Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement (this “Agreement”) is dated as of August  25, 2003,
among Metron Technology N.V., a corporation organized under the laws of The
Netherlands (the “Company”), and the purchasers identified on the signature
pages hereto (each, including its successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”) and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

 

WHEREAS, (a) the Debentures and the Warrants are offered solely to the
Purchasers, and they are not, and have not been, offered to persons or entities
who or which are established, domiciled or have their usual residence in The
Netherlands, (b) the offering of the Debentures and the Warrants, this Agreement
and any documents announcing the offering comply with the laws and regulations
of the country and/or state where the Purchasers are established, domiciled or
have their usual residence, and (c) the Company has submitted a statement that
the laws and regulations referred to under (b) are complied with, to the
Authority for the Financial Markets (the “Autoriteit Financiële Markten”) prior
to entering into this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agrees
as follows:

 

ARTICLE I
DEFINITIONS

 

1.1                                 DEFINITIONS.  IN ADDITION TO THE TERMS
DEFINED ELSEWHERE IN THIS AGREEMENT: (A) CAPITALIZED TERMS THAT ARE NOT
OTHERWISE DEFINED HEREIN HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE DEBENTURES
(AS DEFINED HEREIN), AND (B) THE FOLLOWING TERMS HAVE THE MEANINGS INDICATED IN
THIS SECTION 1.1:

 

“Actual Minimum” means, as of any date, the maximum aggregate number of shares
of Common Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable upon
exercise or conversion in full of all Warrants and Debentures, ignoring any
conversion or exercise limits set forth therein, and assuming all interest
thereon is paid in shares of Common Stock and any previously unconverted
Debentures are held until the 42nd month anniversary of the date of issuance of
the Debentures.

 

“Affiliate” means any Person that, directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act.

 

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“CAPITAL SHARES” MEANS THE COMMON STOCK AND ANY SHARES OF ANY OTHER CLASS OF
COMMON STOCK WHETHER NOW OR HEREAFTER AUTHORIZED, HAVING THE RIGHT TO
PARTICIPATE IN THE DISTRIBUTION OF EARNINGS AND ASSETS OF THE COMPANY.

 

“CAPITAL SHARES EQUIVALENTS” MEANS ANY SECURITIES, RIGHTS OR OBLIGATIONS THAT
ARE CONVERTIBLE INTO OR EXCHANGEABLE FOR OR GIVE ANY RIGHT TO SUBSCRIBE FOR OR
PURCHASE, DIRECTLY OR INDIRECTLY, ANY CAPITAL SHARES OF THE COMPANY OR ANY
WARRANTS, OPTIONS OR OTHER RIGHTS TO SUBSCRIBE FOR OR PURCHASE, DIRECTLY OR
INDIRECTLY, CAPITAL SHARES OR ANY SUCH CONVERTIBLE OR EXCHANGEABLE SECURITIES.

 

“Closing” means the closing of the issuance of the Securities pursuant to
Section 2.1.

 

“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to the Purchasers’ obligations to pay the Subscription
Amount have been satisfied or waived.

 

“Closing Price” shall mean $3.45.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common shares of the Company under the laws of The
Netherlands, par value (based on application of Section 2:67c of the Netherlands
Civil Code) EUR 0.44 per share, and any securities into which such common shares
shall hereinafter have been reclassified.

 

“Company Counsel” means Cooley Godward LLP.

 

“Debentures” means the 8% Convertible Debentures due 42 months from their date
of issuance, unless otherwise set forth therein, issued by the Company to the
Purchasers hereunder, in the form of Exhibit A.

 

“Disclosure Schedules” shall have the meaning ascribed to such term in
Section 3.1 hereof.

 

“Effective Date” means the date the initial Registration Statement filed by the
Company pursuant to the Registration Rights Agreement is first declared
effective by the Commission.

 

“Enable Warrants” means the Common Share Warrants, in the form of Exhibit C and
with a term of exercise of 4 years, to be delivered to Enable Capital, LLC (the
“Enable Warrants”) in accordance with the terms of Engagement Letter between the
Company and Enable Capital, LLC dated June 5, 2003.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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“Exempt Transaction” shall have the meaning ascribed to such term in Section 4.7
hereof.

 

“FW” means Feldman Weinstein LLP with offices at 420 Lexington Avenue, Suite
2620, New York, New York 10170-0002.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h) hereof.

 

“Liens” shall have the meaning ascribed to such term in Section 3.1(a) hereof.

