EXHIBIT 10.23
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into as of this
____ day of June, 1997, by and among Trikon Technologies, Inc., a California
corporation (formerly known as Plasma & Materials Technologies, Inc.) (the
"Company"), and the persons listed on Schedule 1 attached hereto (collectively,
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the "Investors").
RECITALS:
The Company proposes to authorize, issue and sell to the Investors the number
of shares of Series G Preferred Stock, no par value (the "Preferred Stock"),
together with warrants (the "Warrants") to purchase shares of the Company's
common stock, no par value (the "Common Stock"), all as specified on Schedule 1.
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The Preferred Stock shall be entitled to the preferences, rights and benefits,
including without limitation conversion and liquidation privileges, as are set
forth in the capital stock provisions of the Certificate of Determination
(together with the amendment thereto) amending the Company's Seventh Restated
Articles of Incorporation (collectively, the "Certificate of Determination"),
which has been filed with the California Secretary of State in the form set
forth in Exhibit A attached hereto. Further, the Company proposes to authorize
and reserve a sufficient number of its previously authorized but unissued shares
of Common Stock to satisfy the conversion rights and exercise rights of the
holders of the Preferred Stock and Warrants, respectively. Any shares of Common
Stock issuable upon conversion of the Preferred Stock, when issued shall be
referred to as the "Conversion Shares." Any shares of Common Stock issuable
upon exercise of the Warrants, when issued shall be referred to as the "Warrant
Shares." The Preferred Stock, the Warrants, the Warrant Shares and the
Conversion Shares are referred to collectively herein as the "Securities."
Holders of the Securities have the registration rights described in Section 9.
AGREEMENT:
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and the Investors agree as follows:
1. SALE AND PURCHASE OF SHARES OF SECURITIES
In reliance upon the representations, warranties, covenants and agreements
contained herein and subject to the terms and conditions of this Agreement, the
Company agrees to sell to the Investors, and each of the Investors severally
agrees to purchase from the Company, on the terms set forth herein, the number
of shares of Preferred Stock and a Warrant to purchase the number of shares of
Common Stock set forth opposite such Investor's name on Schedule 1 attached
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hereto (the "Purchase Commitment") at a purchase price of Six Dollars and
75/100s Dollars (6.75) per share, which shall constitute the "Original Issue
Price" for purposes of the Certificate of Determination. The Preferred Stock
shall be entitled to the preferences, rights and benefits are set forth in the
Certificate of Determination. The Preferred Stock shall be convertible into
shares of Common Stock and shall have certain liquidation preferences, as
provided for in the Certificate of Determination.
2. CLOSING
2.1. Closings. The execution of this Agreement and the initial closing of
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the transactions contemplated hereby shall take place simultaneously
at the offices of Xxxxxxxxxxx Xxxxx & Xxxxxxxx, 00 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000, at 11 a.m.,
Minneapolis time, on or about June 27, 1997, or as soon as practical
thereafter (the "First Closing") or at such other place or different
time or day as may be mutually acceptable to the Investors and the
Company, provided that a minimum of $15 million of Securities are
purchased at the First Closing and all other conditions to Closing as
set forth in this Agreement have been met to the reasonable
satisfaction of, or waived by, the Investors or the Company, as the
case may be. Thereafter, a second closing of the purchase of
additional shares of Preferred Stock may be held, up to a maximum
aggregate amount (including the amount sold in the First Closing) of
$20 million, with one or more investors provided such transaction is
completed on substantially the same terms set forth in this Agreement
and that such closing occurs prior to July 1, 1997, or such other date
as may be mutually agreed upon by the Investors and the Company (the
"Second Closing"). The date and time on which the First Closing and
Second Closing occur each shall be a "Closing Date" and the First
Closing and Second Closing each may be referred to hereinafter as a
"Closing."
2.2. Deliveries. At each Closing, the Company will deliver the Preferred
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Stock and Warrants purchased at such Closing and any other documents
required by this Agreement against delivery by the Investors of their
respective Purchase Commitment in payment for such Securities.
3. USE OF PROCEEDS
The Company shall use the proceeds from the transactions contemplated hereby
as working capital for general corporate purposes.
4. REPRESENTATIONS AND WARRANTIES BY THE COMPANY
To induce the Investors to enter into this Agreement and to purchase the
Securities, the Company hereby represents and warrants to the Investors the
following, except as disclosed in the Schedule 4 attached hereto, which
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exceptions shall be set forth in reasonable detail and reference the appropriate
subsection(s) of this Section 4:
4.1. Organization, Standing, Etc. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the
State of California and has the requisite corporate power and
authority to own or lease its properties and to carry on its business
as it is now being conducted. The Company has the requisite corporate
power and authority to issue the Securities and to perform its
obligations under this Agreement.
4.2. Governing Instruments. The copies of the articles of incorporation and
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bylaws of the Company, and all amendments thereto (collectively, the
"Charter Documents"), as contained in the SEC Filings (as defined in
Section 4.26 hereof), are true and complete
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copies of the duly and legally adopted Charter Documents in effect as
of the date of this Agreement and as of the Closing Date.
4.3. Subsidiaries, Etc. Except for (i) the Company's wholly-owned
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subsidiary, Plasma & Materials Technologies (Korea) Co. Ltd. ("PMT
Korea"), (ii) Electrotech Limited and Electrotech Equipment Limited
(collectively, "Electrotech") and the direct and indirect subsidiaries
thereof and (iii) Energy Transfer Systems, Inc., a Delaware
corporation ("ETS"), the Company does not have any direct or indirect
ownership interest in any corporation, partnership, joint venture,
association or other business enterprise. For purposes of this
Section, references to the Company shall include PMT Korea,
Electrotech and ETS. Notwithstanding the foregoing, the Company has
formed (but not capitalized or perfected the organization of) various
other subsidiary entities in connection with its overall tax and
business planning; provided, however, that the ultimate capitalization
and organization of such additional subsidiary entities will maintain
the Company's full ownership, directly or indirectly, of all existing
subsidiaries and all existing business operations of the Company,
Electrotech, PMT Korea (except that 10% ownership of PMT Korea may be
allocated to a manager of PMT Korea) and ETS.
4.4. Qualification. The Company has not failed to qualify, be licensed or
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domesticated in any jurisdiction in which the failure to so qualify,
be licensed or domesticated would have a material adverse effect upon
its business, properties, operations or financial condition ("Material
Adverse Effect").
4.5. Financial Statements. The (i) audited financial statements of the
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Company for the fiscal years ended December 31, 1996 and 1995, and
(ii) unaudited interim financial statements for the period ended March
31, 1997, together with the notes thereto, complete and correct copies
of which are included in the SEC Filings (collectively, the "Financial
Statements"), present fairly the financial position of the Company, as
of such dates and the results of operations for the periods covered
thereby (subject, in the case of such unaudited interim financial
statements, to year-end audit adjustments) and have been prepared in
accordance with generally accepted accounting principles consistently
applied. Except as set forth in the Financial Statements or described
in the Notes thereto, the Company does not have any liabilities,
contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to the date of such quarterly
Financial Statements; (ii) obligations under real and personal
property leases disclosed in the Notes to the Financial Statements or
not required, under generally accepted accounting principles, to be so
disclosed, and (iii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the
Financial Statements, which, individually or in the aggregate, are not
material to the financial condition or operating results of the
Company. Except as disclosed in the Financial Statements, since the
date of the interim Financial Statements, (i) there has been no
material adverse change in the business or condition, financial or
otherwise, operations or prospects of the Company; (ii) to the
Company's knowledge, neither the business, condition or operations of
the Company nor any of its properties or assets have been materially
adversely affected as the result of any legislative or regulatory
change, any revocation or
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change in any franchise, permit, license, or right to do business, or
any other event or occurrence, whether or not insured against; (iii)
the Company has not entered into any material transaction other than
in the ordinary course of business, made any distribution on its
capital stock, or redeemed or repurchased any of its capital stock;
and (iv) there has been no lien or encumbrance placed upon any
property of the Company. Notwithstanding and in modification of the
immediately preceding sentence, various risk factors and various facts
and uncertainties attendant to the Company's current operations and
financial condition have been disclosed in the SEC Filings.
