<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)
SUBMICRON SYSTEMS CORPORATION
(Name of Issuer)
Common Stock, $.0001 Par Value
(Title of Class of Securities)
86431310
(CUSIP Number)
Robert J. Wickey
Equinox Investment Partners, L.L.C.
405 Lexington Avenue, 21st Floor
New York, New York 10174
(212) 883-4600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 4, 1998
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box: [ ]
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 7 Pages)
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SCHEDULE 13D
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CUSIP NO. 86431310 PAGE 2 OF 7
- ------------------ -----------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
THE KB MEZZANINE FUND II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 21,595,837
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
21,595,837
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,595,837
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
52.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
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<PAGE> 3
SCHEDULE 13D
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CUSIP NO. 86431310 PAGE 3 OF 7
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
CELERITY SILICON, L.L.C.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 5,398,959
OWNED BY EACH ----------------------------------------------------------
REPORTING 8 SHARED VOTING POWER
PERSON WITH
0
----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
5,398,959
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,398,959
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
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<PAGE> 4
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 2 (the "Amendment") amends the Schedule 13D (as
previously amended, the "Statement") previously filed by (i) The KB Mezzanine
Fund II, L.P., a Delaware limited partnership ("KBMF II"), and (ii) Celerity
Silicon, L.L.C., a Delaware limited liability company ("Celerity"). This
Amendment relates to the common stock, par value $0.0001 per share, of SubMicron
Systems Corporation, a Delaware corporation (the "Company"). The principal
executive offices of the Company are located at 6330 Hedgewood Drive, No. 150,
Allentown, Pennsylvania 18106. Capitalized terms used but not defined herein
have the meanings set forth in the Statement.
ITEM 2. IDENTITY AND BACKGROUND.
There is no change to the information called for by this item and
previously disclosed in the Statement, except that Michael H. Khougaz and Mary
E. Ochsner are no longer managing members of Equinox.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
KBMF II and Celerity acquired warrants to purchase 16,000,000 shares and
4,000,000 shares, respectively, of the Company's common stock in a private
placement on December 4, 1998. Pursuant to this private placement, KBMF II and
Celerity purchased the warrants together with subordinated debt securities in
the total principal amount of $4,000,000, all for a total purchase price of
$4,000,000. In addition, KBMF II and Celerity acquired warrants to purchase
302,743 shares and 75,686 shares, respectively, of the Company's common stock,
together with additional subordinated debt securities in the total principal
amount of $525,596, in payment of past due interest on other subordinated debt
securities previously issued to KBMF II and Celerity. Each warrant is
exercisable to purchase one share of the Company's common stock at an exercise
price of $0.52 per share. The funds used by KBMF II and Celerity to acquire the
debt securities and warrants were obtained from capital contributions by their
limited partners or members, as applicable. Except as set forth above, there is
no change to the information called for by this item and previously disclosed in
the Statement.
ITEM 4. PURPOSE OF TRANSACTION.
Each of the reporting persons acquired the additional warrants referred
to above for its investment purposes pursuant to a Subscription Agreement dated
as of December 4, 1998. A copy of the Subscription Agreement is included as
Exhibit 1 to this Amendment. Except as set forth above, there is no change to
the information called for by this item and previously disclosed in the
Statement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
This Amendment is being filed to report that on December 4, 1998, KBMF
II and Celerity acquired the additional warrants as set forth above. Except as
set forth above, there is no change to the information called for by this item
and previously disclosed in the Statement.
(Page 4 of 7)
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Each of the reporting persons entered into a Subscription Agreement with
the Company, as described above, pursuant to which the additional subordinated
debt securities and warrants were issued. The Subscription Agreement contains
various customary representations, warranties, indemnities, conditions and
covenants. A copy of the Subscription Agreement is included as Exhibit 1 to this
Amendment and is incorporated herein by reference.
The terms and conditions of the additional warrants are set forth
therein, including but not limited to (i) their exercise price of $0.52 per
share, (ii) the period of exercisability, which commences the date of issuance
and expires on November 26, 2007, (iii) certain anti-dilution provisions
intended to preserve the warrant holders' percentage ownership of the Company's
equity securities in the event of stock splits, below-market issuances and the
like, (iv) provisions allowing for the cashless exercise of the warrants by
surrendering shares otherwise issuable upon exercise, or by surrendering
subordinated notes payable by the Company, in payment of the exercise price of
the warrants, and (v) customary "demand" and "piggyback" registration rights
with respect to the Company's common stock underlying the warrants. The form of
warrants is included as Exhibit 2 to this Amendment and is incorporated herein
by reference.
The reporting persons have agreed that, in lieu of cash interest
payments otherwise due on or before October 31, 1999 on account of the
subordinated notes of the Company held by each of them, the Company may issue
additional subordinated notes in a principal amount equal to the amount of the
cash interest otherwise due, together with additional warrants to purchase 720
shares of the Company's common stock for each $1,000 principal amount of
additional subordinated notes so issued. Any additional warrants so issued will
have the same terms and conditions as the warrants issued on December 4, 1998
and attached as Exhibit 2 to this Amendment. The exercise price of such
additional warrants will be equal to 110% of the fair market value, defined as
the average of the closing bid and asked price, of the underlying Company common
stock on the date the warrant is issued.
On January 19, 1999, Robert J. Wickey, Kevin Lynch and Bonaparte Liu, as
representatives of KBMF II, were elected to the Company's Board of Directors
pursuant to the provisions of the Stockholders Agreement. Michael J. Khougaz has
ceased to be a member of the Company's Board of Directors. Except as set forth
above, there is no change to the information called for by this item and
previously disclosed in the Statement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Form of Subscription Agreement.
Exhibit 2. Form of Warrant.
Exhibit 3. Joint Filing Agreement.
(Page 5 of 7)
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment is true, complete and
correct.
Dated: January 26, 1999 THE KB MEZZANINE FUND II, L.P.
By: EIP Capital Partners, L.P.
Its: General Partner
By: Equinox Investment Partners, L.L.C.
/s/ Robert J. Wickey
--------------------------------------------
By: Robert J. Wickey
Its: Managing Member
Dated: January 26, 1999 CELERITY SILICON, L.L.C.
/s/ Mark R. Benham
---------------------------------------------------
By: Mark R. Benham
Its: Managing Member
(Page 6 of 7)
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EXHIBIT INDEX
Exhibit 1. Form of Subscription Agreement.
Exhibit 2. Form of Warrant.
Exhibit 3. Joint Filing Agreement.
(Page 7 of 7)
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EXHIBIT 1
THE SECURITIES SUBSCRIBED FOR UNDER
THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAW AND THE TRANSFER OF
SUCH SECURITIES BY THE SUBSCRIBER IS RESTRICTED
BY THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAW
SUBSCRIPTION AGREEMENT
SUBMICRON SYSTEMS CORPORATION
6630 Hedgewood Drive, #150
Allentown, PA 18106
Ladies and Gentlemen:
In connection with this Subscription Agreement, the
undersigned has read the Confidential Private Offering Memorandum dated December
2, 1998, including the exhibits attached thereto (collectively, the "Offering
Memorandum"), of SubMicron Systems Corporation (the "Company"), relating to the
offering (the "Offering") of a minimum of 4,000 Units (the "New Units"), each
New Unit consisting of $1,000 in principal amount of 12% Series B Senior
Subordinated Notes due February 1, 2002 (a "Series B Note") of the Company and
warrants (the "Warrants") to purchase 5,000 shares of the Company's common
stock, par value $.0001 (the "Common Stock"). The New Units, the Series B Notes,
the Warrants and the shares of Common Stock to be issued upon exercise of the
Warrants are hereinafter sometimes referred to as the "Securities."
1. Subscription.
(a) The undersigned ("Subscriber") hereby subscribes
for and offers to purchase the number of New Units indicated on the Signature
Page of the Subscription Agreement (this "Agreement") at $1,000 per New Unit, on
the terms and conditions described herein and in the Offering Memorandum.
Subscriber acknowledges that the Company reserves the absolute right to withdraw
or terminate the Offering, without notice, in its sole discretion, to accept or
reject any subscription for New Units in whole or in part and to allot less than
the number of New Units subscribed for. It is understood that this subscription
is not binding on the Company until the Company accepts it (in whole or in
part), which acceptance is at the sole discretion of the Company, and will be
evidenced by execution of this Agreement by the Company on the Acceptance Page
hereto. The undersigned hereby acknowledges and agrees that once accepted by the
Company, the Subscription hereunder (or if the Subscription is partially
accepted, the amount so accepted) is irrevocable by the undersigned and that,
except as required by law, the undersigned is not entitled to cancel, terminate
or revoke this Agreement or any agreements of Subscriber hereunder.
