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EXHIBIT 2
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of November 26, 1997 among SUBMICRON
SYSTEMS CORPORATION, a Delaware corporation (the "Company"), and THE KB
MEZZANINE FUND II, L.P., a Delaware limited partnership, and CELERITY SILICON,
L.L.C., a Delaware limited liability company (each, a "Purchaser" and
collectively, the "Purchasers").
WHEREAS, the Company proposes to issue to the Purchasers certain
Common Stock Purchase Warrants, as hereinafter described, to purchase an
aggregate 6,616,367 shares of Common Stock, $0.0001 par value (the "Common
Stock"), of the Company (the "Initial Warrants") and, at the election of the
Purchasers upon the occurrence of certain events, Common Stock Purchase Warrants
to purchase, up to an additional 2,878,459 shares of Common Stock (the
"Incremental Warrants" and together with the Initial Warrants, the "Warrants")
of the Company, (the Common Stock issuable on exercise of the Warrants being
referred to herein as the "Warrant Shares"), pursuant to Purchase Agreements
(the "Purchase Agreement") between the Company and each of the Purchasers, of
even date herewith. All defined terms used but not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The Company will issue and deliver
a certificate or certificates evidencing the Warrants (the "Warrant
Certificates") pursuant to the terms of the Purchase Agreement. Such certificate
or certificates shall be in registered form only and shall be substantially in
the form set forth as Exhibit A attached hereto. Warrant Certificates shall be
dated the date of issuance by the Company.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board, its
President, its Chief Executive Officer, Chief Financial Officer or a Vice
President. Each such signature upon the Warrant Certificates may be in the form
of a facsimile signature of the present or any future Chairman of the Board,
President or Vice President, and may be imprinted or otherwise reproduced on the
Warrant Certificates and for that purpose the Company may adopt and use the
facsimile signature of any person who shall have been Chairman of the Board,
President or Vice President, notwithstanding the fact that at the time the
Warrant Certificates shall be delivered or disposed of he shall have ceased to
hold such office. Each Warrant Certificate shall also be manually signed on
behalf of the Company by its Secretary or an Assistant Secretary under its
corporate seal. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates.
SECTION 3. Registration. The Company shall number and register the
Warrant Certificates in a register as they are issued. The Company may deem and
treat the registered holder(s) of the Warrant Certificates (the "Holders") as
the absolute owner(s) thereof (notwithstanding any notation of ownership or
other writing thereon made by anyone) for all purposes and shall not be affected
by any notice to the contrary. The Warrants shall be registered initially in
such name or names as the Purchasers shall designate.
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SECTION 4. Restrictions on Transfer; Registration of Transfers and
Exchanges.
The Warrants (and any Warrant Shares issued upon the exercise of the
Warrants) shall not be transferable except in accordance with the terms of the
Purchase Agreement.
Prior to any proposed transfer of the Warrants or the Warrant
Shares, unless such transfer is made pursuant to Rule 144 or an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
the transferring Holder will deliver to the Company an opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the Warrants or Warrant Shares, as applicable, may be sold or otherwise
transferred without registration under the Act. The Company will reimburse the
transferring Holder for the reasonable fees and expenses incurred in obtaining
any such opinion of counsel. Upon original issuance thereof, and until such time
as the same shall have been registered under the Act or sold pursuant to Rule
144 promulgated thereunder (or any similar rule or regulation) each Warrant
Certificate or certificate for Warrant Shares shall bear any legend required
pursuant to the Purchase Agreement or the Stockholders Agreement, unless in the
opinion of such counsel, such legend required pursuant to the Purchase Agreement
is no longer required by the Act or such legend required by the Stockholders
Agreement is no longer required thereunder.
The Company shall from time to time register the transfer of any
outstanding Warrant Certificates in a Warrant register to be maintained by the
Company upon surrender thereof accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, duly executed by
the registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be canceled and
disposed of by the Company.
