EXHIBIT 1.1
PLASMA & MATERIALS TECHNOLOGIES, INC.
$75,000,000
7-1/8% Convertible Subordinated Notes Due 2001
PURCHASE AGREEMENT
New York, New York
October 1, 1996
Salomon Brothers Inc
Unterberg Harris
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Plasma & Materials Technologies, Inc., a California corporation (the
"Company" or "PMT"), proposes to issue and sell to the parties named in Schedule
I hereto (the "Purchasers"), $75,000,000 principal amount of its 7-1/8%
Convertible Subordinated Notes due 2001 (the "Firm Securities"). The Securities
will be convertible into shares of Common Stock, no par value per share (the
"Common Stock"), of the Company at the conversion price set forth herein. The
Company also proposes to grant to you an option to purchase up to $11,250,000
additional principal amount of such Notes to cover over-allotments, if any (the
"Option Securities" and, together with the Firm Securities, the "Securities").
The Securities are to be issued under an indenture (the "Indenture") to be dated
as of October 7, 1996, between the Company and U.S. Trust Company of California,
N.A., as trustee (the "Trustee").
The sale of the Securities to you will be made without registration of
the Securities or the Common Stock issuable upon conversion thereof under the
Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption
from the registration requirements of the Act provided by Section 4(2) thereof.
You have advised the Company that you will make an offering of the Securities
purchased by you hereunder in accordance with Section 4 hereof on the terms set
forth in the Final Memorandum (as defined below), as soon as you deem advisable
after this Agreement has been executed and delivered.
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated September 13, 1996 (the
"Preliminary Memorandum"), and a final offering memorandum, dated October 1,
1996 (the "Final Memorandum"). The Company has also prepared a final proxy
statement dated September 11, 1996, and supplement dated October 1, 1996 (the
"Final Proxy Statement"), to be delivered to
its shareholders in order to obtain shareholder approval of the Company's
acquisition of Electrotech Limited and Electrotech Equipments Limited
(collectively, "Electrotech") pursuant to the Share Purchase Agreement dated
July 17, 1996, as amended ("Share Purchase Agreement") among the Company,
Electrotech and the shareholders named therein, as well as certain other matters
described therein. Each of the Preliminary Memorandum and the Final Memorandum
sets forth certain information concerning the Company, the Securities and the
Common Stock issuable upon conversion thereof. The Company hereby confirms that
it has authorized the use of the Preliminary Memorandum and the Final Memorandum
in connection with the offering and resale by the Purchasers of the Securities.
Any references herein to the Preliminary Memorandum and the Final Memorandum
shall be deemed to include all exhibits thereto and all documents incorporated
by reference therein that were filed under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), on or before the date and time that this
Agreement is executed and delivered by the parties hereto (the "Execution
Time"), including but not limited to the Final Proxy Statement; and any
reference herein to the terms "amend", "amendment" or "supplement" with respect
to the Final Memorandum shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Execution Time that is
incorporated by reference therein.
The holders of the Securities or the Common Stock issuable upon
conversion thereof will be entitled to the benefits of the Registration
Agreement to be dated October 7, 1996, between the Company and the Purchasers
(the "Registration Agreement").
1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, each Purchaser as set forth below in this Section
1.
(a) Each of the Preliminary Memorandum and the Final Memorandum as of
its respective date did not, and the Final Memorandum (as the same may have
been amended or supplemented) as of the Closing Date will not, contain any
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
under which they were made, not misleading; provided, however, that the
-------- -------
Company makes no representations or warranties as to the information
contained in or omitted from the Preliminary Memorandum or the Final
Memorandum in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Purchasers specifically for
inclusion in the Preliminary Memorandum or the Final Memorandum (or any
amendment or supplement thereof or thereto). All documents incorporated by
reference in the Preliminary Memorandum or the Final Memorandum that were
filed under the Exchange Act on or before the Execution Time complied, and
all such documents that are filed under the Exchange Act after the
Execution Time and on or before the Closing Date will
2
comply, in all material respects with the applicable requirements of the
Exchange Act and the rules thereunder.
(b) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Rule 10b-6 under the Exchange Act in
connection with the offering of the Securities.
(c) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Act ("Regulation D")) of the Company has
directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) that is currently or will be integrated with the sale
of the Securities in a manner that would require the registration of the
Securities or the Common Stock issuable upon conversion thereof under the
Act or (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the
offering of the Securities.
(d) Assuming compliance by the Purchasers with their representations,
warranties and agreements set forth in Section 4 hereof and provided that
the Securities are otherwise offered and sold by the Purchasers in the
manner contemplated by this Agreement and the Final Memorandum, except as
contemplated by the Registration Agreement, it is not necessary in
connection with the offer, sale and delivery of the Securities in the
manner contemplated by this Agreement and the Final Memorandum to register
the Securities under the Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(e) None of the Company, its affiliates or any person acting on
behalf of the Company or its affiliates has engaged in any directed selling
efforts (as that term is defined in Regulation S under the Act ("Regulation
S")) with respect to the Securities, and the Company and its affiliates and
any person acting on its or their behalf have complied with the offering
restrictions requirement of Regulation S with respect to the offering of
the Securities.
(f) The Company is subject to the reporting requirements of Section
13 or Section 15(d) of the Exchange Act.
(g) The Securities satisfy the eligibility requirements set forth in
Rule 144A(d)(3) under the Act.
(h) The Company has agreed to permit the Securities to be designated
PORTAL eligible securities, will pay the requisite fees related thereto and
has provided all necessary information to the National Association of
3
Securities Dealers, Inc. in order to ensure that the Securities are
designated PORTAL eligible securities.
(i) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), without taking account of any exemption arising out of the number of
holders of the Company's securities.
(j) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the
Company (except as contemplated by this Agreement).
(k) The information provided by the Company pursuant to Section 5(h)
hereof will not, at the date thereof, contain any 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 under which they were
made, not misleading.
(l) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of California,
with full corporate power and authority to own its properties and conduct
its business as described in the Final Memorandum, and is duly qualified to
do business as a foreign corporation and is in good standing under the laws
of each jurisdiction which requires such qualification wherein it owns or
leases properties or conducts business, and in which the failure to be so
qualified would, in the aggregate in all such cases, have a material
adverse effect on the business, condition (financial or otherwise), results
of operation, operations or prospects of the Company and its subsidiaries
on a consolidated basis (a "Material Adverse Effect").