(b) In payment for the New Units subscribed for,
Subscriber either is (i) accompanying this Agreement with a certified check
payable to the Company in the amount of the purchase price for such New Units or
(ii) initiating a wire transfer in such amount, in accordance with the
instructions provided by the Company.
2. Minimum Offering; Return of Payment if not Accepted; No
Maximum Offering.
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(a) Subscriber understands that unless a minimum of
4,000 New Units are subscribed for and accepted by the Company by December 31,
1998 (or January 31, 1999 if the Offering shall have been extended by the
Company in its sole discretion) (the "Initial Closing Date"), the Offering will
be withdrawn and all subscription documents and all payments, without interest,
will be returned to the respective Subscribers.
(b) Subscriber understands that if a minimum of 4,000
New Units are subscribed for and accepted by the Company by the Initial Closing
Date, the Company may thereafter continue to offer and sell New Units until
March 31, 1999, unless extended by the Company in its sole discretion until June
30, 1999. There is no maximum number of New Units that may be offered and sold.
(c) The Company reserves the right, in its sole
discretion, to accept or reject any subscription, in whole or in part, whether
before and after the Initial Closing Date. If the Company does not accept all or
a portion of Subscriber's subscription, the Company will return, without
interest, the amount of the Subscription not accepted.
3. Representations and Warranties of Subscriber. Subscriber
hereby represents, warrants and covenants as follows:
(a) Subscriber has carefully read the Offering
Memorandum and has relied solely upon the Offering Memorandum and investigations
made by or on behalf of Subscriber in making the decision to purchase the New
Units and is familiar with the operations and financial condition of the
Company. No person or entity has made any representations or warranties or
furnished any sales or offering literature to Subscriber other than the Offering
Memorandum.
(b) All documents, records and books pertaining to the
Company have been available for inspection by Subscriber, Subscriber's attorney,
accountant and/or other representatives. Subscriber has been granted the
opportunity to ask questions of, and has received answers satisfactory to it
from, representatives of the Company concerning the terms of the New Units, the
Company and its operations. The Subscriber also has been give the opportunity to
obtain, and has obtained, all additional information which Subscriber deemed
necessary to verify the accuracy of the information contained in the Offering
Memorandum and to evaluate the merits and risks of an investment in the New
Units.
(c) Subscriber is acquiring the New Units for
investment purposes only, for such Subscriber's own account and with such
Subscriber's own funds and not for the account or with the funds of any other
person and not with a view to the resale, assignment, fractionalization or
distribution thereof, either in whole or in part. The Subscriber is not
participating, either directly or indirectly, in an underwriting of the New
Units and will not take, or cause to be taken, any action that would cause the
Subscriber to be deemed to be an underwriter of the New Units as defined in
Section 2(11) of the Securities Act.
(d) Subscriber understands that no federal or state
agency or regulatory body, including without limitation, any federal or state
securities commission, has approved or disapproved the New Units or passed upon
or endorsed the merits of the Offering or this Offering Memorandum.
(e) If Subscriber is a trust, the trust's decision to
subscribe for and purchase any New Units has been directed by a sophisticated
person as described in Rule 506(b)(2)(ii) of Regulation D under the Securities
Act, and such person has such knowledge and experience in financial and business
matters that such person is capable of evaluating the merits and risks of an
investment in
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the New Units, including without limitation, the federal, state and local tax
effects with respect to a purchase of the New Units.
(f) Subscriber understands that (i) the Company has
not applied to register the New Units under the Securities Act or any applicable
state securities laws, (ii) the New Units are being offered in this Offering by
reason of exemptions from the registration requirements of the Securities Act
and such laws, and (iii) the Securities may not be sold, pledged, assigned or
otherwise disposed of by Subscriber in the absence of an effective registration
statement for the applicable Securities under the Securities Act or unless an
exemption from such registration is available.
(g) Subscriber has consulted with the Subscriber's own
legal, accounting, tax, investment and other advisers with respect to the tax
treatment of an investment by Subscriber in the New Units and the merits and
risks of an investment in the Securities.
(h) Subscriber understands that there will be no
market for the New Units, the Series B Notes or the Warrants and that Subscriber
may be precluded from selling or otherwise transferring or disposing of the
Securities for an indefinite period of time or at any particular time, and may
therefore have to bear the economic risk of investment in the New Units, the
Series B Notes and/or the Warrants for an indefinite period of time.
(i) Subscriber recognizes that an investment in the
New Units involves a high degree of risk, and understands that any and all of
the risk factors related to the purchase of New Units, including those set forth
under the caption "Risk Factors" in the Offering Memorandum, as well as those
described elsewhere in the Offering Memorandum, could individually, or in the
aggregate, have a material adverse effect on the Company and the value of the
Securities.
(j) If an individual, Subscriber represents that
Subscriber has adequate means of providing for Subscriber's current needs and
possible personal contingencies and has no need for liquidity in the New Units,
and can afford a complete loss of the investment in the New Units. Subscriber's
commitment to illiquid investments is reasonable in relation to Subscriber's net
worth.
(k) Subscriber understands that the New Units are
being offered and sold in reliance upon specific exemptions from the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings set forth herein and
in the Confidential Purchaser Questionnaire accompanying this Agreement (the
"Purchaser Questionnaire") in order to determine the applicability of such
exemptions and the suitability of the undersigned to acquire the New Units.
(l) Subscriber will supply the Company with such other
facts as from time to time are deemed necessary or desirable in order to
ascertain that no violation has occurred of any securities laws, including the
Securities Act.
(m) Subscriber, if a corporation, a limited liability
company or a partnership was not formed specifically for the purpose of
acquiring the New Units.
(n) Subscriber has such knowledge and experience in
financial and business matters that Subscriber is capable of evaluating the
merits and risks of an investment in the New Units.
(o) Subscriber has the full right, power and authority
to enter into this Agreement. If other than an individual or individuals,
Subscriber has taken all actions necessary to authorize fully the execution of
this Agreement.
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(p) Subscriber will inform the Company immediately by
telephone and in writing of any change in the information set forth herein
occurring on or before the termination of the Offering.
(q) Subscriber is an "Accredited Investor" as such
term is defined in Rule 501 under the Securities Act, as evidenced in the
Purchaser Questionnaire.
(r) The warranties and representations made by the
Subscriber hereunder shall survive the delivery of this Subscription Agreement
and the purchase by Subscriber of the New Units subscribed for hereunder.
4. Representations and Warranties of the Company. All
capitalized terms not otherwise defined herein are defined in Section 4(h).
(a) Each of the Company and its subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation; has all requisite power and authority
to own or lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted; and is duly qualified or licensed to
do business as a foreign corporation in good standing in all jurisdictions in
which it owns or leases property or in which the conduct of its business
requires it so to qualify or be licensed, except where the failure to be so
qualified or licensed would not be reasonably likely to have a Material Adverse
Effect.
(b) The Company has all requisite power and authority
to enter into and perform all of its obligations under the Series B Notes, the
Warrants, the Security Agreement dated November 26, 1997, as amended (the
"Security Agreement"), and this Agreement (collectively, together with the
Continuing Guaranty dated November 26, 1997, as amended (the "Guaranty"), and
the Patent Security Agreement dated November 26, 1997, as amended (the "Patent
Security Agreement"), the "Transaction Documents"), to issue the Securities and
to carry out the transactions contemplated hereby and thereby.
(c) The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, $0.0001 par value, of which
19,690,979 shares were issued and outstanding as of October 1, 1998 and 5,000
shares of Preferred Stock of which 1,349 shares are designated Series A
Convertible Preferred Stock (the "Preferred Stock"), and of which 95.85 shares
were issued and outstanding as of October 1, 1998. All such outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable.
(d) The Company has taken all actions necessary to
authorize it to enter into and perform all of its obligations under the
Transaction Documents, to issue the Series B Notes and Warrants and to
consummate the transactions contemplated hereby and thereby. Each of SubMicron
Systems, Inc. and SubMicron Wet Process Stations, Inc. (collectively, the
"Subsidiary Guarantors") have taken all actions necessary to authorize such
Subsidiary Guarantor to enter into and perform all of its obligations under the
Guarantee and the Security Agreements and to consummate the transactions
contemplated hereby and thereby. The Transaction Documents to which the Company
or a Subsidiary Guarantor is a party are legal, valid and binding obligations of
the Company or such Subsidiary Guarantor, as applicable, enforceable against it
in accordance with their respective terms, except for (i) the effect thereon of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally and (ii) limitations
imposed by federal or state law or equitable principles upon the specific
enforceability of any of the remedies, covenants or other provisions thereof and
upon the availability of injunctive relief or other equitable remedies.