 

“Losses” means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including without limitation costs of preparation and
reasonable attorneys’ fees.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b) hereof.

 

“Netherlands Counsel” means NautaDutilh.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Principal Market” means the NASDAQ National Market, American Stock Exchange,
the New York Stock Exchange, or the NASDAQ Small-Cap Market, whichever is at the
time the principal trading exchange or market for the Common Stock, based upon
share volume.

 

“Proxy” means the Company’s definitive proxy statement on Schedule 14A (as filed
with the Commission) for the Company’s 2003 annual meeting of shareholders,
scheduled to be held not later than November 30, 2003.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated
the Closing Date, among the Company and the Purchasers, in the form of Exhibit
B.

 

“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e) hereof.

 

“Required Minimum” means, as of any date, the maximum aggregate number of shares
of Common Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable upon
exercise or conversion in full of all Warrants and Debentures, ignoring any
conversion or exercise limits set forth therein, and assuming that all interest
is paid in shares of Common Stock and any previously unconverted Debentures are
held until the 42nd month anniversary of

 

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its date of issuance or, if earlier, until maturity, and the VWAP at all times
on and after the date of determination equals 90% of the actual VWAP on the
Trading Day immediately prior to the date of determination.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h)
hereof.

 

“Securities” means the Debentures, the Warrants, the Enable Warrants and the
Underlying Shares.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Shareholder Approval” means such approval as may be required by the applicable
rules and regulations of the Principal Market (or any successor entity) from the
shareholders of the Company with respect to the transactions contemplated by the
Transaction Documents, including the issuance of all of the Underlying Shares
and shares of Common Stock issuable upon exercise of the Warrants and the Enable
Warrants in excess of 19.999% of the Company’s issued and outstanding Common
Stock on the Closing Date.

 

“Subscription Amount” means, as to each Purchaser, the amount set forth below
such Purchaser’s signature block on the signature pages hereto and next to the
heading “Subscription Amount” in United States dollars and in immediately
available funds.

 

“Subsidiary” means any operating subsidiary of the Company.

 

“Trading Day” means any day during which the Principal Market shall be open for
business.

 

“Transaction Documents” means this Agreement, the Debentures, the Warrants, the
Registration Rights Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

 

“Underlying Shares” means the shares of Common Stock issuable upon conversion of
the Debentures and upon exercise of the Warrants and the Enable Warrants and
issued and issuable in lieu of the cash payment of interest on the Debentures.

 

“Underlying Shares Registration Statement” or “Registration Statement” means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale of the Underlying Shares by each
Purchaser as provided for in the Registration Rights Agreement.

 

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“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Principal Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Principal Market on which
the Common Stock is then listed or quoted as reported by Bloomberg Financial
L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern
Time); (b) if the Common Stock is not then listed or quoted on a Principal
Market and if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the OTC Bulletin Board; (c)  if the Common Stock
is not then listed or quoted on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by the National
Quotation Bureau Incorporated (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good
faith by the holders of a majority of the principal amount of Debentures then
outstanding and reasonably acceptable to the Company.

 

“Warrants” means collectively the Common Share Warrants, in the form of
Exhibit C, delivered to the Purchasers at the Closing in accordance with
Section 2.2 hereof,  with a term of exercise of 4 years.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants and the Enable Warrants.

 

ARTICLE II
PURCHASE AND SALE

 

2.1                                 CLOSING.  ON OR BEFORE AUGUST 25, 2003, UPON
THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN, CONCURRENT WITH THE
EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE PARTIES HERETO, THE COMPANY
AGREES TO ISSUE, AND THE PURCHASERS AGREE TO SUBSCRIBE FOR IN THE AGGREGATE,
SEVERALLY AND NOT JOINTLY, UP TO $7,000,000 OF THE DEBENTURES, TOGETHER WITH THE
WARRANTS.  EACH PURCHASER SHALL DELIVER TO, OR AS DIRECTED BY, THE COMPANY VIA
WIRE TRANSFER OR A CERTIFIED CHECK IMMEDIATELY AVAILABLE FUNDS EQUAL TO THEIR
SUBSCRIPTION AMOUNT AND THE COMPANY SHALL DELIVER TO SUCH PURCHASER A DEBENTURE
EVIDENCING A PRINCIPAL AMOUNT EQUAL TO SUCH PURCHASER’S SUBSCRIPTION AMOUNT
INDICATED BELOW SUCH PURCHASER’S NAME ON THE SIGNATURE PAGE OF THIS AGREEMENT
AND THE OTHER ITEMS SET FORTH IN SECTION 2.2 ISSUABLE AT THE CLOSING.  UPON
SATISFACTION OF THE CONDITIONS SET FORTH IN SECTION 2.2, THE CLOSING SHALL OCCUR
AT THE OFFICES OF FW, OR SUCH OTHER LOCATION AS THE PARTIES SHALL MUTUALLY
AGREE.