(m) The Company's authorized equity capitalization is as set forth in
the Final Memorandum; the capital stock of the Company conforms to the
description thereof contained in the Final Memorandum; the outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable; the Securities being sold hereunder have been
duly and validly authorized and, when validly authenticated, issued and
delivered in accordance with the Indenture and paid for by the Purchasers
pursuant to this Agreement, will be validly issued and outstanding
obligations enforceable in accordance with their terms and entitled to the
benefits of the Indenture. Upon delivery of the Securities pursuant to
this Agreement and payment therefor as contemplated herein, the Purchasers
will acquire good and marketable title to the Securities, free and clear of
any liens, claims, encumbrances, and security interests ("Liens"),
restriction on transfer (other than those imposed by state or Federal
securities laws) or other defect in title. The appropriate number of
shares of Common Stock
4
issuable upon conversion of the Securities has been duly reserved for
issuance, and such shares have been duly and validly authorized, and will
when issued upon conversion of the Securities against delivery thereof, be
validly issued, fully paid and non-assessable. The holders of outstanding
shares of capital stock of the Company are not entitled to any preemptive
right or other similar rights to subscribe for the Securities or the shares
of Common Stock issuable upon conversion thereof.
(n) Except as described in the Final Memorandum, there are no
outstanding options, warrants or other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or any security convertible into or exchangeable or
exercisable for capital stock of the Company; except as described in the
Final Memorandum, there is no holder of any securities of the Company or
any other person who has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to underwrite
the sale of, any of the Securities or the right to have any Common Stock or
other securities of the Company included in the offering.
(o) There is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries of a character
which would have a Material Adverse Effect which is not adequately
disclosed in the Final Memorandum. The descriptions in the Final
Memorandum of statutes, regulations, contracts, franchises, other
documents, and pending or threatened actions, suits or proceedings before
any court or arbitrator, or brought by any governmental agency, authority
or body are accurate in all material respects and fairly summarize the
matters therein described.
(p) The consolidated financial statements of the Company and its
consolidated subsidiaries, together with related schedules and notes,
included in the Final Memorandum present fairly the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods or at the dates
therein specified; the combined financial statements of Electrotech,
together with related schedules and notes, present fairly the combined
profit and loss accounts, combined statements of total recognized gains and
losses and combined balance sheets of Electrotech for the periods or at the
dates therein specified; such consolidated and combined financial
statements and related schedules and notes have been prepared in conformity
with generally accepted accounting principles, consistently applied
throughout the periods involved except as otherwise noted in such financial
statements; and the other financial data concerning the Company and its
subsidiaries and
5
Electrotech set forth in the Final Memorandum (and any amendment or
supplement thereto) are accurately presented and were derived from such
financial statements and the books and records of the Company or
Electrotech, as the case may be. The pro forma consolidated financial
statements and other pro forma financial information included or
incorporated in the Final Memorandum present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been
properly compiled on the pro forma bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein. Ernst & Young LLP are independent
public accountants under the Act and the Exchange Act and the related
published rules and regulations thereunder.
(q) Neither the Company nor any of its subsidiaries is in violation
of its articles of incorporation or bylaws, or other organizational
documents, or in violation in any material respect of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company
or its subsidiaries, or in violation of any decree of any court or
governmental agency or body having jurisdiction over the Company or its
subsidiaries, or in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company or its
subsidiaries are a party or by which it or any of their properties may be
bound.
(r) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own their properties and to
conduct their business in the manner described in the Final Memorandum,
except where the failure so to have would not, in all such cases in the
aggregate, result in a Material Adverse Effect; the Company and each
subsidiary has fulfilled and performed all of their material obligations
with respect to such permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of the
holder of any such permit; and none of such permits contains any
restriction that is materially burdensome to the Company or its
subsidiaries in conducting its or their business as described in the Final
Memorandum.
(s) Subsequent to the respective dates of which information is given
in the Final Memorandum, there has not been (1) any material adverse change
in the condition (financial or otherwise), earnings, operations, business
or
6
business prospects of the Company, (2) any transaction that is material to
the Company, except transactions entered into in the ordinary course of
business, (3) any obligation, direct or contingent, that is material to the
Company incurred by the Company, except obligations incurred in the
ordinary course of business, (4) any change in the capital stock or
outstanding indebtedness of the Company that is material to the Company,
(5) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or (6) any loss or damage (whether or not
insured) to the property of the Company which has been sustained or will
have been sustained which has a Material Adverse Effect.
(t) Except as set forth in the Final Memorandum, (1) the Company has
good and marketable title to all properties and assets described in the
Final Memorandum as owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest, other than
such as would not have a Material Adverse Effect, (2) the agreements to
which the Company is a party described in the Final Memorandum are valid
agreements, enforceable by the Company and its subsidiaries (as
applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general
equitable principles or with respect to which any unenforceability would
not have a Material Adverse Effect and, to the Company's knowledge, the
other contracting party or parties thereto are not in material breach or
material default under any of such agreements, and (3) the Company has
valid and enforceable leases for all properties described in the Final
Memorandum as leased by it, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or
by general equitable principles or with respect to which any
unenforceability would not have a Material Adverse Effect. Except as set
forth in the Final Memorandum, the Company owns or leases all such
properties as are necessary to its operations as now conducted or as
proposed to be conducted.
(u) The Company and its subsidiaries have filed all material federal,
state, local, and foreign tax returns required to be filed, which returns
are true and correct in all material respects, and the Company and its
subsidiaries are not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect thereto,
except where either (i) the amount of such unpaid taxes is not in excess of
the amount reserved therefor, or (ii) the Company is contesting such
default in good faith through appropriate proceedings.
7
(v) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorizations; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) The Company and its subsidiaries own or possess adequate licenses
or other rights to use all patents, trademarks, trademark registrations,
service marks, service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets, and know-how or other similar rights
("Intellectual Property") described in the Final Memorandum as being owned
or possessed by them, or necessary for the conduct of its business as
described in the Final Memorandum; the Company has not infringed, is not
now infringing, and its business as presently conducted and as proposed to
be conducted will not cause it to infringe, any Intellectual Property
belonging to any other person, which infringement or infringements, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; the Company has not received any claim or notice
of infringement or potential infringement of any Intellectual Property of
any other person which could reasonably be expected to have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has any
claim against a third party with respect to the infringement by such third
party of Intellectual Property of the Company or any such subsidiary
material to the business or prospects of the Company and its subsidiaries
considered as a whole. To the Company's knowledge, the Company is not
using any confidential information or trade secrets of any former employer
of any past or present employees.
(x) Neither the Company nor any of its subsidiaries is involved in
any labor dispute with any union or group of employees nor, to the
knowledge of the Company, is any dispute threatened; and the Company is not
aware of any existing or imminent labor disturbance by the employees of any
of its principal suppliers, manufacturers, distributors, licensees or
contractors which might reasonably be expected to result in a Material
Adverse Effect or any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of
the Company.
(y) The Company and its subsidiaries maintain insurance of the types
and in the amounts generally deemed
8
adequate for their respective businesses, including, but not limited to,
general liability insurance and insurance covering real and personal
property owned or leased by the Company or any of its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect.
(z) This Agreement, the Indenture and the Registration Rights
Agreement have been duly authorized, executed and delivered by the Company
and are valid and binding agreements enforceable against the Company in
accordance with their terms, except to the extent that rights to indemnity
and contribution hereunder may be limited by federal securities law or the
public policy of a state with respect to such matters.
