructuring of the Etch Division, 64 out of the 99 employees
located at the Chatsworth, California facilities were terminated as of January
12, 1998. The Company
26
<PAGE>
will continue to provide customer support for MORI(TM) etch products currently
at customer locations and is evaluating to what extent it will manufacture
MORI(TM) etch products at its Newport, United Kingdom facility. There can be
no assurance that the Company's restructuring efforts will be successful in
returning the Company to profitability in the short or long term.
Adequacy of Provisions for Restructuring. The operating loss for the year
ended December 31, 1997 includes a charge of $18.3 million for restructuring
costs which include provisions for sales returns, allowance against accounts
receivable and provisions for closure costs. These charges to earnings reflect
the estimates and assumptions of management, and there can be no assurance
that the provisions and allowances are adequate. If actual costs are greater
than the provisions and allowances, then it will materially and adversely
affect its results of operations.
Future Capital Needs. The Company is capital intensive and requires
significant funds to conduct operations and requires regular and significant
investments in working capital and research and development. In order to
remain competitive, the Company must continue to make significant investments
in technology and systems, in the expansion of its operations, in evaluation
systems and in research and development. As of the date of this Offering
Circular, the Company does not have a credit facility to fund its working
capital requirements. Consequently, the Company expects that it will require
additional financing to fund its working capital requirements. There can be no
assurance that additional financing will be available to the Company on
commercially reasonable terms. Any inability to obtain additional financing
will have a material adverse affect on the Company.
Increased International Exposure. Sales outside the United States accounted
for approximately 37%, 77% and 47% of the Company's total revenues for the
years ended December 31, 1997, 1996 and 1995. The Company anticipates that
sales outside of the United States will continue to account for a substantial
amount of the Company's total revenues. International sales are subject to
certain risks, including unexpected changes in regulatory requirements,
exchange rates, tariffs and other barriers, political and economic
instability, difficulties in accounts receivable collections, extended payment
terms, the challenges of maintaining a readily available supply of spare
parts, difficulties in managing distributors or representatives, difficulties
in staffing and managing foreign subsidiary operations, and potentially
adverse tax consequences. In addition, international sales may be materially
adversely affected by currency risks associated with devaluation of certain
currencies. There can be no assurance that these and other factors will not
have a material adverse effect on revenue and net earnings (losses).
Economic Downturn in Asia. During the second half of 1997, several nations
in Asia, including South Korea, Malaysia and Thailand, experienced sudden and
serious economic and fiscal crises. Economists are predicting, among other
things, a tightening of credit in nations such as South Korea, Thailand and
Malaysia which could result in decreasing capital expenditures by
semiconductor manufacturers and diminished economic growth in those countries.
The decline in the value of certain Asian currencies could also adversely
affect the purchasing power of the Company's customers in Asia. In addition,
diminished economic growth in Asia could reduce demand for computers, which in
turn would cause a further slowdown in the semiconductor manufacturing and
semiconductor equipment manufacturing industries.
In addition, Japan continues to suffer from an extended recession. If the
Japanese economy weakens further, investments by Japanese customers may be
negatively affected and it is possible that economic recovery in other Asian
countries could be delayed. The economic downturn in Asia could materially and
adversely affect the Company's business and results of operations.
Subordination of Unconverted Notes. The unconverted Notes will be unsecured
and subordinate in right of payment in full to all existing and future Senior
Debt of the Company. "Senior Debt" includes all indebtedness of the Company,
whether existing on or created or incurred after the date of issuance of the
unconverted Notes, that is not made subordinate to or pari passu with the
Notes by the instrument creating the indebtedness. As a result of such
subordination, in the event of bankruptcy, liquidation or reorganization of
the Company, or upon the acceleration of any Senior Debt, the assets of the
Company will be available to pay
27
<PAGE>
obligations on the Notes only after all Senior Debt has been paid in full, and
there may not be sufficient assets remaining to pay amounts due on any or all
of the Notes then outstanding. The Company expects from time to time to incur
additional indebtedness, including indebtedness that would constitute Senior
Debt. The Notes are also structurally subordinate to all existing and future
indebtedness and other liabilities, including trade payables, of the Company's
subsidiaries. See "Description of the Notes--Subordination of Notes."
Recent Developments in Semiconductor Industry. Trikon has focused a
significant portion of its marketing and sales efforts for its MORI(TM) and
Flowfill(TM) products on DRAM manufacturers in South Korea and Japan. The DRAM
market is presently characterized by overcapacity, which has resulted in
historically low prices for DRAM chips. As a result, DRAM manufacturers have
reduced their investment in semiconductor manufacturing equipment. Decreased
product sales and pricing pressures resulted in decreased gross and operating
margins for Trikon for the year ended December 31, 1997, as compared to the
preceding year and quarter ended December 31, 1996.
Reduced demand for semiconductor processing equipment for manufacturing DRAM
chips is anticipated to continue to adversely affect the product sales,
margins and operating results of Trikon for the first two quarters of 1998.
MORI(TM) and Flowfill(TM) product sales of Trikon for the quarter ended June
30, 1998 will be substantially the same as, or lower than, its respective
product sales for the preceding quarter ended March 31, 1998. The Company is
particularly sensitive to the current DRAM market slowdown because the loss or
delay of one or more system sales during any quarter can significantly and
adversely affect its operating results for that quarter, and also because the
lengthy sales cycle experienced by the Company may adversely affect its
ability to rapidly recover from the downturn.
The semiconductor industry is aggressively pursuing copper, CMP and novel
low dielectric constant insulating materials for future metalization
structures. These changes present both opportunities and threats to Trikon.
Presently Trikon's Forcefill(R) product is not competitive for copper and
therefore developments are underway to enable a viable copper Forcefill
process.
Development and Acceptance of New Products and Systems. While the Company
sells several conventional products, it also offers novel technologies. Its
Planar 200(R) Flowfill(TM) system uses a CVD technique applied to silicon
dioxide that allows for gap filling and planarization. Competing products
include spin on glass (SOG) and high density plasma (HDP) coupled with a
chemical mechanical polishing (CMP) process. The Company's Sigma Forcefill(R)
system incorporates an alternative technology to conventional PVD techniques
by using aluminum forced by high pressure argon to fill small diameter deep
holes and vias on ICs. The Company's competitors produce systems that use a
conventional CVD tungsten system to fill deep holes and vias. Trikon's
MORI(TM) source offers an alternative etch environment for the manufacture of
1 IC to the reactive ion etch (RIE), inductively coupled plasma (ICP) and
electron cyclotron resonance (ECR) etch technology currently used by Trikon's
competitors. The Company will continue to produce MORI(TM) etch products at
its Newport, United Kingdom facility, and it intends to continue marketing
licenses of the MORI(TM) source technology.
The Company's Planar 200(R) Flowfill(TM) is currently at the stage of
customer review and evaluation. Considerable efforts are being applied by the
Company to attain product functionality and reliability levels acceptable to
the Company's target markets, with an emphasis being given to the Planar
200(R) Flowfill(TM). The Company has sold a limited number of its PINNACLE
8000(R) and PINNACLE 8000R(TM) etch systems to a small number of customers. To
date, the substantial majority of the Company's sales of its etch systems,
Sigma Forcefill(R) and Planar 200(R) Flowfill(TM) systems have been initial
purchases by customers of individual systems. Typically, semiconductor
manufacturers initially purchase individual systems and deploy them in a
development or pre-production environment prior to purchasing multiple systems
for production. There can be no assurance that any of such customers will
purchase additional systems from the Company for deployment in production or
that any additional customers will enter into licensing agreements for the
MORI(TM) source technology.
Recently, certain customers have adopted a new etching standard, which is
referred to as zero overlay design, whereby misalignment of etched metal lines
to contact plugs is no longer allowable. This presents a technical challenge
to the Company's Forcefill(R) PVD technology which produces a metal plug of
the same composition as
28
<PAGE>
the connective conductor. Consequently, if part of the contact plug is not
covered by the line delineated by the photoresist, then during the etching of
the metal lines the metal plug is also partially etched. Because zero overlay
design potentially offers higher yields and lower die costs, semiconductor
manufacturers have demonstrated strong interest in the standard. Trikon has
not yet developed a solution to the problem that it presents to the
Forcefill(R) PVD technology. There can be no assurance that Trikon, or any
other party, will develop a solution to the technical problems of zero overlay
design in connection with Forcefill(R) PVD technology.
Given that certain of the Company's systems represent an alternative to
conventional CVD, PVD and etch systems currently marketed by competitors,
management believes that continued growth depends in large part upon the
ability of the Company to gain acceptance of its systems and technology. Due
to the substantial investment required by semiconductor manufacturers to
install and integrate capital equipment into a semiconductor production line,
these manufacturers will tend to choose equipment manufacturers based on past
relationships, product compatibility and proven financial performance. Once a
semiconductor manufacturer has selected a particular vendor, management
believes that the manufacturer generally relies upon the equipment supplied by
that vendor for the specific production line application, and frequently will
attempt to consolidate its other capital equipment requirements with the same
vendor. As a result, semiconductor manufacturers will normally engage in a
long period of analysis and planning before determining to convert to a new
vendor of capital equipment. Given these factors, there can be no assurance
that the Company will be successful in obtaining broader acceptance of its new
systems or of its Flowfill(TM) technologies, Forcefill(R) or MORI(TM) source.
Customers' acceptance may further erode because of the Company's current
financial uncertainty.
Potential Returns of Systems. Under certain circumstances, the Company has
provided completed systems to certain strategic customer 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 evaluation period, provided that
the equipment performs to the specifications, management of the Company
expects that the customer will purchase the demonstration system, though they
are not obligated to do so. Included in the historical financial statements,
the Company has provided a reserve for returns of MORI(TM) etch demonstration
systems. At December 31, 1997, the Company had a Flowfill(TM) product located
at a customer site under an evaluation agreement. There can be no assurance
that the customers will purchase such evaluation systems at the end of the
agreed upon demonstration periods.
Following the announcement of the restructuring of the Etch Division,
certain customers have indicated an intent to return previously purchased
systems. The Company has provided for such returns in its financial statements
for the year ended December 31, 1997. There can be no assurance that this
reserve will be adequate to cover all such returns or any required settlement
with such customers.
Maintenance of Sales and Customer Support Operations for MORI(TM) Etch
Products. In November 1997, the Company announced the restructuring of its
Etch Division based in Chatsworth, California. In January 1998, the Company
terminated all employees engaged in research and development, in sales and
marketing, and in manufacturing at the Chatsworth, California facilities. The
Company is transferring certain inventory at the Chatsworth, California
facilities to its field operations in the United States and to its
manufacturing facility in Newport, United Kingdom. The Company will maintain
its customer support for the MORI(TM) etch products currently in the field and
at customer sites through their life-cycles. Despite the efforts of the
Company, there can be no assurance that the Company will be able to maintain
sufficient levels of customer support for its MORI(TM) etch products during
the transition period and thereafter. Insufficient levels of support would
cause customer dissatisfaction, and in turn could cause the return of
additional systems. See "--Potential Return of Systems." Furthermore, customer
dissatisfaction with support of MORI(TM) etch products could affect the
reputation of the Company with regard to all of its products, thereby reducing
its overall sales. Therefore, customer dissatisfaction as a result of the
restructuring could have materially adverse affect on the results of
operations of the Company.
Rapid Technological Change. The markets in which the Company and its
customers compete are characterized by rapidly changing technology, the
introduction of alternative technologies, evolving industry
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standards and continuous improvements in products and services. Management
believes that the Company's future success will depend, in part, upon its
ability to continue to improve its systems and process technologies and to
develop new technologies and systems which compete effectively on the basis of
total cost of ownership and performance and which adequately address customer
requirements. Due to the risks inherent in transitioning to new products the
Company will be required to accurately forecast demand for new products while
managing the transition from older products. If new products have reliability
or quality problems, reduced orders, higher manufacturing costs, delays in
acceptance of and payment for new products and additional service and warranty
expense may result. There can be no assurance that the Company will
successfully develop and manufacture new products, or that new products
introduced by the Company will be accepted in the marketplace. If the Company
does not successfully introduce new products, the Company's results of
operations will be materially adversely affected.
Although the Company expects to continue to make significant investments in
research and development, as a result of its continued operating losses, it
will be necessary to reduce its level of investment in research and
development in 1998 as compared to previous years. There can be no assurance
that the Company will be able to develop and introduce new products or
enhancements to its existing products which satisfy customer needs in a timely
manner or achieve market acceptance with the planned research and development
investment in 1998. The failure to do so could adversely affect the Company's
business.
Quarterly Operating Results Affected by Many Business Factors. The Company
has routinely experienced fluctuations in quarterly results and historically
derived most of its quarterly revenue from the sale of a small number of
systems which typically have list prices ranging from approximately $600,000
to $4,000,000. The Company ships a significant portion of its systems in the
last week of each quarter. Accordingly, the timing of the shipment of a single
system could have a significant impact on the Company's recognition of revenue
and its quarterly operating results. A delay in a shipment near the end of a
particular quarter may cause product sales in that quarter to fall below
expectations, and may thus materially and adversely affect operating results
for such quarter, which will have an adverse impact on the market price of the
Common Stock of the Company. Historically, the Company's backlog at the
beginning of a quarter has not included all sales required to achieve its
sales objectives for that quarter. As such, the Company's quarterly product
sales and operating results have historically depended on the receipt of
orders and the shipment of products in that same quarter. As of December 31,
1997, backlog was approximately $1.6 million for the Company, as compared to
$3.0 million as of September 30, 1997.
As a result of its continued investments in research, development and
engineering, and the development of a worldwide sales and marketing
organization, the Company has significant fixed costs that it will not be able
to reduce rapidly if its sales goals for a particular period are not met. The
impact of this factor on operating results in any future period cannot be
forecasted accurately.
Shares Eligible for Future Sale; Dilution. Prior to the Exchange Offer, the
Company had approximately 10,286,781 shares of Common Stock held by members of
the public that are able to trade without restriction. Pursuant to the
Exchange Offer, up to an additional 51,923,000 shares of Common Stock could be
issued into the public market (assuming the conversion of the Series I
Preferred Stock) immediately following the close of the Exchange Offer. The
issuance of the shares of Common Stock in the Exchange Offer and sales of a
substantial number of additional shares of Common Stock in the public market
could materially adversely effect the market price of the Common Stock.
Highly Competitive Industry. The markets served by the Company's products
are extremely competitive. The Company faces significant competition from
various suppliers of systems that utilize alternative technologies. In the CVD
market, the Company's Flowfill(TM) technology faces competition from a number
of CVD competitors, including Applied Materials, Lam Research Corporation
("Lam Research"), Novellus Systems, Inc., and Watkins-Johnson Company. In the
PVD market, the Company's Forcefill(R) technology faces competition from
suppliers of aluminum PVD systems, such as Applied Materials, Tokyo Electron,
MRC, Varian and Ulvac. In the etch market, the Company's MORI(TM)-based etch
systems and other etch products face competition from suppliers of RIE
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<PAGE>
systems, including Applied Materials, Lam Research and Tokyo Electron Ltd.,
from ICP-based etch systems marketed by Applied Materials and Lam Research, as
well as the ECR-based etch system marketed by Hitachi. In addition, as a
result of the non-exclusive licenses sold to Applied Material and Lam
Research, in the future, the Company's PVD and etch products may have to
compete with products of Applied Materials and, with respect to the Company's
etch products, Lam Research, based upon the Company's technologies.
Many of these competitors are substantially larger companies with broader
product lines, and have well established reputations in the markets in which
the Company competes, longer operating histories, greater experience with high
volume manufacturing, broader name recognition, substantially larger customer
bases and substantially greater financial, technical and marketing resources
than the Company and, among other things, may therefore be less vulnerable
than the Company to long-term industry downturns, including the downturn
presently being experienced by the DRAM manufacturing industry. The Company
also faces potential competition from new entrants in its respective markets,
including established manufacturers in other segments of the semiconductor
capital equipment market, who may decide to diversify into the Company's
market segments. There can be no assurance that their competitors will not
develop enhancements to or future generations of competitive products that
will offer price and performance features superior to those offered by the
Company's systems.
Lengthy Sales Cycle. Sales of the Company's systems typically involve a
lengthy period during which it may expend substantial funds and management
effort. Such sales will depend, in significant part, upon the decision of a
prospective customer to increase manufacturing capacity or to expand current
manufacturing capacity, both of which involve a significant capital commitment
by the customer. The amount of time from initial contact with a customer to
the first order is typically nine to twelve months, and may be longer, and may
involve competing capital budget considerations for the customer, thus making
the timing of customers' orders uneven and difficult to predict. The Company's
ability to receive orders for production systems from potential semiconductor
manufacturing customers depends, among other things, upon such customers
undertaking an evaluation for new equipment. Presently, all of the Planar
200(R) Flowfill(TM) systems sold are being used by such customers to evaluate
the future manufacturing capabilities of such systems. There can be no
assurance that the Company will receive any orders for Planar 200(R)
Flowfill(TM) systems from any of the customers who have purchased such systems
for evaluation purposes. Prior to placing orders for production systems,
semiconductor manufacturing customers expect to evaluate systems on an
extended trial basis. Following initial system qualification, the Company
often experiences further delays in finalizing system sales while the customer
evaluates and receives approvals for the purchase of its systems and completes
a new or expanded facility. The failure or inability of the Company to convert
an evaluation system with a customer to a sale of production systems could
materially and adversely affect operations. Furthermore, this lengthy sales
cycle process may adversely affect the Company's ability to rapidly recover
from its current low sales level.
Failure to Retain Key Personnel. The Company's future success depends, to a
large extent, upon the efforts and abilities of a number of its current key
personnel. Such key personnel include, but are not limited to, Christopher D.
Dobson, Chairman of the Board and Chief Executive Officer, Nigel Wheeler,
President and Chief Operating Officer, and Nicolas Carrington, Senior Vice
President, Sales and Field Operations. During 1997 and the first quarter of
1998, the Company has lost the services of several of its key executive
officers and members of management, including Gregor A. Campbell, formerly
Chief Executive Officer, John LaValle, formerly Chief Financial Officer, Steve
Rhoades, formerly Vice President, Deposition Division, David J. Hemker,
formerly Vice President, Technology, Robert J. Snyder, formerly Senior Vice
President, Operations, and Harvey J. Frye, formerly Vice President, Sales and
Marketing, and has terminated a significant number of employees at the
Company. Furthermore, the Company has not had a full-time Chief Financial
Officer since John LaValle resigned as of June 30, 1997. The loss of certain
of these people or the Company's inability to retain other key employees could
materially and adversely affect its operations.
Possible Volatility of Stock Price; Effect of Exchange Offer on Stock
Price. Since August 1995, the market price of the Common Stock has experienced
a high degree of volatility. In addition, as a result of the significant
increase in the number of shares of Common Stock which may be issued pursuant
to the Exchange Offer
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<PAGE>
(77,838,900 additional shares if 100% participation in the Exchange Offer and
assuming the Conversion of Series I Preferred Stock), the market price of the
Common Stock is likely to experience an even higher degree of volatility and
may decline materially as a result of the number of shares issued in the
Exchange Offer. There can be no assurance that such volatility will not
continue or become more pronounced. In addition, recently the stock market has
experienced, and is likely to experience in the future, significant price and
volume fluctuations which could materially adversely affect the market price
of the Common Stock without regard to the operating performance of the
Company. The Company believes that factors such as the Exchange Offer,
quarterly fluctuations in the financial results of the Company or its
competitors and general conditions in the industry, the overall economy and
the financial markets could cause the price of the Common Stock to fluctuate
substantially.
Intellectual Property Rights. The Company relies on a variety of types of
intellectual property protection to protect proprietary technology, including
patent, copyright, trademark and trade secret laws, non-disclosure agreements
and other intellectual property protection methods. Although management
believes that the Company's patents and trademarks may have value, management
believes that its future success will also depend on the innovation, technical
expertise and marketing abilities of its personnel.
The Company currently holds a number of patents in the United Kingdom, the
United States, Taiwan, Germany, France, Italy and the Netherlands, and has
patent applications pending in South Korea, Japan and Europe.
There can be no assurance that patents will be issued on the Company's
pending patent applications or that competitors will not be able to
legitimately ascertain proprietary information embedded in its products which
is not covered by patent or copyright. In such case, the Company may be
precluded from preventing the competitor from making use of such information.
In addition, should the Company wish to assert its patent rights against a
particular competitor's product, there can be no assurance that any claim in a
Company patent will be sufficiently broad nor, if sufficiently broad, any
assurance that the Company patent will not be challenged, invalidated or
circumvented, or that the Company will have sufficient resources to prosecute
its rights. The Company has a policy to protect and defend vigorously its
patents, trademarks and trade secrets. In connection with the non-exclusive
licenses of technologies sold to Applied Materials, the Company released
Applied Materials from all claims or actions arising from acts, omissions or
dealings of Applied Materials prior to the licenses, other than claims against
Applied Materials of infringement of the patent or patent applications of the
Company relating to its Flowfill(TM) technology.
There are no pending lawsuits against the Company regarding infringement of
any existing patents or other intellectual property rights or any unresolved
claim where the Company has received notice that it is infringing the
intellectual property rights of others. There can be no assurance, however,
that such infringement claims will not be asserted in the future nor can there
be any assurance, if such claims were made, that the Company would be able to
defend against such claims successfully or, if necessary, obtain licenses on
reasonable terms. In addition, management believes that litigation in the
semiconductor equipment industry over patent and other intellectual property
rights has been increasing in recent years.
Any involvement in a patent or other intellectual property dispute or in any
action to protect trade secrets and know-how, even if successful, could
materially and adversely affect operations. Adverse determinations in any such
action could subject the Company to significant liabilities, require it to
seek licenses from third parties, which might not be available, and possibly
prevent it from manufacturing and selling its products, any of which could
materially and adversely affect operations.
Trikon is opposing an issued German patent held by a competitor which relate
to a process similar to Forcefill(TM). A decision has been issued by the
opposition division of the German patent office which strongly suggests that
Trikon's Forcefill(TM) process does not infringe on this issued patent.
However, Trikon has nonetheless appealed the decision, in case a higher court
should give the patent's claims a broad reading. In that event, Trikon
believes the claims should be invalid.
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Customer Concentration. To date the Company's product sales have been highly
concentrated, with approximately 20% and 14% of its product revenues for the
year ended December 31, 1997 derived from sales to Texas Instruments
Incorporated and Siemens AG and 19% and 12% of its product revenues for the
year ended December 31, 1996 derived from sales to Hyundai and Siemens. There
can be no assurance that Texas Instruments and Siemens will continue to
purchase systems and technology from the Company at current levels, or at all.
Furthermore, a portion of the sales in prior periods have been of etch
products which the Company may no longer manufacture.
Year 2000. Many computer systems experience problems handling dates beyond
the year 1999. Therefore, some computer hardware and software will need to be
modified prior to the year 2000 in order to remain functional. The company is
assessing both the internal readiness of its computer systems and the
compliance of its products sold to customers for handling the year 2000. The
Company expects to implement successfully the systems and programming changes
necessary to address year 2000 issues and does not believe that the cost of
such actions will have a material effect on the Company's results of
operations or financial condition. There can be no assurance, however, that
there will not be a delay in, or increased costs associated with, the
implementation of such changes, and the Company's inability to implement such
changes could have an adverse effect on future results of operations.
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THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Offering Circular and in the accompanying Note Consent and
Letter of Transmittal, to exchange each $1,000 principal amount of the
Company's Notes for 262.7339 shares of Common Stock, 34.7826 shares of its
Series H Preferred Stock and 0.3393 shares of Series I Preferred Stock. In
connection with the Note Exchange Offer, the Company hereby solicits holders
of Series G Preferred Stock, upon the terms and subject to the conditions set
forth in this Offering Circular and in the accompanying Series G Conversion
Notice and Letter of Transmittal, to convert each share of Series G Preferred
Stock held by such holder into one share of Common Stock in exchange for a
Conversion Payment of 1.2512 shares of Common Stock and 0.0027 shares of
Series I Preferred Stock. In addition, the Company hereby offers, upon the
terms and subject to the conditions set forth in this Offering Circular and in
the accompanying Warrant Letter of Transmittal, to exchange each Warrant for
one share of Common Stock. It is the Company's intention to exchange and
retire all Notes and Warrants tendered to and accepted by the Company pursuant
to the Exchange Offer. In addition, upon consummation of the Note Exchange
Offer and the Warrant Exchange Offer, each tendered share of Series G
Preferred Stock will be converted into one share of Common Stock and the
holders thereof will be entitled to receive the Conversion Payment.
Unconverted Series G Preferred Stock, assuming the participation of holders of
at least sixty-six and two-thirds of the number of shares issued of Series G
Preferred Stock, will be automatically converted into one share of Common
Stock and holders thereof will also be entitled to the Conversion Payment.
If all the conditions to the Exchange Offer have been met or waived, and the
Company accepts Notes in exchange for the Note Exchange Consideration, but
fewer than 100% of the Notes and more than 90% of the Notes (the difference
being referred to as the "Stub Notes") have been accepted, in the Note
Exchange Offer, the Company will also deliver, as part of the Note Exchange
Consideration, pro rata to each holder of Notes that duly tendered Notes, the
amount of Common Stock and Series I Preferred Stock that would have been
distributed to the holders of Stub Notes had they duly tendered their Stub
Notes in the Note Exchange Offer.
The Company intends to conduct a 2-for-3 reverse stock split after the
consummation of the Exchange Offer. None of the numbers in this Offering
Circular reflect the proposed reverse stock split.
PURPOSE
As reported in the 1997 Form 10-K, the Company reported a net loss of $99.3
million for the year then ended and an accumulated deficit of $201.3 million.
In its Auditors' Report accompanying the Company's audited consolidated
financial statement in the 1997 Form 10-K, the Company's independent auditors,
Ernst & Young LLP, included an explanatory paragraph stating that the Company
had experienced significant losses from operations and negative cash flow from
operating activities, and its Working Capital Facility had been terminated. In
addition, concerns exist as to the Company's ability to restructure its debt
evidenced by the outstanding Notes, which could become in default in 1998.
These and other factors raise substantial doubt about the Company's ability to
continue as a going concern.
During the last quarter of 1997, in response to continuing operating losses,
violations of debt covenants and limited availability of financing, the
Company initiated a restructuring effort that included exploring various
strategic alternatives as to the future of the business. In October 1997, the
Company reduced its global work force by 20%. In November 1997, it sold non-
exclusive, paid-up licenses of its MORI(TM) source and Forcefill(R) PVD
technologies to Applied Materials. With the sale of the MORI(TM) source
license and continuing losses, the Company focused its restructuring efforts
on its Etch Division based in Chatsworth California. The Company is in the
process of terminating all operations at its Chatsworth, California facilities
and transferring its Etch Division customer support operations to field
offices in the United States and to its Newport, United Kingdom facilities.
The Company is also continuing its efforts to reduce its operating costs
worldwide. See "The Business--Recent Developments--Restructuring of
Operations."
At the end of 1997, the Board of Directors concluded that in addition to
above described strategic and operational restructuring, the viability of the
Company depends upon reducing the Company's financial leverage,
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which at December 31, 1997 consisted of approximately $87.2 million in
interest bearing indebtedness. The debt service obligations of the Notes
deplete the Company's cash on hand and other working capital resources that
are necessary to fund its operations. With the Notes outstanding, the Company
believes that it will be unable to obtain additional debt or equity financing
to provide additional working capital resources to permit the Company to fund
any shortfalls in operating income and to make any necessary capital
expenditures. Based upon negotiations with certain United Kingdom financial
institutions, the Board of Directors believes that eliminating or
significantly reducing the outstanding principal amount of the Notes will
enable the Company to establish a credit facility for its working capital
needs.
In addition, at December 31, 1997, the Company did not meet the net tangible
asset continued listing requirement of the Nasdaq National Market. See "Risk
Factors--Nasdaq National Market Listing Requirements." So long as the Notes
remain outstanding, for the foreseeable future the Company's liabilities will
substantially exceed its assets and will eventually cause the Company's Common
Stock to be delisted from the Nasdaq National Market. The delisting of the
Common Stock would likely result in substantial illiquidity for the Company's
shareholders, a decrease in the stock price and a general deterioration of the
Company as viewed by the investment community, the semiconductor industry,
customers and employees. In addition, if the Company is delisted from the
Nasdaq National Market and is unable to list for trading on a United States
national securities exchange or the Nasdaq SmallCap Market and the Indenture
has not be amended or cancelled, a Designated Event under the terms of the
Indenture will have occurred. The occurrence of a Designated Event enables
each holder of Notes to elect to have the Company repurchase such holder's
Notes at a purchase price equal to 101% of the principal amount thereof,
together with accrued and unpaid interest thereon. The Company does not
currently have, and in the foreseeable future will not have, the financial
resources necessary to repurchase the Notes in such circumstances.
The Company's financial position has also contributed to a reduction in
revenues because of customer concern about the long-term viability of the
Company. The Company believes that competitors are using the Company's
operating losses and highly-leveraged balance sheet to discourage customers
from purchasing the Company's products. Employees, who are generally very
skilled and in demand, are also concerned by the precarious financial position
of the Company.
If the Company is unable, and within a short period of time, to successfully
restructure its obligations in accordance with the terms of the Exchange
Offer, the Company will likely have no alternative but to seek protection
under the United States bankruptcy laws. In order to expedite any such
bankruptcy proceeding, if the minimum tender condition (i.e., 90% of the
principal amount of the Notes and 66 2/3% of the Series G Preferred Stock) is
not satisfied, but a majority in number of the holders of the Notes holding
more than two-thirds of the outstanding principal amount of the Notes tender
such Notes, the Company intends to enter into a reorganization plan with its
creditors and then have such reorganization plan confirmed by a bankruptcy
court under Chapter 11 of the United States Bankruptcy Code. Such a
reorganization plan would bind dissenting creditors and holders of equity
securities of the Company to the reorganization plan. The Company believes
that so long as the Notes remain outstanding, the obligation to pay interest
will continue to deplete the limited cash resources which should be preserved
for working capital and research and development efforts, and the obligation
to repay the Notes at maturity will represent a substantial and, possibly
insurmountable, impediment for the Company to successfully pursue its business
objectives.
TERMS OF THE EXCHANGE OFFER
Notes may be tendered and will be accepted for exchange only in
denominations of $1,000 principal amount and integral multiples thereof.
Holders of Notes delivered to the Exchange Agent will not be entitled to any
payment in respect of accrued and unpaid interest on the converted securities.
After the Expiration Date, if fewer than all of the Notes have been tendered
and exchanged in the Exchange Offer, the Company may, or may cause any
affiliate to, purchase additional Notes in the open market, in privately
negotiated transactions, through subsequent exchange offers or otherwise or
may seek to cause the Notes to be
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<PAGE>
retired or defeased. Any future purchases or exchanges may be for other
securities or for cash and may be on the same terms or on terms that are more
or less favorable to holders than the terms of the Exchange Offer. Any future
purchases or exchanges by the Company or any affiliate will depend on various
factors at that time.
Tendering holders of Notes will not be required to pay brokerage commissions
or fees or, subject to the instructions in the Note Consent and Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Note Exchange Offer. The Company will pay all charges and expenses, other
than certain applicable taxes, in connection with the Exchange Offer.
CONSIDERATION BEING OFFERED
The Restated Articles of the Company permits its Board of Directors to issue
up to 20,000,000 shares of preferred stock (the "Preferred Stock"), in one or
more series, to designate the number of shares constituting such series, and
to fix the rights, preferences, privileges and restrictions thereof, without
any further vote or action by shareholders. 2,963,032 shares of the Company's
Preferred Stock are currently outstanding. Immediately prior to the acceptance
for exchange of the Notes, Series G Preferred Stock and Warrants tendered in
the Exchange Offer, the Company will file with the Secretary of State of the
State of California a certificate of determination concerning the Series H
Preferred Stock and the Series I Preferred Stock (the "New Certificate of
Determination"), with the following designations.
Series H Preferred Stock. The following summary description of the Series H
Preferred Stock, $10 stated amount per share (the "Stated Amount"), is
necessarily incomplete and is thus qualified in its entirety by reference to
the more detailed description of the terms of the Series H Preferred Stock
which is attached as Annex B to this Offering Circular and incorporated herein
by reference.
Dividend..................... 8 1/8% of the stated amount per annum, payable
semiannually on October 15 and April 15 (each,
a "Dividend Payment Date"). On each Dividend
Payment Date, the dividend may be paid, at the
Company's option, with either cash, additional
shares of Series H Preferred Stock ("Pik
Preferred") or a combination thereof. If the
Company's consolidated EBITDA for the two most
recently completed fiscal quarters exceeds
$7,500,000 and the Company elects to pay all or
a portion of dividends in Series H Preferred
Stock, then the dividend rate shall increase to
9 1/8% on all outstanding Series H Preferred
Stock (including any outstanding Pik
Preferred). In addition, if the holders of
Series H Preferred Stock are entitled to elect
a majority of the Board of Directors as
described in the voting rights section below,
the dividend payable on the Series H Preferred
Stock shall increased to 12%.
Liquidation Preference....... The Stated Amount per share plus accrued but
unpaid dividends. After payment of such
liquidation preference, the holders of Series H
Preferred Stock shall not be entitled to share
in any assets or funds remaining for
distribution.
Ranking...................... Because the tender of sixty-six and two-thirds
of the Series G Preferred Stock is a condition
to the Exchange Offer, if this condition is
satisfied, all nontendered Series G Preferred
Stock will by the terms of the Series G
Preferred Stock automatically convert to Common
Stock, and the Series H Preferred Stock will by
its terms ranks senior to all other equity
securities of the Company then outstanding.
Holders of Common Stock or any other class of
capital stock shall not be entitled to receipt
of dividends unless and until all accrued and
unpaid dividends on the Series H Preferred
Stock have
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<PAGE>
first been paid and all shares of Pik Preferred
have been redeemed in cash. No equity security
senior to or on parity with the Series H
Preferred Stock can be issued without the
consent of holders of a majority of the Series
H Preferred Stock.
Conversion................... Each share of Series H Preferred Stock shall
automatically convert into 1.4285 shares of
Common Stock if and when the closing price of
the Common Stock on a United States national
securities exchange or on an established
automated over-the-counter trading market in
the United States is at a price in excess of
$7.00 for a period of 30 consecutive trading
days.
Optional Redemption.......... The Series H Preferred Stock is subject to
redemption in whole or in part at the option of
the Company for a cash amount per share equal
to the Stated Amount plus accrued and unpaid
dividends to the date of such redemption.
Voting Rights................ The holders of Series H Preferred Stock shall
not be entitled to vote except to the extent
required by applicable law and as provided
below. The Series H Preferred Stock, voting as
a class, shall be entitled to elect one
director if the Board of Directors is
constituted of five members or fewer, and two
directors if the Board of Directors is
constituted of more than five members (each a
"Series H Designated Director"). If the Company
has not redeemed all of the outstanding Series
H Preferred Stock on or prior to June 30, 2001
or if, at the end of any fiscal quarter of the
Company, the Company's Consolidated Free Cash
exceeds $30,000,000 and the Company shall not
have offered to redeem Series I Preferred Stock
with a Stated Amount equal to the excess, then
the holders of Series H Preferred Stock shall
be entitled to elect the number of directors
that will constitute a majority of the Board of
Directors. "Consolidated Free Cash" means cash
and cash equivalents minus (i) debt and (ii)
projected capital expenditures budgeted for the
succeeding twelve months following the date of
determination.
Restrictive Covenants........ Without the affirmative vote or written consent
of holders of a majority of the outstanding
shares of Series H Preferred Stock, or without
the consent of the Series H Designated
Director(s), the Company may not incur funded
debt, other than ordinary course debt utilized
for working capital purposes and purchase money
debt.
Dilution..................... The Series H Preferred Stock is entitled to
customary antidilution protection in the event
of stock splits and recapitalizations.
Series I Preferred Stock. The Series I Preferred Stock, no par value per
share, is designed to be the functional equivalent of approximately 43,867,628
shares Common Stock. There are approximately 43,867.628 shares of Series I
Preferred Stock to be issued in the Exchange Offer; accordingly, each share is
convertible into 1,000 shares of Common Stock, has 1,000 votes and receives
dividends if declared at 1,000 times the rate declared on the Common Stock.