4.6. Valid Issuance. The Securities, when issued and delivered pursuant to
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the terms of this Agreement, will be duly authorized, validly issued
and enforceable in accordance with their respective terms and the
terms of this Agreement, except as such enforceability may be limited
by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and to
judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies. The Conversion Shares and
Warrant Shares have been reserved for issuance and, when issued upon
the conversion of the Preferred Stock or exercise of the Warrants,
will be duly authorized, validly issued and outstanding, fully paid,
nonassessable and free and clear of all pledges, liens, encumbrances
and restrictions, except as set forth in Section 5 or the Charter
Documents.
4.7. Corporate Acts and Proceedings. Each of this Agreement and the
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Certificate of Determination has been duly authorized by all necessary
corporate action on behalf of the Company, has been duly executed and
delivered by authorized officers of the Company, is a valid and
binding agreement on the part of the Company and is enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and to judicial limitations on the
enforcement of the remedy of specific performance and other equitable
remedies. All corporate actions necessary to the authorization,
creation, issuance and delivery of the Securities and the reservation
of the Conversion Shares and Warrant Shares contemplated hereunder
have been taken by the Company.
4.8. Tax Returns and Audits. The Company has prepared and timely filed all
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federal, state and other tax returns required by law to be filed, has
paid or made provision for the payment of all taxes shown to be due
and all additional assessments, and adequate provisions have been made
and are reflected in the Financial Statements to the extent required
by generally accepted accounting principles for all current taxes and
other charges to which the Company is subject and which are not
currently due and payable. None of the income tax returns of the
Company have been audited by the Internal Revenue Service or the state
taxing authority in such a manner to bring such audit to the attention
of the Company. The Company does not know of any additional
assessments or adjustments pending or threatened against the Company
or its assets for any period, nor of any basis for any such assessment
or adjustment, which would have a Material Adverse Effect.
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4.9. Title to Properties and Encumbrances. Except with respect to real and
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personal property leased pursuant to lease agreements disclosed in the
manner set forth in Section 4.17, the Company has good and marketable
title to all of its properties and assets, including all properties
and assets used in the conduct of its business, except for property
disposed of in the ordinary course of business since the date of the
quarterly Financial Statements, which properties and assets are not
subject to any mortgage, pledge, lease, lien, charge, security
interest, encumbrance or restriction, except (i) those which are shown
and described in the Financial Statements or disclosed in Schedule 4
or (ii) liens for taxes and assessments or governmental charges or
levies not at this time due or in respect of which the validity
thereof shall currently be contested in good faith by appropriate
proceedings.
4.10. Condition of Properties. The plant, offices, equipment, inventory and
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other assets of the Company have been kept in good condition and
repair in the ordinary course of business, and are reasonably fit and
suitable for the purposes for which they are being used and conform in
all material respects with applicable ordinances, regulations and
laws.
4.11. Litigation; Governmental Proceedings. Except as disclosed in the Notes
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to the Financial Statements, there are no legal actions, suits,
arbitrations or other legal, administrative or governmental
proceedings or investigations pending or, to the knowledge of the
Company, threatened against the Company, or its properties or business
or any executive officer or director of the Company, and neither the
Company nor any executive officer or director of the Company is aware
of any facts which are probable to result in or form the reasonable
basis for any such action, suit or other proceeding. The Company is
not in default with respect to any judgment, order or decree of any
court or any governmental agency or instrumentality. To the best of
its knowledge, the Company has not been threatened with any action or
proceeding under any business or zoning ordinance, law or regulation.
4.12. Compliance with Applicable Laws and Other Instruments. The properties,
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business and operations of the Company have been and are being
conducted in all material respects in accordance with all applicable
laws, rules and regulations of all governmental authorities. Neither
the execution nor delivery of, nor the performance of or compliance
with this Agreement, the Certificate of Determination, the Shares or
the Conversion Shares, nor the consummation of the transactions
contemplated hereby or thereby will, with or without the giving of
notice or passage of time, result in any breach of, or constitute a
default under, or result in the imposition of any lien or encumbrance
upon any asset or property of the Company pursuant to, any agreement
or other instrument to which the Company is a party or by which it or
any of its properties, assets or rights is bound or affected, and will
not violate the Charter Documents. The Company is not in violation of
its Charter Documents and, except as disclosed in the SEC Filings, it
is not in violation of, or in default under, any lien, indenture, loan
or credit agreement, mortgage, lease, agreement, instrument,
commitment or arrangement in any material respect.
4.13. Environmental and Safety Laws. The Company is not, in any material
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respect, in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and no
material expenditures are or are reasonably
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anticipated to be required in order to comply with any such existing
statute, law or regulation.
4.14. Securities Laws. Based in part upon the representations of the
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Investors in Section 5, no consent, authorization, approval, permit or
order of or filing with any governmental or regulatory authority is
required under current laws and regulations in connection with the
execution and delivery of this Agreement or the offer, issuance, sale
or delivery of the Securities, other than the filing of a Form D
pursuant to Regulation D under the Securities Act of 1933, as amended
(the "Securities Act"), the filing of a copy thereof (or a
substantially equivalent notice) with the State of California and any
other state whose securities laws require such filing, and the
qualification thereof, if required, under other applicable state
securities laws which qualification has been or will be effected as a
condition of this sale. Under the circumstances contemplated by this
Agreement, the offer, issuance, sale and delivery of the Securities
will not, under current laws and regulations, require compliance with
the prospectus delivery or registration requirements of the Securities
Act.
4.15. Patents and Other Intangible Rights. Except as disclosed in the SEC
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Filings, the Company (i) owns or has the right to use, free and clear
of all liens, claims and restrictions, all patents, patent
applications, trademarks, service marks, trade names, copyrights,
trade secrets, licenses and similar rights with respect to the
foregoing, necessary for and used in the conduct of its business as
now conducted and as proposed to be conducted, to the Company's
knowledge, without infringing upon or otherwise acting adversely to
the right or claimed right of any person under or with respect to any
of the foregoing; (ii) is not contractually or, to the Company's
knowledge, otherwise obligated to make any material payments by way of
royalties, fees or otherwise to any owner of, licensor of, or other
claimant to, any patent, trademark, service xxxx, trade name,
copyright, trade secret or other intangible asset, with respect to the
use thereof or in connection with the conduct of its business or
otherwise; (iii) has not received any notice of conflict with the
asserted rights of others with respect to such matters; (iv) to the
Company's knowledge, owns or has the unrestricted right to use all
trade secrets, including know-how, customer lists, inventions,
designs, processes, computer programs and technical data used by the
Company in the development, operation and sale of all products and
services sold by it, free and clear of any rights, liens or claims of
others; and (v) to the Company's knowledge, is not using any
confidential information or trade secrets of others.
4.16. Capital Stock.
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(a) The authorized and issued capital stock of the Company as of the
date hereof is correctly set forth in the Financial Statements.
