<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
For the transition period from -------------- to ----------------------
Commission file number 0-20470
Integrated Process Equipment Corp.
----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 77-0296222
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
911 Bern Court, San Jose, California 95112
- ------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (408) 436-2170
--------------
- ------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by (X) whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
---- ----
As of November 10, 1997, 308,469 shares of Class A Common Stock and
17,264,625 shares of Common Stock of the registrant were outstanding.
Page 1 of 26
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTEGRATED PROCESS EQUIPMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
ASSETS 1997 1997
----------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 40,656 $ 114,944
Accounts receivable 45,590 58,222
Inventories 44,729 46,891
Prepaid expenses 968 1,315
Deferred income taxes 11,425 11,425
Net assets of discontinued operations 2,463 3,506
----------- -----------
Total current assets 145,831 236,303
----------- -----------
Property, plant and equipment, net 25,462 29,297
Intangible assets, net 11,798 11,142
Deferred income taxes 13,381 11,734
Other assets 1,593 5,552
----------- -----------
$ 198,065 $ 294,028
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 124 $ 124
Current portion of long-term debt 10,599 2,283
Accounts payable 17,445 15,256
Accrued liabilities 18,567 19,070
----------- -----------
Total current liabilities 46,735 36,733
Long-term debt, less current portion 19,546 117,252
----------- -----------
Total liabilities 66,281 153,985
----------- -----------
Stockholders' equity:
Series B preferred stock, $ .01 par value per share. Nonvoting, authorized
2,000,000 shares:
Series B-1 cumulative preferred stock. Authorized 21,478 shares,
issued and outstanding 14,543 shares at June 30, 1997, 14,408
shares at September 30, 1997. Liquidation preference of $1,342. - -
Series B-2 cumulative preferred stock. Authorized 21,478 shares,
issued and outstanding 19,544 shares at June 30 and September 30, 1997.
Liquidation preference of $1,820. - -
Series B-3 cumulative preferred stock. Authorized 21,478 shares,
issued and outstanding 9,898 shares at June 30 and September 30, 1997.
Liquidation preference of $922. - -
Series D preferred stock, $10 par value per share. Authorized 17,342 shares
at June 30, 1997 and 17,564 shares at September 30, 1997; 1,000 votes
per share; no shares issued and outstanding. Liquidation preference
of $120 per share. - -
Common stock, $.01 par value per share. Authorized 50,000,000 shares;
one vote per share; issued and outstanding.
16,889,071 shares at June 30, 1997 and 17,183,443 at September 30, 1997. 169 172
Class A common stock, $.01 par value per share. Authorized 3,500,000
shares, four votes per share; issued and outstanding 453,057 shares at
June 30, 1997 and 380,763 shares at September 30, 1997. 5 4
Additional paid-in capital. 189,422 193,119
Accumulated deficit. (57,850) (53,282)
Foreign currency translation adjustment. 38 30
----------- -----------
Total stockholders' equity. 131,784 140,043
----------- -----------
$ 198,065 $ 294,028
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 3
INTEGRATED PROCESS EQUIPMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1996 1997
-------- --------
<S> <C> <C>
Revenue $ 29,407 $ 51,274
Cost of goods sold 19,043 29,078
-------- --------
Gross margin 10,364 22,196
-------- --------
Operating expenses:
Research and development 6,507 6,709
Selling, general and administrative 6,305 7,788
-------- --------
Total operating expenses 12,812 14,497
-------- --------
Operating income (loss) (2,448) 7,699
Other income (expense):
Interest income 109 203
Interest expense (572) (473)
Other, net 67 15
-------- --------
Total other income (expense) (396) (255)
-------- --------
Income (loss) from continuing operations before income taxes (2,844) 7,444
Income tax expense (benefit) (1,185) 2,753
-------- --------
Income (loss) from continuing operations (1,659) 4,691
Net loss from discontinued operations (1,718) -
-------- --------
Net income (loss) (3,377) 4,691
Cumulative dividends on preferred stock (81) (61)
-------- --------
Net income (loss) attributable to common stockholders $ (3,458) $ 4,630
======== ========
Income (loss) per common share:
From continuing operations $ (.12) $ .24
From discontinued operations (.12) -
-------- --------
Income (loss) per common share $ (.24) $ .24
======== ========
Shares used in per share calculation 14,785 19,004
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
INTEGRATED PROCESS EQUIPMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Series B Class A
Preferred Stock Common Stock Common Stock Additional
---------------- ------------------- ------------------ Paid-In Accumulated
Shares Amount Shares Amount Shares Amount Capital Deficit
------- ------ ---------- ------ --------- ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance -
June 30, 1997 43,985 $ -- 16,889,071 $ 169 453,057 $ 5 $ 189,422 $ (57,850)
Net income -- -- -- -- -- -- -- 4,691
Conversion of Series B
Preferred Stock (135) -- 1,692 -- -- -- -- --
Conversion of Class A
Common Stock -- -- 72,294 1 (72,294) (1) -- --
Exercise of Stock Options
(including tax benefits of $1,106) -- -- 220,138 2 -- -- 3,697 --
Employee Stock Purchase Plan -- -- 248 -- -- -- -- --
Cumulative translation adjustment -- -- -- -- -- -- -- --
Dividends Paid -- -- -- -- -- -- -- (123)
------- ------ ---------- ------ --------- ------ ---------- ----------
Balance -
September 30, 1997 43,850 $ -- 17,183,443 $ 172 380,763 $ 4 $ 193,119 $ (53,282)
======= ====== ========== ====== ========= ====== ========== ==========
Foreign
Currency
Translation
Adjustment
-----------
<S> <C>
Balance -
June 30, 1997 $ 38
Net income --
Conversion of Series B
Preferred Stock --
Conversion of Class A
Common Stock --
Exercise of Stock Options
(including tax benefits of $1,106) --
Employee Stock Purchase Plan --
Cumulative translation adjustment (8)
Dividends Paid --
-----------
Balance -
September 30, 1997 $ 30
===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
INTEGRATED PROCESS EQUIPMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
Cash flows from operating activities: 1996 1997
-------- ---------
<S> <C> <C>
Net income (loss) $ (3,377) $ 4,691
Adjustments to reconcile net income (loss) to net
cash (used in) operating activities:
Depreciation and amortization 2,440 2,547
Deferred tax expense (benefit) (1,805) 2,753
Costs of warrants issued 657 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 3,126 (12,632)
(Increase) in inventories (9,089) (2,892)
(Increase) in prepaid expenses and other assets (280) (487)
Increase (decrease) in accounts payable 2,276 (2,189)
Increase in accrued liabilities 413 1,233
(Increase) in net assets of discontinued operations (651) (1,043)
-------- ---------
Net cash (used in) operating activities (6,290) (8,019)
-------- ---------
Cash flows from investing activities:
Purchases of property and equipment (116) (5,726)
Proceeds from sale of property and equipment 745 --
-------- ---------
Net cash provided by (used in) investing activities 629 (5,726)
-------- ---------
Cash flows from financing activities:
Proceeds from long-term debt 1,407 111,181
Repayment of long-term debt and capital leases (495) (25,610)
Repayment of notes payable (434) --
Payment of preferred stock dividends (396) (123)
Net proceeds from issuance of common stock and warrants 1,105 2,593
-------- ---------
Net cash provided by financing activities 1,187 88,041
-------- ---------
Effect of exchange rate changes on cash 15 (8)
-------- ---------
Net increase (decrease) in cash and cash equivalents (4,459) 74,288
Cash and cash equivalents, beginning of period 11,325 40,656
-------- ---------
Cash and cash equivalents, end of period $ 6,866 $ 114,944
======== =========
Supplemental disclosure of cash flow information:
Cash paid for interest during the period $ 725 $ 245
======== =========
Supplemental disclosure of noncash activities:
Retirement of Class B 6% cumulative convertible preferred stock $ (500) $ --
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
BASIS OF PREPARATION:
The accompanying condensed consolidated financial statements as of
September 30, 1997 and for the three month period ended September 30, 1997 are
unaudited; however, in the opinion of the management of Integrated Process
Equipment Corp. ("IPEC") and subsidiaries (the "Company"), such statements
include all adjustments (consisting solely of normal recurring accruals)
necessary for the fair statement of the information presented therein. The
condensed consolidated balance sheet as of June 30, 1997 was derived from the
audited financial statements at such date.
As more fully described in the following notes to condensed consolidated
financial statements, the Company announced its strategic decision to focus on
chemical mechanical planarization (CMP) and CMP-related products and discontinue
the operations of IPEC Clean, Inc. during the second quarter of fiscal 1997.
Prior period financial statements have been restated to reflect the
discontinuation of IPEC Clean, Inc.
Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-Q, the accompanying
condensed consolidated financial statements and notes do not include all
disclosures required by generally accepted accounting principles for complete
financial statements. Accordingly, these statements should be read in
conjunction with the Company's annual financial statements and notes thereto
included in the Company's annual report on Form 10-K for the year ended June 30,
1997.
Results of operations for interim periods are not necessarily indicative
of those to be achieved for full fiscal years.
ORGANIZATION:
IPEC is a Delaware corporation organized in December 1991 and is the
successor by merger to a California corporation of the same name that was
incorporated in October 1989. The Company is primarily engaged in designing,
manufacturing, marketing and servicing equipment for the semiconductor
manufacturing industry.
The Company is organized into two divisions. IPEC Planar manufactures CMP
equipment and CMP-related products. IPEC Precision manufactures advanced
plasma-assisted chemical etching equipment and metrology equipment for use
primarily in manufacturing of silicon wafers and semiconductor devices.
6
<PAGE> 7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Income (loss) per share of common stock:
Net income (loss) per common share is computed by dividing net income
(loss) less dividends on convertible preferred stock by the weighted average
number of common shares outstanding during the period, plus, when their effect
is dilutive, common stock equivalents consisting of certain shares subject to
stock options and warrants.
New Accounting Standards:
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128"). This Statement establishes standards for computing and presenting
earnings per share ("EPS"), and supersedes APB Opinion No. 15. The Statement
replaces primary EPS with basic EPS and requires dual presentation of basic and
diluted EPS. The Statement is effective for both interim and annual periods
ending after December 15, 1997. Earlier application is not permitted. After
adoption, all prior-period EPS data shall be restated to conform to Statement
128. Pro forma basic and diluted EPS, as calculated under Statement 128 would
have been $.27 and $.23 for the three months ended September 30, 1997.
INVENTORIES:
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1997 September 30, 1997
------------- ------------------
(Unaudited)
<S> <C> <C>
Raw materials $ 35,977 $39,756
Work in process 18,182 18,976
Finished goods 3,549 1,265
-------- -------
57,708 59,997
Less inventory obsolescence reserve (12,979) (13,106)
-------- -------
$ 44,729 $46,891
======== =======
</TABLE>
DISCONTINUED OPERATIONS:
In the second quarter of fiscal 1997, the Company announced its decision
to focus its resources on the manufacturing of CMP and CMP-related equipment. As
a result of this decision, the Company adopted a plan for the disposition by
sale of IPEC Clean by December 31, 1997.
IPEC Clean has been accounted for as a discontinued operation, and
accordingly its operations are segregated for all periods presented in the
accompanying statements of operations. Revenue, related
7
<PAGE> 8
losses and income tax benefits associated with the discontinued operation for
the three month period ended September 30, 1996 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30, 1996
------------------
(in thousands)
<S> <C>
Revenue $ 2,610
============
Loss from operations before income taxes (2,603)
Income tax benefit (885)
------------
Net loss from discontinued operations $ (1,718)
============
</TABLE>
The Company recorded a pre-tax charge amounting to $27.2 million to write
down intangible assets, accounts receivable, inventory, equipment and other
assets to estimated net realizable value and to record additional liabilities in
the second quarter of fiscal 1997. A charge amounting to $3.0 million was also
recorded to reflect the estimated phase out costs associated with IPEC Clean.
This charge is included in accrued liabilities at September 30, 1997 in the
accompanying condensed consolidated balance sheet. The tax benefit associated
with these charges amounted to $5.2 million.
The net assets of the discontinued operations are summarized in the
accompanying condensed consolidated balance sheets as follows:
<TABLE>
<CAPTION>
June 30, 1997 September 30, 1997
------------- ------------------
(in thousands)
<S> <C> <C>
Current assets $ 7,078 $ 6,769
Current liabilities (4,615) (3,263)
------------ ----------
$ 2,463 $ 3,506
============ ==========
</TABLE>
LONG-TERM DEBT:
The Company completed a private placement of $115.0 million 6.25%
Convertible Subordinated Notes due in 2004 in the first quarter of fiscal 1998.
Interest is payable semi-annually in March and September. The Notes are
subordinated to all existing and future senior indebtedness and effectively
subordinated to all liabilities, including trade payables and lease obligations
of the Company and its subsidiaries. The Notes can be converted after ninety
days from the original issuance into the Company's common stock at a conversion
price of $39.00 per share. The notes are not redeemable by the Company prior to
September 20, 2000.
Proceeds have been utilized to repay the balance of the Company's
revolving line of credit, described below. Remaining portions of proceeds may be
used to expand the Company's sales and
8
<PAGE> 9
service operations in Asia, to expand IPEC Precision's facilities and for
general corporate purposes including working capital and research and
development. Pending such uses, the Company intends to invest the net proceeds
in interest-bearing, investment grade securities. Debt issuance costs amounting
to $3.8 million incurred in connection with the private placement have been
included in other assets and are being amortized over seven years.
The Company entered into a loan agreement in April 1996 with a bank. Under
the terms of the agreement, the Company received a $10.0 million term loan and a
$20.0 million revolving loan facility to provide working capital for general
corporate purposes. The loan agreement was further modified to allow an increase
of the revolving loan facility from $20.0 million to $25.0 million from the
beginning of the last week of each fiscal quarter through the end of the first
week of the subsequent quarter. If the Company is unable to qualify for the
entire commitment amount under its borrowing base, the Company may nonetheless
borrow the amount for which it would not otherwise qualify, by pledging with the
bank dollar for dollar security in the form of cash equivalents or marketable
securities. The borrowing base for the revolving loan facility consists of
eighty percent of eligible accounts receivable as defined by the agreement. At
June 30, 1997, the eligible borrowing base was $23.7 million, of which $20.0
million was borrowed. An additional $5.0 million was borrowed under the
modification to the loan agreement and $5.0 million of cash equivalents were
pledged as restricted cash collateral for this borrowing. At September 30, 1997
there were no amounts outstanding under this loan agreement.
The facility bears interest at the Company's option at the prime rate plus
.25% or LIBOR plus 2.75%. The revolving loan facility was modified in April 1997
and extended until April 1998 with an option to renew the facility for a one
year period which the Bank must approve. If the revolving credit facility
expires, the Company is obligated to repay the outstanding balance in twelve
equal monthly payments of principal plus interest. The revolving loan facility
is secured by a first lien on all assets of the Company and its subsidiaries.
The $10 million term loan was repaid in the second quarter of fiscal 1997.
The terms of the loan agreement include various covenants, which, among
other things, include maintenance of certain financial ratios, limits on the
amount of dividends that can be paid to common stockholders and limit
acquisitions of treasury stock. The Company was in compliance with these
covenants at June 30, 1997 and September 30, 1997.
9
<PAGE> 10
PART I -- FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the condensed
consolidated financial statements and notes thereto included in this Quarterly
Report and the audited Consolidated Financial Statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Annual Report on Form 10-K for the year ended June
30, 1997.
OVERVIEW
IPEC is a Delaware corporation primarily engaged in designing,
manufacturing, marketing and servicing equipment for the semiconductor
manufacturing industry. The Company is organized into two divisions. IPEC Planar
manufactures CMP equipment and CMP-related products. IPEC Precision manufactures
advanced plasma-assisted chemical etch systems and metrology equipment for use
primarily in manufacturing silicon wafers and semiconductor devices. Financial
information for fiscal 1997 has been restated to reflect the discontinuation in
fiscal 1997 of IPEC Clean.
IPEC incurred net losses of $33.7 million and $10.7 million in fiscal 1997
and 1996, respectively, compared to net income of $599,000 in fiscal 1995. The
Company's fiscal 1997 net loss resulted from a $25.0 million charge (net of
taxes) for estimated losses on disposal of IPEC Clean, a $3.6 million loss (net
of taxes) from IPEC Clean operations in fiscal 1997 and a $17.6 million pretax
charge for asset write downs due to the discontinuation of the Avanti 672
program development effort. The Company's fiscal 1996 net loss resulted from a
one-time pretax charge of $37.0 million for the purchase of in-process research
and development in connection with the acquisitions of IPEC Planar Portland and
IPEC Precision. See "Factors Affecting Operating Results -- Operating Results
Are Subject to Quarterly Fluctuations for Varied Reasons."
The Company's revenue is derived from the sale of products and related
spare parts and service. The Company recognizes product and spare part revenue
when the product or part is shipped. Service revenue is recognized ratably over
the term of service contracts or in some cases upon completion of service.
The Company's gross margin has varied in the past and may vary
significantly in the future due to many factors and is especially dependent on
the percentage of sales through distributors, materials costs, product mix and
favorable terms given to customers to introduce new products, penetrate new
markets and accelerate purchases. The Company sells directly in the United
States, and such sales historically have had a higher gross margin than indirect
international sales. Gross margins in any period may not be indicative of
margins for future periods. Because IPEC Precision's customer base is new, the
Company believes that IPEC Precision's gross margin could be lower than the
gross margin for the Company's CMP tools. As new products are introduced by IPEC
Precision in future quarters, the Company's gross margin may decrease. See
"Factors Affecting Operating Results -- Operating Results Are Subject to
Quarterly Fluctuations for Varied Reasons."
10
<PAGE> 11
This report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, which are subject to the
"safe harbor" created by that section. These forward-looking statements include,
but are not limited to, statements concerning future revenues, operating
margins, expenses, interest income and interest expense, disposal of IPEC Clean,
and cash needs. The Company's actual future results could differ materially from
those projected in the forward-looking statements. Some factors which could
cause future actual results to differ materially from the Company's recent
results or those projected in the forward-looking statements are described in
"Factors Affecting Operating Results" below. The Company assumes no obligation
to update the forward-looking statements or such factors.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the results of
operations for the Company expressed as a percentage of total revenue.
<TABLE>
<CAPTION>
PERCENT OF TOTAL REVENUE
--------------------------------
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1996 1997
-------- ---------
<S> <C> <C>
Revenue 100.0% 100.0%
Cost of goods sold 64.8% 56.7%
-------- ---------
Gross margin 35.2% 43.3%
-------- ---------
Operating expenses:
Research and development 22.1% 13.1%
Selling, general and administrative 21.4% 15.2%
-------- ---------
Total operating expenses 43.5% 28.3%
-------- ---------
Operating income (loss) (8.3%) 15.0%
Other income (expense):
Interest income .4% .4%
Interest expense (1.9%) (.9%)
Other, net .2% -
-------- ---------
Total other income (expense) (1.3%) (.5%)
-------- ---------
Income (loss) from continuing operations before income taxes (9.6%) 14.5%
Income tax expense (benefit) (4.0%) 5.4%
-------- ---------
Income (loss) from continuing operations (5.6%) 9.1%
Net loss from discontinued operations (5.8%) -
-------- ---------
Net income (loss) (11.4%) 9.1%
======== =========
</TABLE>
11
<PAGE> 12
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1996
Revenue. Revenue was $51.3 million for the quarter ended September 30,
1997 compared to $29.4 million for the quarter ended September 30, 1996. Revenue
has increased each quarter since the quarter ended September 30, 1996 and has
resulted in the highest quarterly revenue recorded in the Company's history. The
74% growth in revenue from the quarter ended September 30, 1996 resulted
primarily from two factors. First, the Company sold more of its high throughput
systems, the AvantGaard 676 and 776, which have higher average selling prices
than the older Avanti 372M and 472 systems. Second, there was an industrywide
slowdown in semiconductor equipment shipments in the first half of fiscal 1997.
Revenue from international sales represented 30% and 35% of total revenue for
the quarters ended September 30, 1997 and 1996, respectively. Revenue from the
Company's largest customer represented 41% and 51% of total revenue for the
quarters ended September 30, 1997 and 1996, respectively.
Cost of goods sold. Cost of goods sold decreased as a percentage of
revenue to 56.7% for the quarter ended September 30, 1997 from 64.8% for the
quarter ended September 30, 1996. Cost of goods sold increased as a percentage
of revenue from 54.3% in the quarter ended June 30, 1997. This resulted from
pricing concessions given to certain customers as the AvantGaard 676 and 776
tools were introduced in new markets and from variances in manufacturing costs
because the Company has limited experience manufacturing these new products.
Cost of goods sold for the quarter ended September 30, 1996 was adversely
affected by a $657,000 increase in cost of goods sold related to warrants issued
to a major customer in connection with an agreement to accelerate product
shipments into the first, second and third quarters of fiscal 1997. Cost of
goods sold as a percentage of revenue for the quarter ended September 30, 1996
was also adversely affected by $.8 million of costs associated with
repositioning the Avanti 672, and high levels of fixed manufacturing and
customer service costs allocated across lower revenue.
Research and development. Research and development expense increased 3% to
$6.7 million for the quarter ended September 30, 1997 from $6.5 million for the
quarter ended September 30, 1996. Expenditures were incurred to further develop
the AvantGaard 676 and integrated cleaner 776 product lines. Additional efforts
are underway to develop 300 mm integrated CMP wafer systems, plasma-assisted
chemical etch systems, metrology technologies and copper dual damascene
processes. Research and development expense for the quarter ended September 30,
1996 included expenditures for the development of the Avanti 672 CMP tool. This
program was discontinued in the second quarter of fiscal 1997.
Selling, general and administrative. Selling, general and administrative
expense increased 24% to $7.8 million for the quarter ended September 30, 1997
from $6.3 million for the quarter ended September 30, 1996. The $1.5 million
increase resulted primarily from a higher level of sales activity in the quarter
ended September 30, 1997 compared to September 30, 1996. Additionally, for the
quarter ended September 30, 1996, selling, general and administrative expenses
were offset by an $865,000 benefit resulting from adjustments for both the
acquisitions of Westech Systems, Inc. in fiscal 1994 and GAARD Automation, Inc.
in fiscal 1996.
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<PAGE> 13
Interest income and interest expense. Interest income and interest expense
for the quarter ended September 30, 1997 did not change significantly from the
quarter ended September 30, 1996. As a result of the $115 million 6.25%
Convertible Subordinated Note financing completed in September 1997, interest
expense in future periods will increase. Investment of proceeds from the
financing will also result in increased interest income in future periods.
Income tax expense. Income tax expense for the quarter ended September 30,
1997 was $2.8 million compared to a tax benefit of $1.2 million for the quarter
ended September 30, 1996. The effective tax expense (benefit) rates were 37.0%
and (41.7%) for the quarters ended September 30, 1997 and 1996, respectively.
Differences in the effective tax rates result primarily from adjustments for
deferred taxes and state taxes for the quarter ended September 30, 1996.
Net loss from discontinued operations. As a result of the Company's
decision to focus on CMP and CMP-related products, the Company decided to
discontinue the operations of IPEC Clean and recorded a $25.0 million loss on
disposal of IPEC Clean for the quarter ended December 31, 1996. The operating
results of IPEC Clean have been segregated from the continuing operations of the
Company and reported as discontinued operations for all periods presented. The
loss from operations of IPEC Clean was $1.7 million for the quarter ended
September 30, 1996. Results of operations of IPEC Clean for the quarter ended
September 30, 1997 were charged to an accrued liability established in the
quarter ended December 31, 1996 for estimated phase out costs in connection with
the loss on disposal of IPEC Clean. The Company has signed a letter of intent
for the sale of IPEC Clean and negotiations are currently in progress. See
"Factors affecting operating results - Disposition of IPEC Clean May Require
Significant Resources and Adversely Affect Results."
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity include cash and cash
equivalents of $114.9 million as of September 30, 1997, an increase of $74.3
million from June 30, 1997. The increase in cash and cash equivalents during the
quarter ended September 30, 1997 resulted primarily from the private placement
of $115 million of 6.25% Convertible Subordinated Notes due in 2004. The Notes
can be converted after ninety days from the original issuance into the Company's
common stock at a conversion price of $39.00 per share. The Notes are not
redeemable by the Company prior to September 30, 2000.
Proceeds from the Notes were utilized to repay the balance of the
Company's revolving line of credit. Remaining portions of proceeds may be used
to expand the Company's sales and service operations in Asia, to expand IPEC
Precision's facilities and for general corporate purposes including working
capital and research and development. Pending such uses, the Company has
invested net proceeds in interest bearing investment grade securities.
As of September 30, 1997, the Company had $199.6 million of working
capital compared to $99.1 million as of June 30, 1997. The Company's accounts
receivable increased to $58.2 million as of September 30, 1997 compared to $45.6
million at June 30, 1997. The increase in accounts receivable was primarily due
to a higher level of sales in the first quarter of fiscal 1998 compared to the
fourth quarter of fiscal 1997, favorable credit terms granted to certain
international customers, and to customers purchasing initial AvantGaard 676 and
776 systems. The Company's inventory increased to $46.9
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million as of September 30, 1997 compared to $44.7 million as of June 30, 1997.
This was primarily due to an increase in production of the Company's AvantGaard
676 and 776 systems and increased levels of manufacturing at IPEC Precision.
The Company's property, plant and equipment increased $3.8 million to
$29.3 million as of September 30, 1997 from $25.5 million as of June 30, 1997,
primarily due to additions of testing and demonstration equipment related to the
AvantGaard 676 and 776 systems.
Total long-term debt increased to $119.5 million as of September 30, 1997
from $30.1 million as of June 30, 1997 as a result of the issuance of $115
million of Convertible Subordinated Notes described above. Total long-term debt
as a percentage of stockholders' equity increased to 85% as of September 30,
1997 from 23% as of June 30, 1997. The Company also has $20.0 million available
under a revolving loan facility with a bank. As of September 30, 1997 there were
no amounts outstanding under this facility.
The Company believes that its cash and cash equivalents will be sufficient
to fund its operations for the foreseeable future. The Company's cash needs
depend on, among other things, whether its sales continue to expand, which would
require greater investments in working capital, and on whether the Company is
forced by competitive pressures and commercial terms to continue or increase
extended terms for accounts receivable and whether the Company acquires other
companies or businesses. If the Company requires additional cash, there can be
no assurance that such additional financing will be available when needed or, if
available, will be available on satisfactory terms. In order to raise capital,
the Company may issue debt or equity securities and may incur substantial
dilution. The failure to obtain additional financing when needed on satisfactory
terms would also hinder the Company's ability to invest in capital equipment and
working capital.
FACTORS AFFECTING OPERATING RESULTS
The Company's Limited Operating History Has Involved Annual and Quarterly
Losses. Prior to the Company's acquisition of IPEC Planar Phoenix in fiscal
1994, the Company did not have significant revenue. The Company had net losses
in fiscal 1996 and 1997 of $10.7 million and $33.7 million, respectively.
Operating results in fiscal 1997 include a net loss of approximately $36.9
million in the second quarter of fiscal 1997, due to one-time charges (net of
taxes) of approximately $40.2 million for discontinuation of the business of
IPEC Clean and of a research and development program. Operating results for
future periods are subject to numerous uncertainties, and there can be no
assurance that the Company will be profitable in future periods.
Operating Results Are Subject to Quarterly Fluctuations for Varied
Reasons. The Company's operating results are subject to quarterly fluctuations
due to a variety of factors, including industry-wide changes in the demand for
semiconductors or for semiconductor production equipment generally and, in
particular, for high performance semiconductors with smaller line widths and
multiple layers; the timing of significant shipments; accelerations, delays,
cancellations or postponement of orders; the gain or loss of significant
customers; competitive pressures; availability and costs of components from the
Company's suppliers; the timing of product announcements and introductions and
process qualifications by the Company, its customers or its competitors; the
ability of the Company to manufacture, test and
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deliver products in a timely and cost-effective manner; the level of field
service operations; the timing and structure of acquisitions and dispositions or
spin-offs; changes in the mix of products sold; the level of international
sales, which historically have had lower margins than domestic sales; delayed or
canceled construction of wafer fabrication facilities by customers; research and
development expenses associated with new product introductions; market
acceptance of new or enhanced versions of the Company's and its customers'
products; reductions in personnel; discontinuance of operations; and the
sufficiency of personnel and capital resources to support operations. The
Company cannot assure that it will be able to anticipate or respond timely to
changes in any of the factors listed above.
The Company has experienced adverse effects from some of these factors in
the past and may experience them in the future. In the second quarters of fiscal
1995 and 1996, the Company incurred net losses due to one-time charges
associated with the IPEC Planar Portland and IPEC Precision acquisitions. The
Company incurred a loss in the first quarter of fiscal 1997, primarily due to a
decline in demand for semiconductor capital equipment, the Company's lack of a
high-throughput oxide process CMP system, unprofitable operations at IPEC
Precision and increased cost of goods sold resulting from the issuance of
warrants to a major customer as described below. The Company incurred a net loss
in the second quarter of fiscal 1997, due to a $25.0 million charge (net of
taxes) for estimated losses on disposal of IPEC Clean and a $17.6 million pretax
charge for asset write-downs due to discontinuation of the Company's Avanti 672
product development effort. The semiconductor equipment market experienced an
industry-wide slowdown in the second half of calendar 1996, which adversely
affected sales of the Company's CMP polishing equipment. The Company's revenue
from sales of CMP equipment in each of the first three quarters of fiscal 1997
was lower than such revenue in each of the first three quarters of fiscal 1996.
Fiscal 1997 revenue was below fiscal 1996 revenue.
Results of operations in any period should not be considered indicative of
the results to be expected for future periods. Fluctuations in operating results
may also result in fluctuations in the price of the Company's Common Stock. In
future quarters, the Company's operating results may not meet the expectations
of public market analysts or investors. In such an event, the market price of
the Common Stock would be materially adversely affected.
The Timing of Significant Shipments and Orders Can Impact Quarterly
Results. The Company derives most of its revenue from the sale of products in a
price range from $250,000 to $1.4 million per unit, and clustered systems can be
priced much higher. As a result, the timing of individual shipments can have a
significant impact on the Company's results of operations for a particular
period. The Company has previously experienced order and delivery delays and
cancellations which caused the Company to miss its quarterly revenue and profit
projections, including during the first quarter of fiscal 1997, and there can be
no assurance that the Company can avoid such order and delivery delays in the
future. During the first quarter of fiscal 1997, a significant customer agreed
to accelerate certain orders into the first three quarters of fiscal 1997, which
could adversely affect the Company's ability to obtain orders from this customer
in fiscal 1998. These accelerated orders represented 14% of the Company's
revenue in fiscal 1997. Cost of goods sold increased in the first three quarters
of fiscal 1997 by $657,000, $191,000 and $212,000, respectively, due to the
issuance of certain warrants in connection with this acceleration. Orders which
the Company has included in its backlog may be canceled. For example, the
Company removed from its backlog orders of approximately $12.0 million in the
fourth quarter of fiscal 1997, primarily due to delays in construction of a
wafer fabrication facility for
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Submicron Systems in Thailand. A significant portion of the Company's operating
expenses are relatively fixed in nature and planned expenditures are based in
part on anticipated orders. Ongoing expenditures for product development and
engineering make it difficult to reduce expenses in a particular quarter if the
Company's sales goals for the quarter are not met. Any inability to reduce
spending quickly enough to mitigate any revenue shortfall would magnify the
adverse impact of the revenue shortfall on the Company's results of operations.
See "MD&A -- Results of Operations."
The Company Depends on a Small Number of Major Customers. A small number
of customers account for a significant percentage of the Company's orders and
revenue. In the quarter ended September 30, 1997 Intel represented 41% of the
Company's revenue. In fiscal 1997, Intel represented 51% of the Company's
revenue. In fiscal 1996, Intel and IBM represented 35% and 11%, respectively, of
the Company's revenue. In fiscal 1995, Intel, IBM and Motorola represented 16%,
24% and 16%, respectively, of the Company's revenue. The Company anticipates
that its revenue will continue to depend on a limited number of major customers,
although the companies considered to be major customers and the percentage of
the Company's revenue represented by each major customer may vary from quarter
to quarter. Several of the Company's major customers, including Intel, must
determine shortly the extent to which they will adopt the Company's AvantGaard
676 or AvantGaard 776, particularly for the oxide process, or comparable
high-throughput products from the Company's competitors. The loss of a major
customer, any material reduction in orders by such customers, including
reductions due to market or competitive conditions or the determination of any
such customer not to adopt the Company's next-generation products, would have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company's future success depends in part upon its
ability to obtain orders from new customers, as well as the financial condition
of its customers and the general economy.
The Company Depends on Broader Industry Acceptance of CMP and the
AvantGaard 676 and AvantGaard 776. The CMP process has not been broadly adopted
by semiconductor manufacturers for volume production. IPEC defines semiconductor
manufacturers using CMP in volume production as companies using ten or more CMP
systems. Most semiconductor manufacturers who have CMP equipment use it only for
pilot line production, and few semiconductor manufacturers produce commercial
quantities of ICs using CMP machines. To date, the Company's products have been
used primarily to manufacture advanced semiconductor logic and memory devices.
While industry analysts have projected significant future growth for the CMP
polisher market, these projections depend on the analysts' assumptions, and
variations in industry demand can occur during the several years included in the
projections. There can be no assurance that projected industry growth will occur
or that semiconductor manufacturers will adopt CMP processes for volume
production. Lack of growth in the semiconductor industry and the determination
of such manufacturers not to adopt CMP processes for volume production would
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company's future results depend on sales of the AvantGaard 676,
AvantGaard 776 and Avanti 472 CMP wafer polishing systems. The Avanti 372M CMP
wafer polishing system is based on older technology and is sold primarily to one
customer, with shipments expected only through calendar 1999. Because shipments
of the Avanti 372M are limited and the Avanti 472 does not offer the same
throughput or footprint as the AvantGaard 676 or AvantGaard 776 or other
high-throughput CMP
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systems, the Company expects its reliance on sales of the AvantGaard 676 and
AvantGaard 776 to increase in the future. As of September 30, 1997, the
AvantGaard 676 had been shipped to nine customers and the AvantGaard 776 had
been shipped to six customers. The AvantGaard 676 was initially designed solely
to planarize metal layers and has not been broadly adopted for this purpose in
volume production. The Company's oxide process for the AvantGaard 676 and
AvantGaard 776 was recently developed and has not been widely accepted. Several
customers are qualifying a new production level oxide CMP process for these
systems, and the Company believes that the oxide process is being used in
production by a very limited number of customers. The AvantGaard 776 was
designed to integrate CMP, metrology and wafer cleaning in a single unit with
both oxide and metal capability. If commercial use does not confirm the utility
of the AvantGaard 676 and AvantGaard 776 for both oxide and metal processes, or
if customers do not broadly adopt the AvantGaard 676 and AvantGaard 776, the
Company's business, financial condition and results of operations would be
materially and adversely affected.
The Company's future results also depend on sales of IPEC Precision's
products, which are currently oriented toward semiconductor wafer manufacturers
and have not been widely adopted by these or other semiconductor industry
customers. There can be no assurance that customers will accept these products
or that these products can be sold profitably or in volume.