The Company intends to call a special meeting of its shareholders as soon as
possible after the consummation of the Exchange Offer for the purpose of
approving the Charter Amendment to provide for an increase in the number of
authorized shares of Common Stock from 50,000,000 to 110,000,000 and a
decrease in the number of authorized shares of preferred stock from 20,000,000
to 5,000,000. Upon approval of the Charter Amendment, the Series I Preferred
Stock will automatically convert into Common Stock as provided below. See the
description of the
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<PAGE>
conversion rights of the Series I Preferred Stock below. The following summary
description of the Series I Preferred Stock, is necessarily incomplete and is
thus qualified in its entirety by reference to the more detailed description
of the terms of the Series I Preferred Stock which is attached as Annex C to
this Offering Circular and incorporated by reference.
Conversion................... Each share of Series I Preferred Stock shall
automatically convert into 1,000 shares of the
Common Stock (the "Conversion Ratio")
immediately upon effectiveness of the Charter
Amendment. The Conversion Ratio shall be
decreased (i.e., the number of shares of Common
Stock to be received per share of Series I
Preferred Stock shall be decreased) by one
percent (1%) for each six month period that
elapses after the date of the first issuance of
the Series I Preferred Stock prior to the
shareholders approving the Charter Amendment.
Dividend..................... The Series I Preferred Stock shall receive
dividends, whenever the Company pays dividends
on its Common Stock, in such amount as if the
outstanding shares of Series I Preferred Stock
were converted into shares of Common Stock at
the applicable Conversion Ratio.
Liquidation Preference....... Subject to the liquidation preference of the
Series H Preferred Stock, $0.001 per share.
After payment of such liquidation preference,
the holders of Series I Preferred Stock shall
share any assets and funds remaining for
distribution with holders of Common Stock on an
as converted basis.
Ranking...................... The Series I Preferred Stock ranks junior to
the Series H Preferred Stock as to dividends
and liquidation, pari passu with the Common
Stock as to dividends and senior to the Common
Stock as to liquidation.
Voting Rights................ The holders of Series I Preferred Stock are
entitled to vote as a class with the Common
Stock on an as converted basis, except that the
Series I Preferred Stock is not entitled to
vote on the Charter Amendment.
Dilution..................... The Series I Preferred Stock is entitled to
customary antidilution protection in the event
of stock splits and recapitalizations.
Common Stock. See "Description of Capital Stock--Common Stock."
THE PROPOSALS
The proposed amendments to the Indenture that are contained in the
Supplemental Indenture are set forth in Annex A to this Offering Circular.
Annex A should be read in its entirety and the following summary is qualified
in its entirety by reference to Annex A and the Indenture.
The Supplemental Indenture would, among other things, eliminate the
following provisions and restrictive covenants and references thereto from the
Indenture:
(i) The provision entitled "Designated Event Offer" (Section 3.8 of the
Indenture);
(ii) The covenant entitled "SEC Reports" (Section 4.2 of the Indenture);
(iii) The covenant entitled "Compliance Certificate" (Section 4.3 of the
Indenture);
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(iv) The covenant entitled "Corporate Existence" (Section 4.5 of the
Indenture);
(v) The covenant entitled "Taxes" (Section 4.6 of the Indenture);
(vi) The covenant entitled "Designated Event" (Section 4.7 of the
Indenture);
(vii) The provision entitled "Merger, Consolidation or Sale of Assets"
(Section 7.1 of the Indenture);
(viii) The following paragraphs of the provision entitled "Events of
Default" (Section 8.1 of the Indenture): Paragraphs c, e, and f;
(ix) The provision entitled "Acceleration" (Section 8.2 of the
Indenture);
(x) The following sentences in the provision entitled "Revocation and
Effect of Consents" (Section 11.4 of the Indenture): Sentences 2 and 5
contained in that provision; and
(xi) All references to "Liquidated Damages," including, without
limitation, those references found in the provisions entitled "Defaulted
Interest or Liquidated Damages" (Section 2.12 of the Indenture), "Deposit
of Redemption Price (Section 3.5 of the Indenture), "Notice of Redemption"
(Section 3.3 of the Indenture), and "Payment of Notes" (Section 4.1 of the
Indenture).
The provision entitled "Limitation on Suits" (Section 8.6(b) of the
Indenture) shall be amended to require at least 51% in principal amount of the
then outstanding Notes to make a request to the Trustee to pursue the remedy.
Certain conforming and other changes to the Indenture will be made,
including deleting definitions no longer used and correcting cross references.
The Proposals relating to amending the Indenture will be effected by a
Supplemental Indenture with respect to the Notes, which will be executed on or
promptly following the date the requisite Consents have been obtained.
Although the Supplemental Indenture will be executed on or promptly following
the date the Requisite Consents have been obtained, the Proposals will not
become operative until validly tendered Notes are accepted for exchange by the
Company on the Acceptance Date. The Indenture, without giving effect to the
Proposals, will remain in effect until the Proposals become operative on the
Acceptance Date. If the Exchange Offer is terminated or withdrawn, or the
Notes are not purchased hereunder, the Supplemental Indenture will never
become operative.
The proposed amendment to the Registration Agreement would provide for the
termination of the Registration Agreement and cancellation of any penalty
interest incurred under the Registration Agreement upon the consummation of
the Exchange Offer. The Registration Agreement currently obligates the Company
to register the Notes and underlying Common Stock into which it is convertible
under the Securities Act. See "Description of the Notes--Registration
Agreement."
The Proposals constitute a single proposal and a tendering and consenting
holder of Notes must consent to the Proposals as an entirety and may not
consent selectively with respect to certain of the Proposals relating to
either the Indenture or the Registration Agreement. Pursuant to the terms of
the Indenture, the Proposals with respect to the Indenture require the consent
of the holders of Notes of not less than a majority in aggregate principal
amount of the then outstanding Notes. IF THE REQUISITE CONSENTS ARE RECEIVED
AND THE PROPOSALS BECOME OPERATIVE WITH RESPECT TO THE INDENTURE, THE
PROPOSALS WILL BE BINDING ON ALL NON-TENDERING HOLDERS OF NOTES. PURSUANT TO
THE TERMS OF THE REGISTRATION AGREEMENT, THE PROPOSALS WITH RESPECT TO THE
REGISTRATION AGREEMENT REQUIRE THE CONSENT OF THE HOLDERS OF A MAJORITY OF THE
THEN OUTSTANDING AGGREGATE PRINCIPAL AMOUNT OF NOTES. IF THE REQUISITE
CONSENTS ARE RECEIVED AND THE PROPOSALS BECOME OPERATIVE WITH RESPECT TO THE
REGISTRATION AGREEMENT, THE PROPOSALS WILL BE BINDING ON ALL NON-TENDERING
HOLDERS OF NOTES.
THE COMPLETION, EXECUTION AND DELIVERY OF THE NOTE CONSENT AND LETTER OF
TRANSMITTAL BY A HOLDER OF NOTES IN CONNECTION WITH THE NOTE EXCHANGE OFFER
WILL BE DEEMED TO CONSTITUTE THE CONSENT OF THE TENDERING HOLDER TO THE
PROPOSALS AND AN IRREVOCABLE WAIVER OF COMPLIANCE WITH THE PROVISIONS OF THE
INDENTURE AND THE REGISTRATION AGREEMENT AFFECTED BY THE PROPOSALS AFTER THE
EXCHANGE OFFER ACCEPTANCE DATE.
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CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company will
not be required to accept for exchange, any Notes, Series G Preferred Stock or
Warrants tendered for exchange and may postpone the exchange of any Notes,
Series G Preferred Stock or Warrants tendered and to be exchanged by it, and
may terminate or amend the Exchange Offer as provided herein if any of the
following conditions have not been satisfied to the Company's satisfaction:
(1) the principal amount of Notes tendered and not withdrawn shall equal
or exceed $77,625,000 (i.e., 90% of the outstanding principal amount);
(2) at least sixty-six and two-thirds percent (66 2/3%) of the cumulative
number of Series G Preferred Stock theretofore issued by the Company shall
have been tendered and not withdrawn;
(3) there shall have not been instituted or threatened or be pending any
action or proceeding before or by any court or governmental, regulatory or
agency or instrumentality, or by any other person, (a) that challenges the
making of the Exchange Offer, or might, directly or indirectly, prohibit,
prevent, restrict or delay consummation of the Exchange Offer or otherwise
adversely affect, in any material manner the Exchange Offer or which
requires the Company to file a registration statement in respect of the
Exchange Consideration being offered as consideration in the Exchange Offer
or (ii) that is, or is reasonably likely to be, in the sole judgment of the
Company, materially adverse to the business, operations, properties,
condition (financial or otherwise), assets, liabilities or prospects of the
Company; and
(4) there shall have not have occurred or be likely to occur any event
affecting the business or financial affairs of the Company or which, in the
sole judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Exchange Offer, or that will, or is reasonably
likely to, materially impair the contemplated benefits to the Company of
the Exchange Offer.
All the foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company at any time regardless of the circumstances giving
rise to such conditions and may be waived by the Company, in whole or in part,
at any time and from time to time, in the sole discretion of the Company. The
failure by the Company at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
If any of the conditions set forth in this section shall not be satisfied,
the Company may, subject to applicable law, (i) terminate the Exchange Offer
and return all Notes, Series G Preferred Stock and Warrants tendered pursuant
to the Exchange Offer to tendering holders; (ii) extend the Exchange Offer and
retain all tendered Notes, Series G Preferred Stock and Warrants until the
Expiration Date for the extended Exchange Offer; (iii) amend the terms of the
Exchange Offer or modify the consideration to be provided by the Company
pursuant to the Exchange Offer; or (iv) waive the unsatisfied conditions with
respect to the Exchange Offer and accept all Notes, Series G Preferred Stock
and Warrants tendered pursuant to the Exchange Offer.
EXPIRATION; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer is scheduled to expire at midnight, New York City time,
on May 11, 1998. Additionally, the Company expressly reserves the right, in
its sole discretion, at any time or from time to time, to extend the period of
time during which the Exchange Offer is open by giving oral or written notice
of such extension to the Exchange Agent and making a public announcement
thereof as described in the second succeeding paragraph. There can be no
assurance that the Company will exercise its right to extend the Exchange
Offer. During any extension of the Exchange Offer, all Notes, Series G
Preferred Stock and Warrants previously tendered pursuant thereto and not
exchanged or withdrawn will remain subject to the Exchange Offer and may be
accepted for exchange by the Company at the expiration of the Exchange Offer
subject to the right of a tendering holder to withdraw his, her or its Notes,
Series G Preferred Stock or Warrants. See "The Exchange Offer--Withdrawal of
Tenders." Under no circumstances will interest on the Exchange Consideration
be paid by the Company by reason of any such extension.
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The Company also expressly reserves the right, subject to applicable law,
(i) to delay acceptance for exchange of any Notes, Series G Preferred Stock or
Warrants, or, regardless of whether such Notes, Series G Preferred Stock or
Warrants were theretofore accepted for exchange, to delay the exchange of any
Notes, Series G Preferred Stock or Warrants pursuant to the Exchange Offer or
to terminate the Exchange Offer and not accept for exchange any Notes, Series
G Preferred Stock or Warrants, if any of the conditions to the Exchange Offer
specified herein fail to be satisfied by giving oral or written notice of such
delay or termination to the Exchange Agent; (ii) to waive any condition to the
Exchange Offer and accept any or all the Notes, Series G Preferred Stock and
Warrants tendered; and (iii) at any time, or from time to time, to amend the
terms of Exchange Offer in any respect, including the Exchange Consideration.
The reservation by the Company of the right to delay exchange or acceptance
for exchange of Notes is subject to the provisions of Rule 13e-4(f)(5) under
the Exchange Act, which requires that the Company pay the consideration
offered or return the Notes, Series G Preferred Stock or Warrants deposited by
or on behalf of holders thereof promptly after the termination or withdrawal
of the Exchange Offer.
Any extension, delay, termination or amendment of the Exchange Offer will be
followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which the Company may choose to make a public
announcement of any extension, delay, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to
the Dow Jones News Service, except in the case of an announcement of an
extension of the Exchange Offer, in which case the Company shall have no
obligation to publish, advertise or otherwise communicate such announcement
other than by issuing a notice of such extension by press release or other
public announcement, which notice shall be issued no later than 9:00 A.M., New
York City time, on the next business day after the previously scheduled
Expiration Date.
If the Company makes a material change in the terms of the Exchange Offer or
the information concerning the Exchange Offer, or if the Company waives any
condition of the Exchange Offer that results in a material change to the
circumstances of the Exchange Offer, the Company will disseminate additional
Exchange Offer materials in a manner reasonably calculated to inform holders
of Notes, Series G Preferred Stock and Warrants of such change, and will
provide holders of Notes, Series G Preferred Stock and Warrants adequate time
to consider such materials and their participation in the Exchange Offer. The
minimum period during which the Exchange Offer must remain open following a
material change in the terms of the Exchange Offer or the information
concerning the Exchange Offer, other than a change in the Exchange
Consideration or the percentage of the Notes, Series G Preferred Stock and
Warrants sought in the Exchange Offer, will depend upon the facts and
circumstances, including the relative materiality, of the changed terms or
information.
If the Company increases or decreases the Exchange Consideration or the
amount of Notes, Series G Preferred Stock and Warrants sought in the Exchange
Offer, the Exchange Offer will remain open at least ten business days from the
date that the Company first publishes, sends or gives notice, by public
announcement or otherwise, of such increase or decrease. The Company has no
current intention to increase or decrease the Exchange Consideration currently
offered or the amount of Notes, Series G Preferred Stock or Warrants sought to
be purchased.
PROCEDURES FOR TENDERING NOTES
The tender of Notes pursuant to the Note Exchange Offer and in accordance
with the procedures described below will constitute the delivery of a Consent
with respect to the Notes tendered. Holders who desire to tender their Notes
pursuant to the Notes Exchange Offer and receive the Note Exchange
Consideration are required to deliver Consents to the Proposals, which are
included in the Note Consent and Letter of Transmittal. Holders may not
deliver Consents without validly tendering their Notes pursuant to the Note
Exchange Offer.
Notes, a Note Consent and Letter of Transmittal and any other required
documents should only be sent as instructed below and not to the Company.
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Tenders of Notes and Delivery of Consents. For a holder registered as owning
a Note on the books of the Trustee (a "Registered Holder") to validly tender
Notes pursuant to the Note Exchange Offer, a properly completed and validly
executed Note Consent and Letter of Transmittal (or a facsimile thereof),
together with any signature guarantees or, in the case of a Book-Entry
Transfer (as defined below), an Agent's Message (as defined below), and any
other documents required by the instructions to the Note Consent and Letter of
Transmittal, must be received by the Exchange Agent prior to the Expiration
Date at one of its addresses set forth on the back cover page of this Offering
Circular. In addition, the Exchange Agent must receive either certificates for
tendered Notes at any of such addresses or such Notes must be transferred
pursuant to the procedures for Book-Entry Transfer described below and a
confirmation of, or an Agent's Message with respect to, such Book-Entry
Transfer must be received by the Exchange Agent prior to the Expiration Date.
A Registered Holder who desires to tender Notes and Consent and who cannot
comply with the procedures set forth herein for tender on a timely basis or
whose Notes are not immediately available must comply with the procedures for
guaranteed delivery set forth below. Note Consents and Letters of Transmittal,
certificates representing Notes and confirmations of, or an Agent's Message
with respect to, book-entry transfer should be sent only to the Exchange
Agent, and not to the Company.
The term "Agent's Message" means a message transmitted by a Book-Entry
Facility to, and received by, the Exchange Agent and forming a part of a Book-
Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility, tendering the Notes that such participant has received and
agrees to be bound by the terms of the Note Consents and Letter of Transmittal
and that the Company may enforce such agreement against the participant.
Delivery of Note Consents and Letters of Transmittal. If the certificates
for Notes are registered in the name of a person other than the signer of the
Note Consent and Letter of Transmittal relating thereto, then, in order to
tender such Notes pursuant to the Exchange Offer, the certificates evidencing
such Notes must be endorsed or accompanied by appropriate bond powers signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or bond powers
guaranteed as provided below.
ANY BENEFICIAL OWNER WHOSE NOTES ARE REGISTERED IN THE NAME OF A BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE AND WHO WISHES TO
TENDER NOTES IN THE NOTE EXCHANGE OFFER SHOULD CONTACT SUCH REGISTERED HOLDER
PROMPTLY AND INSTRUCT SUCH REGISTERED HOLDER TO TENDER THE NOTES ON SUCH
BENEFICIAL OWNER'S BEHALF. IF ANY BENEFICIAL OWNER WISHES TO TENDER NOTES
HIMSELF, THAT BENEFICIAL OWNER MUST, PRIOR TO COMPLETING AND EXECUTING THE
NOTE CONSENT AND LETTER OF TRANSMITTAL AND, WHERE APLICABLE, DELIVERING HIS
NOTES, EITHER MAKE APPROPRIATE ARRANGEMENTS TO REGISTER OWNERSHIP OF THE NOTES
IN SUCH BENEFICIAL OWNER'S NAME OR FOLLOW THE PROCEDURES DESCRIBED IN THE
IMMEDIATELY PRECEDING PARAGRAPH. THE TRANSFER OF RECORD OWNERSHIP MAY TAKE A
CONSIDERABLE AMOUNT OF TIME.
The method of delivery of Notes, Note Consent and Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and risk
of the holder tendering the Notes. If delivery is to be made by mail, it is
suggested that the holder use properly insured, registered mail with return
receipt requested, and that the mailing be made sufficiently in advance of the
Expiration Date to permit delivery to the Exchange Agent prior to that date
and time.
Book-Entry Transfer. Promptly after the commencement of the Note Exchange
Offer, the Exchange Agent and the Company will seek to establish a new account
or utilize an existing account with respect to the Notes at The Depository
Trust Company (the "Book-Entry Transfer Facility"). Any financial institution
that is a participant in the Book-Entry Transfer Facility system and whose
name appears on a security position listing as the owner of Notes may make
book-entry delivery of such Notes by causing the Book-Entry Transfer Facility
to transfer such Notes into the Exchange Agent's account in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Notes may be effected through book-entry transfer
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at the Book-Entry Transfer Facility, the applicable Note Consent and Letter of
Transmittal (or a facsimile or electronic copy thereof or an electronic
agreement to comply with the terms thereof), properly completed and validly
executed, with any required signature guarantees, an Agent's Message and any
other required documents, must, in any case, be received by the Exchange Agent
at one of its addresses set forth on the back cover page of this Offering
Circular on or prior to the Expiration Date, or the tendering holder must
comply with the guaranteed delivery procedures described below. The Company
may elect to waive receipt of a written Note Consent and Letter of Transmittal
if delivery is properly effected through the Book-Entry Transfer Facility.
IN ORDER TO BE ASSURED OF PARTICIPATING IN THE NOTE EXCHANGE OFFER, ANY
BENEFICIAL OWNER WHOSE NOTES ARE REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE OR WHO WISHES TO TENDER NOTES
SHOULD CONTACT SUCH REGISTERED HOLDER PROMPTLY (LEAVING SUCH REGISTERED HOLDER
WITH SUFFICIENT TIME TO TENDER THE NOTES ON THE BENEFICIAL HOLDER'S BEHALF)
AND INSTRUCT SUCH REGISTERED HOLDER TO TENDER THE NOTES ON SUCH BENEFICIAL
OWNER'S BEHALF.
Signature Guarantees. Signatures on the Note Consent and Letter of
Transmittal must be guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., or by a commercial bank or trust company having an office or
correspondent in the United States or by any other "eligible guarantor
institution" as defined in Rule 17Ad-15 under the Exchange Act (each of the
foregoing being an "Eligible Institution") unless (a) the Note Consent and
Letter of Transmittal is signed by the registered holder of the Notes tendered
therewith (or by a participant in one of the Book-Entry Transfer Facilities
whose name appears on a security position listing as the owner of such Notes)
and neither the "Special Payment Instructions" box nor the "Special Delivery
Instructions" box of the Note Consents and Letter of Transmittal is completed,
or (b) such Notes are tendered for the account of an Eligible Institution.
Guaranteed Delivery. If a holder desires to tender Notes pursuant to the
Note Exchange Offer and (a) certificates representing such Notes are not
immediately available, (b) time will not permit such holder's Note Consent and
Letter of Transmittal, certificates evidencing such Notes or other required
documents to reach the Exchange Agent prior to the Expiration Date or (c) such
holder cannot complete the procedures for book-entry transfer prior to the
Expiration Date, a tender may be effected if all the following procedures are
complied with:
(a) such tender is made by or through an Eligible Institution;
(b) on or prior to the Expiration Date, the Exchange Agent has received
from such Eligible Institution, at one of the addresses of the Exchange
Agent set forth on the back cover page of this Offering Circular, a
properly completed and validly executed Notice of Guaranteed Delivery (by
telegram, telex, facsimile transmission, mail or hand delivery) in
substantially the form accompanying this Offering Circular, setting forth
the name and address of the registered holder and the principal amount or
number of Notes being tendered and stating that the tender is being made
thereby and guaranteeing that, within three New York Stock Exchange trading
days after the date of the Notice of Guaranteed Delivery, the Note Consent
and Letter of Transmittal validly executed (or a facsimile thereof),
together with certificates evidencing the Notes (or confirmation of, or an
Agent's Message with respect to, book-entry transfer of such Notes into the
Exchange Agent's account with a Book-Entry Transfer Facility), and any
other documents required by the Note Consent and Letter of Transmittal and
the instructions thereto, will be deposited by such Eligible Institution
with the Exchange Agent; and
(c) such Note Consent and Letter of Transmittal (or a facsimile thereof),
properly completed and validly executed, together with certificates
evidencing all physically delivered Notes in proper form for transfer (or
confirmation of, or an Agent's Message with respect to, book-entry transfer
of such Notes into the Exchange Agent's account with a Book-Entry Transfer
Facility) and any other required documents are received by the Exchange
Agent within three New York Stock Exchange trading days after the date of
such Notice of Guaranteed Delivery.
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Lost or Missing Certificates. If a holder desires to tender Notes pursuant
to the Exchange Offer but the certificates evidencing such Notes have been
mutilated, lost, stolen or destroyed, such holder should write to or telephone
the Trustee, at the address or telephone number listed below, about procedures
for obtaining replacement certificates for such Notes or arranging for
indemnification or any other matter that requires handling by the Trustee:
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, NY 10276-0841
(800) 225-2398
Tender Constitutes an Agreement. The tender of Notes into the Note Exchange
Offer pursuant to any of the procedures described above, including tendering
through a book-entry delivery, will constitute a binding agreement between the
tendering holder and the Company upon the terms and conditions of the Note
Exchange Offer, and a representation that (i) such holder owns the Notes being
tendered and is entitled to tender such Notes as contemplated by the Note
Exchange Offer all within the meaning of Rule 14e-4 under the Exchange Act,
and (ii) the tender of such Notes complies with Rule 14e-4.
Further, by executing or transmitting a Note Consent and Letter of
Transmittal (as set forth above, including book-entry transfer, and subject to
and effective upon acceptance for exchange for the Notes tendered therewith or
effectively agreeing to the terms of the Note Consent and Letter of
Transmittal pursuant to a book-entry delivery), a tendering holder irrevocably
sells, assigns and transfers to or upon the order of the Company or its
assignee all right, title and interest in and to all such Notes tendered
thereby, waives any and all rights with respect to the Notes (including,
without limitation, the tendering holder's waiver of any existing or past
defaults and their consequences with respect to the Notes, and releases and
discharges any obligor or parent of any obligor of the Notes from any and all
claims such holder may have now, or may have in the future, arising out of or
related to the Notes, including, without limitation, any claims that such
holder is entitled to receive additional principal or interest payments with
respect to the Notes or to participate in any redemption or defeasance of the
Notes, and each such holder irrevocably selects and appoints the Exchange
Agent the true and lawful agent and attorney-in-fact of such holder (with full
knowledge that the Exchange Agent also acts as agent of the Company and as the
Trustee under the Indenture) with respect to such Notes, with full power of
substitution and resubstitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) to (a) deliver certificates
representing such Notes, or transfer ownership of such Notes on the account
books maintained by a Book-Entry Transfer Facility, together, in each case,
with all accompanying evidences of transfer and authenticity, to or upon the
order of the Company, (b) present such Notes for transfer on the relevant
security register and (c) receive all benefits or otherwise exercise all
rights of beneficial ownership of such Notes.
Other Matters. Notwithstanding any other provision of the Note Exchange
Offer, delivery of the Note Exchange Consideration for Notes tendered and
accepted pursuant to the Note Exchange Offer will occur only after timely
receipt by the Exchange Agent of such Notes (or confirmation of, or an Agent's
Message with respect to, book-entry transfer of such Notes into the Exchange
Agent's account with a Book-Entry Transfer Facility), together with properly
completed and validly executed Note Consents and Letters of Transmittal (or a
facsimile or electronic copy thereof or an electronic agreement to comply with
the terms thereof) and any other required documents.
All questions as to the form of all documents, the validity (including time
of receipt) and acceptance of tenders of the Notes will be determined by the
Company, in its sole discretion, the determination of which shall be final and
binding. Alternative, conditional or contingent tenders of Notes will not be
considered valid. The Company reserves the absolute right to reject any or all
tenders of Notes that are not in proper form or the acceptance of which, in
the Company's opinion, would be unlawful. The Company also reserves the right
to waive any defects, irregularities or conditions of tender as to particular
Notes. If the Company waives its right to reject a defective tender of Notes,
the holder will be entitled to the Note Exchange Consideration. The Company's
interpretation of
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the terms and conditions of the Note Exchange Offer (including the
instructions in the Note Consent and Letter of Transmittal) will be final and
binding. Any defect or irregularity in connection with tenders of Notes must
be cured within such time as the Company determines, unless waived by the
Company. Tenders of Notes shall not be deemed to have been made until all
defects and irregularities have been waived by the Company or cured. None of
the Company, the Exchange Agent, the Trustee or any other person will be under
any duty to give notice of any defects or irregularities in tenders of Notes,
or will incur any liability to holders for failure to give any such notice.
PROCEDURES FOR TENDERING SERIES G PREFERRED STOCK
Tenders of Series G Preferred Stock. For a holder to validly tender Series G
Preferred Stock pursuant to the Series G Exchange Offer, a properly completed
and validly executed Series G Conversion Notice and Letter of Transmittal (or
a facsimile thereof), together with any signature guarantees, and any other
documents required by the instructions to the Series G Conversion Notice and
Letter of Transmittal, must be received by the Exchange Agent prior to the
Expiration Date at one of its addresses set forth on the back cover page of
this Offering Circular. In addition, the Exchange Agent must receive
certificates for tendered Series G Preferred Stock at any of such addresses
prior to the Expiration Date. Series G Conversion Notice and Letter of
Transmittal and certificates representing Series G Preferred Stock should be
sent only to the Exchange Agent, and not to the Company.
Delivery of Letters of Transmittal. If the certificates for Series G
Preferred Stock are registered in the name of a person other than the signer
of the Series G Conversion Notice and Letter of Transmittal relating thereto,
then, in order to tender such Series G Preferred Stock pursuant to the Series
G Exchange Offer, the certificates evidencing such Series G Preferred Stock
must be endorsed or accompanied by appropriate stock powers signed exactly as
the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as provided below.
The method of delivery of Series G Preferred Stock, Series G Conversion
Notice and Letter of Transmittal and all other required documents to the
Exchange Agent is at the election and risk of the holder tendering the Series
G Preferred Stock. If delivery is to be made by mail, it is suggested that the
holder use properly insured, registered mail with return receipt requested,
and that the mailing be made sufficiently in advance of the Expiration Date to
permit delivery to the Exchange Agent prior to that date and time.
Signature Guarantees. Signatures on the Series G Conversion Notice and
Letter of Transmittal must be guaranteed by a firm which is a member of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States or by any other "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Exchange Act (each
of the foregoing being an "Eligible Institution") unless (a) the Series G
Conversion Notice and Letter of Transmittal is signed by the registered holder
of the Series G Preferred Stock tendered therewith and neither the "Special
Payment Instructions" box nor the "Special Delivery Instructions" box of the
Series G Conversion Notice and Letter of Transmittal is completed, or (b) such
Series G Preferred Stock are tendered for the account of an Eligible
Institution.
Lost or Missing Certificates. If a holder desires to tender Series G
Preferred Stock pursuant to the Series G Exchange Offer but the certificates
evidencing such Series G Preferred Stock have been mutilated, lost, stolen or
destroyed, such holder should contact U.S. Trust Company of California, N.A.
at the address and telephone number listed below, about procedures for
obtaining replacement certificates for such Series G Preferred Stock or
arranging for indemnification.
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, NY 10276-0841
(800) 225-2398
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Tender Constitutes an Agreement. The tender of Series G Preferred Stock into
the Series G Exchange Offer pursuant to any of the procedures described above,
will constitute a binding agreement between the tendering holder and the
Company upon the terms and conditions of the Series G Exchange Offer, and a
representation that (i) such holder owns the Series G Preferred Stock being
tendered and is entitled to tender such Series G Preferred Stock as
contemplated by the Series G Exchange Offer all within the meaning of Rule
14e-4 under the Exchange Act, and (ii) the tender of such Series G Preferred
Stock complies with Rule 14e-4.
Further, by executing or transmitting a Series G Conversion Notice and
Letter of Transmittal (as set forth above, and subject to and effective upon
acceptance for exchange for the Series G Preferred Stock tendered therewith),
a tendering holder irrevocably sells, assigns and transfers to or upon the
order of the Company or its assignee all right, title and interest in and to
all such Series G Preferred Stock tendered thereby, waives any and all rights
with respect to the Series G Preferred Stock (including, without limitation,
the tendering holder's waiver of any existing or past defaults and their
consequences with respect to the Series G Preferred Stock, and releases and
discharges any obligor or parent of any obligor of the Series G Preferred
Stock from any and all claims such holder may have now, or may have in the
future, arising out of or related to the Series G Preferred Stock, including,
without limitation, any claims that such holder is entitled to receive
additional dividends with respect to the Series G Preferred Stock or to
participate in any redemption or defeasance of the Series G Preferred Stock,
and each such holder irrevocably selects and appoints the Exchange Agent the
true and lawful agent and attorney-in-fact of such holder (with full knowledge
that the Exchange Agent also acts as agent of the Company and as the Trustee
under the Indenture) with respect to such Series G Preferred Stock, with full
power of substitution and resubstitution (such power of attorney being deemed
to be an irrevocable power coupled with an interest) to (a) deliver
certificates representing such Series G Preferred Stock, together with all
accompanying evidences of transfer and authenticity, to or upon the order of
the Company, (b) present such Series G Preferred Stock for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such Series G Preferred Stock.
Other Matters. Notwithstanding any other provision of the Series G Exchange
Offer, delivery of the shares of the Series G Exchange Consideration for
Series G Preferred Stock tendered and accepted pursuant to the Series G Stock
Exchange Offer will occur only after timely receipt by the Exchange Agent of
such Series G Preferred Stock, together with properly completed and validly
executed Series G Conversion Notice and Letters of Transmittal (or a facsimile
or electronic copy thereof or an electronic agreement to comply with the terms
thereof) and any other required documents.
All questions as to the form of all documents, the validity (including time
of receipt) and acceptance of tenders of the Series G Preferred Stock will be
determined by the Company, in its sole discretion, the determination of which
shall be final and binding. Alternative, conditional or contingent tenders of
Series G Preferred Stock will not be considered valid. The Company reserves
the absolute right to reject any or all tenders of Series G Preferred Stock
that are not in proper form or the acceptance of which, in the Company's
opinion, would be unlawful. The Company also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Series G
Preferred Stock. If the Company waives its right to reject a defective tender
of Series G Preferred Stock, the holder will be entitled to the Series G
Exchange Consideration. The Company's interpretation of the terms and
conditions of the Series G Exchange Offer (including the instructions in the
Series G Conversion Notice and Letter of Transmittal) will be final and
binding. Any defect or irregularity in connection with tenders of Series G
Preferred Stock must be cured within such time as the Company determines,
unless waived by the Company. Tenders of Series G Preferred Stock shall not be
deemed to have been made until all defects and irregularities have been waived
by the Company or cured. None of the Company, the Exchange Agent, the Trustee
or any other person will be under any duty to give notice of any defects or
irregularities in tenders of Series G Preferred Stock, or will incur any
liability to holders for failure to give any such notice.
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PROCEDURES FOR TENDERING WARRANTS
Tenders of Warrants. For a holder to validly tender Warrants pursuant to the
Warrant Exchange Offer, a properly completed and validly executed Warrant
Letter of Transmittal (or a facsimile thereof), together with any signature
guarantees, and any other documents required by the instructions to the
Warrant Letter of Transmittal, must be received by the Exchange Agent prior to
the Expiration Date at one of its addresses set forth on the back cover page
of this Offering Circular. In addition, the Exchange Agent must receive
certificates for tendered Warrants at any of such addresses prior to the
Expiration Date. The Warrant Letters of Transmittal and certificates
representing Warrants should be sent only to the Exchange Agent, and not to
the Company.
Delivery of Letters of Transmittal. If the certificates for Warrants are
registered in the name of a person other than the signer of the Warrant Letter
of Transmittal relating thereto, then, in order to tender such Warrants
pursuant to the Warrant Exchange Offer, the certificates evidencing such
Warrants must be endorsed or accompanied by appropriate stock powers signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers
guaranteed as provided below.
The method of delivery of Warrants, Warrant Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holder tendering the Warrants. If delivery is to be made by mail, it is
suggested that the holder use properly insured, registered mail with return
receipt requested, and that the mailing be made sufficiently in advance of the
Expiration Date to permit delivery to the Exchange Agent prior to that date
and time.
Signature Guarantees. Signatures on the Warrant Letter of Transmittal must
be guaranteed by a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or by a
commercial bank or trust company having an office or correspondent in the
United States or by any other "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Exchange Act (each of the foregoing being an "Eligible
Institution") unless (a) the Warrant Letter of Transmittal is signed by the
registered holder of the Warrants tendered therewith and neither the "Special
Payment Instructions" box nor the "Special Delivery Instructions" box of the
Warrant Letter of Transmittal is completed, or (b) such Warrants are tendered
for the account of an Eligible Institution.
Lost or Missing Certificates. If a holder desires to tender Warrants
pursuant to the Warrant Exchange Offer but the certificates evidencing such
Warrants have been mutilated, lost, stolen or destroyed, such holder should
contact U.S. Trust Company of California, N.A. at the address and telephone
number listed below, about procedures for obtaining replacement certificates
for such Warrants or arranging for indemnification.
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, NY 10276-0841
(800) 225-2398
Tender Constitutes an Agreement. The tender of Warrants into the Warrant
Exchange Offer pursuant to any of the procedures described above, will
constitute a binding agreement between the tendering holder and the Company
upon the terms and conditions of the Warrant Exchange Offer, and a
representation that (i) such holder owns the Warrants being tendered and is
entitled to tender such Warrants as contemplated by the Warrant Exchange Offer
all within the meaning of Rule 14e-4 under the Exchange Act, and (ii) the
tender of such Warrants complies with Rule 14e-4.
Further, by executing or transmitting a Warrant Letter of Transmittal (as
set forth above, and subject to and effective upon acceptance for exchange for
the Warrants tendered therewith), a tendering holder irrevocably sells,
assigns and transfers to or upon the order of the Company all right, title and
interest in and to all such Warrants tendered thereby, waives any and all
rights with respect to the Warrants and releases and discharges any obligor
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or parent of any obligor of the Warrants from any and all claims such holder
may have now, or may have in the future, arising out of or related to the
Warrants, and each such holder irrevocably selects and appoints the Exchange
Agent the true and lawful agent and attorney-in-fact of such holder (with full
knowledge that the Exchange Agent also acts as agent of the Company and as the
Trustee under the Indenture) with respect to such Warrants, with full power of
substitution and resubstitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) to (a) deliver certificates
representing such Warrants, together, in each case, with all accompanying
evidences of transfer and authenticity, to or upon the order of the Company,
(b) present such Warrants for transfer on the relevant security register and
(c) receive all benefits or otherwise exercise all rights of beneficial
ownership of such Warrants.