Warrant Certificates may be exchanged at the option of the Holder(s)
thereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled and disposed of by the Company.
SECTION 5. Warrants; Exercise of Warrants. Subject to the terms of
this Agreement, each Holder shall have the right, which may be exercised at any
time or from time to time commencing on the date hereof until 5:00 p.m., New
York City time, on November 26, 2007 (the "Exercise Period") to receive from the
Company the number of fully paid and nonassessable Warrant Shares (and such
other consideration) which the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price then in effect for
such Warrant Shares. In the alternative, each Holder may exercise its right,
during the Exercise Period, to receive Warrant Shares on a net basis, such that,
without the exchange of any funds, the Holder receives that number of Warrant
Shares (and such other consideration) otherwise issuable (or payable) upon
exercise of its Warrants less that number of Warrant Shares having an aggregate
Current Market Value (as defined in Section 9) at the time of exercise equal to
the aggregate Exercise Price that would otherwise have been paid by the Holder
for the Warrant Shares. Each Warrant not exercised during the Exercise Period
shall become void and all rights thereunder and all rights in respect thereof
under this agreement shall cease as of such time.
The price at which each Warrant shall be exercisable (the "Exercise
Price") shall initially be $2.25 per share, subject to adjustment pursuant to
the terms hereof.
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A Warrant may be exercised upon surrender to the Company at its
office designated for such purpose (the address of which is set forth in Section
13 hereof) of the Warrant Certificate or Certificates to be exercised with the
form of election to purchase attached thereto duly filled in and signed, and
upon payment to the Company of the Exercise Price for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by certified or official bank
check payable to the order of the Company or, at the election of the Holder,
through the surrender to the Company of Notes, the aggregate principal amount of
which, together with any unpaid accrued interest thereon, equals the aggregate
Exercise Price, or in the manner provided in the first paragraph of this Section
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Subject to the provisions of Section 6 hereof, upon such surrender
of Warrants and payment of the Exercise Price the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as such Holder may designate a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants (and such other consideration as may be deliverable upon exercise
of such Warrants) together with cash for fractional Warrant Shares as provided
in Section 10. Such certificate or certificates shall be deemed to have been
issued and the person so named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price, irrespective of the date of delivery
of such certificate or certificates for Warrant Shares.
Each Warrant shall be exercisable during the Exercise Period, at the
election of the Holder thereof, either in full or from time to time in part and,
in the event that a Warrant Certificate is exercised in respect of fewer than
all of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the Warrants, a new certificate evidencing the remaining
Warrant or Warrants will be issued and delivered pursuant to the provisions of
this Section and of Section 2 hereof.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the Holders during normal business hours at its office.
SECTION 6. Payment of Taxes. The Company will pay all documentary
stamp taxes and other governmental charges (excluding all foreign, federal or
state income, franchise, property, estate, inheritance, gift or similar taxes)
in connection with the issuance or delivery of the Warrants hereunder, as well
as all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. The
Company shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate or certificate evidencing Warrant Shares shall be mutilated, lost,
stolen or destroyed, the Company shall issue, in exchange and substitution
therefor and upon cancellation of the mutilated Warrant Certificate or other
certificate, or in lieu of and substitution for the Warrant Certificate or other
certificate lost, stolen or destroyed, a new Warrant Certificate or other
certificate of like tenor and representing an equivalent number of Warrants or
Warrant Shares, pursuant to Section 3.4 of the Purchase Agreement.
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SECTION 8. Reservation of Warrant Shares. The Company shall at all
times reserve and keep available, free from preemptive rights (except as
otherwise provided herein), out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its treasury, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common
Stock and each transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the Warrants (collectively, the "Transfer
Agent") will be irrevocably authorized and directed at all times to reserve such
number of authorized shares as shall be required for such purpose. The Company
shall keep a copy of this Agreement on file with the Transfer Agent. The Company
will supply the Transfer Agent with duly executed certificates for such purposes
and will provide or otherwise make available all other consideration that may be
deliverable upon exercise of the Warrants. The Company will furnish such
Transfer Agent a copy of all notices of adjustments and certificates related
thereto, transmitted to each Holder pursuant to Section 12 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 9 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
The Company covenants that all Warrant Shares and other capital
stock issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights (except as may be granted by this Agreement) and free
from all taxes, liens, charges and security interests with respect to the issue
thereof.