(aa) Neither the issuance and sale of the Securities, the execution,
delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby, except
as contemplated by the Registration Agreement, (i) requires any consent,
approval, authorization or other order of or registration or filing with
any court, regulatory body, administrative agency or other governmental
body, agency or official (assuming compliance by the Purchasers with their
representations, warranties and agreements set forth in Section 4 hereof
and provided that the Securities are otherwise offered and sold by the
Purchasers in the manner contemplated by this Agreement and the Final
Memorandum) (except such as may have been obtained or such as may be
required for compliance with the securities or Blue Sky laws of various
jurisdictions) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the articles of incorporation
or bylaws of the Company or (ii) conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, any
agreement, indenture, lease or other instrument to which the Company is a
party or by which it or any of its properties may be bound, or violates or
will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of its
properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to the terms of any agreement or instrument to which it is a party or by
which it may be bound or to which any of its property or assets is subject.
(ab) The representations and warranties of the Company contained in
the Share Purchase Agreement are true and correct in all material respects
at and as of the date hereof as if made at and as of such date. The
Company has no reason to believe that such representations and warranties
will not be true and correct as of the consummation of the Acquisition
("Acquisition Closing
9
Date"), that the representations and warranties of Electrotech contained in
the Share Purchase Agreement are or will be untrue or inaccurate as of the
date hereof and the Acquisition Closing Date, or that any of the conditions
to the obligations of Electrotech or the Company to consummate the
Acquisition will not be satisfied (without waiver) prior to the Acquisition
Closing Date.
2. Purchase and Sale.
-----------------
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell
to the Purchasers, and the Purchasers agree to purchase from the Company,
the Firm Securities at a purchase price of 96.25% of the principal amount
thereof, plus accrued interest, if any, from October 7, 1996, to the
Closing Date (the difference between such amount and 100% of the principal
amount of the Firm Securities shall be referred to as the "Firm Discount");
provided, however, that the Company shall pay, or cause the Trustee to pay,
to the Purchasers the amount of the Discount, together with interest earned
thereon, only upon the release of the Collateral under Section 4.8(c)(i) of
the Indenture. Each such Security will be convertible at the option of the
holder into shares of Common Stock of the Company at a conversion price
$15.635 per share of Common Stock, subject to adjustment as specified in
the Final Memorandum.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants
an option (the "Option") to the Purchasers to purchase the Option
Securities at a purchase price of 96.25% of the principal amount thereof,
plus accrued interest, if any, from October 7, 1996, to the settlement date
for the Option Securities (the difference between such amount and 100% of
the principal amount of the Option Securities purchased shall be referred
to as the "Option Discount"); provided, however, that the Company will pay,
or cause the Trustee to pay, to the Purchasers the amount of the Option
Discount, together with interest earned thereon, only upon the release of
the Collateral under Section 4.8(c)(i) of the Indenture. The Option may be
exercised only to cover over-allotments in the sale of the Firm Securities
by the Purchasers. The Option may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date of
the Final Memorandum upon written or telegraphic notice by the Purchasers
to the Company setting forth the principal amount of Option Securities as
to which the Purchasers are exercising the Option and the settlement date
therefor. Delivery of certificates for the Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof.
10
(c) The Purchasers shall notify the Company of the completion of the
sale of the Securities by the Purchasers.
3. Delivery and Payment. Delivery of and payment for the Firm
--------------------
Securities and Option Securities (if the option provided for in Section 2(b)
hereof shall have been exercised on or before the third business day prior to
the Closing Date) shall be made at 10:00 AM, New York City time, on October 7,
1996, or such later date as the Purchasers and the Company shall agree (such
date and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Purchasers
against payment by the Purchasers of 100% of the principal amount of the Firm
Securities to or upon the order of the Company by certified or official bank
check or checks drawn on or by a New York Clearing House bank and payable in
next day funds. Delivery of the Securities shall be made at such location as
the Purchasers shall reasonably designate at least one (1) business day in
advance of the Closing Date and payment for the Securities shall be made at the
office of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇. Certificates for the Securities shall be registered in such names
and in such denominations as the Purchasers may request not less than three full
business days in advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Purchasers in New York, New York, not later than
1:00 PM on the business day prior to the Closing Date.
If the Option is exercised after the third business day prior to the
Closing Date, the Company will deliver (at the expense of the Company) to the
Purchasers, at Seven World Trade Center, New York, New York, on the date
specified by the Purchasers (which shall be within three business days after
exercise of the Option), certificates for the Option Securities in such names
and denominations as the Purchasers shall have requested against payment of 100%
of the principal amount of the purchased Option Securities to or upon order of
the Company by certified or official bank check or checks drawn on or by a New
York Clearing House bank and payable in next day funds. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Purchasers on the settlement date for the Option Securities, and the obligation
of the Purchasers to purchase the Option Securities shall be conditioned upon
receipt of, supplemental opinions, certificates and letters confirming as of
such date the opinions, certificates and letters delivered on the Closing Date
pursuant to Section 6 hereof.
4. Offering of Securities; Restrictions on Transfer.
------------------------------------------------
(a) Each of the Purchasers, severally and not jointly, represents and
warrants to and agrees with the Company that (i) it has not solicited and
will not solicit any offer to buy, and has not offered and will not offer
to sell, the
11
Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D) or in any manner involving
a public offering within the meaning of Section 4(2) of the Act or, with
respect to Securities sold in reliance on Regulation S, by means of any
directed selling efforts and (ii) it has solicited and will solicit offers
to buy the Securities only from, and has offered and will offer, sell or
deliver the Securities only to, (A) persons who it reasonably believes to
be qualified institutional buyers (as defined in Rule 144A under the Act)
or, if any such person is buying for one or more institutional accounts for
which such person is acting as fiduciary or agent, only when such person
has represented to it that each such account is a qualified institutional
buyer, to whom notice has been given that such sale or delivery is being
made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A, (B) persons who it reasonably believes to be institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D), and who provide to it a letter in the form of Exhibit A
hereto or (C) persons to whom, and under circumstances which, it reasonably
believes offers and sales of Securities may be made without registration of
the Securities under the Act in reliance upon Regulation S thereunder.
Each of the Purchasers also represents and warrants and agrees that it has
offered and will offer to sell the Securities only to, and has solicited
and will solicit offers to buy the Securities only from, persons that in
purchasing such Securities will be deemed to have represented and agreed as
provided under "Investor Representations and Restrictions on Resale" in
Exhibit B hereto.
(b) Each of the Purchasers represents and warrants to and agrees with
the Company that (i) it has not offered or sold, and will not offer or sell
any Securities to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or as agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom, within the
meaning of the Public Offers of Securities Regulations 1995 (the
"Regulations"), (ii) it has complied and will comply with all applicable
provisions of the Financial Services ▇▇▇ ▇▇▇▇ and the Regulations with
respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom, and (iii) it has only issued or
passed on and will only issue or pass on to any person in the United
Kingdom any document received by it in connection with the issue of the
Securities if that person is of a kind described in Article 11(3) of the
Financial Services ▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.