 

2.2                                 CLOSING CONDITIONS.  UPON SATISFACTION OR
WAIVER BY THE PARTY SOUGHT TO BE BENEFITED THEREBY OF THE CONDITIONS SET FORTH
IN THIS SECTION 2.2, THE CLOSING SHALL OCCUR.

 

(A) AT OR PRIOR TO THE CLOSING, THE COMPANY SHALL DELIVER OR CAUSE TO BE
DELIVERED TO EACH PURCHASER THE FOLLOWING:

 

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(I)                                     A DEBENTURE EVIDENCING A PRINCIPAL
AMOUNT EQUAL TO THE SUBSCRIPTION AMOUNT INDICATED BELOW SUCH PURCHASER’S NAME ON
THE SIGNATURE PAGE OF THIS AGREEMENT, REGISTERED IN THE NAME OF SUCH PURCHASER;

 

(II)                                  (A) A WARRANT REGISTERED IN THE NAME OF
SUCH PURCHASER TO PURCHASE UP TO A NUMBER OF SHARES OF COMMON STOCK EQUAL TO 20%
OF SUCH PURCHASER’S SUBSCRIPTION AMOUNT DIVIDED BY THE CLOSING PRICE AND AN
EXERCISE PRICE PER WARRANT SHARE EQUAL TO 115% OF CLOSING PRICE, SUBJECT TO
ADJUSTMENT THEREIN AND (B) A WARRANT TO PURCHASE UP TO A NUMBER OF SHARES OF
COMMON STOCK EQUAL TO 20% OF SUCH PURCHASER’S SUBSCRIPTION AMOUNT DIVIDED BY THE
CLOSING PRICE AND AN EXERCISE PRICE PER WARRANT SHARE EQUAL TO 125% OF THE
CLOSING PRICE, SUBJECT TO ADJUSTMENT THEREIN;

 

(III)                               A LEGAL OPINION OF COMPANY COUNSEL, IN THE
FORM OF EXHIBIT D ATTACHED HERETO, ADDRESSED TO THE PURCHASERS;

 

(IV)                              A LEGAL OPINION OF NETHERLANDS COUNSEL, IN THE
FORM OF EXHIBIT E ATTACHED HERETO, ADDRESSED TO THE PURCHASERS;

 

(v)                                 the Registration Rights Agreement duly
executed by the Company;

 

(vi)                              this Agreement duly executed by the Company;
and

 

(vii)                           the written voting agreements of Entegris, Inc.,
FSI International, Inc., Edward D. Segal and Bricoleur Capital Management, LLC
to vote all Common Stock owned by each of them as of the record date for the
annual meeting of shareholders of the Company in favor of the proposal described
in the Proxy with respect to the Shareholder Approval.

 

(B)                                 AT OR PRIOR TO THE CLOSING, EACH PURCHASER
SHALL DELIVER OR CAUSE TO BE DELIVERED TO THE COMPANY THE FOLLOWING:

 

(I)                                     THIS AGREEMENT DULY EXECUTED BY SUCH
PURCHASER;

 

(II)                                  SUCH PURCHASER’S SUBSCRIPTION AMOUNT; AND

 

(III)                               THE REGISTRATION RIGHTS AGREEMENT DULY
EXECUTED BY SUCH PURCHASER.