Other Matters. Notwithstanding any other provision of the Exchange Offer,
delivery of the shares of the Warrant Exchange Consideration for Warrants
tendered and accepted pursuant to the Warrant Exchange Offer will occur only
after timely receipt by the Exchange Agent of such Warrants, together with
properly completed and validly executed Warrant Letters of Transmittal (or a
facsimile or electronic copy thereof or an electronic agreement to comply with
the terms thereof) and any other required documents.
All questions as to the form of all documents, the validity (including time
of receipt) and acceptance of tenders of the Warrants will be determined by
the Company, in its sole discretion, the determination of which shall be final
and binding. Alternative, conditional or contingent tenders of Warrants will
not be considered valid. The Company reserves the absolute right to reject any
or all tenders of Warrants that are not in proper form or the acceptance of
which, in the Company's opinion, would be unlawful. The Company also reserves
the right to waive any defects, irregularities or conditions of tender as to
particular Warrants. If the Company waives its right to reject a defective
tender of Warrants, the holder will be entitled to the Warrant Exchange
Consideration. The Company's interpretation of the terms and conditions of the
Warrant Exchange Offer (including the instructions in the Warrant Letter of
Transmittal) will be final and binding. Any defect or irregularity in
connection with tenders of Warrants must be cured within such time as the
Company determines, unless waived by the Company. Tenders of Warrants shall
not be deemed to have been made until all defects and irregularities have been
waived by the Company or cured. None of the Company, the Exchange Agent, the
Trustee or any other person will be under any duty to give notice of any
defects or irregularities in tenders of Warrants, or will incur any liability
to holders for failure to give any such notice.
WITHDRAWAL OF TENDERS
Tenders of Notes, Series G Preferred Stock or Warrants may be withdrawn at
any time until the Expiration Date as such date may be extended. Thereafter,
such tenders are irrevocable, except that they may be withdrawn after the
expiration of 40 business days from the commencement of the Exchange Offer
unless accepted for exchange prior to that date.
Holders who wish to exercise their right of withdrawal with respect to an
Exchange Offer must give written notice of withdrawal, delivered by mail or
hand delivery or facsimile transmission, to the Exchange Agent at one of its
addresses set forth on the back cover page of this Offering Circular prior to
the Expiration Date or at such other time as otherwise provided for herein. In
order to be effective, a notice of withdrawal must specify the name of the
person who deposited the Notes, shares of Series G Preferred Stock or Warrants
to be withdrawn (the "Depositor"), the name in which the Notes, Series G
Preferred Stock or Warrants are registered, if different from that of the
Depositor, and the principal amount of the Notes, number of shares of Series G
Preferred Stock or number of Warrants to be withdrawn prior to the physical
release of the certificates to be withdrawn. If tendered Notes to be withdrawn
have been delivered or identified through confirmation of book-entry transfer
to the Exchange Agent, the notice of withdrawal also must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
withdrawn Notes. The notice of withdrawal must be signed by the registered
holder of such Notes in the same manner as the applicable Note Consent and
Letter of Transmittal (including any required signature guarantees), or be
accompanied by evidence satisfactory to the Company that the person
withdrawing the tender has succeeded to the beneficial ownership of such
Notes. Withdrawals of tenders of Notes, Series G Preferred Stock or Warrants
may not be rescinded, and any Notes, Series G Preferred
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Stock or Warrants withdrawn will be deemed not validly tendered thereafter for
purposes of the Exchange Offer. However, properly withdrawn Notes, Series G
Preferred Stock or Warrants may be tendered again at any time prior to the
Expiration Date by following the procedures for tendering not previously
tendered Notes, Series G Preferred Stock or Warrants described elsewhere
herein.
All questions as to the form, validity and eligibility (including time of
receipt) of any withdrawal of tendered Notes, Series G Preferred Stock or
Warrants will be determined by the Company, in its sole discretion, which
determination shall be final and binding. None of the Company, the Exchange
Agent, the Trustee or any other person will be under any duty to give
notification of any defect or irregularity in any withdrawal of tendered
Notes, Series G Preferred Stock or Warrants, or will incur any liability for
failure to give any such notification.
If the Company is delayed in its acceptance for conversion and payment for
any Notes, Series G Preferred Stock or Warrants or is unable to accept for
conversion or convert any Notes, Series G Preferred Stock or Warrants pursuant
to the Exchange Offer for any reason, then, without prejudice to the Company's
rights hereunder, tendered Notes, Series G Preferred Stock or Warrants may be
retained by the Exchange Agent on behalf of the Company and may not be
withdrawn (subject to Rule 13e-4(f)(5) under the Exchange Act, which requires
that the issuer making the tender offer pay the consideration offered, or
return the tendered securities, promptly after the termination or withdrawal
of a tender offer), except as otherwise permitted hereby.
FRACTIONAL SHARES
In the event that an exchanging holder of Notes, Series G Preferred Stock or
Warrants would otherwise be entitled to receive fractional shares of Common
Stock or Series H Preferred Stock, the fractional share will be rounded to the
nearest whole share. Fractional shares of Series I Preferred Stock will be
rounded to the nearest one thousandth of a share of Series I Preferred Stock.
ACCEPTANCE OF NOTES, SERIES G PREFERRED STOCK AND WARRANTS; DELIVERY OF COMMON
STOCK, SERIES H PREFERRED STOCK AND SERIES I PREFERRED STOCK
The acceptance of the Notes, Series G Preferred Stock and Warrants validly
tendered for exchange and not withdrawn will be made as promptly as
practicable after the Expiration Date. For purposes of the Note Exchange Offer
and the Warrant Exchange Offer, the Company will be deemed to have accepted
for exchange validly tendered Notes and Warrants if, as and when the Company
gives oral or written notice thereof to the Exchange Agent. For purposes of
the Series G Exchange Offer, the conversion notice with respect to tendered
Series G Preferred Stock will become effective and the Company will become
obligated to pay the Conversion Payment upon the Company's acceptance of the
validly tendered Notes and Warrants. Such notice of acceptance shall
constitute a binding contract between the Company and the tendering holder
pursuant to which the Company will be obligated to provide the Exchange
Consideration therefor. Subject to the terms and conditions of the Exchange
Offer, delivery of the Exchange Consideration in respect of Notes, Series G
Preferred Stock and Warrants accepted and exchanged pursuant to the Exchange
Offer will be made by the Exchange Agent as soon as practicable after receipt
of such notice. The Exchange Agent will act as agent for the tendering holders
of Notes for the purposes of receiving the Exchange Consideration from the
Company and transmitting the Exchange Consideration. Tendered Notes, Series G
Preferred Stock and Warrants not accepted for exchange by the Company, if any,
will be returned without expense to the tendering holder of such Notes, Series
G Preferred Stock and Warrants (or, in the case of Notes tendered by book-
entry transfer into the Exchange Agent's account at a Book-Entry Transfer
Facility, such Notes will be credited to an account maintained at a Book-Entry
Transfer Facility) as promptly as practicable following the Expiration Date.
If the Company accepts the tender for conversion of Series G Preferred Stock
in excess of sixty-six and two-thirds percent (66 2/3%) of the number of
shares theretofore issued, and such shares are therein converted then all
shares of Series G Preferred Stock shall automatically convert into shares of
Common Stock on a share-for-share basis. Series G Preferred Stock
automatically converted in connection with the Exchange Offer will also
receive the Conversion Payment.
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EXCHANGE AGENT
U.S. Trust Company of California, N.A. has been appointed Exchange Agent for
the Exchange Offer. All deliveries and correspondence sent to the Exchange
Agent should be directed to one of its addresses set forth on the back cover
page of this Offering Circular. Requests for assistance or additional copies
of this Offering Circular, the Note Consent and Letter of Transmittal, the
Series G Conversion Notice and Letter of Transmittal and the Warrant Letter of
Transmittal should be directed to the Exchange Agent, at its address set forth
on the back cover page of this Offering Circular. The Company has agreed to
pay the Exchange Agent customary fees for its services and to reimburse the
Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company also has agreed to indemnify the Exchange Agent for
certain liabilities, including liabilities under the federal securities laws.
The Exchange Agent also acts as Trustee under the Indenture for the Notes.
MISCELLANEOUS
The Company has not retained any dealer manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting tenders of Notes, Series G Preferred Stock or
Warrants. However, directors, officers and employees of the Company (who will
not be separately compensated for such services) may solicit exchanges by use
of the mails, personally or by telephone, facsimile or similar means of
electronic transmission. The Company also will pay brokerage houses and other
custodians, nominees and fiduciaries their reasonable out-of-pocket expenses
incurred in forwarding copies of this Offering Circular and related documents
to the beneficial owners of the Notes and in handling or forwarding tenders of
Notes by their customers.
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THE COMPANY
Trikon develops, manufactures, markets and services semiconductor processing
equipment for the worldwide semiconductor manufacturing industry.
The Company's products are used for chemical vapor deposition (CVD),
sputtering--a type of physical vapor deposition ("PVD"), and etch applications
and are sold to semiconductor manufacturers worldwide. Trikon currently offers
leading-edge products including the Planar 200(R) Flowfill(TM) system for
inter-metal dielectric CVD and the Sigma sputter system for PVD, with optional
Forcefill module. Trikon's CVD process technology, Flowfill(TM), forms high
quality silicon dioxide layers which possess the properties of both gap fill
and planarization. Forcefill(TM) technology allows manufacturers to eliminate
the use of multistep CVD tungsten-plug based metallization processes and to
utilize an entirely aluminum-based PVD multi-level metal scheme in sub-0.5
micron Integrated Circuit (IC) manufacturing. Trikon also offers various
products for the etch market, including its Omega(R) Inductively Coupled
Plasma (ICP) system. Historically, the Company also offered its patented
MORI(TM) source technology for dielectric, polysilicon and metal etch
applications in the fabrication of semiconductor devices. The MORI(TM) source
product has historically been manufactured in the United States at the
Company's Chatsworth, California facilities. Management is currently
evaluating whether the Company will begin to manufacture its MORI(TM) etch
products at its Newport, United Kingdom facility.
In the second half of 1997, in response to continuing losses, violations of
debt covenants and limited availability of financing, the Company began a
restructuring effort that included exploring various strategic alternatives as
to the future of the business. In October 1997, the Company reduced its global
work force by 20%. In November 1997, it sold non-exclusive, paid-up licenses
of its MORI(TM) source and Forcefill(R) PVD technologies to Applied Materials.
Under the terms of the license agreements, the Company is not precluded from
utilizing, or licensing to other third parties, the licensed technology. With
the sale of the MORI(TM) source license and continuing losses, the Company
focused its restructuring efforts on its Etch Division based in Chatsworth,
California. The Company is in the process of terminating all operations at its
Chatsworth, California facilities and transferring its Etch Division customer
support operations to field offices in the United States and to its Newport,
United Kingdom facilities. The Company is also continuing its efforts to
reduce its operating costs worldwide. Following the completion of the
restructuring of the Company's operations, the remaining business will consist
primarily of the worldwide operations of Trikon Limited, the Company acquired
by Trikon on November 15, 1996 (see discussion of Electrotech Acquisition
following), with headquarters located in the United Kingdom.
DEVELOPMENT OF THE COMPANY
Initial Public Offering. On August 29, 1995, the Company completed an
initial public offering of its Common Stock resulting in approximately
$40,093,235 of net proceeds to the Company. Since that date, the Company has
been subject to the reporting requirements of Section 13(a) of the Exchange
Act of 1934.
Formation of the CVD Partnership. On March 29, 1996, Trikon, as limited
partner, entered into the Agreement of Limited Partnership of PMT CVD
Partners, L.P. (the "CVD Partnership") with CVD Inc., as general partner, and
SBIC Partners, L.P. ("SBIC Partners"), Norwest Equity V ("Norwest") and R&M
Partners/CVD, G.P., each as a limited partner (collectively, the limited
partners are referred to as the "Limited Partners"). The CVD Partnership was
sponsored by Trikon to fund research and development costs and expenses
relating to CVD technology and applications using MORI(TM) source technology.
An aggregate of $5,350,000 was invested by the Limited Partners in the CVD
Partnership to fund such research and development, which was to be performed
by Trikon under an agreement with the CVD Partnership.
Convertible Subordinated Note Offering. On October 7, 1996, the Company
issued and sold the Notes in the aggregate amount of $86,250,000 to Salomon
Brothers Inc (which has merged with a subsidiary of Travellers Group Inc. to
form Salomon Smith Barney Holdings Inc.) and Unterberg Harris (which has been
renamed C.E. Unterberg Towbin) (the "Initial Purchasers") in a transaction
exempt from the registration requirements of the
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Securities Act. The Initial Purchasers then offered and sold the Notes to
persons reasonably believed by the Initial Purchasers to be "qualified
institutional buyers" as defined by Rule 144A under the Securities Act, other
institutional "accredited investors" as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act or in transactions complying with provisions of
Regulation S under the Securities Act. A portion of the net proceeds from the
issuance and sale of the Notes were used by the Company to pay the cash
portion of the purchase price paid to the shareholders of Trikon Limited (as
hereinafter defined) in the Acquisition (as hereinafter defined). In
connection with the issuance and sale of the Notes, the Company agreed with
the Initial Purchasers, for the benefit of the Initial Purchasers and the
holders of the Notes from time to time, to prepare, file and cause a shelf
registration statement covering the Notes and the shares of Common Stock
issuable upon the conversion of the Notes to become effective within 90 days
after the closing date of the offering of the Acquisition (the "Original
Offering"). Because the Company did not cause such a shelf registration
statement to become effective within the required time period, the Company is
subject to the payment of liquidated damages until such a shelf registration
statement becomes effective. The liquidated damages are calculated at a rate
of one-half of one percent (50 basis points) per annum of the aggregate
principal amount outstanding of the Notes.
Working Capital Facility. On November 15, 1996, in preparation for the
Acquisition, the Company entered into a senior secured facility (the "Working
Capital Facility") with certain banks (the "Lending Banks") in the United
States and United Kingdom that permitted the Company to borrow up to an
aggregate of $35.0 million, subject to certain borrowing base limitations
based upon eligible accounts receivable. The Working Capital Facility
contained sub-facilities which provided for the issuance of letters of credit
up to $4.0 million ($3.0 million in the United Kingdom and $1.0 million in the
United States) and an overdraft line of credit up to 2.5 million British
pounds.
Electrotech Acquisition. On November 15, 1996, the Company completed the
acquisition (the "Acquisition") of 100% of the outstanding capital stock of
Electrotech Limited, an English corporation, Electrotech Equipments Limited,
an English corporation, and, directly or indirectly, each subsidiary thereof
for an aggregate consideration of $145.7 million, excluding approximately $8.0
million in acquisition costs, consisting of $75 million in cash and 5.6
million shares of newly issued Common Stock having a fair market value of
$70.7 million, based on the $12.625 per share closing price for the Common
Stock on July 17, 1996, the last day prior to the public announcement of the
Acquisition. The net proceeds from the sale of the Notes in the Original
Offering were used by the Company to substantially fund the cash needed with
respect to the Acquisition. In connection with the Acquisition, Christopher D.
Dobson, formerly the principal shareholder of Electrotech Limited and
Electrotech Equipments Limited (collectively, "Electrotech,") became the
Chairman of the Board of Directors of Trikon, and Nigel Wheeler, formerly the
President of Electrotech, became the President, Chief Operating Officer and a
director of Trikon. Subsequent to the Acquisition, Electrotech Limited and
Electrotech Equipments Limited formally changed their names to Trikon
Technologies Limited and Trikon Equipments Limited. As a result of the
Acquisition, each of Trikon Technologies Limited and Trikon Equipments Limited
became a direct, wholly-owned subsidiary of the Company. Trikon has since
reorganized its ownership of Trikon Technologies Limited and Trikon Equipments
Limited such that Trikon Technologies Limited and Trikon Equipments Limited
are directly owned by holding companies (collectively, with Trikon
Technologies Limited and Trikon Equipments Limited, referred to as "Trikon
Limited") that, in turn, are directly wholly-owned by Trikon.
Name Change. On March 31, 1997, the Company changed its name from Plasma &
Materials Technologies, Inc. to Trikon Technologies, Inc.
Series G Preferred Stock Private Placement. Effective June 30, 1997, the
Company offered and sold shares of the Series G Preferred Stock to investors
at a price of $6.75 per share in a transaction exempt from the registration
requirements of the Securities Act (the "Series G Private Placement"). Each
investor in the Series G Private Placement also received presently exercisable
three-year warrants to purchase Common Stock, at a price of $8.00 per share,
in a share amount equal to 30% of the number of shares of Series G Preferred
Stock purchased. The Series G Preferred Stock is convertible on a share-for-
share basis into Common Stock (subject to customary antidilution adjustments),
bears no dividend, and automatically converts into Common Stock three
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years after issuance. The Company sold an aggregate of 2,962,032 shares of
Series G Preferred Stock and Warrants to purchase 888,610 shares of Common
Stock in the Series G Private Placement, resulting in net proceeds of
approximately $19,349,000 to the Company.
Amendment to Working Capital Facility. 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 Lending Banks
under the Working Capital Facility had granted the Company a waiver of such
financial ratios and covenants for the year and quarter then ended. Concurrent
with the closing of the Series G Private Placement, the Company entered into
an amendment agreement with its lending banks to amend its 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. At June 30, 1997, the Company was again out of compliance with the
certain financial ratios and covenants established under the amended Working
Capital Facility. The Lending Banks then granted a waiver of such financial
ratio and covenant violations through September 30, 1997, which also suspended
the obligations of the Lending Banks to advance any further funds under the
Working Capital Facility. At September 30, the Company was again out of
compliance with certain financial ratios and covenants under the amended
Working Capital Facility. As a result of the Company being in default under
the amended Working Capital Facility, the Lending Banks issued on October 7,
1997 a payment blockage notice to the holders of the Notes (the "Payment
Blockage Notice"). The Payment Blockage Notice prevented the payment of
principal or interest due and payable under the Notes on October 15, 1997. The
Payment Blockage Notice was cancelled on November 12, 1997 in connection with
the termination of the Working Capital Facility.
CVD Acquisition. Effective June 30, 1997, the Company acquired all the
outstanding limited partnership interests of the CVD Partnership and all of
the share interests in the CVD Partnership's corporate general partner (the
"CVD Acquisition") in exchange for the Company's issuance of an aggregate of
679,680 shares of Common Stock of the Company (the "CVD Partnership Shares")
pro rata to the Limited Partners of the CVD Partnership, excluding the
Company, pursuant to the terms of a purchase agreement (the "CVD Purchase
Agreement"). The Company had previously determined that certain
characteristics of the CVD technology of Trikon Limited, acquired in the
Acquisition and known as "Flowfill" are superior to the high density CVD
processes which were being pursued by the CVD Partnership (through a research
and development agreement with the Company). Accordingly the Company
discontinued the research and development work on behalf of the CVD
Partnership and focused its consolidated efforts upon the Flowfill technology
used in the Trikon Limited equipment. As a result of the CVD Acquisition, the
Company acquired all CVD technology which had been developed by the CVD
Partnership prior to such discontinuation, together with approximately
$2,208,000 of unspent funds of the CVD Partnership. Any and all claims that
the Limited Partners of the CVD Partnership may have had in connection with
the termination of the research and development project thereunder or
otherwise relating to the CVD Partnership were released and discharged
pursuant to the CVD Purchase Agreement.
In connection with the purchase of all of the outstanding interests in the
CVD Partnership and CVD Inc., the Company agreed to cause a registration
statement covering the shares issued to the Limited Partners on June 30, 1997
to be filed under the Securities Act, and to become effective on or prior to
September 1, 1997. In the event that the Company did not cause a registration
statement covering the CVD Partnership Shares become effective on or prior to
September 1, 1997, the Company agreed pursuant to the original terms of the
CVD Purchase Agreement to pay the holders of CVD Partnership Shares liquidated
damages comprised of a one-time fee of $75,000, and an amount equal to $2,500
per day for each day after September 1, 1997 and prior to the effective date
of a registration statement.
On December 12, 1997, the Company and the holders of the CVD Partnership
Shares amended the CVD Purchase Agreement to provide for (i) the immediate
payment of liquidated damages accrued through November 1, 1997 of $225,000,
(ii) no further incurrence of liquidated damages should a registration
statement
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be effective by March 15, 1998, (iii) in the event Trikon does not cause a
registration statement to become effective by March 15, 1998, resumption of
liquidated damages accruing at a rate of $2,500 for each day thereafter until
a registration statement becomes effective, and (iv) should a registration
statement not be effective by April 1, 1998, Trikon becoming obligated to pay
the Limited Partners liquidated damages for the period between November 1,
1997 and March 15, 1998, of $335,000. As of the date hereof, the Company has
not caused a registration statement to become effective.
Non-Exclusive Licenses of Technology to Applied Materials. On November 12,
1997, the Company granted non-exclusive, worldwide, paid-up licenses of its
MORI(TM) source and Forcefill(R) PVD technologies to Applied Materials. Under
the terms of the license agreements and related technology transfer
agreements, Applied Materials paid $29.5 million, $26.5 million of which was
paid prior to December 31, 1997, and $3.0 million of which was paid in the
first quarter of 1998 upon completion of the technology transfer. The license
agreements with Applied Materials do not preclude the Company from utilizing,
or licensing to other third parties, the licensed technologies. In addition,
the Company sold four MORI(TM) sources to Applied Materials for $0.5 million,
which were transferred to Applied Materials prior to December 31, 1997.
Restructuring of Operations. In October 1997, as a result of significant
operating losses, the Company reduced its global work force by approximately
20%, or 105 employees. As a result, 85 persons employed by the Company in the
United Kingdom and 20 persons employed at the Company's Chatsworth, California
facilities were terminated. Costs associated with this reduction, $0.3
million, were included in expenses for the fourth quarter of 1997.
In response to continuing operating losses, negative cash flows from
operations and the sale of the licenses of MORI(TM) source and Forcefill(R)
PVD technologies to Applied Materials, Trikon initiated the restructuring of
its etch business. On November 12, 1997, the Company announced the
restructuring of its Etch Division based in Chatsworth, California. In
connection with the restructuring of its Etch Division, the Company terminated
approximately 13% of its global work force or 64 employees in January 1998 and
is in the process of closing the Chatsworth, California facilities. The
Company will retain its customer support operations for the MORI(TM) etch
products through the life-cycle of the products and will continue to supply
Pinnacle 8000R(TM) systems to existing customers. Management is currently
conducting a review of its MORI(TM) etch products to determine whether the
restructured Company will manufacture MORI(TM) etch products at its Newport,
United Kingdom facility. The restructuring of the Etch Division, the shutdown
of operations in Chatsworth, California, and other impairment write-downs of
the intangible assets established upon the acquisition of Trikon Limited,
California have resulted in charges to earnings in 1997 aggregating $77.6
million.
Termination of Working Capital Facility. On November 12, 1997, with proceeds
from the licenses issued to Applied Materials, the Company made payments in
the aggregate of approximately $12.5 million to the Lending Banks under the
Working Capital Facility, which included all outstanding principal and
interest due at November 12, 1997, and terminated the Working Capital
Facility. On the same date, the Company made an interest payment of
approximately $3.1 million to the holders of the Notes, which payment was
originally due on October 15, 1997. As of the date hereof, the Company has not
established a new credit facility to replace the Working Capital Facility.
New Chief Executive Officer. On November 17, 1997, the Company announced
that its Chief Executive Officer, Gregor A. Campbell, had resigned to take a
senior position at Lam Research Corporation and that Christopher D. Dobson had
been appointed Chief Executive Officer of the Company.
Non-Exclusive License of Technology to Lam Research. On March 18, 1998, the
Company granted a non-exclusive, worldwide license of its MORI(TM) source
technology to Lam Research. Under the terms of the license agreement, Lam
Research will pay up to $20.0 million, $9.0 million of which was paid in the
first quarter of 1998, $1.0 million of which is due in the second quarter of
1998 and $10.0 million of which consists of contingent payments and royalties.
The license agreement does not preclude Trikon from utilizing, or licensing to
other third parties, the licensed technology.
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Substantial Doubt as to Ability of the Company to Continue as a Going
Concern. The Company has experienced significant losses from operations and
negative cash flows from operating activities, resulting in violations of debt
covenants and the termination of the Company's Working Capital Facility. The
Company does not currently have a credit facility with any lenders or any
other readily available source of debt financing. Management's plans with
respect to these conditions include the Exchange Offer, the sale of licenses,
restructuring of its operations, and obtaining a new working capital facility.
Management believes that the successful implementation of these actions and
the cash flow from future operations will be sufficient to fund the Company's
operations. However, any increase in costs or decrease or elimination of
anticipated sources of revenues or the inability of the Company to
successfully implement the Exchange Offer and other management plans would
raise significant doubt as to the Company's ability to fund its operations in
the ordinary course.
55
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DESCRIPTION OF THE NOTES
The following summary of certain provisions of the Indenture, the Notes and
the Registration Agreement does not purport to be complete, and where
reference is made to particular provisions of the Indenture or the Notes, such
provisions are qualified in their entirety by reference to all of the
provisions of the Indenture and the Notes, as the case may be, including the
definitions therein of certain terms. THE FOLLOWING SUMMARY DESCRIBES THE
INDENTURE AND NOTES PRIOR TO THE EFFECTIVENESS OF THE PROPOSALS, WHICH
CONTEMPLATE REVISIONS TO THE TERMS AND PROVISIONS OF THE INDENTURE AND THE
TERMINATION OF THE REGISTRATION AGREEMENT. See "The Exchange Offer--The
Proposals."
GENERAL
The Notes were issued pursuant to the Indenture dated as of October 7, 1996,
between the Company and U.S. Trust Company of California, N.A., as Trustee.
The following summary of certain provisions of the Notes, the Indenture and
the Registration Agreement does not purport to be complete and is qualified in
its entirety by reference to the Notes, the Indenture and the Registration
Agreement, respectively, including the definitions therein of certain terms
used in the following summary.
The Notes are unsecured general obligations of the Company, subordinated in
right of payment to all existing and future Senior Debt of the Company to the
extent set forth in the Indenture and limited to $86,250,000 aggregate
principal amount. The Indenture does not limit the amount of other
indebtedness or securities that may be issued by the Company or any of its
subsidiaries. The Indenture does not contain any financial covenants or
restrictions on the payment of dividends, the incurrence of Senior Debt or
issuance or repurchase of securities of the Company (other than the Notes).
The Indenture contains no covenants or other provisions to afford protection
to holders of Notes in the event of a highly leveraged transaction or a change
in control of the Company except to the extent described under "Repurchase at
the Option of Holders." The Notes are also structurally subordinated to all
existing and future indebtedness and other liabilities of the Company's
subsidiaries.
The Notes have been approved for trading in the PORTAL Market. Price
information regarding the Notes in the PORTAL Market is not publicly
available.
PRINCIPAL, MATURITY AND INTEREST
The Notes bear interest from October 7, 1996 at the rate of 7 1/8% per annum
and will mature on October 15, 2001.
Interest on the Notes is payable semiannually on April 15 and October 15 of
each year (each an "Interest Payment Date"), which commenced on April 15,
1997, to holders of record at the close of business on April 1 or October 1
(each a "Regular Record Date") immediately preceding such Interest Payment
Date. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.
As of immediately prior to the date of this Offering Circular, the Company
was in violation of its registration obligations under the Registration
Agreement (as defined below).
The Notes are payable as to principal, liquidated damages or premium, if
any, and interest at the office or agency of the Company maintained for such
purpose within the City and State of New York or, at the option of the
Company, payment of interest may be made by check mailed to the holders of the
Notes at their respective addresses set forth in the register of holders of
Notes. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purposes. The Notes were issued in registered form, without coupons, and in
denominations of $1,000 and integral multiples thereof.
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OPTIONAL REDEMPTION
The Notes are not subject to optional redemption prior to October 15, 1999
and are redeemable on such date and thereafter at the option of the Company,
in whole or in part (in any integral multiple of $1,000), upon not less than
15 days nor more than 60 days' prior notice by mail at the following
redemption prices (expressed as percentages of the principal amount), in each
case, together with accrued and unpaid interest to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on an Interest Payment Date). If redeemed during the 12-
month period beginning October 15 of the years indicated below, such
redemption price shall be as indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
1999.............................. 102.850%
2000.............................. 101.425%
</TABLE>
On or after the redemption date, interest will cease to accrue on the Notes,
or portion thereof, called for redemption.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Upon the occurrence of a Designated Event, each holder of Notes shall have
the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such holder's Notes pursuant to the
offer described below (the "Designated Event Offer") at a purchase price equal
to 101% of the principal amount thereof, together with accrued and unpaid
interest thereon to the Designated Event Payment Date (the "Designated Event
Payment"). Within 30 days following any Designated Event, the Company will
mail a notice to each holder stating: (1) that the Designated Event Offer is
being made pursuant to the covenant entitled "Designated Event," and that all
Notes tendered will be accepted for payment; (2) the purchase price, the
length of time the Designated Event Offer will remain open and the purchase
date, which shall be no earlier than 30 days nor later than 40 days from the
date such notice is mailed (the "Designated Event Payment Date"); (3) that any
Notes not tendered will continue to accrue interest; (4) that, unless the
Company defaults in the payment of the Designated Event Payment, all Notes
accepted for payment pursuant to the Designated Event Offer shall cease to
accrue interest on and after the Designated Event Payment Date; (5) that
holders electing to have any Notes purchased pursuant to a Designated Event
Offer will be required to surrender the Notes, with the form entitled "Option
of Noteholder to Elect Purchase" on the reverse of the Notes completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Designated Event Payment
Date; (6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Designated Event Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder, the
principal amount of Notes delivered for purchase, and a statement that such
holder is withdrawing his or her election to have such Notes purchased; and
(7) that holders whose Notes are being purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof.
On the Designated Event Payment Date, the Company will, to the extent
lawful, (1) accept for payment Notes or portions thereof tendered pursuant to
the Designated Event Offer, (2) deposit with the Paying Agent in immediately
available funds an amount equal to the Designated Event Payment in respect of
all Notes or portions thereof so tendered and (3) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate identifying the Notes or portions thereof tendered to the Company.
The Paying Agent will
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promptly mail to each holder of Notes so accepted payment in an amount equal
to the purchase price for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each
holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any, provided that each such new certificate
representing a Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company will publicly announce the results of the
Designated Event Offer on or as soon as practicable after the Designated Event
Payment Date. There can be no assurance that the Company will have the
financial resources necessary to repurchase the Notes in such circumstances.
Except as described above with respect to a Designated Event, the Indenture
does not contain any other provisions that permit the holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring. There are no restrictions
in the Indenture on the creation of Senior Debt (or any other indebtedness)
and, under certain circumstances, the incurrence of significant amounts of
additional indebtedness could have an adverse effect on the Company's ability
to service its indebtedness, including the Notes.
A "Designated Event" will be deemed to have occurred upon a Change of
Control or a Termination of Trading.
A "Change of Control" will be deemed to have occurred when: (i) any "person"
or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) of shares representing more than 50% of the combined
voting power of the then outstanding securities entitled to vote generally in
elections of directors of the Company ("Voting Stock"), (ii) the Company
consolidates with or merges into any other corporation, or any other
corporation merges into the Company, and, in the case of any such transaction,
the outstanding Common Stock of the Company is reclassified into or exchanged
for any other property or security, unless the shareholders of the Company
immediately before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined voting power
of the outstanding voting securities of the corporation resulting from such
transaction in substantially the same proportion as their ownership of the
Voting Stock immediately before such transaction, (iii) the Company conveys,
transfers or leases all or substantially all of its assets (other than to one
or more wholly-owned subsidiaries of the Company) or (iv) any time the
Continuing Directors do not constitute a majority of the Board of Directors of
the Company (or, if applicable, a successor corporation to the Company);
provided that a Change of Control shall not be deemed to have occurred if at
least 90% of the consideration (excluding cash payments for fractional shares)
in the transaction or transactions constituting the Change of Control consists
of shares of common stock that are, or upon issuance will be, traded on a
United States national securities exchange or approved for trading on an
established automated over-the-counter trading market in the United States and
as a result of such transaction or transactions the Notes become convertible
solely into such common stock or a combination of such common stock and cash.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
A "Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Notes are then convertible) is
neither listed for trading on a United States national securities exchange nor
approved for trading on an established automated over-the-counter trading
market in the United States.
REGISTRATION RIGHTS
In connection with the Original Offering, the Company entered into the
Registration Agreement, pursuant to which the Company agreed for the benefit
of the holders of the Notes or Common Stock issued upon conversion thereof
that are, in each case, Registrable Securities, that it would, at its cost,
file a shelf registration statement (the "Shelf Registration Statement") with
the Commission with respect to resales of the Notes and the Common Stock and
keep such Shelf Registration Statement continuously effective under the
Securities Act
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until the third anniversary of the date of the closing or such earlier date as
of which all the Notes or the Common Stock issuable upon conversion thereof
have been sold pursuant to such Shelf Registration Statement or are otherwise
saleable without restrictions under applicable exemptions (the "Shelf
Registration Period").
In the event the Shelf Registration Statement is not declared effective
under the Securities Act within the time period specified in the Registration
Agreement the Company agreed to pay liquidated damages to all holders of Notes
and of Common Stock issuable upon conversion thereof until such event is
cured. Liquidated damages shall be calculated, with respect to Notes held by a
holder, at a rate of one-half of one percent (50 basis points) per annum of
the aggregate principal amount of such Notes and, with respect to shares of
Common Stock held by a holder and issued upon conversion of Notes, the same
percentage of the aggregate principal amount of Notes that were converted into
such shares.
"Registrable Securities" means the Notes and shares of Common Stock issued
upon conversion thereof, excluding any such securities that, and any such
securities the predecessors of which, were previously sold pursuant to a
registration statement or Rule 144 under the Securities Act.
CONVERSION
The holder of any Note has the right, exercisable at any time after January
5, 1997, and prior to the close of business on the business day immediately
preceding the maturity date of the Notes, to convert the principal amount
thereof (or any portion thereof that is an integral multiple of $1,000) into
shares of Common Stock at the conversion price of $15.635, subject to
adjustment as described below (the "Conversion Price"), except that if a Note
is called for redemption, the conversion right will terminate at the close of
business on the business day immediately preceding the date fixed for
redemption. Upon conversion, no adjustment or payment will be made for
interest accrued thereon or for dividends or distributions on any Common Stock
issued, but if a holder surrenders a Note for conversion after the close of
business on the record date for the payment of an installment of interest and
prior to the opening of business on the next Interest Payment Date, then,
notwithstanding such conversion, the interest payable on such Interest Payment
Date shall be paid to the registered holder of such Note on such record date.
In such event, such Note, when surrendered for conversion after October 15,
1999, must be accompanied by payment of an amount equal to the interest
payable on such Interest Payment Date on the portion so converted and, when
surrendered on or prior to October 15, 1999, need not be accompanied by such
payment. No fractional shares will be issued upon conversion but a cash
adjustment will be made for any fractional interest.
The Conversion Price is subject to adjustment upon the occurrence of certain
events, including: (i) the issuance of shares of Common Stock as a dividend or
distribution on the Common Stock; (ii) the subdivision or combination of the
outstanding Common Stock; (iii) the issuance to substantially all holders of
Common Stock of rights or warrants to subscribe for or purchase Common Stock
(or securities convertible into Common Stock) at a price per share less than
the then Current Market Price per share, as defined; (iv) the distribution of
shares of capital stock of the Company (other than Common Stock), evidences of
indebtedness or other assets (excluding dividends in cash out of current or
retained earnings, except as described in clause (v) below) to all holders of
Common Stock; (v) the distribution, by dividend or otherwise, of cash to all
holders of Common Stock in an aggregate amount that, together with the
aggregate of any other distributions of cash that did not trigger a Conversion
Price adjustment to all holders of its Common Stock within the 12 months
preceding the date fixed for determining the shareholders entitled to such
distribution and all Excess Payments in respect of each tender offer or other
negotiated transaction by the Company or any of its subsidiaries for Common
Stock concluded within the preceding 12 months not triggering a Conversion
Price adjustment, exceeds 15% of the product of the current market price per
share (determined as set forth below) on the date fixed for the determination
of shareholders entitled to receive such distribution times the number of
shares of Common Stock outstanding on such date; (vi) payment of an Excess
Payment in respect of a tender offer or other negotiated transaction by the
Company or any of its subsidiaries for Common Stock, if the aggregate amount
of such Excess Payment, together
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<PAGE>
with the aggregate amount of cash distributions made within the preceding 12
months not triggering a Conversion Price adjustment and all Excess Payments in
respect of each tender offer or other negotiated transaction by the Company or
any of its subsidiaries for Common Stock concluded within the preceding 12
months not triggering a Conversion Price adjustment, exceeds 15% of the
product of the current market price per share on the expiration of such tender
offer or the date of payment of such negotiated transaction consideration
times the number of shares of Common Stock outstanding on such date; and (vii)
the distribution to substantially all holders of Common Stock of rights or
warrants to subscribe for securities (other than those securities referred to
in clause (iii) above). In the event of a distribution to substantially all
holders of Common Stock of rights to subscribe for additional shares of the
Company's capital stock (other than those securities referred to in clause
(iii) above), the Company may, instead of making any adjustment in the
Conversion Price, make proper provision so that each holder of a Note who
converts such Note after the record date for such distribution and prior to
the expiration or redemption of such rights shall be entitled to receive upon
such conversion, in addition to shares of Common Stock, an appropriate number
of such rights.