The Company Must Develop New Products Due to Technological Change. The
Company derives most of its revenue from sales of CMP equipment and related
products by IPEC Planar. Semiconductor manufacturing equipment and processes are
subject to rapid technological changes and product obsolescence. Sales of
certain of the Company's products generally depend on new semiconductor
fabrication facility construction projects and facility upgrades by customers.
The Company's strategy depends in part on developing and introducing products
that lower the semiconductor manufacturer's cost of ownership, which involves a
number of factors, including product acquisition and operating expenses,
throughput, reliability, footprint and wafer yields. The Company believes that
its future success will depend in part upon its ability to enhance its existing
products, develop new products and qualify new processes on its CMP systems to
address technological changes and customer requirements.
Product or Process Development Difficulties Could Adversely Affect the
Company's Results of Operations. The Company's current development efforts
include the AvantGaard 876 300 mm wafer CMP systems, plasma-assisted chemical
etch systems, metrology technologies and copper dual damascene processes.
Semiconductor equipment companies often experience delays in completing advanced
products and processes. In the past, the Company has experienced delays in
developing new CMP tools and processes and the plasma-assisted chemical etch
system. The Company cannot assure that any product in development will be
completed as scheduled or that completed products or processes will be
commercially adopted. Due to the complexity and sophistication of the Company's
products and related automation software, the Company's products from time to
time may contain defects or "bugs" which can be difficult to correct.
Furthermore, as the Company continues to develop and enhance its products, there
can be no assurance that the Company will be able to identify and correct
defects in a timely manner. IPEC Precision may require a large amount of capital
in order to commercialize its current products and products under development.
If any of the Company's products currently under development are not
commercialized in a timely manner, the Company could be required to write off
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inventory and other assets related to the development project, and the Company
could lose customers and revenue. For example, the Company incurred a $17.6
million pretax asset write off in the second quarter of fiscal 1997 for
discontinuance of the Avanti 672 product development program. To the extent
products developed by the Company are based upon anticipated changes in
semiconductor production technologies, sales for such products may be adversely
affected if other technology becomes accepted in the industry.
The Company May be Adversely Affected by the Intensely Competitive Market
in Which it Participates. The semiconductor equipment industry is an intensely
competitive market. The Company believes that direct domestic and international
competition in CMP polishing systems and clustered CMP polishing and cleaning
systems is likely to increase substantially. The Company is aware of a number of
companies currently marketing CMP systems that directly compete with the
Company's systems, including Applied Materials, Inc. ("Applied Materials"),
Ebara Corporation, SpeedFam International, Inc., and Strasbaugh. Competition is
increasing significantly in the market for high-throughput planarization
systems. The Company is aware that other capital equipment manufacturers not
currently involved in the development of CMP systems may also attempt to enter
and develop products for this market or to develop alternative technologies
which may reduce the need for the Company's products. For example, Lam Research
Corporation, a semiconductor production equipment supplier, acquired OnTrak
Systems, Inc., a manufacturer of wafer processing equipment which has developed
a CMP tool. The Company anticipates that its customers will be increasingly
inclined to utilize multiple CMP suppliers. Therefore, successful process
qualification of the Company's CMP systems may not lead to exclusive source
supplier relationships with its customers in the future. The Company also
believes that other companies are developing or marketing products which compete
with the Company's plasma-assisted chemical etch systems and metrology equipment
and that such competition may increase in the future.
The trend toward consolidation in the semiconductor equipment industry has
made it increasingly important to have the financial resources necessary to
compete effectively across a broad range of product offerings, to fund customer
service and support on a worldwide basis and to invest in both product and
process research and development. Certain current and potential competitors,
including Applied Materials, provide customers with evaluation tools and have
substantially greater financial resources and name recognition than the Company.
In addition, current and potential competitors, including Applied Materials,
that supply a broader range of semiconductor capital equipment may have better
relationships with semiconductor manufacturers, including the Company's
customers. The Company expects its current competitors to continue to improve
the design and performance of their existing products and processes, and to
introduce new products and processes with improved price and performance
characteristics. New product introductions or product announcements by the
Company's competitors could cause a decline in sales or loss of market
acceptance of the Company's existing products and could adversely affect the
acceptance of new products. Moreover, increased competitive pressure could lead
to intensified price based competition, which could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company is Subject to Risks Associated with International
Sales. International sales accounted for approximately 30% of the Company's
revenue for the quarter ended September 30, 1997. International sales accounted
for approximately 27% and 28% of the Company's revenue in fiscal 1997
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and 1996, respectively. The Company's international sales historically have had
lower gross margins than domestic sales since these sales have been made through
distributors, which purchase products from the Company at a discount to list
price. The Company expects that international sales will continue to account for
a significant portion of its revenue in future periods. Margins on international
sales may vary in the future depending on the level of sales made through
distributors. International sales are subject to certain inherent risks,
including tariffs, embargoes and other trade barriers, staffing and operating
foreign sales and service operations, managing distributors and collecting
accounts receivable. The Company is also subject to risks associated with
regulations relating to the import and export of high technology products. The
export of the Company's products to certain countries is limited by law. The
Company cannot predict whether quotas, duties, taxes or other charges or
restrictions upon the importation or exportation of the Company's products in
the future will be implemented by the United States or any other country.
Fluctuations in currency exchange rates could cause the Company's products
to become relatively more expensive to customers in a particular country,
leading to a reduction in sales or profitability in that country. While the
Company's sales are currently denominated only in U.S. dollars, future
international activity may result in foreign currency denominated sales. Gains
and losses on the conversion to U.S. dollars of accounts receivable and accounts
payable arising from international operations may contribute to fluctuations in
the Company's results of operations.
The Company's Strategy Relies on Increased Penetration of the Asian
Market. The Company believes that its future success will depend in part upon
continued acceptance of its products by Asian semiconductor manufacturers. This
market segment is large, represents a substantial percentage of the worldwide
semiconductor manufacturing capacity, and is difficult for foreign companies to
penetrate. Asian manufacturers may develop alternatives to CMP or may enhance
existing manufacturing techniques such as spin-on glass and deposited glass to
achieve acceptable yields for DRAMs and other integrated circuits involving
three or more metal layers and line widths at or below 0.5 micron. The Company
currently sells its products in Asia through sales representatives and
distributors. The Company is establishing a fully-staffed Asia Pacific division
to service this market. A direct presence in these markets, particularly Japan,
requires the allocation of substantial management and financial resources, may
adversely affect the Company's relationship with its current distributors, and
may increase a number of risks related to international sales as described
above.
The Semiconductor Industry Is Cyclical, Causing Fluctuations in the
Company's Operating Results. The Company's business depends upon capital
expenditures by manufacturers of semiconductor devices, primarily for the
opening of new or expansion of existing fabrication facilities which, in turn,
depends upon the current and anticipated market demand for semiconductor devices
and products utilizing such devices. The semiconductor industry is highly
cyclical and has experienced significant overall growth in recent years, which
has resulted in growth in the semiconductor capital equipment industry. The
cyclicality of the semiconductor industry has had a severe adverse effect on the
industry's demand for semiconductor processing equipment. In certain instances,
industry downturns have lasted for extended periods of time. Because the Company
believes that it must maintain research and development and customer service and
support expenditures even during industry downturns, any downturn in the
semiconductor industry could have a material adverse effect on the Company's
business, financial condition and results of operations. There can be no
assurance that past growth in the
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semiconductor and semiconductor capital equipment industries, or the resulting
growth in the Company's business, can be sustained in the future or that the
downturns in the market will not reoccur.
The Company's planned operations assume that a significant portion of new
orders will result from demand from semiconductor manufacturers building or
expanding fabrication facilities for advanced multi-level semiconductor devices
with design requirements of 0.35 micron and below, and there can be no assurance
that such demand will exist.
Past Acquisitions Have Adversely Affected Operating Results. The Company's
growth in annual revenues from fiscal 1994 through fiscal 1996 has resulted not
only from expansion of its core CMP business, but also from acquisitions in
fiscal 1994, 1995 and 1996. The Company's expansion through acquisitions has
resulted in significantly higher operating expenses, particularly because the
Company's strategy initially has been to operate each acquired business
independently, resulting in separate marketing, customer support and
administrative functions. The companies acquired generally had not operated
profitably before their acquisition by IPEC. IPEC Clean, acquired in fiscal
1995, has never operated profitably and was discontinued by the Company in the
second quarter of fiscal 1997, resulting in a $25.0 million charge (net of
taxes) in that quarter. IPEC Precision has only recently achieved significant
revenue from shipments of production equipment. There can be no assurance that
the Company will be able to integrate or operate profitably any acquired entity.
IPEC Precision Joint Development Program May Require Significant Resources
and Adversely Affect Results. The Company has entered into an agreement with
MEMC to develop a family of wafer shaping tools using IPEC Precision's
plasma-based planarization and metrology technology. IPEC Precision and MEMC
have established an LLC which will own the intellectual property developed and
license it to IPEC Precision. IPEC Precision will share expenses related to the
joint development program and pay royalties to the LLC on the sale of newly
developed plasma wafer shaping tools. There can be no assurance that the joint
development program will be successful.
Disposition of IPEC Clean May Require Significant Resources and Adversely
Affect Results. The Company may dispose of or spin off portions of its business
which the Company determines are not complementary to its strategy. The Company
has signed a letter of intent for the sale of IPEC Clean and negotiations are
currently in progress. There can be no assurance of the terms of such a sale or
whether the Company can complete a sale by the end of calendar 1997. In the
event a sale cannot be achieved by the end of calendar 1997, the Company plans
to shut down IPEC Clean's operations. The IPEC Clean disposition effort could
absorb significant management time and adversely affect the Company's business,
financial condition and results of operations.
Future Acquisitions May Require Significant Resources and Adversely Affect
Results. The Company's strategy is to obtain additional wafer fabrication
technologies and may involve, in part, acquisitions of products, technologies or
businesses from third parties. The Company also may make acquisitions for other
reasons, including to obtain additional distribution capacity in specified
geographic markets. An acquisition could absorb substantial cash resources,
require the Company to incur or assume debt obligations, or involve the issuance
of additional Common Stock, which could dilute the Company's existing
stockholders. An acquisition which is accounted for as a purchase, like the
Company's past acquisitions, could involve significant one-time charges, or
could involve the
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amortization of goodwill over a number of years, which would adversely affect
earnings in those years. An acquired entity may have unknown liabilities, and
its business may not achieve the results anticipated at the time of the
acquisition. An acquisition or disposition would absorb significant management
time and could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company Would be Adversely Affected if Suppliers Could Not Deliver
Goods and Services. The Company relies on a limited number of independent
manufacturers to provide certain components in assemblies made to the Company's
specifications and use in the Company's products. In the event that the
Company's subcontractors were to experience financial, operational, production
or quality assurance difficulties that resulted in the reduction or interruption
of supply to the Company, the Company's business, financial condition and
results of operations would be materially adversely affected. In addition, the
Company purchases certain key components from qualified vendors for which
alternative qualified sources are not currently available. Any prolonged
inability to obtain adequate amounts of qualified components would have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company Depends on its Key Personnel and Has Appointed a New Chief
Executive Officer. The Company's future success is dependent upon its ability to
attract and retain qualified management, technical, sales and support personnel.
There is intense competition for such personnel, particularly in Phoenix,
Arizona, which has a relatively low unemployment rate, and the Company may
experience difficulty in hiring skilled personnel. IPEC announced the
appointment of Roger D. McDaniel to the position of President and Chief
Executive Officer effective September 1, 1997. Mr. McDaniel will oversee all
financial and operational aspects of the Company. Thomas C. McKee, IPEC's
President and Chief Operating Officer from October 1995 to August 1997, will
remain with the Company through December 1997 as Chief Operating Officer and
serve as a consultant until February 1999. Lack of a smooth transition of
financial and operational control to Mr. McDaniel, the loss of certain key
employees or consultants, or the Company's inability to attract and retain new
key employees could have a material adverse effect on the Company's business,
financial condition and results of operations. During July and October 1996, the
Company effected reductions in its work force to reduce its expenses and may do
so in the future. Repeated layoffs could adversely affect the retention of
employees and could adversely affect the Company's ability to hire new personnel
in the future. Personnel terminations at IPEC Precision included technical
personnel, who could be difficult to replace if IPEC Precision successfully
markets its products and requires additional engineering staff to support
customers.
The Company Depends on Proprietary Technology, and Protection is
Uncertain. The Company's success depends in significant part on the proprietary
nature of its technology. Patents issued to the Company may not provide the
Company with meaningful advantages and may be challenged. The two initial
patents relating to the Company's single wafer rotational planarization system
products (the Avanti 372M and Avanti 472) expired in September 1997. In 1993,
the technology covered by these patents was licensed on a royalty-free basis to
a competitor. This license was granted pursuant to a settlement arrangement in
which the Company also incurred settlement obligations aggregating $1.4 million,
of which $50,000 remained outstanding at September 30, 1997. To the extent that
a competitor of the Company is able to reproduce or otherwise capitalize on the
Company's technology, it may be difficult or impossible for the Company to
obtain necessary intellectual property
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protection in the United States or other countries where such competitor
conducts its operations. Moreover, the laws of foreign countries may not protect
the Company's intellectual property to the same extent as do the laws of the
United States.
The Company also relies on trade secrets that it seeks to protect, in
part, through confidentiality agreements with employees and other parties. These
agreements may be breached, and the Company may not have adequate remedies for
any such breach. The Company's trade secrets may also become known to or
independently developed by others.
The Company is Subject to Infringement Claims. As is the case with high
technology companies generally, the Company may from time to time receive notice
of claims of infringement of other parties' proprietary rights. If any Company
equipment is found to infringe a patent, a court may grant an injunction to
prevent making, selling or using the equipment in the applicable country. The
Company may seek to obtain a license of such third party's intellectual property
rights, which may not be available under reasonable terms or at all. Expensive
and time-consuming litigation may be necessary to enforce patents issued to the
Company, to protect trade secrets or know-how owned by the Company, to defend
the Company against claimed infringement of the rights of others and to
determine the scope and validity of proprietary rights of others.
The Company Has Placed Its Technology in Escrow Under a Significant
License Agreement. The Company manufactures the AvantGaard 676 under a license
from a volume manufacturer of advanced microprocessors. The Company has escrowed
technical data sufficient to permit such manufacturer to manufacture the
Company's AvantGaard 676. The data may be released from escrow if the Company
does not meet certain criteria regarding product or spare part delivery
schedules to the manufacturer. If the data were to be released from escrow, the
semiconductor manufacturer could manufacture the AvantGaard 676 or have the
AvantGaard 676 manufactured by others for its use, which would have a material
adverse effect on the Company's business, financial condition and results of
operations. The escrow terminates in October 1998.
The Company is Exposed to Product Liability and Environmental Regulations.
The nature of the Company's business exposes it to product liability claims, as
well as the risk that harmful substances will escape into the workplace and the
environment and cause damage or injuries. The Company's products could
malfunction in the future and damage a customer's facilities and harm its
employees. The Company and its customers are subject to stringent federal, state
and local regulations governing the storage, use, discharge and disposal of
toxic, volatile or otherwise hazardous chemicals used in their manufacturing
operations. Current or future regulations could require the Company or its
customers to make substantial expenditures for preventive or remedial action,
reduction of chemical exposure or waste treatment or disposal.
Certain Anti-Takeover Provisions May Discourage Change in Control. The
Company had at September 30, 1997 approximately 381,000 shares of Class A Common
Stock outstanding, which has four votes for each share. The majority of the
Class A Common Stock is beneficially owned by Sanjeev R. Chitre, the Chairman of
the Board of Directors, and a trust for the benefit of his daughter. The voting
power held by the Company's officers and directors may give those individuals
substantial influence over any corporate action submitted to the Company's
stockholders for vote. The Company designated
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50,000 shares of Series D Preferred Stock in connection with a stockholder
rights plan adopted in May 1997. The Company's Certificate of Incorporation
authorizes the Company's Board of Directors to issue additional Preferred Stock
in one or more series and to fix the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued shares of preferred
stock and to fix the number of shares constituting any series and the
designation of such series, without further vote or action by its stockholders.
Pursuant to Delaware corporate law, the approval of the holders of outstanding
Preferred Stock may be required for certain corporate actions. Any series of
Preferred Stock which the Company may issue in the future would participate in
these class voting rights and may have additional independent rights to approve
certain actions. The Company is subject to Section 203 of the Delaware General
Corporation Law, which restricts certain business combinations with any
"interested stockholder" as defined by that statute. This statute and the
stockholder rights plan are designed to encourage potential acquirers to
negotiate with the Company's Board of Directors. The voting power held by
officers and directors, outstanding rights to elect members of the Company's
Board of Directors, the Company's stockholder rights plan, the voting rights of
outstanding Preferred Stock and Preferred Stock which may be issued in the
future, the existence of Class A Common Stock and the application of Delaware
General Corporation Law Section 203 could discourage certain types of
transactions involving an actual or potential change in control of the Company,
including transactions in which the holders of Common Stock who are not officers
and directors might otherwise receive a premium for their shares over then
current prices, and may limit the ability of such stockholders to cause or
approve transactions which they may deem to be in their best interests.
The Company's Common Stock Price is Volatile. The market price of the
Company's Common Stock has been, and may continue to be, extremely volatile. The
market price of the Common Stock may be significantly affected by factors such
as quarter to quarter variations in the actual or anticipated financial results
of the Company or of other companies in the semiconductor industry, or in the
markets served by the Company, announcements by the Company or its competitors
regarding new product introductions, changes in financial estimates by
securities analysts, general market conditions, and other factors. In addition,
the stock market has experienced extreme price and volume fluctuations that have
particularly affected the market price for many high technology companies and
that have often been unrelated to the operating performance of these companies.
The market price of the Company's Common Stock has fluctuated substantially in
recent periods, from a low of $9 1/2 on July 16, 1996 to a high of $37 11/16 on
October 1, 1997. On November 10, 1997, the reported last sale price of the
Company's Common Stock on the Nasdaq National Market was $21 5/8. These broad
market fluctuations may adversely affect the market price of the Common Stock,
and there can be no assurance that the market price of the Common Stock will not
decline below current levels. In the past, following periods of volatility in
the market price of a particular company's securities, securities class action
litigation has often been brought against that company. Such litigation, if
brought against the Company, could result in substantial costs and a diversion
of management's attention and resources.
The Company May Need to Raise Capital on Unfavorable Terms. The Company
believes that its cash and cash equivalents are sufficient to support its
operation through the foreseeable future. Additional new debt or equity
financing may be required to fund the Company's growth. There can be no
assurance that such additional financing will be available when needed or, if
available, will be on satisfactory terms. In order to raise capital, the Company
may issue debt or equity securities senior to the outstanding Common Stock, and
may incur substantial dilution. The failure to obtain additional
23
<PAGE> 24
financing when needed on satisfactory terms would also hinder the Company's
ability to make continued capital investments.
The Company Faces Year 2000 Computer Issues. In the next two-and-one-half
years, most large companies will face potentially serious information systems
and computer problems because most software application and operational programs
written in the past will not properly recognize calendar dates beginning in the
year 2000. This could force computers to either shut down or lead to incorrect
calculations. The Company has identified the changes required to its computer
programs and hardware. The necessary modifications to the Company's centralized
financial, customer, and operational information systems are expected to be
completed by the end of calendar 1998. Noncentralized systems, such as software
used to operate the Company's products, are currently being reviewed for Year
2000 problems. The Company is unable to predict the costs to be incurred for
correction of such noncentralized systems, but expects the scope and schedule
for such work to be less complex than for its centralized systems. The Company
believes that Year 2000 problems will not have a material adverse effect on the
Company's business, financial condition and results of operations.
24
<PAGE> 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Purchase Agreement between Integrated Process Equipment Corp. (the
"Company") and Morgan Stanley & Co. Incorporated ("MS"), acting on
behalf of MS, Hambrecht & Quist LLC, Prudential Securities
Incorporated and UBS Securities LLC (collectively, the "Initial
Purchasers"), dated September 11, 1997.
10.2 Indenture between the Company and State Street Bank and Trust of
California, N.A., dated September 15, 1997.
10.3 Registration Rights Agreement between the Company and the Initial
Purchasers, dated September 15, 1997.
10.4 Specimen of 6 1/4% Convertible Subordinated Note due 2004 issued
by the Company on September 17, 1997 in the amount of
$115,000,000.
10.5 Executive Employment Agreement between the Company and Roger D.
McDaniel (without exhibits), dated August 13, 1997.
(b) Reports on Form 8-K:
A report on Form 8-K was filed on September 3, 1997 reporting (under
Item 5) with respect to the intention of the Company to raise $100
million (excluding the proceeds of the over-allotment option, if any)
through a private offering of Convertible Subordinated Notes within the
United States to qualified institutional buyers and other institutional
accredited investors.
A report on Form 8-K was filed on September 12, 1997 reporting (under
Item 5) with respect to the announcement of the Company that it had
completed the pricing of a private placement of $100 million of its
6 1/4% Convertible Subordinated Notes due 2004.
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 13, 1997 INTEGRATED PROCESS EQUIPMENT CORP.
AND SUBSIDIARIES
By: /s/ John S. Hodgson
-----------------------
John S. Hodgson
Vice President
and Chief Financial Officer
26
<PAGE> 1
EXHIBIT 10.1
$100,000,000
INTEGRATED PROCESS EQUIPMENT CORP.
6 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
PURCHASE AGREEMENT
SEPTEMBER 11, 1997
<PAGE> 2
September 11, 1997
Morgan Stanley & Co. Incorporated
Hambrecht & Quist LLC
Prudential Securities Incorporated
UBS Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Integrated Process Equipment Corp., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several Initial Purchasers named
in Schedule I hereto (the "INITIAL PURCHASERS") $100,000,000 principal amount of
its 6 1/4% Convertible Subordinated Notes due 2004 (the "FIRM SECURITIES") to be
issued pursuant to the provisions of an Indenture dated as of September 15, 1997
(the "INDENTURE") between the Company and State Street Bank and Trust Company of
California, N.A., as Trustee (the "TRUSTEE"). The Company also proposes to issue
and sell to the Initial Purchasers not more than an additional $15,000,000
principal amount of its 6 1/4% Convertible Subordinated Notes due 2004 (the
"ADDITIONAL SECURITIES") if and to the extent that you, as Managers of the
offering, shall have determined to exercise, on behalf of the Initial
Purchasers, the right to purchase such 6 1/4% Convertible Subordinated Notes due
2004 granted to the Initial Purchasers in Section 2 hereof. The Firm Securities
and the Additional Securities are hereinafter collectively referred to as the
"SECURITIES". The Securities will be convertible into shares of Integrated
Process Equipment Corp. common stock, par value $0.01 per share (the "UNDERLYING
SECURITIES").
The Securities and the Underlying Securities will be offered without
being registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), to qualified institutional buyers in compliance with the exemption from
registration provided by Rule 144A under the Securities Act, in offshore
transactions in reliance on Regulation S under the Securities Act ("REGULATION
S") and to institutional accredited investors (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) that deliver a letter in the form
annexed to the Final Memorandum (as defined below).
The Initial Purchasers and their direct and indirect transferees will
be entitled to the benefits of a Registration Rights Agreement dated the Closing
Date between the Company and the Initial Purchasers (the "REGISTRATION RIGHTS
AGREEMENT").
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum (the "PRELIMINARY MEMORANDUM") and
will prepare a final offering
1.
<PAGE> 3
memorandum (the "FINAL MEMORANDUM" and, with the Preliminary Memorandum, each a
"MEMORANDUM") including or incorporating by reference a description of the terms
of the Securities and the Underlying Securities, the terms of the offering and a
description of the Company. As used herein, the term "MEMORANDUM" shall include
in each case the documents incorporated by reference therein. The terms
"SUPPLEMENT," "AMENDMENT" and "AMEND" as used herein with respect to a
Memorandum shall include all documents deemed to be incorporated by reference in
the Preliminary Memorandum or Final Memorandum that are filed subsequent to the
date of such Memorandum with the Securities and Exchange Commission (the
"COMMISSION") pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to and agrees with each of the Initial Purchasers that:
(a) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in either Memorandum complied
or will comply when so filed in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission thereunder, (ii) the
Company has filed with the Commission all documents required to be filed by the
Company pursuant to the Exchange Act, including all documents required to be
filed pursuant to Item 601 of Regulation S-K of the Securities Act (each, a
"MATERIAL CONTRACT") and (iii) the Preliminary Memorandum does not contain and
the Final Memorandum, in the form used by the Initial Purchasers to confirm
sales and on the Closing Date (as defined in Section 4), will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in either
Memorandum based upon information relating to any Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through you expressly for use
therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in each Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in each Memorandum and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole; all of the issued shares of
capital stock of each subsidiary of the Company have been
2.
<PAGE> 4
duly and validly authorized and issued, are fully paid and non-assessable and
are owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(d) This Agreement has been duly authorized, executed and
delivered by the Company, and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(e) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Final Memorandum.
(f) The shares of common stock outstanding on the date hereof
have been duly authorized and are validly issued, fully paid and non-assessable.
(g) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will be valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity, and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement pursuant to which such Securities are to be
issued.
(h) The Underlying Securities reserved for issuance upon
conversion of the Securities have been duly authorized and reserved and, when
issued upon conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and nonassessable, and the
issuance of the Underlying Securities will not be subject to any preemptive or
similar rights.
(i) Each of the Indenture and Registration Rights Agreement
has been duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity and except as rights to
indemnification and contribution under the Registration Rights Agreement may be
limited under applicable law.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the Securities will not
contravene any provision of applicable law or the certificate of incorporation
or bylaws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture, the Registration Rights Agreement or the Securities, except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of
3.
<PAGE> 5
the Securities and by federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreement.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the Final
Memorandum.
(l) Subsequent to the respective dates as of which information
is given in the Final Memorandum, (i) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (iii)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company or any of its subsidiaries, taken as a whole,
except in each case as described in or contemplated by the Final Memorandum.
(m) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
other than proceedings accurately described in all material respects in each
Memorandum and proceedings that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or ability of
the Company to perform its obligations under this Agreement, the Indenture,
Registration Rights Agreement or the Securities or to consummate the
transactions contemplated by the Final Memorandum.
(n) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended.
(o) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up,
4.
<PAGE> 6
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(q) The Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been refused any
insurance coverage sought or applied for; and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, except as described in or contemplated
by the Final Memorandum.
(r) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "AFFILIATE") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Securities
in a manner that would require the registration of the Securities under the
Securities Act or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Securities (as those terms
are used in Regulation D under the Securities Act), or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(s) None of the Company, its Affiliates or any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Securities and
the Company and its Affiliates and any person acting on its or their behalf have
complied and will comply with the offering restrictions requirement of
Regulation S, except no representation, warranty or agreement is made by the
Company in this paragraph with respect to the Initial Purchasers.
(t) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers in the manner contemplated
by this Agreement to register the Securities under the Securities Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended.
(u) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(v) Neither the Company nor any of its subsidiaries, nor to
the Company's knowledge, any other principal party thereto, is in violation or
breach of, or in default with respect to, complying with any material provision
of any Material Contract, and each such Material Contract is in full force and
is the legal, valid and binding obligation of the Company
5.
<PAGE> 7
or such subsidiary and, to the Company's knowledge, the other principal parties
thereto. The Company and its subsidiaries enjoy peaceful and undisturbed
possession under all leases and licenses under which they operate. Neither the
Company nor any of its subsidiaries is in violation or breach of, or in default
with respect to, any term of its certificate of incorporation or bylaws.
(w) The Company and its subsidiaries own or possess adequate
licenses or other rights to use all patents, copyrights, trademarks, service
marks, trade names, technology and know-how necessary to conduct their
respective businesses in the manner described in the Final Memorandum and,
except as disclosed in the Final Memorandum, neither of the Company nor any of
its subsidiaries has received any notice of infringement or conflict with
asserted rights of others with respect to any patents, copyrights, trademarks,
service marks, trade names, technology or know-how that could result in any
material adverse effect upon the Company and its subsidiaries, taken as a whole;
and except as described in the Final Memorandum, the discoveries, inventions,
products or processes of the Company and its subsidiaries referred to in the
Final Memorandum, do not, to the best knowledge of the Company, infringe or
conflict with any right or patent of any third party, or any discovery,
invention, product or process that is the subject of a patent application filed
by any third party, known to the Company or any of its subsidiaries that could
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(x) The Company and its subsidiaries possess all consents,
approvals, orders, certificates, authorization and permits issued by, and have
made all declarations and filings with, all appropriate federal, state or
foreign governmental and self-regulatory authorities and all courts and other
tribunals necessary to conduct their respective businesses and to own, lease,
license and use their properties in the manner described in the Final
Memorandum, except to the extent that the failure to obtain or file would not
have a material adverse effect on the Company and its subsidiaries, taken as a
whole, and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
consent, approval, order, certificate, authorization or permit that, singly or
in the aggregate, if the subject of any unfavorable decision, ruling or finding,
or failure to obtain or file, would result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, except as described in the
Final Memorandum.
(y) The Company and its subsidiaries maintain systems of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; ((ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles of the United States and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
6.
<PAGE> 8
(z) No material labor dispute with employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is imminent,
and, without conducting any independent investigation, the Company is not aware
of any existing, threatened or imminent labor disturbance by the employees of
any of its principal suppliers, manufacturers or contractors that could result
in any material adverse change in the condition, financial or otherwise, the
earnings, the business or operations of the Company and its subsidiaries, taken
as a whole.
(aa) The schedules of backlog provided to counsel for the
Initial Purchasers accurately reflect the backlog of the Company as of June 30,
1996 and June 30, 1997, subject to the qualifications and limitations specified
therein. The Company has not been advised by Intel that Intel intends to cancel
or delay shipments of the CMP systems that the Company has forecast to you as
future shipments to Intel and the Company has no reason to believe that such
cancellations or delays may occur.
(ab) The Company and each of its subsidiaries have timely
filed all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes shown thereon as due, and there is no tax deficiency
that has been or, to the Company's knowledge, might be asserted against the
Company or any of its subsidiaries that could have a material adverse effect on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries, taken as a whole; and
all tax liabilities are adequately provided for on the books of the Company.
(ac) Since the date of the Preliminary Memorandum, to the
Company's knowledge after due inquiry, no executive officer or director of the
Company has sold, contracted to sell or otherwise transferred or agreed to
transfer the economic consequences or ownership of any shares of common stock of
the Company or any securities convertible into or exchangeable or exercisable
for or any rights to purchase or acquire common stock of the Company.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell
to the several Initial Purchasers, and each Initial Purchaser, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Securities set forth in
Schedule I hereto opposite its name at a purchase price of 96.75% of the
principal amount thereof (the "PURCHASE PRICE") plus accrued interest, if any,
to the Closing Date.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchasers the Additional Securities, and the Initial Purchasers
shall have a one-time right to purchase, severally and not jointly, up to
$15,000,000 principal amount of Additional Securities at the Purchase Price plus
accrued interest, if any, to the Closing Date. If you, on behalf of the Initial
Purchasers, elect to exercise such option, you shall so notify the Company in
writing not later than 30 days after the date of this Agreement, which notice
shall specify the principal amount of Additional Securities to be purchased by
the Initial Purchasers and the date on which such Additional Securities are to
be purchased. Such date may be the same as the Closing Date (as
7.
<PAGE> 9
defined below) but not earlier than the Closing Date nor later than ten (10)
business days after the date of such notice. Additional Securities may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Securities. If
any Additional Securities are to be purchased, each Initial Purchaser agrees,
severally and not jointly, to purchase the percentage of the principal amount of
Additional Securities (subject to such adjustments to eliminate fractional
Securities as you may determine) set forth in Schedule I hereto opposite the
name of such Initial Purchaser.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period ending 90 days after the date of the Final Memorandum,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend or otherwise transfer or dispose of, directly or
indirectly, any shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the common stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of common stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the sale of the Securities hereunder; (B) the
issuance by the Company of shares of common stock upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof of
which the Initial Purchasers have been advised in writing; (C) options issued
under the Company's 1992 Stock Option Plan and the shares issuable upon exercise
thereof; (D) shares issued under the Company's 1994 Employee Stock Purchase
Plan; (E) shares and options granted to Roger D. McDaniel in connection with his
commencing employment by the Company; (F) shares and warrants issuable upon
exercise of outstanding unit purchase options and shares issuable upon exercise
of such warrants; or (G) shares issuable under the Company's stockholder rights
plan.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period beginning on the date hereof and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Securities (other than the sale of the Securities
hereunder).
3. TERMS OF OFFERING. You have advised the Company that the Initial
Purchasers will make an offering of the Securities purchased by the Initial
Purchasers hereunder on the terms to be set forth in the Final Memorandum, as
soon as practicable after this Agreement is entered into as in your judgment is
advisable.
4. PAYMENT AND DELIVERY. Payment for the Firm Securities shall be
made to the Company in federal or other funds immediately available in New York
City against delivery of such Firm Securities for the respective accounts of the
several Initial Purchasers at a closing to be held at the offices of Wilson
Sonsini Goodrich & Rosati at 650 Page Mill Road, Palo Alto, California at 10:00
a.m., New York City time, on September 17, 1997, or at such other time on the
same or such other date, not later than September 17, 1997, as shall be
designated in
8.
<PAGE> 10
writing by you. The time and date of such payment are hereinafter referred to as
the "CLOSING DATE".
Payment for any Additional Securities shall be made to the Company in
federal or other funds immediately available in New York City against delivery
of such Additional Securities for the respective accounts of the several Initial
Purchasers at the offices of Wilson Sonsini Goodrich & Rosati at 650 Page Mill
Road, Palo Alto, California at 10:00 a.m., New York City time, on the date
specified in the notice described in Section 2 or at such other time on the same
or on such other date, in any event not later than October 17, 1997, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "OPTION CLOSING DATE".
Certificates for the Firm Securities and Additional Securities shall
be in definitive form or global form, as specified by you, and registered in
such names and in such denominations as you shall request in writing not later
than one (1) full business day prior to the Closing Date or the Option Closing
Date, as the case may be. The certificates evidencing the Firm Securities and
Additional Securities shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, for the respective accounts of the
several Initial Purchasers, with any transfer taxes payable in connection with
the transfer of the Securities to the Initial Purchasers duly paid, against
payment of the purchase price therefor.
5. CONDITIONS TO THE INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of the Initial Purchasers to purchase and pay for the Firm
Securities on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the direction of the
possible change, in the rating accorded the Company or any of the Company's
securities by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act;
and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Final Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement) that, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable to market the Securities on the terms and in
the manner contemplated in the Final Memorandum.
(iii) The Initial Purchasers shall have received on
the Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Company, to the effect set forth in Section 5(a)(i)
above and to the effect that the representations and warranties
9.
<PAGE> 11
of the Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(b) The Initial Purchasers shall have received on the Closing
Date an opinion of Wilson Sonsini Goodrich & Rosati, outside counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit A. Such
opinion shall be rendered to the Initial Purchasers at the request of the
Company and shall so state therein.