 

(C)                                  ALL REPRESENTATIONS AND WARRANTIES OF THE
OTHER PARTY CONTAINED HEREIN SHALL REMAIN TRUE AND CORRECT AS OF THE CLOSING
DATE AND ALL COVENANTS OF THE OTHER PARTY SHALL HAVE BEEN PERFORMED;

 

(D)                                 THERE SHALL HAVE BEEN NO MATERIAL ADVERSE
EFFECT (AS DEFINED IN SECTION 3.1(B) HEREOF) WITH RESPECT TO THE COMPANY SINCE
THE DATE HEREOF;

 

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(e)                                  From the date hereof to the Closing Date,
trading in the Common Stock shall not have been suspended by the Commission
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by such service, or on the Principal Market, nor shall a banking moratorium have
been declared either by the United States or New York State authorities, nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Purchasers, makes it impracticable or inadvisable to
subscribe for the Debentures at the Closing.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1                                 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.  EXCEPT: AS SET FORTH UNDER THE CORRESPONDING SECTION OF THE DISCLOSURE
SCHEDULES DELIVERED TO THE PURCHASERS CONCURRENTLY HEREWITH (THE “DISCLOSURE
SCHEDULES”) WHICH DISCLOSURE SCHEDULES SHALL BE DEEMED A PART HEREOF, THE
COMPANY HEREBY MAKES THE REPRESENTATIONS AND WARRANTIES SET FORTH BELOW TO EACH
PURCHASER.

 

(A)                                  SUBSIDIARIES.  EXCEPT AS SET FORTH IN THE
SEC REPORTS, THE COMPANY HAS NO DIRECT OR INDIRECT SUBSIDIARIES.  EXCEPT FOR
EMPLOYEE/DIRECTOR STOCK OPTIONS, THE COMPANY OWNS, DIRECTLY OR INDIRECTLY, ALL
OF THE CAPITAL STOCK OR OTHER EQUITY INTERESTS OF EACH SUBSIDIARY FREE AND CLEAR
OF ANY LIEN, CHARGE, SECURITY INTEREST, ENCUMBRANCE, RIGHT OF FIRST REFUSAL OR
OTHER RESTRICTION (COLLECTIVELY, “LIENS”), AND ALL THE ISSUED AND OUTSTANDING
SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY ARE VALIDLY ISSUED AND ARE FULLY
PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR RIGHTS.

 

(B)                                 ORGANIZATION AND QUALIFICATION.  EACH OF THE
COMPANY AND THE SUBSIDIARIES IS AN ENTITY DULY INCORPORATED OR OTHERWISE
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION OF ITS INCORPORATION OR ORGANIZATION (AS APPLICABLE), WITH THE
REQUISITE POWER AND AUTHORITY TO OWN AND USE ITS PROPERTIES AND ASSETS AND TO
CARRY ON ITS BUSINESS AS CURRENTLY CONDUCTED.  NEITHER THE COMPANY NOR ANY
SUBSIDIARY IS IN VIOLATION OF ANY OF THE PROVISIONS OF ITS RESPECTIVE
CERTIFICATE OR ARTICLES OF INCORPORATION OR ASSOCIATION, BYLAWS OR OTHER
ORGANIZATIONAL OR CHARTER DOCUMENTS.  EACH OF THE COMPANY AND THE SUBSIDIARIES
IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING AS A FOREIGN
CORPORATION OR OTHER ENTITY IN EACH JURISDICTION IN WHICH THE NATURE OF THE
BUSINESS CONDUCTED OR PROPERTY OWNED BY IT MAKES SUCH QUALIFICATION NECESSARY,
EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING, AS THE CASE MAY
BE, WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE: (I) MATERIALLY ADVERSELY AFFECT
THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY TRANSACTION DOCUMENT, (II) HAVE
OR RESULT IN OR BE REASONABLY LIKELY TO HAVE OR RESULT IN A MATERIAL ADVERSE
EFFECT ON THE RESULTS OF OPERATIONS, ASSETS, PROSPECTS, BUSINESS OR CONDITION
(FINANCIAL OR OTHERWISE) OF THE COMPANY AND THE SUBSIDIARIES, TAKEN AS A WHOLE,
OR (III) MATERIALLY ADVERSELY IMPAIR THE COMPANY’S ABILITY

 

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TO PERFORM FULLY ON A TIMELY BASIS ITS OBLIGATIONS UNDER ANY OF THE TRANSACTION
DOCUMENTS (ANY OF (I), (II) OR (III), A “MATERIAL ADVERSE EFFECT”).