The Company shall from time to time take all action which may be
necessary or appropriate so that the Warrant Shares, immediately upon their
issuance following an exercise of Warrants, will be listed on the principal
securities exchanges and markets within the United States of America, if any, on
which other shares of Common Stock are then listed.
SECTION 9. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The number of shares of Common Stock issuable upon the exercise of
each Warrant (the "Warrant Number") is initially one. The Exercise Price and
Warrant Number are subject to adjustment from time to time upon the occurrence
of the events enumerated in, or as otherwise provided in, this Section 9.
(a) Adjustment for Change in Capital Stock
If the Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides or reclassifies its outstanding shares of
Common Stock into a greater number of shares;
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(3) combines or reclassifies its outstanding shares of Common
Stock into a smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares
of its capital stock;
then the Warrant Number in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he or it would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur. If the occurrence of any event listed above results in an
adjustment under subsections (b) or (c) below, no adjustment shall be made under
this subsection (a).
(b) Adjustment for Rights Issue
If the Company distributes any rights, options or warrants (whether
or not immediately exercisable) to holders of its Common Stock entitling them to
purchase shares of Common Stock at a price per share less than the Specified
Value (as defined in subsection (f) below) per share on the record date relating
to such distribution, the Warrant Number shall be adjusted in accordance with
the formula:
W' = W x O + N
-------------
O + N x P
-----
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record date for
any such distribution.
O = the number of Fully Diluted Shares (as defined in subsection
(p) below) outstanding on the record date for any such
distribution.
N = the number of additional shares of Common Stock issuable
upon exercise of such rights, options or warrants.
P = the exercise price per share of such rights, options or
warrants.
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M = the Specified Value per share of Common Stock on the record
date for any such distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which all or a
portion of such rights, options or warrants are exercisable, not all rights,
options or warrants shall have been exercised, the Warrant shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares actually issued with respect to such portion that is no longer
exercisable.
(c) Adjustment for Other Distributions
If the Company distributes to holders of its Common Stock (i) any
evidences of indebtedness of the Company or any of its subsidiaries, (ii) any
assets of the Company or any of its subsidiaries (other than cash dividends
which are paid out of retained earnings of the Company and are not prohibited by
the Purchase Agreement), or (iii) any rights, options or warrants to acquire any
of the foregoing or to acquire any other securities of the Company, the Warrant
Number shall be adjusted in accordance with the formula:
W' = W x M
-------
M - F
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record date
mentioned below.
M = the Specified Value per share of Common Stock on the record
date mentioned below.
F = the fair market value on the record date mentioned below of
the indebtedness, assets, rights, options or warrants
distributable to the holder of one share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to this subsection (c) as a result of the
issuance of rights, options or warrants and at the end of the period during
which all or a portion of any such rights, options or warrants are exercisable,
not all such rights, options or warrants (or portion thereof) shall have been
exercised, the Warrant shall be immediately readjusted as if "F" in the above
formula was the fair market value on the record date of the indebtedness or
assets actually distributed upon exercise of such rights, options or warrants,
with respect to such portion that is no longer exercisable, divided by the
number of shares of Common Stock outstanding on the record date.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 9.
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(d) Adjustment for Common Stock Issue
If the Company issues shares of Common Stock for a consideration per
share less than the Specified Value per share on the date the Company fixes the
offering price of such additional shares, the Warrant Number shall be adjusted
in accordance with the formula:
W' = W x A
-----------
O + P
---
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
O = the number of Fully Diluted Shares outstanding immediately
prior to the issuance of such additional shares of Common
Stock.