All of the outstanding shares of the Company were duly authorized
and validly issued and are fully paid and nonassessable.
(b) Except as described in the SEC Filings, there are no outstanding
subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or
arrangements of any character or nature whatever, other
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than this Agreement, pursuant to which the Company is obligated
to issue any securities of any kind representing an ownership
interest in the Company. Neither the offer nor the issuance or
sale of the Securities constitutes an event under any anti-
dilution provisions of any securities issued (or issuable
pursuant to outstanding rights, warrants or options) by the
Company or any agreements with respect to the issuance of
securities by the Company, which will either increase the number
of shares issuable pursuant to such provisions or decrease the
consideration per share to be received by the Company pursuant to
such provisions.
(c) No holder of any securities of the Company is entitled to any
preemptive or similar rights to purchase any securities of the
Company from the Company.
4.17. Assets and Contracts.
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(a) The Company has included (or incorporated by reference) in the
SEC Filings all material agreements and contracts, has provided
in the SEC Filings a true and complete list of such agreements
and contracts required to be so filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and has
not entered into any such material agreements since the date of
its most recent filing under the Exchange Act.
(b) Except as disclosed in the SEC Filings, the Company has in all
material respects substantially performed its obligations
required to be performed by it to date and is not in default in
any material respect under any contracts, agreements, leases,
documents, commitments or other arrangements to which it is a
party or by which it is otherwise bound. Except as disclosed in
the SEC Filings, there is not under any of such agreements, any
existing material default or event of default or event which,
with notice or lapse of time or both, would constitute an event
of default by the Company thereunder.
4.18. Outstanding Debt. The Company does not have any indebtedness incurred
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as the result of a direct borrowing of money, including, but not
limited to, indebtedness with respect to trade accounts, except as set
forth in the Financial Statements or pursuant to the Indenture for the
7 1/8% convertible subordinated notes due 2001 and other than
indebtedness incurred in the ordinary course of business. Except as
set forth in Schedule 4, the Company is not in default in the payment
of the principal of or interest or premium on any such indebtedness,
and, except as disclosed in the SEC Filings, no event has occurred or
is continuing under the provisions of any instrument, document or
agreement evidencing or relating to any such indebtedness which with
the lapse of time or the giving of notice, or both, would constitute
an event of default by the Company thereunder. The Company is not
committed or obligated to make any loan or advance to any person or
entity, nor does the Company own any capital stock, securities or
other equity, except for the stock of its subsidiaries described in
Section 4.3.
4.19. Accounts Receivable. To the extent that they exceed the reserves for
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doubtful accounts set forth in the interim Financial Statements, the
accounts receivable reflected therein and
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all accounts receivable of the Company that have arisen since March
31, 1997 (except such accounts receivable as have been collected since
such date) are valid and enforceable claims, and the goods and
services sold and delivered which gave rise to such accounts were sold
and delivered in conformity with the applicable purchase orders,
agreements and specifications. To the Company's knowledge, such
accounts receivable are subject to no valid defense or offsets except
routine customer complaints or warranty demands of an immaterial
nature. The Company does not believe that its uncollectable accounts
will exceed the reserve for doubtful accounts set forth in the latest
balance sheet included in the Financial Statements.
4.20. Insurance Coverage. The Company has in full force policies of
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insurance issued by insurers of recognized responsibility insuring the
Company and its properties and business against such losses and risks,
and in such amounts, as in the Company's judgment, are acceptable for
the nature and extent of such business and its resources. The Company
is not in default with respect to any material provision contained in
any insurance policy, and has not failed to give any notice or present
any material existing claims it has under its insurance policies in a
timely fashion.
4.21. Licenses. The Company possesses from the appropriate agency,
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commission, board and government body and authority, whether state,
local or federal, all licenses, permits, authorizations, approvals,
franchises and rights which (i) are necessary for it to engage in the
business currently conducted by it, and (ii) if not possessed by the
Company, would have a Material Adverse Effect.
4.22. Employees. To the Company's knowledge, except as set forth in
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Schedule 4, no officer of the Company or employee of the Company
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(whose annual compensation is in excess of $125,000) has any present
plans to terminate his or her employment with the Company. Each
officer and other employee of the Company having access to the
confidential and proprietary information of the Company has executed
an agreement with the Company regarding confidentiality and
proprietary information.
4.23. Absence of Restrictive Agreements. To the Company's knowledge, no
---------------------------------
employee of the Company is subject to any secrecy or noncompetition
agreement or any agreement or restriction of any kind that would
impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the business of the
Company. To the Company's knowledge, no former employer of any
employee of the Company has any claim of any kind whatsoever in
respect of any of the patents or other intangible rights of the
Company described in Section 4.15 of this Agreement.
4.24. Retirement Plans. The Company does not have any retirement plan in
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which any employee of the Company participates that is subject to any
provisions of the Employee Retirement Income Security Act of 1974 and
of the regulations adopted pursuant thereto.
4.25. No Brokers or Finders. No person, firm or corporation has or will
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have, as a result of any contractual undertaking by the Company, any
right, interest or valid claim against the Company or the Investors
for any commission, fee or other compensation as a finder
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or broker, or in any similar capacity, in connection with the
transaction contemplated by this Agreement. The Company will indemnify
and hold each of the Investors harmless against any and all liability
with respect to any such commission, fee or other compensation which
may be payable or determined to be payable.
4.26. Company SEC Filings. The Company has furnished, or made available
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through the XXXXX internet web site of the Securities and Exchange
Commission, to the Investors true and complete copies of its Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 and
its quarterly report on Form 10-Q for the quarter ended March 31,
1997, in each case as filed with the Securities and Exchange
Commission (such documents are collectively referred to herein as the
"SEC Filings"). As of their respective filing dates, the SEC Filings
complied in all material respects with the applicable requirements of
the Exchange Act, and none of the SEC Filings contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading.
4.27. Full Disclosure. The Company has not knowingly withheld from the
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Investors any material facts relating to the assets, business,
operations, financial condition or prospects of the Company. No
representation or warranty in this Agreement or in any written
certificate, schedule, statement or other document prepared by or on
behalf of the Company and furnished by the Company to any Investor
pursuant hereto, including without limitation Schedule 4 to this
Agreement, and none of the SEC Filings, as of the date furnished to
the Investor or filed under the Exchange Act, as the case may be,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated herein or therein necessary to
make the statements herein or therein not misleading.
5. REPRESENTATIONS OF THE INVESTORS
Each of the Investors hereby severally represents and warrants to the
Company that:
5.1. Investment Intent. The Investor is purchasing the Securities for
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investment for such Investor's own account and not with the view to,
or for resale in connection with, any distribution or public offering
thereof. The Investor has no current plan or intention to engage in a
sale, exchange, transfer, distribution, redemption, reduction in any
way of the Investor's risk of ownership by short sale or otherwise, or
other disposition, directly or indirectly of the Securities pursuant
to this Agreement.
5.2. Knowledge and Experience. The Investor has substantial experience in
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evaluating and investing in private placement transactions of
securities in companies similar to the Company and has the knowledge
and experience in financial and business matters such that the
Investor is capable of evaluating the merits and risks of an
investment in the Company and has the capacity to protect such
Investor's own interests.
5.3. Location of Principal Office, Qualification as an Accredited Investor,
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Etc.
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The state of domicile of the Investor is the state set forth in the
Investor's address on Schedule 1.