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<PAGE> 5
(e) Neither the execution or delivery of the
Transaction Documents nor the issuance, sale or delivery of the Securities, nor
the performance by the Company or the Subsidiary Guarantors of their respective
obligations under the Transaction Documents or the Securities nor the
consummation of the transactions contemplated hereby and thereby, will:
(i) violate any provision of the Articles or
Certificate of Incorporation and Bylaws, as currently in
effect of the Company or any of its subsidiaries;
(ii) violate any statute, law, rule or
regulation or any judgment, decree, order, regulation or rule
of any court or governmental authority to which the Company or
any of its subsidiaries or any of their respective properties
may be subject;
(iii) permit or cause the acceleration of
the maturity of any debt or obligation of the Company or any
of its subsidiaries in excess of $100,000 or the acceleration
of which would be reasonably likely to result in a Material
Adverse Effect; or
(iv) violate, or be in conflict with, or
constitute a default under, or permit the termination of, or
require the consent of any Person under, or result in the
creation of any lien or encumbrance (a "Lien") upon any
property of the Company or any of its subsidiaries under, any
mortgage, indenture, loan agreement, note, debenture or other
agreement for borrowed money or any other material agreement
to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries (or their
respective properties) may be bound, other than the Liens
created by the Transaction Documents and such violations,
conflicts, defaults, terminations and Liens, or such failures
to obtain consents, which would not be reasonably likely to
result in a Material Adverse Effect.
(f) The net proceeds from the sale of the New Units hereunder
will be used solely for the repayment of existing debt and for general corporate
purposes, including working capital and the expenses incurred in connection with
the transactions contemplated by the Transaction Documents.
(g) All indebtedness represented by the Series B Notes shall
be subordinated in right of payment to Senior Indebtedness (as such term is
defined in the form of Series B Note attached as Exhibit A to the Offering
Memorandum and only to the extent and in the manner set forth in the Series B
Notes), and the Company and its subsidiaries do not have any outstanding
indebtedness (other than the Senior Indebtedness) to which the indebtedness
represented by the Series B Notes is in any way subordinated; except for
indebtedness secured by Permitted Liens.
(h) For the purposes of this Section 4, the following terms
have the following meanings:
"Permitted Liens" means Liens in favor of banks and finance or
leasing companies including, but not limited to, (i) purchase money liens upon
or in any real or personal property (including fixture and other equipment)
acquired or held by the Company or any subsidiary in the ordinary course of
business to secure the purchase price of such property or to secure Indebtedness
incurred solely for the purpose of financing the acquisition or improvement of
such property, or Liens existing on such property at the time of its acquisition
and (ii) liens securing capital leases or operating leases.
-5-
<PAGE> 6
"Material Adverse Effect" means (i) any material adverse
effect whatsoever upon the validity, perfection or enforceability of the
Transaction Documents, (ii) any material adverse effect on the results of
operations, financial condition, properties, assets, business or prospects of
the Company and its subsidiaries, taken as a whole, or (iii) any material
adverse effect on the ability of the Company or the Subsidiary Guarantors to
fulfill their obligations under the Transaction Documents and any instrument
governing indebtedness of the Company or a subsidiary incurred as of the Closing
Date, or any document contemplated hereby or thereby.
"Security Agreements" means the Security Agreement and the
Patent Security Agreement.
5. Covenants of the Company.
(a) The Company shall deliver to the holders of Series
B Notes within 15 days after it files them with the Securities and Exchange
Commission (the "SEC") copies of any reports, proxy statements and other
information which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act of 1934.
(b) The Company covenants and agrees (to the extent
that it may lawfully do so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter enforce,
which may affect the covenants or the performance of its obligations under this
Agreement or the Securities; and the Company (to the extent it may lawfully do
so) each hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the holders of Series B Notes, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
(c) 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 existence of each of its subsidiaries in accordance with the
respective organizational documents of each of them and the corporate 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 corporate existence, if the
Board of Directors of the Company 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 holders of the Series B Notes.
(d) The Company and its subsidiaries will not engage
in businesses which are not of the same general type as conducted by the Company
and its subsidiaries on the date hereof or businesses which do not have a
substantial connection thereto.
6. Legend. Subscriber understands and agrees that any
instrument or certificate representing or relating to any of the Securities may
bear such legends as the Company, in its sole discretion, deems necessary or
advisable in order to facilitate compliance with the Securities Act and any
applicable state securities laws, including without limitation, the legend in
substantially the form set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND SUCH SECURITIES MAY NOT
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<PAGE> 7
BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
ANY EXEMPTION THEREFROM UNDER THE SECURITIES ACT AND
SUCH STATE SECURITIES LAWS.
7. Indemnification. Subscriber recognizes that the sale of New
Units to Subscriber is based upon Subscriber's representations and warranties as
set forth herein, and on the information provided by Subscriber in Subscriber's
Purchaser Questionnaire, a copy of which is attached to the Offering Memorandum
as Exhibit D and is being tendered herewith. Subscriber hereby agrees to
indemnify and hold harmless the Company, its directors, employees, agents,
representatives and affiliates, and their respective successors and assigns,
from and against all liability, damage, cost or expenses (including reasonable
attorneys' fees) which: (a) arise out of or are due to a breach of the
warranties and representations made by Subscriber or the inaccuracy,
incompleteness or other defect in the information provided therein or in the
Purchaser Questionnaire; or (b) arise after the consummation of the Offering, as
a result of the sale or distribution of the Securities subscribed for hereby, or
any interest therein, or Subscriber's violation of any federal and state
securities laws or any other applicable laws. All such representations and
warranties shall survive the consummation of the transactions contemplated
hereby.
8. Acceptance by the Company; Binding Agreement. Subscriber
understands that this subscription may be accepted or rejected, in whole or in
part, by the Company, in its sole and absolute discretion, and that no
subscription for New Units will be binding until accepted by the Company. In the
event this subscription is rejected in whole, the instruments and documents
delivered herewith and the consideration tendered for the New Units, without
interest thereon, will be returned to Subscriber, and all of the obligations of
Subscriber hereunder shall terminate. In the event this subscription is rejected
in part, the consideration tendered in respect of the portion not accepted,
without interest thereon, will be returned to Subscriber. Upon acceptance by the
Company, this Subscription Agreement, and all of the obligations of Subscriber
hereunder and all of the representations and warranties by Subscriber herein,
shall be binding upon the heirs, executors, administrators, personal
representatives, successors and assigns of Subscriber; provided, however, that
this Subscription Agreement is transferable or assignable by Subscriber only
with the Company's prior express written consent, which may be withheld for any
reason.
9. Miscellaneous Provisions.
(a) This Subscription Agreement shall be construed in
accordance with and governed in all respects by the laws of the State of
Delaware, without regard to any conflict of law provisions.
(b) This Agreement and the representations,
acknowledgments, warranties and agreements set forth herein shall be binding
upon and shall inure to the benefit of the Subscriber, and Subscriber's
successors, assigns, heirs and legal representatives. This Agreement shall be
binding upon and shall inure to the benefit of the Company, its successors and
assigns.
(c) This Agreement, together with the Purchaser
Questionnaire and the Securities, represents the entire agreement of the
Subscriber and the Company with respect to the subject matter hereof. This
Agreement may not be modified except by writing signed by Subscriber and the
Company.
(d) This Agreement may be executed in counterparts,
each of which shall constitute an original and which together shall constitute a
single agreement.
-7-
<PAGE> 8
(e) If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
-8-
<PAGE> 1
EXHIBIT 2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF REGISTRATION UNDER SAID ACT EXCEPT PURSUANT TO AN EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
No. __ _________ Warrants
Warrant Certificate
SubMicron Systems Corporation
This Warrant Certificate certifies that ______________or registered
assigns, is the registered holder (the "Holder") of the number of Warrants (the
"Warrants") set forth above to purchase common stock, $0.0001 par value (the
"Common Stock"), of SubMicron Systems Corporation, a Delaware corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company one fully paid and nonassessable share of Common Stock of the Company at
the initial exercise price (the "Exercise Price") of $______ [110% of fair
market value (currently average of the closing bid and asked price) of a share
of Common Stock on the respective issue date of each Warrant] payable in lawful
money of the United States of America, upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of the Company.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants (the "Series B Warrants") which are issued
in units in conjunction with the Company's Series B Notes, as defined in the
Company's Private Offering Memorandum dated November __, 1998 regarding the
offering of units of the Company's Series B 12% Senior Subordinated Notes due
February 1, 2002 and Warrants. The shares of Common Stock issuable on exercise
of the Series B Warrants are referred to herein as the "Warrant Shares."