P = the aggregate consideration received for the issuance of
such additional shares of Common Stock.
M = the Specified Value per share of Common Stock on the date of
issuance of such additional shares.
A = the number of Fully Diluted Shares outstanding immediately
after the issuance of such additional shares of Common Stock.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsection (a) of
this Section 9; or
(2) the issuance of Common Stock in connection with (i) the
exercise of Warrants, or (ii) the conversion, exchange or exercise of any
options, warrants, or other securities convertible into or exchangeable or
exercisable for Common Stock.
(e) Adjustment for Convertible Securities Issue
If the Company issues any options, warrants or other securities
convertible into or exchangeable or exercisable for Common Stock (other than
securities issued in transactions described in subsection (b) or (c) of this
Section 9) for a consideration per share of Common Stock initially deliverable
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upon conversion, exchange or exercise of such securities less than the Specified
Value per share on the date of issuance of such securities, the Warrant Number
shall be adjusted in accordance with this formula:
W' = W x O + D
------
O + P
---
M
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
O = the number of Fully Diluted Shares outstanding immediately
prior to the issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the Specified Value per share of Common Stock on the date of
issuance of such securities.
D = the maximum number of shares of Common Stock deliverable
upon conversion or in exchange for or upon exercise of such
securities at the initial conversion, exchange or exercise
rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion, exchange or
exercise of such securities has not been issued when such securities are no
longer outstanding, then the Warrant Number shall promptly be readjusted to the
Warrant Number which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exchange or exercise of such
securities.
This subsection (e) does not apply to the issuance of the Warrants
or the grant to employees or directors of options having an exercise price of
not less than the market price of the Common Stock as of the date of the grant.
(f) Specified Value
"Specified Value" per share of Common Stock shall be the greater of
the Current Market Value or the Exercise Price.
"Current Market Value" per share of Common Stock at any date shall
be the average of the daily market prices of the Common Stock for each business
day during the period commencing 30 business days before such date and ending on
the date one day prior to such date or, if the Security has been registered
under the Exchange Act for less than 30 consecutive business days before such
date, then the average of the daily market prices for all of the business days
before such date for which daily market prices are available. If the market
price is not determinable for at least 15 business days in such
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period, the Current Market Value of the Security shall be determined based on
the good faith determination of the Board of Directors of the Company.
The "market price" for any Security on each business day means: (A)
if such Security is listed or admitted to trading on any securities exchange,
the closing price, regular way, on such day on the principal exchange on which
such Security is traded, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, (B) if such Security is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as reported by
a reputable quotation source designated by the Company, or (C) if neither clause
(A) nor (B) is applicable, the average of the reported high bid and low asked
prices on such day, as reported by the "Over-The-Counter" Bulletin Board or
other reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City of New York, customarily published on each business
day, designated by the Company. If there are no such prices on a business day,
then the market price shall not be determinable for such business day.
(g) Consideration Received
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 9, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting of the issue
or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for
a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof
(irrespective of the accounting treatment thereof) as determined in good
faith by the Board of Directors; and
(3) in the case of the issuance of options, warrants or other
securities convertible into or exchangeable or exercisable for shares of
Common Stock, the aggregate consideration received therefor shall be
deemed to be the consideration received by the Company for the issuance of
such securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion, exchange or exercise thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(h) When De Minimis Adjustment May Be Deferred
No adjustment in the Warrant Number need be made unless the
adjustment would require an increase or decrease of at least 0.5% in the Warrant
Number. Any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment, provided that no such adjustment
shall be deferred beyond the date on which a Warrant is exercised.
All calculations under this Section 9 shall be made to the nearest
1/1000th of a share.