(c) The Initial Purchasers shall have received on the Closing
Date an opinion of Cooley Godward LLP, counsel for the Initial Purchasers, dated
the Closing Date, to the effect set forth in Exhibit B.
(d) The Initial Purchasers shall have received, on each of the
date hereof and the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the Initial
Purchasers, from KPMG Peat Marwick LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into each Memorandum; provided that the letter delivered on the
Closing Date shall use a "cut-off date" not earlier than the date hereof.
(e) The "lock-up" agreements, each substantially in the form
of Exhibit C hereto, between you and all executive officers and directors of the
Company relating to sales and certain other dispositions of shares of common
stock or certain other securities, delivered to you on or before the date
hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Initial Purchasers to purchase
Additional Securities hereunder are subject to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Securities and other matters related to the issuance of the
Additional Securities.
6. COVENANTS OF THE COMPANY. In further consideration of the agreements
of the Initial Purchasers herein contained, the Company covenants with each
Initial Purchaser as follows:
(a) To furnish to you in New York City without charge, prior
to 5:00 p.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c), as many copies
of the Final Memorandum, any documents incorporated by reference therein and any
supplements and amendments thereto as you may reasonably request.
10.
<PAGE> 12
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and not to
use any such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Securities shall have been sold by the Initial
Purchasers, any event shall occur or condition shall exist as a result of which
it is necessary to amend or supplement the Final Memorandum in order to make the
statements therein, in the light of the circumstances when the Final Memorandum
is delivered to a purchaser, not misleading, or if, in the opinion of counsel
for the Initial Purchasers, it is necessary to amend or supplement the Final
Memorandum to comply with applicable law, forthwith to prepare and furnish, at
the Company's own expense, to the Initial Purchasers, either amendments or
supplements to the Final Memorandum so that the statements in the Final
Memorandum as so amended or supplemented will not, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented, will
comply with applicable law.
(d) To endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company's
counsel and the Company's accountants in connection with the issuance and sale
of the Securities and all other fees or expenses in connection with the
preparation and filing of each Memorandum and all amendments and supplements
thereto, including all printing costs associated therewith, and the delivering
of copies thereof to the Initial Purchasers, in the quantities herein above
specified, (ii) all costs and expenses related to the transfer and delivery of
the Securities to the Initial Purchasers, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the Securities
under state securities laws and all expenses in connection with the
qualification of the Securities for offer and sale under state securities laws
as provided in Section 6(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Initial Purchasers in connection with
such qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any fees charged by rating agencies for the rating of the
Securities, (v) all document production charges and expenses of counsel of the
Initial Purchasers (but not including their fees for professional services) in
connection with the preparation of this Agreement, (vi) the fees and expenses,
if any, incurred in connection with the admission of the Securities for trading
in PORTAL or any appropriate market system, (vii) the costs and charges of the
Trustee and any transfer agent, registrar or depository, (viii) the cost of the
preparation, issuance and delivery of the Securities, (ix) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Securities,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the
11.
<PAGE> 13
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, and (x) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this Section 6, Section 8 and
the last paragraph of Section 10, the Initial Purchasers will pay all of their
costs and expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Securities by them and any advertising
expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which could be integrated with the sale of
the Securities in a manner that would require registration of the Securities
under the Securities Act.
(g) Not to solicit any offer to buy or offer or sell the
Securities or the Underlying Securities by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
(h) While any of the Securities or the Underlying Securities
remain "restricted securities" within the meaning of the Securities Act, to make
available, upon request, to any seller of such Securities the information
specified in Rule 144A(d)(4) under the Securities Act, unless the Company is
then subject to Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in The Portal Market.
(j) None of the Company, its Affiliates or any person acting
on its or their behalf (other than the Initial Purchasers) will engage in any
directed selling efforts (as that term is defined in Regulation S) with respect
to the Securities, and the Company and its Affiliates and each person acting on
its or their behalf (other than the Initial Purchasers) will comply with the
offering restrictions requirement of Regulation S.
(k) During the period of two (2) years after the Closing Date
or the Option Closing Date, if later, the Company will not resell, and will use
reasonable efforts to prevent any of its affiliates (as defined in Rule 144A
under the Securities Act) from reselling any of the Securities or the Underlying
Securities which constitute "restricted securities" under Rule 144A that have
been reacquired by any of them.
7. OFFERING OF SECURITIES; RESTRICTIONS ON TRANSFER.
(a) Each Initial Purchaser, severally and not jointly,
represents and warrants that such Initial Purchaser is a qualified institutional
buyer as defined in Rule 144A under the Securities Act (a "QIB"). Each Initial
Purchaser, severally and not jointly, agrees with the
12.
<PAGE> 14
Company that (i) it will not solicit offers for, or offer or sell, such
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act and (ii) it will solicit offers for such Securities only from, and will
offer such Securities only to, persons that it reasonably believes to be (A) in
the case of offers inside the United States, (1) QIBs or (2) other institutional
accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act ("INSTITUTIONAL ACCREDITED INVESTORS") that, prior to their
purchase of the Securities, deliver to such Initial Purchaser a letter
containing the representations and agreements set forth in Appendix A to the
Memorandum and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("FOREIGN PURCHASERS," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)) in reliance
upon Regulation S under the Securities Act that, in each case, in purchasing
such Securities are deemed to have represented and agreed as provided in the
Final Memorandum under the caption "Transfer Restrictions".
(b) Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees with respect to offers and sales outside the
United States that:
(i) such Initial Purchaser understands that no action
has been or will be taken in any jurisdiction by the Company that would permit a
public offering of the Securities, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) such Initial Purchaser will comply with all
applicable laws and regulations in each jurisdiction in which it acquires,
offers, sells or delivers Securities or has in its possession or distributes
either Memorandum or any such other material, in all cases at its own expense;
(iii) the Securities have not been registered under
the Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance with
Rule 144A or Regulation S under the Securities Act or pursuant to another
exemption from the registration requirements of the Securities Act;
(iv) such Initial Purchaser has offered the
Securities and will offer and sell the Securities (A) as part of their
distribution at any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date (or Option Closing Date, if
later), only in accordance with Rule 903 of Regulation S or as otherwise
permitted in Section 7(a); accordingly, neither such Initial Purchaser, its
Affiliates nor any persons acting on its or their behalf have engaged or will
engage in any directed selling efforts (within the meaning of Regulation S) with
respect to the Securities, and any such Initial Purchaser, its Affiliates and
any such persons have complied and will comply with the offering restrictions
requirement of Regulation S;
13.
<PAGE> 15
(v) such Initial Purchaser has (A) not offered or
sold and, prior to the date six (6) months after the Closing Date, will not
offer or sell any Securities to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (B) complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and (C) only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the issue of the Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on;
(vi) such Initial Purchaser understands that the
Securities have not been and will not be registered under the Securities and
Exchange Law of Japan, and represents that it has not offered or sold, and
agrees not to offer or sell, directly or indirectly, any Securities in Japan or
for the account of any resident thereof except pursuant to any exemption from
the registration requirements of the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law; and
(vii) such Initial Purchaser agrees that, at or prior
to confirmation of sales of the Securities, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Securities from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"),
and may not be offered and sold within the United States or
to, or for the account or benefit of, U.S. persons (i) as part
of their distribution at any time or (ii) otherwise until 40
days after the later of the commencement of the offering and
the final closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the
Securities Act. Terms used above have the meaning given to
them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by
Regulation S.
8. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim)
14.
<PAGE> 16
caused by any untrue statement or alleged untrue statement of a material fact
contained in either Memorandum (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by 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 or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through you expressly for use therein.
(b) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its 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 Initial Purchaser, but only
with reference to information relating to such Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through you expressly for use
in either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its
15.
<PAGE> 17
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the one
hand and of the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand in connection with the offering of the Securities
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Securities (before deducting expenses) received by the
Company and the total discounts and commissions received by the Initial
Purchasers, in each case as set forth in the Final Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the Company on
the one hand and of the Initial Purchasers 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 Company or by the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Initial
Purchasers' respective obligations to contribute pursuant to this Section 8 are
several in proportion to the respective principal amount of Securities they have
purchased hereunder, and not joint.
(e) The Company and the Initial Purchasers agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities
16.
<PAGE> 18
resold by it in the initial placement of such Securities were offered to
investors exceeds the amount of any damages that such Initial Purchaser 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. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Securities.
9. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade; (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner contemplated in the Final
Memorandum.
10. EFFECTIVENESS; DEFAULTING INITIAL PURCHASERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Initial Purchasers shall fail or refuse to purchase
Securities that it has or they have agreed to purchase hereunder on such date,
and the aggregate principal amount of Securities which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase is not
more than one-tenth of the aggregate amount of the Securities to be purchased on
such date, the other Initial Purchasers shall be obligated severally in the
proportions that the principal amount of Firm Securities set forth opposite
their respective names in Schedule I bears to the aggregate principal amount of
Firm Securities set forth opposite the names of all such non-defaulting Initial
Purchasers, or in such other proportions as you may specify, to purchase the
Securities which such defaulting Initial Purchaser or Initial Purchasers agreed
but failed or refused to purchase
17.
<PAGE> 19
on such date; that in no event shall the principal amount of Securities that any
Initial Purchaser has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such
principal amount of Securities without the written consent of such Initial
Purchaser. If, on the Closing Date, any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Firm Securities and the aggregate principal
amount of Firm Securities with respect to which such default occurs is more than
one-tenth of the aggregate principal amount of Firm Securities to be purchased,
and arrangements satisfactory to you and the Company for the purchase of such
Firm Securities are not made within thirty-six (36) hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser or the Company. In any such case either you or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven (7) days, in order that the required changes, if any, in
the Final Memorandum or in any other documents or arrangements may be effected.
If, on the Option Closing Date, any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Additional Securities and the aggregate
principal amount of Additional Securities with respect to which such default
occurs is more than one-tenth of the aggregate principal amount of Additional
Securities to be purchased, the non-defaulting Initial Purchasers shall have the
option to (i) terminate their obligation hereunder to purchase Additional
Securities or (ii) purchase not less than the principal amount of Additional
Securities that such non-defaulting Initial Purchasers would have been obligated
to purchase in the absence of such default. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of such Initial Purchaser under this Agreement.
If this Agreement shall be terminated by the Initial Purchasers, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Initial Purchasers or such Initial
Purchasers as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Initial Purchasers in connection
with this Agreement or the offering contemplated hereunder.
11. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
18.
<PAGE> 20
13. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
INTEGRATED PROCESS EQUIPMENT CORP.
By: /s/ Roger D. McDaniel
----------------------------
Name: Roger D. McDaniel
Title: President and CEO
ACCEPTED AS OF THE DATE HEREOF
MORGAN STANLEY & CO. INCORPORATED
HAMBRECHT & QUIST LLC
PRUDENTIAL SECURITIES INCORPORATED
UBS SECURITIES LLC
Acting severally on behalf of themselves and the several Initial Purchasers
named in Schedule I hereto.
By: MORGAN STANLEY & CO. INCORPORATED
By /s/ Tim Sullivan
---------------------------
Name: Tim Sullivan
Title: Vice President
19.
<PAGE> 21
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PERCENTAGE OF
FIRM SECURITIES ADDITIONAL SECURITIES
TO BE PURCHASED TO BE PURCHASED
<S> <C> <C>
Morgan Stanley & Co. Incorporated $ 44,235,000 50%
Hambrecht & Quist LLC 44,235,000 50%
Prudential Securities Incorporated 5,380,000 __
UBS Securities LLC 6,150,000 __
------------ ------------
Total $100,000,000 100%
============ ============
</TABLE>
<PAGE> 22
EXHIBIT A
OPINION OF COUNSEL FOR THE COMPANY
The opinion of Wilson Sonsini Goodrich & Rosati, counsel for the
Company, to be delivered pursuant to Section 5(c) of the Purchase Agreement,
shall be to the effect that:
(i) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Final Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(ii) Each subsidiary of the Company listed on Exhibit A hereto
has been duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its business as
described in the Final Memorandum and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole;
(iii) The authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the Final Memorandum;
(iv) The shares of Common Stock outstanding on the Closing
Date have been duly authorized and are validly issued and non-assessable and, to
the knowledge of such counsel, are fully paid;
(v) The Securities have been duly authorized by the Company
and, when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in accordance
with the terms of the Purchase Agreement, will be valid and binding obligations
of the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity, and will be entitled to the benefits
of the Indenture and the Registration Rights Agreement pursuant to which such
Securities are to be issued.
(vi) The Underlying Securities reserved for issuance upon
conversion of the Securities have been duly authorized and reserved and, when
issued upon conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid
1.
<PAGE> 23
<PAGE> 24
and non-assessable and the issuance of the Underlying Securities will not be
subject to any preemptive or similar rights;
(vii) Each of the Purchase Agreement, the Indenture and the
Registration Rights Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity and except as rights to indemnification and contribution under the
Purchase Agreement and the Registration Rights Agreement may be limited under
applicable law;
(viii) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Purchase Agreement, the
Indenture, the Registration Rights Agreement and the Securities will not
contravene any provision of applicable law or the certificate of incorporation
or bylaws of the Company or, to such counsel's knowledge, any Material Contract
or, to such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under the Purchase Agreement, the
Indenture, the Registration Rights Agreement or the Securities, except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and by federal and state
securities laws with respect to the Company's obligations under the Registration
Rights Agreement;
(ix) Such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject other than proceedings summarized in the Final
Memorandum and proceedings which such counsel believes are not likely to have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
or on the power or ability of the Company to perform its obligations under the
Purchase Agreement, the Indenture, the Registration Rights Agreement or the
Securities or to consummate the transactions contemplated by the Final
Memorandum;
(x) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Final Memorandum, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended;
(xi) The statements in the Final Memorandum under the captions
"Description of Notes," "Description of Capital Stock" and "Transfer
Restrictions," insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly summarize the
matters referred to therein;
(xii) The statements in the Final Memorandum under the caption
"Certain Federal Income Tax Considerations," insofar as such statements
constitute a summary
2.
<PAGE> 25
of the United States federal tax laws referred to therein, are accurate and
fairly summarize in all material respects the United States federal tax laws
referred to therein;
(xiii) Each document incorporated by reference in the Final
Memorandum (except for financial statements and schedules and other financial
and statistical data included therein, as to which such counsel need not express
any opinion), complied as to form when filed with the Commission in all material
respects with the Exchange Act and the rules and regulations of the Commission
thereunder; and
(xiv) Based upon the representations, warranties and
agreements of the Company in Sections 1(q), 1(r), 1(t), 6(f), 6(g) and 6(j) of
the Purchase Agreement and of the Initial Purchasers in Section 7 of the
Purchase Agreement, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers under the Purchase
Agreement or in connection with the initial resale of such Securities by the
Initial Purchasers in accordance with Section 7 of the Purchase Agreement to
register the Securities under the Securities Act of 1933 or to qualify the
Indenture under the Trust Indenture Act of 1939, it being understood that no
opinion is expressed as to any subsequent resale of any Security or Underlying
Security.
Based upon its participation in the preparation of the Final
Memorandum (and any amendments or supplements thereto) and review and discussion
of the contents thereof and review of the documents incorporated by reference
therein, but without independent check or verification except as specified, such
counsel has no reason to believe that (except for financial statements and
schedules and other financial and statistical data, as to which such counsel
need not express any belief) the Final Memorandum when issued contained, or as
of the date such opinion is delivered contains, any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
3.
<PAGE> 26
EXHIBIT A TO OPINION OF COUNSEL FOR THE COMPANY
SUBSIDIARIES
IPEC Planar, Inc.
IPEC Precision, Inc.
1.
<PAGE> 27
EXHIBIT B
OPINION OF COOLEY GODWARD LLP
The opinion of Cooley Godward LLP to be delivered pursuant to Section 5(c) of
the Purchase Agreement shall be to the effect that:
(A) The Purchase Agreement has been duly authorized, executed and
delivered by the Company;
(B) The Securities have been duly authorized by the Company and, when
duly executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in accordance
with the terms of the Purchase Agreement, will be valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
and will be entitled to the benefits of the Indenture and the Registration
Rights Agreement pursuant to which such securities are to be issued;
(C) The Underlying Securities reserved for issuance upon conversion of
the Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the Indenture, will
be validly issued, fully paid and non-assessable, and the issuance of the
Underlying Securities will not be subject to any preemptive or, to the best of
such counsel's knowledge, other similar rights under any agreement to which the
Company is a party;
(D) Each of the Indenture and the Registration Rights Agreement has
been duly authorized, executed and delivered by the Company and each constitutes
a valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity and except as rights to indemnification and contribution under the
Registration Rights Agreement and Section 8.6 of the Indenture may be limited
under applicable law;
(E) The statements in the Final Memorandum under the captions,
"Description of Notes," "Description of Capital Stock," "Plan of Distribution"
and "Transfer Restrictions" in each case, insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to therein,
have been reviewed by such counsel and fairly present the information that would
be called for with respect to, and are fair summaries of such legal matters,
documents and proceedings to the extent that would be required to be summarized
in the Final Memorandum if it were a prospectus included in a registration
statement of the Company on Form S-3 under the Securities Act of 1933, as
amended (the "Act");
(F) Based upon the representations, warranties and agreements of the
Company in Sections 1(r), 1(s), 1(t), 1(u), 6(f), 6(g), 6(h) and 6(j) of the
Purchase Agreement and of the Initial Purchasers in Section 7 of the Purchase
Agreement, it is not necessary in connection with
1.
<PAGE> 28
the offer, sale and delivery of the Securities to the Initial Purchasers under
the Purchase Agreement or in connection with the initial resale of such
Securities by the Initial Purchasers in accordance with Section 7 of the
Purchase Agreement to register the Securities under the Act or to qualify the
Indenture under the Trust Indenture Act of 1939, it being understood that no
opinion is expressed as to any subsequent resale of any Security or Underlying
Security.
With respect to paragraphs B and D above, such counsel may rely as to
certain matters relating to New York law on an opinion of New York counsel.
Based upon its participation in the preparation of the Final Memorandum
(and any amendments or supplements thereto) and review and discussion of the
contents thereof, but without independent verification, such counsel has no
reason to believe that (except for financial statements and schedules and other
financial and statistical data, as to which such counsel need not express any
belief) the Final Memorandum when issued contained, or as of the date such
opinion is delivered contains, any untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
2.
<PAGE> 29
EXHIBIT C
FORM OF LOCK-UP LETTER
Morgan Stanley & Co. Incorporated
Hambrecht & Quist LLC
Prudential Securities Incorporated
UBS Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into a Purchase Agreement (the "PURCHASE
AGREEMENT") with Integrated Process Equipment Corp., a Delaware corporation (the
"COMPANY"), providing for the offering (the "OFFERING") by the several Initial
Purchasers, including Morgan Stanley (the "INITIAL PURCHASERS"), of $100,000,000
principal amount of its 63% Convertible Subordinated Notes Due 2004 (the
"SECURITIES"). The Securities will be convertible into shares of the Common
Stock ($0.01 par value) of the Company (the "COMMON STOCK").
To induce the Initial Purchasers that may participate in the Offering
to continue their efforts in connection with the Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Initial Purchasers, it will not, during the period commencing on
the date hereof and ending 90 days after the date of the final memorandum
relating to the Offering (the "FINAL MEMORANDUM"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Offering. In addition, the undersigned
agrees that, without the prior written consent of Morgan Stanley on behalf of
the Initial Purchasers, it will not, during the period commencing on the date
hereof and ending 90 days after the date of the Final Memorandum, make any
demand for or exercise any right with
1.
<PAGE> 30
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
a Purchase Agreement, the terms of which are subject to negotiation between the
Company and the Initial Purchasers.
Very truly yours,
-----------------------------------
(Name)
-----------------------------------
(Address)
2.
<PAGE> 1
Exhibit 10.2
INTEGRATED PROCESS EQUIPMENT CORP.
TO
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
TRUSTEE
INDENTURE
DATED AS OF SEPTEMBER 15, 1997
6 1/4% SUBORDINATED NOTES DUE 2004
<PAGE> 2
INTEGRATED PROCESS EQUIPMENT CORP.
Reconciliation and Tie Between the Trust Indenture Act of 1939 and
Indenture, dated as of September 15, 1997, between Integrated Process Equipment
Corp. and State Street Bank and Trust Company of California, N.A., as Trustee.
Trust Indenture
ACT SECTION INDENTURE SECTION
Section 310(a)(1) 8.9
(a)(2) 8.9
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 8.9
(b) 8.8; 8.9; 8.10; 8.11
Section 311(a) 8.13
(b) 8.13
(b)(2) 6.3(a)
Section 312(a) 6.1; 6.2(a)
(b) 6.2(b)
(c) 6.2(c)
Section 313(a) 6.3(a)
(b) 6.3(a)
(c) 6.3(a)
(d) 6.3(b)
Section 314(a) 6.14
(b) Not Applicable
(c)(1) 16.5
(c)(2) 16.5
(c)(3) Not Applicable
(d) Not Applicable
(e) 16.5
Section 315(a) 8.1
(b) 7.8
(c) 8.1
(d) 8.1
(d)(1) 8.1(a)
(d)(2) 8.1(b)
(d)(3) 8.1(c)
(e) 7.9
Section 316(a) 7.7
(a)(1)(A) 7.7
i
<PAGE> 3
ACT SECTION INDENTURE SECTION
(a)(1)(B) 7.7
(a)(2) Not Applicable
(b) 7.4
Section 317(a)(1) 7.5
(a)(2) 7.5
(b) 5.4
Section 318(a) 16.7
- -------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
ii
<PAGE> 4
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS...................................... 1
Section 1.1 Definitions.......................... 1
Affiliate............................ 2
Applicable Price..................... 2
Board of Directors................... 2
Business Day......................... 2
Closing Price........................ 2
Commission........................... 2
Common Stock......................... 2
Company.............................. 3
Conversion Price..................... 3
Corporate Trust Office............... 3
Custodian............................ 3
Default.............................. 3
Depositary........................... 3
Designated Senior Indebtedness....... 3
Exchange Act......................... 4
Event of Default..................... 4
Fundamental Change................... 4
Indebtedness......................... 4
Indenture............................ 5
Initial Purchasers................... 5
Institutional Accredited Investor.... 5
Liquidated Damages................... 5
Loan Agreement....................... 5
Non-U.S. Person...................... 5
Note or Notes........................ 5
Noteholder or holder................. 5
Note register........................ 5
Officers' Certificate................ 6
Opinion of Counsel................... 6
outstanding.......................... 6
Payment Blockage Notice.............. 6
Person............................... 6
Portal Market........................ 6
Predecessor Note..................... 6
QIB.................................. 7
Reference Market Price............... 7
Registration Rights Agreement........ 7
Regulation S......................... 7
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Representative..................................................... 7
Responsible Officer................................................ 7
Restricted Securities.............................................. 7
Rule 144A ....................................................... 7
Securities Act..................................................... 7
Senior Indebtedness................................................ 7
Significant Subsidiary............................................. 8
Subsidiary ....................................................... 8
Trading Day ....................................................... 8
Trigger Event...................................................... 9
Trust Indenture Act................................................ 9
Trustee ....................................................... 9
ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF
NOTES.......................................................................... 9
Section 2.1 Designation Amount and Issue of Notes.............................. 9
Section 2.2 Form of Notes...................................................... 9
Section 2.3 Date and Denomination of Notes; Payments of Interest............... 10
Section 2.4 Execution of Notes................................................. 11
Section 2.5 Exchange and Registration of Transfer of Notes: Restrictions on
Transfer; Depositary............................................... 12
Section 2.6 Mutilated, Destroyed, Lost or Stolen Notes......................... 19
Section 2.7 Temporary Notes.................................................... 20
Section 2.8 Cancellation of Notes Paid, Etc.................................... 21
Section 2.9 CUSIP Numbers...................................................... 21
ARTICLE III REDEMPTION OF NOTES............................................................ 21
Section 3.1 Redemption Prices.................................................. 21
Section 3.2 Notice of Redemption; Selection of Notes........................... 21
Section 3.3 Payment of Notes Called for Redemption............................. 23
Section 3.4 Conversion Arrangement on Call for Redemption...................... 24
Section 3.5 Redemption at Option of Holders.................................... 24
ARTICLE IV SUBORDINATION OF NOTES......................................................... 27
Section 4.1 Agreement of Subordination......................................... 27
Section 4.2 Payments to Noteholders............................................ 27
Section 4.3 Subrogation of Notes............................................... 30
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(CONTINUED)
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Section 4.4 Authorization to Effect Subordination.............................. 31
Section 4.5 Notice to Trustee.................................................. 31
Section 4.6 Trustee's Relation to Senior Indebtedness.......................... 32
Section 4.7 No Impairment of Subordination..................................... 32
Section 4.8 Certain Conversions Not Deemed Payment............................. 32
Section 4.9 Article Applicable to Paying Agents................................ 33
Section 4.10 Senior Indebtedness Entitled to Rely.............................. 33
Section 4.11 Reliance on Judicial Order or Certificate of Liquidating Agent.... 33
ARTICLE V PARTICULAR COVENANTS OF THE COMPANY............................................ 34
Section 5.1 Payment of Principal, Premium and Interest......................... 34
Section 5.2 Maintenance of Office or Agency.................................... 34
Section 5.3 Appointments to Fill Vacancies in Trustee's Office................. 35
Section 5.4 Provisions as to Paying Agent...................................... 35
Section 5.5 Existence.......................................................... 36
Section 5.6 Maintenance of Properties.......................................... 36
Section 5.7 Payment of Taxes and Other Claims.................................. 36
Section 5.8 Rule 144A Information Requirement.................................. 37
Section 5.9 Stay, Extension and Usury Laws..................................... 37
Section 5.10 Compliance Certificate............................................ 37
ARTICLE VI NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE.................. 38
Section 6.1 Noteholders' Lists................................................. 38
Section 6.2 Preservation and Disclosure of Lists............................... 38
Section 6.3 Reports by Trustee................................................. 38
Section 6.4 Reports by Company................................................. 39
ARTICLE VII REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF
DEFAULT........................................................................ 39
Section 7.1 Events of Default.................................................. 39
Section 7.2 Payments of Notes on Default; Suit Therefor........................ 41
Section 7.3 Application of Monies Collected by Trustee......................... 43
Section 7.4 Proceedings by Noteholder.......................................... 43
Section 7.5 Proceedings by Trustee............................................. 44
Section 7.6 Remedies Cumulative and Continuing................................. 44
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(CONTINUED)
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Section 7.7 Direction of Proceedings and Waiver of Defaults by Majority of
Noteholders....................................................... 45
Section 7.8 Notice of Defaults................................................ 45
Section 7.9 Undertaking to Pay Costs.......................................... 45
ARTICLE VIII CONCERNING THE TRUSTEE....................................................... 46
Section 8.1 Duties and Responsibilities of Trustee............................ 46
Section 8.2 Reliance on Documents, Opinions, Etc.............................. 47
Section 8.3 No Responsibility for Recitals, Etc............................... 48
Section 8.4 Trustee, Paying Agents, Conversion Agents or Registrar May Own
Notes............................................................. 48
Section 8.5 Monies to Be Held in Trust........................................ 48
Section 8.6 Compensation and Expenses of Trustee.............................. 49
Section 8.7 Officers' Certificate as Evidence................................. 49
Section 8.8 Conflicting Interests of Trustee.................................. 49
Section 8.9 Eligibility of Trustee............................................ 49
Section 8.10 Resignation or Removal of Trustee................................ 50
Section 8.11 Acceptance by Successor Trustee.................................. 51
Section 8.12 Succession by Merger, Etc........................................ 52
Section 8.13 Preferential Collection of Claims................................ 52
Section 8.14 Trustee's Application for Instructions from the Company.......... 52
ARTICLE IX CONCERNING THE NOTEHOLDERS.................................................... 53
Section 9.1 Action by Noteholders............................................. 53
Section 9.2 Proof of Execution by Noteholders................................. 53
Section 9.3 Who Are Deemed Absolute Owners.................................... 53
Section 9.4 Company-Owned Notes Disregarded................................... 53
Section 9.5 Revocation of Consents; Future Holders Bound...................... 54
ARTICLE X NOTEHOLDERS' MEETINGS......................................................... 54
Section 10.1 Purpose of Meetings.............................................. 54
Section 10.2 Call of Meetings by Trustee...................................... 55
Section 10.3 Call of Meetings by Company or Noteholders....................... 55
Section 10.4 Qualifications for Voting........................................ 55
Section 10.5 Regulations...................................................... 55
Section 10.6 Voting........................................................... 56
</TABLE>
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(CONTINUED)
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Section 10.7 No Delay of Rights by Meeting...................................... 56
ARTICLE XI SUPPLEMENTAL INDENTURES......................................................... 57
Section 11.1 Supplemental Indentures Without Consent of Noteholders............. 57
Section 11.2 Supplemental Indentures with Consent of Noteholders................ 58
Section 11.3 Effect of Supplemental Indenture................................... 59
Section 11.4 Notation on Notes.................................................. 59
Section 11.5 Evidence of Compliance of Supplemental Indenture to Be Furnished
Trustee............................................................. 59
ARTICLE XII CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE............................... 60
Section 12.1 Company May Consolidate Etc. on Certain Terms...................... 60
Section 12.2 Successor Corporation to Be Substituted............................ 60
Section 12.3 Opinion of Counsel to Be Given Trustee............................. 61
ARTICLE XIII SATISFACTION AND DISCHARGE OF INDENTURE........................................ 61
Section 13.1 Discharge of Indenture............................................. 61
Section 13.2 Deposited Monies to Be Held in Trust by Trustee.................... 62
Section 13.3 Paying Agent to Repay Monies Held.................................. 62
Section 13.4 Return of Unclaimed Monies......................................... 62
Section 13.5 Reinstatement...................................................... 62
ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
............................................................................... 63
Section 14.1 Indenture and Notes Solely Corporate Obligations................... 63
ARTICLE XV CONVERSION OF NOTES............................................................. 63
Section 15.1 Right to Convert................................................... 63
Section 15.2 Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends................ 63
Section 15.3 Cash Payments in Lieu of Fractional Shares......................... 65
Section 15.4 Conversion Price................................................... 65
Section 15.5 Adjustment of Conversion Price..................................... 66
Section 15.6 Effect of Reclassification, Consolidation, Merger or Sale.......... 74
</TABLE>
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(CONTINUED)
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Section 15.7 Taxes on Shares Issued............................................... 75
Section 15.8 Reservation of Shares; Shares to Be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock................... 75
Section 15.9 Responsibility of Trustee............................................ 76
Section 15.10 Notice to Holders Prior to Certain Actions.......................... 77
ARTICLE XVI MISCELLANEOUS PROVISIONS.......................................................... 77
Section 16.1 Provisions Binding on Company's Successors........................... 77
Section 16.2 Official Acts by Successor Corporation............................... 78
Section 16.3 Addresses for Notices, Etc........................................... 78
Section 16.4 Governing Law........................................................ 78
Section 16.5 Evidence of Compliance with Conditions Precedent; Certificates to
Trustee.............................................................. 78
Section 16.6 Legal Holidays....................................................... 79
Section 16.7 Trust Indenture Act.................................................. 79
Section 16.8 No Security Interest Created......................................... 79
Section 16.9 Benefits of Indenture................................................ 79
Section 16.10 Table of Contents, Headings, Etc.................................... 79
Section 16.11 Authenticating Agent................................................ 80
Section 16.12 Execution in Counterparts........................................... 80
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vi
<PAGE> 10
INDENTURE
INDENTURE, dated as of September 15, 1997, between Integrated Process
Equipment Corp., a Delaware corporation (hereinafter sometimes called the
"Company", as more fully set forth in Section 1.1), and State Street Bank and
Trust Company of California, N.A., a national banking association organized
under the laws of the United States of America, as trustee hereunder
(hereinafter sometimes called the "Trustee", as more fully set forth in Section
1.1).
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 6 1/4% Convertible Subordinated Notes due 2004
(hereinafter sometimes called the "Notes"), in an aggregate principal amount not
to exceed $115,000,000 and, to provide the terms and conditions upon which the
Notes are to be authenticated, issued and delivered, the Company has duly
authorized the execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by the
Notes, a form of assignment, a form of option to elect repayment upon a
Fundamental Change, and a form of conversion notice to be borne by the Notes are
to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
ARTICLE
DEFINITIONS
SECTION 1.1 DEFINITIONS. The terms defined in this Section 1.1 (except as
herein otherwise expressly provided or unless the context otherwise requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.1. All other
terms used in this Indenture that are defined in the Trust Indenture
1
<PAGE> 11
Act or which are by reference therein defined in the Securities Act (except as
herein otherwise expressly provided or unless the context otherwise requires)
shall have the meanings assigned to such terms in said Trust Indenture Act and
in said Securities Act as in force at the date of the execution of this
Indenture. The words "herein," "hereof," "hereunder," and words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other Subdivision. The terms defined in this Article include the
plural as well as the singular.
AFFILIATE: The term "Affiliate" of any specified Person shall mean
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control," when used with respect to any specified Person
means the power to direct or cause the direction of the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
APPLICABLE PRICE: The term "Applicable Price" shall mean (i) in the
event of a Fundamental Change in which the holders of the Common Stock receive
only cash, the amount of cash received by the holder of one share of Common
Stock and (ii) in the event of any other Fundamental Change, the arithmetic
average of the Closing Price for the Common Stock (determined as set forth in
Section 15.5(h)) during the ten Trading Days (as defined in Section 15.5(h))
prior to (A) the record date for the determination of the holders of Common
Stock entitled to receive cash, securities, property or other assets in
connection with such Fundamental Change, or, (B) if there is no such record
date, the date upon which the holders of the Common Stock shall have the right
to receive such cash, securities, property or other assets in connection with
the Fundamental Change.
BOARD OF DIRECTORS: The term "Board of Directors" shall mean the
Board of Directors of the Company or a committee of such Board duly authorized
to act for it hereunder.
BUSINESS DAY: The term "Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York, Phoenix, Arizona or the city in which the
Corporate Trust Office is located are authorized or obligated by law or
executive order to close or be closed.
CLOSING PRICE: The term "Closing Price" shall have the meaning
specified in Section 15.5(h)(1).
COMMISSION: The term "Commission" shall mean the Securities and
Exchange Commission.
COMMON STOCK: The term "Common Stock" shall mean any stock of any
class of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to redemption
by the Company. Subject to the provisions of Section 15.6, however, shares
issuable on conversion of Notes shall include only shares of the class
designated
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as common stock of the Company at the date of this Indenture or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which are not subject to redemption by the
Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
COMPANY: The term "Company" shall mean Integrated Process Equipment
Corp., a Delaware corporation, having its principal office at 4717 E. Hilton
Avenue, Phoenix, Arizona 85034 and subject to the provisions of Article XII,
shall include its successors and assigns.
CONVERSION PRICE: The term "Conversion Price" shall have the meaning
specified in Section 15.4.
CORPORATE TRUST OFFICE: The term "Corporate Trust Office" or other
similar term, shall mean the principal office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office is, at the date as of which this Indenture is dated, located at 725
Figueroa Street, Los Angeles, California, 90017, Attention: Corporate Trust
Department.