12
5. Agreements. The Company agrees with the Purchasers that:
----------
(a) The Company will furnish to the Purchasers, without charge,
during the period mentioned in paragraph (d) below, as many copies of the
Final Memorandum and any supplements and amendments thereof or thereto as
the Purchasers may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering.
(b) The Company will not amend or supplement the Final Memorandum,
other than by filing documents under the Exchange Act that are incorporated
by reference therein, without the prior consent of the Purchasers. Prior
to the completion of the sale of the Securities by the Purchasers, the
Company will not file any document under the Exchange Act that is
incorporated by reference in the Final Memorandum unless the Company has
furnished you a copy for your review prior to filing and will not file any
such document to which you reasonably and timely object.
(c) The Company will promptly advise the Purchasers when, prior to
the completion of the sale of the Securities by the Purchasers, any
document filed under the Exchange Act which is incorporated by reference in
the Final Memorandum shall have been filed with the Securities and Exchange
Commission (the "Commission").
(d) If at any time prior to the completion of the sale of the
Securities by the Purchasers, any event occurs as a result of which the
Final Memorandum as then amended or supplemented would include any 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 under
which they were made not misleading, or if it shall be necessary to amend
or supplement the Final Memorandum (including any document incorporated by
reference therein which was filed under the Exchange Act) to comply with
the Exchange Act or the rules thereunder or other applicable law, the
Company promptly will notify the Purchasers of the same and, subject to
paragraph (b) of this Section 5, will prepare and provide to the Purchasers
pursuant to paragraph (a) of this Section 5 an amendment or supplement
which will correct such statement or omission or effect such compliance
and, in the case of such an amendment or supplement which is to be filed
under the Exchange Act and which is incorporated by reference in the Final
Memorandum, will file such amendment or supplement with the Commission.
(e) The Company will cooperate with you and your counsel in
endeavoring to obtain the qualification of the Securities for sale under
the laws of such jurisdictions as the Purchasers may reasonably designate,
and will maintain
13
such qualifications in effect so long as reasonably required for the sale
of the Securities; provided, however, that the Company shall not be
-------- -------
required to file any general consent to service of process or to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.
The Company will promptly advise the Purchasers of the receipt by the
Company of any notification with respect to (i) the suspension of the
qualification of the Securities for sale in any jurisdiction or (ii) the
initiation or threatening of any proceeding for such purpose.
(f) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D) of the Company will solicit any offer to buy or offer or
sell the Securities by means of any form of general solicitation or general
advertising (within the meaning of Regulation D).
(g) None of the Company, its affiliates nor any person (excluding the
Purchasers) acting on behalf of the Company or its affiliates will engage
in any directed selling efforts with respect to the Securities within the
meaning of Regulation S, and the Company, its affiliates and each such
person acting on its or their behalf will comply with the offering
restrictions requirement of Regulation S.
(h) The Company shall, during any period in the three years after the
Closing Date in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act, make available, upon request, to any holder of the
Securities or Common Stock issued upon conversion thereof in connection
with any sale thereof and any prospective purchaser of Securities or Common
Stock issued upon conversion thereof from such holder the information
specified in Rule 144A(d)(4) under the Act.
(i) The Company will not, and will not permit any of its affiliates
(as defined in Rule 501(b) of Regulation D) to, sell any Securities or
Common Stock issued upon conversion thereof which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them.
(j) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D) will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) the
offering of which security will be integrated with the sale of the
Securities in a manner that would require the registration of the issuance
and sale by the Company of the Securities or Common Stock issuable upon
conversion thereof under the Act.
14
(k) The Company shall include information substantially in the form
set forth in Exhibit B in each Final Memorandum.
(l) The Company shall use its best efforts in cooperation with the
Purchasers to permit the Securities to be eligible for clearance and
settlement through the Depository Trust Company.
(m) The Company will not, for a period of 90 days following the
Execution Time without prior written consent of the Purchasers (which
consent shall not be unreasonably withheld), offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or announce the
offering of, any debt securities issued or guaranteed by the Company, any
preferred stock or Common Stock of the Company or any security convertible
into or exchangeable for preferred stock or Common Stock (other than the
Securities); provided, however, that the Company may (1) issue Common Stock
-------- -------
upon exercise of presently outstanding options and warrants, (2) grant
options pursuant to its 1991 Stock Option Plan, and (3) issue options and
shares of its Common Stock to the shareholders of Electrotech as provided
in the Share Purchase Agreement.
(n) The Company will apply the net proceeds from the sale of the
Securities substantially in accordance with the description set forth in
the Final Memorandum under the heading "Use of Proceeds."