1. Exercise of Warrants.
(a) Subject to the terms hereof, the Holder shall have the right, which
may be exercised at any time or from time to time commencing on the date hereof
until 5:00 p.m., New York City time, on November 26, 2007 (the "Exercise
Period") to receive from the Company the number of fully paid and nonassessable
Warrant Shares (and such other consideration) which the Holder may at the time
be entitled to receive on exercise of the Warrants and payment of the Exercise
Price then in effect for such Warrant Shares. In lieu of payment of the Exercise
Price, the Holder may exercise the right, during the Exercise Period, to receive
Warrant Shares on a net basis, such that, without the exchange of any funds, the
Holder receives that number of Warrant Shares (and such other consideration)
otherwise issuable (or payable) upon exercise of its Warrants less that number
of Warrant Shares having an aggregate Current Market Value (as defined in
Section 2(f)) at the time of exercise equal to the aggregate Exercise Price that
would otherwise have been paid by the Holder for the Warrant Shares. Each
Warrant not exercised during the Exercise Period shall become void and all
rights thereunder and all rights in respect thereof under this Warrant
Certificate shall cease as of such time.
<PAGE> 2
(b) A Warrant may be exercised upon surrender to the Company at its
office of the Warrant Certificate to be exercised with the form of election to
purchase attached thereto duly filled in and signed, and upon payment to the
Company of the Exercise Price for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by certified or official bank check payable to the
order of the Company or, at the election of the Holder, through the surrender to
the Company of Series B Notes, the aggregate principal amount of which, together
with any unpaid accrued interest thereon, equals the aggregate Exercise Price,
or in the manner provided in Section 1(a) above.
(c) Subject to the provisions of Section 7 hereof, upon such surrender
of Warrants and payment of the Exercise Price the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as such Holder may designate a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants (and such other consideration as may be deliverable upon exercise
of such Warrants) together with cash for fractional Warrant Shares as provided
in Section 5. Such certificate or certificates shall be deemed to have been
issued and the person so named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price, irrespective of the date of delivery
of such certificate or certificates for Warrant Shares.
(d) Each Warrant shall be exercisable during the Exercise Period, at
the election of the Holder thereof, either in full or from time to time in part
and, in the event that the Warrant Certificate is exercised in respect of fewer
than all of the Warrant Shares issuable on such exercise at any time prior to
the date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrants will be issued and delivered pursuant to the
provisions of this Section 1.
2. Adjustment of Exercise Price and Number of Warrant Shares Issuable.
The number of shares of Common Stock issuable upon the exercise of each Warrant
(the "Warrant Number") is initially one. The Exercise Price and Warrant Number
are subject to adjustment from time to time upon the occurrence of the events
enumerated in, or as otherwise provided in, this Section 2.
(a) Adjustment for Change in Capital Stock
If the Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides or reclassifies its outstanding shares of
Common Stock into a greater number of shares;
2
<PAGE> 3
(3) combines or reclassifies its outstanding shares of Common
Stock into a smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares
of its capital stock;
then the Warrant Number in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he or it would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur. If the occurrence of any event listed above results in an
adjustment under subsections (b) or (c) below, no adjustment shall be made under
this subsection (a).
(b) Adjustment for Rights Issue
If the Company distributes any rights, options or warrants (whether or
not immediately exercisable) to holders of its Common Stock entitling them to
purchase shares of Common Stock at a price per share less than the Specified
Value (as defined in subsection (f) below) per share on the record date relating
to such distribution, the Warrant Number shall be adjusted in accordance with
the formula:
W' = W x O + N
-------
O + N x P
------
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record date
for any such distribution.
O = the number of Fully Diluted Shares (as defined in
subsection (p) below) outstanding on the record date
for any such distribution.
3
<PAGE> 4
N = the number of additional shares of Common Stock
issuable upon exercise of such rights, options or
warrants.
P = the exercise price per share of such rights, options or
warrants.
M = the Specified Value per share of Common Stock on
the record date for any such distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which all or a
portion of such rights, options or warrants are exercisable, not all rights,
options or warrants shall have been exercised, the Warrant shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares actually issued with respect to such portion that is no longer
exercisable.
(c) Adjustment for Other Distributions
If the Company distributes to holders of its Common Stock (i) any
evidences of indebtedness of the Company or any of its subsidiaries, (ii) any
assets of the Company or any of its subsidiaries (other than cash dividends
which are paid out of retained earnings of the Company), or (iii) any rights,
options or warrants to acquire any of the foregoing or to acquire any other
securities of the Company, the Warrant Number shall be adjusted in accordance
with the formula:
W' = W x M
---
M - F
4
<PAGE> 5
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record date
mentioned below.
M = the Specified Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date mentioned
below of the indebtedness, assets, rights, options or
warrants distributable to the holder of one share of
Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to this subsection (c) as a result of the
issuance of rights, options or warrants and at the end of the period during
which all or a portion of any such rights, options or warrants are exercisable,
not all such rights, options or warrants (or portion thereof) shall have been
exercised, the Warrant shall be immediately readjusted as if "F" in the above
formula was the fair market value on the record date of the indebtedness or
assets actually distributed upon exercise of such rights, options or warrants,
with respect to such portion that is no longer exercisable, divided by the
number of shares of Common Stock outstanding on the record date.
This subsection does not apply to rights, options or warrants referred
to in subsection (b) of this Section 2.
(d) Adjustment for Common Stock Issue
If the Company issues shares of Common Stock for a consideration per
share less than the Specified Value per share on the date the Company fixes the
offering price of such additional shares, the Warrant Number shall be adjusted
in accordance with the formula:
W' = W x A
----
O + P
--
M
where:
W'= the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
5
<PAGE> 6
O = the number of Fully Diluted Shares outstanding
immediately prior to the issuance of such additional
shares of Common Stock.
P = the aggregate consideration received for the
issuance of such additional shares of Common Stock.
M = the Specified Value per share of Common Stock on
the date of issuance of such additional shares.
A = the number of Fully Diluted Shares outstanding
immediately after the issuance of such additional
shares of Common Stock.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsection (a) of
this Section 2; or
(2) the issuance of Common Stock in connection with (i) the
exercise of Warrants, or (ii) the conversion, exchange or exercise of
any options, warrants, or other securities convertible into or
exchangeable or exercisable for Common Stock.
(e) Adjustment for Convertible Securities Issue
If the Company issues any options, warrants or other securities
convertible into or exchangeable or exercisable for Common Stock (other than
securities issued in transactions described in subsection (b) or (c) of this
Section 2) for a consideration per share of Common Stock initially deliverable
upon conversion, exchange or exercise of such securities less than the Specified
Value per share on the date of issuance of such securities, the Warrant Number
shall be adjusted in accordance with this formula:
W' = W x O + D
------
O + P
--
M
where:
W'= the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
6
<PAGE> 7
O = the number of Fully Diluted Shares outstanding
immediately prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of
such securities.
M = the Specified Value per share of Common Stock on
the date of issuance of such securities.
D = the maximum number of shares of Common Stock
deliverable upon conversion or in exchange for or
upon exercise of such securities at the initial
conversion, exchange or exercise rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion, exchange or
exercise of such securities has not been issued when such securities are no
longer outstanding, then the Warrant Number shall promptly be readjusted to the
Warrant Number which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exchange or exercise of such
securities.
This subsection (e) does not apply to the issuance of the Warrants or
the grant to employees or directors of options having an exercise price of not
less than the Market Price (as defined below) of the Common Stock as of the date
of the grant.
(f) Specified Value
"Specified Value" per share of Common Stock shall be the greater of the
Current Market Value or the Exercise Price.
"Current Market Value" per share of Common Stock at any date shall be
the average of the daily Market Prices of the Common Stock for each business day
during the period commencing 30 business days before such date and ending on the
date one day prior to such date or, if the Security has been registered under
the Securities Exchange Act of 1934 (the "Exchange Act") for less than 30
consecutive business days before such date, then the average of the daily Market
Prices for all of the business days before such date for which daily Market
Prices are available. If the Market Price is not determinable for at least 15
business days in such period, the Current Market Value of the Security shall be
determined based on the good faith determination of the Board of Directors of
the Company.
Market Price for security (a "Security") on each business day means:
(i) if the Security is listed or admitted to trading on any securities exchange,
the closing price, regular way, on such day on the principal exchange on which
such Security is traded, or if no sale takes place
7
<PAGE> 8
on such day, the average of the closing bid and asked prices on such day, (ii)
if such Security is not then listed or admitted to trading on any securities
exchange, the last reported sale price on such day, or if there is no such last
reported sale price on such day, the average of the closing bid and the asked
prices on such day, as reported by a reputable quotation source designated by
the Company, or (iii) if neither clause (i) nor (ii) is applicable, the average
of the reported high bid and low asked prices on such day, as reported by the
"Over-The-Counter" Bulletin Board or other reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City of New York,
customarily published on each business day, designated by the Company or (iv) if
clause (iii) is not applicable, the Market Price of the Security shall be
determined based on the good faith determination of the Board of Directors of
the Company.
(g) Consideration Received
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 2, the following shall
apply:
(1) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by the Company for
any underwriting of the issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market
value thereof (irrespective of the accounting treatment thereof) as
determined in good faith by the Board of Directors; and
(3) in the case of the issuance of options, warrants
or other securities convertible into or exchangeable or exercisable for
shares of Common Stock, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration,
if any, to be received by the Company upon the conversion, exchange or
exercise thereof (the consideration in each case to be determined in
the same manner as provided in clauses (1) and (2) of this subsection).