CUSTODIAN: The term "Custodian" shall mean State Street Bank and
Trust Company of California, N.A., as custodian with respect to the Notes in
global form, or any successor entity thereto.
DEFAULT: The term "default" shall mean any event that is, or after
notice or passage of time, or both, would be, an Event of Default.
DEPOSITARY: The term "Depositary" shall mean, with respect to the
Notes issuable or issued in whole or in part in global form, the person
specified in Section 2.5(d) as the Depositary with respect to such Notes, until
a successor shall have been appointed and become such pursuant to the applicable
provisions of this Indenture, and thereafter, "Depositary" shall mean or include
such successor.
DESIGNATED SENIOR INDEBTEDNESS: The term "Designated Senior
Indebtedness" shall mean Senior Indebtedness under the Loan Agreement or any
other particular Senior Indebtedness in which the instrument creating or
evidencing the same or the assumption or guarantee thereof (or related
agreements or documents to which the Company is a party) expressly provides that
such Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes
of this Indenture (provided that such instrument, agreement or other document
may place limitations and conditions on the right of such Senior Indebtedness to
exercise the rights of Designated Senior Indebtedness). If any payment made to
any holder of any Designated Senior Indebtedness or its Representative with
respect to such Designated Senior Indebtedness
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is rescinded or must otherwise be returned by such holder or Representative upon
the insolvency, bankruptcy or reorganization of the Company or otherwise, the
reinstated Indebtedness of the Company arising as a result of such rescission or
return shall constitute Designated Senior Indebtedness effective as of the date
of such rescission or return.
EXCHANGE ACT: The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder, as in effect from time to time.
EVENT OF DEFAULT: The term "Event of Default" shall mean any event
specified in Section 7.1(a), (b), (c), (d) or (e).
FUNDAMENTAL CHANGE: The term "Fundamental Change" shall mean the
occurrence of any transaction or event in connection with which all or
substantially all the Common Stock shall be exchanged for, be converted into, be
acquired for, or constitute in all material respects solely the right to
receive, consideration which is not all or substantially all common stock which
is (or, upon consummation of or immediately following such transaction or event,
will be) listed on a United States national securities exchange or approved for
quotation on the Nasdaq National Market or any similar United States system of
automated dissemination of quotations of securities prices (whether by means of
an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise).
INDEBTEDNESS: The term "Indebtedness" shall mean, with respect to
any Person, and without duplication, (a) all indebtedness, obligations and other
liabilities (contingent or otherwise) of such Person for borrowed money
(including obligations of the Company in respect of overdrafts, foreign exchange
contracts, currency exchange agreements, interest rate protection agreements,
and any loans or advances from banks, whether or not evidenced by notes or
similar instruments) or evidenced by bonds, debentures, notes or similar
instruments (whether or not the recourse of the lender is to the whole of the
assets of such Person or to only a portion thereof) (other than any account
payable or other accrued current liability or obligation incurred in the
ordinary course of business in connection with the obtaining of materials or
services); (b) all reimbursement obligations and other liabilities (contingent
or otherwise) of such Person with respect to letters of credit, bank guarantees
or bankers' acceptances; (c) all obligations and liabilities (contingent or
otherwise) in respect of leases of such Person required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person and all obligations and
other liabilities (contingent or otherwise) under any lease or related document
(including a purchase agreement) in connection with the lease of real property
which provides that such Person is contractually obligated to purchase or cause
a third party to purchase the leased property and thereby guarantee a minimum
residual value of the leased property to the lessor and the obligations of such
Person under such lease or related document to purchase or to cause a third
party to purchase such leased property; (d) all obligations of such Person
(contingent or otherwise) with respect to an interest rate or other swap, cap or
collar agreement or other similar instrument or agreement or foreign currency
hedge, exchange, purchase or similar instrument or agreement; (e) all direct or
indirect guaranties or similar agreements by such Person in respect of, and
obligations or liabilities
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(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of indebtedness, obligations
or liabilities of another Person of the kind described in clauses (a) through
(d); (f) any indebtedness or other obligations described in clauses (a) through
(d) secured by any mortgage, pledge, lien or other encumbrance existing on
property which is owned or held by such Person, regardless of whether the
indebtedness or other obligation secured thereby shall have been assumed by such
Person; and (g) any and all deferrals, renewals, extensions and refundings of,
or amendments, modifications or supplements to, any indebtedness, obligation or
liability of the kind described in clauses (a) through (f).
INDENTURE: The term "Indenture" shall mean this instrument as
originally executed or, if amended or supplemented as herein provided, as so
amended or supplemented.
INITIAL PURCHASERS: The term "Initial Purchasers" shall mean Morgan
Stanley & Co. Incorporated, Hambrecht & Quist LLC, Prudential Securities
Incorporated and UBS Securities LLC.
INSTITUTIONAL ACCREDITED INVESTOR: The term "Institutional
Accredited Investor" shall mean an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
LIQUIDATED DAMAGES: The term "Liquidated Damages" shall have the
meaning specified in Section 2(f) of the Registration Rights Agreement.
LOAN AGREEMENT: The term "Loan Agreement" shall mean that certain
Loan Agreement, dated as of April 24, 1996, between the Company, IPEC Clean,
Inc., IPEC Precision, Inc., IPEC Planar, Inc., formerly known as IPEC Planar
Phoenix, Inc., successor-by-merger to IPEC Planar Portland, Inc., and Wells
Fargo Bank, National Association, successor-by-merger to First Interstate Bank
of Arizona, N.A., individually as Agent, as amended through the date hereof, as
further amended, amended and restated, supplemented or otherwise modified from
time to time.
NON-U.S. PERSON: The term Non-U.S. Person shall mean a person other
than a U.S. Person (as defined in Regulation S).
NOTE OR NOTES: The terms "Note" or "Notes" shall mean any Note or
Notes, as the case may be, authenticated and delivered under this Indenture,
including the Global Note.
NOTEHOLDER OR HOLDER: The terms "Noteholder" or "holder" as applied
to any Note, or other similar terms (but excluding the term "beneficial
holder"), shall mean any person in whose name at the time a particular Note is
registered on the Note registrar's books.
NOTE REGISTER: The term "Note register" shall have the meaning
specified in Section 2.5.
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OFFICERS' CERTIFICATE: The term "Officers' Certificate," when used
with respect to the Company, shall mean a certificate signed by both (a) the
President, the Chief Executive Officer, Executive or Senior Vice President or
any Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) by the Treasurer
or any Assistant Treasurer or Secretary or any Assistant Secretary of the
Company.
OPINION OF COUNSEL: The term "Opinion of Counsel" shall mean an
opinion in writing signed by legal counsel, who may be an employee of or counsel
to the Company, or other counsel acceptable to the Trustee.
OUTSTANDING: The term "outstanding," when used with reference to
Notes, shall, subject to the provisions of Section 9.4, mean, as of any
particular time, all Notes authenticated and delivered by the Trustee under this
Indenture, except
(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, (i) for the redemption of
which monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or (ii) which shall
have been otherwise defeased in accordance with Article XIII;
(c) Notes in lieu of which, or in substitution for which,
other Notes shall have been authenticated and delivered pursuant to the terms of
Section 2.6; and
(d) Notes converted into Common Stock pursuant to Article XV
and Notes deemed not outstanding pursuant to Article III.
PAYMENT BLOCKAGE NOTICE: The term "Payment Blockage Notice" shall
have the meaning specified in Section 4.2.
PERSON: The term "Person" shall mean a corporation, an association,
a partnership, a limited liability corporation, an individual, a joint venture,
a joint stock company, a trust, an unincorporated organization or a government
or an agency or a political subdivision thereof.
PORTAL MARKET: The term "The Portal Market" shall mean The Portal
Market operated by the National Association of Securities Dealers, Inc. or any
successor thereto.
PREDECESSOR NOTE: The term "Predecessor Note" of any particular Note
shall mean every previous Note evidencing all or a portion of the same debt as
that evidenced by such particular Note; and, for the purposes of this
definition, any Note authenticated and delivered under Section 2.6 in lieu of a
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
lost, destroyed or stolen Note that it replaces.
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QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
REFERENCE MARKET PRICE: The term "Reference Market Price" initially
shall mean $20.00 and in the event of any adjustment to the Conversion Price
pursuant to Sections 15.5(a), (b), (c), (d), (e), (f) or (g) the Reference
Market Price shall also be adjusted so that the ratio of the Reference Market
Price to the Conversion Price after giving effect to any such adjustment shall
always be the same as the ratio of $20.00 to the initial Conversion Price
specified in the form of Note attached hereto (without regard to any adjustment
thereto).
REGISTRATION RIGHTS AGREEMENT: The term "Registration Rights
Agreement" shall mean that certain Registration Rights Agreement, dated as of
September 15, 1997, between the Company and the Initial Purchasers, as amended
from time to time in accordance with its terms, a copy of which is attached as
Exhibit C hereto.
REGULATION S: The term "Regulation S" shall mean Regulation S as
promulgated under the Securities Act.
REPRESENTATIVE: The term "Representative" shall mean the (a)
indenture trustee or other trustee, agent or representative for any Senior
Indebtedness or (b) with respect to any Senior Indebtedness that does not have
any such trustee, agent or other representative, (i) in the case of such Senior
Indebtedness issued pursuant to an agreement providing for voting arrangements
as among the holders or owners of such Senior Indebtedness, any holder or owner
of such Senior Indebtedness acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Indebtedness and (ii) in
the case of all other such Senior Indebtedness, the holder or owner of such
Senior Indebtedness.
RESPONSIBLE OFFICER: The term "Responsible Officer," when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
corporate trust matters.
RESTRICTED SECURITIES: The term "Restricted Securities" shall have
the meaning specified in Section 2.5.
RULE 144A: The term "Rule 144A" shall mean Rule 144A as promulgated
under the Securities Act.
SECURITIES ACT: The term "Securities Act" shall mean the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
SENIOR INDEBTEDNESS: The term "Senior Indebtedness" shall mean the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, Indebtedness
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of the Company, whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company
(including all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), unless in the case of any
particular Indebtedness the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes or expressly provides that such
Indebtedness is "pari passu" or " junior" to the Notes. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include any Indebtedness of
the Company to any subsidiary of the Company, a majority of the voting stock of
which is owned, directly or indirectly, by the Company. If any payment made to
any holder of any Senior Indebtedness or its Representative with respect to such
Senior Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Senior Indebtedness effective as of
the date of such rescission or return.
SIGNIFICANT SUBSIDIARY: The term "Significant Subsidiary" shall
mean, as of any date of determination, a subsidiary of the Company, a majority
of the voting stock or other voting power of which is owned directly or
indirectly by the Company, if as of such date of determination either (a) the
assets of such subsidiary equal 10% or more of the Company's total consolidated
assets or (b) the total revenue of which represented 10% or more of the
Company's consolidated total revenue for the most recently completed fiscal
year. Notwithstanding the foregoing, until the second anniversary of the date of
this Indenture, the term "Significant Subsidiary" shall include each of IPEC
Planar, Inc. ("Planar") and IPEC Precision, Inc. ("Precision"), whether or not
such entities meet one of the foregoing tests. From and after the second
anniversary of the date of this Indenture and until the third anniversary of the
date of this Indenture, the term "Significant Subsidiary" shall include Planar
and/or Precision if the assets or total revenue of such entity equal or
represent 5% or more of the Company's total consolidated assets or total
consolidated revenue, as applicable, for the most recently completed fiscal
year. From and after the third anniversary of the date of this Indenture, the
term "Significant Subsidiary" shall include Planar and/or Precision only if such
entity meets the test set forth in the first sentence of this paragraph.
SUBSIDIARY: The term "Subsidiary" shall mean, with respect to any
Person, (i) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or managing general partner of which is such Person or a
subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more subsidiaries of such Person (or any combination
thereof).
TRADING DAY: The term "Trading Day" shall have the meaning specified
in Section 15.5(h)(5).
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TRIGGER EVENT: The term "Trigger Event" shall have the meaning
specified in Section 15.5(d).
TRUST INDENTURE ACT: The term "Trust Indenture Act" shall mean the
Trust Indenture Act of 1939, as amended, as it was in force at the date of
execution of this Indenture, except as provided in Sections 11.3 and 15.6;
provided, however, that in the event the Trust Indenture Act of 1939 is amended
after the date hereof, the term "Trust Indenture Act" shall mean, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.
TRUSTEE: The term "Trustee" shall mean State Street Bank and Trust
Company of California, N.A. and its successors and any corporation resulting
from or surviving any consolidation or merger to which it or its successors may
be a party and any successor trustee at the time serving as successor trustee
hereunder.
The definitions of certain other terms are as specified in Sections 2.5
and 3.5 and Article XV.
ARTICLE
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
SECTION 2.1 DESIGNATION AMOUNT AND ISSUE OF NOTES. The Notes shall be
designated as "6 1/4% Convertible Subordinated Notes due 2004." Notes not to
exceed the aggregate principAL amount of $100,000,000 (or $115,000,000 if the
over-allotment option set forth in Section 2 of the Purchase Agreement dated
September 11, 1997 (as amended from time to time by the parties thereto) by and
between the Company and the Initial Purchasers is exercised in full) (except
pursuant to Sections 2.5, 2.6, 3.3, 3.5 and 15.2 hereof) upon the execution of
this Indenture, or from time to time thereafter, may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Company,
signed by its (a) Chief Executive Officer, President, Executive or Senior Vice
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title "Vice President") and
(b) Treasurer or Assistant Treasurer or its Secretary or any Assistant
Secretary, without any further action by the Company hereunder.
SECTION 2.2 FORM OF NOTES. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule
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or regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Note in global form shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a Note in global form to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Custodian, at the direction of the Trustee,
in such manner and upon instructions given by the holder of such Notes in
accordance with this Indenture. Payment of principal of and interest and
premium, if any, on any Note in global form shall be made to the holder of such
Note.
The terms and provisions contained in the form of Note attached as Exhibit
A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
SECTION 2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication and shall bear interest from the applicable
date in each case as specified on the face of the form of Note attached as
Exhibit A hereto. Interest on the Notes shall be computed on the basis of a
360-day year comprised of twelve (12) 30-day months.
The person in whose name any Note (or its Predecessor Note) is registered
on the Note register at the close of business on any record date with respect to
any interest payment date shall be entitled to receive the interest payable on
such interest payment date, except (i) that the interest payable upon redemption
(unless the date of redemption is an interest payment date) will be payable to
the person to whom principal is payable and (ii) as set forth in the next
succeeding sentence. In the case of any Note (or portion thereof) which is
converted into Common Stock of the Company during the period from (but
excluding) a record date to (but excluding) the next succeeding interest payment
date either (i) if such Note (or portion thereof) has been called for redemption
on a redemption date which occurs during such period, or is to be redeemed in
connection with a Fundamental Change on a Repurchase Date (as defined in Section
3.5) which occurs during such period, the Company shall not be required to pay
interest on such interest payment date in respect of any such Note (or portion
thereof) except to the extent required to be paid upon redemption of such Note
or portion thereof pursuant to Section 3.3 or 3.5 hereof or (ii) if otherwise,
any Note (or portion thereof) submitted for conversion during such period shall
be accompanied by funds equal to the interest payable on such succeeding
interest payment date on the principal amount so converted. Interest may, as the
Company shall specify to the paying agent in writing by each record date, be
paid either (i) by check mailed to the address of the person entitled thereto as
it appears in the Note register (provided that the holder of Notes with an
aggregate principal amount in excess of $2,000,000 shall, at the written
election of such
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holder, be paid by wire transfer in immediately available funds) or (ii) by
transfer to an account maintained by such person located in the United States;
provided, however, that payments to the Depositary will be made by wire transfer
of immediately available funds to the account of the Depositary or its nominee.
The term "record date" with respect to any interest payment date shall mean the
September 1 or March 1 preceding said March 15 or September 15, respectively.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any said March 15 or September 15 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder; and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below;
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor Notes)
are registered at the close of business on a special record date for the payment
of such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
to be paid on each Note and the date of the payment (which shall be not less
than twenty-five (25) days after the receipt by the Trustee of such notice,
unless the Trustee shall consent to an earlier date), and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate
amount to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall be not more than fifteen (15) days and
not less than ten (10) days prior to the date of the proposed payment, and not
less than ten (10) days after the receipt by the Trustee of the notice of the
proposed payment, the Trustee shall promptly notify the Company of such special
record date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first-class postage prepaid, to each Noteholder at
his address as it appears in the Note register, not less than ten (10) days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the Notes
(or their respective Predecessor Notes) were registered at the close of business
on such special record date and shall no longer be payable pursuant to the
following clause (2) of this Section 2.3.
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the Notes may be listed or
designated for issuance, and upon such notice as may be required by such
exchange or automated quotation system, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
SECTION 2.4 EXECUTION OF NOTES. The Notes shall be signed in the name and
on behalf of the Company by the facsimile signature of its Chief Executive
Officer, President, any
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Executive or Senior Vice President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title "Vice President") and attested by the facsimile signature of its Secretary
or any of its Assistant Secretaries or Treasurer or any of its Assistant
Treasurers (which may be printed, engraved or otherwise reproduced thereon, by
facsimile or otherwise). Only such Notes as shall bear thereon a certificate of
authentication substantially in the form set forth on the form of Note attached
as Exhibit A hereto, manually executed by the Trustee (or an authenticating
agent appointed by the Trustee as provided by Section 16.11), shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee (or such an authenticating agent) upon any Note
executed by the Company shall be conclusive evidence that the Note so
authenticated has been duly authenticated and delivered hereunder and that the
holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
SECTION 2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES: RESTRICTIONS
ON TRANSFER; DEPOSITARY.
(a) The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. The Note register shall be
in written form or in any form capable of being converted into written form
within a reasonably prompt period of time. The Trustee is hereby appointed "Note
registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. The Company may appoint one or more co-registrars in accordance with
Section 5.2.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for such
transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations and
of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant to
Section 5.2. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and
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deliver, the Notes which the Noteholder making the exchange is entitled to
receive bearing registration numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption or conversion shall (if so required by the Company or the
Note registrar) be duly endorsed, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, and the Notes shall
be duly executed by the Noteholder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax, assessment or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes.
Neither the Company nor the Trustee nor any Note registrar or any Company
registrar shall be required to exchange or register a transfer of (a) any Notes
for a period of fifteen (15) days next preceding any selection of Notes to be
redeemed or (b) any Notes or portions thereof called for redemption pursuant to
Section 3.2 or (c) any Notes or portion thereof surrendered for conversion
pursuant to Article XV or (d) any Notes or portions thereof tendered for
redemption (and not withdrawn) pursuant to Section 3.5.
(b) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Notes that upon initial
issuance are beneficially owned by QIBs and all Notes that are beneficially
owned by Non-U.S. Persons as a result of a sale or transfer after initial
issuance will be represented by one or more Notes in global form registered in
the name of the Depositary or the nominee of the Depositary (the "Global Note"),
except as otherwise specified below. The transfer and exchange of beneficial
interests in any such Global Note shall be effected through the Depositary in
accordance with this Indenture and the procedures of the Depositary therefor.
The Trustee shall make appropriate endorsements to reflect increases or
decreases in the principal amounts of any such Global Note as set forth on the
face of the Note ("Principal Amount") to reflect any such transfers. Except as
provided below, beneficial owners of a Global Note shall not be entitled to have
certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form and will not be
considered Holders of such Notes in global form.
(c) So long as the Notes are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Note to a
QIB in accordance with Rule 144A or to a Non-U.S. Person in accordance with
Regulation S, and upon receipt of the definitive Note or Notes being so
transferred, together with a certification, substantially in the form on the
reverse of the Note, from the transferor that the transfer is being made in
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compliance with Rule 144A or to a Non-U.S. Person in accordance with Regulation
S (or other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Global Note to reflect an increase in the aggregate Principal
Amount of the Notes represented by such Note in global form, the Trustee shall
cancel such definitive Note or Notes in accordance with the standing
instructions and procedures of the Depositary, the aggregate Principal Amount of
Notes represented by such Note in global form to be increased accordingly;
provided that no definitive Note, or portion thereof, in respect of which the
Company or an Affiliate of the Company held any beneficial interest shall be
included in such Note in global form until such definitive Note is freely
tradable in accordance with Rule 144(k); provided further that the Trustee shall
issue Notes in definitive form upon any transfer of a beneficial interest in the
Note in global form to the Company or any Affiliate of the Company.
Upon any sale or transfer of a Note to an Institutional Accredited
Investor (other than pursuant to a registration statement that has been declared
effective under the Securities Act), such Institutional Accredited Investor
shall, prior to such sale or transfer, furnish to the Company and/or the Trustee
a signed letter containing representations and agreements relating to
restrictions on transfer substantially in the form set forth in Exhibit B to
this Indenture.
Any Note in global form may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Notes to be tradeable on The Portal Market or as may be required for the Notes
to be tradeable on any other market developed for trading of securities pursuant
to Rule 144A or Regulation S or required to comply with any applicable law or
any regulation thereunder or with the rules and regulations of any securities
exchange or automated quotation system upon which the Notes may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Notes are subject.
(d) Every Note that bears or is required under this Section 2.5(d)
to bear the legend set forth in this Section 2.5(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend set
forth in Section 2.5(e), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.5(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Note, by such Noteholder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any sale, pledge,
transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Note (and all securities issued in exchange therefor
or substitution thereof, other than Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Section 2.5(e), if applicable)
shall bear a legend in substantially the following form, unless such Note has
been sold pursuant to a registration statement that has been declared effective
under the Securities Act
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(and which continues to be effective at the time of such transfer), or unless
otherwise agreed by the Company in writing, with written notice thereof to the
Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT),
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A UNITED STATES PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES
THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER
THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF
SUCH NOTE EXCEPT (A) TO INTEGRATED PROCESS EQUIPMENT CORP. OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(F) ABOVE), IT WILL FURNISH TO STATE STREET BANK AND
TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS
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<PAGE> 25
OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
(4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS
NOT A UNITED STATES PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE
TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 1(F) ABOVE OR
UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "UNITED STATES PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Note (or security issued in exchange or substitution therefor) as to
which such restrictions on transfer shall have expired in accordance with their
terms or as to the conditions for removal of the foregoing legend set forth
therein have been satisfied may, upon surrender of such Note for exchange to the
Note registrar in accordance with the provisions of this Section 2.5, be
exchanged for a new Note or Notes, of like tenor and aggregate principal amount,
which shall not bear the restrictive legend required by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in the second paragraph of Section 2.5(b) and in this
Section 2.5(d)), a Note in global form may not be transferred as a whole or in
part except by the Depositary to a nominee of the Depositary or
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<PAGE> 26
by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Notes in global form. Initially, the Global Note
shall be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co.
If at any time the Depositary for a Note in global form notifies the
Company that it is unwilling or unable to continue as Depositary for such Note,
the Company may appoint a successor Depositary with respect to such Note. If a
successor Depositary is not appointed by the Company within ninety (90) days
after the Company receives such notice, the Company will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, will authenticate and deliver, Notes in certificated form, in
aggregate principal amount equal to the principal amount of such Note in global
form, in exchange for such Note in global form.
If a Note in certificated form is issued in exchange for any portion of a
Note in global form after the close of business at the office or agency where
such exchange occurs on any record date and before the opening of business at
such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such Note, but
will be payable on such interest payment date, subject to the provisions of
Section 2.3, only to the person to whom interest in respect of such portion of
such Note in global form is payable in accordance with the provisions of this
Indenture.
Notes in certificated form issued in exchange for all or a part of a Note
in global form pursuant to this Section 2.5 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such Notes
in certificated form to the persons in whose names such Notes in certificated
form are so registered.
At such time as all interests in a Note in global form have been redeemed,
converted, canceled, exchanged for Notes in certificated form, or transferred to
a transferee who receives Notes in certificated form thereof, such Note in
global form shall, upon receipt thereof, be canceled by the Trustee in
accordance with standing procedures and instructions existing between the
Depositary and the Custodian. At any time prior to such cancellation, if any
interest in a global Note is exchanged for Notes in certificated form, redeemed,
converted, repurchased or canceled, exchanged for Notes in certificated form or
transferred to a transferee who receives Notes in certificated form therefor or
any Note in certificated form is exchanged or transferred for part of a Note in
global form, the principal amount of such Note in global form shall, in
accordance with the standing procedures and instructions existing between the
Depositary and the Custodian, be appropriately reduced or increased, as the case
may be, and an endorsement
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<PAGE> 27
shall be made on such Note in global form, by the Trustee or the Custodian, at
the direction of the Trustee, to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any stock certificate representing Common Stock issued upon conversion of such
Note shall bear a legend in substantially the following form, unless such Common
Stock has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer) or such Common Stock has been issued upon conversion of
Notes that have been transferred pursuant to a registration statement that has
been declared effective under the Securities Act, or unless otherwise agreed by
the Company in writing with written notice thereof to the transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT
UNTIL THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
ANY SUCCESSOR PROVISION), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE
COMMON STOCK EVIDENCED HEREBY EXCEPT (A) TO INTEGRATED PROCESS EQUIPMENT
CORP. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER
FURNISHES TO AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS TRANSFER AGENT
(OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM SUCH TRANSFER AGENT OR A SUCCESSOR TRANSFER AGENT, AS
APPLICABLE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME
OF SUCH TRANSFER); (2) PRIOR TO
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SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE), IT
WILL FURNISH TO AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS TRANSFER
AGENT (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON
STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 1(F) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON
STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER
OF THE COMMON STOCK EVIDENCED HEREBY AFTER THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED
HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.5(e).
(f) Any Note or Common Stock issued upon the conversion or exchange
of a Note that, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Company or any Affiliate thereof may
not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such Notes
or Common Stock, as the case may be, no longer being "restricted securities" (as
defined under Rule 144).
SECTION 2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. In case any Note
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen. In every case the
applicant for
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a substituted Note shall furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company, to
the Trustee and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Note and of the ownership
thereof.
Following receipt by the Trustee or such authenticating agent, as the case
may be, of satisfactory security or indemnity and evidence, as described in the
preceding paragraph, the Trustee or such authenticating agent may authenticate
any such substituted Note and make available for delivery such Note. Upon the
issuance of any substituted Note, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses connected therewith. In case any Note
which has matured or is about to mature or has been called for redemption or has
been tendered for redemption (and not withdrawn) or is about to be converted
into Common Stock shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Note, pay or authorize the payment
of or convert or authorize the conversion of the same (without surrender thereof
except in the case of a mutilated Note), as the case may be, if the applicant
for such payment or conversion shall furnish to the Company, to the Trustee and,
if applicable, to such authenticating agent such security or indemnity as may be
required by them to save each of them harmless for any loss, liability, cost or
expense caused by or connected with such substitution, and, in case of
destruction, loss or theft, evidence satisfactory to the Company, the Trustee
and, if applicable, any paying agent or conversion agent of the destruction,
loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section
2.6 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
SECTION 2.7 TEMPORARY NOTES. Pending the preparation of Notes in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the Notes in certificated form, but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in
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substantially the same manner, and with the same effect, as the Notes in
certificated form. Without unreasonable delay the Company will execute and
deliver to the Trustee or such authenticating agent Notes in certificated form
(other than in the case of Notes in global form) and thereupon any or all
temporary Notes (other than any such Note in global form) may be surrendered in
exchange therefor, at each office or agency maintained by the Company pursuant
to Section 5.2 and the Trustee or such authenticating agent shall authenticate
and make available for delivery in exchange for such temporary Notes an equal
aggregate principal amount of Notes in certificated form. Such exchange shall be
made by the Company at its own expense and without any charge therefor. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as Notes in
certificated form authenticated and delivered hereunder.
SECTION 2.8 CANCELLATION OF NOTES PAID, ETC. All Notes surrendered for the
purpose of payment, redemption, conversion, exchange or registration of
transfer, shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by
it, and no Notes shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Indenture. The Trustee shall return such
canceled Notes to the Company. If the Company shall acquire any of the Notes,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.
SECTION 2.9 CUSIP NUMBERS. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Noteholders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
REDEMPTION OF NOTES
SECTION 3.1 REDEMPTION PRICES. The Company may not redeem the Notes prior
to September 20, 2000. At any time on or after September 20, 2000, the Company
may, at its option, redeem all or from time to time any part of the Notes on any
date prior to maturity, upon notice as set forth in Section 3.2, and at the
optional redemption prices set forth in the form of Note attached as Exhibit A
hereto, together with accrued interest to, but excluding, the date fixed for
redemption.
SECTION 3.2 NOTICE OF REDEMPTION; SELECTION OF NOTES. In case the Company
shall desire to exercise the right to redeem all or, as the case may be, any
part of the Notes pursuant
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to Section 3.1, it shall fix a date for redemption and it or, at its written
request received by the Trustee not fewer than forty-five (45) days prior (or
such shorter period of time as may be acceptable to the Trustee) to the date
fixed for redemption, the Trustee in the name of and at the expense of the
Company, shall mail or cause to be mailed a notice of such redemption at least
thirty (30) days prior to the date fixed for redemption to the holders of Notes
so to be redeemed as a whole or in part at their last addresses as the same
appear on the Note register; provided that if the Company shall give such
notice, it shall also give written notice, and written notice of the Notes to be
redeemed, to the Trustee. Such mailing shall be by first class mail. The notice
if mailed in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the holder receives such notice. In any case,
failure to give such notice by mail or any defect in the notice to the holder of
any Note designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Note.
Each such notice of redemption shall specify the aggregate principal
amount of Notes to be redeemed, the CUSIP numbers, the date fixed for redemption
(which shall be a Business Day), the redemption price at which Notes are to be
redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of such Notes, that interest accrued to the date
fixed for redemption will be paid as specified in said notice, and that on and
after said date interest thereon or on the portion thereof to be redeemed will
cease to accrue. Such notice shall also state the current Conversion Price and
the date on which the right to convert such Notes or portions thereof into
Common Stock will expire. If fewer than all the Notes are to be redeemed, the
notice of redemption shall identify the Notes to be redeemed (including CUSIP
numbers, if any). In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of redemption
given as provided in this Section 3.2, the Company will deposit with the Trustee
or with one or more paying agents (or, if the Company is acting as its own
paying agent, set aside, segregate and hold in trust as provided in Section 5.4)
an amount of money sufficient to redeem on the redemption date all the Notes (or
portions thereof) so called for redemption (other than those theretofore
surrendered for conversion into Common Stock) at the appropriate redemption
price, together with accrued interest to, but excluding, the date fixed for
redemption; provided that if such payment is made on the redemption date it must
be received by the Trustee or paying agent, as the case may be, by 10:00 a.m.
New York City time, on such date. If any Note called for redemption is converted
pursuant hereto, any money deposited with the Trustee or any paying agent or so
segregated and held in trust for the redemption of such Note shall be paid to
the Company upon its written request, or, if then held by the Company shall be
discharged from such trust. Whenever any Notes are to be redeemed, the Company
will give the Trustee written notice in the form of an Officers' Certificate not
fewer than forty-five (45) days (or such shorter period of time as may be
acceptable to the Trustee) prior to the redemption date as to the aggregate
principal amount of Notes to be redeemed.
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If fewer than all the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof of the Global Note or the Notes in certificated
form to be redeemed (in principal amounts of $1,000 or integral multiples
thereof), by lot on a pro rata basis or by another method the Trustee deems fair
and appropriate. If any Note selected for partial redemption is converted in
part after such selection, the converted portion of such Note shall be deemed
(so far as may be) to be the portion to be selected for redemption. The Notes
(or portions thereof) so selected shall be deemed duly selected for redemption
for all purposes hereof, notwithstanding that any such Note is converted as a
whole or in part before the mailing of the notice of redemption.
Upon any redemption of less than all Notes, the Company and the Trustee
may (but need not) treat as outstanding any Notes surrendered for conversion
during the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as outstanding any Note authenticated
and delivered during such period in exchange for the unconverted portion of any
Note converted in part during such period.
SECTION 3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date fixed for
redemption and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to (but excluding) the date
fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Notes at the redemption price, together with
interest accrued to said date), interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and such Notes shall cease after the
close of business on the Business Day next preceding the date fixed for
redemption to be convertible into Common Stock and, except as provided in
Sections 8.5 and 13.4, to be entitled to any benefit or security under this
Indenture, and the holders thereof shall have no right in respect of such Notes
except the right to receive the redemption price thereof and unpaid interest to
(but excluding) the date fixed for redemption. On presentation and surrender of
such Notes at a place of payment in said notice specified, the said Notes or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to (but
excluding) the date fixed for redemption; provided that, if the applicable
redemption date is an interest payment date, the semi-annual payment of interest
becoming due on such date shall be payable to the holders of such Notes
registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes or
mail any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default of which,
in the case of any Event of Default other than under Sections 7.1 (a) or 7.1
(b), a Responsible Officer of the Trustee has knowledge. If any
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Note called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and premium, if any, shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate borne
by the Note and such Note shall remain convertible into Common Stock until the
principal and premium, if any, shall have been paid or duly provided for.
SECTION 3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to (but
excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything to the contrary
contained in Article XV) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the date fixed for redemption
(and the right to convert any such Notes shall be extended through such time),
subject to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in the
same manner as it would monies deposited with it by the Company for the
redemption of Notes. Without the Trustee's prior written consent, no arrangement
between the Company and such purchasers for the purchase and conversion of any
Notes shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Indenture.
SECTION 3.5 REDEMPTION AT OPTION OF HOLDERS.
(a) If there shall occur a Fundamental Change, then each Noteholder
shall have the right, at such holder's option, to require the Company to redeem
all of such holder's Notes, or any portion thereof that is an integral multiple
of $1,000 principal amount, on the date (the "Repurchase Date") that is thirty
(30) days after the date of the Company Notice (as defined in Section 3.5(b)
below) of such Fundamental Change (or, if such 30th day is not a Business Day,
the next succeeding Business Day). Such repayment shall be made at 106.250% from
the date of initial issuance of the Notes until September 14, 1998; 105.357%
from September 15, 1998 until September 14, 1999; 104.464% from September 15,
1999 until September 19, 2000; 103.571% from September 20, 2000 until September
14, 2001 and thereafter at the following
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prices (expressed as percentages of the principal amount) in the event of a
Fundamental Change occurring during the twelve (12) month period beginning
September 15:
YEAR REDEMPTION PRICE
2001 102.679%
2002 101.786%
2003 100.893%
and 100% at September 15, 2004; provided that, if the Applicable Price with
respect to the Fundamental Change is less than the Reference Market Price, the
Company shall redeem such Notes at a price equal to the foregoing redemption
price multiplied by the fraction obtained by dividing the Applicable Price by
the Reference Market Price. In each case, the Company shall also pay to such
holders accrued interest on the redeemed Notes to, but excluding, the Repurchase
Date; provided that, if such Repurchase Date is March 15 or September 15, then
the interest payable on such date shall be paid to the holders of record of the
Notes on the next preceding March 1 or September 1, respectively.