6. Conditions to the Obligations of the Purchasers. The obligations
-----------------------------------------------
of the Purchasers to purchase the Firm Securities and the Option Securities, as
the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution Time
and the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) The Company shall have furnished to the Purchasers the opinion of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, dated the Closing Date, to the
effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own and lease its properties and
conduct its business as described in the Final Memorandum and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business, and in which the failure to
15
be so qualified or to be in good standing would, in the aggregate in
all such cases, have a Material Adverse Effect;
(ii) the Company's authorized equity capitalization is as set
forth in the Final Memorandum; the Securities and the Common Stock
conform to the description thereof contained in the Final Memorandum
in all material respects; the holders of the outstanding shares of
capital stock of the Company are not entitled to any preemptive or, to
such counsel's knowledge, any other similar rights to subscribe for
the Securities or the shares of Common Stock issuable upon conversion
thereof; and the shares of Common Stock initially issuable upon
conversion of the Securities have been duly and validly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable;
(iii) to the best knowledge of such counsel, except as described
in the Final Memorandum, there are no outstanding rights, warrants, or
options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or equity interest in the Company or
its subsidiaries;
(iv) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries that would have a Material Adverse
Effect on the Company that is not adequately disclosed in the Final
Memorandum, and there is no material franchise, contract or other
material document which would be required to be disclosed in a
Registration Statement on Form S-1 filed under the Act and which is
not described in the Final Memorandum; the descriptions in the Final
Memorandum of statutes, regulations, contracts, franchises or other
documents, pending or threatened actions, suits or proceedings before
any court or arbitrator, or brought by any governmental agency,
authority or body fairly present the information shown;
(v) the Indenture has been duly authorized, executed and
delivered by the Company, and, assuming due authorization, execution
and delivery by the Trustee, constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with its
terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and
general principles of equity, whether enforcement
16
is considered in a proceeding in equity or at law and the discretion
of the court before which any proceeding therefor may be brought); and
the Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Purchasers pursuant to
this Agreement, will constitute legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture; and the
statements set forth under the "Description of the Notes" in the Final
Memorandum, insofar as such statements purport to summarize certain
provisions of the Securities and the Indenture, provide a fair summary
of such provisions;
(vi) the Company has the corporate power and authority to enter
into this Agreement, the Registration Agreement and the Share Purchase
Agreement; this Agreement, the Registration Agreement and the Share
Purchase Agreement have been duly authorized, executed and delivered
by the Company;
(vii) provided that the Securities are offered and sold in the
manner contemplated by the Purchase Agreement and the Final
Memorandum, and assuming compliance by the Company and the Purchasers
with their respective representations, warranties and agreements with
respect thereto as set forth in the Purchase Agreement and the
compliance by the Shareholder parties thereto with their
representations, warranties and covenants set forth in the Share
Purchase Agreement, no consent, approval, authorization or order of
any court or governmental agency or body is required for the
performance by the Company of its obligations hereunder or under the
Share Purchase Agreement, except (i) such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Purchasers (as to which such
counsel need express no opinion), (ii) as contemplated by the
Registration Agreement and the separate Registration Agreement
attached as Exhibit D to the Share Purchase Agreement and (iii) such
other approvals (specified in such opinion) as have been obtained;
(viii) provided that the Securities are offered and sold in the
manner contemplated by the Purchase Agreement and the Final
Memorandum, and assuming compliance by the Company and the Purchasers
with their respective representations, warranties and agreements with
respect thereto as set forth in the Purchase Agreement and the
compliance by the Shareholder parties thereto with their
representations, warranties and covenants set forth in the Share
Purchase Agreement, neither the issue and sale of the Securities, the
17
execution and delivery of the Indenture, the performance by the
Company of its obligations under this Agreement, the Share Purchase
Agreement, the Indenture, the Registration Agreement or the Notes, nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under any law (except
Blue Sky laws, as to which such counsel expresses no opinion) or the
articles of incorporation or by-laws of the Company or the terms of
any indenture or other agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or by which
it is bound or any judgment, order or decree known to such counsel to
be applicable to the Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
subsidiaries; provided, however, that such counsel need express no
opinion as to whether any such conflict, breach, violation or default
will result under any covenant, restriction or provision with respect
to financial ratios or tests or any aspect of the financial condition
or results of operations of the Company;
(ix) provided that the Securities are offered and sold in the
manner contemplated by the Purchase Agreement and the Final
Memorandum, and assuming compliance by the Company and the Purchasers
with their respective representations, warranties and agreements with
respect thereto as set forth in the Purchase Agreement, it is not
necessary in connection with the offer, sale and delivery by the
Company of the Securities in the manner contemplated by this Agreement
to register the Securities under the Act or to qualify the Indenture
under the Trust Indenture Act; and
In addition, such counsel shall state that, in the course of
preparation by the Company of the Final Memorandum, such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants for the
Company, representatives of the Purchasers and representatives of counsel
for the Purchasers, at which conferences such counsel made inquiries of
such officers, representatives and accountants and discussed the contents
of the Final Memorandum and related matters and (without taking any further
action to verify independently the statements made in the Final Memorandum
and, except solely as expressly stated in the foregoing opinion, without
assuming responsibility for the accuracy, completeness or fairness of such
statements) nothing has come to the attention of such counsel which would
lead such counsel to believe that as of the date thereof or on the Closing
Date, the Final Memorandum contained or contains an untrue
18
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not express any statement with respect to the financial
statements, schedules and other financial information included in the Final
Memorandum).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of California or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good
standing whom they believe to be reliable and who are satisfactory to
counsel for the Purchasers and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Final Memorandum in this paragraph
(a) include any amendments or supplements thereof or thereto at the Closing
Date.
(b) The Purchasers shall have received from ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇,
counsel for the Purchasers, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, the
Indenture, the Final Memorandum (together with any amendment or supplement
thereof or thereto) and other related matters as the Purchasers may
reasonably require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass
upon such matters.
(c) The Company shall have furnished to the Purchasers a certificate
of the Company, signed on behalf of the Company by the Chairman of the
Board or the President and the principal financial or accounting officer of
the Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Final Memorandum, any amendment or
supplement to the Final Memorandum and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied pursuant to this agreement at or prior to the
Closing Date; and
(ii) since the date of the most recent financial statements
incorporated by reference in the Final Memorandum, there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
19
subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Final Memorandum.
(d) At the Execution Time and at the Closing Date, Ernst & Young LLP
shall have furnished to the Purchasers a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form
and substance satisfactory to the Purchasers, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act
and the respective applicable published rules and regulations thereunder
and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in
the Final Memorandum and reported on by them comply in form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of
the following:
(1) a reading of the minutes of the meetings of
stockholders, directors and the Audit and Compensation Committees
of the Company and Electrotech and, where applicable, their
subsidiaries;
(2) performing the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, Interim
Financial Information, on the unaudited interim financial
statements of the Company and its consolidated subsidiaries
included in the Final Memorandum and reading the unaudited
interim financial data for the period from the date of the latest
audited balance sheet included in the Final Memorandum to the
date of the latest available interim financial data; and
(3) inquiries of certain officials of the Company and
Electrotech who have responsibility for financial and accounting
matters of the Company and Electrotech regarding their
subsidiaries as to transactions and events subsequent to the
December 31, 1995 and June 30, 1996 audited financial statements
incorporated in the Final Memorandum,
20
nothing came to their attention which caused them to believe that:
(1) the unaudited financial statements included in the
Final Memorandum do not comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations;
(2) any material modifications should be made to the
unaudited financial statements for them to be in conformity with
generally accepted accounting principles; or
(3) with respect to the period subsequent to June 30,
1996, there were any changes, at a specified date not more than
five business days prior to the date of the letter, in the Long-
Term Debt or Capital Stock of the Company or Electrotech and
their consolidated subsidiaries or decreases in the Shareholders'
Equity of the Company or Electrotech as compared with the amounts
shown on the June 30, 1995 consolidated balance sheet of the
Company and combined balance sheet of Electrotech included in the
Final Proxy Statement, or for the period from July 1, 1996 to
such specified date there were any decreases, as compared with
the corresponding period in the preceding year, in Revenue, or in
total or per share amounts of Net Income (Loss) of the Company
and Electrotech and their consolidated subsidiaries, except in
all instances for changes or decreases set forth in such letter,
in which case the letter shall be accompanied by an explanation
by the Company or Electrotech as to the significance thereof
unless said explanation is not deemed necessary by the
Representatives; and
(iii) they are unable to and do not express any opinion on the
pro forma capitalization or the "Pro Forma Information" included or
incorporated in the Final Memorandum or on the pro forma adjustments
applied to the historical amounts included in such statements (the
"Pro Forma Information"); however, for purposes of such letter they
have:
(1) read the Pro Forma Information;
(2) made inquiries of certain officials of the Company
who have responsibility for financial and accounting matters
about the basis for their determination of the pro forma
adjustments and whether the Pro Forma Information above complies
in form in all material respects with the
21
applicable accounting requirements of Rule 11-02 of Regulation S-
X;
(3) compared the historical amounts in the Pro Forma
Information with the Company's or Electrotech's audited financial
statements or accounting records; and
(4) proved the arithmetic accuracy of the application of
the pro forma adjustments to the historical amounts in the Pro
Forma Information; and
on the basis of such procedures, and such other inquiries and
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that the Pro Forma
Information included in the Final Memorandum does not comply as
to form in all material respects with the applicable requirements
of Rule 11-02 of Regulation S-X and that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements; and
(iv) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and Electrotech and their
subsidiaries) included or incorporated by reference in the Final
Memorandum, including the information set forth under the captions
"Summary Financial and Pro Forma Data," "Risk Factors", "Selected
Consolidated Financial Data of PMT," "Selected Consolidated Financial
Data of Electrotech," "Management's Discussion and Analysis of
Financial Condition and Results of Operations of PMT," "Management's
Discussion and Analysis of Financial Condition and Results of
Operation of Electrotech," and "Business" therein, the information
included or incorporated in Items 1, 6, 7, and 11 of the Company's
Annual Report on Form 10-K, incorporated by reference in the Final
Memorandum, and the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the Final
Memorandum, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
22
References to the Final Memorandum in this paragraph (d) include any
amendment or supplement thereof or thereto at the date of the letter.