No adjustment in the Conversion Price will be required unless such
adjustment would require a change of at least 1% of the Conversion Price then
in effect; provided that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment. Except as stated above, the Conversion Price will not be adjusted
for the issuance of Common Stock or any securities convertible into or
exchangeable for Common Stock or carrying the right to purchase any of the
foregoing.
If the Company reclassifies or changes its outstanding Common Stock, or
consolidates with or merges into any person or transfers or leases all or
substantially all its assets, or is a party to a merger that reclassifies or
changes its outstanding Common Stock, the Notes will become convertible into
the kind and amount of securities, cash or other assets which the holders of
the Notes would have owned immediately after the transaction if the holders
had converted the Notes immediately before the effective date of the
transaction.
The "Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily market prices for the shorter of (i) 30
consecutive business days ending on the last full trading day on the exchange
or market referred to in determining such daily market prices prior to the
time of determination (as defined in the Indenture) or (ii) the period
commencing on the date next succeeding the first public announcement of the
issuance of such rights or warrants or such distribution or negotiated
transaction through such last full trading day on the exchange or market
referred to in determining such daily market prices prior to the time of
determination.
"Excess Payment" means the excess of (i) the aggregate of the cash and fair
market value of other consideration paid by the Company or any of its
subsidiaries with respect to the shares acquired in a tender offer or other
negotiated transaction over (ii) the daily market price on the trading day
immediately following the completion of the tender offer or other negotiated
transaction multiplied by the number of acquired shares.
SUBORDINATION OF NOTES
The Notes are subordinate in right of payment to all existing and future
Senior Debt. The Indenture does not restrict the amount of Senior Debt or
other indebtedness of the Company or any subsidiary of the Company. In
addition, the Notes are structurally subordinate to all existing and future
indebtedness and other liabilities of the Company's subsidiaries, including
Trikon Limited.
The payment of the principal of, interest on or any other amounts due on the
Notes is subordinate in right of payment to the prior payment in full of all
Senior Debt of the Company (whether outstanding on the date of the Indenture
or thereafter incurred). No payment on account of principal of, redemption of,
interest on or any other amounts due on the Notes, including, without
limitation, any payments on the Designated Event Offer, and no redemption,
purchase or other acquisition of the Notes may be made unless (i) full payment
of amounts then due on all Designated Senior Debt (as defined below) has been
made or duly provided for pursuant to the terms of the instrument governing
such Designated Senior Debt, and (ii) at the time for, or immediately after
giving
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effect to, any such payment, redemption, purchase or other acquisition, there
shall not exist under any Senior Debt or any agreement pursuant to which any
Senior Debt has been issued, any default which shall not have been cured or
waived and which shall have resulted in the full amount of such Senior Debt
being declared due and payable. In addition, the Indenture will provide that
if any of the holders of any issue of Designated Senior Debt notify (the
"Payment Blockage Notice") the Company and the Trustee that a default has
occurred giving the holders of such Designated Senior Debt the right to
accelerate the maturity thereof, no payment on account of principal,
redemption, interest or any other amounts due on the Notes and no purchase,
redemption or other acquisition of the Notes will be made for the period (the
"Payment Blockage Period") commencing on the date the Payment Blockage Notice
is received and ending on the earlier of (A) the date on which such event of
default shall have been cured or waived or (B) 180 days from the date the
Payment Blockage Notice is received. Notwithstanding the foregoing (but
subject to the provisions contained in the first sentence of this Section),
unless the holders of such Designated Senior Debt or the representative of
such holders shall have accelerated the maturity of such Designated Senior
Debt, the Company may resume payments on the Notes after the end of such
Payment Blockage Period. Not more than one Payment Blockage Notice may be
given in any consecutive 365-day period, irrespective of the number of
defaults with respect to Senior Debt during such period.
"Designated Senior Debt" means (i) any Senior Debt which, as of the date of
the Indenture, has an aggregate principal amount outstanding of at least $20
million, (ii) any Senior Debt which, at the date of determination, has an
aggregate principal amount outstanding of, or commitments to lend up to, at
least $20 million, (iii) Senior Debt which, at the date of determination, has
a principal amount outstanding of at least $5 million and consists of one
capital leasing facility to which the Company is a party with respect to
equipment used in the operation of the Company, and (iv) any Senior Debt
which, at the date of determination, has an aggregate principal amount
outstanding of, or commitments to lend up to, at least $2.5 million and
consists of obligations for borrowed money to a bank, savings and loan
association or foreign bank or savings and loan association or equivalent
institution as defined in Rule 144A(a)(1)(vi) pursuant to the Securities Act;
provided that with respect to the Senior Debt referenced in clauses (ii),
(iii) and (iv) above, such Senior Debt is specifically designated by the
Company in the instrument evidencing or governing such Senior Debt as
"Designated Senior Debt" for purposes of the Indenture (provided that such
instrument may place limitations and conditions on the right of such Senior
Debt to exercise the rights of Designated Senior Debt).
Upon any distribution of its assets in connection with any dissolution,
winding-up, liquidation or reorganization of the Company or acceleration of
the principal amount due on the Notes because of an Event of Default, all
Senior Debt must be paid in full before the holders of the Notes are entitled
to any payments whatsoever.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of Senior Debt or the
representatives of such holders of such acceleration. The Company may not pay
the Notes until five days after such holders or such representatives receive
notice of such acceleration and, thereafter, may pay the Notes only if the
subordination provisions of the Indenture otherwise permit payment at that
time.
As a result of these subordination provisions, in the event of the Company's
insolvency, holders of the Notes may recover ratably less than general
creditors of the Company.
The Notes are structurally subordinate to all existing and future
indebtedness and other liabilities of the Company's subsidiaries, including
Trikon Limited. The Indenture does not limit the amount of additional
Indebtedness, including Senior Debt, that the Company can create, incur,
assume or guarantee, nor does the Indenture limit the amount of indebtedness
and other liabilities that any subsidiary of the Company can create, incur,
assume or guarantee.
In the event that, notwithstanding the foregoing, the Trustee or any holder
of Notes receives any payment or distribution of assets of the Company of any
kind in contravention of any of the terms of the Indenture, whether in cash,
property or securities, including, without limitation by way of set-off or
otherwise, in respect to the Notes before all Senior Debt is paid in full,
then such payment or distribution will be held by the recipient in
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trust for the benefit of holders of Senior Debt, and will be immediately paid
over or delivered to the holders of Senior Debt or their representative or
representatives to the extent necessary to make payment in full of all Senior
Debt remaining unpaid, after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of Senior Debt.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with or
into any person (whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties of assets unless (i) (a) the Company is
the surviving or continuing corporation or (b) the entity person formed by or
surviving any such consolidation or merger (if other than the Company) or the
person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company is a corporation
organized or existing under the laws of the United States, any state thereof
or the District of Columbia; (ii) the entity or person formed by or surviving
any such consolidation or merger (if other than the Company) or the person to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made assumes all the obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and the Indenture; (iii) such sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the Company's
properties or assets shall be as an entirety or virtually as an entirety to
one person and such person shall have assumed all the obligations of the
Company, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Notes and the Indenture; (iv)
immediately after such transaction no Default or Event of Default exists; and
(v) the Company or such person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and the supplemental indenture comply with the Indenture and that
all conditions precedent in the Indenture relating to such transaction have
been satisfied.
PAYMENTS FOR CONSENT
Neither the Company nor any of its subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all holders of the Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
REPORTS
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, the Company will, to the extent permitted
by the Commission, file with the Commission and furnish to the holders of
Notes all quarterly and annual financial information required to be contained
in a filing with the Commission on Forms 10-Q and 10-K, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual consolidated financial statements
only, a report thereon by the Company's independent auditors.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on the
Notes; (ii) default in payment when due of principal on the Notes;
(iii) failure by the Company to comply with the provisions described under
"Designated Event"; (iv) failure by the Company for 60 days after the receipt
of written notice to comply with any other covenants and agreements contained
in the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any of its
subsidiaries (or the payment of which is guaranteed by the Company or any of
its subsidiaries), whether such indebtedness or guarantee now exists or is
created after the date on which the Notes were first authenticated and issued,
which default (a) is caused by a failure to pay when due principal or interest
on such indebtedness within
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the grace period provided in such indebtedness (which failure continues beyond
any applicable grace period) (a "Payment Default") or (b) results in the
acceleration of such indebtedness prior to its express maturity without such
acceleration being rescinded or annulled and, in each case, the principal
amount of any such indebtedness, together with the principal amount of any
other such indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $10 million or more;
(vi) failure by the Company or any subsidiary of the Company to pay final
judgments (other than any judgment or portion thereof as to which a reputable
insurance company has accepted full liability) aggregating in excess of $10
million, which judgments are not discharged, stayed or bonded within 60 days
after their entry; and (vii) certain events of bankruptcy or insolvency with
respect to the Company or any material subsidiary of the Company.
If any Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company or any material
subsidiary of the Company, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from holders of the Notes notice of any continuing
default or Event of Default (except a default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
The holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the holders of all of
the Notes waive any existing default or Event of Default and its consequences
under the Indenture except a continuing default or Event of Default in the
payment of the Designated Event Payment or interest on, or the principal of,
the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any default or Event of Default, to deliver to the Trustee a
statement specifying such default or Event of Default.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the Indenture or the
Notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a nonconsenting holder of Notes): (i)
reduce the amount Notes whose holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of the Notes,
(iii) reduce the rate of or change the time for payment of interest on any
Note, (iv) waive a default in the payment of the Designated Event Payment or
principal of or interest on any Notes (except a rescission of acceleration of
the Notes by the holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration), (v) make any Note payable in money other than that stated in
the Notes, (vi) make any change in the provisions of the Indenture relating to
waivers of Defaults or the rights of holders of Notes to receive payments of
principal of or interest on the Notes, (vii) waive a redemption payment with
respect to any Note, (viii) impair the right to convert the Notes into Common
Stock, (ix) modify the conversion or subordination provisions of the Indenture
in a manner adverse to the holders of the Notes or (x) make any change in the
foregoing amendment and waiver provisions.
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Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to holders of the Notes in the case of
a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of the Notes or that does not
adversely affect in any material respect the legal rights under the Indenture
of any such holder, or to comply with the requirements of the Commission in
order to qualify, or maintain the qualification of, the Indenture under the
Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee is permitted to engage in
other transactions, provided that, if it acquires any conflicting interest, it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding Notes
have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that, in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of his or her own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of Notes, unless such holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, no par value, and 20,000,000 shares of Preferred Stock, no par
value. The following is a summary of the terms of the outstanding Common Stock
and Series G Preferred Stock. This summary is not intended to be complete and
is subject to, and qualified in its entirety by reference to, all of the
provisions of the Restated Articles and the Certificate of Determination,
including the definition of certain terms therein, available in the manner set
forth under "Additional Information."
COMMON STOCK
On April 13, 1998 there were 15,140,115 shares of Common Stock outstanding
held of record by 126 shareholders.
Holders of Common Stock are entitled to one vote per share on all matters
voted upon by shareholders and have cumulative voting rights with respect to
the election of directors. Subject to preferences that may be applicable to
any then outstanding Preferred Stock, holders of Common Stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors
out of funds legally available therefor. In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any then outstanding Preferred Stock. Holders of
Common Stock have no preemptive rights and no right to convert their Common
Stock into any other securities. There are no redemption or sinking fund
provisions applicable to Common Stock.
PREFERRED STOCK
The Board of Directors has the authority to issue up to 20,000,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the designation
of such series, without any further vote or action by shareholders.
Series G Preferred Stock. On June 5, 1997, the Board of Directors
established and designated 3,125,000 shares of Series G Preferred Stock. As of
the date hereof there are 2,962,032 shares of Series G Preferred Stock
outstanding. The Series G Preferred Stock ranks junior in right of payment to
all indebtedness of the Company and as of the dates hereof, no capital stock
of the company ranks senior to the Series G Preferred Stock. The terms of the
Series G Preferred Stock do not restrict the incurrence of indebtedness by the
Company.
Dividends.................... In each fiscal year of the Company, the holders
of shares of Series G Preferred Stock are
entitled to receive, when, as and if dividends
are declared by the Board of Directors out of
funds legally available therefor, and before
any cash dividends are paid or declared and set
aside for the Common Stock, dividends payable
in an amount per share as described below. Each
share of Series G Preferred Stock is entitled
to receive dividends, at the rate 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. All
dividends declared by the Board of Directors,
but not paid, accrue, without interest, until
declared and paid, which declaration and
payment may be for all or part of the then
accumulated dividends. As of the date hereof
there are no unpaid dividends. No cash
dividends have ever been paid on the Series G
Preferred Stock.
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Liquidation Preference....... Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company,
including a merger, acquisition or other
reorganization in which the Company is not the
surviving entity, all assets shall be
distributed to the holders of 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 Company
(the "Original Issue Price which aggregates
$20,000,000 for all Series G Preferred
Stock");
(ii) Second, ratably among the holders of
the Common Stock until such holders have
received an 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.
Automatic Conversion......... Each share of Series G Preferred Stock shall
automatically convert into shares of Common
Stock on July 1, 2000. In addition, the Series
G Preferred Stock automatically converts into
shares of Common Stock upon the optional
conversion into shares of Common Stock, as
described below, of at least sixty-six and two-
thirds percent (66 2/3%) of the cumulative
number of shares of Series G Preferred Stock
issued and outstanding.
Optional Conversion.......... The Series G Preferred Stock is convertible, at
any time after September 29, 1997, and without
the payment of any additional consideration by
the holder thereof and at the option of the
holder thereof, 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 in effect at the time
of the conversion. The conversion price is the
Original Issue Price of the Series G Preferred
Stock subject to certain adjustments, as
described below.
The Conversion Price is subject to adjustment
upon the occurrence of certain events,
including: (i) the subdivision or combination
of the outstanding Common Stock; (ii) the
issuance of shares of Common Stock as a
dividend or distribution on the Common Stock;
(iii) certain reclassifications,
reorganizations or exchanges; (iv) any
consolidation or merger (other than a merger,
acquisition or other reorganization in which
the Company is not the surviving entity); (v) a
dividend or distribution payable in securities
of the Company (other than Common Stock); (vi)
the issuance or sale of additional shares of
Common Stock for a consideration per share less
than the Conversion Price then in effect; (vii)
the issuance or sale of any convertible
securities; (viii) the issuance or grant of any
rights or options to subscribe for, purchase or
otherwise acquire additional shares of
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Common Stock; and (ix) the issuance or grant of
any rights or options to subscribe for,
purchase or otherwise acquire convertible
securities (excluding approved employee
incentive stock options .
Voting Rights................ At all meetings of the stockholders of the
Company and in the case of any actions of
stockholders in lieu of a meeting, each share
of Series G Preferred Stock is 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 the terms
of the Certificate of Determination 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 described below, the holders of
Common Stock and Series G Preferred Stock shall
vote together as a single class, 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.
The affirmative vote of the holders of at least
a majority of the then outstanding shares of
Series G Preferred Stock, voting as a single
class, will be required for (i) the
preferences, privileges, special rights or
other powers of Series G Preferred Stock in a
manner adverse to the holders thereof and (ii)
the authorization or issuance, or the
obligation 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. Holders of Series G
Preferred Stock have entered into a ten-year
Voting Agreement with the Company pursuant to
which such holders have agreed that, if a
separate class vote of the Series G Preferred
Stock is required by law and if the proposal
being presented to the shareholders have been
approved by the Board of Directors of the
Company and approved by the holders of Common
Stock and Series G Preferred Stock voting as a
single class, 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, or otherwise.
WARRANTS
The Warrants were issued in connection with the Stock Purchase Agreement
relating to the sale of the Company's Series G Preferred Stock. As of the date
of this Offering Circular, there are Warrants to purchase 888,610 shares of
Common Stock outstanding.
Each Warrant when exercised, entitles the holder thereof to receive one
fully paid and nonassessable share of Common Stock at an exercise price of
$8.00 per share. The Warrants either are currently exercisable or are
exercisable sixty-one (61) days after written notice is given to the Company
provided that the fair market value of the Common Stock is equal to or exceeds
$8.00 per share. The Warrants expire on June 28, 2000.
TRANSFER AGENT
The Transfer Agent and registrar for the Common Stock is American Stock
Transfer & Trust Company. Its telephone number is (718) 921-8200.
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<PAGE>
MARKET PRICE OF COMMON STOCK
The Common Stock began trading in the over-the-counter market on August 23,
1995 upon effectiveness of the registration statement relating to the
Company's initial public offering and is quoted on the Nasdaq National Market
under the symbol "TRKN". The quarterly high and low sale prices for Common
Stock as reported by the Nasdaq National Market for the periods indicated
below are as follows:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1996
First Quarter............................................. $16.25 $ 8.63
Second Quarter............................................ $20.25 $11.00
Third Quarter............................................. $15.75 $10.50
Fourth Quarter............................................ $16.88 $11.25
1997
First Quarter............................................. $16.75 $11.00
Second Quarter............................................ $12.13 $ 4.25
Third Quarter............................................. $12.25 $ 6.38
Fourth Quarter............................................ $ 9.31 $ 1.00
1998
First Quarter............................................. $ 1.83 $ 1.00
Second Quarter (through April 13, 1998)................... $ 2.00 $ 0.69
</TABLE>
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion is a summary of certain United States
federal income tax aspects with respect to the Exchange Offer and is for
general information only and does not consider all aspects of United States
federal income tax that may be relevant to a holder of Notes, Series G
Preferred Stock or Warrants in light of his or her personal circumstances. The
discussion assumes that the Notes are properly classified as indebtedness for
federal income tax purposes. The discussion does not address the United States
federal income tax consequences to holders of Notes, Series G Preferred Stock
or Warrants who do not hold such securities and the securities to be issued
pursuant to the Exchange Offer as capital assets within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This
discussion also does not address the United States federal income tax
consequences to holders of Notes, Series G Preferred Stock or Warrants subject
to special treatment under the federal income tax laws, such as dealers in
securities or foreign currency, tax-exempt entities, banks, thrifts, insurance
companies, and investors in pass-through entities. In addition, the discussion
is generally limited to the United States federal income tax consequences to
holders of Notes, Series G Preferred Stock or Warrants tendering such
securities in the Exchange Offer. The discussion does not describe any tax
consequences arising out of the tax laws of any state, local or foreign
jurisdiction.
This summary is based upon the Code, existing and proposed regulations
thereunder, and current administrative rulings and court decisions. All of the
foregoing are subject to change, and any such change could affect the
continuing validity of this discussion.
The following discussion is limited to the United States federal income tax
consequences relevant to a holder of Notes, Series G Preferred Stock or
Warrants that is (i) a citizen or resident of the United States, (ii) a
corporation organized under the laws of the United States or any political
subdivision thereof or therein, (iii) an estate, the income of which is
subject to United States federal income tax regardless of the source, or (iv)
a "U.S. Trust." For this purpose, a "U.S. Trust" is any trust if (i) a court
within the United States is able to exercise primary supervision over the
administration of the trust and (ii) one or more United States fiduciaries
have the authority to control all substantial decisions of the trust. Trusts
should consult their own tax advisers regarding their status as U.S. Trusts
under these rules.
PERSONS TENDERING NOTES, SERIES G PREFERRED STOCK OR WARRANTS IN THE
EXCHANGE OFFER SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
APPLICATION OF UNITED STATES FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF
ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO THEIR PARTICULAR
SITUATIONS.
TAX CONSEQUENCES OF THE NOTE EXCHANGE OFFER
The determination of whether the exchange of Notes for Note Exchange
Consideration is a tax-free "recapitalization" for federal income tax purposes
depends upon whether the Notes are "securities" for federal income tax
purposes. The term "security" is not defined in the Code or regulations, and
has not been clearly defined by court decisions. Generally, corporate debt
instruments with maturities when issued of less than five years are not
considered securities and corporate debt instruments with maturities when
issued of ten years or more generally are considered securities.
If the Notes are "securities" for federal income tax purposes, a holder
exchanging Notes for Note Exchange Consideration in the Note Exchange Offer
will not recognize gain or loss in respect of such exchange for federal income
tax purposes. A holder's adjusted tax basis in the Note Exchange Consideration
received will be equal to the holder's adjusted tax basis in the Notes
exchanged therefor. A holder's holding period in the Note Exchange
Consideration received in the exchange will include the holder's holding
period in the Notes exchanged therefor.
If the exchange of Notes for Note Exchange Consideration is not treated as a
recapitalization for federal income tax purposes (e.g., because the Notes are
not treated as "securities" for federal income tax purposes), a holder of
Notes would recognize gain or loss for federal income tax purposes in an
amount equal to the difference
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<PAGE>
between the fair market value of the Note Exchange Consideration received and
the holder's tax basis in the Notes. Subject to the discussion of "market
discount" below, gain or loss recognized by a holder on the exchange generally
would be capital gain or loss. If the exchange is not treated as a
recapitalization for federal income tax purposes, a holder's tax basis in the
Note Exchange Consideration received would equal its fair market value, and
the holding period for such Note Exchange Consideration would begin on the day
after the date of the exchange.
Notwithstanding the discussion above and regardless of whether or not the
Exchange Offer is treated as a recapitalization for tax purposes, holders will
be required to include as ordinary income the amount of any Note Exchange
Consideration deemed to be received for accrued interest and penalties, to the
extent such amount has not previously been included in income.
Furthermore, notwithstanding the discussion above, holders of Notes who
acquired them at a "market discount" will be subject to the market discount
rules of the Code applicable to the exchange. Subject to a de minimis
exception, "market discount" is generally defined as the excess (if any) of
(i) the "stated redemption price at maturity" (as such phrase is defined in
the Code) of a debt obligation over (ii) the tax basis of the obligation in
the hands of the holder immediately after its acquisition. Unless the holder
elects otherwise, the amount of accrued market discount as of a date generally
would be the amount calculated by multiplying the market discount by a
fraction, the numerator of which is the number of days the Notes have been
held by the holder, and the denominator of which is the number of days from
the date of the holder's acquisition of the Notes to their maturity date.
The market discount rules provide that gain recognized on the disposition of
a market discount bond must be included as ordinary income, rather than as
capital gain, to the extent of the market discount accrued during the holder's
period of ownership, unless the holder elected to include market discount in
income as it accrued. If the exchange does not constitute a recapitalization
for tax purposes, any accrued market discount of a Note holder would be
triggered on the exchange under the foregoing rules. If the exchange is
treated as a recapitalization for federal income tax purposes, any market
discount should carry over to the nonrecognition property received in the
exchange. Any gain later recognized on the disposition of the Note Exchange
Consideration generally would be treated as ordinary income to the extent of
the accrued market discount as of the time of the Exchange Offer not
previously included in the holder's income.
TAX CONSEQUENCES OF CONVERSION OF SERIES G PREFERRED STOCK
The conversion of the Series G Preferred Stock into shares of Common Stock
and Series I Preferred Stock will not be a taxable exchange to the holders of
Series G Preferred Stock. Each such holder's basis in the shares received will
equal the holder's basis in the Series G Preferred Stock exchanged and the
holder's holding period for the shares received will include the holding
period of the Series G Preferred Stock exchanged.
TAX CONSEQUENCES OF EXCHANGE FOR WARRANTS FOR COMMON STOCK
The exchange of Warrants for Common Stock will not be a taxable exchange to
the Warrant holders. Each such holder's basis in the Common Stock received
will equal the holder's basis in the Warrant exchanged and the holder's
holding period for the Common stock received will include the holding period
of the Warrant exchanged.
CONSEQUENCES OF HOLDING COMMON STOCK AND PREFERRED STOCK
Distributions made with respect to shares of Common Stock or preferred stock
(including any taxable stock dividends) generally will be treated as ordinary
income to the extent of the Company's current and accumulated earnings and
profits for the taxable year of the distribution. Amounts distributed in
excess of such earnings and profits will be treated as a tax-free return of
capital to the extent of the holder's tax basis in its shares of Common Stock
or preferred stock, with any amount distributed in excess of such tax basis
being treated as an amount
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<PAGE>
received on a sale or exchange of the stock. A dividends received deduction
may be available for certain corporate holders, subject to numerous conditions
and exceptions.
Generally, gain or loss will be recognized on a sale or other disposition of
Common Stock or preferred stock to the extent of the difference between the
amount of cash (and the fair market value of other property) received in the
disposition and the holder's tax basis in its Common Stock or preferred stock.
Such gain or loss will (subject to the discussion of market discount above) be
capital gain or loss.
BACKUP WITHHOLDING
A holder of Common Stock or preferred stock may be subject to backup
withholding at the rate of 31% with respect to dividends paid on the Common
Stock or preferred stock , unless the holder (i) is a corporation or comes
within certain other exempt categories and, when required, demonstrates this
fact or (ii) provides a correct taxpayer identification number, certifies as
to no loss of exemption from backup withholding and otherwise complies with
the applicable requirements of the backup withholding rules. Any amount paid
as backup withholding will be creditable against the holder's federal income
tax liability.
HOLDERS WHO DO NOT PARTICIPATE IN THE EXCHANGE OFFER
Holders of Notes, Series G Preferred Stock or Warrants who elect not to
participate in the Exchange Offer and who consequently do not exchange their
securities for new securities should not recognize gain or loss as a
consequence of the Exchange Offer.
THE FOREGOING IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX
ASPECTS OF THE EXCHANGE OFFER AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING
AND ADVICE BASED UPON THE INDIVIDUAL CIRCUMSTANCES OF EACH HOLDER OF NOTES,
SERIES G PREFERRED STOCK OR WARRANTS. HOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE CONSEQUENCES TO THEM OF THE EXCHANGE OFFER.
INTEREST IN NOTES, SERIES G PREFERRED STOCK AND WARRANTS
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, except as
provided below, neither the Company nor any of its subsidiaries or affiliates
nor any of the directors or executive officers of the Company, nor any
associates of any of the foregoing, including the directors or executive
officers of its subsidiaries, has effected any transactions in the Notes,
Series G Preferred Stock or Warrants during the forty business day period
prior to the date hereof. Any Note, Series G Preferred Stock or Warrants owned
directly or indirectly by officers/directors at the time of the Exchange Offer
are eligible for exchange if properly tendered pursuant to the Exchange Offer
on the same basis as all other Notes, Series G Preferred Stock or Warrants.
CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE NOTES, SERIES G PREFERRED STOCK OR WARRANTS
In connection with the Exchange Offer, the Board of Directors of the Company
has reached certain agreements with Mr. Christopher D. Dobson, Chairman of the
Board, Chief Executive Officer and Chief Science Officer of the Company. The
Company and Mr. Dobson agreed that upon the consummation of the Exchange
Offer, 11,492,806 shares of restricted Common Stock (the "Restricted Stock")
would be granted to Mr. Dobson. The Restricted Stock shall vest one hundred
percent (100%) upon the earlier of (i) the date five years after the closing
of the Exchange Offer, or (ii) the sale of all or substantially all of the
assets of the Company or the merger, acquisition or other reorganization of
the Company in which the Company is not the surviving entity. The Restricted
Stock shall automatically be reacquired by the Company in return for a payment
of $0.001 per
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share upon Mr. Dobson's resignation from all offices or termination for cause
or if, during the first two years following the Exchange Offer, Mr. Dobson
devotes fewer than 750 hours per annum to Trikon related matters. For purposes
of the Restricted Stock, the meaning of "for cause " is limited to willful
misconduct that materially injures the pecuniary interests of the Company. Mr.
Dobson is permitted, at his discretion, to reallocate up to twenty percent
(20%) of the Restricted Stock to other members of senior management of the
Company.
The Board of Directors and Mr. Dobson further agreed that after the
consummation the Exchange Offer Mr. Dobson shall receive a contingent variable
interest up to 3% of the net proceeds (gross proceeds less reasonable and
customary expenses) received upon the sale of the Company as follows:
<TABLE>
<CAPTION>
CUMULATIVE
SALES PRICE($) PERCENTAGE(%)
-------------- -------------
<S> <C>
At least $250 million 0.5%
At least $260 million 1.0
At least $270 million 2.0
At least $280 million 2.5
$300 million or more 3.0
</TABLE>
In addition, the Board and Mr. Dobson established certain terms of his
employment following the consummation of the Exchange Offer. Among other
things, Mr. Dobson shall continue in his position as Chairman, Chief Science
Officer and Chief Executive Officer of the Company, devote substantially his
full business time to his duties (which shall include research and development
work performed on Trikon projects and products, wherever located) and receive
his current rate of compensation and benefits. Upon successful recruitment of
a chief executive officer candidate, Mr. Dobson shall step down as Chief
Executive Officer of the Company and continue to receive compensation at his
current rate of compensation, unless in connection therewith he determines to
devote substantially less than his full business time to the Company. All
intellectual property and know-how developed by Mr. Dobson while employed by
the Company will automatically be assigned to the Company without royalties or
other payment.
In connection with the negotiation of the Applied Materials and Lam Research
licenses, restructuring the Company and future licensing efforts, the Board
has approved a $1,500,000 bonus payable to Mr. Dobson, subject to consummation
of the Exchange Offer. Such bonus payment by Trikon is subject to (i) payment
of all accrued and unpaid dividends on the Series H Preferred Stock and
redemption for cash of all outstanding shares of Pik Preferred, (ii) such
payment not being made prior to June 30, 1999 and (iii) at the time of payment
Trikon shall have had at least $8,000,000 of EBITDA during and for its two
most recently completed fiscal quarters (taken as one period). For purposes of
calculating EBITDA, upfront license fees (excluding the Applied Material and
Lam Research licenses) shall be equally amortized over the twelve-month period
following receipt (including the month of receipt), and, incremental license
fees associated with the MORI(TM) source technology (excluding the licenses to
Applied Materials and Lam Research) to the extent received in 1998, shall be
deemed received in 1999 and allocated equally to each month's EBITDA. Mr.
Dobson shall not be entitled to any bonuses with respect to future licenses of
Trikon's MORI(TM) source technology.
The Company has been informed by Brian Jacobs, a director of the Company and
general partner and Executive Vice President of St. Paul Venture Capital, Inc.
("St. Paul") that St. Paul intends to tender 185,185 shares of Series G
Preferred Stock and 55,556 Warrants, which represent its entire holdings of
such securities. The Company has also been informed by Dawson-Samberg Capital
Management, Inc., which holds approximately 50% of the outstanding shares of
Series G Preferred Stock and, to the knowledge of the Company, beneficially
owns approximately 10% of the Common Stock (determined in accordance with Rule
13d-3 under the Exchange Act), that it intends to tender 1,481,481 shares of
Series G Preferred Stock and 444,445 Warrants, which represent its entire
holdings of such securities.
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ANNEX A
PROPOSED AMENDMENTS TO THE INDENTURE
Set forth below are the provisions of the Indenture that would be deleted or
amended by the Proposals. The following is qualified in its entirety by
reference to the Indenture, copies of which can be obtained without charge
from the Company. Capitalized terms not otherwise defined in this Annex A have
the meanings assigned thereto in the Indenture.
A. IF THE PROPOSALS ARE ADOPTED, THE FOLLOWING SECTIONS WILL BE DELETED IN
THEIR ENTIRETY FROM THE INDENTURE UPON CONSUMMATION OF THE EXCHANGE OFFER:
SECTION 3.8 Designated Event Offer.
(a) In the event that, pursuant to Section 4.7 hereof, the Company shall
commence a Designated Event Offer, the Company shall follow the procedures in
this Section 3.8.
(b) The Designated Event Offer shall remain open for a period specified by
the Company which shall be no less than 30 calendar days and no more than 40
calendar days following its commencement on the date of the mailing of notice
in accordance with Section 4.7(b) hereof (the "Commencement Date"), except to
the extent that a longer period is required by applicable law (the "Tender
Period"). Upon the expiration of the Tender Period (the "Designated Event
Payment Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.7 hereof (the "Offer Amount").
(c) If the Designated Event Payment Date is on or after an interest payment
record date and on or before the related interest payment date, any accrued
interest or Liquidated Damages, if any, to the related interest payment date
will be paid to the person in whose name a Note is registered at the close of
business on such record date, and no additional interest or Liquidated
Damages, if any, will be payable to Noteholders who tender Notes pursuant to
the Designated Event Offer.
(d) The Company shall provide the Trustee with notice of the Designated
Event Offer at least 5 Business Days before the Commencement Date.
(e) On or before the Commencement Date, the Company or the Trustee (at the
request and expense of the Company) shall send, by first class mail, a notice
to each of the Noteholders, which shall govern the terms of the Designated
Event Offer and shall state:
(i) that the Designated Event Offer is being made pursuant to this
Section 3.8 and Section 4.7 hereof and that all Notes tendered will be
accepted for payment;
(ii) the purchase price (as determined in accordance with Section 4.7
hereof), the length of time the Designated Event Offer will remain open and
the Designated Event Payment Date;
(iii) that any Note or portion thereof not tendered or accepted for
payment will continue to accrue interest and, if applicable, Liquidated
Damages, if any;
(iv) that, unless the Company defaults in the payment of the Designated
Event Payment, any Note or portion thereof accepted for payment pursuant to
the Designated Event Offer shall cease to accrue interest or Liquidated
Damages, if any, on and after the Designated Event Payment Date;
(v) that Noteholders electing to have a Note or portion thereof purchased
pursuant to any Designated Event Offer will be required to surrender the
Note, with the form entitled "Option of Noteholder To Elect Purchase" on
the reverse of the Note completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Designated Event Payment Date;
(vi) that Noteholders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Designated Event Payment Date, or
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such longer period as may be required by law, a letter or a telegram, telex
or facsimile transmission (receipt of which is confirmed and promptly
followed by a letter) setting forth the name of the Noteholder, the
principal amount of the Note or portion thereof the Noteholder delivered
for purchase and a statement that such Noteholder is withdrawing his
election to have the Note or portion thereof purchased; and
(vii) that Noteholders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof.
In addition, the notice shall contain all instructions and materials that
the Company shall reasonably deem necessary to enable such Noteholders to
tender Notes pursuant to the Designated Event Offer.
(f) On or prior to the Designated Event Payment Date, the Company shall
irrevocably deposit with the Trustee or a Paying Agent in immediately
available funds an amount equal to the Offer Amount to be held for payment in
accordance with the terms of this Section 3.8. On the Designated Event Payment
Date, the Company shall, to the extent lawful, (i) accept for payment the
Notes or portions thereof tendered pursuant to the Designated Event Offer,
(ii) deliver or cause to be delivered to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating such Notes or
portions thereof have been accepted for payment by the Company in accordance
with the terms of this Section 3.8. The Paying Agent shall promptly (but in
any case not later than ten (10) calendar days after the Designated Event
Payment Date) mail or deliver to each tendering Noteholder an amount equal to
the purchase price of the Notes tendered by such Noteholder, and the Trustee
shall promptly authenticate and mail or deliver to such Noteholders a new Note
equal in principal amount to any unpurchased portion of the Note surrendered,
if any; provided, that each new Note shall be in a principal amount of $1,000
or an integral multiple thereof. Any Notes not so accepted shall be promptly
mailed or delivered by or on behalf of the Company to the holder thereof. The
Company will publicly announce the results of the Designated Event Offer on,
or as soon as practicable after, the Designated Event Payment Date.