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(i) When No Adjustment Required
If an adjustment is made upon the establishment of a record date for
a distribution subject to subsections (a), (b) or (c) of this Section 9 and such
distribution is subsequently cancelled, the Warrant Number then in effect shall
be readjusted, effective as of the date when the Board of Directors determines
to cancel such distribution, to that which would have been in effect if such
record date had not been fixed.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(j) Notice of Adjustment
Whenever the Warrant Number or Exercise Price is adjusted, the
Company shall provide the notices required by Section 12 hereof.
(k) Voluntary Reduction
The Company from time to time may reduce the Exercise Price by any
amount for any period of time (including, without limitation, permanently) if
the period is at least 20 days and if the reduction is irrevocable during the
period.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant Holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price under this Subsection (k) (other
than a permanent reduction) does not change or adjust the Exercise Price
otherwise in effect for purposes of subsections (a), (b), (c), (d) or (e) of
this Section 9.
(l) When Issuance or Payment May Be Deferred
In any case in which this Section 9 shall require that an adjustment
in the Warrant Number be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event (i)
issuing to the Holder of any Warrant exercised after such record date the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Warrant Number
prior to such adjustment, and (ii) paying to such Holder any amount in cash in
lieu of a fractional share pursuant to Section 10; provided, however, that the
Company shall deliver to such Holder a due xxxx or other appropriate instrument
evidencing such Holder's right to receive such additional Warrant Shares, other
capital stock and cash upon the occurrence of the event requiring such
adjustment.
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(m) Reorganizations
In case of any capital reorganization, other than in the cases
referred to in Sections 9(a), (b), (c), (d) or (e) hereof, or the consolidation
or merger of the Company with or into another corporation (other than a merger
or consolidation in which the Company is the continuing corporation and which
does not result in any reclassification of the outstanding shares of Common
Stock into shares of other stock or other securities or property), or the sale
of the property of the Company as an entirety or substantially as an entirety
(collectively such actions being hereinafter referred to as "Reorganizations"),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of shares of Common Stock theretofore deliverable) the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock that would otherwise have been deliverable upon the
exercise of such Warrant would have been entitled upon such Reorganization if
such Warrant had been exercised in full immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any shares or other property thereafter
deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior to
or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such Reorganization or the corporation
purchasing or leasing such assets or other appropriate corporation or entity
shall expressly assume, by a supplemental Warrant Agreement or other
acknowledgement executed and delivered to the Holder(s), the obligation to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement.
(n) Adjustment in Exercise Price
Upon each adjustment of the Warrant Number pursuant to this Section
9, the Exercise Price in effect prior to the making of the adjustment in the
Warrant Number shall thereafter be adjusted as follows:
E' = E x W
---
W'
where:
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
W' = the adjusted Warrant Number.
W = the Warrant Number prior to adjustment.
(o) Form of Warrants
Irrespective of any adjustments in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue
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to express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
(p) Miscellaneous
For purpose of this Section 9 the term "shares of Common Stock"
shall mean (i) shares of any class of stock designated as Common Stock of the
Company at the date of this Agreement, and (ii) shares of any other class of
stock resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. For purposes of this Section 9 the term "Fully
Diluted Shares" shall mean (i) shares of Common Stock outstanding as of a
specified date, and (ii) shares of Common Stock into or for which rights,
options, warrants or other securities outstanding as of such date are
exercisable or convertible (other than the Warrants), provided that either: (a)
such rights, options, warrants or other securities are issued and outstanding as
of the date of this Agreement, or (b) the conversion or exercise price of such
rights, options, warrants or other securities is not greater than 120% of the
fair market value, as of their issue date, of the Common Stock issuable upon
conversion or exercise thereof. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the holders of Warrants shall become
entitled to purchase any securities of the Company other than, or in addition
to, shares of Common Stock, thereafter the number or amount of such other
securities so purchasable upon exercise of each Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in
subsections (a) through (o) of this Section 9, inclusive, and the provisions of
Sections 5, 6, 8 and 10 with respect to the Warrant Shares or the Common Stock
shall apply on like terms to any such other securities.