(e) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto), there shall not have been (i)
any change or decrease specified in the letter or letters referred to in
paragraph (d) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the business or properties
of the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the reasonable judgment of
the Purchasers, so material and adverse as to make it impractical or
inadvisable to market the Securities as contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereof or thereto).
(f) Prior to the Closing Date, the Company shall have furnished to
the Purchasers such further information, certificates and documents as the
Purchasers may reasonably request.
(g) At the Execution Time, the Company shall have furnished to the
Purchasers a letter substantially in the form of Exhibit C hereto from
persons listed on Exhibit C addressed to the Purchasers, in which each such
person agrees not to offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce an offering of, any shares of
preferred stock or Common Stock beneficially owned by such persons or any
securities convertible into, or exchangeable for, shares of preferred stock
or Common Stock for a period of 90 days following the closing of the Share
Purchase Agreement without the prior written consent of Salomon Brothers
Inc, other than shares of Common Stock disposed of as bona fide gifts.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchasers and counsel for the Purchasers, this Agreement
and all obligations of the Purchasers hereunder may be canceled at, or at any
time prior to, the Closing Date by the Purchasers. Notice of such cancellation
shall be given to the Company in writing or by telephone or telefax confirmed in
writing.
The documents required to be delivered by this Section 6 shall be delivered
at the office of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Purchasers, at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on the Closing Date.
23
7. Reimbursement of Purchasers' Expenses. If the sale of the
-------------------------------------
Securities provided for herein is not consummated because any condition to the
obligations of the Purchasers set forth in Section 6 hereof (other than the
condition set forth in Section 6(b) (solely to the extent the inability to
deliver such an opinion is due to general industry or economic conditions
affecting the business or properties of the Company and its subsidiaries), or
the condition set forth in Section 6(e)(ii) solely by reason of any change, or
any development involving a prospective change, relating to general industry or
economic conditions) is not satisfied, because of any termination pursuant to
clause (i) of Section 9 hereof or because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by the Purchasers, the
Company will reimburse the Purchasers upon demand for all reasonable and duly
documented out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by it in connection with the proposed
purchase and sale of the Securities.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each Purchaser,
the directors, officers, employees and agents of each Purchaser and each
person who controls each Purchaser within the meaning of either the Act or
the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Memorandum, the Final Memorandum
or any information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 5(h), or in any amendment
thereof 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 not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
-------- -------
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of a Purchaser
specifically for inclusion therein; provided, further, that the
indemnification contained in this paragraph 8(a) with
24
respect to any Preliminary Memorandum shall not inure to the benefit of any
Purchaser (or of any person controlling such Purchaser) from whom the
person asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof, if such person did not receive a
copy of the Final Memorandum, provided the Company has delivered the Final
Memorandum to the Purchasers in requisite quantity on a timely basis to
permit the delivery thereof at or prior to the confirmation of the sale of
such Securities to such person, and any untrue statement or omission of a
material fact contained in such Preliminary Memorandum was corrected in the
Final Memorandum. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Purchaser severally agrees to indemnify and hold harmless
the Company, its directors, its officers, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company to the Purchasers,
but only with reference to written information furnished to the Company by
or on behalf of such Purchaser specifically for inclusion in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof
or supplement thereto. This indemnity agreement will be in addition to any
liability which the Purchasers may otherwise have. The Company acknowledges
that the statements set forth in the last paragraph of the cover page, in
the last two paragraphs of page 3 and under the heading "Plan of
Distribution" in the Preliminary Memorandum and the Final Memorandum
constitute the only information furnished in writing by or on behalf of the
Purchasers for inclusion in the Preliminary Memorandum or the Final
Memorandum.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below);
25
provided, however, that such counsel shall be reasonably satisfactory to
-------- -------
the indemnified party. Notwithstanding the indemnifying party's election
to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchasers agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company and one or both Purchasers may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company and by
the Purchasers from the offering of the Securities; provided, however, that
-------- -------
in no case shall a Purchaser be responsible for any amount in excess of the
purchase discount or commission applicable to the Securities purchased by
such Purchaser hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Purchasers shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company
and of the Purchasers in connection with the statements or omissions that
resulted in such Losses as well
26
as any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses), and benefits received by the
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions, in each case as set forth on the cover page of the Final
Memorandum. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Purchasers. The Company and the Purchasers agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person
who controls a Purchaser within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of a Purchaser
shall have the same rights to contribution as such Purchaser, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act and each officer and director of the Company shall have the
same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Purchasers, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in the Company's Common Stock shall have been suspended by the Commission or the
National Association of Securities Dealers Automated Quotation National Market
System ("NMS") (other than by reason of an event listed in Clauses (ii), (iii)
or (iv) of this Section 9), (ii) trading in securities generally on the New York
Stock Exchange or the NMS shall have been suspended or limited or minimum prices
shall have been established on either of such Exchange or NMS, (iii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iv) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the reasonable judgment of the Purchasers, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Memorandum (exclusive of any amendment or supplement
thereof or thereto).
10. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchasers set forth in or made pursuant to
this Agreement will
27
remain in full force and effect, regardless of any investigation made by or on
behalf of the Purchasers or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or telefaxed and confirmed to it in writing, at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, telefax no.: (▇▇▇) ▇▇▇-▇▇▇▇, attention of
Legal Department; or, if sent to the Company, will be mailed, delivered or
telefaxed and confirmed to it in writing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telefax no.: (▇▇▇) ▇▇▇-▇▇▇▇, attention of Chief Executive
Officer.
12. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed
--------------
in accordance with the laws of the State of New York without regard to the
conflicts of law provisions thereof.
28
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and the Purchasers.
Very truly yours,
PLASMA & MATERIALS TECHNOLOGIES, INC.,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and
Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
UNTERBERG HARRIS
By: Salomon Brothers Inc
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Its: Managing Director
29
EXHIBIT A
Form of Investment Letter for
-----------------------------
Institutional Accredited Investors
----------------------------------
Plasma & Materials Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Salomon Brothers Inc
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
In connection with our proposed purchase of $ aggregate
principal amount of the 7-1/8% Convertible Subordinated Notes Due 2001 (the
"Securities") of Plasma & Materials Technologies, Inc., a California corporation
(the "Company"), we confirm that:
1. We understand that the Securities and the Common Stock issuable
upon conversion thereof have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and may not be sold except as
permitted in the following sentence. We understand and agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, (x) that such Securities are being offered only in a transaction
not involving any public offering within the meaning of the Securities Act,
(y) that if we should resell, pledge or otherwise transfer such Securities
or the Common Stock issuable upon conversion thereof within three years
after the date of the original issuance of the Securities or within three
months after we cease to be an Affiliate (within the meaning of Rule 144A
under the Securities Act) of the Company, such Securities or the Common
Stock issuable upon conversion thereof may be resold, pledged or
transferred only (i) to the Company, (ii) so long as the Securities or the
Common Stock issuable upon conversion thereof are eligible for resale
pursuant to Rule 144A under the Securities Act ("Rule 144A"), to a person
whom we reasonably believe is a "qualified institutional buyer" (as defined
in Rule 144A) ("QIB") that purchases for its own account or for the account
of a QIB to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the certificate
for the Securities or the Common Stock issuable upon conversion thereof),
(iii) in an offshore transaction in accordance with Regulation S under the
30
Securities Act (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the certificate for the
Securities or the Common Stock issuable upon conversion thereof), (iv) to
an institution that is an "Accredited Investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act (as indicated by the
box checked by the transferor on the Certificate of Transfer on the reverse
of the certificate for the Securities or the Common Stock issuable upon
conversion thereof) that has certified to the Company and the Trustee (or,
in the case of Common Stock, the Transfer Agent) that it is such an
accredited investor and is acquiring the Securities or the Common Stock
issuable upon conversion thereof for investment purposes and not for
distribution, (v) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 (if applicable) under the Securities
Act, or (vi) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States, and we will notify any purchaser of
the Securities or the Common Stock issuable upon conversion thereof from us
of the above resale restrictions, if then applicable. We further
understand that, in connection with any transfer of the Securities or
Common Stock issuable upon conversion thereof by us, the Company and the
Trustee (or, in the case of Common Stock, the Transfer Agent) may request,
and if so requested we will furnish, such certificates, legal opinions and
other information as they may reasonably require to confirm that any such
transfer complies with the foregoing restrictions.
2. We are able to fend for ourselves in the transactions
contemplated by this Offering Memorandum, we have such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Securities, and we and any
accounts for which we are acting are each able to bear the economic risk of
our or its investment and can afford the complete loss of such investment.
3. We understand that the minimum principal amount of Securities
that may be purchased by an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) is $250,000.
4. We understand that the Company, Salomon Brothers Inc and
Unterberg Harris as the initial purchasers of the Securities ("Initial
Purchasers") and others will rely upon the truth and accuracy of the
foregoing acknowledgements, representations and agreements and we agree
that if any of the acknowledgements, representations and warranties deemed
to have been made by us by our purchase of Securities, for our own account
or for one or more accounts as to each of which we exercise sole investment
discretion, are no longer
31
accurate, we shall promptly notify the Company and the Initial Purchasers.
5. We are acquiring the Securities purchased by us for investment
purposes, and not for distribution, for our own account or for one or more
accounts as to each of which we exercise sole investment discretion and we
are or such account is an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act).
6. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
______________________________
(Name of Purchaser)
By:___________________________
Date:_________________________
32
EXHIBIT B
NOTICE TO INVESTORS
Offers and Sales by the Initial Purchasers
------------------------------------------
The Securities and the Common Stock issuable upon conversion thereof
have not been registered under the Securities Act and may not be offered or sold
in the United States or to, or for the account or benefit of, U.S. persons
except in accordance with an applicable exemption from the registration
requirements thereof. Accordingly, the Securities are being offered and sold
only (1) in the United States to qualified institutional buyers ("Qualified
Institutional Buyers") under Rule 144A under the Securities Act and to a limited
number of other institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) ("Institutional Accredited
Investors") in a private sale exempt from the registration requirements of the
Securities Act, and (2) outside the United States to non-U.S. persons ("foreign
purchasers") in reliance upon Regulation S under the Securities Act. Each
Institutional Accredited Investor that is a purchaser of Securities from the
Initial Purchasers will be required to sign a certificate in the form of Exhibit
A attached hereto. Each foreign purchaser that is a purchaser of Securities
from the Initial Purchasers (an "Initial Foreign Purchaser") will be required to
sign a certificate in the form provided by the Initial Purchasers.