Upon presentation of any Note redeemed in part only, the Company shall
execute and, upon the Company's written direction to the Trustee, the Trustee
shall authenticate and deliver to the holder thereof, at the expense of the
Company, a new Note or Notes, of authorized denominations, in principal amount
equal to the unredeemed portion of the Notes so presented.
(b) On or before the tenth day after the occurrence of a Fundamental
Change, the Company, or, at its written request (which must be received by the
Trustee at least five (5) Business Days prior to the date the Trustee is
requested to give notice as described below), the Trustee in the name of and at
the expense of the Company, shall mail or cause to be mailed to all holders of
record on the date of the Fundamental Change a notice (the "Company Notice") of
the occurrence of such Fundamental Change and of the redemption right at the
option of the holders arising as a result thereof. Such notice shall be mailed
in the manner and with the effect set forth in the first paragraph of Section
3.2. The Company shall also deliver a copy of the Company Notice to the Trustee
at such time as it is mailed to Noteholders.
Each Company Notice shall specify the circumstances constituting the
Fundamental Change, the Repurchase Date, the price at which the Company shall be
obligated to redeem Notes, the latest time (not less than thirty (30) days after
the date of the Company's notice of a Fundamental Change) on the Repurchase Date
by which the holder must exercise the redemption right (the "Fundamental Change
Expiration Time"), that the holder shall have the right to withdraw any Notes
surrendered prior to the Fundamental Change Expiration Time, a description of
the procedure which a Noteholder must follow to exercise such redemption right
and to withdraw any surrendered Notes, the place or places where the holder is
to surrender such holder's Notes, and the amount of interest accrued on each
Note to the Repurchase Date.
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No failure of the Company to give the foregoing notices and no
defect therein shall limit the Noteholders' redemption rights or affect the
validity of the proceedings for the repurchase of the Notes pursuant to this
Section 3.5.
(c) For a Note to be so repaid at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such holder, the Corporate Trust Office, such Note
with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on
the reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time. All questions as
to the validity, eligibility (including time of receipt) and acceptance of any
Note for repayment shall be determined by the Company, whose determination shall
be final and binding absent manifest error.
(d) On or prior to the Repurchase Date, the Company will deposit
with the Trustee or with one or more paying agents (or, if the Company is acting
as its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money sufficient to repay on the Repurchase Date all
the Notes to be repaid on such date at the appropriate redemption price,
together with accrued interest to (but excluding) the Repurchase Date; provided
that if such payment is made on the Repurchase Date it must be received by the
Trustee or paying agent, as the case may be, by 10:00 a.m. New York City time,
on such date. Payment for Notes surrendered for redemption (and not withdrawn)
prior to the Fundamental Change Expiration Time will be made promptly (but in no
event more than five (5) Business Days) following the Repurchase Date by mailing
checks for the amount payable to the holders of such Notes entitled thereto as
they shall appear on the registry books of the Company.
(e) In the case of a reclassification, change, consolidation,
merger, combination, sale or conveyance to which Section 15.6 applies, in which
the Common Stock of the Company is changed or exchanged as a result into the
right to receive stock, securities or other property or assets (including cash),
which includes shares of Common Stock of the Company or another person that are,
or upon issuance will be, traded on a United States national securities exchange
or approved for trading on an established automated over-the-counter trading
market in the United States and such shares constitute at the time such change
or exchange becomes effective in excess of 50% of the aggregate fair market
value of such stock, securities or other property or assets (including cash) (as
determined by the Company, which determination shall be conclusive and binding),
then the Person formed by such consolidation or resulting from such merger or
which acquires such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture (accompanied by an Opinion of Counsel that such
supplemental indenture complies with the Trust Indenture Act as in force at the
date of execution of such supplemental indenture) modifying the provisions of
this Indenture relating to the right of holders of the Notes to cause the
Company to repurchase the Notes following a Fundamental Change, including
without limitation the applicable provisions of this Section 3.5 and the
definitions of the Applicable Price, Common Stock, Fundamental Change and
Reference Market Price, as appropriate, as determined in good faith by the
Company (which determination shall be conclusive and binding), to make such
provisions apply to the common stock and the issuer
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thereof if different from the Company and Common Stock of the Company (in lieu
of the Company and the Common Stock of the Company).
(f) The Company will comply with the provisions of Rule 13e-4 and
any other tender offer rules under the Exchange Act to the extent then
applicable in connection with the redemption rights of the holders of Notes in
the event of a Fundamental Change.
ARTICLE IV
SUBORDINATION OF NOTES
SECTION 4.1 AGREEMENT OF SUBORDINATION. The Company covenants and agrees,
and each holder of Notes issued hereunder by its acceptance thereof likewise
covenants and agrees, that all Notes shall be issued subject to the provisions
of this Article IV; and each Person holding any Note, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees to be
bound by such provisions.
The payment of the principal of, premium, if any, and interest (including
Liquidated Damages, if any) on all Notes (including, but not limited to, the
redemption price with respect to the Notes called for redemption in accordance
with Section 3.2 or submitted for redemption in accordance with Section 3.5, as
the case may be, as provided in the Indenture) issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness,
whether outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article IV shall prevent the occurrence of any
default or Event of Default hereunder.
SECTION 4.2 PAYMENTS TO NOTEHOLDERS. No payment shall be made with respect
to the principal of, premium, if any, or interest (including Liquidated Damages,
if any) on the Notes (including, but not limited to, the redemption price with
respect to the Notes to be called for redemption in accordance with Section 3.2
or submitted for redemption in accordance with Section 3.5, as the case may be,
as provided in this Indenture), except payments and distributions made by the
Trustee as permitted by the first or second paragraph of Section 4.5, if:
(i) a default in the payment of principal, premium, if any,
interest, rent or other obligations in respect of Senior Indebtedness occurs and
is continuing (or, in the case of Senior Indebtedness for which there is a
period of grace, in the event of such a default that continues beyond the period
of grace, if any, specified in the instrument or lease evidencing such Senior
Indebtedness) (a "Payment Default"), unless and until such Payment Default shall
have been cured or waived or shall have ceased to exist; or
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(ii) a default, other than a Payment Default, on any
Designated Senior Indebtedness occurs and is continuing that then permits
holders of such Designated Senior Indebtedness to accelerate its maturity and
the Trustee receives a notice of the default (a "Payment Blockage Notice") from
a holder of Designated Senior Indebtedness, a Representative of Designated
Senior Indebtedness or the Company (a "Non-Payment Default").
If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section 4.2 unless and until (A) at least 365 days shall have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice and (B) all scheduled payments of principal, premium, if any,
and interest (including Liquidated Damages, if any) on the Notes that have come
due have been paid in full in cash. No Non-Payment Default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in respect
of the Notes upon the earlier of:
(1) the date upon which any such Payment Default is cured or
waived or ceases to exist, or
(2) in the case of a Non-Payment Default, the earlier of (a) the
date upon which such default is cured or waived or ceases to
exist or (b) 179 days after notice is received if the maturity
of such Designated Senior Indebtedness has not been
accelerated,
unless this Article IV otherwise prohibits the payment or distribution at the
time of such payment or distribution.
Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness, or payment thereof in
accordance with its terms provided for in cash or other payment satisfactory to
the holders of such Senior Indebtedness before any payment is made on account of
the principal of, premium, if any, or interest (including Liquidated Damages, if
any) on the Notes (except payments made pursuant to Article XIII from monies
deposited with the Trustee pursuant thereto prior to commencement of proceedings
for such dissolution, winding up, liquidation or reorganization); and upon any
such dissolution or winding up or liquidation or reorganization of the Company
or bankruptcy, insolvency, receivership or other proceeding, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Notes or
the Trustee would be entitled, except for the provision of this Article IV,
shall (except as aforesaid) be paid by the Company or by any receiver, trustee
in
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bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the holders of the Notes or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, or as otherwise required by law or a
court order) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior Indebtedness in full, in cash
or other payment satisfactory to the holders of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness, before any payment or distribution is made to the holders
of the Notes or to the Trustee.
For purposes of this Article IV, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article IV with respect to
the Notes to the payment of all Senior Indebtedness which may at the time be
outstanding; provided that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii)
the rights of the holders of Senior Indebtedness (other than leases which are
not assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article XII shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 4.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article XII.
In the event of the acceleration of the Notes because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Notes in respect of the principal of, premium, if any, or interest (including
Liquidated Damages, if any) on the Notes (including, but not limited to, the
redemption price with respect to the Notes called for redemption in accordance
with Section 3.2 or submitted for redemption in accordance with Section 3.5, as
the case may be, as provided in the Indenture), except payments and
distributions made by the Trustee as permitted by the first or second paragraph
of Section 4.5, until all Senior Indebtedness has been paid in full in cash or
other payment satisfactory to the holders of Senior Indebtedness or such
acceleration is rescinded in accordance with the terms of this Indenture. If
payment of the Notes is accelerated because of an Event of Default, the Company
shall promptly notify holders of Senior Indebtedness of the acceleration.
In the event that, notwithstanding the foregoing provisions, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing provisions in this Section 4.2, shall be
received by the Trustee or the holders of the Notes before
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all Senior Indebtedness is paid in full in cash or other payment satisfactory to
the holders of such Senior Indebtedness, or provision is made for such payment
thereof in accordance with its terms in cash or other payment satisfactory to
the holders of such Senior Indebtedness, such payment or distribution shall be
held in trust for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of any Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
Nothing in this Section 4.2 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.6. This Section 4.2 shall be subject to
the further provisions of Section 4.5.
SECTION 4.3 SUBROGATION OF NOTES. Subject to the payment in full of all
Senior Indebtedness, the rights of the holders of the Notes shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Indebtedness pursuant to the provisions of this Article IV (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to other indebtedness of the Company to substantially the
same extent as the Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any, and
interest (including Liquidated Damages, if any) on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article IV, and no payment over pursuant to the provisions of
this Article IV, to or for the benefit of the holders of Senior Indebtedness by
holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article IV, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company to
or for the account of the Notes. It is understood that the provisions of this
Article IV are and are intended solely for the purposes of defining the relative
rights of the holders of the Notes, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.
Nothing contained in this Article IV or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of, premium, if any, and interest (including
Liquidated Damages, if any) on the Notes as and when the same shall become
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due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the Notes and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or the holder of any Note from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article IV of the holders
of Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article IV, the Trustee, subject to the provisions of Section 8.1, and the
holders of the Notes shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such bankruptcy, dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article IV.
SECTION 4.4 AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of a Note
by the holder's acceptance thereof authorizes and directs the Trustee on the
holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article IV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in the third paragraph of Section
7.2 hereof at least thirty (30) days before the expiration of the time to file
such claim, the holders of any Senior Indebtedness or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the holders
of the Notes.
SECTION 4.5 NOTICE TO TRUSTEE. The Company shall give prompt written
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company which would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Notes pursuant to the provisions of this Article IV.
Notwithstanding the provisions of this Article IV or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article IV,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative or a holder or holders of
Senior Indebtedness or from any trustee thereof; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Section 8.1,
shall be entitled in all respects to assume that no such facts exist; provided
that if on a date not less than two Business Days prior to the date upon which
by the terms hereof any such monies may become payable for any purpose
(including, without limitation, the payment of the principal of, or premium, if
any, or interest (including Liquidated Damages, if any) on any Note) the Trustee
shall not have received, with respect to such monies, the notice provided for in
this Section 4.5, then, anything herein
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contained to the contrary notwithstanding, the Trustee shall have full power and
authority to apply moneys received to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received by
it on or after such prior date.
Notwithstanding anything in this Article IV to the contrary, nothing shall
prevent any payment by the Trustee to the Noteholders of monies deposited with
it pursuant to Section 13.1, and any such payment shall not be subject to the
provisions of Section 4.1 or 4.2.
The Trustee, subject to the provisions of Section 8.1, shall be entitled
to rely on the delivery to it of a written notice by a Representative or a
person representing himself to be a holder of Senior Indebtedness (or a trustee
on behalf of such holder) to establish that such notice has been given by a
Representative or a holder of Senior Indebtedness or a trustee on behalf of any
such holder or holders. The Trustee shall not be required to make any payment or
distribution to or on behalf of a holder of Senior Indebtedness pursuant to this
Article IV unless it has received satisfactory evidence as to the amount of
Senior Indebtedness held by such person, the extent to which such person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article IV.
SECTION 4.6 TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article IV in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness (i) for any failure to make any payments or distributions to
such holder or (ii) if it shall pay over or deliver to holders of Notes, the
Company or any other person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article IV or otherwise.
SECTION 4.7 NO IMPAIRMENT OF SUBORDINATION. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
SECTION 4.8 CERTAIN CONVERSIONS NOT DEEMED PAYMENT. For the purposes of
this Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of, premium, if
any, or interest (including Liquidated Damages, if any)
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on Notes or on account of the purchase or other acquisition of Notes, and (2)
the payment, issuance or delivery of cash (except in satisfaction of fractional
shares pursuant to Section 15.3), property or securities (other than junior
securities) upon conversion of a Note shall be deemed to constitute payment on
account of the principal of, premium, if any, or interest (including Liquidated
Damages, if any) on such Note. For the purposes of this Section 4.8, the term
"junior securities" means (a) shares of any stock of any class of the Company or
(b) securities of the Company that are subordinated in right of payment to all
Senior Indebtedness that may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Article. Nothing
contained in this Article IV or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company, its creditors (other than
holders of Senior Indebtedness) and the Noteholders, the right, which is
absolute and unconditional, of the Holder of any Note to convert such Note in
accordance with Article XV.
SECTION 4.9 ARTICLE APPLICABLE TO PAYING AGENTS. If at any time any paying
agent other than the Trustee shall have been appointed by the Company and be
then acting hereunder, the term "Trustee" as used in this Article shall (unless
the context otherwise requires) be construed as extending to and including such
paying agent within its meaning as fully for all intents and purposes as if such
paying agent were named in this Article in addition to or in place of the
Trustee; provided, however, that the first paragraph of Section 4.5 shall not
apply to the Company or any Affiliate of the Company if it or such Affiliate
acts as paying agent.
The Trustee shall not be responsible for the actions or inactions of any
other paying agents (including the Company if acting as its own paying agent)
and shall have no control of any funds held by such other paying agents.
SECTION 4.10 SENIOR INDEBTEDNESS ENTITLED TO RELY. The holders of Senior
Indebtedness (including, without limitation, Designated Senior Indebtedness)
shall have the right to rely upon this Article IV, and no amendment or
modification of the provisions contained herein shall diminish the rights of
such holders unless such holders shall have agreed in writing thereto.
SECTION 4.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee and the Noteholders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, liquidating trustee, custodian, receiver, assignee for
the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or to the Noteholders, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
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ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
SECTION 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any (including upon redemption pursuant to
Article III), and interest (including Liquidated Damages, if any) on each of the
Notes at the places, at the respective times and in the manner provided herein
and in the Notes. Each installment of interest on the Notes due on any
semi-annual interest payment date may be paid either (i) by check mailed to the
address of the person entitled thereto as it appears in the Note register;
provided that the holder of Notes with an aggregate principal amount in excess
of $2,000,000 shall, at the written election of such holder, be paid by wire
transfer in immediately available funds; or (ii) by transfer to an account
maintained by such person located in the United States; provided, however, that
payments to the Depositary will be made by wire transfer of immediately
available funds to the account of Depositary or its nominee.
SECTION 5.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain an
office or agency in The Borough of Manhattan, The City of New York, an office or
agency where the Notes may be surrendered for registration of transfer or
exchange or for presentation for payment or for conversion or redemption and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not designated or appointed by the Trustee. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office or the
office or agency of the Trustee in The Borough of Manhattan, The City of New
York (which shall initially be State Street Bank and Trust Company, N.A., an
affiliate of the Trustee located at 61 Broadway, Concourse Level, Corporate
Trust Window, New York, New York 10006).
The Company may also from time to time designate co-registrars and one or
more other offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice to any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Trustee as paying agent, Note
registrar, Custodian and conversion agent and each of the Corporate Trust Office
of the Trustee and the office or agency of the Trustee in The Borough of
Manhattan, The City of New York (which shall initially be State Street Bank and
Trust Company, N.A., an Affiliate of the Trustee located at 61 Broadway,
Concourse Level, Corporate Trust Window, New York, New York 10006), shall be
considered as one such office or agency of the Company for each of the aforesaid
purposes.
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So long as the Trustee is the Note registrar, the Trustee agrees to mail,
or cause to be mailed, the notices set forth in Section 8.10(a) and the third
paragraph of Section 8.11. If co-registrars have been appointed in accordance
with this Section, the Trustee shall mail such notices only to the Company and
the holders of Notes it can identify from its records.
SECTION 5.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
SECTION 5.4 PROVISIONS AS TO PAYING AGENT.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, it will cause such
paying agent to execute and deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of this Section
5.4:
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or interest on the Notes
(whether such sums have been paid to it by the Company or by any other obligor
on the Notes) in trust for the benefit of the holders of the Notes;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment of the
principal of and premium, if any, or interest on the Notes when the same shall
be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the Trustee all
sums so held in trust.
The Company shall, on or before each due date of the principal of,
premium, if any, or interest on the Notes, deposit with the paying agent a sum
sufficient to pay such principal, premium, if any, or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action; provided that if such deposit is made on the due
date, such deposit shall be received by the paying agent by 10:00 a.m. New York
City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, set aside, segregate and
hold in trust for the benefit of the holders of the Notes a sum sufficient to
pay such principal, premium, if any, or interest (including Liquidated Damages,
if any) so becoming due and will notify the Trustee of any failure to take such
action and of any failure by the Company (or any other obligor under the Notes)
to make any payment of the principal of, premium, if any, or interest (including
Liquidated Damages, if any) on the Notes when the same shall become due and
payable.
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(c) Anything in this Section 5.4 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any paying agent hereunder
as required by this Section 5.4, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any paying agent
to the Trustee, the Company or such paying agent shall be released from all
further liability with respect to such sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
The Trustee shall not be responsible for the actions of any other
paying agents (including the Company if acting as its own paying agent) and
shall have no control of any funds held by such other paying agents.
SECTION 5.5 EXISTENCE. Subject to Article XII, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any such right if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the holders.
SECTION 5.6 MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Significant Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Significant
Subsidiary and not disadvantageous in any material respect to the holders.
SECTION 5.7 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Significant Subsidiary or upon the income,
profits or property of the Company or any Significant Subsidiary, (ii) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Significant Subsidiary
and (iii) all stamps and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection with
the issuance, transfer, exchange or conversion of any Notes or with respect to
this Indenture; provided, however, that, in the case of clauses (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in
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the aggregate, have a material adverse impact on the Company, or (B) if the
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 5.8 RULE 144A INFORMATION REQUIREMENT. Within the period prior to
the expiration of the holding period applicable to sales thereof under Rule
144(k) under the Securities Act (or any successor provision), the Company
covenants and agrees that it shall, during any period in which it is not subject
to Section 13 or 15(d) under the Exchange Act, make available to any holder or
beneficial holder of Notes or any Common Stock issued upon conversion thereof
which continue to be Restricted Securities in connection with any sale thereof
and any prospective purchaser of Notes or such Common Stock from such holder or
beneficial holder, the information required pursuant to Rule 144A(d)(4) under
the Securities Act upon the request of any holder or beneficial holder of the
Notes or such Common Stock and it will take such further action as any holder or
beneficial holder of such Notes or such Common Stock may reasonably request, all
to the extent required from time to time to enable such holder or beneficial
holder to sell its Notes or Common Stock without registration under the
Securities Act within the limitation of the exemption provided by Rule 144A, as
such Rule may be amended from time to time. Upon the request of any holder or
any beneficial holder of the Notes or such Common Stock, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.
SECTION 5.9 STAY, EXTENSION AND USURY LAWS. The Company covenants (to the
extent that it may lawfully do so) that it shall 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 or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of, premium, if any,
or interest (including Liquidated Damages, if any) on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 5.10 COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee, within one hundred twenty (120) days after the end of each fiscal year
of the Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not to the best knowledge of the signer thereof the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
the signer may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming aware of
any default in the performance or observance of any covenant, agreement or
condition contained in this
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Indenture, or any Event of Default, an Officers' Certificate specifying with
particularity such default or Event of Default and further stating what action
the Company has taken, is taking or proposes to take with respect thereto.
Any notice required to be given under this Section 5.10 shall be delivered
to the Trustee at its Corporate Trust Office.
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 6.1 NOTEHOLDERS' LISTS. The Company covenants and agrees that it
will furnish or cause to be furnished to the Trustee, semiannually, not more
than fifteen (15) days after each March 1 and September 1 in each year beginning
with March 1, 1998, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished by the Company to the Trustee so long as the Trustee is
acting as the sole Note registrar.
SECTION 6.2 PRESERVATION AND DISCLOSURE OF LISTS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar or
co-registrar in respect of the Notes, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 6.1 upon receipt of a new list so
furnished.
(b) The rights of Noteholders to communicate with other holders of
Notes with respect to their rights under this Indenture or under the Notes, and
the corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of holders of Notes made pursuant to the
Trust Indenture Act.
SECTION 6.3 REPORTS BY TRUSTEE.
(a) Within sixty (60) days after May 31 of each year commencing with
the year 1998, the Trustee shall transmit to holders of Notes such reports dated
as of May 31 of the
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year in which such reports are made concerning the Trustee and its actions under
this Indenture as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant thereto.
(b) A copy of such report shall, at the time of such transmission to
holders of Notes, be filed by the Trustee with each stock exchange and automated
quotation system upon which the Notes are listed and with the Company. The
Company will notify the Trustee in writing within a reasonable time when the
Notes are listed on any stock exchange or automated quotation system.
SECTION 6.4 REPORTS BY COMPANY. The Company shall file with the Trustee
(and the Commission if at any time after the Indenture becomes qualified under
the Trust Indenture Act), and transmit to holders of Notes, such information,
documents and other reports and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act, whether or not the Notes are governed by such Act;
provided that any such information, documents or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be
filed with the Trustee within fifteen (15) days after the same is so required to
be filed with the Commission. Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
ARTICLE VII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. In case one or more of the following Events
of Default (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall have occurred and be continuing:
(a) default in the payment of any installment of interest (including
Liquidated Damages, if any) upon any of the Notes as and when the same shall
become due and payable, and continuance of such default for a period of thirty
(30) days, whether or not such payment is permitted under Article IV hereof; or
(b) default in the payment of the principal of or premium, if any,
on any of the Notes as and when the same shall become due and payable either at
maturity or in connection with any redemption pursuant to Article III, by
acceleration or otherwise, whether or not such payment is permitted under
Article IV hereof; or
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(c) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the Notes
or in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section 7.1 specifically dealt
with) continued for a period of sixty (60) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or to the Company and a Responsible
Officer of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes at the time outstanding determined in
accordance with Section 9.4; or
(d) the Company or any Significant Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or any Significant Subsidiary or its such
Significant Subsidiary's debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
Significant Subsidiary or any substantial part of the property of the Company or
any Significant Subsidiary, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it or any Significant Subsidiary, or shall
make a general assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due; or
(e) an involuntary case or other proceeding shall be commenced
against the Company or any Significant Subsidiary seeking liquidation,
reorganization or other relief with respect to it or any Significant Subsidiary
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any Significant
Subsidiary or any substantial part of the property of the Company or any
Significant Subsidiary, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of ninety (90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1 (d) or (e) with respect to the Company), unless the principal of
all of the Notes shall have already become due and payable, either the Trustee
or the holders of not less than twenty-five percent (25%) in aggregate principal
amount of the Notes then outstanding hereunder determined in accordance with
Section 9.4, by notice in writing to the Company (and to the Trustee if given by
Noteholders), may declare the principal of and premium, if any, on all the Notes
and the interest accrued thereon (including Liquidated Damages, if any) to be
due and payable immediately, and upon any such declaration the same shall become
and shall be immediately due and payable, anything in this Indenture or in the
Notes contained to the contrary notwithstanding. If an Event of Default
specified in Section 7.1(d) or (e) with respect to the Company occurs, the
principal of all the Notes and the interest accrued thereon shall (including
Liquidated Damages, if any) be immediately and automatically due and payable
without necessity of further action. This provision, however, is subject to the
conditions that if, at any time after the principal of the Notes shall have been
so declared due and payable, and before any judgment
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or decree for the payment of the monies due shall have been obtained or entered
as hereinafter provided, the Company shall pay or shall deposit with the Trustee
a sum sufficient to pay all matured installments of interest upon (including
Liquidated Damages, if any) all Notes and the principal of and premium, if any,
on any and all Notes which shall have become due otherwise than by acceleration
(with interest on overdue installments of interest (including Liquidated
Damages, if any) (to the extent that payment of such interest is enforceable
under applicable law) and on such principal and premium, if any, at the rate
borne by the Notes, to the date of such payment or deposit) and amounts due to
the Trustee pursuant to Section 8.6, and if any and all defaults under this
Indenture, other than the nonpayment of principal of and premium, if any, and
accrued interest on (including Liquidated Damages, if any) Notes which shall
have become due by acceleration, shall have been cured or waived pursuant to
Section 7.7 -- then and in every such case the holders of a majority in
aggregate principal amount of the Notes then outstanding, by written notice to
the Company and to the Trustee, may waive all defaults or Events of Default and
rescind and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or Event of Default, or shall impair any right consequent thereon. The Company
shall notify a Responsible Officer of the Trustee, promptly upon becoming aware
thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been taken.
SECTION 7.2 PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon (including Liquidated Damages, if any) any of the
Notes as and when the same shall become due and payable, and such default shall
have continued for a period of thirty (30) days, or (b) in case default shall be
made in the payment of the principal of or premium, if any, on any of the Notes
as and when the same shall have become due and payable, whether at maturity of
the Notes or in connection with any redemption, by or under this Indenture
declaration or otherwise -- then, upon demand of the Trustee, the Company will
pay to the Trustee, for the benefit of the holders of the Notes, the whole
amount that then shall have become due and payable on all such Notes for
principal and premium, if any, or interest (including Liquidated Damages, if
any), as the case may be, with interest upon the overdue principal and premium,
if any, and (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest (including Liquidated
Damages, if any) at the rate borne by the Notes; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including reasonable compensation to the Trustee, its agents,
attorneys and counsel, and any expenses or liabilities incurred by the Trustee
hereunder other than through its negligence or bad faith. Until such demand by
the Trustee, the Company may pay the principal of and premium, if any, and
interest on (including Liquidated Damages, if any) the Notes to the registered
holders, whether or not the Notes are overdue.
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In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Notes under Title
11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest (including Liquidated Damages, if any) owing and unpaid in
respect of the Notes, and, in case of any judicial proceedings, to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and of the Noteholders allowed in
such judicial proceedings relative to the Company or any other obligor on the
Notes, its or their creditors, or its or their property, and to collect and
receive any monies or other property payable or deliverable on any such claims,
and to distribute the same after the deduction of any amounts due the Trustee
under Section 8.6; and any receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, custodian or similar official is hereby authorized
by each of the Noteholders to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
the Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including counsel fees
incurred by it up to the date of such distribution. To the extent that such
payment of reasonable compensation, expenses, advances and disbursements out of
the estate in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
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In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.
SECTION 7.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
8.6;
SECOND: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall not have become due and be
unpaid, to the payment of interest on (including Liquidated Damages, if
any) the Notes in default in the order of the maturity of the installments
of such interest, with interest (to the extent that such interest has been
collected by the Trustee) upon the overdue installments of interest
(including Liquidated Damages, if any) at the rate borne by the Notes,
such payments to be made ratably to the persons entitled thereto;
THIRD: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall have become due, by declaration
or otherwise, and be unpaid to the payment of the whole amount then owing
and unpaid upon the Notes for principal and premium, if any, and interest
(including Liquidated Damages, if any), with interest on the overdue
principal and premium, if any, and (to the extent that such interest has
been collected by the Trustee) upon overdue installments of interest
(including Liquidated Damages, if any) at the rate borne by the Notes; and
in case such monies shall be insufficient to pay in full the whole amounts
so due and unpaid upon the Notes, then to the payment of such principal
and premium, if any, and interest (including Liquidated Damages, if any)
without preference or priority of principal and premium, if any, over
interest (including Liquidated Damages, if any), or of interest (including
Liquidated Damages, if any) over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any
Note over any other Note, ratably to the aggregate of such principal and
premium, if any, and accrued and unpaid interest; and
FOURTH: Subject to the provisions of Article IV, to the payment of
the remainder, if any, to the Company or any other person lawfully
entitled thereto.
SECTION 7.4 PROCEEDINGS BY NOTEHOLDER. No holder of any Note shall have
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than twenty-five percent (25%)
in aggregate principal amount of the Notes
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then outstanding shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for sixty (60) days after its receipt of such notice, request and offer
of indemnity, shall have neglected or refused to institute any such action, suit
or proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 7.7; it being understood and
intended, and being expressly covenanted by the taker and holder of every Note
with every other taker and holder and the Trustee, that no one or more holders
of Notes shall have any right in any manner whatever by virtue of or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights of
any other holder of Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Notes (except as otherwise provided herein).
For the protection and enforcement of this Section 7.4, each and every
Noteholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any (including upon redemption pursuant to Article
III), and accrued interest on (including Liquidated Damages, if any) such Note,
on or after the respective due dates expressed in such Note or in the event of
redemption, or to institute suit for the enforcement of any such payment on or
after such respective dates against the Company shall not be impaired or
affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in its own behalf and for its own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, its rights of
conversion as provided herein.
SECTION 7.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 7.6 REMEDIES CUMULATIVE AND CONTINUING. Except as provided in
Section 2.6, all powers and remedies given by this Article VII to the Trustee or
to the Noteholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any thereof or of any other powers and remedies available
to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default
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or Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or any
acquiescence therein; and, subject to the provisions of Section 7.4, every power
and remedy given by this Article VII or by law to the Trustee or to the
Noteholders may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Noteholders.
SECTION 7.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF
NOTEHOLDERS. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4 shall
have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided, however, that (a) such direction shall
not be in conflict with any rule of law or with this Indenture, (b) the Trustee
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction and (c) the Trustee may decline to take any action that
would benefit some Noteholder to the detriment of other Noteholders. The holders
of a majority in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 9.4 may on behalf of the holders of all of
the Notes waive any past default or Event of Default hereunder and its
consequences except (i) a default in the payment of interest or premium, if any,
on, or the principal of, the Notes, (ii) a failure by the Company to convert any
Notes into Common Stock, (iii) a default in the payment of redemption price
pursuant to Article III or (iv) a default in respect of a covenant or provisions
hereof which under Article XI cannot be modified or amended without the consent
of the holders of all Notes then outstanding. Upon any such waiver, the Company,
the Trustee and the holders of the Notes shall be restored to their former
positions and rights hereunder; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 7.7, said default or Event of Default shall
for all purposes of the Notes and this Indenture be deemed to have been cured
and to be not continuing; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 7.8 NOTICE OF DEFAULTS. The Trustee shall, within ninety (90) days
after a Responsible Officer of the Trustee has knowledge of the occurrence of a
default, mail to all Noteholders, as the names and addresses of such holders
appear upon the Note register, notice of all defaults known to a Responsible
Officer, unless such defaults shall have been cured or waived before the giving
of such notice; and provided that, except in the case of default in the payment
of the principal of, or premium, if any, or interest (including Liquidated
Damages, if any) on any of the Notes, the Trustee shall be protected in
withholding such notice if and so long as a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interests of the Noteholders.
SECTION 7.9 UNDERTAKING TO PAY COSTS. All parties to this Indenture agree,
and each holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that
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such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
provided that the provisions of this Section 7.9 (to the extent permitted by
law) shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Noteholder, or group of Noteholders, holding in the aggregate
more than ten percent in principal amount of the Notes at the time outstanding
determined in accordance with Section 9.4, or to any suit instituted by any
Noteholder for the enforcement of the payment of the principal of or premium, if
any, or interest on any Note on or after the due date expressed in such Note or
to any suit for the enforcement of the right to convert any Note in accordance
with the provisions of Article XV.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE. The Trustee, prior to
the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture and the Trust
Indenture Act, and the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture and the
Trust Indenture Act against the Trustee; and
(2) in the absence of bad faith and willful misconduct on the
part of the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but, in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Indenture;
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(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers of the Trustee, unless the
Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the written
direction of the holders of not less than a majority in principal amount of the
Notes at the time outstanding determined as provided in Section 9.4 relating to
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this Section;
(e) the Trustee shall not be liable in respect of any payment (as to
the correctness of amount, entitlement to receive or any other matters relating
to payment) or notice effected by the Company or any paying agent or any records
maintained by any co-registrar with respect to the Notes; and
(f) if any party fails to deliver a notice relating to an event the
fact of which, pursuant to this Indenture, requires notice to be sent to the
Trustee, the Trustee may conclusively rely on its failure to receive such notice
as reason to act as if no such event occurred.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
SECTION 8.2 RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise
provided in Section 8.1:
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon or other paper or
document believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company;
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(c) the Trustee may consult with counsel and any advice or Opinion
of Counsel shall be full and complete authorization and protection in respect of
any action taken or omitted by it hereunder in good faith and in accordance with
such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney; and
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder.
SECTION 8.3 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
SECTION 8.4 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN
NOTES. The Trustee, any paying agent, any conversion agent or Note registrar, in
its individual or any other capacity, may become the owner or pledgee of Notes
with the same rights it would have if it were not Trustee, paying agent,
conversion agent or Note registrar.
SECTION 8.5 MONIES TO BE HELD IN TRUST. Subject to the provisions of
Section 13.4 and Section 4.2, all monies received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed from time to time by the Company and the Trustee.
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SECTION 8.6 COMPENSATION AND EXPENSES OF TRUSTEE. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) as mutually agreed to in
writing between the Company and the Trustee, and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence, willful misconduct, recklessness or
bad faith. The Company also covenants to indemnify the Trustee (or any officer,
director or employee of the Trustee) in any capacity under this Indenture and
its agents and any authenticating agent for, and to hold them harmless against,
any loss, liability or expense incurred without negligence, willful misconduct,
recklessness, or bad faith on the part of the Trustee or such officers,
directors, employees and agent or authenticating agent, as the case may be, and
arising out of or in connection with the acceptance or administration of this
trust or in any other capacity hereunder, including the costs and expenses of
defending themselves against any claim of liability in the premises. The
obligations of the Company under this Section 8.6 to compensate or indemnify the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall be secured by a lien prior to that of the Notes upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the holders of particular Notes. The obligation of the
Company under this Section shall survive the satisfaction and discharge of this
Indenture.
When the Trustee and its agents and any authenticating agent incur
expenses or render services after an Event of Default specified in Section
7.1(d) or (e) with respect to the Company occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency or similar laws.
SECTION 8.7 OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness,
or bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee.
SECTION 8.8 CONFLICTING INTERESTS OF TRUSTEE. If the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either eliminate such interest or resign, to the extent and in
the manner provided by, and subject to the provisions of, the Trust Indenture
Act and this Indenture.