(h) When De Minimis Adjustment May Be Deferred
No adjustment in the Warrant Number need be made unless the
adjustment would require an increase or decrease of at least 0.5% in the Warrant
Number. Any adjustments that
8
<PAGE> 9
are not made shall be carried forward and taken into account in any subsequent
adjustment, provided that no such adjustment shall be deferred beyond the date
on which a Warrant is exercised.
All calculations under this Section 2 shall be made to the nearest
1/1000th of a share.
(i) When No Adjustment Required
If an adjustment is made upon the establishment of a record date for a
distribution subject to subsections (a), (b) or (c) of this Section 2 and such
distribution is subsequently cancelled, the Warrant Number then in effect shall
be readjusted, effective as of the date when the Board of Directors determines
to cancel such distribution, to that which would have been in effect if such
record date had not been fixed.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the amount of cash into which such Warrants are
exercisable. Interest will not accrue on the cash.
(j) Notice of Adjustment
Whenever the Warrant Number or Exercise Price is adjusted, the Company
shall provide the notices required by Section 9 hereof.
(k) Voluntary Reduction
The Company from time to time may reduce the Exercise Price by any
amount for any period of time (including, without limitation, permanently) if
the period is at least 20 days and if the reduction is irrevocable during the
period.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant Holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price under this Subsection (k) (other than
a permanent reduction) does not change or adjust the Exercise Price otherwise in
effect for purposes of subsections (a), (b), (c), (d) or (e) of this Section 2.
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<PAGE> 10
(l) When Issuance or Payment May Be Deferred
In any case in which this Section 2 shall require that an adjustment in
the Warrant Number be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing to
the Holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Warrant Number prior to such
adjustment, and (ii) paying to such Holder any amount in cash in lieu of a
fractional share pursuant to Section 5; provided, however, that the Company
shall deliver to such Holder a due bill or other appropriate instrument
evidencing such Holder's right to receive such additional Warrant Shares, other
capital stock and cash upon the occurrence of the event requiring such
adjustment.
(m) Reorganizations
(i) In case of any capital reorganization, other than in the cases
referred to in Sections 2(a), (b), (c), (d) or (e) hereof, or the consolidation
or merger of the Company with or into another corporation (other than a merger
or consolidation in which the Company is the continuing corporation and which
does not result in any reclassification of the outstanding shares of Common
Stock into shares of other stock or other securities or property), or the sale
of the property of the Company as an entirety or substantially as an entirety
(collectively such actions being hereinafter referred to as "Reorganizations"),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of shares of Common Stock theretofore deliverable) the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock that would otherwise have been deliverable upon the
exercise of such Warrant would have been entitled upon such Reorganization if
such Warrant had been exercised in full immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any shares or other property thereafter
deliverable upon exercise of Warrants.
(ii) The Company shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such Reorganization or the corporation
purchasing or leasing such assets or other appropriate corporation or entity
shall expressly assume, by a written acknowledgement executed and delivered to
the Holder(s), the obligation to deliver to each such Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase, and all other obligations and
liabilities under this Warrant Certificate.
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<PAGE> 11
(n) Adjustment in Exercise Price
Upon each adjustment of the Warrant Number pursuant to this Section 2,
the Exercise Price in effect prior to the making of the adjustment in the
Warrant Number shall thereafter be adjusted as follows:
E' = E x W
--
W'
where:
E'= the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
W'= the adjusted Warrant Number.
W = the Warrant Number prior to adjustment.
(o) Form of Warrants
Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Warrant Certificate.
11
<PAGE> 12
(p) Miscellaneous
For purpose of this Section 2, the term "shares of Common Stock" shall
mean (a) shares of any class of stock designated as Common Stock of the Company
at the date of this Warrant Certificate, and (b) shares of any other class of
stock resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. For purposes of this Section 2, the term "Fully
Diluted Shares" shall mean (a) shares of Common Stock outstanding as of a
specified date, and (b) shares of Common Stock into or for which rights,
options, warrants or other securities outstanding as of such date are
exercisable or convertible (other than the Warrants), provided that either: (i)
such rights, options, warrants or other securities are issued and outstanding as
of the date of this Warrant Certificate, or (ii) the conversion or exercise
price of such rights, options, warrants or other securities is not greater than
120% of the fair market value, as of their issue date, of the Common Stock
issuable upon conversion or exercise thereof. In the event that at any time, as
a result of an adjustment made pursuant to this Section 2, the holders of
Warrants shall become entitled to purchase any securities of the Company other
than, or in addition to, shares of Common Stock, thereafter the number or amount
of such other securities so purchasable upon exercise of each Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in subsections (a) through (o) of this Section 2, inclusive, and the
provisions of Sections 1, 4, 5 and 7 with respect to the Warrant Shares or the
Common Stock shall apply on like terms to any such other securities.
(q) No Adjustment for Series B Notes or Series B Warrants
Notwithstanding anything in this Warrant Certificate to the contrary,
there shall be no adjustments made under this Section 2 with respect to the
offer or issuance of any Series B Notes or Series B Warrants.
3. Restrictions on Transfer; Registration of Transfers and Exchanges.
(a) The Warrants (and any Warrant Shares issued upon the exercise of
the Warrants) may not be transferred except in compliance with applicable
securities laws, except that such holder may transfer any or all of the Warrants
or the Warrant Shares to any of its general partners, limited partners,
shareholders or affiliates, or any combination of the foregoing, if such
transfer is effected in accordance with such securities laws and this Warrant
Certificate.
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<PAGE> 13
(b) Prior to any proposed transfer of the Warrants or the Warrant
Shares, unless such transfer is made pursuant to Rule 144 or an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), the transferring Holder will deliver to the Company an
opinion of counsel, reasonably satisfactory in form and substance to the
Company, to the effect that the Warrants or Warrant Shares, as applicable, may
be sold or otherwise transferred without registration under the Securities Act.
The Company will reimburse the transferring Holder for the reasonable fees and
expenses incurred in obtaining any such opinion of counsel. Upon original
issuance thereof, and until such time as the same shall have been registered
under the Act or sold pursuant to Rule 144 promulgated thereunder (or any
similar rule or regulation), each Warrant Certificate or certificate for Warrant
Shares shall bear any legend required pursuant to the Act.
(c) The Company shall from time to time register the transfer of any
outstanding Warrant Certificates in a Warrant register to be maintained by the
Company upon surrender thereof accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, duly executed by
the registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be canceled and
disposed of by the Company.
(d) Warrant Certificates may be exchanged at the option of the
Holder(s) thereof, when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled and disposed of by the Company.
4. Reservation of Warrant Shares;Valid Issuance;Exchange Listing.
(a) The Company shall at all times reserve and keep available, free
from preemptive rights, of the aggregate of its authorized but unissued Common
Stock or its authorized and issued Common Stock held in its treasury, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants, the maximum number of shares of Common Stock which may
then be deliverable upon the exercise of all outstanding Warrants.
(b) The Company covenants that all Warrant Shares and other capital
stock issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof, except as otherwise provided in
Section 7 hereof.
(c) The Company shall from time to time take all action which may be
necessary or appropriate so that the Warrant Shares, immediately upon their
issuance following an exercise of Warrants, will be listed on the principal
securities exchanges and markets within the United States of America, if any, on
which other shares of Common Stock are then listed.
5. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the same time by the same holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
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<PAGE> 14
Warrant Share would, except for the provisions of this Section 5, be issuable on
the exercise of any Warrants (or specified portion thereof), the Company shall
pay an amount in cash equal to the fair market value of the Warrant Share so
issuable (as determined in good faith by the Board of Directors), multiplied by
such fraction.
6. Registration Rights
(a) Demand Registration
(i) Request for Registration by Certain Holders of Registrable
Securities. At any time the Company receives from the holder(s) of 50% of the
outstanding Registrable Securities (as defined in Section 6(i)) a written
request that the Company effect a registration or qualification of at least 25%
of the Registrable Securities then outstanding (a "Demand Registration"), the
Company will:
(A) promptly give written notice of the proposed registration
or qualification to all other holders of Registrable Securities known
to the Company, which holders may request in writing within 10 days
after receipt of such notice that Registrable Securities held by them
be included in such Demand Registration, and the number of Registrable
Securities requested to be so included shall be deemed a part of such
Demand Registration; and
(B) as soon as practicable, use its best efforts to effect
such registration or qualification (including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under the applicable blue sky or other state
securities laws and appropriate compliance with exemptive regulations
issued under the Securities Act and any other governmental requirements
or regulations) as may be so requested and as is reasonably necessary
to permit or facilitate the sale and distribution of all or such
portion of such holder's or holders' Registrable Securities as is
specified in such request; provided that the Company will not be
obligated to effect more than two Demand Registrations pursuant to a
request under this Section 6.