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The Investor, by execution of this Agreement, hereby represents that
such Investor qualifies as an "accredited investor" for purposes of
Regulation D promulgated under the Securities Act. The Investor can
bear the loss of the entire investment in the Securities without any
Material Adverse Effect on such Investor's assets, net worth,
business, operations or prospects.
5.4. Acts and Proceedings. This Agreement has been duly authorized by all
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necessary action on the part of the Investor, has been duly executed
and delivered by the Investor, and is a valid and binding agreement of
the Investor and enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
the enforcement of creditor's rights generally and to judicial
limitations on the remedy of specific enforcement and other equitable
remedies.
5.5. Disclosure of Information. The Investor acknowledges that the Company
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has made available to the Investor at a reasonable time prior to the
execution of this Agreement the opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
the Securities and to obtain any additional information (which the
Company possesses or can acquire without unreasonable effort or
expense) as may be necessary to verify the accuracy of information
furnished to the Investor. Such opportunity has been presented at one
or more sessions, at which the Investor has been invited to be
physically present or participate by telephone conference call, with
appropriate officers of the Company and in connection with which
confidential and non-public information regarding the current
financial condition, operations and prospects has been presented and
discussed (the "Due Diligence Meetings"). The foregoing, however, does
not limit or modify the representations and warranties of the Company
in this Agreement or the right of the Investor to rely thereon. The
Investor acknowledges that in making the decision to invest in the
Company, Investor is not relying on any person, firm or company, other
than the Company and its officers, employees and/or directors.
5.6. Exculpation Among Investors. Each Investor acknowledges that in making
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its decision to invest in the Company, it is not relying on any other
Investor or upon any person, firm or company, other than the Company
and its officers, employees and/or directors. Each Investor agrees
that no other Investor, nor the partners, employees, officers or
controlling persons of any other Investor shall be liable for any
actions taken by such Investor, or omitted to be taken by such
Investor, in connection with such investment.
5.7. No Brokers or Finders. No person, firm or corporation has or will
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have, as a result of any contractual undertaking by the Investor, any
right, interest or valid claim against the Investor for any
commission, fee or other compensation as a finder or broker, or in any
similar capacity, in connection with the transactions contemplated by
this Agreement. The Investor will indemnify and hold the Company
harmless against any and all liability with respect to any such
commission, fee or other compensation which may be payable or
determined to be payable in connection with such Investor's purchase
hereunder.
5.8. Restrictions on Resale; Rule 144. The Investor understands that (i)
--------------------------------
none of the Securities have been registered under the Securities Act
or any state securities laws
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because they are being issued in transactions exempt from such
registration requirements, pursuant to Section 4(2) of the Securities
Act and applicable state securities laws, and (ii) that the reliance
of the Company and others upon these exemptions is predicated in part
upon this representation by the Investor. The Investor acknowledges
that the Securities must be held indefinitely unless subsequently
registered under the Securities Act and any applicable state
securities act or unless exemptions from such registration are
available. The Investor understands that none of the Securities may be
transferred or resold without (i) registration under the Securities
Act and any applicable state securities laws, or (ii) an exemption
from the requirements of the Securities Act and applicable state
securities laws. The Investor understands that an exemption from such
registration is not presently available pursuant to Rule 144 ("Rule
144") promulgated under the Securities Act by the Securities and
Exchange Commission (the "Commission") and that the Investor may not
currently sell any securities acquired hereunder in full compliance
with Rule 144. Nothing in the Section is intended to limit the
registration requirements set forth in Section 8.
5.9. Public Market. The Investor understands that no public market now
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exists for the Securities.
5.10. Legend; Stop Transfer. The Preferred Stock and Warrants shall bear the
---------------------
following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS, AND
ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER THE ACT, AND SUCH APPLICABLE BLUE SKY
LAWS OR AN EXEMPTION THEREFROM.
The Conversion Shares and the Warrant Shares, if and when issued,
shall bear a similar legend. In addition, the Company shall make a
notation regarding the restrictions on transfer of the Securities in
its books and the Securities shall be transferred on the books of the
Company only if transferred or sold pursuant to an effective
registration statement under the Securities Act covering the
securities to be transferred or an opinion of counsel satisfactory to
the Company that such registration is not required.
5.11. Conflict Waiver. Any Investor which is now or at any time has been
---------------
represented by Xxxxxxx & XxXxxxxx ("R&M") in any matter understands,
acknowledges and agrees that R&M is general counsel to the Company and
has represented solely the Company in connection with this Stock
Purchase Agreement. The Investors have been represented by Xxxxxxxxxxx
Xxxxx & Xxxxxxxx and such other counsel of their individual choice,
exlcuding R&M, in connection with this Stock Purchase Agreement. As
required by Rule 3-310 of the California Rules of Professional
Conduct, any Investor which is or has at any time been represented by
R&M in any capacity hereby consents to R&M's sole representation of
the Company in conneciton with this Stock Purchase Agreement.
11
6. CONDITIONS OF THE INVESTORS' OBLIGATIONS.
The obligations of each of the Investors hereunder are subject to the
fulfillment or waiver by such Investor prior to or on each Closing Date of the
conditions set forth in this Section.
6.1. Representations and Warranties. The representations and warranties of
------------------------------
the Company under this Agreement shall be true in all material
respects as of each Closing Date with the same effect as though made
on and as of such date.
6.2. Compliance with Agreement. The Company shall have performed and
-------------------------
complied with all covenants, agreements or conditions required by this
Agreement to be performed and complied with by it prior to or as of
the relevant Closing Date.
6.3. Certificate of Officers. The Company shall have delivered to the
-----------------------
Investors a certificate, dated as of the relevant Closing Date,
executed by the President and Chief Financial Officer of the Company,
certifying to the satisfaction of the conditions specified in Sections
6.1 and 6.2.
6.4. Termination of Loan Commitment. The obligation of certain of the
------------------------------
Investors to loan money to the Company pursuant to the Note Purchase
and Loan Agreement, dated as of December 16, 1996 (the "Loan
Agreement"), shall have been terminated effective on or prior to the
relevant Closing Date. The Company hereby agrees that, concurrent with
a Closing hereunder, it releases each and every Investor party to the
Loan Agreement from any obligation to loan money pursuant to the Loan
Agreement, thus satisfying the condition set forth in this Section 6.4
automatically by effecting such Closing. The warrants to purchase
Common Stock issued in connection with the Loan Agreement shall remain
outstanding.
6.5. Supporting Documents. Legal counsel for the Investors shall have
--------------------
received the following:
(a) a copy of the Charter Documents and resolutions of the Board of
Directors authorizing and approving the issuance of the Shares
and the authorization and reservation of the Conversion Shares
and authorizing and approving the execution, delivery and
performance of this Agreement, all such resolutions to be
certified by the Secretary of the Company;
(b) a Certificate of Incumbency, dated as of the relevant Closing
Date and executed by the Secretary of the Company certifying the
names, titles and signatures of the officers authorized to
execute this Agreement, and the Shares.
(c) a copy of the Certificate of Determination, certified by the
Secretary of State of California;
(d) a legal opinion of Company's counsel, dated as of the relevant
Closing Date and covering such matters typical in transactions of
this type as may be reasonably requested by legal counsel for the
Investors; and
12
(e) such additional supporting documentation and other information
as the Investors or legal counsel for the Investors may
reasonably request.
6.6. Qualification under State Securities Laws. All registrations,
-----------------------------------------
qualifications, permits and approvals required under applicable state
securities laws for the lawful execution and delivery of this
Agreement and the offer, sale, issuance and delivery of the securities
to the Investors at the closing shall have been obtained or will be
obtained by the Company in compliance with such laws.