Investor Representations and Restrictions on Resale
---------------------------------------------------
Each purchaser of the Securities will be deemed to have represented
and agreed as follows:
(1) it is acquiring the Securities for its own account or for an
account with respect to which it exercises sole investment discretion, and
that it or such account is a Qualified Institutional Buyer, an
Institutional Accredited Investor acquiring the Securities for investment
purposes and not for distribution or a foreign purchaser outside the United
States;
(2) it acknowledges that the Securities and the Common Stock issuable
upon conversion thereof have not been registered under the Securities Act
and may not be sold except as permitted below;
(3) it understands and agrees (x) that such Securities are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act, and (y) that (A) if within three years (or
such shorter period as may then be applicable under the Securities Act
regarding the holding period for securities under Rule 144(k) of the
Securities Act or any successor rule) after
33
the date of original issuance of the Securities or if within three months
after it ceases to be an affiliate (within the meaning of Rule 144 under
the Securities Act) of the Company, it decides to resell, pledge or
otherwise transfer such Securities or the Common Stock issuable upon
conversion thereof on which the applicable legend as set forth below
appears, such Securities or the Common Stock issuable upon conversion
thereof may be resold, pledged or transferred only (i) to the Company, (ii)
so long as such Security or the Common Stock issuable upon conversion
thereof is eligible for resale pursuant to Rule 144A, to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that
purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A (as indicated by the box
checked by the transferor on the Certificate of Transfer on the reverse of
the Security if such Security is not in book-entry form) and a certificate
which may be obtained from the Company or the Trustee is delivered by the
transferee to the Company and the Trustee, (iii) in an offshore transaction
in accordance with Regulation S (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the Security if
such Security is not in book-entry form), but, if such transfer is being
effected by an Initial Foreign Purchaser or any foreign purchaser who has
purchased Securities from an Initial Foreign Purchaser or from any person
other than a Qualified Institutional Buyer or an Institutional Accredited
Investor pursuant to this clause (iii) prior to the expiration of the "40
day restricted period" (within the meaning of Rule 903(c)(3) of Regulation
S under the Securities Act), the transferee shall have certified to the
Company and the Trustee that such transferee is a non-U.S. person (within
the meaning of Regulation S) and that such transferee is acquiring the
Securities in an offshore transaction; (iv) to an Institutional Accredited
Investor (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the Security if such Security is
not in book-entry form) who has certified to the Company and the Trustee
(or, in the case of Common Stock, the Transfer Agent) that such transferee
is an Institutional Accredited Investor and is acquiring the Securities or
Common Stock for investment purposes and not for distribution (provided
that no Initial Foreign Purchaser or any foreign purchaser who has
purchased Securities from an Initial Foreign Purchaser or from any person
other than a Qualified Institutional Buyer or an Institutional Accredited
Investor pursuant to clause (iii) shall be permitted to transfer any
Securities (or the Common Stock issuable upon conversion thereof) so
purchased by it to an Institutional Accredited Investor pursuant to this
clause (iv) prior to the expiration of the "40 day restricted period" and a
certificate which may be obtained from the Company or the Trustee is
delivered by the transferee to the Company and the Trustee), (v) pursuant
to
34
an exemption from registration under the Securities Act provided by Rule
144 (if applicable) under the Securities Act and a certificate which may be
obtained from the Company or the Trustee is delivered by the transferee to
the Company and the Trustee, in each case in accordance with any applicable
securities laws of any state of the United States, (B) the purchaser will,
and each subsequent holder is required to, notify any purchaser of
Securities or the Common Stock issuable upon conversion thereof from it of
the resale restrictions referred to in (A) above, if then applicable, and
(C) with respect to any transfer of Securities or the Common Stock issuable
upon conversion thereof by an Institutional Accredited Investor, such
holder will deliver to the Company and the Trustee (or, in the case of
Common Stock, the Transfer Agent) such certificates and other information
as they may reasonably require to confirm that the transfer by it complies
with the foregoing restrictions, including, without limitation, a
certificate in the form of Exhibit A hereto;
(4) with respect to the Securities, it understands that the
notification requirement referred to in (3) above will be satisfied, in the
case only of transfers by physical delivery of certificated Securities
other than a Global Note, by virtue of the fact that the following legend
will be placed on the Securities unless otherwise agreed by the Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE THIRD ANNIVERSARY (OR SUCH SHORTER PERIOD AS MAY THEN BE
APPLICABLE UNDER THE SECURITIES ACT) OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) AND A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT (AS INDICATED BY THE ▇▇▇
▇▇
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY
CERTAIN TRANSFERORS SPECIFIED IN THE INDENTURE (AS DEFINED BELOW)
PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE
MEANING OF RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE
FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE (PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN
THE INDENTURE MAY NOT TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE
(4) PRIOR TO EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE
MEANING OF RULE 903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT),
(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT AND
A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE,
IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR OTHER JURISDICTIONS. AN INSTITUTIONAL
ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH
TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION
AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER
HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT AND THAT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT.";
(5) with respect to the Common Stock issuable upon conversion of the
Securities, it understands that the notification requirement referred to in
(3) above will be
36
satisfied by virtue of the fact that the following legend will be placed on
the Common Stock unless otherwise agreed by the Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE THIRD ANNIVERSARY (OR SUCH SHORTER PERIOD AS MAY THEN BE
APPLICABLE UNDER THE SECURITIES ACT) OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) AND A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), AND, IF
SUCH TRANSFER IS BEING EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN
THE INDENTURE (AS DEFINED BELOW) PRIOR TO THE EXPIRATION OF THE "40
DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE 903(c)(3) OF
REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE FORM ATTACHED TO THIS
SECURITY IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE
TRANSFER AGENT, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE
COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY
AND THE TRUSTEE, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER
37
THE SECURITIES ACT AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE
COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY
AND THE TRUSTEE, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER
JURISDICTIONS. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS
SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRANSFER
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A OR (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
AND THAT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
(o)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.";
(6) it (i) is able to fend for itself in the transactions
contemplated by this Offering Memorandum; (ii) has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Securities; and
(iii) has the ability to bear the economic risks of its prospective
investment and can afford the complete loss of such investment;
(7) it understands the Company, the Initial Purchasers and others
will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements and agrees that if any of the
acknowledgements, representations and warranties deemed to have been made
by it by its purchase of the Securities are no longer accurate, it shall
promptly notify the Company and the Initial Purchasers. If it is acquiring
the Securities as a fiduciary or agent for one or more investor accounts,
it represents that it has sole investment discretion with respect to each
such account and it has full power to make the foregoing acknowledgements,
representations and agreements on behalf of such account; and
(8) it has not engaged in, and prior to the expiration of the 40-
day period provided for in Rule 903 of Regulation S will not engage in, any
short selling of any equity issued by the Company (including, without
limitation, the Common Stock) or any hedging transaction with respect to
any such equity security, including without limitation put, call or other
option transactions, option writing and equity swaps.
38
(Letterhead of officer, director or major shareholder of
Plasma & Materials Technologies, Inc.
Plasma & Materials Technologies, Inc.
Offering of 7-1/8% Convertible Subordinated
-------------------------------------------
Notes Due 2001
--------------
, 1996
Salomon Brothers Inc
Unterberg Harris
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
This letter is being delivered to you in connection with the proposed
Purchase Agreement (the "Purchase Agreement"), between Plasma & Materials
Technologies, Inc., a California corporation (the "Company"), and you as
purchasers relating to an offering of the Company's 7-1/8% Convertible
Subordinated Notes Due 2001, which are convertible into Common Stock, no par
value (the "Common Stock"), of the Company.
In order to induce you to enter into the Purchase Agreement, the
undersigned agrees not to offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce an offering of, any shares of Common
Stock beneficially owned by the undersigned or any securities convertible into,
or exchangeable for, shares of Common Stock for a period of 90 days following
the day on which the Purchase Agreement is executed without Salomon Brothers
Inc's; provided, however, that the undersigned may exercise any outstanding
stock options without such prior written consent.
If for any reason the Purchase Agreement shall be terminated prior to
the Closing Date (as defined in the Purchase Agreement), the agreement set forth
above shall likewise be terminated.
Yours very truly,
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. Rollwagon
39
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
C. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ST. ▇▇▇▇ VENTURE CAPITAL, INC.
By:________________________________
BRENTWOOD ASSOCIATES
By:________________________________
40
SCHEDULE I
Principal Amount
of Firm Securities
to be Purchased
---------------
Salomon Brothers Inc................................. $60,000,000
Unterberg Harris..................................... 15,000,000
-----------
TOTAL................................................ $75,000,000
===========
41