SECTION 8.9 ELIGIBILITY OF TRUSTEE. There shall at all times be a Trustee
hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person is a member of
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a bank holding company system, its bank holding company shall have a combined
capital and surplus of at least $50,000,000). If such person publishes reports
of condition at least annually, pursuant to law or to the requirements of any
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 8.10 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Notes. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment sixty (60) days after the mailing of
such notice of resignation to the Noteholders, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Noteholder who has been a bona fide holder of a Note or Notes
for at least six (6) months may, subject to the provisions of Section 7.9, on
behalf of himself and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 8.8 after
written request therefor by the Company or by any Noteholder who has been a bona
fide holder of a Note or Notes for at least six (6) months; or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.9 and shall fail to resign after written request
therefor by the Company or by any such Noteholder; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.9, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six (6) months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and
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the appointment of a successor trustee; provided that if no successor Trustee
shall have been appointed and have accepted appointment sixty (60) days after
either the Company or the Noteholders has removed the Trustee, the Trustee so
removed may petition any court of competent jurisdiction for an appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee which shall be deemed appointed as successor trustee unless
within ten (10) days after notice to the Company of such nomination the Company
objects thereto, in which case the Trustee so removed or any Noteholder, upon
the terms and conditions and otherwise as in Section 8.10(a) provided, may
petition any court of competent jurisdiction for an appointment of a successor
trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
SECTION 8.11 ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for funds held in trust for the benefit of holders
of particular Notes, to secure any amounts then due it pursuant to the
provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, the Company (or the former trustee, at the written direction of
the Company) shall mail or cause to be mailed notice of the succession of such
trustee hereunder to the holders of Notes at their addresses as they shall
appear on the Note register. If the Company fails to mail such notice within ten
(10) days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Company.
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SECTION 8.12 SUCCESSION BY MERGER, ETC. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee (including any trust created
by this Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation succeeding to all
or substantially all of the corporate trust business of the Trustee such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 8.13 PREFERENTIAL COLLECTION OF CLAIMS. If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Notes), the Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of the claims against the Company (or any such
other obligor).
SECTION 8.14 TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY. Any
application by the Trustee for written instructions from the Company (other than
with regard to any action proposed to be taken or omitted to be taken by the
Trustee that affects the rights of the holders of the Notes or holders of Senior
Indebtedness under this Indenture, including, without limitation, under Article
IV hereof) may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three (3) Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Trustee shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
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ARTICLE IX
CONCERNING THE NOTEHOLDERS
SECTION 9.1 ACTION BY NOTEHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.
SECTION 9.2 PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the provisions
of Sections 8.1, 8.2 and 10.5, proof of the execution of any instrument by a
Noteholder or its agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The holding of Notes shall
be proved by the registry of such Notes or by a certificate of the Note
registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 10.6.
SECTION 9.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the Trustee, any
paying agent, any conversion agent and any Note registrar may deem the person in
whose name such Note shall be registered upon the Note register to be, and may
treat it as, the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of,
premium, if any, and interest on such Note, for conversion of such Note and for
all other purposes; and neither the Company nor the Trustee nor any paying agent
nor any conversion agent nor any Note registrar shall be affected by any notice
to the contrary. All such payments so made to any holder for the time being, or
upon his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.
SECTION 9.4 COMPANY-OWNED NOTES DISREGARDED. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or any Affiliate of
the Company or any other obligor on the Notes shall be disregarded and deemed
not to be outstanding for the purpose of any such
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determination; provided that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action only Notes which a Responsible Officer knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or any Affiliate of the Company or any such other obligor. In the case of
a dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described persons; and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Notes not listed therein are outstanding for the purpose of any
such determination.
SECTION 9.5 REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE X
NOTEHOLDERS' MEETINGS
SECTION 10.1 PURPOSE OF MEETINGS. A meeting of Noteholders may be called
at any time and from time to time pursuant to the provisions of this Article X
for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to
give any directions to the Trustee permitted under this Indenture, or to consent
to the waiving of any default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by Noteholders
pursuant to any of the provisions of Article VII;
(2) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VIII;
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(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of the Notes
under any other provision of this Indenture or under applicable law.
SECTION 10.2 CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time call
a meeting of Noteholders to take any action specified in Section 10.1, to be
held at such time and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 9.1, shall be mailed to
holders of Notes at their addresses as they shall appear on the Note register.
Such notice shall also be mailed to the Company. Such notices shall be mailed
not less than twenty (20) nor more than ninety (90) days prior to the date fixed
for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
SECTION 10.3 CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent (10%) in aggregate principal amount of the Notes
then outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within twenty (20) days after receipt of such request,
then the Company or such Noteholders may determine the time and the place for
such meeting and may call such meeting to take any action authorized in Section
10.1, by mailing notice thereof as provided in Section 10.2.
SECTION 10.4 QUALIFICATIONS FOR VOTING. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 10.5 REGULATIONS. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
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The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each Noteholder
or proxyholder shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Note challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Notes held by
him or instruments in writing as aforesaid duly designating him as the proxy to
vote on behalf of other Noteholders. Any meeting of Noteholders duly called
pursuant to the provisions of Section 10.2 or 10.3 may be adjourned from time to
time by the holders of a majority of the aggregate principal amount of Notes
represented at the meeting, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.
SECTION 10.6 VOTING. The vote upon any resolution submitted to any meeting
of Noteholders shall be by written ballot on which shall be subscribed the
signatures of the holders of Notes or of their representatives by proxy and the
principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 10.7 NO DELAY OF RIGHTS BY MEETING. Nothing in this Article X
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the exercise of any right
or rights conferred upon or reserved to the Trustee or to the Noteholders under
any of the provisions of this Indenture or of the Notes.
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ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS. The
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6 and the redemption
obligations of the Company pursuant to the requirements of Section 3.5(e);
(b) subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets;
(c) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company pursuant
to Article XII;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however, that in
respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture which shall not materially adversely affect the
interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
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(h) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualifications of this
Indenture under the Trust Indenture Act, or under any similar federal statute
hereafter enacted.
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture, the Trustee
is hereby authorized to join with the Company in the execution of any such
supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.
Notwithstanding any other provision of the Indenture or the Notes, the
Registration Rights Agreement and the obligation to pay Liquidated Damages
thereunder may be amended, modified or waived in accordance with the provisions
of the Registration Rights Agreement.
SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. With the
consent (evidenced as provided in Article IX) of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
any supplemental indenture or of modifying in any manner the rights of the
holders of the Notes; provided, however, that no such supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon, or reduce any amount payable on redemption thereof,
or impair the right of any Noteholder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Notes, or modify the
provisions of this Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to redeem any Note upon the happening of a Fundamental
Change in a manner adverse to the holder of Notes, or impair the right to
convert the Notes into Common Stock subject to the terms set forth herein,
including Section 15.6, in each case, without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.
Upon the written request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the
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consent of Noteholders as aforesaid, the Trustee shall join with the Company in
the execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in is discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 11.3 EFFECT OF SUPPLEMENTAL INDENTURE. Any supplemental indenture
executed pursuant to the provisions of this Article XI shall comply with the
Trust Indenture Act, as then in effect; provided that this Section 11.3 shall
not require such supplemental indenture or the Trustee to be qualified under the
Trust Indenture Act prior to the time such qualification is in fact required
under the terms of the Trust Indenture Act or the Indenture has been qualified
under the Trust Indenture Act, nor shall it constitute any admission or
acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article XI, this Indenture shall be
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 11.4 NOTATION ON NOTES. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article XI may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee shall
so determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Board of Directors, to any modification of this Indenture contained in
any such supplemental indenture may, at the Company's expense, be prepared and
executed by the Company, authenticated by the Trustee (or an authenticating
agent duly appointed by the Trustee pursuant to Section 16.11) and delivered in
exchange for the Notes then outstanding, upon surrender of such Notes then
outstanding.
SECTION 11.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TRUSTEE. Prior to entering into any supplemental indenture, the
Trustee may request an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
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ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 12.1 COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS. Subject to the
provisions of Section 12.2, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of the Company with or into any
other corporation or corporations (whether or not affiliated with the Company),
or successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other corporation (whether or not
affiliated with the Company), authorized to acquire and operate the same and
which shall be organized under the laws of the United States of America, any
state thereof or the District of Columbia; provided that upon any such
consolidation, merger, sale, conveyance or lease, the due and punctual payment
of the principal of and premium, if any, and interest (including Liquidated
Damages, if any) on all of the Notes, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed by the Company, shall be expressly assumed, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee by the corporation (if other than the Company) formed
by such consolidation, or into which the Company shall have been merged, or by
the corporation which shall have acquired or leased such property, and such
supplemental indenture shall provide for the applicable conversion rights set
forth in Section 15.6.
SECTION 12.2 SUCCESSOR CORPORATION TO BE SUBSTITUTED. In case of any such
consolidation, merger, sale, conveyance or lease and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and premium, if any, and interest on all of the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of Integrated Process Equipment Corp. any or all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the Notes
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the person named as the "Company" in the first paragraph of
this Indenture or any successor which shall thereafter have become such in the
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manner prescribed in this Article XII may be dissolved, wound up and liquidated
at any time thereafter and such person shall be released from its liabilities as
obligor and maker of the Notes and from its obligations under this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
SECTION 12.3 OPINION OF COUNSEL TO BE GIVEN TRUSTEE. The Trustee shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 13.1 DISCHARGE OF INDENTURE. When (a) the Company shall deliver to
the Trustee for cancellation all Notes theretofore authenticated (other than any
Notes which have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled, or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes which shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) not theretofore canceled or delivered to
the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due to such date of maturity or redemption date, as
the case may be, accompanied by a verification report, as to the sufficiency of
the deposited amount, from an independent certified accountant or other
financial professional satisfactory to the Trustee, and if the Company shall
also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect (except as to (i)
remaining rights of registration of transfer, substitution and exchange and
conversion of Notes, (ii) rights hereunder of Noteholders to receive payments of
principal of and premium, if any, and interest on, the Notes and the other
rights, duties and obligations of Noteholders, as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on written demand of the Company accompanied by an Officers' Certificate and an
Opinion of Counsel as required by Section 16.5 and at the cost and expense of
the Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses thereafter reasonably and properly
incurred by the Trustee and to
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compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Notes.
SECTION 13.2 DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE. Subject to
Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1,
provided such deposit was not in violation of Article IV, shall be held in trust
for the sole benefit of the Noteholders and not to be subject to the
subordination provisions of Article IV, and such monies shall be applied by the
Trustee to the payment, either directly or through any paying agent (including
the Company if acting as its own paying agent), to the holders of the particular
Notes for the payment or redemption of which such monies have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest and premium, if any.
SECTION 13.3 PAYING AGENT TO REPAY MONIES HELD. Upon the satisfaction and
discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.
SECTION 13.4 RETURN OF UNCLAIMED MONIES. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
SECTION 13.5 REINSTATEMENT. If the Trustee or the paying agent is unable
to apply any money in accordance with Section 13.2 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2;
provided, however, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.
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ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 14.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No recourse
for the payment of the principal of or premium, if any, or interest on any Note,
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in this
Indenture or in any supplemental indenture or in any Note, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
ARTICLE XV
CONVERSION OF NOTES
SECTION 15.1 RIGHT TO CONVERT. Subject to and upon compliance with the
provisions of this Indenture, including without limitation Article IV, the
holder of any Note shall have the right, at its option, at any time after ninety
(90) days following the latest date of original issuance thereof through the
close of business on September 15, 2004 (except that, with respect to any Note
or portion of a Note which shall be called for redemption, such right shall
terminate, except as provided in Section 15.2 or Section 3.4, at the close of
business on the Business Day next preceding the date fixed for redemption of
such Note or portion of a Note unless the Company shall default in payment due
upon redemption thereof) to convert the principal amount of any such Note, or
any portion of such principal amount which is $1,000 or an integral multiple
thereof, into that number of fully paid and non-assessable shares of Common
Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided, together with any required
funds, in Section 15.2. A Note in respect of which a holder is exercising its
option to require redemption upon a Fundamental Change pursuant to Section 3.5
may be converted only if such holder withdraws its election to exercise in
accordance with Section 3.5. A holder of Notes is not entitled to any rights of
a holder of Common Stock until such holder has converted his Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article XV.
SECTION 15.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON
CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to exercise the
conversion privilege with respect to any Note in certificated form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency
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maintained by the Company pursuant to Section 5.2, accompanied by the funds, if
any, required by the penultimate paragraph of this Section 15.2, and shall give
written notice of conversion in the form provided on the Notes (or such other
notice which is acceptable to the Company) to the office or agency that the
holder elects to convert such Note or the portion thereof specified in said
notice. Such notice shall also state the name or names (with address or
addresses) in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued, and shall be
accompanied by transfer taxes, if required pursuant to Section 15.7. Each such
Note surrendered for conversion shall, unless the shares issuable on conversion
are to be issued in the same name as the registration of such Note, be duly
endorsed by, or be accompanied by instruments of transfer in form satisfactory
to the Company duly executed by, the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any interest
in a Note in global form, the holder must complete the appropriate instruction
form for conversion pursuant to the Depository's book-entry conversion program,
deliver by book-entry delivery an interest in such Note in global form, furnish
appropriate endorsements and transfer documents if required by the Company or
the Trustee or conversion agent, and pay the funds, if any, required by this
Section 15.2 and any transfer taxes if required pursuant to Section 15.7.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 15.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.3, the Company shall execute and the Trustee shall
authenticate and deliver to the holder of the Note so surrendered, without
charge to him, a new Note or Notes in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 15.2 have been satisfied as to such Note (or portion thereof), and
the person in whose name any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
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Any Note or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date to
the close of business on the Business Day next preceding the following interest
payment date shall (unless such Note or portion thereof being converted shall
have been called for redemption on a redemption date which occurs during the
period from the close of business on such record date to the close of business
on the Business Day next preceding the following interest payment date) be
accompanied by payment, in New York Clearing House funds or other funds
acceptable to the Company, of an amount equal to the interest otherwise payable
on such interest payment date on the principal amount being converted; provided,
however, that no such payment need be made if there shall exist at the time of
conversion a default in the payment of interest on the Notes. Except as provided
above in this Section 15.2, no payment or other adjustment shall be made for
interest accrued on any Note converted or for dividends on any shares issued
upon the conversion of such Note as provided in this Article.
Upon the conversion of an interest in a Note in global form, the Trustee
(or other conversion agent appointed by the Company), or the Custodian at the
direction of the Trustee (or other conversion agent appointed by the Company),
shall make a notation on such Note in global form as to the reduction in the
principal amount represented thereby. The Company shall notify the Trustee in
writing of any conversions of Notes effected through any conversion agent other
than the Trustee.
SECTION 15.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market price thereof to
the holder of Notes. The current market price of a share of Common Stock shall
be the Closing Price on the last Business Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
SECTION 15.4 CONVERSION PRICE. The conversion price shall be as specified
in the form of Note (herein called the "Conversion Price") attached as Exhibit A
hereto, subject to adjustment as provided in this Article XV.
SECTION 15.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be
adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price in effect at the opening of business on the date
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the
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number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such determination.
The Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company. If any dividend or
distribution of the type described in this Section 15.5(a) is declared but not
so paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared.
(b) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a period
expiring within forty-five (45) days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights and warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date fixed for determination of stockholders entitled to receive such rights and
warrants plus the total number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be successively made whenever
any such rights and warrants are issued, and shall become effective immediately
after the opening of business on the day following the date fixed for
determination of stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered after the expiration of
such rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined by the Board of
Directors.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and conversely,
in case outstanding shares of Common Stock shall be
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combined into a smaller number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such subdivision
or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 15.5(a)
applies) or evidences of its indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 15.5(b), and excluding
any dividend or distribution (x) paid exclusively in cash or (y) referred to in
Section 15.5(a) (any of the foregoing hereinafter in this Section 15.5(d) called
the "Securities")), then, in each such case (unless the Company elects to
reserve such Securities for distribution to the Noteholders upon the conversion
of the Notes so that any such holder converting Notes will receive upon such
conversion, in addition to the shares of Common Stock to which such holder is
entitled, the amount and kind of such Securities which such holder would have
received if such holder had converted its Notes into Common Stock immediately
prior to the Record Date (as defined in Section 15.5(h) for such distribution of
the Securities)), the Conversion Price shall be reduced so that the same shall
be equal to the price determined by multiplying the Conversion Price in effect
on the Record Date with respect to such distribution by a fraction of which the
numerator shall be the Current Market Price per share of the Common Stock on
such Record Date less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive, and described in a
resolution of the Board if Directors) on the Record Date of the portion of the
Securities so distributed applicable to one share of Common Stock and the
denominator shall be the Current Market Price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following such Record Date; provided, however, that in the event the
then fair market value (as so determined) of the portion of the Securities so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of Securities such
holder would have received had such holder converted each Note on the Record
Date. In the event that such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such dividend or distribution had not been declared.
If the Board of Directors determines the fair market value of any distribution
for purposes of this Section 15.5(d) by reference to the actual or when issued
trading market for any securities, it must in doing so consider the prices in
such market over the same period used in computing the Current Market Price of
the Common Stock.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this
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Section 15.5 (and no adjustment to the Conversion Price under this Section 15.5
will be required) until the occurrence of the earliest Trigger Event, whereupon
such rights and warrants shall be deemed to have been distributed and an
appropriate adjustment (if any is required) to the Conversion Price shall be
made under this Section 15.5(d). If any such right or warrant, including any
such existing rights or warrants distributed prior to the date of this
Indenture, are subject to events, upon the occurrence of which such rights or
warrants become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the date of the occurrence of any and each
such event shall be deemed to be the date of distribution and record date with
respect to new rights or warrants with such rights (and a termination or
expiration of the existing rights or warrants without exercise by any of the
holders thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Price under this Section 15.5 was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (2) in the case of such rights or
warrants which shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.
Notwithstanding the foregoing, in the event that the Company shall
distribute rights or warrants to subscribe for additional shares of the Common
Stock (other than rights or warrants described in Section 15.5(b)), pro rata to
holders of Common Stock, and in the case of the rights issued pursuant to the
Company's stockholder rights agreement in existence as of the date hereof, the
Company may, in lieu of making any adjustment pursuant to this Section 15.5(d),
make proper provision (in the case of the Company's stockholder rights agreement
in existence as of the date thereof, to the extent it does not make proper
provision) so that each holder of a Note who converts such Note (or any portion
thereof) after the record date for such distribution shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock issuable
upon such conversion (the "Conversion Shares"), a number of rights or warrants
to be determined as follows: (i) if such conversion occurs on or prior to the
date for the distribution to the holders of such rights or warrants of separate
certificates evidencing such rights or warrants (the "Distribution Date"), the
same number of rights or warrants to which a holder of a number of shares of
Common Stock equal to the number of Conversion Shares is entitled at the time of
such conversion in accordance with the terms and provisions of and applicable to
such rights or warrants; and (ii) if such conversion occurred after the
Distribution Date, the same number of rights or warrants to which a holder of
the number of shares of Common Stock into which the principal amount of the Note
so converted was convertible immediately prior to the Distribution Date would
have been entitled on the Distribution Date in accordance with the terms and
provisions of, and applicable to such rights or warrants.
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For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that also
includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock (or both), shall be deemed instead to be (1) a
dividend or distribution of the evidences of indebtedness, assets or shares of
capital stock other than such shares of Common Stock or rights or warrants (and
any Conversion Price reduction required by this Section 15.5(d) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Price reduction required by Sections
15.5(a) and (b) with respect to such dividend or distribution shall then be
made), except (A) the Record Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution" and "the date fixed for such
determination" within the meaning of Sections 15.5(a) and (b) and (B) any shares
of Common Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (x) any quarterly
cash dividend on the Common Stock to the extent the aggregate cash dividend per
share of Common Stock in any fiscal quarter does not exceed the greater of (A)
the amount per share of Common Stock of the next preceding quarterly cash
dividend on the Common Stock to the extent that such preceding quarterly
dividend did not require any adjustment of the Conversion Price pursuant to this
Section 15.5(e) (as adjusted to reflect subdivisions or combinations of the
Common Stock), and (B) 3.75% of the arithmetic average of the Closing Price
(determined as set forth in Section 15.5(h)) during the ten Trading Days (as
defined in Section 15.5(h)) immediately prior to the date of declaration of such
dividend, and (y) any dividend or distribution in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary), then, in such case, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such Record Date by a
fraction of which the numerator shall be the Current Market Price of the Common
Stock on the record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock and the
denominator shall be such Current Market Price of the Common Stock, such
reduction to be effective immediately prior to the opening of business on the
day following the record date; provided, however, that in the event the portion
of the cash so distributed applicable to one share of Common Stock is equal to
or greater than the Current Market Price of the Common Stock on the Record Date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each Noteholder shall have the right to receive upon conversion the amount of
cash such holder would have received had such holder converted each Note on the
Record Date. In the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not been
declared. If any adjustment is required to be made as set forth in this Section
15.5(e) as a result of a distribution that is a quarterly dividend, such
adjustment shall be based upon the amount by which such distribution exceeds the
amount of the quarterly cash dividend permitted to be excluded pursuant hereto.
If an adjustment is required to be made as set forth in this
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Section 15.5(e) above as a result of a distribution that is not a quarterly
dividend, such adjustment shall be based upon the full amount of the
distribution.
(f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to stockholders of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board if Directors)
that as of the last time (the "Expiration Time") tenders or exchanges may be
made pursuant to such tender or exchange offer (as it may be amended) that
exceeds the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Expiration Time multiplied by the
Current Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time. In the event that the Company is obligated to purchase shares
pursuant to any such tender or exchange offer, but the Company is permanently
prevented by applicable law from effecting any such purchases or all such
purchases are rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender or exchange offer
had not been made.
(g) In case of a tender or exchange offer made by a person other
than the Company or any Subsidiary for an amount which increases the offeror's
ownership of Common Stock to more than twenty-five percent (25%) of the Common
Stock outstanding and shall involve the payment by such person of consideration
per share of Common Stock having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) at the last time (the "Offer Expiration
Time") tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the Current Market Price of
the Common Stock on the Trading Day next succeeding the Offer Expiration Time,
and in which, as of the Offer Expiration Time the Board of Directors is not
recommending rejection of the offer, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Offer Expiration Time by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) on the Offer Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the Offer Expiration Time and the
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denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Offer Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Accepted Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Accepted Purchased
Shares) on the Offer Expiration Time and the Current Market Price of the Common
Stock on the Trading Day next succeeding the Offer Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the day following the Offer Expiration Time. In the event that such person is
obligated to purchase shares pursuant to any such tender or exchange offer, but
such person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
tender or exchange offer had not been made. Notwithstanding the foregoing, the
adjustment described in this Section 15.5(g) shall not be made if, as of the
Offer Expiration Time, the offering documents with respect to such offer
disclose a plan or intention to cause the Company to engage in any transaction
described in Article XII.
(h) For purposes of this Section 15.5, the following terms shall
have the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the New York Stock Exchange, or, if such
security is not listed or admitted to trading on such Exchange, on the principal
national security exchange or quotation system on which such security is quoted
or listed or admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the over-the-counter market
on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or if not so
available, in such manner as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors for that purpose, or a
price determined in good faith by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof, whose
determination shall be conclusive.
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive Trading Days
immediately prior to the date in question; provided, however, that (1) if the
"ex" date (as hereinafter defined) for any event (other than the issuance or
distribution or Fundamental Change requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f) or (g) occurs during such ten consecutive Trading Days, the Closing
Price for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such other event,
(2) if the "ex" date for any event (other than the issuance, distribution or
Fundamental Change requiring such computation) that requires an
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adjustment to the Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f) or (g) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if the "ex" date for the issuance,
distribution or Fundamental Change requiring such computation is prior to the
day in question, after taking into account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined by the Board of Directors or, to the
extent permitted by applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for purposes of Section
15.5(d), (f) or (g), whose determination shall be conclusive and described in a
resolution of the Board of Directors or such duly authorized committee thereof,
as the case may be) of the evidences of indebtedness, shares of capital stock or
assets being distributed applicable to one share of Common Stock as of the close
of business on the day before such "ex" date. For purposes of any computation
under Section 15.5(f) or (g), the Current Market Price of the Common Stock on
any date shall be deemed to be the average of the daily Closing Prices per share
of Common Stock for such day and the next two succeeding Trading Days; provided,
however, that if the "ex" date for any event (other than the tender or exchange
offer requiring such computation) that requires an adjustment to the Conversion
Price pursuant to Section 15.5(a), (b), (c), (d), (e), (f) or (g) occurs on or
after the Expiration Time or Offer Expiration Time, as the case may be, for the
tender or exchange offer requiring such computation and prior to the day in
question, the Closing Price for each Trading Day on and after the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event. For purposes of this paragraph, the
term "ex" date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution, (2) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades regular way
on such exchange or in such market after the Offer Expiration Time of such
offer.
(3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of stockholders entitled to receive such cash,
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securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).
(5) "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or another
national security exchange, a day on which the New York Stock Exchange or
another national security exchange is open for business or (y) if the applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made on thereon or (z) if the applicable security is not so listed, admitted for
trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
(i) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.5 (a), (b), (c), (d), (e), (f) or (g)
as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to time
may reduce the Conversion Price by any amount for any period of time if the
period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to holders of record of the Notes a
notice of the reduction at least fifteen (15) days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such price; provided, however, that any adjustments which by reason of
this Section 15.5(j) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Article XV shall be made by the Company and shall be made to the nearest cent or
to the nearest one-hundredth (1/100) of a share, as the case may be. No
adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. To the extent the Notes
become convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities. Interest will not accrue on the cash.
(k) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Promptly after delivery of such certificate, the Company shall
prepare a notice of such adjustment of the Conversion Price
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setting forth the adjusted Conversion Price and the date on which each
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to the holder of each Note at his last address appearing on
the Note register provided for in Section 2.5 of this Indenture, within twenty
(20) days after execution thereof. Failure to deliver such notice shall not
affect the legality or validity of any such adjustment.
(l) In any case in which this Section 15.5 provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such record date and before the occurrence of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the Common
Stock issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such holder any amount in cash in lieu of any fraction pursuant
to Section 15.3.
(m) For purposes of this Section 15.5, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
SECTION 15.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If
any of the following events occur, namely (i) any reclassification or change of
the outstanding shares of Common Stock (other than a subdivision or combination
to which Section 15.5(c) applies), (ii) any consolidation, merger or combination
of the Company with another corporation as a result of which holders of Common
Stock shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, or (iii)
any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Note shall be convertible
into the kind and amount of shares of stock and other securities or property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance (provided that, if
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised ("nonelecting share")), then for the purposes of this
Section 15.6 the kind and amount of
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securities, cash or other property receivable upon such consolidation, merger,
statutory exchange, sale or conveyance for each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares. Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at its address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.
SECTION 15.7 TAXES ON SHARES ISSUED. The issue of stock certificates on
conversions of Notes shall be made without charge to the converting Noteholder
for any tax in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of stock in any name other than that of the holder of
any Note converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the person or persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 15.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID; COMPLIANCE
WITH GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK. The Company shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares of Common Stock to provide for the
conversion of the Notes from time to time as such Notes are presented for
conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and non-assessable by the
Company and free from all taxes, liens and charges with respect to the issue
thereof.
The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of Notes hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be validly issued
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<PAGE> 85
upon conversion, the Company will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be.
The Company further covenants that if at any time the Common Stock shall
be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Notes;
provided, however, that if rules of such exchange or automated quotation system
permit the Company to defer the listing of such Common Stock until the first
conversion of the Notes into Common Stock in accordance with the provisions of
this Indenture, the Company covenants to list such Common Stock issuable upon
conversion of the Notes in accordance with the requirements of such exchange or
automated quotation system at such time.
SECTION 15.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine the Conversion Price or whether any facts exist
which may require any adjustment of the Conversion Price, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and the Trustee and any other conversion agent make no representations
with respect thereto. Neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
cash upon the surrender of any Note for the purpose of conversion or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Article. Without limiting the generality of the foregoing, neither the
Trustee nor any conversion agent shall be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
entered into pursuant to Section 15.6 relating either to the kind or amount of
shares of stock or securities or property (including cash) receivable by
Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
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SECTION 15.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock that would require an adjustment in the Conversion Price
pursuant to Section 15.5; or
(b) the Company shall authorize the granting to the holders of all
or substantially all of its Common Stock of rights or warrants to subscribe for
or purchase any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Common Stock of
the Company (other than a subdivision or combination of its outstanding Common
Stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company or any Significant Subsidiary; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or any Significant Subsidiary;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
fifteen (15) days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
SECTION 16.1 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
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SECTION 16.2 OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or proceeding
by any provision of this Indenture authorized or required to be done or
performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
SECTION 16.3 ADDRESSES FOR NOTICES, ETC. Any notice or demand which by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Integrated Process Equipment Corp., 4717 E. Hilton Avenue, Phoenix,
Arizona 85034, Attention: Chief Financial Officer. Any notice, direction,
request or demand hereunder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed to the Corporate Trust Office, which office is, at the date
as of which this Indenture is dated, located at 725 Figueroa Street, Suite 3100,
Los Angeles, California, 90017, Attention: Corporate Trust Department
(Integrated Process Equipment Corp. 6 1/4% Convertible Subordinated Notes due
2004).
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to him
by first class mail, postage prepaid, at his address as it appears on the Note
register and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 16.4 GOVERNING LAW. This Indenture and each Note shall be deemed
to be a contract made under the laws of New York, and for all purposes shall be
construed in accordance with the laws of New York.
SECTION 16.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (1) a statement that the person making such
certificate or opinion has read such covenant
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or condition; (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (4) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
SECTION 16.6 LEGAL HOLIDAYS. In any case where the date of maturity of
interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
SECTION 16.7 TRUST INDENTURE ACT. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided, however, that, unless otherwise required by law, notwithstanding the
foregoing, this Indenture and the Notes issued hereunder shall not be subject to
the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the
Trust Indenture Act as now in effect or as hereafter amended or modified;
provided, further, that this Section 16.7 shall not require this Indenture or
the Trustee to be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act,
nor shall it constitute any admission or acknowledgment by any party to such
supplemental indenture that any such qualification is required prior to the time
such qualification is in fact required under the terms of the Trust Indenture
Act. If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in an indenture qualified
under the Trust Indenture Act, such required provision shall control.
SECTION 16.8 NO SECURITY INTEREST CREATED. Nothing in this Indenture or in
the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction where property of the
Company or its subsidiaries is located.
SECTION 16.9 BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any Person, other than the parties
hereto, any paying agent, any authenticating agent, any Note registrar and their
successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 16.10 TABLE OF CONTENTS, HEADINGS, ETC. The table of contents and
the titles and headings of the articles and sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
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SECTION 16.11 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 3.5, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 16.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written notice
of resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
shall either promptly appoint a successor authenticating agent or itself assume
the duties and obligations of the former authenticating agent under this
Indenture, and upon such appointment of a successor authenticating agent, if
made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all holders of Notes as the names and
addresses of such holders appear on the Note register.
The Trustee agrees to pay to the authenticating agent from time to time
reasonable compensation for its services (to the extent pre-approved by the
Company in writing), and the Trustee shall be entitled to be reimbursed for such
pre-approved payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 16.11 shall
be applicable to any authenticating agent.
SECTION 16.12 EXECUTION IN COUNTERPARTS. This Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed.
INTEGRATED PROCESS EQUIPMENT CORP.
By: /s/ John S. Hodgson
----------------------------------
Name: John S. Hodgson
--------------------------
Title: V.P. & C.F.O
--------------------------
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:
---------------------------------
Name:
-------------------------
Title:
-------------------------
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<PAGE> 91
State Street Bank and Trust Company of California, N.A., hereby accepts
the trusts in this Indenture declared and provided, upon the terms and
conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed.
INTEGRATED PROCESS EQUIPMENT CORP.
By:
----------------------------------
Name:
--------------------------
Title:
--------------------------
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By: /s/ Scott C. Emmons
---------------------------------
Name: Scott C. Emmons
-------------------------
Title: Assistant Vice President
-------------------------
<PAGE> 92
EXHIBIT A
[For Global Note only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR"); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION
OF SUCH NOTE EXCEPT (A) TO INTEGRATED PROCESS EQUIPMENT CORP. OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
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<PAGE> 93
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN
A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE), IT WILL FURNISH TO STATE STREET BANK
AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PRIOR
TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA N.A., AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF
THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF
THE NOTES EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
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<PAGE> 94
INTEGRATED PROCESS EQUIPMENT CORP.
6 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2004
No:____ CUSIP:______
INTEGRATED PROCESS EQUIPMENT CORP., a corporation duly organized and
validly existing under the laws of the State of Delaware (herein called the
"Company"), which term includes any successor corporation under the Indenture
referred to on the reverse hereof, for value received hereby promises to pay to
____________________________ or registered assigns, the principal sum of
__________________ ($____________) on September 15, 2004, at the office or
agency of the Company maintained for that purpose in accordance with the terms
of the Indenture, or, at the option of the holder of this Note, at the Corporate
Trust Office, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, and to pay interest, semi-annually on March 15 and September 15, of each
year, commencing March 15, 1998, on said principal sum at said office or agency,
in like coin or currency, at the rate per annum of 6 1/4% from September 17,
1997 and thereafter to maturity from the March 15 or September 15, as the case
may be, next preceding the date of this Note to which interest has been paid or
duly provided for, unless the date hereof is a date to which interest has been
paid or duly provided for, in which case from the date of this Note, or unless
no interest has been paid or duly provided for on the Notes, in which case from
September 17, 1997, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after any
March 1 or September 1, as the case may be, and before the following March 15 or
September 15, this Note shall bear interest from such March 15 or September 15;
provided, however, that if the Company shall default in the payment of interest
due on such March 15 or September 15, then this Note shall bear interest from
the next preceding March 15 or September 15, to which interest has been paid or
duly provided for or, if no interest has been paid or duly provided for on such
Note, from September 17, 1997. The interest payable on the Note pursuant to the
Indenture on any March 15 or September 15 will be paid to the person entitled
thereto as it appears in the Note register at the close of business on the
record date, which shall be the March 1 or September 1 (whether or not a
Business Day) next preceding such March 15 or September 15, as provided in the
Indenture; provided that any such interest not punctually paid or duly provided
for shall be payable as provided in the Indenture. Interest may, at the option
of the Company, be paid either (i) by check mailed to the registered address of
such person (provided that the holder of Notes with an aggregate principal
amount in excess of $2,000,000 shall, at the written election of such holder, be
paid by wire transfer in immediately available funds) or (ii) by transfer to an
account maintained by such person located in the United States.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred
3
<PAGE> 95
to on the reverse hereof and as more fully specified in the Indenture. Such
further provisions shall for all purposes have the same effect as though fully
set forth at this place.
This Note 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
and governed by the laws of said State.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal to be affixed or imported hereon.
INTEGRATED PROCESS EQUIPMENT CORP.
By:
------------------------------------
Name:
Title:
Attest:
--------------------------------
Name:
Title:
Dated:
-------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
---------------------------------
Authorized Signatory
By:.
---------------------------------
As Authenticating Agent
(if different from Trustee)
4
<PAGE> 96
[FORM OF REVERSE OF NOTE]
INTEGRATED PROCESS EQUIPMENT CORP.