6.7. Amendment to Credit Agreement. The Company shall have entered into the
-----------------------------
First Amendment to the Credit Agreement, dated as of November 15, 1996
on terms and conditions satisfactory to the Investors.
7. CONDITIONS OF THE COMPANY'S OBLIGATION
The obligations of the Company to the Investors under this Agreement are
subject to the fulfillment prior to or on each Closing Date of the following
conditions:
7.1. Representations and Warranties. The representations and warranties of
------------------------------
the Investors contained in Section 5 shall be true and correct on and
as of each Closing Date with the same effect as though made on and as
of such date.
7.2. Qualification under State Securities Laws. All registrations,
-----------------------------------------
qualifications, permits and approvals required under applicable state
securities laws for the lawful execution and delivery of this
Agreement and the offer, sale, issuance and delivery of the securities
to the Investors at the closing shall have been obtained or will be
obtained in compliance with such laws.
8. REGISTRATION RIGHTS
8.1. Required Registration.
---------------------
(a) If at any time after December 30, 1997, the Company receives a
written request from the record holder or holders of an aggregate
of at least a majority of the Securities (collectively, the
"Registrable Shares") not registered under the Securities Act and
sold, the Company shall prepare and file a registration statement
under the Securities Act covering the Registrable Shares;
provided, however, that (i) all Shares covered by such
registration statement shall either be converted prior to
inclusion in such registration statement or the holders thereof
shall execute and deliver a written commitment to the Company to
convert such Shares simultaneously within the effective date of
such registration statement, (ii) the Company will not be
obligated to effect more than two registrations (other than
incidental registrations pursuant to Section 8.1(b) hereof and
not including registration statements that are withdrawn) under
these demand right provisions and shall not be required to cause
a second registration statement to be effective earlier than the
date which is twelve (12) months from the date of effectiveness
of the first registration statement filed pursuant to this
Section 8.1(a); and (iii) the Company shall not be obligated to
file any such
13
registration statement if the anticipated aggregate offering
price, based upon the public offering price per share proposed by
the underwriters, net of underwriting discounts and commissions,
would be less than $1,500,000. In addition, upon the receipt of
such request, the Company shall promptly give written notice to
all other record holders of the Registrable Shares that such
registration is to be effected. The Company shall include in such
registration statement such Registrable Shares for which it has
received written requests to register by such other record
holders within thirty (30) days after the Company's written
notice to such other record holders.
(b) In the event that the holders of a majority of the Registrable
Shares, for which registration has been requested pursuant to
this section determine for any reason not to proceed with a
registration at any time before the registration statement has
been declared effective by the Commission, and such holders
request the Company to withdraw such registration statement with
respect to the Registrable Shares covered thereby, and the
holders of such Registrable Shares agree to bear their own
expenses incurred in connection therewith and to reimburse the
Company for the expenses incurred by it attributable to the
registration of such Registrable Shares, then the holders of such
Registrable Shares shall not be deemed to have exercised a demand
right pursuant to Section 8.1(a).
(c) In addition to the foregoing, the record holder or record holders
of a majority of the Registrable Shares not registered under the
Securities Act and sold pursuant to such registration may require
the Company to file any number of registration statements on Form
S-3 (or any successor form subsequently promulgated by the
Commission as a replacement for Form S-3) if such form is then
available for use by the Company and such record holder or
holders, provided that the Company shall not be obligated to
register securities under this Section 8.1(c) more frequently
than once during any period of twelve calendar months and the
total amount of securities registered in each such registration
shall not be less than $500,000.
(d) The Company and any other holder of securities of the Company may
include securities in any registration pursuant to this Section
8.1; provided that such additional securities may be excluded, in
whole or in part if in the good faith judgment of the managing
underwriter of such public offering, the inclusion of such
securities would interfere with the successful marketing of the
Registrable Shares.
8.2. Incidental Registration.
-----------------------
(a) Each time the Company shall determine to proceed with the actual
preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for
money of any of its Securities by it or any of its security
holders (other than a registration statement on Form X-0, X-0 or
other limited purpose form), the Company will give written notice
of its determination to all record holders of Registrable Shares.
Upon the written request of a record
14
holder of any Registrable Shares given within thirty (30) days
after receipt of any such notice, the Company will, except as
herein provided, cause all such Registrable Shares, the record
holders of which have so requested registration thereof, to be
included in such registration statement, all to the extent
requisite to permit the sale or other disposition by the
prospective seller or sellers of the Registrable Shares to be so
registered; provided, however, that (i) all Shares intended to be
registered shall be converted prior to any sale pursuant to such
registration statement; (ii) nothing herein shall prevent the
Company from, at any time, abandoning or delaying any such
registration initiated by it; and (iii) if the Company determines
not to proceed with a registration after the registration
statement has been filed with the Commission and the Company's
decision not to proceed is primarily based upon the anticipated
public offering price of the securities to be sold by the
Company, the Company shall promptly complete the registration for
the benefit of those selling security holders who wish to proceed
with a public offering of their securities; provided, however,
that in such event, such registration shall be deemed a
registration under Section 8.1(a) hereof; and provided further,
that the Company shall be required to proceed with such
registration only if such registration meets the criteria
established for a registration upon demand as set forth in
Section 8.1(a) hereof.
(b) If any registration pursuant to this Section 8.1(b) shall be
underwritten, in whole or in part, the Company may require that
the Registrable Shares requested for inclusion hereunder be
included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters.
However, if in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of the
Registrable Shares originally covered by a request for
registration would reduce the number of securities to be offered
by the Company (or if the registration is the demand registration
of a selling shareholder, by such selling shareholder) or
interfere with the successful marketing of the securities offered
by the Company (or if the registration is the demand registration
of a selling shareholder, by such selling shareholder), the
number of shares of Registrable Shares to be included in the
underwritten public offering may, at the election of the managing
underwriter, be reduced pro rata among the holders thereof (but
if the registration is the demand registration of a selling
shareholder, excluding such demanding selling shareholder)
requesting such registration (based on the respective numbers of
shares for which registration was requested). Those shares of
Registrable Shares which are not included in the underwritten
public offering shall be withheld from the market by the holders
thereof for a period, not to exceed one hundred eighty (180)
days, which the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering.