Subject to the foregoing provisions, the Company will file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, but in any event within 90 days, after
receipt of the request or requests of the initiating holders.
(ii) Effective Registration and Expenses. A registration of Registrable
Securities will not count as a Demand Registration until it has become effective
and has remained effective for 180 days or until all Registrable Securities
included therein have been sold, if earlier. The Company will pay all
Registration Expenses (as hereinafter defined) in connection with any
registration initiated as a Demand Registration, whether or not it becomes
effective.
(iii) Priority on Demand Registrations. If the holder or holders of a
majority in number of the Registrable Securities to be registered in a Demand
Registration under this Section 6 so elect, the offering of such Registered
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. In such event, if the managing underwriter or
underwriters of such offering advise the Company and the holders in writing that
in their opinion the number of Registrable Securities requested to be included
in such offering is
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<PAGE> 15
sufficiently large so as to adversely affect the success of the offering, then
the Company will include in such registration the maximum amount of Registrable
Securities which in the opinion of such managing underwriter or underwriters can
be sold without any such adverse effect. Subject to the advice of the managing
underwriter or underwriters concerning the size and composition of the offering,
the Company will include Registrable Securities or other Common Stock in such
registration in accordance with the following priorities: (i) first, pro rata
among all holders of Registrable Securities who have requested to be included in
such registration pursuant to Section 6(a) hereof, in proportion to the number
of shares each such holder requested to be included in the offering; and (ii)
second, pro rata among the other holders of Common Stock of the Company who have
requested to be included in such registration pursuant to piggy-back
registration provisions of other registration rights agreements, in proportion
to the number of shares each such holder requested be included in the offering
pursuant to their piggy-back rights; and (iii) third, any Common Stock proposed
to be issued or sold for the account of the Company.
(iv) Selection of Underwriters. If any Demand Registration is to be in
the form of an underwritten offering, the investment banker or bankers and
manager or managers that will administer the offering will be selected by the
holders of a majority in number of the Registrable Securities to be included in
such offering; provided that such investment bankers and managers must be
reasonably satisfactory to the Company.
(b) Piggy-Back Registration. If at any time the Company shall determine
to file a registration statement under the Securities Act relating to a proposed
sale to the public of any of its securities, except for nonconvertible debt
securities (other than a registration statement on Form S-8 or Form S-4 or any
successor to such Forms) either for its own account or the account of a security
holder or holders, the Company shall:
(i) promptly give to each holder of a Registrable Security known to the
Company written notice thereof (which notice will include a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under the applicable blue sky or other state securities laws, the proposed
offering price, and the plan of distribution);
(ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
within 20 days after such written notice from the Company, by any holder or
holders of Registrable Securities;
(iii) use its best efforts to cause the managing underwriter or
underwriters of such proposed underwritten offering, if any, to permit the
Registrable Securities requested to be included in the registration statement
for such offering to be included on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding the foregoing, if
the managing underwriter or underwriters of such offering advise the Company in
writing that, in their opinion, marketing considerations require a limitation on
the number of shares of Common Stock or other Registrable Securities offered
pursuant to any registration statement subject to this Section, then subject to
the advice of said managing underwriter or underwriters as to the size and
composition of the offering, the Company will include Common Stock and other
Registrable Securities in such registration in accordance with the following
priorities: (i) first, Common Stock to be sold for the account of the Company
or, if such registration statement is filed at the demand of a selling
shareholder or shareholders, in accordance with the provisions of such
requirement; and (ii) second, pro rata with respect to all
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<PAGE> 16
holders of Registrable Securities or other Common Stock of the Company who have
requested to be included in the registration pursuant to this Section 6(b) or
pursuant to other, analogous piggy-back registration provisions of other
agreements, in proportion to the number of shares each such holder requested to
be included in the offering pursuant to their piggy-back rights. The Company
will bear all Registration Expenses in connection with a piggy-back
registration.
Holders of Registrable Securities may exercise piggy-back registration
rights under this Section 6(b) at any time or from time to time, so long as such
holders continue to hold Registrable Securities.
(c) Hold-Back Agreements
(i) Restrictions on Public Sale by Holders of Registrable Securities.
Each holder of Registrable Securities whose Registrable Securities are covered
by a Registration Statement filed pursuant to Sections 6(a) or 6(b) hereof
agrees, if requested in writing by the managing underwriters in an underwritten
offering, not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such Registration
Statement, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration), during the 7-day period
prior to, and during the 180-day period following, the effective date of the
Registration Statement for each underwritten offering made pursuant to such
Registration Statement, to the extent timely requested in writing by the Company
or the managing underwriters.
(ii) Restrictions on Public Sale by the Company and Others. The Company
agrees:
(A) not to effect any public or private sale or distribution
of its debt or equity securities, including a sale pursuant to
Regulation D under the Securities Act, during the 7-day period prior
to, and during the 90-day period following, the effective date of the
Registration Statement for each underwritten offering made pursuant to
a Registration Statement filed under Section 6 hereof, to the extent
timely requested in writing by the managing underwriters (except as
part of such underwritten registration or pursuant to registrations on
Forms S-4 or S-8 or any successor form to such Forms); and
(B) to cause each holder of its privately placed debt or
equity securities issued by the Company at any time on or after the
date of this Warrant Certificate to agree not to effect any public sale
or distribution, including a sale pursuant to Rule 144 under the
Securities Act, of any such securities during the period set forth in
clause (1) above with respect to a Registration Statement filed under
Section 6(a) hereof, to the extent timely requested in writing by the
managing underwriters (except as part of such underwritten
registration, if permitted).
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<PAGE> 17
(d) Registration Procedures
In connection with the Company's registration obligations pursuant to
Sections 6(a) and 6(b) hereof, the Company will use its best efforts to effect
such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof (provided,
however, the Company shall have no obligation to proceed with or maintain the
effectiveness of any Registration Statement under Section 6(b) hereof), and
pursuant thereto the Company will as expeditiously as possible:
(i) with respect to Registration Statement under Section 6(a) hereof,
before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, furnish to the holders of the Registrable Securities
covered by such Registration Statement and the underwriters, if any, copies of
all such documents proposed to be filed, which documents will be made available
for prior review by such holders and underwriters, and the Company will not file
any Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which the holders of a majority in number of the
Registrable Securities covered by such Registration Statement or the
underwriters, if any, shall reasonably object;
(ii) with respect to Registration Statement under Section 6(a) hereof,
prepare and file with the Securities and Exchange Commission (the "SEC") such
amendments and post-effective amendments to any Registration Statement, and such
supplements to the Prospectus, as may be reasonably requested by any holder of
Registrable Securities or any underwriter of Registrable Securities or as may be
required by the rules, regulations or instructions applicable to the
registration form utilized by the Company or by the Securities Act or otherwise
necessary to keep such Registration Statement effective for the applicable
period and cause the Prospectus as so supplemented to be filed pursuant to Rule
424 under the Securities Act; and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such person)
confirm such advice in writing,
(A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective,
(B) of any request by the SEC for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information,
(C) of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose,
(D) if at any time the representations and warranties of the
Company contemplated by paragraph (xiv) below cease to be true and
correct,
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<PAGE> 18
(E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and
(F) of the existence of any fact which results in the
Registration Statement, the Prospectus or any document incorporated
therein by reference containing an untrue statement of material fact or
omitting to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(iv) with respect to a Registration Statement under Section 6(a)
hereof, make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(v) with respect to a Registration Statement under Section 6(a) hereof,
if reasonably requested by the managing underwriter or underwriters or a holder
of Registrable Securities being sold in connection with an underwritten
offering, immediately incorporate in a Prospectus supplement or post-effective
amendment such necessary information as the managing underwriters or the holders
of a majority in number of the Registrable Securities being sold reasonably
request to have included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the amount of Registrable Securities being sold to
such underwriters, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment;
(vi) at the request of any selling holder of Registrable Securities,
furnish to such selling holder of Registrable Securities and each managing
underwriter, without charge, at least one signed copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference);
(vii) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such persons may reasonably request; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by each of the selling holders
of Registrable Securities and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(viii) with respect to a Registration Statement under Section 6(a)
hereof, prior to any public offering of Registrable Securities, register or
qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as any seller or
underwriter reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration
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<PAGE> 19
Statement; provided that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process or taxation in
any such jurisdiction where it is not then so subject;
(ix) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(x) use its best efforts to cause the Registrable Securities covered by
the applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof and the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(xi) with respect to a Registration Statement under Section 6(a)
hereof, if any fact contemplated by Section 6(d)(iii)(F) shall exist, prepare a
supplement or post-effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(xii) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed, if requested by the holders of a majority
in number of such Registrable Securities or by the managing underwriters, if
any;
(xiii) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and provide the
applicable trustee(s) or transfer agent(s) with printed certificates for the
Registrable Securities which are in a form eligible for deposit with Depositary
Trust Company;
(xiv) with respect to a Registration Statement under Section 6(a)
hereof, enter into agreements (including underwriting agreements) and take all
other appropriate actions in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is an
underwritten registration:
(A) make such representations and warranties and give
indemnities to the holders of such Registrable Securities and the
underwriters, if any, in form, scope and substance as are customarily
made by issuers to underwriters in primary underwritten offerings;
(B) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions shall be reasonably satisfactory in
form, scope and substance to the managing underwriters, if any, and the
holders of a majority in number of the Registrable Securities being
sold) addressed to each selling holder and the
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<PAGE> 20
underwriters, if any, covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as
may be reasonably requested by such holders and underwriters;
(C) if an underwritten offering, obtain "cold comfort" letters
and updates thereof from the Company's independent certified public
accountants addressed to the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters to underwriters in connection with primary
underwritten offerings;
(D) if an underwriting agreement is entered into, cause the
same to set forth in full the indemnification provisions and procedures
of Section 6(f) hereof (or such other substantially similar provisions
and procedures as the underwriters shall reasonably request) with
respect to all parties to be indemnified pursuant to said Section; and
(E) deliver such documents and certificates as may be
reasonably requested by the holders of a majority of the Registrable
Securities being sold and the managing underwriters, if any, to
evidence compliance with paragraph (xi) above and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company.