SECTION 10. Fractional Interests. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the fair market value of the
Warrant Share so issuable (as determined in good faith by the Board of
Directors), multiplied by such fraction.
SECTION 11. Disposition of Warrant Shares; Registration of Warrant
Securities. The ownership and disposition of the Warrant Shares shall be subject
to the Stockholders Agreement; and registration of the Warrant Shares shall be
subject to the Registration Rights Agreement.
SECTION 12. Notices to Warrant Holders. Upon any adjustment pursuant
to Section 9 hereof, the Company shall promptly thereafter (i) cause to be filed
with the Company a certificate of an officer of the Company setting forth the
Warrant Number and Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based, and (ii) cause to be given to each of the registered
holders of the Warrant Certificates at his or its address appearing on the
Warrant register written notice of such adjustments by first class mail, postage
prepaid. Where appropriate, such notice may be given in advance and included as
a part of the notice required to be mailed under the other provisions of this
Section 12.
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In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of assets, including cash, evidences of
its indebtedness, or other securities; or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and assets of
the Company substantially as an entirety, or of any reclassification or
change of Common Stock issuable upon exercise of the Warrants (other than
a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or a
tender offer or exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(e) the Company proposes to take any action that would require
an adjustment to the Warrant Number or the Exercise Price pursuant to
Section 9 hereof; or
(f) the Company proposes to take any action which would give
rise to the Holders' preemptive rights as specified in Section 14 hereof;
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his or its address appearing on the Warrant
register, at least 30 days prior to the applicable record date hereinafter
specified, or the date of the event in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 12 or any defect therein shall not affect the legality or
validity of any action taken requiring such notice.
Nothing contained in this Agreement or in any Warrant Certificate
shall be construed as conferring upon the Holders of Warrants (prior to the
exercise of such Warrants) the right to vote or to consent or to receive notice
as shareholder in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company; provided that nothing in the foregoing provision is
intended to detract from any rights explicitly granted to any Holder hereunder.
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SECTION 13. Notices to the Company and Warrant Holders. All notices
and other communications provided for or permitted hereunder shall be made by
hand-delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to Purchasers at their respective addresses set forth
on the signature page hereof, with a copy to Xxxxxx & Xxxxxxx, 000 X.
Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx,
Esq.; and
(b) if to the Company, at 0000 Xxxxxxxxx Xxxxx # 000,
Xxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Chief Executive Officer or
President, with a copy to Cozen and X'Xxxxxx, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, Esq.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. The parties may change the addresses to
which notices are to be given by giving five days' prior notice of such change
in accordance herewith.
SECTION 14. Preemptive Right. In the event of the issuance, sale,
grant or distribution by the Company of any capital stock of the Company,
(collectively, an "Equity Security") or any security convertible into or
exchangeable for any such Equity Security of the Company, each Purchaser and the
first transferee of any Warrants from a Purchaser which, in the case of any of
the foregoing, at such time is a Holder of Warrants and/or Warrant Shares (each,
an "Entitled Holder") shall be entitled to participate in such issuance, sale,
grant or distribution on a pro rata basis, and on the same terms and conditions
(to the extent applicable to any such Entitled Holder), so that following such
issuance, sale, grant or distribution each Entitled Holder will, if it has
elected to purchase or otherwise receive the new securities to be issued, sold,
granted or distributed (and after giving effect to any adjustments pursuant to
Section 9 hereof), have the same percentage of the equity ownership of the
Company (on a fully diluted basis and assuming exercise of the Warrants) as such
Entitled Holder had (on a fully diluted basis and assuming exercise of the
Warrants) prior to such issuance, sale, grant or distribution. Notwithstanding
the foregoing, however, Entitled Holders will not be entitled to any such
preemptive right with respect to, after the date hereof, (i) the issuance of any
Equity Security upon the exercise or conversion or any security convertible into
or exchangeable for any Equity Security of the Company or the issuance of any
option or other right to acquire securities pursuant to an employee benefit plan
or a stock option plan, (ii) any underwritten public offering of any Securities
of the Company, (iii) the issuance of any securities as consideration for an
acquisition by the Company of stock or operating assets of any corporation or
other business entity or (iv) any stock splits or stock dividends. Any such
Entitled Holder desiring to utilize any such preemptive rights must so notify
the Company within 10 days of its receipt of notice from the Company that the
Company is undertaking a transaction that would give rise to the rights created
under this Section 14.