(g) The Designated Event Offer shall be made by the Company in compliance
with all applicable provisions of all applicable securities laws, including
the Exchange Act, and all applicable tender offer rules promulgated
thereunder, and shall include all instructions and materials that the Company
shall reasonably deem necessary to enable such Noteholders to tender their
Notes.
SECTION 4.2 SEC Reports.
Whether or not required by the rules and regulations of the SEC, so long as
any Notes are outstanding, the Company will, to the extent permitted by the
SEC, file with the SEC and, if requested, furnish to the Trustee and to the
holders of Notes all quarterly and annual financial information required to be
contained in a filing with the SEC on Forms 10-Q and 10-K, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to annual information only, a report thereon by
the Company's certified independent accountants.
SECTION 4.3 Compliance Certificate.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and its subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under, and complied with the covenants
and conditions contained in, this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of his knowledge, the
company has kept, observed, performed and fulfilled each and every covenant,
and complied with the covenants and conditions contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he
may have knowledge) and that to the best of his knowledge no event has
occurred and remains in existence by reason of which payments on account of
the principal or of interest, if any, on the Notes are prohibited.
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One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or
principal accounting officer.
The Company will, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon becoming aware of:
(a) any Default or Event of Default arising under this Indenture; or
(b) any event of default under any other mortgage, indenture or
instrument as that term is used in Section 8.1(e),
an Officers' Certificate specifying such Default, Event of Default or default.
Immediately upon the occurrence of any event giving rise to Liquidated
Damages in respect of the Notes in accordance with Section 11 of the form
thereof or the termination of any such Liquidated Damages, the Company shall
give the Trustee notice of such Liquidated Damages or termination, of the
interest rate borne by the Notes after giving effect to such Liquidated
Damages or termination and of the event giving rise to such Liquidated Damages
or termination thereof (such notice to be contained in an Officers'
Certificate), and prior to receipt of such Officers' Certificate the Trustee
shall be entitled to assume that no such Liquidated Damages are owing or
termination has occurred, as the case may be.
SECTION 4.5 Corporate Existence.
Subject to Article 7 hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
of the Company in accordance with the respective organizational documents of
each subsidiary and all material rights (charter and statutory), licenses and
franchises of the Company and its subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise
or the corporate, partnership or other existence of any subsidiary, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its subsidiaries
taken as a whole and that the loss thereof is not adverse in any material
respect to the Noteholders. Notwithstanding the foregoing, the corporate
existence of any Subsidiary may be terminated in connection with any Board
approved corporate restructuring or reorganization.
SECTION 4.6 Taxes.
The Company shall, and shall cause each of its subsidiaries to, pay prior to
delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
SECTION 4.7 Designated Event.
(a) Upon the occurrence of a Designated Event, each holder of Notes shall
have the right, in accordance with this Section 4.7 and Section 3.8 hereof, to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such holder's Notes pursuant to the terms of
Section 3.8 (the "Designated Event Offer") at a purchase price equal to 101%
of the principal amount thereof, together with accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Designated Event Payment Date (the
"Designated Event Payment").
(b) Within 30 days following any Designated Event, the Company shall mail to
each holder the notice provided by Section 3.8(e) of this Indenture, and shall
comply with the provisions of Section 3.8 in regard to the related Designated
Event Offer.
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SECTION 7.1 Merger, Consolidation or Sale of Assets.
The Company may not consolidate or merge with or into any person (whether or
not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets unless:
(a) the Company is the surviving corporation or the entity or the person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(b) the entity or person formed by or surviving any such consolidation or
merger (if other than the Company) or the person to which such sale,
assignment, transfer, lease conveyance or other disposition will have been
made assumes all the Obligations of the Company, pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Notes
and the Indenture;
(c) such sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's properties or
assets shall be as an entirety or virtually as an entirety to one person
and such person shall have assumed all the Obligations of the Company,
pursuant to a supplemental indenture in a form reasonably satisfactory to
the Trustee, under the Notes and the Indenture;
(d) immediately after such transaction no Default or Event of Default
exists; and
(e) the Company or such person shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and the supplemental indenture comply with the Indenture and
that all conditions precedent in the Indenture relating to such transaction
have been satisfied.
SECTION 8.2 Acceleration.
If an Event of Default (other than an Event of Default specified in clauses
(g) and (h) of Section 8.1 hereof) occurs and is continuing, the Trustee by
notice to the Company, or the Noteholders of at least 25% in principal amount
of the then outstanding Notes by notice to the Company and the Trustee, may
declare all the Notes to be due and payable. Upon such declaration, the
principal of, premium, if any, and accrued and unpaid interest on the Notes
shall be due and payable immediately. If an Event of Default specified in
clause (g) or (h) of Section 8.1 hereof occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Noteholder. If there has been a
declaration of acceleration of the Notes because an Event of Default under
Section 8.1(e) has occurred, such declaration of acceleration shall be
automatically annulled if the holders of the Indebtedness described in Section
8.1(e) have rescinded the declaration of acceleration in respect of such
Indebtedness within 60 days of such declaration and if: (1) the annulment of
the acceleration of the Notes would not conflict with any judgment or decree
of a court of competent jurisdiction, (2) all existing Events of Default,
except non-payment of principal of, or premium, if any, or interest on the
Notes that became due solely because of the acceleration of the Notes, have
been cured or waived, and (3) the Company has delivered an Officers'
Certificate to the Trustee to the effect of clauses (1) and (2) above. The
Noteholders of a majority in aggregate principal amount of the then
outstanding Notes by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration.
B. IF THE PROPOSALS ARE ADOPTED THE FOLLOWING SECTIONS WILL BE AMENDED AND
RESTATED AS SET FORTH BELOW UPON CONSUMMATION OF THE EXCHANGE OFFER:
SECTION 2.12 Defaulted Interest.
If the Company fails to make a payment of interest on the Notes, it shall
pay such defaulted interest plus any interest payable on the defaulted
interest, in any lawful manner. It may pay such defaulted interest, plus any
such interest payable on them, to the persons who are Noteholders on a
subsequent special record date. The
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Company shall fix any such record date (which shall be at least 5 and not more
than 30 days before the payment date) and the payment date. At least 15 days
before any such record date, the Company shall mail to Noteholders a notice
that states the record date, payment date, and amount of such interest to be
paid. Interest to be paid prior to the expiration of the 30-day grace period
specified in Section 8.1(a) of this Indenture shall be paid to the holders on
the regular record date for the interest payment that has not been made.
SECTION 3.3 Notice of Redemption.
At least 15 days but not more than 60 days before a redemption date (other
than with respect to a Special Redemption), the Company shall mail a notice of
redemption to each holder whose Notes are to be redeemed at such holder's
registered address. In the event of a Special Redemption, the Company shall
mail a notice of redemption to each holder at such holder's registered address
at least ten Business Days before a redemption date.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date,
upon cancellation of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion will be issued in the name of the holder
thereof;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price plus accrued interest;
(f) that, unless the Company defaults in making such redemption payment
or the Paying Agent is prohibited from making such payment pursuant to the
terms of this Indenture, interest on Notes or portions thereof called for
redemption ceases to accrue on and after the redemption date; and
(g) the paragraph of the Notes pursuant to which the Notes called for
redemption are being redeemed.
Such notice shall also state the current Conversion Price, if any, and the
date on which the right to convert such Notes or portions thereof into Common
Stock of the Company will expire.
At the Company's request, the Trustee shall give notice of redemption in the
Company's name and at its expense.
SECTION 3.5 Deposit of Redemption Price.
On or before the redemption date (other than for a Special Redemption), the
Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest, if any, up to
but not including the redemption date on all Notes to be redeemed on that date
(subject to the right of holders of record on the relevant record date to
receive interest due on an interest payment date) unless theretofore converted
into Common Stock pursuant to the provisions hereof. The Trustee or the Paying
Agent shall return to the Company any money not required for that purpose.
SECTION 4.1 Payment of Notes.
The Company shall pay the principal of, premium, if any, and interest on,
the Notes on the dates and in the manner provided in the Notes. Principal,
premium, if any, and interest shall be considered paid on the date due if the
Paying Agent (other than the Company or an Affiliate of the Company) holds on
that date money designated for and sufficient to pay all principal, premium,
if any, and interest then due and such Paying Agent
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is not prohibited from paying such money to the Noteholders on that date
pursuant to the terms of this Indenture. To the extent lawful, the Company
shall pay interest, if any (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest (without regard
to any applicable grace period) at the rate borne by the Notes, compounded
semiannually.
SECTION 8.1 Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on any Note when the
same becomes due and payable, whether or not such payments shall be
prohibited by Article 6, and the Default continues for a period of 30 days
after the date due and payable;
(b) the Company defaults in the payment of the principal of any Note when
the same becomes due and payable at maturity, upon redemption or otherwise,
whether or not such payment shall be prohibited by Article 6;
(c) [Intentionally omitted.]
(d) [intentionally omitted.]
(e) [Intentionally omitted.]
(f) [Intentionally omitted.]
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case, (ii)
consents to the entry of an order for relief against it in an involuntary
case in which it is the debtor, (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (iv) makes
a general assignment for the benefit of its creditors, or (v) makes the
admission in writing that it generally is unable to pay its debts as the
same become due; or
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (i) is for relief against the Company or any
Subsidiary of the Company in an involuntary case, (ii) appoints a Custodian
of the Company or any Subsidiary of the Company or for all or substantially
all of its property, and the order or decree remains unstayed and in effect
for 60 days, or (iii) orders the liquidation of the Company or any
Subsidiary of the Company, and the order or decree remains unstayed and in
effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
SECTION 8.6 Limitation on Suits.
A Noteholder may pursue a remedy with respect to this Indenture or the Notes
only if:
(a) the Noteholder gives to the Trustee notice of a continuing Event of
Default;
(b) the Noteholders of at least a majority in principal amount of the
then outstanding Notes make a request to the Trustee to pursue the remedy;
(c) such Noteholder or Noteholders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
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(e) during such 60-day period the Noteholders of more than a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
SECTION 11.4 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Noteholder of a Note is a continuing consent by the Noteholder and every
subsequent Noteholder of a Note or portion of a Note that evidences the same
debt as the consenting Noteholder's Note, even if notation of the consent is
not made on any Note.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Noteholders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly assigned proxies), and only
those persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not such persons
continue to be Noteholders after such record date.
After an amendment, supplement or waiver becomes effective it shall bind
every Noteholder, unless it is of the type described in any of clauses (a)
through (i) of Section 11.2 hereof. In such case, the amendment or waiver
shall bind each Noteholder who has consented to it and every subsequent
Noteholder that evidences the same debt as the consenting Noteholder's Note.
In addition, conforming changes to the Indenture (such as deleting
definitions no longer used, correcting cross references, etc.) will also be
made.
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ANNEX B
TERMS OF SERIES H PREFERRED STOCK
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 H
Preferred Stock, and the number of shares of such Series H Preferred Stock is
3,000,000, none of which has been issued.
(b) The rights, preferences, privileges and restrictions granted to and
imposed upon the Series H Preferred Stock and the holders thereof shall be as
set forth below.
Section 1. Definitions.
For purposes of Sections 1 through 7 below, the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Common Stock" shall mean the Common Stock of the Corporation.
(c) "Conversion Ratio" shall have the meaning set forth in Section 6(a)
below.
(d) "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.
(e) "Corporation" shall mean this corporation.
Section 2. Dividends.
(a) The holders, as of the Dividend Record Date (as defined below), of this
Series H Preferred Stock shall be entitled to receive semi-annual dividends on
their respective shares of Series H Preferred Stock (aggregating, for this
purpose, all shares of Series H Preferred Stock held of record or, to the
Corporation's knowledge, beneficially by such holder), payable, at the option
of the Corporation, in cash or additional shares of Series H Preferred Stock
("PIK Preferred") at the rate of 8-1/8% per annum (computed on the basis of a
360-day year of twelve 30-day months) of the Dividend Base Amount (as defined
below), payable semi-annually in arrears; provided that, to the extent the
declaration or payment of such dividend is prohibited by applicable law, such
dividend need not be paid but shall nevertheless accrue and shall be paid
promptly when applicable law permits; and, provided further, that, (i) if the
Corporation's consolidated EBITDA for the two most recently completed fiscal
quarters of the Corporation preceding a dividend payment date exceeds
$7,500,000 and the Corporation elects to pay all or a portion of the dividend
due on such date in PIK Preferred, then the dividend rate for all future
dividend periods shall increase to 9-1/8% per annum until such time as the
Corporation has redeemed all PIK Preferred for cash and (ii) if the holders of
the Series H Preferred Stock are then entitled to exercise the special voting
rights specified in Section 4(c) or directors elected pursuant to such Section
4(c) remain in office, then the dividend rate for all future periods shall
increase to 12% until such rights are no longer exerciseable and such
directors are out of office in which case the dividend rate shall be decreased
to the amount otherwise specified in this Section 2(a). Such dividends shall
accrue from the date of issuance of such shares and shall be paid semi-
annually in April 15 and October 15 of each year or, if any such day is not a
business day, on the next succeeding business day. Such dividends shall be
paid, at the election of the Corporation, either in cash or additional duly
authorized, fully paid and non-assessable shares of PIK Preferred. In
calculating the number of shares of Series H Preferred Stock to be paid with
respect to each dividend, the Series H Preferred Stock shall be valued at
$10.00 per share (subject to appropriate adjustment to reflect any stock
split, combination, reclassification or reorganization of the Series H
Preferred Stock). Notwithstanding the foregoing, the Corporation shall not be
required to issue fractional shares of Series H Preferred Stock; the
Corporation may
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elect, in its sole discretion, independently for each holder, whether such
number of shares (on an aggregated basis) will be rounded to the nearest whole
share (with .5 of a share rounded upward) or whether such holder will be given
cash in lieu of any fractional shares. The "Dividend Base Amount" of a share
of Series H Preferred Stock shall be $10.00 plus all accrued but unpaid
dividends (subject to appropriate adjustment to reflect any stock split,
combination, reclassification or reorganization of the Series H Preferred
Stock). The "Dividend Record Date" shall mean, for each semi-annual dividend,
the April 1 or October 1, as the case may be, immediately preceding the
dividend payment date.
(b) The Corporation shall not declare any dividend or distribution on any
Junior Stock (as defined below) of the Corporation unless all dividends
required by Section 2(a) have been or contemporaneously are declared and paid
in cash and all PIK Preferred has been redeemed for cash, or a sum sufficient
for the payment thereof in cash set apart for such payment on the Series H
Preferred Stock and for the redemption of outstanding PIK Preferred.
(c) All dividends or distributions declared upon the Series H Preferred
Stock shall be declared pro rata per share.
(d) No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series H Preferred Stock
which may be in arrears (it being understood that this provision does not
alter the Corporation's obligations under Section 2(a)).
(e) So long as any shares of the Series H Preferred Stock are outstanding,
no other stock of the Corporation ranking on a parity with the Series H
Preferred Stock as to dividends or upon liquidation, dissolution or winding up
shall be redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund or otherwise for
the purchase or redemption of any shares of any such stock) by the Corporation
unless the dividends, if any, accrued on all outstanding shares of the Series
H Preferred Stock shall have been paid or set apart for payment and all
outstanding PIK Preferred redeemed.
(f) "Junior Stock" shall mean the Common Stock and any shares of preferred
stock of any series or class of the Corporation, whether presently outstanding
or hereafter issued, which are junior to the shares of Series H Preferred
Stock with respect to (i) the distribution of assets on any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, (ii)
dividends or (iii) voting. Junior Stock includes the Corporation's Series I
Preferred Stock.
(g) "EBITDA" means earnings before deduction for interest, taxes,
depreciations, amortization and other non-cash changes calculated in
accordance with generally accepted accounting principles.
Section 3. Liquidation, Dissolution or Winding Up.
(a) In the event of a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation (excluding a merger, acquisition or other
reorganization), the assets or surplus funds of the Corporation shall be
distributed in the following manner and order of priority:
(i) First, ratably among the holders of the Series H Preferred Stock an
amount equal to $10 per share (the "Stated Amount") of Series H Preferred
Stock, plus an amount in cash equal to accrued but unpaid dividends thereon
to the date fixed for liquidation, after which holders of Series H
Preferred shall not be entitled to share in any assets or funds remaining
for distribution; and
(ii) Second, ratably among the holders of the Junior Stock in accordance
with their relative preferences until such remaining assets and funds are
exhausted.
(b) The liquidation preference specified in Section 3(a) shall be equitably
adjusted in the event of any stock splits, stock dividends or similar capital
modifications affecting the Series H Preferred Stock after the filing of this
Certificate of Determination.
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(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) Except as otherwise expressly provided in Sections 4(b) or (c) below or
as required by law, the holders of Series H Preferred Stock shall not be
entitled to vote.
(b) The holders of Series H Preferred Stock, voting as a class, shall be
entitled to elect one director of the Board, if the Board is constituted by
five or fewer members. If the Board is constituted by more than five
directors, the holders of Series H Preferred Stock, voting as a class, shall
be entitled to elect two directors of the Board.
(c) (i)Whenever an Excess Free Cash Trigger Event or Horizon Event shall have
occurred and not have been Undone, the holders of all shares of Series H
Preferred Stock shall be entitled to elect a number of directors, which,
together with the director(s) specified in Section 4(b), shall constitute a
majority of the Board. At elections for such directors, each holder of Series
H Preferred Stock shall be entitled to one vote for each share held. The right
of holders of Series H Preferred Stock, voting separately as a class, to elect
members of the Board of Directors as aforesaid shall continue until such time
as all Excess Free Cash Trigger Events and Horizon Events shall have been
Undone, at which time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of each and every
subsequent Excess Free Cash Trigger Event or Horizon Event.
(ii) Whenever such voting right shall have vested, such right may be
exercised initially either at a special meeting of the holders of shares of
Series H Preferred Stock called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors, and at
such meeting or by the written consent of such holders pursuant to Section
603 of the California Corporations Code.
(iii) At any time when such voting right shall have vested in the holders
of shares of Series H Preferred Stock entitled to vote thereon, and if such
right shall not already have been initially exercised, an officer of the
Company shall, upon the written request of 10% of the holders of record of
shares of such Series H Preferred Stock then outstanding, addressed to the
Secretary of the Company, call a special meeting of holders of shares of
such Series H Preferred Stock. Such meeting shall be held at the earliest
practicable date upon the notice required for special meetings of
stockholders at the place for holding annual meetings of stockholders of
the Company or, if none, at a place designated by the Secretary of the
Company. If such meeting shall not be called by the proper officers of the
Company within 30 days after the personal service of such written request
upon the Secretary of the Company, or within 30 days after mailing the same
within the United States, by registered mail, addressed to the Secretary of
the Company at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then holders of record
of 10% of the shares of Series H Preferred Stock then outstanding may
designate in writing any person to call such meeting at the expense of the
Company, and such meeting may be called by such person so designated upon
the notice required for special meetings of stockholders and shall be held
at the same place as is elsewhere provided in this paragraph. Any holder of
shares of Series H Preferred Stock then outstanding that would be entitled
to vote at such meeting shall have access to the stock books of the
Company's transfer agent for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions of this paragraph.
Notwithstanding the provisions of this paragraph, however, no such special
meeting shall be called or held during a period within 45 days immediately
preceding the date fixed for the next annual meeting of stockholders.
(iv) Subject to the provisions hereof, the directors elected pursuant to
this Section 4(c) shall serve until the next annual meeting or until their
respective successors shall be elected and qualified. Any director elected
by the holders of Series H Preferred Stock may be removed by, and shall not
be removed otherwise than by, the vote of the holders of a majority of the
outstanding shares of the Series H Preferred Stock who were entitled to
participate in such election of directors, voting as a separate class,
without regard to series, at a meeting called for such purpose or by
written consent. If the office of any director elected by the holders
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of Series H Preferred Stock, voting as a class, without regard to series,
becomes vacant by reason of death, resignation, retirement,
disqualification or removal from office or otherwise, the remaining
director elected by the holders of Series H Preferred Stock, voting as a
class, without regard to series, may choose a successor who shall hold
office for the unexpired term in respect of which such vacancy occurred.
Upon any termination of the right of the holders of Series H Preferred
Stock to vote for directors as herein provided (i.e., when all Excess Free
Cash Trigger Events and Horizon Events have been Undone), the term of
office of all directors then in office elected by the holders of Series H
Preferred Stock, pursuant to this Section 4(c) shall terminate immediately.
(d) For the purposes of Section 4(c) the following terms have the following
meanings:
"Consolidated Free Cash" means cash and cash equivalents (as determined
by generally accepted accounting principles) minus (i) debt and (ii)
projected capital expenditures budgeted and approved by the Board in good
faith for the twelve month period following such fiscal quarter end.
"Excess Free Cash Trigger Event" means the ninetieth day after the end of
each fiscal quarter of the Corporation if (1) as at the end of such fiscal
quarter the Corporation had Consolidated Free Cash in excess of $30,000,000
and (ii) during such ninety day period the Corporation shall not have
irrevocably offered to redeem, pursuant to Section 5(a), an amount of
Series H Preferred Stock (based on its then Stated Amount) equal to the
difference between Consolidated Free Cash and $30,000,000 (the "Relevant
Portion").
"Horizon Event" means that shares of Series H Preferred Stock are
outstanding after June 30, 2001.
"Undone" means (i) with respect to a Horizon Event, the point in time
after June 30, 2001 at which no shares of Series H Prepared Stock are
outstanding and (ii) with respect to an Excess Free Cash Trigger Event, the
point in time after the occurrence of an Excess Free Cash Trigger Event
when the Relevant Portion of the Series H Preferred Stock has been redeemed
pursuant to Section 5(a).
Section 5. Redemption.
The Series H Preferred Stock (including the PIK Preferred) shall be
redeemable by the Corporation as follows:
(a) Optional Redemption. Each share of Series H Preferred Stock shall be
subject to redemption by the Corporation in whole or in part at the option of
the Corporation, as determined by the Board, for a cash amount per share equal
to the stated amount plus dividends accrued but unpaid on the date of
redemption.
(b) Notice of Redemption. In the event the Corporation shall redeem shares
of Series H Preferred Stock pursuant to clauses (a) or (b) above, a notice of
such redemption shall be given by first-class mail, postage prepaid, mailed
not less than 20 nor more than 60 days prior to the date fixed for redemption
(the "Redemption Date"), to each holder of record of the shares to be redeemed
at such holder's address as the same appears on the stock books of the
Corporation's transfer agent. Each such notice shall state: (i) the redemption
date; (ii) the number of shares of Series H Preferred Stock to be redeemed
and, if less than all the shares held by such holder are to be redeemed, the
number of such shares to be redeemed from such holder; (iii) the redemption
price and the cash amount in which such redemption price will be paid; (iv)
the place or places where certificates for such shares are to be surrendered
for payment of the redemption price; (v) that payment will be made upon
presentation and surrender of such Series H Preferred Stock; (vi) the then
current Conversion Ratio; (vii) that dividends on the shares to be redeemed
shall cease to accrue following such redemption date; (viii) that such
redemption is at the option of the Corporation; and (ix) that accrued and
unpaid dividends up to and including the redemption date will be paid in
accordance with the terms herein. Notice having been mailed as aforesaid, on
and after the redemption date, dividends on the shares of the Series H
Preferred Stock so called for redemption shall cease to accrue, said shares
shall be deemed no longer outstanding, and all rights of the holders thereof
as stockholders of the Corporation (except the right to receive from the
Corporation the monies payable upon
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redemption, without interest thereon, upon surrender of the certificates
evidencing such shares) shall cease. The Corporation's obligation to provide
monies in accordance with the preceding sentence shall be deemed fulfilled if,
on or before the redemption date, the Corporation shall deposit with a bank or
trust company having an office or agency in the Borough of Manhattan, City of
New York, and having a capital and surplus of at least $500,000,000, the
principal amount of funds necessary for such redemption, in trust for the
account of the holders of the shares to be redeemed (and so as to be and
continue to be available therefor), with irrevocable instructions and
authority to such bank or trust company that such funds be applied to the
redemption of the shares of Series H Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation from time
to time. Any funds so deposited and unclaimed at the end of three years from
such redemption date shall be released or repaid to the Corporation, after
which the holder or holders of such shares of Series H Preferred Stock shall
be without recourse against the Corporation for payment of the redemption
price.
Upon surrender in accordance with said notice of the certificates for any
such shares so redeemed (properly endorsed or assigned for transfer, if the
Board shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the applicable redemption price aforesaid. If
fewer than all the outstanding shares of Series H Preferred Stock are to be
redeemed, shares to be redeemed shall be selected by the Corporation from
outstanding shares of Series H Preferred Stock not previously called for
redemption by lot or pro rata or by any other equitable method determined by
the Board in its sole discretion. If fewer than all the shares represented by
any certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
Notwithstanding the foregoing, if the Corporation's notice of redemption has
been given pursuant to this Section 5 and any holder of shares of Series H
Preferred Stock shall, prior to the close of business on the third Business
Day preceding the Redemption Date, give written notice to the Corporation
pursuant to this Section 5 hereof of the conversion of any or all of the
shares to be redeemed held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation),
then the conversion of such shares to be redeemed shall become effective as
provided in Section 6. In the event that such redemption was pursuant to a
Mandatory Redemption, any shares so converted shall, at the option of the
Corporation, be counted as shares required to be redeemed pursuant to such
Mandatory Redemption.
Section 6. Conversion.
The Series H Preferred Stock shall be subject to conversion as follows:
(a) Automatic Conversion. Each share of Series H Preferred Stock shall
automatically be converted into 1.4285 shares of Common Stock (the "Conversion
Ratio") on the day after which the Corporation's Common Stock has a Closing
Price equal to or in excess of $7.00 (the "Base Price") per share for a period
of 30 consecutive Trading Days.
(b) Mechanics of Automatic Conversion. All holders of record of shares of
Series H Preferred Stock will be sent written notice of the actual date of
such conversion. Each notice shall designate a place for automatic conversion
of all of the shares of Series H Preferred Stock pursuant to Section 5(a).
Notice will be sent by mail, first class, postage prepaid, to each record
holder of Series H Preferred Stock at such holder's address appearing on the
stock register. Each holder of shares of Series H 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 of conversion, all
rights with respect to the Series H 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 H 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,
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duly executed by the registered holder or by his or its attorney duly
authorized in writing. All certificates evidencing shares of Series H
Preferred Stock which are converted in accordance with the provisions hereof
shall, from and after the date of conversion, be deemed to have been retired
and cancelled and the shares of Series H Preferred Stock represented thereby
converted into Common Stock for all purposes, notwithstanding the failure of
the holder or holders thereof to surrender such certificates. As soon as
practicable after the date of such automatic conversion and the surrender of
the certificate or certificates for Series H 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(b) in
respect of any fraction of a share of Common Stock otherwise issuable upon
such conversion.
(c) "Closing Price" on any Trading Day with respect to the per share price
of any shares of Common Stock means the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Common Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
Nasdaq national market.
(d) "Trading Day," with respect to a United States national securities
exchange or automated quotation system in the United States, means a day on
which such exchange or system is open for a full day of trading.
(e) Certain Adjustments to Conversion Ratio for Stock Splits, Dividends,
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 Conversion Ratio 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, each share of Series H 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 H
Preferred Stock would have been entitled upon such reclassification,
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 H
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 Ratio) 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 H 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 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 H 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 H 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 6
with respect to the rights of the holders of the Series H Preferred Stock.
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(f) Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Ratio pursuant to this Section 6, 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 H 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 H 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 Ratio 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 H Preferred Stock.
(g) 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 H 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 H
Preferred Stock so converted were registered.
Section 7. Miscellaneous.
(a) Preemptive Rights. Except as required by law, the holders of Series H
Preferred Stock shall not be entitled to any preemptive rights with respect to
any class or series of the Corporation's stock, whether such class or series
currently exists or has not yet been created.
(b) Funded Debt. Without the consent of a majority of the holders of the
Stated Amount of Series H Preferred Stock or the director referred to in
Section 4(b), the Corporation shall not incur funded debt, other than purchase
money debt and debt utilized for working capital purposes.
(c) Limitation and Rights Upon Insolvency. Notwithstanding any other
provision of this certificate, the Corporation shall not be required to pay
any dividend on, or to pay any amount in respect of any redemption or
conversion of, the Series H Preferred Stock at a time when immediately after
making such payment the Corporation is or would be rendered insolvent (as
defined by applicable law), provided that the obligation of the Corporation to
make any such payment shall not be extinguished in the event the foregoing
limitation applies.
(d) Parity or Senior Securities. Without the consent of the majority of the
holders of the Stated Amount of Series H Preferred Stock or the director
referred to in Section 4(b), the Corporation shall not issue any shares of
stock on parity with or senior to the shares of Series H Preferred Stock as to
dividends, distributions or liquidation.
(e) Shares to Be Retired. Any share of Series H Preferred Stock converted,
redeemed or otherwise acquired by the Corporation shall be retired and
cancelled and shall upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to reissuance by the Board as
Series H Preferred Stock or shares of preferred stock of one or more other
series.
(f) 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,
distribution, conversion, redemption, 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 H 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
corporate action.
(f) Record Holders. The Corporation and the Corporation's transfer agent may
deem and treat the record holder of any shares of Series H Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the
Corporation nor the Corporation's transfer agent shall be affected by any
notice to the contrary.
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(g) Notice. Except as may otherwise be provided for herein, all notices
referred to herein shall be in writing, and all notices hereunder shall be
deemed to have been given upon, the earlier of receipt of such notice or three
Business Days after the mailing of such notice if sent by registered mail
(unless first-class mail shall be specifically permitted for such notice under
the terms of this Certificate of Designations) with postage prepaid,
addressed: if to the Corporation, to its offices at Ringland Way, Newport,
Gwent NP6 2TA, United Kingdom (Attention: Secretary) or to an agent of the
Corporation designated as permitted by the Certificate of Incorporation or, if
to any holder of the Series H Preferred Stock, to such holder at the address
of such holder of the Series H Preferred Stock as listed in the stock record
books of the Corporation (which may include the records of the Corporation's
transfer agent); or to such other address as the Corporation or holder, as the
case may be, shall have designated by notice similarly given.
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ANNEX C
TERMS OF
SERIES I JUNIOR PARTICIPATING PREFERRED STOCK
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of the Corporation (hereinafter called the "Board of Directors"
or the "Board") in accordance with the provisions of the Articles of
Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, no par value (the "Preferred Stock"), of the Corporation and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Series I Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series I Junior Participating Preferred Stock" (the "Series I
Preferred Stock") and the number of shares constituting the Series I Preferred
Stock shall be Forty Four Thousand (44,000), none of which have been issued as
of the date hereof. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series I Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series I Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series I Preferred Stock with respect to dividends, the holders of shares
of Series I Preferred Stock, in preference to the holders of the Common
Stock, no par value (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series I Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 1000 times the aggregate per share amount
of all cash dividends, and 1000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Series I Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
to which holders of shares of Series I Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series I Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).
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(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series I Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series I Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series I
Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series I Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series I Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series I Preferred Stock shall entitle the holder thereof to 1000
votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series I Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Determination creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series I Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders
of Series I Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
(D) Notwithstanding any provision hereof to the contrary, holders of
Series I Preferred Stock shall not be entitled to vote at and with respect
to any regular or special meeting regarding the Charter Amendment. "Charter
Amendment" means an amendment to the Corporation's Articles of
Incorporation the purpose of which is to authorize an increase in the
authorized number of shares of Common Stock for the purpose of having a
sufficient number of shares of Common Stock to permit the conversion of the
Series I Preferred Stock into Common Stock as provided in Section 10 below.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series I Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series I Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series I Preferred
Stock;
C-2
<PAGE>
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series I Preferred
Stock, except dividends paid ratably on the Series I Preferred Stock
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series I Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series
I Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series I Preferred Stock, or any shares of stock ranking on a
parity with the Series I Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series I Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Articles of Incorporation, or in any other Certificate of
Determination creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(1) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series I Preferred
Stock unless, prior thereto, the holders of shares of Series I Preferred Stock
shall have received $.001 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of Series I
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series I Preferred Stock, except distributions made ratably on the Series
I Preferred Stock and all such parity stock in proportion to the total amounts
to which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series I Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Series I Preferred Stock
C-3
<PAGE>
shall at the same time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1000 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series I Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. No Redemption. The shares of Series I Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series I Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series
of any other class of the Corporation's Preferred Stock.
Section 10. Conversion.
The Series I Preferred Stock shall be subject to conversion as follows:
(A) Automatic Conversion. Each share of Series I Preferred Stock shall
automatically be converted into 1,000 shares of Common Stock ("Conversion
Ratio") immediately upon approval of the Charter Amendment. The Conversion
Ratio shall be reduced (i.e., the number of shares of Common Stock
receivable with respect to each share of Series I Preferred Stock) by one
percent (1%) for each six months period that elapses after the date that
the Charter Amendment is first submitted to the shareholders for approval
until approval of the Charter Amendment.
(B) Mechanics of Automatic Conversion. All holders of record of shares of
Series I Preferred Stock will be given written notice of the actual date of
such conversion within thirty days after approval of the Charter Amendment.
Notice will be sent by mail, first class, postage prepaid, to each record
holder of Series I Preferred Stock at such holder's address appearing on
the stock register. Each holder of shares of Series I 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 of conversion, all
rights with respect to the Series I 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 I 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 I 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 I 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 conversion date and the surrender of the certificate or certificates
for Series I 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.
C-4
<PAGE>
(C) Adjustments 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 Conversion Ratio 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.
C-5
<PAGE>
Facsimile copies of the Note Consent and Letter of Transmittal, the Series G
Conversion Notice and Letter of Transmittal and the Warrant Letter of
Transmittal will be accepted. Note Consents and Letters of Transmittal, Series
G Conversion Notices and Letters of Transmittal, the Warrant Letters of
Transmittal, certificates for the Notes, Series G Preferred Stock and Warrants
and any other required documents should be sent by each holder of Notes or his
broker, dealer, commercial bank, trust company or other nominee, holder of
Series G Preferred Stock or holder of Warrants to the Exchange Agent at the
addresses set forth below:
To:
U.S. TRUST COMPANY OF CALIFORNIA, N.A., EXCHANGE AGENT
By Mail via the By Overnight Courier or By Hand:
enclosed envelope: Express Mail:
U.S. Trust Company of
U.S. Trust Company of U.S. Trust Company of California, N.A.
California, N.A. California, N.A. c/o United States Trust
c/o United States Trust c/o United States Trust Company of New York
Company of New York Company of New York 111 Broadway, Lower
P.O. Box 841, Peter 770 Broadway, 13th Floor Level
Cooper Station New York, NY 10003 New York, NY 10006
New York, NY 10276-0841 Attn: Corporate Trust Attn: Corporate Trust
and Agency Services and Agency Services
Attn: Corporate Trust
and Agency Services
By Facsimile: Phone Number:
(212) 420-6155 (800) 225-2398
Any questions or requests for assistance or additional copies of this Offering
Circular, the Note Consent and Letter of Transmittal, Notice of Guaranteed
Delivery, the Series G Conversion Notice and Letter of Transmittal and/or the
Warrant Letter of Transmittal may be directed to the Exchange Agent at its
telephone number and address set forth above. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Exchange Offer.
<PAGE>
EXHIBIT (A)(2)
NOTE CONSENT AND LETTER OF TRANSMITTAL
TO EXCHANGE AND TO CONSENT IN RESPECT OF
7 1/8% CONVERTIBLE SUBORDINATED NOTES
DUE OCTOBER 15, 2001 (THE "NOTES") OF
TRIKON TECHNOLOGIES, INC.
PURSUANT TO THE OFFERING CIRCULAR
DATED APRIL 14, 1998 OF
TRIKON TECHNOLOGIES, INC.
(THE "COMPANY")
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MAY
11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH TIME
AND DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS OF
NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
TO:
U.S. TRUST COMPANY OF CALIFORNIA, N.A., EXCHANGE AGENT
By Mail via the By Overnight Courier or By Hand:
enclosed envelope: Express Mail:
U.S. Trust Company of U.S. Trust Company of U.S. Trust Company of
California, N.A. California, N.A. California, N.A.
c/o United States Trust c/o United States Trust c/o United States Trust
Company of New York Company of New York Company of New York
P.O. Box 841, Peter 770 Broadway, 13th Floor 111 Broadway, Lower
Cooper Station New York, NY 10003 Level
New York, NY 10276-0841 Attn: Corporate Trust New York, NY 10006
Attn: Corporate Trust and Agency Services Attn: Corporate Trust
and Agency Services and Agency Services
By Facsimile: Phone Number:
(212) 420-6155 (800) 225-2398
DELIVERY OF THIS NOTE CONSENT AND LETTER OF TRANSMITTAL TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OR TELEX, OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The instructions accompanying this Note Consent and Letter of Transmittal
should be read carefully before this Note Consent and Letter of Transmittal is
completed. Except as otherwise provided herein, all signatures on this Note
Consent and Letter of Transmittal must be guaranteed in accordance with the
procedures set forth herein. See Instruction 1.