The above shall be done at the effectiveness of such Registration Statement,
each closing under any underwriting or similar agreement as and to the extent
required thereunder and from time to time as may reasonably be requested by any
selling holder in connection with the disposition of Registrable Securities
pursuant to such Registration Statement, all in a manner consistent with
customary industry practice;
(xv) with respect to a Registration Statement under Section 6(a)
hereof, make available to a representative of the holders of a majority in
number of the Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney or
accountant retained by the sellers or underwriter all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with the registration, with respect to each at such
time or times as the Company shall reasonably determine; provided that any
records, information or documents that are designated by the Company in writing
as confidential shall be kept confidential by such persons unless disclosure of
such records, information or documents is required by court or administrative
order;
(xvi) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 15 months after the effective date of a
Registration Statement;
(xvii) with respect to a Registration Statement under Section 6(a)
hereof, cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD") and in the
performance of any due diligence investigation by any
20
<PAGE> 21
underwriter (including any "qualified independent underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD); and
(xviii) with respect to a Registration Statement under Section 6
hereof, promptly prior to the filing of any document which is to be incorporated
by reference into the Registration Statement or the Prospectus (after initial
filing of the Registration Statement) provide copies of such document to counsel
to the selling holders of Registrable Securities and to the managing
underwriters, if any, make the Company's representatives available for
discussion of such document.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(d)(xi), such holder
will forthwith discontinue disposition of Registrable Securities until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(d)(xi), or until it is advised in writing by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
the Prospectus, and, if so directed by the Company, such holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods mentioned in
Section 6(a) hereof shall be extended by the number of days during the period
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Securities covered by such Registration
Statement either receives the copies of the supplemented or amended prospectus
contemplated by Section 6(d)(xi) hereof or is advised in writing by the Company
that the use of the Prospectus may be resumed.
Notwithstanding any other provisions of this Warrant Certificate, upon
receipt by the Purchaser of a written notice signed by the President, the Chief
Executive Officer, the Chief Financial Officer or any Vice President of the
Company, to the effect set forth below, the Company shall not be obligated
during a reasonable period of time thereafter to effect any registrations
pursuant to this Warrant Certificate, and the holders of Registrable Securities
agree to immediately suspend sales of any securities under any effective
Registration Statement for a reasonable period of time, in either case not to
exceed 90 days, at any time during which, in the Company's reasonable judgment,
(i) there is a development involving the Company or any of its affiliates which
is material but which has not yet been publicly disclosed or (ii) sales pursuant
to the Registration Statement would materially and adversely affect an
underwritten public offering for the account of the Company or any other
material financing project or a proposed or pending material merger or other
material acquisition or material business combination or material disposition of
the Company's assets, to which the Company or any of its affiliates is, or is
expected to be, a party. In the event sales pursuant to an effective
Registration Statement are suspended in accordance with this paragraph, there
shall be added to the period during which the Company is obligated to keep a
registration effective the number of days for which sales were suspended. The
Company may not provide more than one such notice during any 360-day period. In
addition, the Company has entered into a Registration Rights Agreement dated as
of
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<PAGE> 22
November 26, 1997 with The KB Mezzanine Fund II, L.P. and Celerity Silicon,
L.L.C. (the "Registration Rights Agreement"). Pursuant to such Agreement, the
Company has agreed not to effect, and to cause each holder of its privately
placed debt or equity securities not to effect, any public sale of equity
securities during the 7-day period prior to and the 90-day period following the
effective date of an underwritten demand registration pursuant to such
Agreement, to the extent timely requested in writing by the managing
underwriters of such offering. The holders of Registrable Securities acknowledge
such restriction and agree that each holder of Registrable Securities and the
Company shall comply with such provision of the Registration Rights Agreement.
(e) Registration Expenses
(i) All expenses incident to the Company's performance of or compliance
with this Warrant Certificate will be paid by the Company, regardless whether
the Registration Statement becomes effective, including, without limitation:
(A) all registration and filing fees (including, without
limitation, with respect to filings required to be made with the NASD);
(B) fees and expenses of compliance with securities or blue
sky laws (including, without limitation, fees and disbursements of
counsel for the underwriters or selling holders in connection with blue
sky qualifications of the Registrable Securities and determination of
their eligibility for investment under the laws of such jurisdictions
as the managing underwriters or holders of Registrable Securities being
sold may designate);
(C) printing (including, without limitation, expenses of
printing or engraving certificates for the Registrable Securities in a
form eligible for deposit with Depositary Trust Company and of printing
prospectuses), messenger, telephone and delivery expenses;
(D) fees and disbursements of counsel for the Company, for the
underwriters and for the selling holders of the Registrable Securities
(subject to the provisions of Section 6(e)(ii) hereof);
(E) fees and disbursements of all independent certified public
accountants of the Company (including, without limitation, the expenses
of any special audit and "cold comfort" letters required by or incident
to such performance);
(F) fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities or legal expenses of any
person other than the Company, the underwriters and the selling
holders);
(G) fees and expenses of other persons retained by the
Company; and
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(H) fees and expenses associated with any NASD filing required
to be made in connection with the Registration Statement, including, if
applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD
(all such expenses being herein called "Registration Expenses").
The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange on which similar securities issued by
the Company are then listed, rating agency fees and the fees and expenses of any
person, including special experts, retained by the Company.
(ii) In connection with each Registration Statement required hereunder,
the Company will reimburse the holders of Registrable Securities being
registered pursuant to such Registration Statement for the reasonable fees and
disbursements of not more than one counsel (or more than one counsel if a legal
opinion is required from more than one counsel by the terms of any underwriting
agreement relating to the registered offering) chosen by the holders of a
majority of such Registrable Securities.
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(f) Indemnification
(i) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each holder of Registrable Securities, its officers, directors,
employees and agents and each person who controls such holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as an "Indemnified
Holder") from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
allegation thereof based upon information furnished in writing to the Company by
any holder expressly for use therein; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if (i) such holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale of Registrable
Securities and (ii) the Prospectus would have completely corrected such untrue
statement or omission; and provided further, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is completely corrected in an amendment or supplement to the Prospectus and if,
having previously been furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, such holder thereafter fails to
deliver such Prospectus as so amended or supplemented prior to or concurrently
with the sale of a Registrable Security to the person asserting such loss,
claim, damage, liability or expense who purchased such Registrable Security
which is the subject thereof from such holder. This indemnity will be in
addition to any liability which the Company may otherwise have.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against an Indemnified Holder in
respect of which indemnity may be sought from the Company, such Indemnified
Holder shall promptly notify the Company in writing, and the Company shall
assume the defense thereof, including the employment of counsel satisfactory to
such Indemnified Holder and the payment of all expenses; provided, however, the
failure to so notify the Company shall not affect any obligation the Company may
have to indemnify the Indemnified Holder except to the extent the Company is
materially adversely affected by such failure. Such Indemnified Holder shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel shall be the
expense of such Indemnified Holder unless (a) the Company has agreed to pay such
fees and expenses or (b) the Company shall have failed to assume the defense of
such action or proceeding or shall have failed to employ counsel satisfactory to
such Indemnified Holder in any such action or proceeding or (c) the named
parties to any such action or proceeding (including any impleaded parties)
include both such Indemnified Holder and the Company, and such Indemnified
Holder shall have been advised by counsel that representation of both parties by
the same counsel would be inappropriate due to actual or potential material
differing interests
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between them (in which case, if such Indemnified Holder notifies the Company in
writing that it elects to employ separate counsel at the expense of the Company,
the Company shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Holder, it being understood, however,
that the Company shall not, in connection with any one such action or proceeding
or separate but substantially similar or related actions or proceedings arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for such Indemnified Holder and any other Indemnified Holders, which firm
shall be designated in writing by such Indemnified Holders). The Company shall
not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or proceeding,
the Company agrees to indemnify and hold harmless such Indemnified Holders from
and against any loss or liability by reason of such settlement or judgment.