6 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2004
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 6 1/4% Convertible Subordinated Notes due 2004 (herein called
the "Notes"), limited to the aggregate principal amount of $115,000,000 all
issued or to be issued under and pursuant to an indenture dated as of September
15, 1997 (herein called the "Indenture"), between the Company and State Street
Bank and Trust Company of California, N.A., as trustee (herein called the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest (including Liquidated Damages, if any) on all Notes may be declared,
and upon said declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Notes; provided, however, that no such supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon, or reduce any amount payable on redemption thereof,
or impair the right of any Noteholder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Note, or modify the
provisions of the Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to make redemption of any Note upon the happening of a
Fundamental Change in a manner adverse to the holder of the Notes, or impair the
right to convert the Notes into Common Stock subject to the terms set forth in
the Indenture, including Section 15.6 thereof, without the consent of the holder
of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Notes then outstanding. It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of the Notes, the holders of a majority in aggregate principal amount
of the Notes at the time outstanding may on behalf of the holders of all of the
Notes waive any past default or Event of Default under the Indenture and its
consequences except a default in the payment of interest (including Liquidated
Damages, if any) or any premium on or the principal of any of the Notes, a
default in the payment of redemption price pursuant to Article III or a failure
by
5
<PAGE> 97
the Company to convert any Notes into Common Stock of the Company. Any such
consent or waiver by the holder of this Note (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Note and any Notes which may be issued in exchange or
substitute hereof, irrespective of whether or not any notation thereof is made
upon this Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
his attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
(including Liquidated Damages, if any) on this Note at the place, at the
respective times, at the rate and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a year of twelve
30-day months.
The Notes are issuable in registered form without coupons in denominations
of $1,000 and any integral multiple of $1,000. At the office or agency of the
Company referred to on the face hereof, and in the manner and subject to the
limitations provided in the Indenture, without payment of any service charge but
with payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration or exchange of Notes,
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
September 20, 2000. At any time on or after September 20, 2000, and prior to
maturity, the Notes may be redeemed at the option of the Company as a whole, or
from time to time in part, upon mailing a notice of such redemption not less
than 30 days before the date fixed for redemption to the holders of Notes at
their last registered addresses, all as provided in the Indenture, at the
following optional redemption prices (expressed as percentages of the principal
amount), together in each case with accrued interest (including Liquidated
Damages, if any) to, but excluding, the date fixed for redemption:
6
<PAGE> 98
If redeemed during the period beginning September 20, 2000 and ending on
September 14, 2001, at a redemption price of 103.571%, and if redeemed during
the 12-month period beginning September 15:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
<S> <C> <C>
2001 102.679%
2002 101.786%
2003 100.893%
</TABLE>
and 100% at September 15, 2004; provided that if the date fixed for redemption
is on March 15 or September 15, then the interest payable on such date shall be
paid to the holder of record on the next preceding March 1 or September 1,
respectively.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Fundamental Change (as defined in the Indenture) occurs at any time
prior to September 15, 2004, the Notes will be redeemable on the 30th day after
notice thereof at the option of the holder. Such payment shall be made at
106.25% from the date of initial issuance of the Notes until September 14, 1998;
at 105.357% from September 15, 1998 until September 14, 1999; at 104.464% from
September 15, 1999 until September 19, 2000; at 103.571% from September 20, 2000
until September 14, 2001; and at the following prices (expressed as percentages
of the principal amount) in the event of a Fundamental Change occurring during
the 12-month period beginning September 15:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
<S> <C> <C>
2001 102.679%
2002 101.786%
2003 100.893%
</TABLE>
and 100% at September 15, 2004; provided in each case that if the Applicable
Price (as defined in the Indenture) is less than the Reference Market Price (as
defined in the Indenture), the Company shall redeem such Notes at a price equal
to the foregoing repayment price multiplied by the fraction obtained by dividing
the Applicable Price by the Reference Market Price. In each case, the Company
shall also pay accrued interest, if any (including Liquidated Damages, if any)
on such Notes to, but excluding, the Repurchase Date; provided that if such
Repurchase Date is March 15 or September 15, then the interest payable on such
date shall be paid to the holder of record of the Note on the next preceding
March 1 or September 1. The Company shall mail to all holders of record of the
Notes a notice of the occurrence of a Fundamental Change and of the redemption
right arising as a result thereof on or before the 10th day after the occurrence
of such Fundamental Change. For a Note to be so repaid at the option of the
holder, the Company must receive at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, such
Note with the form entitled "Option to Elect Repayment Upon a Fundamental
Change" on the reverse thereof duly completed, together with such Notes duly
endorsed for transfer, on or before the 30th day after the date of
7
<PAGE> 99
such notice (or if such 30th day is not a Business Day, the immediately
preceding Business Day).
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 90 days following the latest date of
original issuance thereof through the close of business on September 15, 2004,
or, as to all or any portion hereof called for redemption, prior to the close of
business on the Business Day immediately preceding the date fixed for redemption
(unless the Company shall default in payment due upon redemption thereof), to
convert the principal hereof or any portion of such principal which is $1,000 or
an integral multiple thereof into that number of shares of the Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Note or portion thereof to be converted
by the Conversion Price of $39.00 or such Conversion Price as adjusted from time
to time as provided in the Indenture, upon surrender of this Note, together with
a conversion notice as provided in the Indenture, to the Company at the office
or agency of the Company maintained for that purpose in accordance with the
terms of the Indenture, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Note, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or by
his duly authorized attorney. No adjustment in respect of interest or dividends
will be made upon any conversion; provided, however, that if this Note shall be
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the close of business on the Business
Day preceding the interest payment date, this Note (unless it or the portion
being converted shall have been called for redemption during the period from the
close of business on any record date for the payment of interest to the close of
business on the Business Day preceding the interest payment date) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted. No fractional shares will
be issued upon any conversion, but an adjustment in cash will be made, as
provided in the Indenture, in respect of any fraction of a share which would
otherwise be issuable upon the surrender of any Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on or
before the close of business on the date fixed for redemption, may be deemed to
be purchased from the holder of such Notes at an amount equal to the applicable
redemption price, together with accrued interest (including Liquidated Damages,
if any) to (but excluding) the date fixed for redemption, by one or more
investment bankers or other purchasers who may agree with the Company to
purchase such Notes from the holders thereof and convert them into Common Stock
of the Company and to make payment for such Notes as aforesaid to the Trustee in
trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, or at the option of the holder of this Note, at the
Corporate Trust Office, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee
8
<PAGE> 100
in exchange thereof; subject to the limitations provided in the Indenture,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor any other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or interest
on this Note, or for any claim based hereon or otherwise in respect hereof; and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any indenture supplemental thereto or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, employee, agent, officer or director or
subsidiary, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of New
York, and for all purposes shall be construed in accordance with the laws of New
York, without regard to principles of conflicts of laws.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
9
<PAGE> 101
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -- ___________ Custodian ____________
TEN ENT - as tenant by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors Act
of survivorship and not
as tenants in common _____________________________________
(State)
</TABLE>
Additional abbreviations may also be used
though not in the above list.
10
<PAGE> 102
CONVERSION NOTICE
To: Integrated Process Equipment Corp.
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of
Integrated Process Equipment Corp. in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional shares
and any Notes representing any unconverted principal amount hereof, be issued
and delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated: ________________
______________________________________
______________________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange
if shares of Common Stock are to be
issued, or Notes to be delivered,
other than to and in the name of the
registered holder.
______________________________________
Signature Guarantee
11
<PAGE> 103
Fill in for registration of shares of Common Stock if to be issued, and Notes if
to be delivered, other than to and in the name of the registered holder:
__________________________________
(Name)
__________________________________
(Street Address)
__________________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all): $____________
Social Security or Other Taxpayer
Identification Number __________________
12
<PAGE> 104
OPTION TO ELECT REPAYMENT
UPON A FUNDAMENTAL CHANGE
TO: INTEGRATED PROCESS EQUIPMENT CORP.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Integrated Process Equipment Corp. (the
"Company") as to the occurrence of a Fundamental Change with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the redemption price, together with
accrued interest to, but excluding, such date, to the registered holder hereof.
Dated:_________________ ____________________________________________
____________________________________________
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with the
name as written upon the face of the Note
in every particular without alteration or
enlargement or any change whatever.
Principal amount to be converted (if less
than all):
$____________________
____________________________________________
Social Security or Other Taxpayer
Identification Number
<PAGE> 105
ASSIGNMENT
For value received ______________________________ hereby sell(s),
assign(s) and transfer(s) unto ______________________________ (Please insert
social security or other Taxpayer Identification Number of assignee) the within
Note, and hereby irrevocably constitutes and appoints _________________________
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.
In connection with any transfer of the Note within the period prior to the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under the
Securities Act), the undersigned confirms that such Note is being transferred:
/_/ To Integrated Process Equipment Corp. or a subsidiary thereof, or
/_/ Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
/_/ To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
/_/ Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
/_/ Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
/_/ The transferee is an Affiliate of the Company.
Dated:___________________ ____________________________________________
____________________________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a member
firm of a major stock exchange if shares of
Common Stock are to
<PAGE> 106
be issued, or Notes to be delivered, other
than to or in the name of the registered
holder.
____________________________________________
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
<PAGE> 107
EXHIBIT B
Integrated Process Equipment Corp.
4717 E. Hilton Avenue
Phoenix, AZ 85034
State Street Bank and Trust Company
of California, N.A.
725 Figueroa Street, Suite 3100
Los Angeles, CA 90017
Attn: Corporate Trust Department
Ladies/Gentlemen:
We are delivering this letter in connection with an offering of 6 1/4%
Convertible Subordinated Notes due 2004 (the "Notes), which are convertible into
shares of Common Stock, $.01 par value (the "Common Stock"), of Integrated
Process Equipment Corp. (the "Company").
We hereby confirm that:
- we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended
(the "Securities Act"), or an entity in which all of the equity
owners are accredited investors within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act (an "Institutional
Accredited Investor");
- (A) any purchase of Notes by us will be for our own account or for
the account of one or more other Institutional Accredited Investors
or as fiduciary for the account of one or more trusts, each of which
is an "accredited investor" within the meaning of Rule 501(a)(7)
under the Securities Act and for each of which we exercise sole
investment discretion or (B) we are a "bank," within the meaning of
Section 3(a)(2) of the Securities Act, or a "savings and loan
association" or other institution described in Section 3(a)(5)(A) of
the Securities Act that is acquiring Notes as fiduciary for the
account of one or more institutions for which we exercise sole
investment discretion;
- in the event that we purchase any Notes, we will acquire Notes
having a minimum principal amount of not less than $100,000 for our
own account or for any separate account for which we are acting;
- we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing the Notes;
- we are not acquiring Notes with a view to distribution thereof or
with any present intention of offering or selling Notes or the
Common Stock issuable upon
<PAGE> 108
conversion thereof, except as permitted below; provided that the
disposition of our property and property of any accounts for which
we are acting as fiduciary shall remain at all times within our
control; and
- we have received a copy of the Offering Memorandum and acknowledge
that we have had access to such financial and other information, and
have been afforded the opportunity to ask such questions or
representatives of the Company and receive answers thereto, as we
deem necessary in connection with our decision to purchase Notes.
We understand that the Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes and the shares of Common Stock issuable upon
conversion thereof have not been registered under the Securities Act, and we
agree, on our own behalf and on behalf of each account for which we acquire any
Notes, that if in the future we decide to resell or otherwise transfer such
Notes or the Common Stock issuable upon conversion thereof, such Notes or Common
Stock may be resold or otherwise transferred only (i) to the Company or any
subsidiary thereof, or (ii) inside the United States to a person who is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, or (iii) inside the
United States to an Institutional Accredited Investor that, prior to such
transfer, furnishes to the Trustee or transfer agent for such securities a
signed letter containing certain representations and agreements relating to the
restrictions on transfer of such securities (the form of which letter can be
obtained from such Trustee or transfer agent), or (iv) outside the United States
in a transaction meeting the requirements of Rule 904 under the Securities Act,
or (v) pursuant to the exemption from registration provided by Rule 144 under
the Securities Art (if applicable), or (vi) pursuant to a registration statement
which has been declared effective under the Securities Act (and which continues
to be effective at the time of such transfer), and in each case, in accordance
with any applicable securities laws of any State of the United States or any
other applicable jurisdiction and in accordance with the legends set forth on
the Notes or the Common Stock issuable upon conversion thereof, as the case may
be. We further agree to provide any person purchasing any of the Notes or the
Common Stock issuable upon conversion thereof other than pursuant to clause (vi)
above from us a notice advising such purchaser that resales of such securities
are restricted as stated herein. We understand that the Trustee or transfer
agent for the Notes and the Common Stock will not be required to accept for
registration of transfer any Notes or any shares of Common Stock issued upon
conversion of the Notes except upon presentation of evidence satisfactory to the
Company that the foregoing restrictions on transfer have been complied with. We
further understand that any Notes and any certificates representing Common Stock
will be in the form of definitive physical certificates and that such
certificates will bear a legend reflecting the substance of this paragraph other
than certificates representing Common Stock transferred pursuant to clause (vi)
above.
We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
<PAGE> 109
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK
________________________________
(Name of Purchaser)
By:_____________________________
Name:__________________________________
Title:_________________________________
Address:_______________________________
_______________________________________
_______________________________________
<PAGE> 110
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
(SEE TAB 5)
<PAGE> 1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
September 15, 1997 by and among INTEGRATED PROCESS EQUIPMENT CORP., a Delaware
corporation (the "Company") and MORGAN STANLEY & CO. INCORPORATED, HAMBRECHT &
QUIST LLC, PRUDENTIAL SECURITIES INCORPORATED and UBS SECURITIES LLC (the
"Initial Purchasers") pursuant to the Purchase Agreement, dated as of September
11, 1997 (the "Purchase Agreement"), between the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement. The execution of this Agreement is a condition to the closing
under the Purchase Agreement.
The Company agrees with the Initial Purchasers, (i) for their benefit as
Initial Purchasers and (ii) for the benefit of the holders from time to time of
the Notes (including the Initial Purchasers) and the holders from time to time
of the Common Stock issued upon conversion of the Notes (each of the foregoing a
"Holder" and together the "Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:
AFFILIATE: "Affiliate" means, with respect to any specified person,
(i) any other person directly or indirectly controlling or controlled by, or
under direct or indirect common control with, such specified person or (ii) any
officer or director of such other person. For purposes of this definition, the
term "control" (including the terms "controlling," "controlled by" and "under
common control with") of a person means the possession, direct or indirect, of
the power (whether or not exercised) to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
COMMON STOCK: The shares of common stock, $.01 par value per share,
of the Company and any other shares of common stock as may constitute "Common
Stock" for purposes of the Indenture, in each case, as issuable or issued upon
conversion of the Notes.
DAMAGES ACCRUAL PERIOD: See Section 2(f) hereof.
DAMAGES PAYMENT DATE: Each of the semi-annual interest payment dates
provided in the Indenture.
DEFERRAL PERIOD: See Section 2(e) hereof.
1.
<PAGE> 2
EFFECTIVENESS PERIOD: The period commencing with the date hereof and
ending on the date that all Registrable Securities have ceased to be Registrable
Securities.
EVENT: See Section 2(f) hereof.
EVENT DATE: See Section 2(f) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
FILING DATE: See Section 2(a) hereof.
HOLDER: See the second paragraph of this Agreement.
INDENTURE: The Indenture, dated as of September 15, 1997, between
the Company and State Street Bank and Trust Company of California, N.A., as
Trustee, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms hereof.
INITIAL PURCHASERS: Morgan Stanley & Co. Incorporated, Hambrecht &
Quist LLC, Prudential Securities Incorporated and UBS Securities LLC.
INITIAL SHELF REGISTRATION: See Section 2(a) hereof.
LIQUIDATED DAMAGES: See Section 2(f) hereof.
LOSSES: See Section 6 hereof.
MANAGING UNDERWRITERS: The investment banking firm or firms that
shall manage or co-manage an Underwritten Offering.
NOTES: 6 1/4% Convertible Subordinated Notes due 2004 of the Company
being issued and sold pursuant to the Purchase Agreement and the Indenture.
NOTICE HOLDER: See Section 2(d) hereof.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
PURCHASE AGREEMENT: See the first paragraph of this Agreement.
2.
<PAGE> 3
RECORD HOLDER: (i) with respect to any Damages Payment Date relating
to any Note as to which any such Liquidated Damages have accrued, the registered
holder of such Note on the record date with respect to the interest payment date
under the Indenture on which such Damages Payment Date shall occur and (ii) with
respect to any Damages Payment Date relating to any Common Stock as to which any
such Liquidated Damages have accrued, the registered holder of such Common Stock
15 days prior to the next succeeding Damages Payment Date.
REGISTRABLE SECURITIES: (A) The Common Stock of the Company into
which the Notes are convertible or converted, whether or not such Notes have
been converted, and at all times subsequent thereto, and any Common Stock issued
with respect thereto upon any stock dividend, split or similar event until, in
the case of any such Common Stock, (i) it is effectively registered under the
Securities Act and resold in accordance with the Registration Statement covering
it, (ii) it is saleable by the holder thereof pursuant to Rule 144(k) or (iii)
it is sold to the public pursuant to Rule 144, and, as a result of the event or
circumstance described in any of the foregoing clauses (i) through (iii), the
legends with respect to transfer restrictions required under the Indenture
(other than any such legends required solely as the consequence of the fact that
such Common Stock (or the Notes, upon the conversion of which, such Common Stock
was issued or is issuable) is owned by, or was previously owned by, the Company
or an Affiliate of the Company) are removed or removable in accordance with the
terms of the Indenture; (B) the Notes, until, in the case of any such Note, (i)
it is converted into shares of Common Stock in accordance with the terms of the
Indenture, (ii) it is effectively registered under the Securities Act and resold
in accordance with the Registration Statement covering it, (iii) it is saleable
by the holder thereof pursuant to Rule 144(k) or (iv) it is sold to the public
pursuant to Rule 144, and, as a result of the event or circumstance described in
any of the foregoing clauses (ii) through (iv), the legends with respect to
transfer restrictions required under the Indenture (other than any such legends
required solely as the consequence of the fact that such Note is owned by, or
was previously owned by, the Company or an Affiliate of the Company) are removed
or removable in accordance with the terms of the Indenture.
REGISTRATION EXPENSES: See Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
RULE 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
RULE 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
3.
<PAGE> 4
SECURITIES ACT: The Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
SELLING PERIOD: See Section 2(d) hereof.
SHELF REGISTRATION: See Section 2(a) hereof.
SPECIAL COUNSEL: Cooley Godward LLP, or such successor counsel as
shall be specified by the Holders of a majority of the Registrable Securities,
the fees and expenses of which will be paid by the Company pursuant to Section 5
hereof.
SUBSEQUENT SHELF REGISTRATION: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: The Trustee under the Indenture.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. SHELF REGISTRATION.
(a) SHELF REGISTRATION. The Company shall prepare and file with the
SEC, as soon as practicable but in any event on or prior to the date ninety (90)
days following the latest date of original issuance of the Notes (the "Filing
Date"), a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 of the Securities Act (a "Shelf Registration")
registering the resale from time to time by Holders thereof of all of the
Registrable Securities (the "Initial Shelf Registration"). The Initial Shelf
Registration shall be on Form S-3 or another appropriate form permitting
registration of such Registrable Securities for resale by the Holders in the
manner or manners designated by them (including, without limitation, one or more
Underwritten Offerings). The Company shall use reasonable efforts to cause the
Initial Shelf Registration to be declared effective under the Securities Act as
soon as practicable and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the earlier of the expiration of the
Effectiveness Period or the date a Subsequent Shelf Registration, as defined
below, covering all of the Registrable Securities has been declared effective
under the Securities Act.
(b) If the Initial Shelf Registration or any Subsequent Shelf
Registration, as defined below, ceases to be effective for any reason as a
result of the issuance of a stop order by the SEC at any time during the
Effectiveness Period, the Company shall use reasonable efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in any
event shall within thirty (30) days of such cessation of effectiveness amend the
Shelf Registration in a manner reasonably expected to obtain the withdrawal of
the order suspending the effectiveness thereof, or file an additional Shelf
Registration covering all of the Registrable Securities (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, the
4.
<PAGE> 5
Company shall use reasonable efforts to cause the Subsequent Shelf Registration
to be declared effective as soon as practicable after such filing and to keep
such Registration Statement continuously effective until the end of the
Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration, if required
by the Securities Act, or if reasonably requested by the Initial Purchasers or
by the Trustee on behalf of a majority of the Holders of the Registrable
Securities covered by such Registration Statement or by any Managing Underwriter
of such Registrable Securities in the event of an Underwritten Offering of the
Registrable Securities.
(d) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell its Registrable Securities pursuant to a Shelf Registration and
related Prospectus, it will do so only in accordance with this Section 2(d).
Each Holder of Registrable Securities agrees to give written notice to the
Company at least three Business Days prior to any intended distribution of
Registrable Securities under the Shelf Registration, which notice shall specify
the date on which such Holder intends to begin such distribution and any
information with respect to such Holder and the intended distribution of
Registrable Securities by such Holder as may be required to amend the
Registration Statement or supplement the related Prospectus with respect to such
intended distribution of Registrable Securities by such Holder (the "Requisite
Information"). In the event the Holder fails to provide the Requisite
Information in its initial notice of its intention to distribute the Registrable
Securities pursuant to the Registration Statement, the Company will promptly
request such Holder to provide such Requisite Information. As soon as
practicable after the date the Requisite Information is provided, and in any
event within two Business Days after such date, the Company shall (i) if
necessary, prepare and file with the Commission a post-effective amendment to
the Shelf Registration or a supplement to the related Prospectus or a supplement
or amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (ii) provide each Notice Holder (as
defined below) copies of any documents filed pursuant to Section 2(d)(i); and
(iii) inform each Notice Holder that the Company has complied with its
obligations in Section 2(d)(i) (or that, if the Company has filed a
post-effective amendment to the Shelf Registration which has not yet been
declared effective, the Company will notify the Notice Holder to that effect,
will use reasonable efforts to secure the effectiveness of such post-effective
amendment and will immediately notify the Notice Holder when the amendment has
become effective); each Holder who has given notice of intention to distribute
such Holder's Registrable Securities in accordance with Section 2(d) hereof (a
"Notice Holder") will sell all or any of such Registrable Securities pursuant to
the Shelf Registration and related Prospectus only during the thirty (30) day
period commencing with the date on which the Company gives notice, pursuant to
Section 2(d)(iii), that
5.
<PAGE> 6
the Registration Statement and Prospectus may be used for such purpose (such
thirty (30) day period is referred to as a "Selling Period"). The Notice Holders
will not sell any Registrable Securities pursuant to such Registration Statement
or Prospectus after such Selling Period without giving a new notice of intention
to sell pursuant to Section 2(d) hereof and receiving a further notice from the
Company pursuant to Section 2(d)(iii) hereof.
(e) In the event (i) of the happening of any event of the kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(c)(vi) hereof
or (ii) that, in the judgment of the Company, it is advisable to suspend use of
the Prospectus for a discrete period of time due to pending material corporate
developments or similar material events that have not yet been publicly
disclosed and as to which the Company believes public disclosure will be
prejudicial to the Company, the Company shall deliver a certificate in writing,
signed by an authorized executive officer of the Company, to the Notice Holders,
the Special Counsel and the Managing Underwriters, if any, to the effect of the
foregoing and, upon receipt of such certificate, each such Notice Holder's
Selling Period will not commence until such Notice Holder's receipt of copies of
the supplemented or amended Prospectus provided for in Section 2(d)(i)(A)
hereof, or until it is advised in writing by the Company that the Prospectus may
be used and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such Prospectus. The
Company will use reasonable efforts to ensure that the use of the Prospectus may
be resumed, and the Selling Period will commence, as soon as practicable and, in
the case of a pending development or event referred to in Section 2(e)(ii)
hereof, as soon as the earlier of (x) public disclosure of such pending material
corporate development or similar material event or (y) in the judgment of the
Company, public disclosure of such material corporate development or similar
material event would not be prejudicial to the Company. Notwithstanding any
other provision in this Agreement, the Company shall not under any circumstances
be entitled to exercise its right under this Section 2(e) to defer the
commencement of a Selling Period except as follows: the Company may defer the
commencement of a Selling Period in accordance with this Section 2(e) for a
period not to exceed thirty (30) days in any three-month period, or not to
exceed an aggregate of sixty (60) days in any 12-month period, and the period in
which a Selling Period is suspended shall not exceed fifteen (15) days unless
the Company shall deliver to such Notice Holders a second notice to the effect
set forth above, which shall have the effect of extending the period during
which such Selling Period is deferred by up to an additional fifteen (15) days,
or such shorter period of time as is specified in such second notice. In no
event shall the Company be permitted to extend the period during which such
Selling Period is deferred (a "Deferral Period") beyond such thirty (30) day
period from and after the date a Notice Holder provides notice to the Company in
accordance with Section 2(d) of its intention to distribute Registrable
Securities.
(f) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
has not been filed on or prior to the Filing Date, (ii) prior to the end of the
Effectiveness Period, the SEC shall have issued a stop order suspending the
effectiveness of the Shelf Registration or proceedings have been initiated with
respect to the Shelf Registration under Section 8(d) or 8(e) of the Securities
Act, (iii) the aggregate number of days in any one Deferral Period exceeds the
periods permitted pursuant to
6.
<PAGE> 7
Section 2(e) hereof or (iv) the number of Deferral Periods exceeds the number
permitted pursuant to Section 2(e) hereof (each of the events of a type
described in any of the foregoing clauses (i) through (iv) are individually
referred to herein as an "Event," and the Filing Date in the case of clause (i),
the date on which the effectiveness of the Shelf Registration has been suspended
or proceedings with respect to the Shelf Registration under Section 8(d) or 8(e)
of the Securities Act have been commenced in the case of clause (ii), the date
on which the duration of a Deferral Period exceeds the periods permitted by
Section 2(e) hereof in the case of clause (iii), and the date of the
commencement of a Deferral Period that causes the limit on the number of
Deferral Periods under Section 2(e) hereof to be exceeded in the case of clause
(iv), being referred to herein as an "Event Date"). Events shall be deemed to
continue until the date of the termination of such Event, which shall be the
following dates with respect to the respective types of Events: the date the
Initial Registration Statement is filed in the case of an Event of the type
described in clause (i), the date that all stop orders suspending effectiveness
of the Shelf Registration have been removed and the proceedings initiated with
respect to the Shelf Registration under Section 8(d) or 8(e) of the Securities
Act have terminated, as the case may be, in the case of Events of the types
described in clause (ii), termination of the Deferral Period which caused the
aggregate number of days in any one Deferral Period to exceed the number
permitted by Section 2(e) to be exceeded in the case of Events of the type
described in clause (iii), and termination of the Deferral Period the
commencement of which caused the number of Deferral Periods permitted by Section
2(e) to be exceeded in the case of Events of the type described in clause (iv).
Accordingly, upon the occurrence of any Event and until such time as there
are no Events which have occurred and are continuing (a "Damages Accrual
Period"), commencing on the Event Date on which such Damages Accrual Period
began, the Company agrees to pay, as liquidated damages, and not as a penalty,
an additional amount (the "Liquidated Damages"): (A)(i) to each holder of a Note
that is a Notice Holder, accruing at a rate equal to one-half of one percent per
annum (50 basis points) on the aggregate principal amount of Notes held by such
Notice Holder and (ii) to each holder of Common Stock that is a Notice Holder,
accruing at a rate equal to one-half of one percent per annum (50 basis points)
calculated on an amount equal to the product of (x) the then-applicable
Conversion Price (as defined in the Indenture) multiplied by (y) the number of
shares of Common Stock held by such holder; and (B) if the Damages Accrual
Period continues for a period in excess of thirty (30) days from the Event Date,
from and after the end of such thirty (30) days until such time as there are no
Events which have occurred and are continuing, (i) to each holder of a Note
(whether or not a Notice Holder), accruing at a rate equal to one-half of one
percent per annum (50 basis points) on the aggregate principal amount of Notes
held by such holder and (ii) to each holder of Common Stock (whether or not a
Notice Holder), accruing at a rate equal to one-half of one percent per annum
(50 basis points) calculated on an amount equal to the product of (x) the then
applicable Conversion Price (as defined in the Indenture) multiplied by (y) the
number of shares of Common Stock held by such holder. Notwithstanding the
foregoing, no Liquidated Damages shall accrue under clause (A) for the preceding
sentence during any period for which Liquidated Damages accrue under clause (B)
of the preceding sentence or as to any Registrable Securities from and after the
expiration of the Effectiveness Period. The rate of accrual of the Liquidated
7.
<PAGE> 8
Damages with respect to any period shall not exceed the rate provided for in
this paragraph notwithstanding the occurrence of multiple concurrent Events.
The Company shall pay the Liquidated Damages due on any Notes or Common
Stock by depositing with the Trustee under the Indenture, in trust, for the
benefit of the holders of Notes or Common Stock or Notice Holders, as the case
may be, entitled thereto, at least one (1) Business Day prior to the applicable
Damages Payment Date, sums sufficient to pay the Liquidated Damages accrued or
accruing since the last preceding Damages Payment Date through such Damages
Payment Date. The Liquidated Damages shall be paid by the Company to the Record
Holders on each Damages Payment Date by wire transfer of immediately available
funds to the accounts specified by them or by mailing checks to their registered
addresses as they appear in the Note register (as defined in the Indenture), in
the case of the Notes, and in the register of the Company for the Common Stock,
in the case of the Common Stock, if no such accounts have been specified on or
before the Damage Payment Date; provided, however, that any Liquidated Damages
accrued with respect to any Note or portion thereof called for redemption on a
redemption date, redeemed or repurchased in connection with a Fundamental Change
(as defined in the Indenture) on a repurchase date, or converted into Common
Stock on a conversion date prior to the Damages Payment Date, shall, in any such
event, be paid instead to the holder who submitted such Note or portion thereof
for redemption, repurchase or conversion on the applicable redemption date,
repurchase date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion of a Note).
The Trustee shall be entitled, on behalf of the holders of Notes, holders of
Common Stock and Notice Holders, to seek any available remedy for the
enforcement of this Agreement, including for the payment of such Liquidated
Damages. Notwithstanding the foregoing, the parties agree that the sole damages
payable for a violation of the terms of this Agreement with respect to which
Liquidated Damages are expressly provided shall be such Liquidated Damages.
Nothing shall preclude a Notice Holder or Holder of Registrable Securities from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement, in addition to the payment of Liquidated Damages.
All of the Company's obligations set forth in this Section 2(f) which are
outstanding with respect to any Registrable Securities at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of the Agreement pursuant to Section 8(o)).
The parties hereto agree that the Liquidated Damages provided for in this
Section 2(f) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities (other than the Initial
Purchasers) by reason of the failure of the Shelf Registration to be filed or
declared effective or unavailable (absolutely or as a practical matter) for
effecting resales of Registrable Securities, as the case may be, in accordance
with the provisions hereof.
3. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations under Section 2 hereof, the Company shall effect such
registrations to permit the sale of the Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company shall:
8.
<PAGE> 9
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders thereof in
accordance with the intended method or methods of distribution thereof, and use
reasonable efforts to cause each such Registration Statement to become effective
and remain effective as provided herein; provided that, before filing any such
Registration Statement or Prospectus or any amendments or supplements thereto
(other than documents that would be incorporated or deemed to be incorporated
therein by reference and that the Company is required by applicable securities
laws or stock exchange requirements to file), the Company shall furnish to the
Initial Purchasers, the Special Counsel and the Managing Underwriters of such
offering, if any, copies of all such documents proposed to be filed, which
documents will be subject to the review of the Initial Purchasers, the Special
Counsel and such Managing Underwriters, and the Company shall not file any such
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto (other than such documents which, upon filing, would be incorporated or
deemed to be incorporated by reference therein and that the Company is required
by applicable securities laws or stock exchange requirements to file) to which
the Holders of a majority of the Registrable Securities covered by such
Registration Statement, the Initial Purchasers or the Special Counsel shall
reasonably object in writing within two (2) full Business Days.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 2; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) 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 and Prospectus during
the applicable period in accordance with the intended methods of disposition by
the sellers thereof set forth in such Registration Statement as so amended or
such Prospectus as so supplemented.
(c) Notify the Notice Holders, the Initial Purchasers, the Special
Counsel and the Managing Underwriters, if any, promptly, and (if requested by
any such person) confirm such notice in writing, (i) when a Prospectus, any
Prospectus supplement, a Registration Statement or a post-effective amendment to
a Registration Statement has been filed with the SEC, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC or any other federal or state
governmental authority for amendments or supplements to a Registration Statement
or related Prospectus or for additional information, (iii) of the issuance by
the SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation or
threatening of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the existence of any fact or happening of any event which makes
any statement of a material fact in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue or which would require the making of any changes in the
9.
<PAGE> 10
Registration Statement or Prospectus in order that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading and (vi) of the Company's determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
moment.
(e) If reasonably requested by the Initial Purchasers or the
Managing Underwriters, if any, or the Holders of a majority of the Registrable
Securities being sold, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Initial Purchasers, the Special Counsel, the Managing Underwriters, if any, or
such Holders, in connection with any offering of Registrable Securities, agree
should be included therein as required by applicable law and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as reasonably practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided that the Company shall not be required to take any actions
under this Section 3(e) that are not, in the reasonable opinion of counsel for
the Company, in compliance with applicable law.
(f) Furnish to each selling Holder, the Special Counsel, the Initial
Purchasers and each Managing Underwriter, if any, without charge, at least one
conformed copy of the Registration Statement or Statements and any amendment
thereto, including financial statements but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits
(unless requested in writing by such selling Holder, counsel, the Initial
Purchasers or underwriter).
(g) Deliver to each selling Holder, the Special Counsel, the Initial
Purchasers and each Managing Underwriter, if any, in connection with any
offering of Registrable Securities, without charge, as many copies of the
Prospectus or Prospectuses relating to such Registrable Securities (including
each preliminary prospectus) and any amendment or supplement thereto as such
persons may reasonably request; and the Company hereby consents to the use of
such Prospectus or each amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the underwriters, if any, in connection
with any offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders, the Managing
Underwriters, if any, and the Special Counsel in connection with the
registration or qualification (or exemption from such registration
10.
<PAGE> 11
or qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or Managing Underwriter reasonably requests in writing; keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
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
applicable Registration Statement; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified or (ii) take any action that would subject it to general
service of process in suits or to taxation in any such jurisdiction where it is
not then so subject.
(i) Cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States, except as may be
required solely as a consequence of the nature of such selling Holder, in which
case the Company will cooperate in all reasonable respects with the filing of
such Registration Statement and the granting of such approvals, as may be
necessary to enable the selling Holder or Holders thereof or the Managing
Underwriters, if any, to consummate the disposition of such Registrable
Securities.