 

(C)                                  AUTHORIZATION; ENFORCEMENT.  THE COMPANY
HAS THE REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE
THE TRANSACTIONS CONTEMPLATED BY EACH OF THE TRANSACTION DOCUMENTS AND OTHERWISE
TO CARRY OUT ITS OBLIGATIONS HEREUNDER OR THEREUNDER.  THE EXECUTION AND
DELIVERY OF EACH OF THE TRANSACTION DOCUMENTS BY THE COMPANY AND THE
CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY HAVE BEEN
DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF THE COMPANY AND NO
FURTHER CONSENT OR ACTION IS REQUIRED BY THE COMPANY OTHER THAN REQUIRED
APPROVALS.  EACH OF THE TRANSACTION DOCUMENTS HAS BEEN (OR UPON DELIVERY WILL
BE) DULY EXECUTED BY THE COMPANY AND, WHEN DELIVERED IN ACCORDANCE WITH THE
TERMS HEREOF, WILL CONSTITUTE THE VALID AND BINDING OBLIGATION OF THE COMPANY
ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH ITS TERMS, SUBJECT TO
APPLICABLE BANKRUPTCY, INSOLVENCY, FRAUDULENT CONVEYANCE, REORGANIZATION,
MORATORIUM AND SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS AND REMEDIES GENERALLY
AND GENERAL PRINCIPLES OF EQUITY.  NEITHER THE COMPANY NOR ANY SUBSIDIARY IS IN
VIOLATION OF ANY OF THE PROVISIONS OF ITS RESPECTIVE CERTIFICATE OR ARTICLES OF
INCORPORATION, BY-LAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS.

 

(D)                                 NO CONFLICTS.  THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY
THE COMPANY OF THE TRANSACTIONS CONTEMPLATED THEREBY DO NOT AND WILL NOT: (I)
CONFLICT WITH OR VIOLATE ANY PROVISION OF THE COMPANY’S OR ANY SUBSIDIARY’S
CERTIFICATE OR ARTICLES OF INCORPORATION OR ASSOCIATION, BYLAWS OR OTHER
ORGANIZATIONAL OR CHARTER DOCUMENTS, OR (II) SUBJECT TO OBTAINING THE REQUIRED
APPROVALS, CONFLICT WITH, OR CONSTITUTE A DEFAULT (OR AN EVENT THAT WITH NOTICE
OR LAPSE OF TIME OR BOTH WOULD BECOME A DEFAULT) UNDER, OR GIVE TO OTHERS ANY
RIGHTS OF TERMINATION, AMENDMENT, ACCELERATION OR CANCELLATION (WITH OR WITHOUT
NOTICE, LAPSE OF TIME OR BOTH) OF, ANY AGREEMENT, CREDIT FACILITY, DEBT OR OTHER
INSTRUMENT (EVIDENCING A COMPANY OR SUBSIDIARY DEBT OR OTHERWISE) TO WHICH THE
COMPANY OR ANY SUBSIDIARY IS A PARTY OR BY WHICH ANY PROPERTY OR ASSET OF THE
COMPANY OR ANY SUBSIDIARY IS BOUND OR AFFECTED, OR (III) RESULT, IN A VIOLATION
OF ANY LAW, RULE, REGULATION, ORDER, JUDGMENT, INJUNCTION, DECREE OR OTHER
RESTRICTION OF ANY COURT OR GOVERNMENTAL AUTHORITY TO WHICH THE COMPANY OR A
SUBSIDIARY IS SUBJECT (INCLUDING DUTCH, U.S. FEDERAL AND STATE SECURITIES LAWS
AND REGULATIONS AND ANY OTHER DUTCH LAWS AND REGULATIONS), OR BY WHICH ANY
PROPERTY OR ASSET OF THE COMPANY OR A SUBSIDIARY IS BOUND OR AFFECTED; EXCEPT IN
THE CASE OF EACH OF CLAUSES (II) AND (III), SUCH AS WOULD NOT, INDIVIDUALLY OR
IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE OR RESULT IN A MATERIAL ADVERSE
EFFECT.

 

(e)                                  Filings, Consents and Approvals.  Neither
the Company nor any Subsidiary is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other Dutch, U.S. federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) the filings required under Section 4.8, (ii) the filing with the Commission
of the Underlying Shares Registration Statement, (iii) the notice and/or
application(s) to each applicable Principal Market for the issuance and sale of
the Debentures, Warrants and the Enable Warrants and the listing of the
Underlying Shares for trading thereon in

 

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the time and manner required thereby, (iv) the filing of Form D with the
Commission and applicable Blue Sky filings, (v) notice filings with the Dutch
Authority for the Financial Markets (“Authoriteit Financiële Markten”) pursuant
to Section 46b of the Act on the Supervision of the Securities Trade 1995 (“Wet
toezicht effectenverkeer 1995”) (collectively, the “Required Approvals”), (vi)
the depositing of the resolution of the Supervisory Board in connection with,
amongst others, the issuance of the Debentures and the Warrants with the
Commercial Registry of the competent Chamber of Commerce and Industries within 8
days after the date of such resolution, (vii) the updating of the amount of the
issued capital (“geplaatst kapitaal”) and of the paid-up capital (“gestort
kapitaal”) of the Company with the Commercial Registry of the competent Chamber
of Commerce and Industries upon the issuance of any Underlying Shares, and
(viii) the consent of shareholders as discussed in the Proxy and as set forth in
Section 4.5 hereof.