HOLDERS WHO WISH TO TENDER THEIR NOTES MUST, AT A MINIMUM, COMPLETE COLUMNS
(1) THROUGH (3) IN THE BOX HEREIN ENTITLED "DESCRIPTION OF NOTES TENDERED" AND
SIGN IN THE APPROPRIATE BOX BELOW. IF ONLY THOSE COLUMNS ARE COMPLETED, THE
HOLDER WILL BE DEEMED TO HAVE TENDERED ALL THE NOTES, LISTED IN THE TABLE. IF
A HOLDER WISHES TO TENDER LESS THAN ALL OF SUCH NOTES, COLUMN (4) MUST BE
COMPLETED IN FULL, AND SUCH HOLDER SHOULD REFER TO INSTRUCTION 5.
DESCRIPTION OF NOTES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF HOLDER(S) TENDERED (IF
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) TOTAL PRINCIPAL LESS
APPEAR(S) ON NOTES) NOTE NUMBER(S)* AMOUNT OF NOTES THAN ALL)**
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
TOTAL:
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by holders tendering by book-entry transfer (see
below).
** Completion of column (3) will constitute the tender by you of all Notes
delivered unless otherwise specified in column (4). See Instruction 5.
A tendering holder is required to consent to the Proposals with respect
to the principal amount of Notes tendered by such holders.
<PAGE>
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE THE NOTE EXCHANGE CONSIDERATION
PURSUANT TO THE NOTE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW)
THEIR NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
This Note Consent and Letter of Transmittal is to be used only if 7 1/8%
Convertible Subordinated Notes due October 15, 2001 (the "Notes") of the
Company are to be physically delivered to the Exchange Agent or delivered by
book-entry transfer to the Exchange Agent's account at The Depository Trust
Company ("DTC") (the "Book-Entry Transfer Facility") pursuant to the book-
entry transfer procedures set forth in the Offering Circular of the Company
dated April 14, 1998 (as the same may be amended or supplemented from time to
time, the "Offering Circular") under the heading "The Exchange Offer--
Procedures for Tendering Notes--Book-Entry Transfer." See Instruction 2.
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the Exchange Agent.
Holders whose Notes are not immediately available or who cannot deliver
their Notes and all other required documents to the Exchange Agent, or who
cannot complete the procedure for book-entry transfer, prior to the Expiration
Date, may nevertheless tender their Notes in accordance with the guaranteed
delivery procedures set forth in the Offering Circular under the heading "The
Exchange Offer--Procedures for Tendering Notes--Guaranteed Delivery." See
Instruction 2.
All capitalized terms used herein and not otherwise defined herein are used
herein with the meanings ascribed to them in the Offering Circular.
TENDER OF NOTES
- -------------------------------------------------------------------------------
[_]CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE EXCHANGE AGENT'S ACCOUNT AT A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution: ___________________________________________
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
[_]CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): _________________________________________
Window Ticket No. (if any): ______________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Institution which Guaranteed Delivery: ___________________________
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
By execution hereof, the undersigned hereby acknowledges he has received and
reviewed the Offering Circular and this Note Consent and Letter of Transmittal
relating to the Company's offer to exchange (the "Note Exchange Offer") each
outstanding $1,000 principal amount of the Notes into (i) 262.7339 shares of
the Company's Common Stock, no par value per share (the "Common Stock"), (ii)
34.7826 shares of the Company's Series H Preferred Stock, $10 stated amount
per share (the "Series H Preferred Stock"), and (iii) .3393 shares of the
Company's Series I Junior Participating Preferred Stock, no par value per
share (the "Series I Preferred Stock") (collectively, referred to as the "Note
Exchange Consideration"), and otherwise upon the terms and subject to the
conditions set forth in the Offering Circular. The undersigned hereby
acknowledges that the undersigned will not be entitled to any payment in
respect of accrued and unpaid interest on the Notes tendered herewith and
accepted pursuant to the Note Exchange Offer.
Upon the terms and subject to the conditions of the Note Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Notes
indicated above. The undersigned understands that the obligation of the
Company to consummate the Note Exchange Offer is subject to several conditions
as set forth in the Offering Circular under "The Exchange Offer--Conditions to
the Exchange Offer."
The undersigned agrees and acknowledges that, by the execution and delivery
hereof, the undersigned makes and provides the written consent to the
Proposals with respect to the principal amount of Notes tendered indicated in
the table above entitled "Description of Notes Tendered" under the column
headings "Principal Amount Tendered" (or, if nothing is indicated therein,
with respect to the principal amount of Notes with respect to which the
undersigned's consent is deemed given in connection with a tender of Notes) as
permitted by the Indenture and the Registration Agreement relating to the
Notes. The undersigned understands that the consent provided hereby shall
remain in full force and effect unless and until such consent is revoked in
accordance with the procedures set forth in the Offering Circular and this
Note Consent and Letter of Transmittal. The undersigned understands that after
the Expiration Date, no consents may be revoked. The undersigned understands
that although the Supplemental Indenture with respect to the Notes providing
for the Proposals will have been executed by the parties thereto on the
Expiration Date, the Proposals will not become operative until the validly
tendered Notes are accepted for exchange by the Company on the Expiration
Date.
The undersigned acknowledges that all the foregoing conditions are for the
sole benefit of the Company and may be asserted by the Company regardless of
the circumstances giving rise to such conditions and may be waived by the
Company, in whole or in part, at any time and from time to time, in the sole
discretion of the Company. The failure by the Company at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right,
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time. If any of the conditions set forth in this
section shall not be satisfied, the Company may, subject to applicable law,
(i) terminate the Note Exchange Offer and return all Notes tendered pursuant
to the Note Exchange Offer to tendering holders; (ii) extend the Note Exchange
Offer and retain all tendered Notes until the Expiration Date for the extended
Note Exchange Offer; (iii) amend the terms of the Note Exchange Offer or
modify the consideration to be provided by the Company pursuant to the Note
Exchange Offer; or (iv) waive the unsatisfied conditions with respect to the
Note Exchange Offer and accept all Notes tendered pursuant to the Note
Exchange Offer. Notwithstanding anything to the contrary, the Company may
extend the period of the Note Exchange Offer in its sole discretion.
In any such event, the tendered Notes not accepted for exchange will be
returned to the undersigned without cost to the undersigned as soon as
practicable following the date on which the Note Exchange Offer is terminated
or expires without any Notes being purchased thereunder, at the address shown
below the undersigned's signature(s) unless otherwise indicated under "Special
Payment Instructions" below.
Subject to, and effective upon, the acceptance by the Company of the
principal amount of Notes tendered hereby for exchange pursuant to the terms
of the Note Exchange Offer, the undersigned hereby irrevocably sells, assigns
and transfers to, or upon the order of, the Company, all right, title and
interest in and to, and any and all claims in respect of or arising or having
arisen as a result of the undersigned's status as a holder of, all Notes
tendered hereby, waives any and all rights with
3
<PAGE>
respect to the Notes tendered hereby (including, without limitation, the
undersigned's waiver of any existing or past defaults and their consequences
with respect to the Notes) and releases and discharges any obligor or parent
of any obligor of the Notes from any and all claims the undersigned may have
now, or may have in the future, arising out of or related to the Notes,
including, without limitation, any claims that the undersigned is entitled to
receive additional principal or interest payments with respect to the Notes or
to participate in any redemption or defeasance of the Notes. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent (with full
knowledge that the Exchange Agent also acts as agent of the Company) as the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Notes, with full power of substitution (such power-of-attorney being
deemed to be an irrevocable power coupled with an interest) to (a) deliver
such Notes, or transfer ownership of such Notes on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with
all accompanying evidences of transfer and authenticity, to or upon the order
of the Company, (b) present such Notes for transfer on the books of the
Company, and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Notes, all in accordance with the terms of the
Note Exchange Offer.
The undersigned hereby represents and warrants that (i) the undersigned has
full power and authority to tender, sell, assign and transfer the Notes
tendered hereby, and that when such Notes are accepted for exchange by the
Company, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and that none of such Notes will be subject to any adverse claim or right;
(ii) the undersigned owns the Notes being tendered hereby and is entitled to
tender such Notes as contemplated by the Note Exchange Offer, all within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (iii) the tender of such Notes complies with Rule
14e-4. The undersigned, upon request, will execute and deliver all additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Notes tendered
hereby.
The undersigned understands that tenders of Notes pursuant to any of the
procedures described in the Offering Circular under the caption "The Exchange
Offer--Procedures for Tendering Notes" and in the instructions hereto will
constitute the undersigned's acceptance of the terms and conditions of the
Note Exchange Offer. The Company's acceptance of such Notes for exchange
pursuant to the terms of the Note Exchange Offer will constitute a binding
agreement between the undersigned and the Company upon the terms and subject
to the conditions of the Note Exchange Offer. The undersigned has read and
agrees to all terms and conditions of the Note Exchange Offer. Delivery of the
enclosed Notes shall be effected, and risk of loss and title of such Notes
shall pass, only upon proper delivery thereof to the Exchange Agent.
All authority conferred or agreed to be conferred by this Note Consent and
Letter of Transmittal shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Note Consent and Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives. NOTES TENDERED PURSUANT TO THE
NOTE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
See the information set forth under the heading "The Exchange Offer--
Withdrawal of Tenders" in the Offering Circular.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the Note Exchange Consideration with respect to
Notes accepted for exchange, and return any certificates for Notes not
tendered or not accepted for exchange, in the name(s) of the registered
holder(s) appearing in the box entitled "Description of Notes Tendered" (and,
in the case of Notes tendered by book-entry transfer, by credit to the account
at the Book-Entry Transfer Facility designated above). Similarly, unless
otherwise indicated herein in the box entitled "Special Delivery
Instructions," please deliver the Note Exchange Consideration with respect to
Notes accepted for exchange, together with any certificates for Notes not
tendered or not accepted for exchange (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing in the
box entitled "Description of Notes Tendered." If both the "Special Payment
Instructions" box and the "Special Delivery Instructions" box are completed,
please issue the Note Exchange Consideration with respect to any Notes
accepted for exchange, and return any certificates for Notes not tendered or
not accepted for exchange, in the name(s) of, and deliver such Note Exchange
Consideration and any such certificates to, the person(s) at the address(es)
so indicated. Please credit any Notes tendered hereby and delivered by book-
entry transfer, but which are not accepted for exchange, by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that the Company has no obligation pursuant to the "Special Payment
Instructions" box or "Special Delivery Instructions" box provisions of this
Note Consent and Letter of Transmittal to transfer any Notes from the name of
the registered holder(s) thereof if the Company does not accept any of such
Notes for exchange pursuant to the terms of the Note Exchange Offer.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8) (SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if the To be completed ONLY if
certificates for Notes in a certificates for Notes in a
principal amount not tendered or principal amount not tendered or
not accepted for exchange, and/or not accepted for exchange, and/or
the certificates representing the the certificates representing the
Note Exchange Consideration, are Note Exchange Consideration, are
to be issued in the name of to be sent to someone other than
someone other than the the undersigned, or to the
undersigned or if Notes delivered undersigned at an address other
by book-entry transfer not than that shown above.
accepted for purchase are to be
returned by credit to a Deliver: [_]Notes
participant number maintained at [_]Note Exchange
the Book-Entry Transfer Facility Consideration to:
other than the participant number Name: ____________________________
indicated above. (PLEASE PRINT)
Issue: [_]Notes Address: _________________________
[_]Note Exchange Consideration to: __________________________________
(ZIP CODE)
Name: ____________________________
(PLEASE PRINT) PLEASE COMPLETE THE SUBSTITUTE
FORM W-9 BELOW
Address: _________________________
__________________________________
(ZIP CODE)
PLEASE COMPLETE THE SUBSTITUTE
FORM W-9 BELOW
5
<PAGE>
PLEASE SIGN HERE
(To be completed by all tendering holders of Notes
regardless of whether Notes are being physically delivered herewith)
X __________________________________________________________________________
X __________________________________________________________________________
SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY
DATE , 1998
Must be signed by the registered holder(s) of the Notes tendered hereby
exactly as their name(s) appear(s) on the certificate(s) for such Notes or,
if tendered by a participant in one of the Book-Entry Transfer Facilities,
exactly as such participant's name appears on a security position listing
as the owner of the Notes, or by person(s) authorized to become registered
holder(s) by endorsements and documents transmitted with this Note Consent
and Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent
or other person acting in a fiduciary or representative capacity, please
provide the following information and see Instruction 6.
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ______________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone Number _____________________________________________
Tax Identification or Social Security No. __________________________________
SIGNATURE GUARANTEE
(SEE INSTRUCTIONS 1 AND 6 BELOW)
____________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
____________________________________________________________________________
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
ELIGIBLE INSTITUTION)
____________________________________________________________________________
(AUTHORIZED SIGNATURE)
____________________________________________________________________________
(PRINTED NAME)
____________________________________________________________________________
(TITLE)
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE NOTE EXCHANGE OFFER
1. Guarantee of Signatures. All signatures on this Note Consent and Letter
of Transmittal must be guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., by a commercial bank or trust company having an office or
correspondent in the United States or by any other "Eligible Guarantor
Institution" as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (each of the foregoing being referred to
herein as an "Eligible Institution") unless (a) this Note Consent and Letter
of Transmittal is signed by the registered holder of the Notes tendered
herewith (or by a participant in one of the Book-Entry Transfer Facilities
whose name appears on a security position listing as the owner of such Notes)
and neither the "Special Payment Instructions" box nor the "Special Delivery
Instructions" box of this Note Consent and Letter of Transmittal has been
completed or (b) such Notes are tendered for the account of an Eligible
Institution. See Instruction 6.
2. Delivery of Note Consent and Letter of Transmittal and Notes; Guaranteed
Delivery Procedures. This Note Consent and Letter of Transmittal is to be used
only if Notes tendered hereby are to be physically delivered to the Exchange
Agent or delivered by book-entry transfer to the Exchange Agent's account at a
Book-Entry Transfer Facility pursuant to the procedures set forth in the
Offering Circular under the heading "The Note Exchange Offer--Procedures for
Tendering Notes-- Book-Entry Transfer." All physically tendered Notes or
confirmations of, or an Agent's Message with respect to, book-entry transfer
into the Exchange Agent's account with a Book-Entry Transfer Facility,
together with a properly completed and validly executed Note Consent and
Letter of Transmittal (or facsimile or electronic copy thereof or an
electronic agreement to comply with the terms thereof) and any other documents
required by this Note Consent and Letter of Transmittal, must be received by
the Exchange Agent at one of its addresses set forth on the cover page hereof
prior to the Expiration Date. If Notes are forwarded to the Exchange Agent in
multiple deliveries, a properly completed and validly executed Note Consent
and Letter of Transmittal must accompany each such delivery. The Company may
elect to waive receipt of a written Note Consent and Letter of Transmittal if
delivery is properly effected through a Book-Entry Transfer Facility.
If a holder desires to tender Notes pursuant to the Note Exchange Offer and
(a) certificates representing such Notes are not immediately available, (b)
time will not permit this Note Consent and Letter of Transmittal, certificates
representing such Notes and all other required documents to reach the Exchange
Agent prior to the Expiration Date, or (c) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such holder may
effect a tender of Notes in accordance with the guaranteed delivery procedure
set forth in the Offering Circular under the caption "The Exchange Offer--
Procedures for Tendering Notes--Guaranteed Delivery."
Pursuant to such procedure:
(a) such tender must be made by or through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent must have received from
such Eligible Institution, at one of the addresses of the Exchange Agent set
forth on the cover page hereof, a properly completed and validly executed
Notice of Guaranteed Delivery (by telegram, facsimile, mail or hand delivery)
substantially in the form provided by the Company, setting forth the name and
address of the registered holder and the principal amount or number of Notes
being tendered and stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after the
date of the Notice of Guaranteed Delivery, this Note Consent and Letter of
Transmittal validly executed (or a facsimile hereof), together with
certificates evidencing the Notes (or confirmation of, or an Agent's Message
with respect to, book-entry transfer of such Notes into the Exchange Agent's
account with a Book-Entry Transfer Facility), and any other documents required
by this Note Consent and Letter of Transmittal and these instructions, will be
deposited by such Eligible Institution with the Exchange Agent; and
(c) this Note Consent and Letter of Transmittal or a facsimile hereof,
properly completed and validly executed, with any required signature
guarantees, certificates representing the Notes in proper form for transfer
(or confirmation of book-entry transfer into the Exchange Agent's account with
a Book-Entry Transfer Facility) and all other documents required by this Note
Consent and Letter of Transmittal must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of such
Notice of Guaranteed Delivery.
7
<PAGE>
THE METHOD OF DELIVERY OF THIS NOTE CONSENT AND LETTER OF TRANSMITTAL ,
NOTES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-
ENTRY TRANSFER FACILITY, TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE TENDERING HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
THE MAILING SHOULD BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE, TO
PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE. NO ALTERNATIVE,
CONDITIONAL OR CONTINGENT TENDERS OF NOTES WILL BE ACCEPTED. BY EXECUTION OF
THIS NOTE CONSENT AND LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), ALL
TENDERING HOLDERS WAIVE ANY RIGHT TO RECEIVE ANY NOTICE OF THE ACCEPTANCE OF
THEIR NOTES FOR PAYMENT.
3. Inadequate Space. If the space provided herein under "Description of
Notes Tendered" is inadequate, the certificate numbers of the Notes and the
principal amount of Notes tendered should be listed on a separate schedule and
attached hereto.
4. Withdrawal of Tenders. Tenders of Notes may be withdrawn at any time
until the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after the expiration of 40 business days from the
commencement of the Exchange Offer unless accepted for exchange prior to that
date.
Holders who wish to exercise their right of withdrawal with respect to the
Note Exchange Offer must give written notice of withdrawal, delivered by mail
or hand delivery or facsimile transmission, to the Exchange Agent at one of
its addresses set forth on the cover page of this Note Consent and Letter of
Transmittal prior to the Expiration Date or at such other time as otherwise
provided for herein. In order to be effective, a notice of withdrawal must
specify the name of the person who deposited the Notes to be withdrawn (the
"Depositor"), the name in which the Notes are registered, if different from
that of the Depositor, and the principal amount of the Notes to be withdrawn
prior to the physical release of the certificates to be withdrawn. If tendered
Notes to be withdrawn have been delivered or identified through confirmation
of book-entry transfer to the Exchange Agent, the notice of withdrawal also
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with withdrawn Notes. The notice of withdrawal must be
signed by the registered holder of such Notes in the same manner as the
applicable Note Consent and Letter of Transmittal (including any required
signature guarantees), or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of such Notes. Withdrawals of tenders of Notes may not be rescinded,
and any Notes withdrawn will be deemed not validly tendered thereafter for
purposes of the Note Exchange Offer. However, properly withdrawn Notes may be
tendered again at any time prior to the Expiration Date by following the
procedures for tendering not previously tendered Notes described elsewhere
herein.
If the Company is delayed in its acceptance for conversion and payment for
any Notes or is unable to accept for conversion or convert any Notes pursuant
to the Note Exchange Offer for any reason, then, without prejudice to the
Company's rights hereunder, tendered Notes may be retained by the Exchange
Agent on behalf of the Company and may not be withdrawn (subject to Rule 13e-
4(f)(5) under the Exchange Act, which requires that the issuer making the
tender offer pay the consideration offered, or return the tendered securities,
promptly after the termination or withdrawal of a tender offer), except as
otherwise permitted hereby.
5. Partial Tenders (Not Applicable to Holders Who Tender by Book-Entry
Transfer). Tenders of Notes will be accepted only in integral multiples of
$1,000 principal amount. The aggregate principal amount of all Notes delivered
to the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If tenders of Notes are made with respect to less than the entire
principal amount of Notes delivered herewith, certificate(s) for the principal
amount of Notes not tendered will be issued and sent to the registered holder,
unless otherwise specified in the "Special Payment Instructions" or "Special
Delivery Instructions" boxes in this Note Consent and Letter of Transmittal.
6. Signatures on Note Consent and Letter of Transmittal; Bond Powers and
Endorsements. If this Note Consent and Letter of Transmittal is signed by the
registered holder(s) of the Notes tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificates
representing such Notes without alteration, enlargement or any other change
whatsoever. If this Note Consent and Letter of Transmittal is signed by a
participant in one of the Book-Entry Transfer Facilities whose name is shown
on a security position listing as the owner of the Notes tendered hereby, the
signature must correspond with the name shown on the security position listing
as the owner of the Notes.
8
<PAGE>
If any Notes tendered hereby are owned of record by two or more persons, all
such persons must sign this Note Consent and Letter of Transmittal.
If any Notes tendered hereby are registered in the names of different
holders, it will be necessary to complete, sign and submit as many separate
Note Consent and Letters of Transmittal, and any necessary accompanying
documents, as there are different registrations of such Notes.
If this Note Consent and Letter of Transmittal is signed by the registered
holder of Notes tendered hereby, no endorsements of such Notes or separate
bond powers are required, unless the Note Exchange Consideration is to be
issued to, or Notes not tendered or not accepted for exchange are to be issued
in the name of, a person other than the registered holder(s), in which case
the Notes tendered hereby must be endorsed or accompanied by appropriate bond
powers, in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on such Notes (and with respect to a participant in a
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Notes, exactly as the name(s) of the participant(s) appear(s)
on such security position listing as the owner of the Notes). Signatures on
such Notes and bond powers must be guaranteed by an Eligible Institution. See
Instruction 1.
If this Note Consent and Letter of Transmittal is signed by a person other
than the registered holder(s) of the Notes tendered hereby, the Notes must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates representing such Notes. Signatures on such Notes and bond powers
must be guaranteed by an Eligible Institution. See Instruction 1.
If this Note Consent and Letter of Transmittal or any Notes or bond powers
are signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Company of such person's authority so to
act must be submitted with this Note Consent and Letter of Transmittal.
7. Transfer Taxes. Except as otherwise provided in this Instruction 7, the
Company will pay all transfer taxes with respect to the delivery and
conversion of Notes pursuant to the Note Exchange Offer. If, however, issuance
of the Note Exchange Consideration is to be made to, or Notes not tendered or
not accepted for exchange are to be issued in the name of, a person other than
the registered holder(s), the amount of any transfer taxes (whether imposed on
the registered holder(s), such other person or otherwise) payable on account
of the transfer to such other person will be deducted from the Note Exchange
Consideration unless evidence satisfactory to the Company of the payment of
such taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 7, it will not be necessary for transfer tax stamps to be affixed
to the Notes tendered hereby.
8. Special Payment and Delivery Instructions. If the Note Exchange
Consideration with respect to any Notes tendered hereby is to be issued, or
Notes not tendered or not accepted for exchange are to be issued, in the name
of a person other than the person(s) signing this Note Consent and Letter of
Transmittal or to the person(s) signing this Note Consent and Letter of
Transmittal but at an address other than that shown in the box entitled
"Description of Notes Tendered," the appropriate boxes in this Note Consent
and Letter of Transmittal must be completed. All Notes tendered by book-entry
transfer and not accepted for exchange will be returned by crediting the
account at the Book-Entry Transfer Facility designated above as the account
from which such Notes were delivered.
9. Taxpayer Identification Number. Each tendering holder is required to
provide the Exchange Agent with the holder's correct taxpayer identification
number ("TIN"), generally, the holders' social security or federal employer
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, and to certify whether such person is
subject to backup withholding of federal income tax.
A holder must cross out Item (Y) of Part 3 in the Certification box of
Substitute Form W-9 if such holder is subject to backup withholding. Failure
to provide the information on the Substitute Form W-9 may subject the
tendering holder to 31% federal income tax backup withholding on the
reportable payments made to the holder or other payee with respect to Notes
exchanged pursuant to the Note Exchange Offer. The box in Part 1(b) of the
form should be checked if the tendering holder has not been issued a TIN and
has applied for a TIN or intends to apply for a TIN in the near future. If the
box in Part 1(b) is checked and the Exchange Agent is not provided with a TIN
within 60 days, thereafter the Exchange Agent will hold 31% of all reportable
payments until a TIN is provided to the Exchange Agent.
9
<PAGE>
10. Conflicts. In the event of any conflict between the terms of the
Offering Circular and the terms of this Note Consent and Letter of
Transmittal, the terms of the Offering Circular will control.
11. Mutilated, Lost, Stolen or Destroyed Notes. Any holder of Notes, whose
Notes have been mutilated, lost, stolen or destroyed, should contact the
Exchange Agent at the address and telephone number indicated on the back cover
page for further instructions.
12. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to the Exchange Agent at its address set forth below or from
the tendering registered holder's broker, dealer, commercial bank or trust
company. Additional copies of the Offering Circular, this Note Consent and
Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 may
be obtained from the Exchange Agent.
13. Determination of Validity. All questions as to the form of all
documents, the validity (including time of receipt) and acceptance of tenders
of the Notes will be determined by the Company, in its sole discretion, the
determination of which shall be final and binding. Alternative, conditional or
contingent tenders of Notes will not be considered valid. The Company reserves
the absolute right to reject any or all tenders of Notes that are not in
proper form or the acceptance of which, in the Company's opinion, would be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Notes. If the Company
waives its right to reject a defective tender of Notes, the holder will be
entitled to the Note Exchange Consideration. The Company's interpretation of
the terms and conditions of the Note Exchange Offer (including the
instructions in the Note Consent and Letter of Transmittal) will be final and
binding. Any defect or irregularity in connection with tenders of Notes must
be cured within such time as the Company determines, unless waived by the
Company. Tenders of Notes shall not be deemed to have been made until all
defects and irregularities have been waived by the Company or cured. None of
the Company, the Exchange Agent or any other person will be under any duty to
give notice of any defects or irregularities in tenders of Notes, or will
incur any liability to holders for failure to give any such notice.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a holder whose tendered Notes are accepted
for exchange is required by law to provide the Exchange Agent (as payer) with
such holder's correct TIN on Substitute Form W-9 below. If such holder is an
individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, a $50 penalty may be imposed by
the Internal Revenue Service, and payments of Note Exchange Consideration may
be subject to backup withholding.
Certain holders (including, among others, corporations) are not subject to
these backup withholdings and reporting requirements. Exempt holders should
indicate their exempt status on Substitute Form W-9. In order for a foreign
individual to qualify as an exempt recipient, such individual must submit a
statement, signed under penalties of perjury, attesting to such individual's
exempt status. Forms of such statements can be obtained from the Exchange
Agent. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any reportable payments made to the holder or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal
income tax liability of persons subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on reportable payments made with respect to
Notes accepted for conversion pursuant to the Note Exchange Offer, the holder
is required to notify the Exchange Agent of such holder's correct TIN by
completing the form below, certifying that the TIN provided on the Substitute
Form W-9 is correct (or that such holder is awaiting a TIN) and that (a) such
holder is exempt from backup withholding, (b) such holder has not been
notified by the Internal Revenue Service that he is subject to backup
withholding as a result of a failure to report all interest or dividends or
(c) the Internal Revenue Service has notified such holder that such holder is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the holder of the Notes
tendered hereby. If the Notes are held in more than one name or are not held
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10
<PAGE>
PAYOR'S NAME: U.S. TRUST COMPANY OF CALIFORNIA, N.A.
- -------------------------------------------------------------------------------
PART 1(A)--PLEASE PROVIDE
YOUR TIN IN THE BOX AT ----------------------
RIGHT AND CERTIFY BY Social Security Number
SIGNING AND DATING BELOW. OR
SUBSTITUTE
FORM W-9
DEPARTMENT OF
THE TREASURY PART 1(B)--PLEASE CHECK THE ----------------------
INTERNAL BOX AT THE RIGHT IF YOU Employer Identification
REVENUE HAVE APPLIED FOR, AND ARE Number(s)
SERVICE AWAITING RECEIPT OF, YOUR
TIN [_]
--------------------------------------------------------
PAYOR'S REQUEST PART 2--FOR PAYEES EXEMPT FROM
FOR TAXPAYER BACKUP WITHHOLDING PLEASE WRITE
IDENTIFICATION "EXEMPT" HERE (SEE
INSTRUCTIONS)
NUMBER ("TIN") PART 3--CERTIFICATION--UNDER THE PENALTIES OF
PERJURY, I CERTIFY THAT:
-------------------
--------------------------------------------------------
(X) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued for me),
and (Y) I am not subject to backup withholding
because: (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
--------------------------------------------------------
SIGNATURE _______________________ DATE ______________
- -------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (Y) of Part 3 above if
you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject
to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out Item (Y)
of Part 3. (Also see Certification under Specific Instructions in the
enclosed Guidelines.)
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
1(B) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE
AWAITING RECEIPT OF, YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and that I mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
(or I intend to mail or deliver an application in the near future). I
understand that if I do not provide a taxpayer identification number to the
payor, 31 percent of all payments made to me pursuant to this offer shall
be retained until I provide a tax identification number to the payor and
that, if I do not provide my taxpayer identification number within sixty
(60) days, such retained amounts shall be remitted to the IRS as backup
withholding and 31 percent of all reportable payments made to me thereafter
will be withheld and remitted to the IRS until I provide a taxpayer
identification number.
SIGNATURE ___________________________________________________ DATE
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31 PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
The Exchange Agent for the Note Exchange Offer is:
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, NY 10276-0841
Bankers and Brokers and Others Call: (800) 225-2398
<PAGE>
EXHIBIT (A)(3)
TRIKON TECHNOLOGIES, INC.
OFFER TO EXCHANGE EACH $1,000 PRINCIPAL AMOUNT OF 7 1/8% CONVERTIBLE
SUBORDINATED NOTES DUE OCTOBER 15, 2001 INTO 262.7339 SHARES OF COMMON STOCK,
34.7826 SHARES OF SERIES H PREFERRED STOCK AND .3393 SHARES OF SERIES I
PREFERRED STOCK.
CUSIP NO. 72753MAA7
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
MAY 11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH
TIME AND DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE").
TENDERS OF 7 1/8% CONVERTIBLE SUBORDINATED NOTES DUE OCTOBER 15, 2001 MAY
BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
APRIL 14, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We are enclosing herewith the material listed below relating to the offer
(the "Note Exchange Offer") by Trikon Technologies, Inc. (the "Company") to
exchange each $1,000 principal amount of the Company's 7 1/8% Convertible
Subordinated Notes due October 15, 2001 (the "Notes") into 262.7339 shares of
the Company's Common Stock, no par value per share, 34.7826 shares of the
Company's Series H Preferred Stock, $10 stated amount per share, and .3393
shares of the Company's Series I Junior Participating Preferred Stock, no par
value per share (collectively, referred to as the "Note Exchange
Consideration"). Consummation of the Note Exchange Offer is subject to, among
other things, satisfaction of the conditions set forth in the Offering
Circular referred to below under the heading "The Exchange Offer--Conditions
to the Exchange Offer."
We are asking you to contact your clients for whom you hold Notes registered
in your name or in the name of your nominee. In addition, we are asking you to
contact your clients who, to your knowledge, hold Notes registered in their
own name.
Enclosed for your information and use are copies of the following documents:
1. Offering Circular
2. A BLUE Note Consent and Letter of Transmittal for your use in connection
with the tender of Notes and for the information of your clients;
3. A SALMON form of letter that may be sent to your clients for whose
accounts you hold Notes registered in your name or the name of your nominee,
with space provided for obtaining the clients' instructions with regard to the
Note Exchange Offer;
4. A BUFF form of Notice of Guaranteed Delivery;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A BLUE return envelope addressed to the Exchange Agent.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE NOTE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MAY 11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION
(SUCH TIME AND DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE").
NOTES TENDERED PURSUANT TO THE NOTE EXCHANGE OFFER MAY BE WITHDRAWN, SUBJECT
TO THE PROCEDURES DESCRIBED IN THE OFFERING CIRCULAR, AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
<PAGE>
In all cases, the Note Exchange Consideration will be issued for Notes
accepted for exchange pursuant to the Note Exchange Offer only after timely
receipt by the Exchange Agent of such (or confirmation of, or an Agent's
Message with respect to, book-entry transfer of such Notes into the Exchange
Agent's account at one of the Book-Entry Transfer Facilities (as defined in
the Offering Circular)), of a Note Consent and Letter of Transmittal (or
facsimile thereof), properly completed and validly executed, and any other
required documents.
If holders of Notes wish to tender, but it is impracticable for them to
forward their Notes or other required documents prior to the Expiration Date,
a tender may be effected by following the guaranteed delivery procedures
described in the Offering Circular under the heading "The Exchange Offer--
Procedures for Tendering Notes--Guaranteed Delivery."
Procedures for Tendering of Notes are set forth in the Offering Circular
under the caption "The Exchange Offer--Procedures for Tendering Notes ."
Holders of Notes who wish to exchange their Notes must use either the Note
Consent and Letter of Transmittal distributed with the Offering Circular or a
facsimile or electronic copy thereof or an electronic agreement to comply with
the terms thereof. In addition, holders of Notes who are following the
procedures for guaranteed delivery set forth in the Offering Circular must use
the Notice of Guaranteed Delivery distributed with the Offering Circular.
The Company will not pay any fees or commissions to any broker, dealer or
other person in connection with the solicitation of tenders of Notes pursuant
to the Offering Circular. However, the Company will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of
the enclosed materials to your clients. The Company will pay or cause to be
paid any transfer taxes payable with respect to the transfer of Notes to it,
except as otherwise provided in Instruction 7 of the Note Consent and Letter
of Transmittal.
Any inquiries you may have with respect to the Note Exchange Offer should be
addressed to, and additional copies of the enclosed materials may be obtained
from, U.S. Trust Company of California, N.A., the Exchange Agent, at its
address and telephone number set forth on the back cover page of the Offering
Circular.
Very truly yours,
Trikon Technologies, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE COMPANY, THE EXCHANGE AGENT, OR ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE NOTE EXCHANGE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE>
EXHIBIT (A)(4)
TRIKON TECHNOLOGIES, INC.
OFFER TO EXCHANGE EACH $1,000 PRINCIPAL AMOUNT OF 7 1/8% CONVERTIBLE
SUBORDINATED NOTES DUE OCTOBER 15, 2001 INTO 262.7339 SHARES OF COMMON STOCK,
34.7826 SHARES OF SERIES H PREFERRED STOCK AND .3393 SHARES OF SERIES I
PREFERRED STOCK.
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MAY
11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH TIME
AND DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS OF
7 1/8% CONVERTIBLE SUBORDINATED NOTES DUE OCTOBER 15, 2001 MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE.
April 14, 1998
To Our Clients:
Enclosed for your consideration is the Offering Circular dated April 14,
1998 (as the same may be further amended or supplemented from time to time,
the "Offering Circular") and a related Note Consent and Letter of Transmittal
and instructions thereto relating to the offer (the "Note Exchange Offer") by
Trikon Technologies, Inc. (the "Company") to exchange each $1,000 principal
amount of its 7 1/8% Convertible Subordinated Notes due October 15, 2001 (the
"Notes") into 262.7339 shares of the Company's Common Stock, no par value per
share (the "Common Stock"), 34.7826 shares of the Company's Series H Preferred
Stock, $10 stated amount per share (the "Series H Preferred Stock") and .3393
shares of the Company's Series I Junior Participating Preferred Stock, no par
value per share (the "Series I Preferred Stock") (collectively, referred to as
the "Note Exchange Consideration").
Consummation of the Note Exchange Offer is subject to, among other things,
satisfaction of the conditions set forth in the Offering Circular under the
heading "The Exchange Offer--Conditions to the Exchange Offer."