(j) During any Selling Period (other than during a Deferral Period),
immediately upon the existence of any fact or the occurrence of any event as a
result of which a Registration Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or a Prospectus
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, promptly prepare and file (subject to the proviso in Section 3(a)) a
post-effective amendment to each Registration Statement or a supplement to the
related Prospectus or any document incorporated therein by reference or file any
other required document (such as a Current Report on Form 8-K) that would be
incorporated by reference into the Registration Statement so that the
Registration Statement shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and so that the Prospectus will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, as
thereafter delivered to the purchasers of the Registrable Securities being sold
thereunder, and, in the case of a post-effective amendment to a Registration
Statement, use its reasonable efforts to cause it to become effective as soon as
practicable.
(k) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and substance as
is customary in Underwritten Offerings) and take all such other actions in
connection therewith (including, in the event of an Underwritten Offering, those
reasonably requested by the Managing Underwriters, if any, or the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities and in such
11.
<PAGE> 12
connection, whether or not an underwriting agreement is entered into, and if the
registration is an underwritten registration, (i) make such representations and
warranties, subject to the Company's ability to do so, to the Holders of such
Registrable Securities and the underwriters with respect to the business of the
Company and its subsidiaries, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference, if any,
in each case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings (provided that the scope and substance
shall not be materially different than those contained in the Purchase
Agreement) and confirm the same if and when requested; (ii) use its best efforts
to obtain opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably satisfactory to
the Managing Underwriters, if any, Special Counsel and the Holders of a majority
of the Registrable Securities being sold) addressed to each of the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such Special
Counsel and Managing Underwriters; (iii) use its best efforts to obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other certified public
accountants of any business acquired or to be acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each of the Managing Underwriters, if
any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with Underwritten
Offerings; and (iv) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority of the Registrable Securities being sold,
the Special Counsel and the Managing Underwriters, if any, to evidence the
continued validity of the representations and warranties of the Company and its
subsidiaries made pursuant to clause (i) above and to evidence compliance with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The above shall be done at each closing
under such underwriting or similar agreement as and to the extent required
thereunder.
(l) If requested in connection with a disposition of Registrable
Securities pursuant to a Registration Statement, make available for inspection
by a representative of the Holders of Registrable Securities being sold, any
Managing Underwriter participating in any disposition of Registrable Securities,
if any, and any attorney or accountant retained by such selling Holders or
underwriter, financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the executive
officers, directors and employees of the Company and its subsidiaries to supply
all information reasonably requested by any such representative, Managing
Underwriter, attorney or accountant in connection with such disposition; subject
to reasonable assurances by each such person that such information will only be
used in connection with matters relating to such Registration Statement;
provided, however, that such persons shall first agree in writing with the
Company that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons and shall be used solely
for the purposes of exercising rights under this Agreement, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any
12.
<PAGE> 13
Registration Statement or the use of any prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from a
source other than the Company and such source is not bound by a confidentiality
agreement.
(m) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements (which need
not be audited) satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the Securities
Act) no later than forty-five (45) days after the end of any twelve (12) month
period (or ninety (90) days after the end of any twelve (12) month period if
such period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment or
best efforts underwritten offering and (ii) if not sold to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement, which
statements shall cover said twelve (12) month periods.
(n) Cooperate with the selling Holders of Registrable Securities 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 such Holders may request.
(o) Provide the Trustee under the Indenture and the transfer agent
for the Common Stock with printed certificates for the Registrable Securities
which are in a form eligible for deposit with The Depository Trust Company.
(p) Cause the Common Stock covered by the Registration Statement to
be listed on each securities exchange or quoted on each automated quotation
system on which any of the Company's "Common Stock," as that term is defined in
the Indenture, is then listed or quoted) no later than the date the Registration
Statement is declared effective and, in connection therewith, to the extent
applicable, to make such filings under the Exchange Act (e.g., the filing of a
Registration Statement on Form 8-A) and to have such filings declared effective
thereunder.
(q) Cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc.
4. HOLDER'S OBLIGATIONS. Each Holder agrees, by acquisition of the
Notes and Registrable Securities, that no Holder of Registrable Securities shall
be entitled to sell any of such Registrable Securities pursuant to a
Registration Statement or to receive a Prospectus relating thereto, unless such
Holder has furnished the Company with the notice required pursuant to Section
2(d) hereof and such other information regarding such Holder and the
distribution of such Registrable Securities as may be required to be included in
the Registration Statement or the Prospectus or as the Company may from time to
time reasonably request. The Company may exclude from such registration the
Registrable Securities of any Holder who does not furnish such information
provided above for so long as such information is not so furnished.
13.
<PAGE> 14
Each Holder of Registrable Securities as to which any Registration Statement is
being effected agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not misleading. Any sale of any Registrable
Securities by any Holder shall constitute a representation and warranty by such
Holder that the information relating to such Holder and its plan of distribution
is as set forth in the Prospectus delivered by such Holder in connection with
such disposition, that such Prospectus does not as of the time of such sale
contain any untrue statement of a material fact relating to such Holder or its
plan of distribution and that such Prospectus does not as of the time of such
sale omit to state any material fact relating to such Holder or its plan of
distribution necessary to make the statements in such Prospectus, in light of
the circumstances under which they were made, not misleading.
5. REGISTRATION EXPENSES. All fees and expenses incident to the
Company's performance of or compliance with this Agreement shall be borne by the
Company whether or not any of the Registration Statements become effective. Such
fees and expenses shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (x) with respect
to filings required to be made with the SEC or the National Association of
Securities Dealers, Inc. and (y) relating to compliance with federal securities
or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of Special Counsel in connection with Blue Sky qualifications of
the Registrable Securities under the laws of such jurisdictions as the Managing
Underwriters, if any, or Holders of a majority of the Registrable Securities
being sold may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the Special Counsel
or the Holders of a majority of the Registrable Securities included in any
Registration Statement), (iii) the reasonable fees and disbursements of the
Trustee and its counsel and of the registrar and transfer agent for the Common
Stock, (iv) messenger, telephone and delivery expenses relating to the
performance of the Company's obligations hereunder, (v) reasonable fees and
disbursements of counsel for the Company and the Special Counsel in connection
with the Shelf Registration (provided that the Company shall not be liable for
the fees and expenses of more than one separate firm, in addition to counsel for
the Company, for all parties participating in any transaction hereunder), (vi)
fees and disbursements of all independent certified public accountants referred
to in Section 3(k)(iii) hereof (including the expenses of any special audit and
"cold comfort" letters required by or incident to such performance) and (vii)
Securities Act liability insurance, to the extent obtained by the Company in its
sole discretion. In addition, the Company shall 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 any securities exchange on which similar
securities issued by the Company are then listed and the fees and expenses of
any person, including special experts, retained by the Company. Notwithstanding
the provisions of this Section 5, each seller of Registrable Securities shall
pay all underwriting discounts, selling commissions and stock transfer taxes
applicable to the Registrable Securities, all selling expenses and all
registration expenses to the extent that the Company is prohibited by applicable
Blue Sky laws from paying for or on behalf of such seller of Registrable
Securities.
14.
<PAGE> 15
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify and
hold harmless the Initial Purchasers, each Holder and each person, if any, who
controls the Initial Purchasers or any Holder (within the meaning of either
Section 15 of the Securities Act or Section 20(a) of the Exchange Act) from and
against all losses, liabilities, damages and expenses (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (collectively, "Losses"),
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 arise out of or are based upon the
information relating to the Initial Purchasers or any Holder furnished to the
Company in writing by the Initial Purchasers or such Holder expressly for use
therein; provided that the Company shall not be liable to any Holder of
Registrable Securities (or any person controlling such Holder) to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any preliminary
prospectus if either (A)(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 by
such Holder to the person asserting the claims from which such Losses arise and
(ii) the Prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (B)(x) such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and (y) 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, with or prior to the delivery of written
confirmation of the sale of a Registrable Security to the person asserting the
claim from which such Losses arise. The Company shall also indemnify each
underwriter and each person who controls such person (within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act) to the
same extent and with the same limitations as provided above with respect to the
indemnification of the Initial Purchasers or the Holders of Registrable
Securities.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each Holder
agrees, and such agreement shall be evidenced by the Holder delivering the
notice described in Section 2(d) hereof, severally and not jointly to indemnify
and hold harmless the Initial Purchasers, the other selling Holders, the
Company, its directors, its officers who sign a Registration Statement, and each
person, if any, who controls the Company, the Initial Purchasers and any other
selling Holder (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act), from and against all losses arising out of or
based upon any untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary prospectus or arising out of or based upon
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
relating to such Holder so furnished in writing by such Holder to the Company
15.
<PAGE> 16
expressly for use in such Registration Statement or Prospectus. 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.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Initial
Purchasers and all persons, if any, who control the Initial Purchasers within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (b) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Holders and all persons, if any, who
control any Holder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, and (c) the fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign a Registration Statement and each person, if
any, who controls the Company within the meaning of either such Section, and
that all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. In such case involving the Initial Purchasers and persons who control
the Initial Purchasers, such firm shall be designated in writing by Morgan
Stanley & Co. Incorporated. In such case involving the Holders and such persons
who control Holders, such firm shall be designated in writing by the Holders of
the majority of Registrable Securities sold pursuant to the Registration
Statement. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than forty-five (45) days after receipt
16.
<PAGE> 17
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party, shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability or claims
that are the subject matter of such proceeding.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under Section 6(a) or 6(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, 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, (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the initial placement (before deducting expenses) of the Notes
pursuant to the Purchase Agreement. Benefits received by the Initial Purchasers
shall be deemed to be equal to the total purchase discounts and commissions
received by them pursuant to the Purchase Agreement and benefits received by any
other Holders shall be deemed to be equal to the value of receiving Notes
registered under the Securities Act. Benefits received by any underwriter shall
be deemed to be equal to the total discounts and commissions, as set forth on
the cover page of the Prospectus forming a part of the Registration Statement
which resulted in such Losses. The relative fault of the Holders on the one hand
and the Company 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 Holders or by the Company and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders' respective obligations to contribute
pursuant to this paragraph are several in proportion to the respective number of
Registrable Securities they have sold pursuant to a Registration Statement, and
not joint.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the
17.
<PAGE> 18
total price at which the Registrable Securities sold by such indemnifying party
and distributed to the public were offered to the public exceeds the amount of
any damages which such indemnifying party 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.
The indemnity, contribution and expense reimbursement obligations of the
Company hereunder shall be in addition to any liability the Company may
otherwise have hereunder, under the Purchase Agreement or otherwise. The
provisions of this Section 6 shall survive so long as Registrable Securities
remain outstanding, notwithstanding any transfer of the Registrable Securities
by any Holder or any termination of this Agreement.
The indemnity and contribution provisions contained in this Section 6
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchasers, any Holder or any person controlling any Holder, or the
Company, its officers or directors or any person controlling the Company and
(iii) the sale of any Registrable Securities by any Holder.
7. INFORMATION REQUIREMENTS.
(a) The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act, and if at any time the Company is
not required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. The Company further covenants that it will cooperate with any
Holder of Registrable Securities and take such further reasonable action as any
Holder of Registrable Securities may reasonably request (including, without
limitation, making such reasonable representations as any such Holder 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 Rule 144 and Rule 144A
under the Securities Act. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such filing requirements. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company to
register any of its securities under any section of the Exchange Act.
(b) The Company shall file the reports required to be filed by it
under the Exchange Act and shall comply with all other requirements set forth in
the instructions to Form S-3 in order to allow the Company to be eligible to
file registration statements on Form S-3.
8. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by the Company of its
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific
18.
<PAGE> 19
performance of its rights under this Agreement; provided that the sole damages
payable for a violation of the terms of this Agreement for which Liquidated
Damages are expressly provided pursuant to Section 2(e) hereof shall be such
Liquidated Damages. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) NO CONFLICTING AGREEMENTS. The Company has not, as of the date
hereof, and shall not, on or after the date of this Agreement, enter into any
agreement with respect to its securities which conflicts with the rights granted
to the Holders of Registrable Securities in this Agreement. The Company
represents and warrants that the rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with the rights granted to the
holders of the Company's securities under any other agreements.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Common Stock constituting Registrable
Securities (with Holders of Notes deemed to be the Holders, for purposes of this
Section, of the number of outstanding shares of Common Stock into which such
Notes are convertible). Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders of Registrable Securities may
be given by Holders of at least a majority of the Registrable Securities being
sold by such Holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier or
(iii) one business day after being deposited with a reputable next-day courier,
postage prepaid, to the parties as follows:
(i) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company in accordance with the
provisions of Section 8(e);
(ii) if to the Company, to:
Integrated Process Equipment Corp.
4717 E. Hilton Avenue
Phoenix, AZ 85034
Attention: Chief Financial Officer
Telecopy No: (602) 517-6016
19.
<PAGE> 20
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Francis S. Currie
Telecopy No: (650) 493-6811
and
(iii) if to the Special Counsel to:
Cooley Godward LLP
One Maritime Plaza
20th Floor
San Francisco, CA 94111
Attention: Kenneth L. Guernsey
Telecopy No: (415) 951-3699
or to such other address as such person may have furnished to the other persons
identified in this Section 8(d) in writing in accordance herewith.
(e) OWNER OF REGISTRABLE SECURITIES. The Company will maintain, or
will cause its registrar and transfer agent to maintain, a register with respect
to the Registrable Securities in which all transfers of Registrable Securities
of which the Company has received notice will be recorded. The Company may deem
and treat the person in whose name Registrable Securities are registered in such
register of the Company as the owner thereof for all purposes, including without
limitation, the giving of notices under this Agreement.
(f) APPROVAL OF HOLDERS. Whenever the consent or approval of Holders
of a specified percentage of Registrable Securities is required hereunder, (i)
Holders of Notes shall be deemed to be Holders, for such purposes, of the number
of outstanding shares of Common Stock into which such Notes are convertible and
(ii) Registrable Securities held by the Company or its affiliates (as such term
is defined in Rule 405 under the Securities Act) (other than the Initial
Purchasers or subsequent Holders of Registrable Securities if such subsequent
Holders are deemed to be such affiliates solely by reason of their holdings of
such Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(g) SUCCESSORS AND ASSIGNS. Any person who purchases any Registrable
Securities from an Initial Purchasers shall be deemed, for purposes of this
Agreement, to be an assignee of such Initial Purchasers. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities.
20.
<PAGE> 21
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(i) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
(k) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, illegal, void or unenforceable.
(l) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such registration rights.
(m) ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
(n) FURTHER ASSURANCES. Each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate action, do or
cause to be done all things reasonably necessary, proper or advisable under
applicable law, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of
21.
<PAGE> 22
this Agreement and the other documents contemplated hereby and consummate and
make effective the transactions contemplated hereby.
(o) TERMINATION. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Sections 4, 5 or 6 hereof and the
obligations to make payments of and provide for Liquidated Damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
their terms.
22.
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INTEGRATED PROCESS EQUIPMENT CORP.
By: /s/ John S. Hodgson
---------------------------
Name: John S. Hodgson
Title: V.P. & C.F.O
Accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
HAMBRECHT & QUIST LLC
PRUDENTIAL SECURITIES INCORPORATED
UBS SECURITIES LLC
MORGAN STANLEY & CO. INCORPORATED
By:
---------------------------
23.
<PAGE> 1
EXHIBIT 10.4
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE CERTIFICATES)
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DEPOSITARY AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR"); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION
OF SUCH NOTE EXCEPT (A) TO INTEGRATED PROCESS EQUIPMENT CORP. OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 1(F) ABOVE), IT WILL FURNISH TO STATE STREET BANK AND TRUST COMPANY OF
1.
<PAGE> 2
CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE
EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PRIOR TO
THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO STATE
STREET BANK AND TRUST COMPANY OF CALIFORNIA N.A., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE 1(F) ABOVE OR UPON ANY TRANSFER OF THE NOTES
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. INTEGRATED
PROCESS EQUIPMENT CORP.
2.
<PAGE> 3
6 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2004
No: 01 CUSIP: 45812KAB4
INTEGRATED PROCESS EQUIPMENT CORP., a corporation duly organized and
validly existing under the laws of the State of Delaware (herein called the
"Company"), which term includes any successor corporation under the Indenture
referred to on the reverse hereof, for value received hereby promises to pay to
CEDE & Co. or registered assigns, the principal sum of One Hundred Fifteen
Million Dollars ($115,000,000) on September 15, 2004, at the office or agency of
the Company maintained for that purpose in accordance with the terms of the
Indenture, or, at the option of the holder of this Note, at the Corporate Trust
Office, in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
and to pay interest, semi-annually on March 15 and September 15, of each year,
commencing March 15, 1998, on said principal sum at said office or agency, in
like coin or currency, at the rate per annum of 6 1/4% from September 17, 1997
and thereafter to maturity from the March 15 or September 15, as the case may
be, next preceding the date of this Note to which interest has been paid or duly
provided for, unless the date hereof is a date to which interest has been paid
or duly provided for, in which case from the date of this Note, or unless no
interest has been paid or duly provided for on the Notes, in which case from
September 17, 1997, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after any
March 1 or September 1, as the case may be, and before the following March 15 or
September 15, this Note shall bear interest from such March 15 or September 15;
provided, however, that if the Company shall default in the payment of interest
due on such March 15 or September 15, then this Note shall bear interest from
the next preceding March 15 or September 15, to which interest has been paid or
duly provided for or, if no interest has been paid or duly provided for on such
Note, from September 17, 1997. The interest payable on the Note pursuant to the
Indenture on any March 15 or September 15 will be paid to the person entitled
thereto as it appears in the Note register at the close of business on the
record date, which shall be the March 1 or September 1 (whether or not a
Business Day) next preceding such March 15 or September 15, as provided in the
Indenture; provided that any such interest not punctually paid or duly provided
for shall be payable as provided in the Indenture. Interest may, at the option
of the Company, be paid either (i) by check mailed to the registered address of
such person (provided that the holder of Notes with an aggregate principal
amount in excess of $2,000,000 shall, at the written election of such holder, be
paid by wire transfer in immediately available funds) or (ii) by transfer to an
account maintained by such person located in the United States.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
3.
<PAGE> 4
This Note 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
and governed by the laws of said State.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
4.
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal to be affixed or imported hereon.
INTEGRATED PROCESS EQUIPMENT CORP.
By: /s/ Roger D. McDaniel
-------------------------------------------
Roger D. McDaniel
President and Chief Executive Officer
Attest: /s/ John S. Hodgson
-------------------------------------
John S. Hodgson
Vice President, Chief Financial Officer
and Secretary
Dated: September 17, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By: /s/ Scott C Emmons
--------------------------------
Authorized Signatory
By:.
--------------------------------
As Authenticating Agent
(if different from Trustee)
5.
<PAGE> 6
INTEGRATED PROCESS EQUIPMENT CORP.
6 1/4% CONVERTIBLE SUBORDINATED NOTE DUE 2004
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 6 1/4% Convertible Subordinated Notes due 2004 (herein called
the "Notes"), limited to the aggregate principal amount of $115,000,000 all
issued or to be issued under and pursuant to an indenture dated as of September
15, 1997 (herein called the "Indenture"), between the Company and State Street
Bank and Trust Company of California, N.A., as trustee (herein called the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest (including Liquidated Damages, if any) on all Notes may be declared,
and upon said declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Notes; provided, however, that no such supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon, or reduce any amount payable on redemption thereof,
or impair the right of any Noteholder to institute suit for the payment thereof,
or make the principal thereof or interest or premium, if any, thereon payable in
any coin or currency other than that provided in the Note, or modify the
provisions of the Indenture with respect to the subordination of the Notes in a
manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to make redemption of any Note upon the happening of a
Fundamental Change in a manner adverse to the holder of the Notes, or impair the
right to convert the Notes into Common Stock subject to the terms set forth in
the Indenture, including Section 15.6 thereof, without the consent of the holder
of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Notes then outstanding. It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of the Notes, the holders of a majority in aggregate principal amount
of the Notes at the time outstanding may on behalf of the holders of all of the
Notes waive any past default or Event of Default under the Indenture and its
consequences except a default in the payment of interest (including Liquidated
Damages, if any) or any premium on or the principal of any of the Notes, a
default in the payment of redemption price pursuant to Article III or a failure
by the Company to convert any Notes into Common Stock of the Company. Any such
consent or
6.
<PAGE> 7
waiver by the holder of this Note (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such holder and upon all future holders and
owners of this Note and any Notes which may be issued in exchange or substitute
hereof, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture or
thereafter incurred, and this Note is issued subject to the provisions of the
Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the Trustee
his attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
(including Liquidated Damages, if any) on this Note at the place, at the
respective times, at the rate and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a year of twelve
30-day months.
The Notes are issuable in registered form without coupons in denominations
of $1,000 and any integral multiple of $1,000. At the office or agency of the
Company referred to on the face hereof, and in the manner and subject to the
limitations provided in the Indenture, without payment of any service charge but
with payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration or exchange of Notes,
Notes may be exchanged for a like aggregate principal amount of Notes of other
authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
September 20, 2000. At any time on or after September 20, 2000, and prior to
maturity, the Notes may be redeemed at the option of the Company as a whole, or
from time to time in part, upon mailing a notice of such redemption not less
than 30 days before the date fixed for redemption to the holders of Notes at
their last registered addresses, all as provided in the Indenture, at the
following optional redemption prices (expressed as percentages of the principal
amount), together in each case with accrued interest (including Liquidated
Damages, if any) to, but excluding, the date fixed for redemption:
7.
<PAGE> 8
If redeemed during the period beginning September 20, 2000 and ending on
September 14, 2001, at a redemption price of 103.571%, and if redeemed during
the 12-month period beginning September 15:
YEAR REDEMPTION PRICE
---- ----------------
2001 102.679%
2002 101.786%
2003 100.893%
and 100% at September 15, 2004; provided that if the date fixed for redemption
is on March 15 or September 15, then the interest payable on such date shall be
paid to the holder of record on the next preceding March 1 or September 1,
respectively.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Fundamental Change (as defined in the Indenture) occurs at any time
prior to September 15, 2004, the Notes will be redeemable on the 30th day after
notice thereof at the option of the holder. Such payment shall be made at
106.25% from the date of initial issuance of the Notes until September 14, 1998;
at 105.357% from September 15, 1998 until September 14, 1999; at 104.464% from
September 15, 1999 until September 19, 2000; at 103.571% from September 20, 2000
until September 14, 2001; and at the following prices (expressed as percentages
of the principal amount) in the event of a Fundamental Change occurring during
the 12-month period beginning September 15:
YEAR REDEMPTION PRICE
---- ----------------
2001 102.679%
2002 101.786%
2003 100.893%
and 100% at September 15, 2004; provided in each case that if the Applicable
Price (as defined in the Indenture) is less than the Reference Market Price (as
defined in the Indenture), the Company shall redeem such Notes at a price equal
to the foregoing repayment price multiplied by the fraction obtained by dividing
the Applicable Price by the Reference Market Price. In each case, the Company
shall also pay accrued interest, if any (including Liquidated Damages, if any)
on such Notes to, but excluding, the Repurchase Date; provided that if such
Repurchase Date is March 15 or September 15, then the interest payable on such
date shall be paid to the holder of record of the Note on the next preceding
March 1 or September 1. The Company shall mail to all holders of record of the
Notes a notice of the occurrence of a Fundamental Change and of the redemption
right arising as a result thereof on or before the 10th day after the occurrence
of such Fundamental Change. For a Note to be so repaid at the option of the
holder, the Company must receive at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, such
Note with the form entitled "Option to Elect Repayment Upon a Fundamental
Change" on the reverse thereof duly completed, together with such Notes duly
endorsed for transfer, on or before the 30th day after the date of
8.
<PAGE> 9
such notice (or if such 30th day is not a Business Day, the immediately
preceding Business Day).
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 90 days following the latest date of
original issuance thereof through the close of business on September 15, 2004,
or, as to all or any portion hereof called for redemption, prior to the close of
business on the Business Day immediately preceding the date fixed for redemption
(unless the Company shall default in payment due upon redemption thereof), to
convert the principal hereof or any portion of such principal which is $1,000 or
an integral multiple thereof into that number of shares of the Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Note or portion thereof to be converted
by the Conversion Price of $39.00 or such Conversion Price as adjusted from time
to time as provided in the Indenture, upon surrender of this Note, together with
a conversion notice as provided in the Indenture, to the Company at the office
or agency of the Company maintained for that purpose in accordance with the
terms of the Indenture, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Note, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or by
his duly authorized attorney. No adjustment in respect of interest or dividends
will be made upon any conversion; provided, however, that if this Note shall be
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the close of business on the Business
Day preceding the interest payment date, this Note (unless it or the portion
being converted shall have been called for redemption during the period from the
close of business on any record date for the payment of interest to the close of
business on the Business Day preceding the interest payment date) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted. No fractional shares will
be issued upon any conversion, but an adjustment in cash will be made, as
provided in the Indenture, in respect of any fraction of a share which would
otherwise be issuable upon the surrender of any Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on or
before the close of business on the date fixed for redemption, may be deemed to
be purchased from the holder of such Notes at an amount equal to the applicable
redemption price, together with accrued interest (including Liquidated Damages,
if any) to (but excluding) the date fixed for redemption, by one or more
investment bankers or other purchasers who may agree with the Company to
purchase such Notes from the holders thereof and convert them into Common Stock
of the Company and to make payment for such Notes as aforesaid to the Trustee in
trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, or at the option of the holder of this Note, at the
Corporate Trust Office, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued to the transferee
9.
<PAGE> 10
in exchange thereof; subject to the limitations provided in the Indenture,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent, any
conversion agent and any Note registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor any other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
No recourse for the payment of the principal of or any premium or interest
on this Note, or for any claim based hereon or otherwise in respect hereof; and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any indenture supplemental thereto or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, employee, agent, officer or director or
subsidiary, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of New
York, and for all purposes shall be construed in accordance with the laws of New
York, without regard to principles of conflicts of laws.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
10.
<PAGE> 11
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -- ________ Custodian _______
TEN ENT - as tenant by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors Act
of survivorship and not as
tenants in common _______________________________________________
(State)
</TABLE>
Additional abbreviations may also be used
though not in the above list.
11.
<PAGE> 12
CONVERSION NOTICE
To: Integrated Process Equipment Corp.
The undersigned registered owner of this Note hereby irrevocably exercises
the option to convert this Note, or the portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of
Integrated Process Equipment Corp. in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional shares
and any Notes representing any unconverted principal amount hereof, be issued
and delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated: ________________
______________________________________
______________________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange
if shares of Common Stock are to be
issued, or Notes to be delivered,
other than to and in the name of the
registered holder.
______________________________________
Signature Guarantee
12.
<PAGE> 13
Fill in for registration of shares of Common Stock if to be issued, and Notes if
to be delivered, other than to and in the name of the registered holder:
____________________________________
(Name)
____________________________________
(Street Address)
____________________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all): $____________
Social Security or Other Taxpayer
Identification Number ______________
13.
<PAGE> 14
OPTION TO ELECT REPAYMENT
UPON A FUNDAMENTAL CHANGE
TO: INTEGRATED PROCESS EQUIPMENT CORP.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Integrated Process Equipment Corp. (the
"Company") as to the occurrence of a Fundamental Change with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Note, or the portion thereof (which is $1,000 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the redemption price, together with
accrued interest to, but excluding, such date, to the registered holder hereof.
Dated: _______________ ____________________________________________
____________________________________________
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with the
name as written upon the face of the Note in
every particular without alteration or
enlargement or any change whatever.
Principal amount to be converted (if less
than all):
$___________
____________________________________________
Social Security or Other Taxpayer
Identification Number
<PAGE> 15
ASSIGNMENT
For value received ______________________________ hereby sell(s),
assign(s) and transfer(s) unto ______________________________ (Please insert
social security or other Taxpayer Identification Number of assignee) the within
Note, and hereby irrevocably constitutes and appoints _________________________
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.
In connection with any transfer of the Note within the period prior to the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under the
Securities Act), the undersigned confirms that such Note is being transferred:
[ ] To Integrated Process Equipment Corp. or a subsidiary thereof, or
[ ] Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated: _______________ ____________________________________________
____________________________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a member
firm of a major stock exchange if shares of
Common Stock are to
<PAGE> 16
be issued, or Notes to be delivered, other
than to or in the name of the registered
holder.
____________________________________________
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
<PAGE> 1
EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is effective as of August 13, 1997 ("Effective Date")
between Integrated Process Equipment Corp. ("Company") and Roger D. McDaniel
("Executive").
1. Position, Duties and Start Date. Company hires Executive and
Executive accepts employment as Company's President and Chief Executive Officer.
Executive shall devote his full time and best efforts to these positions.
Executive shall comply with the policies of the Company and the direction of the
Company's Board of Directors ("Board"). Exhibit A specifies the separate
responsibilities of Executive and the Board's Chairman. To the extent requested
by the Board, Executive will serve as a Company Director without additional
compensation (other than continued vesting of Executive's existing 30,000 share
option granted in connection with his Board membership). Executive's full-time
employment will begin September 1, 1997 ("Start Date"). From the Effective Date
to the Start Date Executive will serve as a consultant to Company without
additional compensation.
2. Compensation.
(a) Company will pay Executive a monthly base salary of $33,333.33,
less applicable withholding, payable in accordance with Company's standard
payroll policy. At least annually the Board will consider increases in the
annual salary rate in light of Executive's individual performance, Company
performance and other relevant factors determined by the Board.
(b) Company will pay Executive a bonus payment of up to 100% of the
Executive's then base salary ("Bonus"), less applicable withholding, on a fiscal
year basis with the first year being prorated at 10/12ths. The Bonus payable at
the end of each fiscal year shall be determined by accomplishment of the Company
objectives, as agreed to by the Board's Compensation Committee prior to or as
soon as practical after the beginning of the year. The Board Compensation
Committee's reasonable determination as to whether an objective has been
accomplished will be final and binding. If the Executive is not employed by the
Company at the end of the fiscal year, the Board of Director's Compensation
Committee shall decide if any of the bonus will be paid based on the policies of
the Committee.
(c) Company or designee will purchase Executive's primary residence
for $670,000; the Company will reimburse Executive for $100,000 in reasonable
costs (including moving, temporary housing, losses on sale of club memberships,
etc.) of relocating to Phoenix, Arizona; Executive will relocate as soon as
practicable.
(d) Executive will be entitled to 4 weeks vacation per year, company
car, health and standard executive perks.
3. Equity Compensation. Company shall grant Executive the following
equity compensation under Company's 1997 Executive Stock Option Plan ("Plan").
<PAGE> 2
(a) Company shall issue to Executive 50,000 shares of Company Common
Stock ("Shares") without consideration by Executive. The Shares shall vest at
the rate of 1667 shares, pre-tax, at the end of each full month after the
Effective Date (with the first 1667 shares to vest on September 30, 1997).
(b) Company shall grant Executive a stock option exercisable for up
to 50,000 shares of Common Stock ("Base Option"). The exercise price per share
for the Base Option shall be the per share fair market value of the Common Stock
on the Effective Date. The Base Option shall be fully vested and exercisable
upon grant. The Base Option shall be treated as an incentive stock option to the
extent permitted under the Internal Revenue Code and related regulations.
(c) Company shall grant Executive a stock option exercisable for up
to 400,000 shares of Common Stock ("Second Option"). The exercise price per
share for the Second Option shall be the per share fair market value of the
Common Stock on the Effective Date. The Second Option shall become exercisable
on each anniversary of the Start Date as to 25% of the number of shares
initially subject to the Second Option, provided in each case that Executive's
employment with Company has not terminated before such date.
(d) Company shall grant Executive a stock option exercisable for up
to 200,000 shares of Common Stock ("Performance Option"). The exercise price per
share for the Performance Option shall be the per share fair market value of the
Common Stock on the Effective Date. The Performance Option shall become
exercisable as to 50,000 shares on each of the first four anniversaries of the
Start Date if the incentive goals established by the Board have been met,
provided in each case that the Executive's employment with the Company has not
terminated prior to such date. The incentive goals for subsequent fiscal years
shall be specified by the Compensation Committee of the Board prior to the
beginning of each fiscal year. The Board's reasonable determination as to
whether an objective has been accomplished will be final and binding.
(e) The vesting of the Shares and the Second Option shall accelerate
by 12 months upon the closing of an Acquisition (as defined below), or as to
such greater amount as is necessary for Executive in total to receive vesting in
shares and options as to no less than 500,000 shares on such date, including
full vesting of the remainder of the 50,000 shares. For purposes of the
Agreement, an "Acquisition" shall mean (i) a merger, reorganization or sale of
substantially all of the assets of the Company if the holders of a majority of
the voting securities of the Company immediately before such transaction
(counting each share of Class A Common Stock as a single share and ignoring the
additional votes of such shares) do not constitute the holders of a majority of
the voting securities of the surviving corporation immediately after such
transaction or (ii) the acquisition of more than 50% of the Company's voting
equity securities by a single person or entity.
(f) Executive's option to purchase 30,000 shares of Common Stock
granted prior to the Effective Date shall remain in effect and shall be subject
to the terms and conditions of the option agreement under which it was granted.
-2-
<PAGE> 3
4. Company Policies. Executive has reviewed and will comply with
Company's personnel policies, including signing Company's standard Proprietary
Information Agreement.
5. Term and Termination.
(a) The term of this Agreement shall continue until terminated by
either party in accordance with this Section 6.
(b) Company may terminate this Agreement at any time for Cause (as
defined below) without any severance obligation of the Company. "Cause" means
(i) willful or habitual neglect of Executive's obligations under this Agreement,
(ii) misuse of corporate funds, (iii) any other act of gross misconduct. A third
party arbitrator selected by mutual consent will make a final and binding
decision on any issue covered by this clause.
(c) Company may terminate this Agreement at any time without Cause,
provided that Company shall pay Executive as a severance payment a monthly
amount equal to his then current monthly base salary (less applicable
withholding) for a period of 12 months following the date of termination. In
addition, upon such termination, the vesting of the Shares and the Second Option
shall accelerate by 12 months from the vesting at the date of such termination.
The severance payments described in this Section 6(c) and the acceleration of
the vesting of the Shares and the Second Option shall discharge all of the
Company's obligations to the Executive.
(d) This Agreement may be terminated by the Executive at any time
upon 60 days written notice, in which case the Company shall have no severance
obligation to the Executive.
(e) This Agreement shall not constitute an agreement to employ
Executive for a specified term.
6. General.
(a) This Agreement shall be binding upon the legal representatives,
distributees, successors and assigns of the parties hereto.
(b) This Agreement and the exhibits hereto contain the entire
agreement of the parties, and may not be changed orally, but only by a writing
signed by the party against whom enforcement of such change is sought.
(c) If any provision of this Agreement is held invalid, illegal or
unenforceable, such provisions shall be deemed deleted and such deletion shall
not affect the validity of other provisions of this Agreement.
-3-
<PAGE> 4
(d) This Agreement shall be governed by and construed according to
the laws of the State of California. The federal and state courts of the state
of California shall have exclusive jurisdiction to adjudicate any dispute rising
out of this Agreement.
INTEGRATED PROCESS EQUIPMENT CORP.:
By:_____________________________
Title:__________________________
EXECUTIVE:
________________________________
-4-
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