 

(F)                                    ISSUANCE OF THE SECURITIES.  THE
SECURITIES ARE DULY AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH
THE APPLICABLE TRANSACTION DOCUMENTS, WILL BE DULY AND VALIDLY ISSUED, FULLY
PAID AND NON-ASSESSABLE, FREE AND CLEAR OF ALL LIENS (OTHER THAN ANY LIENS
IMPOSED BY ACTION OF THE PURCHASERS).  THE COMPANY HAS RESERVED FROM ITS
AUTHORIZED SHARE CAPITAL (“MAATSCHAPPELIJK KAPITAAL”) A NUMBER OF SHARES OF
COMMON STOCK FOR ISSUANCE OF THE UNDERLYING SHARES AT LEAST EQUAL TO THE
REQUIRED MINIMUM ON THE DATE HEREOF.  THE COMPANY HAS NOT, AND TO THE KNOWLEDGE
OF THE COMPANY, NO AFFILIATE OF THE COMPANY HAS SOLD, OFFERED FOR SALE OR
SOLICITED OFFERS TO BUY OR OTHERWISE NEGOTIATED IN RESPECT OF ANY SECURITY (AS
DEFINED IN SECTION 2 OF THE SECURITIES ACT) THAT WOULD BE INTEGRATED WITH THE
OFFER OR SALE OF THE SECURITIES IN A MANNER THAT WOULD REQUIRE THE REGISTRATION
UNDER THE SECURITIES ACT OF THE SALE OF THE SECURITIES TO THE PURCHASERS, OR
THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES FOR PURPOSES
OF THE RULES AND REGULATIONS OF ANY PRINCIPAL MARKET.

 

(G)                                 CAPITALIZATION.  THE NUMBER OF SHARES AND
TYPE OF ALL AUTHORIZED, ISSUED AND OUTSTANDING CAPITAL STOCK OF THE COMPANY IS
SET FORTH IN THE DISCLOSURE SCHEDULES ATTACHED HERETO.  EXCEPT FOR RIGHTS THAT
HAVE BEEN WAIVED, NO SECURITIES OF THE COMPANY ARE ENTITLED TO PREEMPTIVE OR
SIMILAR RIGHTS, AND NO PERSON HAS ANY RIGHT OF FIRST REFUSAL, PREEMPTIVE RIGHT,
RIGHT OF PARTICIPATION, OR ANY SIMILAR RIGHT TO PARTICIPATE IN THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS.  EXCEPT AS A RESULT OF THE PURCHASE
AND SALE OF THE SECURITIES AND EXCEPT SECURITIES ISSUED OR ISSUABLE PURSUANT TO
ANY STOCK OPTION PLAN, SHARE PURCHASE PLAN, OR OTHER SIMILAR EQUITY INCENTIVE
PLAN DULY ADOPTED BY A MAJORITY OF THE NON-EMPLOYEE MEMBERS OF THE SUPERVISORY
BOARD OF THE COMPANY OR A MAJORITY OF THE MEMBERS OF A COMMITTEE OF NON-EMPLOYEE
DIRECTORS ESTABLISHED FOR SUCH PURPOSE, THERE ARE NO OUTSTANDING OPTIONS,
WARRANTS, SCRIPT RIGHTS TO SUBSCRIBE TO, CALLS OR COMMITMENTS OF ANY CHARACTER
WHATSOEVER RELATING TO, OR SECURITIES, RIGHTS OR OBLIGATIONS CONVERTIBLE INTO OR
EXCHANGEABLE FOR, OR GIVING ANY PERSON ANY RIGHT TO SUBSCRIBE FOR OR ACQUIRE,
ANY SHARES OF COMMON STOCK, OR CONTRACTS, COMMITMENTS, UNDERSTANDINGS OR
ARRANGEMENTS BY WHICH THE COMPANY OR ANY SUBSIDIARY IS OR MAY BECOME BOUND TO
ISSUE ADDITIONAL SHARES OF COMMON STOCK, OR SECURITIES OR RIGHTS CONVERTIBLE OR
EXCHANGEABLE INTO SHARES OF COMMON STOCK.  THE ISSUANCE AND SALE OF THE
SECURITIES WILL NOT OBLIGATE THE COMPANY TO ISSUE SHARES OF COMMON STOCK OR
OTHER SECURITIES TO ANY PERSON (OTHER THAN THE PURCHASERS) AND WILL NOT RESULT
IN A RIGHT OF ANY