WE ARE THE REGISTERED HOLDER OF NOTES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF ANY SUCH NOTES CAN BE MADE ONLY BY US AS THE REGISTERED HOLDER AND PURSUANT
TO YOUR INSTRUCTIONS. THE BLUE NOTE CONSENT AND LETTER OF TRANSMITTAL (THE
"NOTE CONSENT AND LETTER OF TRANSMITTAL") IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER NOTES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish us to tender any
or all of the Notes held by us for your account pursuant to the terms and
conditions set forth in the Offering Circular and the Note Consent and Letter
of Transmittal. We urge you to read the Offering Circular and the Note Consent
and Letter of Transmittal carefully before instructing us to tender your
Notes.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Notes on your behalf in accordance with the provisions
of the Note Exchange Offer. The Exchange Offer will expire at 12:00 midnight,
New York City time, on May 11, 1998, unless extended. Notes tendered pursuant
to the Note Exchange Offer may be withdrawn, subject to the procedures
described in the Offering Circular, at any time prior to the Expiration Date.
Your attention is directed to the following:
1. The Note Exchange Offer is for all outstanding Notes at an exchange ratio
of 262.7339 shares of Common Stock, 34.7826 shares of Series H Preferred Stock
and .3393 shares of Series I Preferred Stock for each $1,000 principal amount
Note.
2. Holders who tender their Notes in the Note Exchange Offer will not be
entitled to receive any payment in respect of accrued and unpaid interest on
Notes accepted for exchange.
<PAGE>
3. Consummation of the Note Exchange Offer is subject to, among other
things, satisfaction of the certain conditions set forth in the Offering
Circular under the heading "The Exchange Offer--Conditions to the Exchange
Offer."
4. Any transfer taxes incident to the transfer of Notes from the tendering
holder to the Company will be paid by the Company, except as provided in the
Offering Circular and the instructions to the Note Consent and Letter of
Transmittal.
If you wish to have us tender any or all of the Notes held by us for your
account, please so instruct us by completing, executing and returning to us
the instruction form that follows.
INSTRUCTIONS REGARDING THE OFFERING CIRCULAR
WITH RESPECT TO THE 7 1/8% CONVERTIBLE
SUBORDINATED NOTES DUE OCTOBER 15, 2001
OF TRIKON TECHNOLOGIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Note Exchange Offer of Trikon
Technologies, Inc.
This will instruct you whether to tender the principal amount of Notes
indicated below held by you for the account of the undersigned pursuant to the
terms of and conditions set forth in the Offering Circular and the Note
Consent and Letter of Transmittal.
[_]Please tender the Notes held by you for my account.
[_]Please do not tender any Notes held by you for my account.
Date: , 1998
PLEASE SIGN HERE
_____________________________________________________________________________
Signature(s)
_____________________________________________________________________________
Please print name(s) here
_____________________________________________________________________________
Principal Amount of Notes to be Tendered*
_____________________________________________________________________________
Please type or print address
_____________________________________________________________________________
Area code and Telephone Number
_____________________________________________________________________________
Taxpayer Identification or Social Security Number
_____________________________________________________________________________
My Account Number With You
* Unless otherwise indicated, signature(s) hereon by beneficial owner(s) shall
constitute an instruction to the nominee to tender all Notes of such
beneficial owner(s).
<PAGE>
EXHIBIT (A)(5)
NOTICE OF GUARANTEED DELIVERY
FOR EXCHANGE OF 7 1/8% CONVERTIBLE SUBORDINATED NOTES
DUE OCTOBER 15, 2001
OF TRIKON TECHNOLOGIES, INC.
This Notice of Guaranteed Delivery or a form substantially equivalent hereto
must be used to accept Trikon Technologies, Inc.'s (the "Company") offer (the
"Note Exchange Offer") to exchange each $1,000 principal amount of the
Company's 7 1/8% Convertible Subordinated Notes due October 15, 2001 (the
"Notes") into 262.7339 shares of the Company's Common Stock, no par value per
share, 34.7826 shares of the Company's Series H Preferred Stock, $10 stated
amount per share, and .3393 of the Company's Series I Junior Participating
Preferred Stock, no par value per share (collectively, referred to as the
"Note Exchange Consideration"), if (a) certificates representing the Notes are
not immediately available, (b) the procedures for book-entry transfer cannot
be completed prior to the Expiration Date (as defined), or (c) time will not
permit the Notes and all other required documents to reach the Exchange Agent
prior to the Expiration Date. This form may be delivered by an Eligible
Institution by mail or hand delivery or transmitted, via facsimile, telegram
or telex to the Exchange Agent as set forth below. All capitalized terms used
herein but not otherwise defined herein shall have the meanings ascribed to
them in the Offering Circular dated April 14, 1998 of the Company (as the same
may be amended or supplemented from time to time, the "Offering Circular").
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MAY
11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH TIME
AND DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS OF
NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
TO:
U.S. TRUST COMPANY OF CALIFORNIA, N.A., EXCHANGE AGENT
By Mail via the
enclosed envelope:
By Overnight Courier or
Express Mail:
By Hand:
U.S. Trust Company of U.S. Trust Company of U.S. Trust Company of
California, N.A. California, N.A. California, N.A.
c/o United States Trust c/o United States Trust c/o United States Trust
Company of New York Company of New York Company of New York
P.O. Box 841, Peter 770 Broadway, 13th Floor 111 Broadway, Lower
Cooper Station New York, NY 10003 Level
New York, NY 10276-0841 Attn: Corporate Trust New York, NY 10006
Attn: Corporate Trust and Agency Services Attn: Corporate Trust
and Agency Services and Agency Services
By Facsimile:
Phone Number:
(212) 420-6155 (800) 225-2398
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OR TELEX, OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Note Consent and Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto, such signature
guarantee must appear in the applicable space provided in the signature box on
the Note Consent and Letter of Transmittal.
<PAGE>
The undersigned hereby tender(s) to Trikon Technologies, Inc. (the
"Company"), upon the terms and subject to the conditions set forth in the
Offering Circular and the Note Consent and Letter of Transmittal, receipt of
which is hereby acknowledged, the principal amount of Notes set forth below,
pursuant to the guaranteed delivery procedures set forth in the Offering
Circular under the heading "The Exchange Offer--Procedures for Tendering
Notes--Guaranteed Delivery."
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed
Delivery shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signature(s) of Registered Holder(s) or Date: ____________________________________________
Authorized Signatory: _____________________
Address: _________________________________________
Name(s) of Registered Holder(s): _____________________________________________________________
___________________________________________ Area Code and Telephone No.: _____________________
______________________________________________________________________________________________
Principal Amount of Notes Tendered:
If Notes will be delivered by book-entry transfer,
___________________________________________ check box below:
Certificate No(s). of Notes (if available): [_] The Depository Trust Company
___________________________________________ Trust Company Account No.: _______________________
</TABLE>
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Notes exactly as their name(s) appear(s) on the certificates
representing such Notes or on a security position listing as the owner(s) of
the Notes, or by person(s) authorized to become registered holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed
Delivery. If signature is by a trustee, guardian, attorney-in-fact, officer of
a corporation, executor, administrator, agent or other representative, such
person must provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):_____________________________________________________________________
Capacity: ___________________________________________________________________
Address(es): ________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE EXCHANGE
AGENT, TOGETHER WITH A PROPERLY COMPLETED AND VALIDLY EXECUTED NOTE CONSENT
AND LETTER OF TRANSMITTAL.
<PAGE>
Exhibit (A)(6)
SERIES G CONVERSION NOTICE AND LETTER OF TRANSMITTAL
TO CONVERT IN RESPECT OF
SERIES G PREFERRED STOCK OF
TRIKON TECHNOLOGIES, INC.
PURSUANT TO THE OFFERING CIRCULAR
DATED APRIL 14, 1998 OF
TRIKON TECHNOLOGIES, INC.
(THE "COMPANY")
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MAY
11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH TIME
AND DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS OF
SERIES G PREFERRED STOCK MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION
DATE.
TO:
U.S. TRUST COMPANY OF CALIFORNIA, N.A., EXCHANGE AGENT
By Mail via the By Overnight Courier or By Hand:
enclosed envelope: Express Mail:
U.S. Trust Company of
U.S. Trust Company of U.S. Trust Company of California, N.A.
California, N.A. California, N.A. c/o United States Trust
c/o United States Trust c/o United States Trust Company of New York
Company of New York Company of New York 111 Broadway, Lower
P.O. Box 841, Peter 770 Broadway, 13th Floor Level
Cooper Station New York, NY 10003 New York, NY 10006
New York, NY 10276-0841 Attn: Corporate Trust Attn: Corporate Trust
Attn: Corporate Trust and Agency Services and Agency Services
and Agency Services
By Facsimile: Phone Number:
(212) 420-6155 (800) 225-2398
DELIVERY OF THIS SERIES G CONVERSION NOTICE AND LETTER OF TRANSMITTAL TO AN
ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OR TELEX, OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The instructions accompanying this Series G Conversion Notice and Letter of
Transmittal should be read carefully before this Series G Conversion Notice
and Letter of Transmittal is completed. Except as otherwise provided herein,
all signatures on this Series G Conversion Notice and Letter of Transmittal
must be guaranteed in accordance with the procedures set forth herein. See
Instruction 1.
HOLDERS WHO WISH TO TENDER THEIR SERIES G PREFERRED STOCK MUST COMPLETE
COLUMNS (1) THROUGH (3) IN THE BOX HEREIN ENTITLED "DESCRIPTION OF SERIES G
PREFERRED STOCK TENDERED" AND SIGN IN THE APPROPRIATE BOX BELOW. IF ONLY THOSE
COLUMNS ARE COMPLETED, THE HOLDER WILL BE DEEMED TO HAVE TENDERED ALL THE
SERIES G PREFERRED STOCK, LISTED IN THE TABLE. IF A HOLDER WISHES TO TENDER
LESS THAN ALL OF SUCH SERIES G PREFERRED STOCK, COLUMN (4) MUST BE COMPLETED
IN FULL, AND SUCH HOLDER SHOULD REFER TO INSTRUCTION 5.
DESCRIPTION OF SERIES G PREFERRED STOCK TENDERED
(ATTACH SEPARATE SIGNED LIST IF NECESSARY)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NAMES(S) AND ADDRESS(ES) OF HOLDER(S) NUMBER OF SHARES
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE EVIDENCED BY NUMBER OF SHARES
APPEAR(S) ON SECURITIES) NUMBER(S) CERTIFICATE(S) TENDERED*
- ----------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* Unless otherwise specified, it will be assumed that the entire number of
shares represented by the Certificates described above is being tendered.
See Instruction 5.
<PAGE>
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE THE SERIES G EXCHANGE
CONSIDERATION PURSUANT TO THE SERIES G EXCHANGE OFFER MUST VALIDLY TENDER (AND
NOT WITHDRAW) THEIR SERIES G PREFERRED STOCK TO THE EXCHANGE AGENT PRIOR TO
THE EXPIRATION DATE.
This Series G Conversion Notice and Letter of Transmittal is to be used only
if Series G Preferred Stock of the Company are to be physically delivered to
the Exchange Agent pursuant to the procedures set forth in the Offering
Circular of the Company dated April 14, 1998 (as the same may be amended or
supplemented from time to time, the "Offering Circular") under the heading
"The Exchange Offer--Procedures for Tendering Series G Preferred Stock."
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
By execution hereof, the undersigned hereby acknowledges he has received and
reviewed the accompanying Offering Circular and this Series G Conversion
Notice and Letter of Transmittal relating to the Company's solicitation (the
"Series G Exchange Offer"), upon the terms and subject to the conditions set
forth therein, of each holder of its Series G Preferred Stock to convert each
share of Series G Preferred Stock into one share of Common Stock in exchange
for a conversion payment of (i) 1.1251 shares of Common Stock and (ii) .0027
shares of Series I Junior Participating Preferred Stock (collectively, the
"Conversion Payment" and together with the converted share the "Series G
Exchange Consideration").
Upon the terms and subject to the conditions of the Series G Exchange Offer,
the undersigned hereby tenders to the Company this Conversion Notice and
Letter of Transmittal and the certificates evidencing Series G Preferred Stock
indicated above. The conversion notice contained in this Conversion Notice and
Letter of Transmittal shall become effective upon the acceptance by the
Company of the Notes and Warrants validly tendered for exchange in the Note
Exchange Offer and the Warrant Exchange Offer (each as defined in the Offering
Circular). Upon the acceptance by the Company of such Notes and Warrants, the
conversion notice contained herein shall become effective, causing each
tendered share of Series G Preferred Stock to be converted into one share of
Common Stock and the undersigned to become entitled to receive the Conversion
Payment. The undersigned understands that the obligation of the Company to
consummate the Series G Exchange Offer is subject to several conditions as set
forth in the Offering Circular under "The Exchange Offer--Conditions to the
Exchange Offer."
The undersigned acknowledges that all the foregoing conditions are for the
sole benefit of the Company and may be asserted by the Company regardless of
the circumstances giving rise to such conditions and may be waived by the
Company, in whole or in part, at any time and from time to time, in the sole
discretion of the Company. The failure by the Company at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right,
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time. If any of the conditions set forth in this
section shall not be satisfied, the Company may, subject to applicable law,
(i) terminate the Series G Exchange Offer and return all Series G Preferred
Stock tendered pursuant to the Series G Exchange Offer to tendering holders;
(ii) extend the Series G Exchange Offer and retain all tendered Series G
Preferred Stock until the Expiration Date for the extended Series G Exchange
Offer; (iii) amend the terms of the Series G Exchange Offer or modify the
Consent Payment to be provided by the Company pursuant to the Series G
Exchange Offer; or (iv) waive the unsatisfied conditions with respect to the
Series G Exchange Offer and accept all Series G Preferred Stock tendered
pursuant to the Series G Exchange Offer. Notwithstanding anything to the
contrary, the Company may extend the period of the Series G Exchange Offer in
its sole discretion.
In any such event, the tendered Series G Preferred Stock not accepted for
conversion will be returned to the undersigned without cost to the undersigned
as soon as practicable following the date on which the Series G Exchange Offer
is terminated or expires without any Series G Preferred Stock being converted
thereunder, at the address shown below the undersigned's signature(s) unless
otherwise indicated under "Special Payment Instructions" below.
Subject to, and effective upon, the acceptance by the Company of the number
of Series G Preferred Stock tendered hereby for conversion pursuant to the
terms of the Series G Exchange Offer, the undersigned hereby irrevocably
tenders to the Company for conversion, all right, title and interest in and
to, and sells, assigns and transfers to, or upon the order of, the Company,
any and all claims in respect of or arising or having arisen as a result of
the undersigned's status as a holder of, all Series G Preferred Stock tendered
hereby, waives any and all rights with respect to the Series G Preferred Stock
tendered hereby (including, without limitation, the undersigned's waiver of
any existing or past defaults and their consequences with respect to the
Series G Preferred Stock) and releases and discharges any obligor or parent of
any obligor of the Series G Preferred Stock from any and all claims the
undersigned may have now, or may have in the future, arising out of or related
to the Series G Preferred Stock, including, without limitation, any claims
that the undersigned is entitled to receive additional dividend payments with
respect to the Series G Preferred Stock or to participate in any redemption or
defeasance of the Series G Preferred Stock. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent (with full knowledge that the
Exchange Agent also acts as agent of the Company) as the true and lawful agent
and attorney-in-fact of
3
<PAGE>
the undersigned with respect to such Series G Preferred Stock, with full power
of substitution (such power-of-attorney being deemed to be an irrevocable
power coupled with an interest) to (a) deliver such Series G Preferred Stock
and to receive on behalf of the undersigned in exchange for the shares
represented thereby, any Certificates for the Company's shares of Common Stock
and the Company's shares of Series I Preferred Stock issuable pursuant to the
Series G Exchange Offer to be forwarded to the undersigned, (b) present such
Series G Preferred Stock for transfer on the books of the Company, and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Series G Preferred Stock, all in accordance with the terms of the
Series G Exchange Offer.
The undersigned hereby represents and warrants that (i) the undersigned has
full power and authority to tender and convert the Series G Preferred Stock
tendered hereby. The undersigned, upon request, will execute and deliver all
additional documents deemed by the Exchange Agent or the Company to be
necessary or desirable to complete the conversion of the Series G Preferred
Stock tendered hereby.
The undersigned understands that tenders of Series G Preferred Stock
pursuant to any of the procedures described in the Offering Circular under the
caption "The Exchange Offer--Procedures for Tendering Series G Preferred
Stock" and in the instructions hereto will constitute the undersigned's
acceptance of the terms and conditions of the Series G Exchange Offer. The
Company's acceptance of such Series G Preferred Stock for conversion pursuant
to the terms of the Series G Exchange Offer will constitute a binding
agreement between the undersigned and the Company upon the terms and subject
to the conditions of the Series G Exchange Offer. The undersigned has read and
agrees to all terms and conditions of the Series G Exchange Offer. Delivery of
the enclosed Series G Preferred Stock shall be effected, and risk of loss and
title of such Series G Preferred Stock shall pass, only upon proper delivery
thereof to the Exchange Agent.
All authority conferred or agreed to be conferred by this Series G
Conversion Notice and Letter of Transmittal shall survive the death or
incapacity of the undersigned and every obligation of the undersigned under
this Series G Conversion Notice and Letter of Transmittal shall be binding
upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives. SERIES G PREFERRED STOCK TENDERED PURSUANT TO THE SERIES G
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. See
the information set forth under the heading "The Exchange Offer--Withdrawal of
Tenders" in the Offering Circular.
4
<PAGE>
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the Series G Exchange Consideration with respect to
Series G Preferred Stock accepted for conversion, and return any certificates
for Series G Preferred Stock not tendered or not accepted for conversion, in the
name(s) of the registered holder(s) appearing in the box entitled "Description
of Series G Preferred Stock Tendered". Similarly, unless otherwise indicated
herein in the box entitled "Special Delivery Instructions," please deliver the
Series G Exchange Consideration with respect to Series G Preferred Stock
accepted for conversion, together with any certificates for Series G Preferred
Stock not tendered or not accepted for conversion (and accompanying documents,
as appropriate) to the address(es) of the registered holder(s) appearing in the
box entitled "Description of Series G Preferred Stock Tendered." If both the
"Special Payment Instructions" box and the "Special Delivery Instructions" box
are completed, please issue the Series G Exchange Consideration with respect to
any Series G Preferred Stock accepted for conversion, and return any
certificates for Series G Preferred Stock not tendered or not accepted for
conversion, in the name(s) of, and deliver such Series G Exchange Consideration
and any such certificates to, the person(s) at the address(es) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Payment Instructions" box or "Special Delivery Instructions" box
provisions of this Series G Conversion Notice and Letter of Transmittal to
transfer any Series G Preferred Stock from the name of the registered holder(s)
thereof if the Company does not accept any of such Series G Preferred Stock for
conversion pursuant to the terms of the Series G Exchange Offer.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8) (SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if the To be completed ONLY if
certificates for Series G certificates for Series G
Preferred Stock not tendered or Preferred Stock not tendered or
not accepted for conversion, not accepted for conversion,
and/or the certificates and/or the certificates
representing the Series G representing the Series G
Exchange Consideration, are to be Exchange Consideration, are to be
issued in the name of someone sent to someone other than the
other than the undersigned. undersigned, or to the
undersigned at an address other
than that shown above.
Issue: [_]Series G Preferred Stock Deliver: [_]Series G Preferred Stock
[_]Series G Exchange [_]Series G Exchange
Consideration to: Consideration to:
Name: ____________________________ Name: ____________________________
(PLEASE PRINT) (PLEASE PRINT)
Address: _________________________ Address: _________________________
__________________________________ __________________________________
(ZIP CODE) (ZIP CODE)
PLEASE COMPLETE THE SUBSTITUTE PLEASE COMPLETE THE SUBSTITUTE
FORM W-9 BELOW FORM W-9 BELOW
5
<PAGE>
PLEASE SIGN HERE
(To be completed by all tendering holders of Series G Preferred Stock
regardless of whether Series G Preferred Stock are being physically
delivered herewith)
X __________________________________________________________________________
X __________________________________________________________________________
SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY
DATE , 1998
Must be signed by the registered holder(s) of the Series G Preferred Stock
tendered hereby exactly as their name(s) appear(s) on the certificate(s)
for such Series G Preferred Stock, or by person(s) authorized to become
registered holder(s) by endorsements and documents transmitted with this
Series G Conversion Notice and Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative
capacity, please provide the following information and see Instruction 6.
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ______________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone Number _____________________________________________
Tax Identification or Social Security No. __________________________________
SIGNATURE GUARANTEE
(SEE INSTRUCTIONS 1 AND 6 BELOW)
____________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
____________________________________________________________________________
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
ELIGIBLE INSTITUTION)
____________________________________________________________________________
(AUTHORIZED SIGNATURE)
____________________________________________________________________________
(PRINTED NAME)
____________________________________________________________________________
(TITLE)
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE SERIES G EXCHANGE OFFER
1. Guarantee of Signatures. All signatures on this Series G Conversion
Notice and Letter of Transmittal must be guaranteed by a firm which is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., by a commercial bank or trust company
having an office or correspondent in the United States or by any other
"Eligible Guarantor Institution" as such term is defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended (each of the foregoing being
referred to herein as an "Eligible Institution") unless (a) this Series G
Conversion Notice and Letter of Transmittal is signed by the registered holder
of the Series G Preferred Stock tendered herewith and neither the "Special
Payment Instructions" box nor the "Special Delivery Instructions" box of this
Series G Conversion Notice and Letter of Transmittal has been completed or (b)
such Series G Preferred Stock is tendered for the account of an Eligible
Institution. See Instruction 6.
2. Delivery of Series G Conversion Notice and Letter of Transmittal and
Series G Preferred Stock. This Series G Conversion Notice and Letter of
Transmittal is to be used only if Series G Preferred Stock tendered hereby is
to be physically delivered to the Exchange Agent. All physically tendered
Series G Preferred Stock, together with a properly completed and validly
executed Series G Conversion Notice and Letter of Transmittal (or facsimile or
electronic copy thereof or an electronic agreement to comply with the terms
thereof) and any other documents required by this Series G Conversion Notice
and Letter of Transmittal, must be received by the Exchange Agent at one of
its addresses set forth on the cover page hereof prior to the Expiration Date.
If Series G Preferred Stock are forwarded to the Exchange Agent in multiple
deliveries, a properly completed and validly executed Series G Conversion
Notice and Letter of Transmittal must accompany each such delivery.
THE METHOD OF DELIVERY OF THIS SERIES G CONVERSION NOTICE AND LETTER OF
TRANSMITTAL, SERIES G PREFERRED STOCK AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, THE MAILING SHOULD
BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE, TO PERMIT DELIVERY TO
THE EXCHANGE AGENT PRIOR TO SUCH DATE. NO ALTERNATIVE, CONDITIONAL OR
CONTINGENT TENDERS OF SERIES G PREFERRED STOCK WILL BE ACCEPTED. BY EXECUTION
OF THIS SERIES G CONVERSION NOTICE AND LETTER OF TRANSMITTAL (OR A FACSIMILE
HEREOF), ALL TENDERING HOLDERS WAIVE ANY RIGHT TO RECEIVE ANY NOTICE OF THE
ACCEPTANCE OF THEIR SERIES G PREFERRED STOCK FOR PAYMENT.
3. Inadequate Space. If the space provided herein under "Description of
Series G Preferred Stock Tendered" is inadequate, the certificate numbers of
the Series G Preferred Stock and the Series G Preferred Stock tendered should
be listed on a separate schedule and attached hereto.
4. Withdrawal of Tenders. Tenders of Series G Preferred Stock may be
withdrawn at any time until the Expiration Date. Thereafter, such tenders are
irrevocable, except that they may be withdrawn after the expiration of 40
business days from the commencement of the Exchange Offer unless accepted for
conversion prior to that date.
Holders who wish to exercise their right of withdrawal with respect to the
Series G Exchange Offer must give written notice of withdrawal, delivered by
mail or hand delivery or facsimile transmission, to the Exchange Agent at one
of its addresses set forth on the cover page of this Series G Conversion
Notice and Letter of Transmittal prior to the Expiration Date or at such other
time as otherwise provided for herein. In order to be effective, a notice of
withdrawal must specify the name of the person who deposited the Series G
Preferred Stock to be withdrawn (the "Depositor"), the name in which the
Series G Preferred Stock are registered, if different from that of the
Depositor, and the number of shares of the Series G Preferred Stock to be
withdrawn prior to the physical release of the certificates to be withdrawn.
The notice of withdrawal must be signed by the registered holder of such
Series G Preferred Stock in the same manner as the applicable Series G
Conversion Notice and Letter of Transmittal (including any required signature
guarantees), or be accompanied by evidence satisfactory to the Company that
7
<PAGE>
the person withdrawing the tender has succeeded to the beneficial ownership of
such Series G Preferred Stock. Withdrawals of tenders of Series G Preferred
Stock may not be rescinded, and any Series G Preferred Stock withdrawn will be
deemed not validly tendered thereafter for purposes of the Series G Exchange
Offer. However, properly withdrawn Series G Preferred Stock may be tendered
again at any time prior to the Expiration Date by following the procedures for
tendering not previously tendered Series G Preferred Stock described elsewhere
herein.
If the Company is delayed in its acceptance for conversion and payment for
any Series G Preferred Stock or is unable to accept for conversion or convert
any Series G Preferred Stock pursuant to the Series G Exchange Offer for any
reason, then, without prejudice to the Company's rights hereunder, tendered
Series G Preferred Stock may be retained by the Exchange Agent on behalf of
the Company and may not be withdrawn, except as otherwise permitted hereby.
5. Partial Tenders. The aggregate number of Series G Preferred Stock
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If tenders of Series G Preferred Stock are made with
respect to less than the entire principal number of Series G Preferred Stock
delivered herewith, certificate(s) for the Series G Preferred Stock not
tendered will be issued and sent to the registered holder, unless otherwise
specified in the "Special Payment Instructions" or "Special Delivery
Instructions" boxes in this Series G Conversion Notice and Letter of
Transmittal.
6. Signatures on Series G Conversion Notice and Letter of Transmittal; Stock
Powers and Endorsements. If this Series G Conversion Notice and Letter of
Transmittal is signed by the registered holder(s) of the Series G Preferred
Stock tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates representing such Series G Preferred
Stock without alteration, enlargement or any other change whatsoever.
If any Series G Preferred Stock tendered hereby is owned of record by two or
more persons, all such persons must sign this Series G Conversion Notice and
Letter of Transmittal.
If any Series G Preferred Stock tendered hereby are registered in the names
of different holders, it will be necessary to complete, sign and submit as
many separate Series G Conversion Notice and Letters of Transmittal, and any
necessary accompanying documents, as there are different registrations of such
Series G Preferred Stock.
If this Series G Conversion Notice and Letter of Transmittal is signed by
the registered holder of Series G Preferred Stock tendered hereby, no
endorsements of such Series G Preferred Stock or separate stock powers are
required, unless the Series G Exchange Consideration is to be issued to, or
Series G Preferred Stock not tendered or not accepted for conversion are to be
issued in the name of, a person other than the registered holder(s), in which
case the Series G Preferred Stock tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Series G Preferred
Stock. Signatures on such Series G Preferred Stock and stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If this Series G Conversion Notice and Letter of Transmittal is signed by a
person other than the registered holder(s) of the Series G Preferred Stock
tendered hereby, the Series G Preferred Stock must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of
the registered holder(s) appear(s) on the certificates representing such
Series G Preferred Stock. Signatures on such Series G Preferred Stock and
stock powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Series G Conversion Notice and Letter of Transmittal or any Series G
Preferred Stock or stock powers are signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing, and proper evidence satisfactory to the Company of such
person's authority so to act must be submitted with this Series G Conversion
Notice and Letter of Transmittal.
7. Transfer Taxes. Except as otherwise provided in this Instruction 7, the
Company will pay all transfer taxes with respect to the delivery and
conversion of Series G Preferred Stock pursuant to the Series G Exchange
Offer. If, however, issuance of the Series G Exchange Consideration is to be
made to, or Series G Preferred Stock not tendered or not accepted
8
<PAGE>
for conversion are to be issued in the name of, a person other than the
registered holder(s), the amount of any transfer taxes (whether imposed on the
registered holder(s), such other person or otherwise) payable on account of
the transfer to such other person will be deducted from the Series G Exchange
Consideration unless evidence satisfactory to the Company of the payment of
such taxes, or exemption therefrom, is submitted. Except as provided in this
Instruction 7, it will not be necessary for transfer tax stamps to be affixed
to the Series G Preferred Stock tendered hereby.
8. Special Payment and Delivery Instructions. If the Series G Exchange
Consideration with respect to any Series G Preferred Stock tendered hereby is
to be issued, or Series G Preferred Stock not tendered or not accepted for
conversion are to be issued, in the name of a person other than the person(s)
signing this Series G Conversion Notice and Letter of Transmittal or to the
person(s) signing this Series G Conversion Notice and Letter of Transmittal
but at an address other than that shown in the box entitled "Description of
Series G Preferred Stock Tendered," the appropriate boxes in this Series G
Conversion Notice and Letter of Transmittal must be completed.
9. Taxpayer Identification Number. Each tendering holder is required to
provide the Exchange Agent with the holder's correct taxpayer identification
number ("TIN"), generally, the holders' social security or federal employer
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, and to certify whether such person is
subject to backup withholding of federal income tax.
A holder must cross out Item (Y) of Part 3 in the Certification box of
Substitute Form W-9 if such holder is subject to backup withholding. Failure
to provide the information on the Substitute Form W-9 may subject the
tendering holder to 31% federal income tax backup withholding on the
reportable payments made to the holder or other payee with respect to Series G
Preferred Stock converted pursuant to the Series G Exchange Offer. The box in
Part 1(b) of the form should be checked if the tendering holder has not been
issued a TIN and has applied for a TIN or intends to apply for a TIN in the
near future. If the box in Part 1(b) is checked and the Exchange Agent is not
provided with a TIN within 60 days, thereafter the Exchange Agent will hold
31% of all reportable payments until a TIN is provided to the Exchange Agent.
10. Conflicts. In the event of any conflict between the terms of the
Offering Circular and the terms of this Series G Conversion Notice and Letter
of Transmittal, the terms of the Offering Circular will control.
11. Mutilated, Lost, Stolen or Destroyed Series G Preferred Stock. Any
holder of Series G Preferred Stock, whose Series G Preferred Stock have been
mutilated, lost, stolen or destroyed, should contact the Exchange Agent at the
address and telephone number indicated on the back cover page for further
instructions.
12. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to the Exchange Agent at its address set forth below.
Additional copies of the Offering Circular, this Series G Conversion Notice
and Letter of Transmittal and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be obtained from the Exchange
Agent.
13. Determination of Validity. All questions as to the form of all
documents, the validity (including time of receipt) and acceptance of tenders
of the Series G Preferred Stock will be determined by the Company, in its sole
discretion, the determination of which shall be final and binding.
Alternative, conditional or contingent tenders of Series G Preferred Stock
will not be considered valid. The Company reserves the absolute right to
reject any or all tenders of Series G Preferred Stock that are not in proper
form or the acceptance of which, in the Company's opinion, would be unlawful.
The Company also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Series G Preferred Stock. If the Company
waives its right to reject a defective tender of Series G Preferred Stock, the
holder will be entitled to the Series G Exchange Consideration. The Company's
interpretation of the terms and conditions of the Series G Exchange Offer
(including the instructions in the Series G Conversion Notice and Letter of
Transmittal) will be final and binding. Any defect or irregularity in
connection with tenders of Series G Preferred Stock must be cured within such
time as the Company determines, unless waived by the Company. Tenders of
Series G Preferred Stock shall not be deemed to have been made until all
defects and irregularities have been waived by the Company or cured. None of
the Company, the Exchange Agent or any other person will be under any duty to
give notice of any defects or irregularities in tenders of Series G Preferred
Stock, or will incur any liability to holders for failure to give any such
notice.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a holder whose tendered Series G Preferred
Stock are accepted for conversion is required by law to provide the Exchange
Agent (as payer) with such holder's correct TIN on Substitute Form W-9 below.
If such holder is an individual, the TIN is his or her social security number.
If the Exchange Agent is not provided with the correct TIN, a $50 penalty may
be imposed by the Internal Revenue Service, and payments of Series G Exchange
Consideration may be subject to backup withholding.
Certain holders (including, among others, corporations) are not subject to
these backup withholdings and reporting requirements. Exempt holders should
indicate their exempt status on Substitute Form W-9. In order for a foreign
individual to qualify as an exempt recipient, such individual must submit a
statement, signed under penalties of perjury, attesting to such individual's
exempt status. Forms of such statements can be obtained from the Exchange
Agent. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any reportable payments made to the holder or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal
income tax liability of persons subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on reportable payments made with respect to
Series G Preferred Stock accepted for conversion pursuant to the Series G
Exchange Offer, the holder is required to notify the Exchange Agent of such
holder's correct TIN by completing the form below, certifying that the TIN
provided on the Substitute From W-9 is correct (or that such holder is
awaiting a TIN) and that (a) such holder is exempt from backup withholding,
(b) such holder has not been notified by the Internal Revenue Service that he
is subject to backup withholding as a result of a failure to report all
interest or dividends or (c) the Internal Revenue Service has notified such
holder that such holder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the holder of the Series
G Preferred Stock tendered hereby. If the Series G Preferred Stock are held in
more than one name or are not held in the name of the actual owner, consult
the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for additional guidance on which number to report.
10
<PAGE>
PAYOR'S NAME: U.S. TRUST COMPANY OF CALIFORNIA, N.A.
- -------------------------------------------------------------------------------
PART 1(A)--PLEASE PROVIDE
YOUR TIN IN THE BOX AT ----------------------
RIGHT AND CERTIFY BY Social Security Number
SIGNING AND DATING BELOW. OR
SUBSTITUTE
FORM W-9
DEPARTMENT OF
THE TREASURY PART 1(B)--PLEASE CHECK THE ----------------------
INTERNAL BOX AT THE RIGHT IF YOU Employer Identification
REVENUE HAVE APPLIED FOR, AND ARE Number(s)
SERVICE AWAITING RECEIPT OF, YOUR
TIN [_]
--------------------------------------------------------
PAYOR'S REQUEST PART 2--FOR PAYEES EXEMPT FROM
FOR TAXPAYER BACKUP WITHHOLDING PLEASE WRITE
IDENTIFICATION "EXEMPT" HERE (SEE
INSTRUCTIONS)
NUMBER ("TIN") PART 3--CERTIFICATION--UNDER THE PENALTIES OF
PERJURY, I CERTIFY THAT:
-------------------
--------------------------------------------------------
(X) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued for me),
and (Y) I am not subject to backup withholding
because: (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
--------------------------------------------------------
SIGNATURE _______________________ DATE ______________
- -------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (Y) of Part 3 above if
you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject
to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out Item (Y)
of Part 3. (Also see Certification under Specific Instructions in the
enclosed Guidelines.)
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
1(B) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE
AWAITING RECEIPT OF, YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and that I mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
(or I intend to mail or deliver an application in the near future). I
understand that if I do not provide a taxpayer identification number to the
payor, 31 percent of all payments made to me pursuant to this offer shall
be retained until I provide a tax identification number to the payor and
that, if I do not provide my taxpayer identification number within sixty
(60) days, such retained amounts shall be remitted to the IRS as backup
withholding and 31 percent of all reportable payments made to me thereafter
will be withheld and remitted to the IRS until I provide a taxpayer
identification number.
SIGNATURE ___________________________________________________ DATE
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31 PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
The Exchange Agent for the Series G Exchange Offer is:
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, NY 10276-0841
Bankers and Brokers and Others Call: (800) 225-2398
<PAGE>
EXHIBIT (A)(7)
WARRANT LETTER OF TRANSMITTAL
TO EXCHANGE
WARRANTS TO PURCHASE COMMON STOCK (THE "WARRANTS") OF
TRIKON TECHNOLOGIES, INC.
PURSUANT TO THE OFFERING CIRCULAR
DATED APRIL 14, 1998 OF
TRIKON TECHNOLOGIES, INC.
(THE "COMPANY")
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MAY
11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH TIME
AND DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). TENDERS OF
WARRANTS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
TO:
U.S. TRUST COMPANY OF CALIFORNIA, N.A., EXCHANGE AGENT
By Mail via the By Overnight Courier or By Hand:
enclosed envelope: Express Mail:
U.S. Trust Company of
U.S. Trust Company of U.S. Trust Company of California, N.A.