SECTION 15. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any Holders of
Warrant Certificates in order to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which shall not in any way adversely affect the interests of the Holders of
Warrant Certificates.
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SECTION 16. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 17. Termination. Except as provided in the following
sentence, this Agreement shall terminate upon expiration of the Exercise Period
or, if earlier, if all Warrants have been exercised. The provisions of Section
14 of this Agreement shall terminate, with respect to any particular Warrants or
Warrant Shares on the earliest of (i) November 26, 2007, (ii) the date the
Purchasers cease to own a majority of the Warrants (or the Warrant Shares
issuable thereunder) that were issued on the date hereof and (iii) after such
time as such Warrants and/or Warrant Shares have been sold pursuant to an
effective registration statement under the Act or pursuant to Rule 144
promulgated thereunder (or any similar rule or regulation).
SECTION 19. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 20. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered Holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company and the registered Holders of the
Warrant Certificates.
SECTION 21. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
SECTION 22. Amendments and Waivers. No provision of this Agreement
may be amended or waived except by an instrument in writing signed by the party
sought to be bound; provided that any amendment or waiver sought from the
Holders of any provision of this Agreement which affects Holders generally shall
be given by Holders of at least a majority of the Warrants outstanding and any
amendment or waiver so given shall be binding on all Holders. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion
shall not be deemed a waiver of any other right or remedy or a waiver of the
same right or remedy on any subsequent occasion.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
SUBMICRON SYSTEMS CORPORATION
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Title: Vice President Finance and CFO
THE KB MEZZANINE FUND II, L.P.
By: EIP Capital Partners, L.P.
Its: General Partner
By: Equinox Investment Partners, L.L.C.
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
By: Xxxxxxx X. Xxxxxxx
Its: Managing Member
Address: 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
CELERITY SILICON, L.L.C.
/s/ Xxxx X. Xxxxxx
------------------------------------------
By: Xxxx X. Xxxxxx
Its: Partner
Address: x/x Xxxxxxxx Xxxxxxxx XX, X.X.X.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF REGISTRATION UNDER SAID ACT EXCEPT PURSUANT TO AN EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
THE SHARES ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON VOTING AND TRANSFER AS SET FORTH IN
AN AGREEMENT BETWEEN THE COMPANY AND CERTAIN OF ITS STOCKHOLDERS. THE COMPANY
WILL FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER OF THIS CERTIFICATE UPON
REQUEST AND WITHOUT CHARGE.
No. _____ Warrants
Warrant Certificate
SubMicron Systems, Corporation
This Warrant Certificate certifies that __________________________,
or registered assigns, is the registered holder of the number of Warrants (the
"Warrants") set forth above to purchase common stock, $0.0001 par value (the
"Common Stock"), of SubMicron Systems Corporation, a Delaware corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company one fully paid and nonassessable share of Common Stock, $0.0001 par
value, of the Company (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $2.25 payable in lawful money of the United States of
America, upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office of the Company designated for such purpose, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
hereinafter. Notwithstanding the foregoing, the Warrants may be exercised only
during the Exercise Period (as defined in the Warrant Agreement). Furthermore,
Warrants may be exercised during the Exercise Period without the exchange of
funds pursuant to the net exercise or Note surrender provisions of Section 5 of
the Warrant Agreement. The Exercise Price and number of Warrant Shares issuable
upon exercise of the Warrants are subject to adjustment upon the occurrence of
certain events, as set forth in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of November 26, 1997 (the "Warrant Agreement"), duly
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
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The holder of Warrants evidenced by this Warrant Certificate may
exercise such Warrants during the Exercise Period under and pursuant to the
terms and conditions of the Warrant Agreement by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon (and by this
reference made a part hereof) properly completed and executed, together with
payment of the Exercise Price in cash or by certified or bank check or other
form as set forth in the Warrant Agreement at the office of the Company
designated for such purpose. In the event that upon any exercise of warrants
evidenced hereby the number of Warrants exercised shall be less than the total
number of Warrants evidenced hereby, there shall be issued by the Company to the
holder hereof or his or its registered assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrants and the Exercise Price set forth on the face
hereof may, subject to certain conditions, be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant Agreement.