Registration Procedures. In connection with any registration pursuant to
-----------------------
Section 8.1 or 8.2, the Company will:
(a) prepare and file with the Commission the registration statement
with respect to the Registrable Shares and use its best efforts
to cause such registration
15
statement to become and remain effective for such period as may
be reasonably necessary to effect the sale of such securities,
not to exceed six (6) months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective for the period referred to above;
(c) furnish to the security holders participating in such
registration and to any underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such
other documents as such security holders and underwriters may
reasonably request in order to facilitate the public offering of
such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such
participating holders may reasonably request prior to the
original filing of such registration statement, except that the
Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction wherein it
is not so qualified;
(e) notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement
has been filed;
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) prepare and file with the Commission, promptly upon the request
of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of
counsel for such holders (and concurred in by counsel for the
Company), is required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the
Registrable Shares by such holder;
(h) prepare and promptly file with the Commission and promptly notify
such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be
delivered under the Securities Act, any event shall have occurred
as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of
a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances in
which they were made, not misleading;
16
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such
holders shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or the rules and
regulations thereunder, after having been furnished with a copy
thereof (in substantially final form) at least two business days
prior to the filing thereof, unless in the opinion of counsel for
the Company the filing of such amendment or supplement is
reasonably necessary to protect the Company from any liabilities
under any applicable federal or state law and such filing will
not violate applicable law; and
(k) at the request of any such holder, furnish on the effective date
of the registration statement and, if such registration includes
an underwritten public offering, at the closing provided for in
the underwriting agreement: (i) opinions, dated such respective
dates, of the counsel representing the Company for the purposes
of such registration, addressed to the underwriters, if any, and
to the holder or holders making such request, covering such
matters as such underwriters and holder or holders may reasonably
request, in which opinion such counsel shall state (without
limiting the generality of the foregoing) that (a) such
registration statement has become effective under the Securities
Act; (b) to the best of such counsel's knowledge no stop order
suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending
or contemplated under the Securities Act; (c) the registration
statement and each amendment or supplement thereto comply as to
form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the
Commission thereunder (except that such counsel need express no
opinion as to financial statements and statistical data contained
therein); (d) to the best of the knowledge of such counsel, the
description in the registration statement or any amendment or
supplement thereto of legal and governmental proceedings and
contracts are summarized accurately in all material respects; and
(e) such counsel does not know of any material legal or
governmental proceedings, pending or threatened, required to be
described in the registration statement or any amendment or
supplement thereto which are not described as required nor of any
contracts or documents or instruments of the character required
to be described in the registration statement or amendment or
supplement thereto or to be filed as Exhibits to the registration
statement, which are not described or filed as required; and,
which opinion shall include the statement that without
guaranteeing the accuracy and completeness of the statements
contained in the registration statements or any amendment or
supplement thereto, and based upon such records, certificates and
other documents specifically cited in such opinion,
17
including certificates and representations by Company officers,
no facts have come to counsel's attention which cause it to
believe that the registration statement or any amendment nor
supplement thereto contains any untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading (except that such counsel need express no opinion as
to financial statements and statistical data contained therein);
and (ii) letters, dated such respective dates, from the
independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the holder or
holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request, in
which letters such accountants shall state (without limiting the
generality of the foregoing) that they are independent certified
public accountants within the meaning of the Securities Act and
that in the opinion of such accountants the financial statements
and schedules of the Company included in the registration
statement or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of
the Securities Act.
8.4. Expenses. The Company shall bear the following fees, costs and
--------
expenses in connection with any registration pursuant to this
Agreement: all registration, filing and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, all
internal Company expenses, the premiums and other costs of policies of
insurance against liability arising out of the public offering, and
all legal fees and disbursements and other expenses of complying with
state securities or blue sky laws of any jurisdictions in which the
securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security
holders, underwriting discounts and commissions and transfer taxes for
selling security holders and any other expenses incurred by the
selling security holders not expressly included above shall be borne
by the selling security holders.
8.5. Indemnification. In the event that any Registrable Shares are included
---------------
in a registration statement under Section 8.1 or 8.2:
(a) The Company will indemnify and hold harmless each holder of
Registrable Shares that are included in a registration statement
pursuant to the provisions of this Agreement and any underwriter
(as defined in the Securities Act) for such holder and each
person, if any, who controls such holder or such underwriter
within the meaning of the Securities Act, from and against any
and all loss, damage, liability, cost and expense to which such
holder or any such underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable as to any holder in
any such case to the extent that any such loss, damage,
liability, cost or
18
expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made
in conformity with information furnished by such holder, such
underwriter or such controlling person for use in the preparation
thereof.
(b) Each holder of Registrable Shares that are included in a
registration pursuant to the provisions of this Agreement
severally will indemnify and hold harmless the Company, any
controlling person and any underwriter from and against any and
all loss, damage, liability, cost or expense to which the Company
or any controlling person and/or any underwriter may become
subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any
untrue or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with written information
furnished by such holder specifically for use in the preparation
thereof and only to the extent of proceeds from the sale of
Registrable Shares.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of Section 8.5(a) or (b) of notice of the commencement
of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to
the provisions of such Section, promptly notify the indemnifying
party of the commencement thereof; but the omission to so notify
the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
hereunder except to the extent such failure shall have materially
prejudiced the indemnifying party. In case such action is brought
against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and
the indemnifying party and there is a conflict of interest which
would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to
participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of Section
8.5(a) or (b) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i)
the indemnified party shall have
19
employed counsel in accordance with the proviso of the preceding
sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of
the commencement of the action, or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
8.6. Registration Rights of Transferees. The registration rights granted to
----------------------------------
the holders of Securities pursuant to this Agreement shall also be for
the benefit of, and enforceable by, any subsequent holder of such
securities (excluding any subsequent holder who acquires such
securities in a public sale, such that such securities are no longer
deemed "restricted securities" within the meaning of Rule 144),
whether or not any express assignment of such rights to any such
subsequent holder is made.
8.7. Exception to Registration Obligations. The Company shall not be
-------------------------------------
obligated to honor a demand to register its capital stock under this
Agreement if all of the capital stock which could be registered
pursuant to such demand is otherwise eligible for immediate sale by
the holder of such capital stock under paragraph (k) of Rule 144.
9. DEFAULT.
9.1. Events of Default. Each of the following events shall be an event of
-----------------
default (an "Event of Default") for purposes of this Agreement:
(a) if (i) any representation or warranty made by or on behalf of the
Company in this Agreement or in any certificate, report or other
instrument delivered under or pursuant to any term hereof shall
prove to have been untrue or incorrect in any material respect as
of the date of this Agreement, or (ii) any report, certificate,
financial statement or financial schedule or other instrument
prepared or purported to be prepared by the Company or any
officer of the Company hereafter furnished or delivered under or
pursuant to this Agreement shall prove to be untrue or incorrect
in any material respect as of the date it was made, furnished or
delivered, provided, however, that an Event of Default shall not
be deemed to have occurred unless (aa) the facts or circumstances
causing such representation, warranty or document to be untrue or
incorrect materially may adversely affect the business or
financial condition of the Company or the value of any of the
Shares, and (bb) if such facts or circumstances are susceptible
of correction by the Company without materially and adversely
affecting the business or financial condition of the Company or
the value of the Shares, if such facts or circumstances continue
for a period of thirty (30) days after written demand for
correction to the Company by the holder of any of the Securities;
or
(b) if the Company defaults in the due and punctual performance or
observance of any covenant contained in this Agreement, and such
default continues for a period of ten (10) days after written
notice thereof to the Company by the holder of any of the
Securities; provided, however, that an Event of Default shall not
be deemed to have occurred if, at the end of such 10-day period,
the Company is
20
diligently attempting to cure such default and the existence of
such default is not materially adversely affecting the business
or financial condition of the Company.
9.2. Remedies upon Events of Default. Upon the occurrence of an Event of
-------------------------------
Default, unless such Event of Default shall have been waived in the
manner provided in Section 10.1, each Investor, at its sole option,
shall have the right to pursue any and all legal and equitable
remedies available to such Investor, including, without limitation,
rescission of this Agreement or the repurchase of the Securities.
9.3. Notice of Defaults. When, to its knowledge, any Event of Default has
------------------
occurred or exists, the Company shall give written notice within three
(3) business days of such Event of Default to the holders of all
outstanding Securities. If the holder of any Securities shall give any
notice in respect of a claimed Event of Default, the Company shall
forthwith give written notice thereof to all other holders of
Securities at the time outstanding, describing such notice and the
nature of the claimed Event of Default.