(ii) Indemnification by Holder of Registrable Securities. Each holder
of Registrable Securities severally agrees to indemnify and hold harmless the
Company, its directors and officers and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such holder, but only with respect to information relating to such
holder furnished in writing by such holder expressly for use in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling person,
in respect of which indemnity may be sought against a holder of Registrable
Securities, such holder shall have the rights and duties given the Company and
the Company or its directors or officers or such controlling person shall have
the rights and duties given to each holder by the preceding paragraph. In no
event shall the liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds received
by such holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such persons specifically for
inclusion in any Prospectus or Registration Statement or any amendment or
supplement thereto, or any preliminary prospectus.
(iii) Contribution. If the indemnification provided for in this Section
6(f) is unavailable to an indemnified party under Section 6(f)(i) or Section
6(f)(ii) hereof (other than by reason of exceptions provided in those Sections)
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and of the indemnified or indemnifying Holder, on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company, on the one
hand, and of the indemnified or indemnifying Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the
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<PAGE> 26
Company or by the indemnified or indemnifying Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in the second paragraph
of Section 6(f)(i) hereof, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company and each holder of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section
6(f)(iii) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of
this Section 6(f)(iii), an indemnified or indemnifying Holder shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Securities sold by such indemnified or indemnifying Holder or
its affiliated indemnified or indemnifying Holders and distributed to the public
were offered to the public exceeds the amount of any damages which such
indemnified or indemnifying Holder, or its affiliated indemnified or
indemnifying Holders, has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(g) Rule 144
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder and will take such further action as
any holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any holder of Registrable Securities,
the Company will deliver to such holder a written statement as to whether it has
complied with such information and requirements.
(h) Participation in Underwritten Registrations
No holder (or its successors or assigns) may participate in any
underwritten registration hereunder unless such person (i) agrees to sell such
person's securities on the basis provided in any underwriting arrangements
approved by the underwriters and other persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(i) Definitions
(i) Registrable Securities: The Warrant Shares (and any other
securities issued or issuable with respect to the Warrant Shares by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation
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<PAGE> 27
or other reorganization) issued or issuable upon exercise of the Series B
Warrants; provided that a security ceases to be a Registrable Security when it
is no longer a Transfer Restricted Security.
(ii) Transfer Restricted Security: Securities acquired by the holder
thereof other than pursuant to an effective registration under Section 5 of the
Securities Act or pursuant to Rule 144; provided that a Security that has ceased
to be a Transfer Restricted Security cannot thereafter become a Transfer
Restricted Security.
7. Payment of Taxes. The Company will pay all documentary stamp taxes
and other governmental charges (excluding all foreign, federal or state income,
franchise, property, estate, inheritance, gift or similar taxes) in connection
with the issuance or delivery of the Warrants hereunder, as well as all such
taxes attributable to the initial issuance or delivery of Warrant Shares upon
the exercise of Warrants and payment of the Exercise Price. The Company shall
not, however, be required to pay any tax that may be payable in respect of any
subsequent transfer of the Warrants or any transfer involved in the issuance and
delivery of Warrant Shares in a name other than that in which the Warrants to
which such issuance relates were registered, and, if any such tax would
otherwise be payable by the Company, no such issuance or delivery shall be made
unless and until the person requesting such issuance has paid to the Company the
amount of any such tax, or it is established to the reasonable satisfaction of
the Company that any such tax has been paid.
8. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate or certificate evidencing Warrant Shares shall be mutilated, lost,
stolen or destroyed, the Company shall issue, in exchange and substitution
therefor and upon cancellation of the mutilated Warrant Certificate or other
certificate, or in lieu of and substitution for the Warrant Certificate or other
certificate lost, stolen or destroyed, a new Warrant Certificate or other
certificate of like tenor and representing an equivalent number of Warrants or
Warrant Shares.
9. Notices to Warrant Holders. Upon any adjustment pursuant to Section
2 hereof, the Company shall promptly thereafter (i) cause to be filed with the
Company a certificate of an officer of the Company setting forth the Warrant
Number and Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based, and (ii) cause to be given to each of the registered holders of the
Warrant Certificates at his or its address appearing on the Warrant register
written notice of such adjustments by first class mail, postage prepaid. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Section 9.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for
or purchase shares of Common Stock or of any other subscription rights
or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of assets, including cash, evidences
of its indebtedness, or other securities; or
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<PAGE> 28
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action that would require
an adjustment to the Warrant Number or the Exercise Price pursuant to
Section 2 hereof; or
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his or its address appearing on the Warrant
register, at least 30 days prior to the applicable record date hereinafter
specified, or the date of the event in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 9 or any defect therein shall not affect the legality or
validity of any action taken requiring such notice.
Nothing contained in this Warrant Certificate shall be construed as
conferring upon the Holders of Warrants (prior to the exercise of such Warrants)
the right to vote or to consent or to receive notice as shareholder in respect
of the meetings of shareholders or the election of Directors of the Company or
any other matter, or any rights whatsoever as shareholders of the Company;
provided that nothing in the foregoing provision is intended to detract from any
rights explicitly granted to any Holder hereunder.
10. Notices to the Company and Warrant Holders.
(a) All notices and other communications provided for or permitted
hereunder shall be made by hand-delivery, first-class mail, telex, telecopier,
or overnight air courier guaranteeing next day delivery.
(b) All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. The parties may change the addresses to
which notices are to be given by giving five days' prior notice of such change
in accordance herewith.
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11. Governing Law. This Warrant Certificate shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the internal laws of said State.
12. Severability. In the event that one or more of the provisions of
this Warrant Certificate shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Warrant Certificate, but this
Warrant Certificate shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
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<PAGE> 30
13. Captions. The captions used in this Warrant Certificate are for
convenience only; they form no part of this Warrant Certificate and shall not
affect its interpretation.
SUBMICRON SYSTEMS CORPORATION
By:________________________________
Title:_____________________________
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<PAGE> 31
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise Of Warrant)
The undersigned holder hereby represents that he or it is the
registered holder of this Warrant Certificate, and hereby irrevocably elects to
exercise the right, represented by this Warrant Certificate, to receive ______
shares of Common Stock, $.0001 par value, of SubMicron Systems Corporation and
herewith tenders payment for such shares to the order of SubMicron Systems
Corporation the amount of $_________ in accordance with the terms hereof (unless
the holder is exercising Warrants pursuant to the net exercise provisions of
Section 1 of this Warrant Certificate). The undersigned requests that a
certificate for such shares be registered in the name of the undersigned or
nominee hereinafter set forth, and further that such certificate be delivered to
the undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth. If said number of shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests that
a new Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or nominee hereinafter set forth, and
further that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth.
Certificate to be registered as follows:
Name:__________________________________________
Address:_______________________________________
_______________________________________
_______________________________________
Social Security or
Taxpayer Identification No.:___________________________
Certificate to be delivered as follows:
Name:__________________________________________
Address:_______________________________________
_______________________________________
_______________________________________
Signature:______________________________
Date:________________
<PAGE> 32
ASSIGNMENT FORM
To assign this Warrant, fill in the form below:
(I) or (we) assign and transfer this Warrant to
___________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________ agent to transfer this
Warrant on the books of the Company. The agent may substitute another to act for
him.
Date: Your Signature:______________________________
(Sign exactly as your name appears on the other side of this Warrant)
Signature Guarantee:
<PAGE> 1
EXHIBIT 3
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f)(1) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree to the joint
filing with all other reporting persons on behalf of each of them of Amendment
No. 2 to Statement on Schedule 13D with respect to the Common Stock, par value
$.0001 per share, of SubMicron Systems Corporation, a Delaware corporation, and
that this Agreement may be included as an Exhibit to such joint filing.
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of
January 26, 1999.
THE KB MEZZANINE FUND II, L.P.
By: EIP Capital Partners, L.P.
Its: General Partner
By: Equinox Investment Partners, L.L.C.
/s/ Robert J. Wickey
--------------------------------------------
By: Robert J. Wickey
Its: Managing Member
CELERITY SILICON, L.L.C.
/s/ Mark R. Benham
---------------------------------------------------
By: Mark R. Benham
Its: Managing Member
Ex. 3-1