California, N.A. California, N.A. c/o United States Trust
c/o United States Trust c/o United States Trust Company of New York
Company of New York Company of New York 111 Broadway, Lower
P.O. Box 841, Peter 770 Broadway, 13th Floor Level
Cooper Station New York, NY 10003 New York, NY 10006
New York, NY 10276-0841 Attn: Corporate Trust Attn: Corporate Trust
Attn: Corporate Trust and Agency Services and Agency Services
and Agency Services
By Facsimile: Phone Number:
(212) 420-6155 (800) 225-2398
DELIVERY OF THIS WARRANT LETTER OF TRANSMITTAL TO AN ADDRESS, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OR TELEX, OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The instructions accompanying this Warrant Letter of Transmittal should be
read carefully before this Warrant Letter of Transmittal is completed. Except
as otherwise provided herein, all signatures on this Warrant Letter of
Transmittal must be guaranteed in accordance with the procedures set forth
herein. See Instruction 1.
HOLDERS WHO WISH TO TENDER THEIR WARRANTS MUST COMPLETE COLUMNS (1) THROUGH
(3) IN THE BOX HEREIN ENTITLED "DESCRIPTION OF WARRANTS TENDERED" AND SIGN IN
THE APPROPRIATE BOX BELOW. IF ONLY THOSE COLUMNS ARE COMPLETED, THE HOLDER
WILL BE DEEMED TO HAVE TENDERED ALL THE WARRANTS, LISTED IN THE TABLE. IF A
HOLDER WISHES TO TENDER LESS THAN ALL OF SUCH WARRANTS, COLUMN (4) MUST BE
COMPLETED IN FULL, AND SUCH HOLDER SHOULD REFER TO INSTRUCTION 5.
DESCRIPTION OF WARRANTS TENDERED
(ATTACH SEPARATE SIGNED LIST IF NECESSARY)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NAMES(S) AND ADDRESS(ES) OF HOLDER(S) NUMBER OF SHARES
(PLEASE FILL IN, IF BLANK, EXACTLY AS WARRANT EVIDENCED NUMBER OF SHARES
NAME(S) APPEAR(S) ON WARRANTS) NUMBER(S) BY WARRANT(S) TENDERED*
- ----------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* Unless otherwise specified, it will be assumed that the entire number of
shares represented by the Warrants described above is being tendered. See
Instruction 5. Only holders may validly tender their Warrants pursuant to
the Warrant Exchange Offer, and only holders are entitled to receive the
Warrant Exchange Consideration (if tendered and not subsequently
withdrawn on or prior to the Expiration Date) with respect to their
Warrants.
<PAGE>
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE THE WARRANT EXCHANGE
CONSIDERATION PURSUANT TO THE WARRANT EXCHANGE OFFER MUST VALIDLY TENDER (AND
NOT WITHDRAW) THEIR WARRANTS TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION
DATE.
This Warrant Letter of Transmittal is to be used only if Warrants of the
Company are to be physically delivered to the Exchange Agent pursuant to the
procedures set forth in the Offering Circular of the Company dated April 14,
1998 (as the same may be amended or supplemented from time to time, the
"Offering Circular") under the heading "The Exchange Offer--Procedures for
Tendering Warrants."
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
By execution hereof, the undersigned hereby acknowledges he has received and
reviewed the accompanying Offering Circular and this Warrant Letter of
Transmittal relating to the Company's offer to exchange (the "Warrant Exchange
Offer"), upon the terms and subject to the conditions set forth therein, each
Warrant to purchase Common Stock issued in connection with the issuance of the
Series G Preferred Stock for one share of Common Stock (the "Warrant Exchange
Consideration").
Upon the terms and subject to the conditions of the Warrant Exchange Offer,
the undersigned hereby tenders to the Company the Warrants indicated above and
elects to have such Warrants converted, upon consummation of the Warrant
Exchange Offer, into the right to receive the Company's Common Stock. The
undersigned understands that the obligation of the Company to consummate the
Warrant Exchange Offer is subject to several conditions as set forth in the
Offering Circular under "The Exchange Offer--Conditions to the Exchange
Offer."
The undersigned acknowledges that all the foregoing conditions are for the
sole benefit of the Company and may be asserted by the Company regardless of
the circumstances giving rise to such conditions and may be waived by the
Company, in whole or in part, at any time and from time to time, in the sole
discretion of the Company. The failure by the Company at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right,
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time. If any of the conditions set forth in this
section shall not be satisfied, the Company may, subject to applicable law,
(i) terminate the Warrant Exchange Offer and return all Warrants tendered
pursuant to the Warrant Exchange Offer to tendering holders; (ii) extend the
Warrant Exchange Offer and retain all tendered Warrants until the Expiration
Date for the extended Warrant Exchange Offer; (iii) amend the terms of the
Warrant Exchange Offer or modify the consideration to be provided by the
Company pursuant to the Warrant Exchange Offer; or (iv) waive the unsatisfied
conditions with respect to the Warrant Exchange Offer and accept all Warrants
tendered pursuant to the Warrant Exchange Offer. Notwithstanding anything to
the contrary, the Company may extend the period of the Warrant Exchange Offer
in its sole discretion.
In any such event, the tendered Warrants not accepted for exchange will be
returned to the undersigned without cost to the undersigned as soon as
practicable following the date on which the Warrant Exchange Offer is
terminated or expires without any Warrants being purchased thereunder, at the
address shown below the undersigned's signature(s) unless otherwise indicated
under "Special Payment Instructions" below.
Subject to, and effective upon, the acceptance by the Company of the
Warrants tendered hereby for exchange pursuant to the terms of the Warrant
Exchange Offer, the undersigned hereby irrevocably sells, assigns and
transfers to, or upon the order of, the Company, all right, title and interest
in and to, and any and all claims in respect of or arising or having arisen as
a result of the undersigned's status as a holder of, all Warrants tendered
hereby, waives any and all rights with respect to the Warrants tendered hereby
and releases and discharges any obligor or parent of any obligor of the
Warrants from any and all claims the undersigned may have now, or may have in
the future, arising out of or related to the Warrants. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent (with full knowledge
that the Exchange Agent also acts as agent of the Company) as the true and
lawful agent and attorney-in-fact of the undersigned with respect to such
Warrants, with full power of substitution (such power-of-attorney being deemed
to be an irrevocable power coupled with an interest) to (a) deliver such
Warrants and to receive on behalf of the undersigned in exchange for the
shares represented thereby, any Certificates for the Company's shares of
Common Stock issuable pursuant to the Warrant Exchange Offer to be forwarded
to the undersigned, (b) present such Warrants for transfer on the books of the
Company, and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Warrants, all in accordance with the terms of the
Warrant Exchange Offer.
The undersigned hereby represents and warrants that (i) the undersigned has
full power and authority to tender, sell, assign and transfer the Warrants
tendered hereby, and that when such Warrants are accepted for exchange by the
Company, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges
3
<PAGE>
and encumbrances and that none of such Warrants will be subject to any adverse
claim or right; (ii) the undersigned owns the Warrants being tendered hereby
and is entitled to tender such Warrants as contemplated by the Warrant
Exchange Offer, all within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (iii) the tender of
such Warrants complies with Rule 14e-4. The undersigned, upon request, will
execute and deliver all additional documents deemed by the Exchange Agent or
the Company to be necessary or desirable to complete the sale, assignment and
transfer of the Warrants tendered hereby.
The undersigned understands that tenders of Warrants pursuant to any of the
procedures described in the Offering Circular under the caption "The Exchange
Offer--Procedures for Tendering Warrants" and in the instructions hereto will
constitute the undersigned's acceptance of the terms and conditions of the
Warrant Exchange Offer. The Company's acceptance of such Warrants for exchange
pursuant to the terms of the Warrant Exchange Offer will constitute a binding
agreement between the undersigned and the Company upon the terms and subject
to the conditions of the Warrant Exchange Offer. The undersigned has read and
agrees to all terms and conditions of the Warrant Exchange Offer. Delivery of
the enclosed Warrants shall be effected, and risk of loss and title of such
Warrants shall pass, only upon proper delivery thereof to the Exchange Agent.
All authority conferred or agreed to be conferred by this Warrant Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Warrant Letter of Transmittal shall
be binding upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives. WARRANTS TENDERED PURSUANT TO THE WARRANT EXCHANGE OFFER MAY
BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE. See the information set
forth under the heading "The Exchange Offer--Withdrawal of Tenders" in the
Offering Circular.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the Warrant Exchange Consideration with respect to
Warrants accepted for exchange, and return any Warrants not tendered or not
accepted for exchange, in the name(s) of the registered holder(s) appearing in
the box entitled "Description of Warrants Tendered". Similarly, unless
otherwise indicated herein in the box entitled "Special Delivery
Instructions," please deliver the Warrant Exchange Consideration with respect
to Warrants accepted for exchange, together with any Warrants not tendered or
not accepted for exchange (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing in the box entitled
"Description of Warrants Tendered." If both the "Special Payment Instructions"
box and the "Special Delivery Instructions" box are completed, please issue
the Warrant Exchange Consideration with respect to any Warrant accepted for
exchange, and return any Warrants not tendered or not accepted for exchange,
in the name(s) of, and deliver such Warrant Exchange Consideration and any
such certificates to, the person(s) at the address(es) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Payment Instructions" box or "Special Delivery Instructions" box
provisions of this Warrant Letter of Transmittal to transfer any Warrants from
the name of the registered holder(s) thereof if the Company does not accept
any of such Warrants for exchange pursuant to the terms of the Warrant
Exchange Offer.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8) (SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if To be completed ONLY if
Warrants not tendered or not Warrants not tendered or not
accepted for exchange, and/or the accepted for exchange, and/or the
certificates representing the certificates representing the
Warrant Exchange Consideration Warrant Exchange Consideration
are to be issued in the name of are to be sent to someone other
someone other than the than the undersigned, or to the
undersigned. undersigned at an address other
than that shown above.
Issue: [_]Warrants
[_]Warrant Exchange Consideration Deliver: [_]Warrants
to: [_]Warrant Exchange
Consideration to:
Name:_____________________________ Name:_____________________________
(PLEASE PRINT) (PLEASE PRINT)
Address:__________________________ Address:__________________________
__________________________________ __________________________________
(ZIP CODE) (ZIP CODE)
PLEASE COMPLETE THE SUBSTITUTE PLEASE COMPLETE THE SUBSTITUTE
FORM W-9 BELOW FORM W-9 BELOW
5
<PAGE>
PLEASE SIGN HERE
(To be completed by all tendering holders of Warrants
regardless of whether Warrants are being physically delivered herewith)
X __________________________________________________________________________
X __________________________________________________________________________
SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY
DATE , 1998
Must be signed by the registered holder(s) of the Warrants tendered hereby
exactly as their name(s) appear(s) on such Warrants, or by person(s)
authorized to become registered holder(s) by endorsements and documents
transmitted with this Warrant Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative
capacity, please provide the following information and see Instruction 6.
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title) ______________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone Number _____________________________________________
Tax Identification or Social Security No. __________________________________
SIGNATURE GUARANTEE
(SEE INSTRUCTIONS 1 AND 6 BELOW)
____________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
____________________________________________________________________________
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
ELIGIBLE INSTITUTION)
____________________________________________________________________________
(AUTHORIZED SIGNATURE)
____________________________________________________________________________
(PRINTED NAME)
____________________________________________________________________________
(TITLE)
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE WARRANT EXCHANGE OFFER
1. Guarantee of Signatures. All signatures on this Warrant Letter of
Transmittal must be guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., by a commercial bank or trust company having an office or
correspondent in the United States or by any other "Eligible Guarantor
Institution" as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (each of the foregoing being registered
referred to herein as an "Eligible Institution") unless (a) this Warrant
Letter of Transmittal is signed by the holder of the Warrants tendered
herewith and neither the "Special Payment Instructions" box nor the "Special
Delivery Instructions" box of this Warrant Letter of Transmittal has been
completed or (b) such Warrants are tendered for the account of an Eligible
Institution. See Instruction 6.
2. Delivery of Warrant Letter of Transmittal and Warrants. This Warrant
Letter of Transmittal is to be used only if Warrants tendered hereby are to be
physically delivered to the Exchange Agent. All physically tendered Warrants,
together with a properly completed and validly executed Warrant Letter of
Transmittal (or facsimile or electronic copy thereof or an electronic
agreement to comply with the terms thereof) and any other documents required
by this Warrant Letter of Transmittal, must be received by the Exchange Agent
at one of its addresses set forth on the cover page hereof prior to the
Expiration Date. If Warrants are forwarded to the Exchange Agent in multiple
deliveries, a properly completed and validly executed Warrant Letter of
Transmittal must accompany each such delivery.
THE METHOD OF DELIVERY OF THIS WARRANT LETTER OF TRANSMITTAL, WARRANTS AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE TENDERING HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, THE MAILING SHOULD BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE, TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH
DATE. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF WARRANTS WILL BE
ACCEPTED. BY EXECUTION OF THIS WARRANT LETTER OF TRANSMITTAL (OR A FACSIMILE
HEREOF), ALL TENDERING HOLDERS WAIVE ANY RIGHT TO RECEIVE ANY NOTICE OF THE
ACCEPTANCE OF THEIR WARRANTS FOR PAYMENT.
3. Inadequate Space. If the space provided herein under "Description of
Warrants Tendered" is inadequate, the Warrant number(s) and the number of
shares tendered should be listed on a separate schedule and attached hereto.
4. Withdrawal of Tenders. Tenders of Warrants may be withdrawn at any time
until the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after the expiration of 40 business days from the
commencement of the Exchange Offer unless accepted for exchange prior to that
date.
Holders who wish to exercise their right of withdrawal with respect to the
Warrant Exchange Offer must give written notice of withdrawal, delivered by
mail or hand delivery or facsimile transmission, to the Exchange Agent at one
of its addresses set forth on the cover page of this Warrant Letter of
Transmittal prior to the Expiration Date or at such other time as otherwise
provided for herein. In order to be effective, a notice of withdrawal must
specify the name of the person who deposited the Warrants to be withdrawn (the
"Depositor"), the name in which the Warrants are registered, if different from
that of the Depositor, and the number of shares to be withdrawn prior to the
physical release of the Warrants to be withdrawn. The notice of withdrawal
must be signed by the registered holder of such Warrants in the same manner as
the applicable Warrant Letter of Transmittal (including any required signature
guarantees), or be accompanied by evidence satisfactory to the Company that
the person withdrawing the tender has succeeded to the beneficial ownership of
such Warrants. Withdrawals of tenders of Warrants may not be rescinded, and
any Warrants withdrawn will be deemed not validly tendered thereafter for
purposes of the Warrant Exchange Offer. However, properly withdrawn Warrants
may be tendered again at any time prior to the Expiration Date by following
the procedures for tendering not previously tendered Warrants described
elsewhere herein.
7
<PAGE>
If the Company is delayed in its acceptance for conversion and payment for
any Warrants or is unable to accept for conversion or convert any Warrants
pursuant to the Warrant Exchange Offer for any reason, then, without prejudice
to the Company's rights hereunder, tendered Warrants may be retained by the
Exchange Agent on behalf of the Company and may not be withdrawn (subject to
Rule 13e-4(f)(5) under the Exchange Act, which requires that the issuer making
the tender offer pay the consideration offered, or return the tendered
securities, promptly after the termination or withdrawal of a tender offer),
except as otherwise permitted hereby.
5. Partial Tenders. The aggregate number of shares evidenced by the Warrants
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If tenders of Warrants are made with respect to less than
the entire number of shares evidenced by the Warrants delivered herewith,
Warrants for the number of shares not tendered will be issued and sent to the
registered holder, unless otherwise specified in the "Special Payment
Instructions" or "Special Delivery Instructions" boxes in this Warrant Letter
of Transmittal.
6. Signatures on Warrant Letter of Transmittal; Stock Powers and
Endorsements. If this Warrant Letter of Transmittal is signed by the
registered holder(s) of the Warrants tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of such Warrants without
alteration, enlargement or any other change whatsoever.
If any Warrants tendered hereby are owned of record by two or more persons,
all such persons must sign this Warrant Letter of Transmittal.
If any Warrants tendered hereby are in the names of different holders, it
will be necessary to complete, sign and submit as many separate Warrant
Letters of Transmittal, and any necessary accompanying documents, as there are
different registrations of such Warrants.
If this Warrant Letter of Transmittal is signed by the registered holder of
Warrants tendered hereby, no endorsements of such Warrants or separate stock
powers are required, unless the Warrant Exchange Consideration is to be issued
to, or Warrants not tendered or not accepted for exchange are to be issued in
the name of, a person other than the holder(s), in which case the Warrants
tendered hereby must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the holder(s) appear(s) on
such Warrants. Signatures on such Warrants and stock powers must be guaranteed
by an Eligible Institution. See Instruction 1.
If this Warrant Letter of Transmittal is signed by a person other than the
holder(s) of the Warrants tendered hereby, the Warrants must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the holder(s) appear(s) on the certificates representing such
Warrants. Signatures on such Warrants and stock powers must be guaranteed by
an Eligible Institution. See Instruction 1.
If this Warrant Letter of Transmittal or any Warrants or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Company of such person's authority so to
act must be submitted with this Warrant Letter of Transmittal.
7. Transfer Taxes. Except as otherwise provided in this Instruction 7, the
Company will pay all transfer taxes with respect to the delivery and
conversion of Warrants pursuant to the Warrant Exchange Offer. If, however,
issuance of the Warrant Exchange Consideration is to be made to, or shares not
tendered or not accepted for exchange are to be issued in the name of, a
person other than the holder(s), the amount of any transfer taxes (whether
imposed on the holder(s), such other person or otherwise) payable on account
of the transfer to such other person will be deducted from the Warrant
Exchange Consideration unless evidence satisfactory to the Company of the
payment of such taxes, or exemption therefrom, is submitted. Except as
provided in this Instruction 7, it will not be necessary for transfer tax
stamps to be affixed to the Warrants tendered hereby.
8. Special Payment and Delivery Instructions. If the Warrant Exchange
Consideration with respect to any Warrants tendered hereby is to be issued, or
Warrants not tendered or not accepted for exchange are to be issued, in the
name of a person other than the person(s) signing this Warrant Letter of
Transmittal or to the person(s) signing this Warrant Letter of
8
<PAGE>
Transmittal but at an address other than that shown in the box entitled
"Description of Warrants Tendered," the appropriate boxes in this Warrant
Letter of Transmittal must be completed.
9. Taxpayer Identification Number. Each tendering holder is required to
provide the Exchange Agent with the holder's correct taxpayer identification
number ("TIN"), generally, the holders' social security or federal employer
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, and to certify whether such person is
subject to backup withholding of federal income tax.
A holder must cross out Item (Y) of Part 3 in the Certification box of
Substitute Form W-9 if such holder is subject to backup withholding. Failure
to provide the information on the Substitute Form W-9 may subject the
tendering holder to 31% federal income tax backup withholding on the
reportable payments made to the holder or other payee with respect to Warrants
exchanged pursuant to the Warrant Exchange Offer. The box in Part 1(b) of the
form should be checked if the tendering holder has not been issued a TIN and
has applied for a TIN or intends to apply for a TIN in the near future. If the
box in Part 1(b) is checked and the Exchange Agent is not provided with a TIN
within 60 days, thereafter the Exchange Agent will hold 31% of all reportable
payments until a TIN is provided to the Exchange Agent.
10. Conflicts. In the event of any conflict between the terms of the
Offering Circular and the terms of this Warrant Letter of Transmittal, the
terms of the Offering Circular will control.
11. Mutilated, Lost, Stolen or Destroyed Warrants. Any holder of Warrants,
whose Warrants have been mutilated, lost, stolen or destroyed, should contact
the Exchange Agent at the address and telephone number indicated on the back
cover page for further instructions.
12. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to the Exchange Agent at its address set forth below.
Additional copies of the Offering Circular, this Warrant Consent and Letter of
Transmittal and the Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 may be obtained from the Exchange Agent.
13. Determination of Validity. All questions as to the form of all
documents, the validity (including time of receipt) and acceptance of tenders
of the Warrants will be determined by the Company, in its sole discretion, the
determination of which shall be final and binding. Alternative, conditional or
contingent tenders of Warrants will not be considered valid. The Company
reserves the absolute right to reject any or all tenders of Warrants that are
not in proper form or the acceptance of which, in the Company's opinion, would
be unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Warrants. If the
Company waives its right to reject a defective tender of Warrants, the holder
will be entitled to the Warrant Exchange Consideration. The Company's
interpretation of the terms and conditions of the Warrant Exchange Offer
(including the instructions in the Warrant Letter of Transmittal) will be
final and binding. Any defect or irregularity in connection with tenders of
Warrants must be cured within such time as the Company determines, unless
waived by the Company. Tenders of Warrants shall not be deemed to have been
made until all defects and irregularities have been waived by the Company or
cured. None of the Company, the Exchange Agent or any other person will be
under any duty to give notice of any defects or irregularities in tenders of
Warrants, or will incur any liability to holders for failure to give any such
notice.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a holder whose tendered Warrants are
accepted for exchange is required by law to provide the Exchange Agent (as
payer) with such holder's correct TIN on Substitute Form W-9 below. If such
holder is an individual, the TIN is his or her social security number. If the
Exchange Agent is not provided with the correct TIN, a $50 penalty may be
imposed by the Internal Revenue Service, and payments of Warrant Exchange
Consideration may be subject to backup withholding.
Certain holders (including, among others, corporations) are not subject to
these backup withholdings and reporting requirements. Exempt holders should
indicate their exempt status on Substitute Form W-9. In order for a foreign
individual to qualify as an exempt recipient, such individual must submit a
statement, signed under penalties of perjury, attesting to such individual's
exempt status. Forms of such statements can be obtained from the Exchange
Agent. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any reportable payments made to the holder or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal
income tax liability of persons subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on reportable payments made with respect to
Warrants accepted for conversion pursuant to the Warrant Exchange Offer, the
holder is required to notify the Exchange Agent of such holder's correct TIN
by completing the form below, certifying that the TIN provided on the
Substitute From W-9 is correct (or that such holder is awaiting a TIN) and
that (a) such holder is exempt from backup withholding, (b) such holder has
not been notified by the Internal Revenue Service that he is subject to backup
withholding as a result of a failure to report all interest or dividends or
(c) the Internal Revenue Service has notified such holder that such holder is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the holder of the
Warrants tendered hereby. If the Warrants are held in more than one name or
are not held in the name of the actual owner, consult the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9"
for additional guidance on which number to report.
10
<PAGE>
PAYOR'S NAME: U.S. TRUST COMPANY OF CALIFORNIA, N.A.
- -------------------------------------------------------------------------------
PART 1(A)--PLEASE PROVIDE
YOUR TIN IN THE BOX AT ----------------------
RIGHT AND CERTIFY BY Social Security Number
SIGNING AND DATING BELOW. OR
SUBSTITUTE
FORM W-9
DEPARTMENT OF
THE TREASURY PART 1(B)--PLEASE CHECK THE ----------------------
INTERNAL BOX AT THE RIGHT IF YOU Employer Identification
REVENUE HAVE APPLIED FOR, AND ARE Number(s)
SERVICE AWAITING RECEIPT OF, YOUR
TIN [_]
--------------------------------------------------------
PAYOR'S REQUEST PART 2--FOR PAYEES EXEMPT FROM
FOR TAXPAYER BACKUP WITHHOLDING PLEASE WRITE
IDENTIFICATION "EXEMPT" HERE (SEE
INSTRUCTIONS)
NUMBER ("TIN") PART 3--CERTIFICATION--UNDER THE PENALTIES OF
PERJURY, I CERTIFY THAT:
-------------------
--------------------------------------------------------
(X) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued for me),
and (Y) I am not subject to backup withholding
because: (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
--------------------------------------------------------
SIGNATURE _______________________ DATE ______________
- -------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (Y) of Part 3 above if
you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject
to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out Item (Y)
of Part 3. (Also see Certification under Specific Instructions in the
enclosed Guidelines.)
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
1(B) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE
AWAITING RECEIPT OF, YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and that I mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
(or I intend to mail or deliver an application in the near future). I
understand that if I do not provide a taxpayer identification number to the
payor, 31 percent of all payments made to me pursuant to this offer shall
be retained until I provide a tax identification number to the payor and
that, if I do not provide my taxpayer identification number within sixty
(60) days, such retained amounts shall be remitted to the IRS as backup
withholding and 31 percent of all reportable payments made to me thereafter
will be withheld and remitted to the IRS until I provide a taxpayer
identification number.
SIGNATURE ___________________________________________________ DATE
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31 PERCENT OF ANY CASH PAYMENTS. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
The Exchange Agent for the Warrant Exchange Offer is:
U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York
P.O. Box 841, Peter Cooper Station
New York, NY 10276-0841
Bankers and Brokers and Others Call: (800) 225-2398
12
<PAGE>
EXHIBIT (A)(8)
TRIKON TECHNOLOGIES, INC.
APRIL 14, 1998
TO THE HOLDERS OF SERIES G PREFERRED STOCK
AND WARRANTS OF TRIKON TECHNOLOGIES, INC.:
We are enclosing herewith the material listed below in connection with (i)
Trikon Technologies, Inc.'s, (the "Company") solicitation (the "Series G
Exchange Offer"), upon the terms and subject to the conditions set forth in
the Offering Circular dated April 14, 1998 (as the same may be further amended
or supplemented from time to time, the "Offering Circular"), and the Series G
Conversion Notice and Letter of Transmittal, of each holder of its Series G
Preferred Stock (the "Series G Preferred Stock") to convert each share of
Series G Preferred Stock into one share of Common Stock, no par value per
share (the "Common Stock"), in exchange for a conversion payment of (a) 1.1251
shares of Common Stock and (b) .0027 shares of Series I Junior Participating
Preferred Stock, no par value per share, and (ii) the Company's offer (the
"Warrant Exchange Offer"), upon the terms and subject to the conditions set
forth in the Offering Circular, and the Warrant Letter of Transmittal, to
exchange each Warrant to purchase Common Stock issued in connection with the
issuance of the Series G Preferred Stock (the "Warrants") for one share of its
Common Stock.
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MAY
11, 1998, UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION (SUCH TIME AND
DATE, AS EXTENDED FROM TIME TO TIME, THE "EXPIRATION DATE"). SERIES G
PREFERRED STOCK AND WARRANTS TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE EXPIRATION DATE. AFTER THE EXPIRATION DATE, SERIES G
PREFERRED STOCK AND WARRANTS TENDERED IN THE EXCHANGE OFFER MAY NOT BE
WITHDRAWN UNLESS THE EXCHANGE OFFER IS TERMINATED OR EXPIRES WITHOUT
CONSUMMATION THEREOF.
Enclosed for your information and use are copies of the following documents:
1. Offering Circular;
2. YELLOW Series G Conversion Notice and Letter of Transmittal for your use
in connection with the Series G Exchange Offer;
3. YELLOW return envelope addressed to U.S. Trust Company of California,
N.A., the Exchange Agent, for you to return the completed and duly
executed Series G Conversion Notice and Letter of Transmittal and your
stock certificates evidencing shares of the Series G Preferred Stock;
4. GREEN Warrant Letter of Transmittal for your use in connection with the
Warrant Exchange Offer;
5. GREEN return envelope addressed to U.S. Trust Company of California,
N.A., the Exchange Agent, for you to return the completed and duly
executed Warrant Letter of Transmittal and the Warrants;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
If you have any questions regarding the exchange process, please feel free
to contact U.S. Trust Company of California, N.A. at (800) 225-2398.
HOLDERS OF SERIES G PREFERRED STOCK AND WARRANTS ARE STRONGLY URGED TO AND
SHOULD READ AND CONSIDER CAREFULLY THE ENCLOSED OFFERING CIRCULAR AND THE
TERMS AND CONDITIONS SET FORTH IN THE SERIES G CONVERSION NOTICE AND LETTER OF
TRANSMITTAL AND THE WARRANT LETTER OF TRANSMITTAL.
Very truly yours,
Trikon Technologies, Inc.
<PAGE>
EXHIBIT (A)(9)
NEWS RELEASE
Contact:
Trikon Technologies, Inc.
Christopher Dobson
Ph: 44 (0) 1633 414030 (U.K.)
Ph: (415) 442-1606 (U.S.)
Fx: 44 (0) 1633 414125 (U.K.)
http://www.trikon.com
TRIKON TECHNOLOGIES
ANNOUNCES PROPOSED RESTRUCTURING AND RECAPITALIZATION
AND
1997 RESULTS AND FIRST QUARTER ESTIMATED RESULTS
NEWPORT, Wales, United Kingdom--April 2, 1998--Trikon Technologies, Inc.
(NASDAQ: TRKN) announced today that it intends to pursue a restructuring and
recapitalization of its balance sheet. Trikon currently has $86,250,000 of
outstanding convertible subordinated notes due 2001 (the ``Notes'') bearing
interest at 7-1/8%; $20,000,000 (liquidation preference) of Series G Preferred
Stock (the ``Series G''); and approximately 16,000,000 outstanding shares of
common stock.
Under the proposed restructuring, Trikon proposes to promptly commence
an exchange offer (the ``Exchange Offer'') for the Notes and Series G pursuant
to which:
(i) holders of the Notes would receive, in exchange for their Notes,
their pro-rata share of a new series of preferred stock (the ``New
Preferred'') having a face amount and liquidation preference of
$30,000,000. The New Preferred
<PAGE>
Trikon Technologies
News Release
Page 2
would have a dividend rate of 8-1/8% payable semi-annually in cash or,
at the option of the Company, additional shares of New Preferred, and,
if the Company's common stock trades at a price in excess of $7.00 for
a period of 30 consecutive trading days, would be automatically
converted into shares of Trikon common stock at a conversion ratio of
1.4285 shares per share of New Preferred. The New Preferred would be
mandatorily redeemable for cash on June 30, 2001;
(ii) holders of the Notes would also receive, in exchange for their
Notes, new shares of Trikon common stock which would represent
approximately 54% of Trikon's outstanding common stock (after giving
effect to the Exchange Offer); and
(iii) holders of the Series G would receive, in exchange for their
shares of Series G and associated common stock warrants, new shares of
Trikon common stock which would represent approximately 16% of
Trikon's outstanding com mon stock (after giving effect to the
Exchange Offer).
In connection with and upon consummation of the Exchange Offer, the
Com pany would issue new restricted stock to Mr. Christopher Dobson, Trikon's
current Chief Executive Officer and Chairman of the Board, which would represent
approximately 12% of Trikon's outstanding common stock (after giving effect to
the Exchange Offer). These shares
<PAGE>
Trikon Technologies
News Release
Page 3
of restricted stock would vest upon the earlier of five years or the sale of
Trikon and would be subject to Mr. Dobson continuing his relationship with
Trikon. These restricted shares, combined with the approximately 4.8 million
shares currently owned by Mr. Dobson, would represent approximately 17% of
Trikon's outstanding common stock (after giving effect to the Exchange Offer).
In addition, under certain circumstances Mr. Dobson would be entitled to a
contingent variable interest of up to 3% if Trikon were to have a market
valuation of at least $250 million.
After giving effect to the Exchange Offer and the issuance of the
restricted stock to Mr. Dobson, current holders of Trikon's common stock and
stock options (including Mr. Dobson's existing 4.8 million shares of common
stock but excluding Mr. Dobson's restricted stock) would own approximately 18%
of Trikon's outstanding common stock. Trikon currently has approximately 1.9
million employee stock options outstanding at an average exercise price of
$1.47. These options would remain in effect. After giving effect to the
Exchange Offer (and assuming 100% tenders), Trikon would have no funded debt,
and the capitalization of the Company would consist of the New Preferred,
approximately 93.5 million shares of outstanding common stock and approximately
1.9 million outstanding employee stock options. Immediately after the Exchange
Offer, Trikon said it would effectuate a 2-for-3 reverse stock split. The
foregoing share numbers do not give effect to the proposed reverse stock split.
<PAGE>
Trikon Technologies
News Release
Page 4
Trikon said that it had engaged in negotiations regarding the Exchange
Offer with holders in excess of $50 million of the Notes and a majority of the
Series G. Christopher Dobson, Chairman and Chief Executive Officer of Trikon,
said: ``A successful restructuring of Trikon's balance sheet will allow the
Company to shift its focus to the future. The proposed Exchange Offer will
create a debt-free Company which will concentrate on customer satisfaction and
service while continuing its history of innovation in the semiconduc tor
equipment industry.''
Trikon said it would formally commence the Exchange Offer as promptly
as is practical. The Exchange Offer will be conditional upon at least 90% of
the Notes being exchanged and 100% of the Series G and associated warrants being
exchanged. Trikon said that in connection with the Exchange Offer that it does
not intend to make its April 15, 1998 interest payment on the Notes and all
accrued interest would be cancelled at the closing of the Exchange Offer.
FISCAL YEAR 1997 RESULTS
Trikon also announced its estimated results for the fiscal year ended
December 31, 1997. Trikon estimates that its total revenues for the year ended
December 31, 1997 were approximately $85 million, which includes $29.5 million
in license revenues from the sale of non-exclusive, paid-up licenses of the
Company's MORI source and
<PAGE>
Trikon Technologies
News Release
Page 5
Forcefill PVD technologies to Applied Materials, Inc. Trikon reported $42.2
million in total revenues for year ended December 31, 1996. Trikon expects
that its net loss per share (basic and diluted) for the year ended December 31,
1997 will be between ($6.50) and ($7.00). This compares to a reported net loss
per share (basic and diluted) for year ended December 31, 1996 of ($10.03). The
loss during the year ended December 31, 1997 includes substantial charges for
restructuring and impairment write-downs of certain tangible and intangible
assets as a result of the restructuring of the Company, and reflects the costs
associated with the closure of the Etch Division operations in Chatsworth,
California and the reorganization of the worldwide operations of the Company,
partially offset by the revenues realized on the sale of licenses. The loss
during the year ended December 31, 1996 includes a charge of approximately $86.0
million for purchased in-process research and development resulting from the
acquisition of Electrotech Limited and Electrotech Equipments Limited by the
Company in November 1996.
FIRST QUARTER 1998 ESTIMATE
Trikon estimates that for the first quarter of 1998 it will report
approximately $18 million in total revenues, including $10 million in license
revenues from the sale of a non-exclusive license of its MORI source technology
to Lam Research Corporation. This compares to reported total revenues of $12.0
million in the first quarter of 1997. The
<PAGE>
Trikon Technologies
News Release
Page 6
Company expects that as a result of the license revenues it will recognize
earnings during the first quarter of 1998. Absent the Lam license, Trikon would
report a substantial loss for the first quarter of 1998. Trikon reported a loss
of ($11.6 million) during the first quarter of 1997.
Trikon provides a broad line of advanced manufacturing systems used
for three of the major processing steps in the manufacture of a semiconductor
device: physical vapor deposition (PVD), chemical vapor deposition (CVD) and
etch. Trikon's corporate headquarters and main manufacturing site are located
in Newport, South Wales, United Kingdom. Trikon operates worldwide.
``Safe Harbor'' Statement Under the Private Securities Litigation Act of
1995: This press release contains certain forward-looking statements, including,
but not limited to, Trikon's Exchange Offer, the terms and effect of such
Exchange Offer, and estimates. These statements are subject to various risks
and uncertainties that could cause results to differ materially, including, but
not limited to, opposition to the proposed Exchange Offer by holders of the
Notes and the Series G and a significant drop in Trikon's stock price. For
other risks attendant to Trikon and the semiconductor manufacturing equipment
industry, please see the Company's SEC reports, including, without limitation,
its annual report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K.
<PAGE>
Trikon Technologies
News Release
Page 7
Nothing herein shall constitute a tender offer for any securities of
Trikon. A tender offer for securities of Trikon shall only be made pursuant to
a definitive offering circular to be mailed to holders of Notes and the Series G
at a later date.
-END-
<PAGE>
EXHIBIT (A)(10)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
Social security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
- ---------------------------------------------
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------
</TABLE>
<TABLE>
------
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
------
<S> <C>
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE:If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding includes the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including the exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding.
FILE SUBSTITUTE FORM W-9 WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION
NUMBER, CHECK THE BOX IN PART 4 ON THE FACE OF THE FORM, AND RETURN IT TO THE
PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.-- If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an underpayment attributable to
that failure.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