9.4. Suits for Enforcement. In case any one or more Events of Default shall
---------------------
have occurred and be continuing, unless such Events of Default shall
have been waived in the manner provided in Section 10.1, the holders
of a majority in interest of the Securities outstanding may proceed to
protect and enforce their rights under this Section by suit in equity
or action at law. It is agreed that in the event of such action, such
holders of the Securities shall be entitled to receive all reasonable
fees, costs and expenses incurred, including without limitation such
reasonable fees and expenses of attorneys (whether or not litigation
is commenced) and reasonable fees, costs and expenses of appeals, in
the event such holders prevail or a settlement and resolution of the
dispute is achieved.
9.5. Remedies Cumulative. No right, power or remedy conferred upon any
-------------------
holder of Securities shall be exclusive, and each such right, power or
remedy shall be cumulative and in addition to every other right, power
or remedy, whether conferred hereby or by any such security or now or
hereafter available at law or in equity or by statute or otherwise.
9.6. Remedies Not Waived. No course of dealing between the Company and any
-------------------
Investor or the holder of any of the Securities, and no delay in
exercising any right, power or remedy conferred hereby or by any such
security or now or hereafter existing at law or in equity or by
statute or otherwise, shall operate as a waiver of or otherwise
prejudice any such right, power or remedy; provided, however, that
this section shall not be construed or applied so as to negate the
provisions and intent of any statute which is otherwise applicable.
10. MISCELLANEOUS
10.1. Waivers, Amendments and Approvals. In each case in which approval of
---------------------------------
the Investors is required by the terms of this Agreement and unless
otherwise expressly provided, such requirement shall be satisfied by a
vote or the written action of Investors owning sixty-six and two-
thirds percent (66-2/3%) in interest of the Securities then owned by
the Investors (on an as-if-converted basis). With the written consent
of Investors owning sixty-six and two-thirds percent (66-2/3%) in
interest of the Securities then owned by the Investors (on an as-if-
converted basis), the obligations of the Company under this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) and with the written approval of
Investors owning sixty-six and two-thirds percent (66-2/3%) in
interest of the Securities then owned by the
21
Investors (on an as-if-converted basis), the Company may enter into a
supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Agreement or of any supplemental agreement or modifying in any manner
the rights and obligations of the holders of the Securities; provided,
however, that no such waiver or supplemental agreement shall (a) amend
the terms of the Preferred Stock as set forth in the Company's
articles of incorporation (any such amendment to the terms of the
shares of Preferred Stock shall require the vote of the holders of
shares of Preferred Stock, called for by the articles of incorporation
or applicable law) or (b) reduce the aforesaid proportions of
Securities the holders of which are required to consent to any waiver
or supplemental agreement, without the consent of all of the record
holders of Securities whose rights would be affected by such
reduction. Written notice of any such waiver, consent or agreement of
amendment, modification or supplement shall be given to the record
holders of the Securities who have not previously consented thereto in
writing.
10.2. Changes, Waivers, Etc. Neither this Agreement nor any provision hereof
---------------------
may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
10.3. Notices. All notices, requests, consents and other communications
-------
required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, registered or
certified mail, as follows:
(a) if to the Investors, to the addresses listed on Schedule 1; and
(b) if to the Company, to:
Trikon Technologies, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
and such notices and other communications shall for all purposes of
this Agreement be treated as being effective or having been given if
delivered personally, or, if sent by mail, when received. Any party
may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
10.4. Survival of Representations, Warranties, Agreements, Etc. All
--------------------------------------------------------
representations, warranties, covenants and agreements contained herein
or in any certificate delivered pursuant to this Agreement shall
survive the execution and delivery of this Agreement or such
certificate, as the case may be, any investigation at any time made by
the Investors or on their behalf, and the closing of the transactions
contemplated by this Agreement.
22
All statements contained in any certificate, instrument or other
writing prepared by or on behalf of the Company and delivered by the
Company pursuant to this Agreement or in connection with or in
contemplation of the transactions herein contemplated shall constitute
representations and warranties by the Company hereunder.
10.5. Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon and be enforceable
by the successors and assigns of the parties hereto, including the
holder or holders from time to time of any of the Securities.
10.6. Entire Agreement. This Agreement, the schedules hereto, the documents
----------------
referenced herein and the exhibits thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior and
contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties
with respect hereto and thereto. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent
with any of the terms hereof.
10.7. Other Remedies. Any and all remedies herein expressly conferred upon a
--------------
party shall be deemed cumulative with, and not exclusive of, any other
remedy conferred hereby or by law on such party, and the exercise of
any one remedy shall not preclude the exercise of any other.
10.8. Delays or Omissions. Except as expressly provided herein, no delay or
-------------------
omission to exercise any right, power or remedy accruing to any party
under this Agreement shall impair any such right, power or remedy of
such party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence thereto, or of a similar breach or
default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party hereto of
any breach of default under the Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must
be in writing and shall be effective only to the extent specifically
set forth in such writing.
10.9. Attorneys' Fees. Should suit be brought to enforce any provision of
---------------
this Agreement, the prevailing party shall be entitled to recover, as
an element of the costs of suit and not as damages, reasonable
attorneys' fees to be fixed by the court (including, without
limitation, costs, expenses and fees on any appeal). The prevailing
party shall be the party entitled to recover its costs of suit,
regardless of whether such suit proceeds to final judgment. A party
not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in
calculating the amount of a judgment for purposes of determining if a
party is entitled to recover costs or attorneys' fees.
10.10. Payment of Fees and Expenses of the Investors. The Company agrees to
---------------------------------------------
reimburse the Investors for their out-of-pocket expenses, including
reasonable legal expenses incurred for one special legal counsel to
the Investors, Xxxxxxxxxxx, Xxxxx & Xxxxxxxx
23
in connection with the transactions contemplated by this Agreement, up
to a maximum of $25,000.
10.11. Construction of Agreement. This Agreement has been negotiated by the
-------------------------
respective parties hereto and their attorneys and the language hereof
shall not be construed for or against any party. A reference in this
Agreement to any section shall include a reference to every section
the number of which begins with the number of the section to which
reference is specifically made (e.g. a reference to Section 10 shall
include a reference to Section 10.1 through 10.15 inclusive). The
titles and headings herein are for reference purposes only and shall
not in any manner limit the construction of this Agreement which shall
be considered as a whole. A reference to a section means a section of
this Agreement, unless the context expressly otherwise requires.
10.12. Governing Law. This Agreement shall be governed by and construed under
-------------
the laws of the State of California.
10.13. Counterparts. This Agreement may be executed concurrently in two or
------------
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
10.14. Severability. Should any one or more of the provisions of this
------------
Agreement or of any agreement entered into pursuant to this Agreement
be determined to be illegal or unenforceable, all other provisions of
this Agreement and of each other agreement entered into pursuant to
this Agreement, shall be given effect separately from the provision or
provisions determined to be illegal or unenforceable and shall not be
affected thereby.
10.15. Rights of Investors Inter Se. Except as provided for in Section 10.1
----------------------------
regarding actions under the Agreement requiring a vote or consent of
sixty-six and two-thirds percent (66-2/3%) in interest of the
Securities (on an as-if-converted basis), each Investor shall have the
absolute right to exercise or refrain from exercising any right or
rights which such Investor may have by reason of this Agreement or any
security, including, without limitation, the right to consent to the
wavier of any obligation of the Company under this Agreement and to
enter into an agreement with the Company for the purpose of modifying
this Agreement or any agreement effecting any such modification, and
such Investor shall not incur any liability to any other or with
respect to exercising or refraining from exercising any such right or
rights.
[balance of page intentionally left blank]
24
IN WITNESS WHEREOF, the Company and each of the Investors has caused this
Agreement to be executed by its duly authorized representatives in counterpart.