Upon exercise of the Warrants, the holder of Common Stock issued
upon such exercise will be bound by and subject to the terms of that certain
Stockholders Agreement dated as of November 26, 1997, by and between the Company
and the stockholder parties listed therein (the "Stockholders Agreement"). By
acceptance of this Warrant Certificate, the holder hereof agrees that upon
exercise of some or all of the Warrants evidenced hereby, he or it will be bound
by the Stockholders Agreement. A copy of the Stockholders Agreement may be
obtained by the holder hereof upon written request to the Company.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock issuable upon the exercise thereof. Said
registration rights are set forth in a Registration Rights Agreement dated as of
November 26, 1997, by and among the Company and the Purchasers named therein
(the "Registration Rights Agreement"). By acceptance of this Warrant
Certificate, the holder hereof agrees that upon exercise of some or all of the
Warrants evidenced hereby, he or it will be bound by the Registration Rights
Agreement as a holder of Registrable Securities thereunder. A copy of the
Registration Rights Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrant Certificates, when surrendered at the office of the Company
by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon
due presentation for registration of transfer of this Warrant Certificate at the
office of the Company a new Warrant Certificate or Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s) thereof as
the absolute owner(s) of this Warrant Certificate (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the
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Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
IN WITNESS WHEREOF, SUBMICRON SYSTEMS CORPORATION has caused this
Warrant Certificate to be signed by its Chairman of the Board, President or Vice
President and by its Secretary or Assistant Secretary and has caused its
corporate seal to be affixed hereunto or imprinted hereon.
Dated: __________ __, 1997
SUBMICRON SYSTEMS CORPORATION
By:_____________________________________
Title:__________________________________
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FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise Of Warrant)
The undersigned holder hereby represents that he or it is the
registered holder of this Warrant Certificate, and hereby irrevocably elects to
exercise the right, represented by this Warrant Certificate, to receive
__________ shares of Common Stock, $.0001 par value, of SubMicron Systems
Corporation and herewith tenders payment for such shares to the order of
SubMicron Systems Corporation the amount of $_____ in accordance with the terms
hereof (unless the holder is exercising Warrants pursuant to the net exercise
provisions of Section 5 of the Warrant Agreement). The undersigned requests that
a certificate for such shares be registered in the name of the undersigned or
nominee hereinafter set forth, and further that such certificate be delivered to
the undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth. If said number of shares is less than all of
the shares of Common Stock purchasable hereunder, the undersigned requests that
a new Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or nominee hereinafter set forth, and
further that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth.
Certificate to be registered as follows:
Name:_________________________________________________________
Address:______________________________________________________
__________________________________________________
__________________________________________________
Social Security or
Taxpayer Identification No.: _________________________________
Certificate to be delivered as follows:
Name:_________________________________________________________
Address:______________________________________________________
__________________________________________________
__________________________________________________
Signature:
Date:__________________________________
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ASSIGNMENT FORM
To assign this Warrant, fill in the form below:
(I) or (we) assign and transfer this Warrant to
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
_________________________________________________________agent to transfer this
Warrant on the books of the Company. The agent may substitute another to act
for him.
Date: _____________ Your Signature:___________________________________________
(Sign exactly as your name appears on the other side of this Warrant)
Signature Guarantee:
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