COMPANY: TRIKON TECHNOLOGIES, INC.
By:
--------------------------------
Its:
----------------------------
INVESTORS: PEQUOT PRIVATE EQUITY FUND, L.P.
By:
--------------------------------
Its:
----------------------------
PEQUOT OFFSHORE PRIVATE EQUITY FUND, INC.
By:
--------------------------------
Its:
----------------------------
PEQUOT PARTNERS FUND, L.P.
By:
--------------------------------
Its:
----------------------------
PEQUOT INTERNATIONAL FUND, INC.
By:
--------------------------------
Its:
----------------------------
ST. XXXX VENTURE CAPITAL IV, LLC
By:
--------------------------------
Xxxxx Xxxxxx
Its General Partner
25
DIMENSIONAL PARTNERS LTD.
By:
-------------------------------
Xxxxxx X. Xxxxxxx
Director
SBIC PARTNERS, L.P.
a Texas limited partnership
By: Xxxxxxx Xxxxxxx & Xxxxx, X.X.,
a Texas limited partnership
By: Xxxxxxx Xxxxxxx & Xxxxx Venture Co.,
a Texas corporation
General Partner
By:
----------------------------
Xxxxxxx X. Xxxxx
Office of the President
By: SL-SBIC Partners, L.P.,
a Texas limited partnership
By: FW-SBIC, Inc.
a Texas corporation
General Partner
By:
-----------------------------
Xxxxx Xxxxxxxx
Chairman
PAW PARTNERS OFFSHORE FUND, L.P.
By:
--------------------------------
Its:
----------------------------
PAW PARTNERS, L.P.
By:
--------------------------------
Its:
----------------------------
26
-----------------------------------
J. XXXXX XXXXXXXXX
UH PRIVATE EQUITY PARTERS, L.P.
By:
--------------------------------
Its:
----------------------------
UH PRIVATE EQUITY PARTNERS C.V.
By:
--------------------------------
Its:
----------------------------
XXXXXXXX & XXXXXXXX X. XXXXXXXXX FOUNDATION
By:
--------------------------------
Its:
----------------------------
------------------------------------
XXXXXX X. XXXXXXXXX
XXXXXX X. XXXXXXXXX FBO XXXXX XXXXXXXXX XXXXX
By:
--------------------------------
Its:
----------------------------
XXXXXX X. XXXXXXXXX FBO XXXXX XXXXXXX
By:
--------------------------------
Its:
----------------------------
27
UNTERBERG HARRIS TECH PTNRS, LDC
---------------------------------
By:
--------------------------------
Its:
----------------------------
UH CAPITAL PARTNERS I, LP
By:
--------------------------------
Its:
----------------------------
UH CAPITAL PARTNERS, INT'L, LDC
By:
--------------------------------
Its:
----------------------------
-----------------------------------
XXXXXX X. XXXXX
XX CO. INC AS NOMINEE 1997-35
By:
--------------------------------
Its:
----------------------------
-----------------------------------
XXXXXX MERCY, JR.
XXXXXXXXX FAMILY FOUNDATION
By:
--------------------------------
Its:
----------------------------
DUCK PARTNERS, L.P.
By:
--------------------------------
Its:
----------------------------
28
SCHEDULE 1
NAMES AND ADDRESSES OF INVESTORS; PURCHASE COMMITMENTS
===================================================================================================
Number of Shares Number of
Name and Address of Investor of Preferred Stock Warrant Shares Purchase Price
---------------------------------------------------------------------------------------------------
Pequot Private Equity Fund, L.P. 690,650 207,195 $4,661,887.50
Pequot Offshore Private Equity Fund, Inc. 87,445 26,234 $ 590,253.75
Pequot Partners Fund, L.P. 351,693 105,508 $2,373,927.75
Pequot International Fund, Inc. 351,693 105,508 $2,373,927.75
c/o Dawson Samberg Capital Management
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
---------------------------------------------------------------------------------------------------
Dimensional Partners Ltd. 74,074 22,222 $ 499,999.50
New York, NY
Attention: Xxxxxx Xxxxxxx
---------------------------------------------------------------------------------------------------
St. Xxxx Venture Capital IV, LLC 185,185 55,556 $1,249,998.75
c/o St. Xxxx Venture Capital
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx
0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
---------------------------------------------------------------------------------------------------
SBIC Partners, L.P. 296,296 88,889 $1,999,998.00
c/o Xxxxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxx
---------------------------------------------------------------------------------------------------
PAW Partners Offshore Fund, L.P. 192,592 57,763 $1,299,996.00
Xxxxxxxxxx Xxxxx
000 Xxxx Xxx Xxxxxx
X.X. XX000
Nassau, Bahamas
Attention:
---------------------------------------------------------------------------------------------------
PAW Partners, L.P. 148,148 44,444 $ 999,999.00
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention:
---------------------------------------------------------------------------------------------------
J. Xxxxx Xxxxxxxxx 37,037 11,111 $ 249,999.75
000 Xxx Xxxxxx
Xxxxxxxxx Xxxxxx, XX 00000
---------------------------------------------------------------------------------------------------
UH Private Equity Partners, L.P. 122,074 36,622 $ 823,999.50
c/o Unterberg Xxxxxx, X.X.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
---------------------------------------------------------------------------------------------------
UH Private Equity Partners C.V. 26,074 7,822 $ 175,999.50
x/x Xxxxxxxxxxxxx X.X.
X.X. Xxxxx - X.X. Xxx 0000
Xxxxxxx
Attention:
---------------------------------------------------------------------------------------------------
Xxxxxxxx & Xxxxxxxx X. Xxxxxxxxx
Foundation
Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx FBO Xxxxx Xxxxxxxxx
Xxxxx Family Trust
Xxxxxx X. Xxxxxxxxx FBO Xxxxx Xxxxxxx
Family Trust
c/o Unterberg Xxxxxx, X.X. 74,074 22,222 $ 499,999.50
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
---------------------------------------------------------------------------------------------------
Unterberg Harris Tech Ptnrs, LDC 55,555 16,667 $ 374,996.25
c/o Olympia Capital Partners
Xxxxxxxx House
00 Xxxx Xxxxxx.
Xxxxxxxx, Xxxxxxx XX00
Xxxxxxxxx:
---------------------------------------------------------------------------------------------------
UH Capital Partners I, LP 31,852 9,556 $ 215,001.00
c/o Unterberg Xxxxxx, X.X.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
---------------------------------------------------------------------------------------------------
UH Capital Partners, Int'l, LDC 23,703 7,111 $ 159,995.25
c/o Olympia Capital Int'l
Xxxxxxxx House
00 Xxxx Xxxxxx.
Xxxxxxxx, Xxxxxxx XX00
Xxxxxxxxx:
---------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxx 18,518 5,555 $ 124,996.50
000 Xxxxx Xxxxxx, #00X
Xxx Xxxx, XX 00000
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
XX Xxxx Co. Inc as Nominee 1997-35 88,889 26,667 $ 600,000.75
000 Xxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention:
---------------------------------------------------------------------------------------------------
Xxxxxx Mercy, Jr. 14,815 4,445 $ 100,001.25
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
---------------------------------------------------------------------------------------------------
Duck Partners, L.P. c/o Hull Capital 74,074 22,222 $ 499,999.50
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention:
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
TOTAL: 2,944,441 883,331 $19,874,976.00
===================================================================================================
EXHIBIT A
CERTIFICATE OF DETERMINATION
Filed concurrently herewith as Exhibit 3.3.