 

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HOLDER OF COMPANY SECURITIES TO ADJUST THE EXERCISE, CONVERSION, EXCHANGE OR
RESET PRICE UNDER SUCH SECURITIES.

 

(H)                                 SEC REPORTS; FINANCIAL STATEMENTS.  THE
COMPANY HAS FILED ALL REPORTS REQUIRED TO BE FILED BY IT UNDER THE EXCHANGE ACT,
INCLUDING PURSUANT TO SECTION 13(A) OR 15(D) THEREOF, FOR THE TWO YEARS
PRECEDING THE DATE HEREOF (OR SUCH SHORTER PERIOD AS THE COMPANY WAS REQUIRED BY
LAW TO FILE SUCH MATERIAL) (THE FOREGOING REPORTS SINCE MAY 31, 2002 ARE
COLLECTIVELY REFERRED TO HEREIN AS THE “SEC REPORTS” AND, TOGETHER WITH THE
SCHEDULES TO THIS AGREEMENT, THE “DISCLOSURE MATERIALS”) ON A TIMELY BASIS OR
HAS RECEIVED A VALID EXTENSION OF SUCH TIME OF FILING AND HAS FILED ANY SUCH SEC
REPORTS PRIOR TO THE EXPIRATION OF ANY SUCH EXTENSION.  THE COMPANY HAS
IDENTIFIED AND MADE AVAILABLE TO THE PURCHASERS A COPY OF ALL SEC REPORTS FILED
WITHIN THE 10 DAYS PRECEDING THE DATE HEREOF.  AS OF THEIR RESPECTIVE DATES, THE
SEC REPORTS COMPLIED IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE
SECURITIES ACT AND THE EXCHANGE ACT AND THE RULES AND REGULATIONS OF THE
COMMISSION PROMULGATED THEREUNDER, AND NONE OF THE SEC REPORTS, WHEN FILED,
CONTAINED ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITTED TO STATE A MATERIAL
FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING.  THE FINANCIAL STATEMENTS OF THE COMPANY INCLUDED IN THE SEC REPORTS
COMPLY IN ALL MATERIAL RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND THE
RULES AND REGULATIONS OF THE COMMISSION WITH RESPECT THERETO AS IN EFFECT AT THE
TIME OF FILING.  SUCH FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”) APPLIED ON A CONSISTENT BASIS
DURING THE PERIODS INVOLVED, EXCEPT AS MAY BE OTHERWISE SPECIFIED IN SUCH
FINANCIAL STATEMENTS OR THE NOTES THERETO, AND FAIRLY PRESENT IN ALL MATERIAL
RESPECTS THE FINANCIAL POSITION OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES
AS OF AND FOR THE DATES THEREOF AND THE RESULTS OF OPERATIONS AND CASH FLOWS FOR
THE PERIODS THEN ENDED, SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL,
IMMATERIAL, YEAR-END AUDIT ADJUSTMENTS.

 

(I)                                     MATERIAL CHANGES.  SINCE THE DATE OF THE
LATEST AUDITED FINANCIAL STATEMENTS INCLUDED WITHIN THE SEC REPORTS, EXCEPT AS
SPECIFICALLY DISCLOSED IN THE SEC REPORTS: (I) THERE HAS BEEN NO EVENT,
OCCURRENCE OR DEVELOPMENT THAT HAS HAD OR THAT WOULD REASONABLY BE EXPECTED TO
RESULT IN A MATERIAL ADVERSE EFFECT, (II) THE COMPANY HAS NOT INCURRED ANY
LIABILITIES (CONTINGENT OR OTHERWISE) OTHER THAN (A) TRADE PAYABLES AND ACCRUED
EXPENSES INCURRED IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE AND (B) LIABILITIES NOT REQUIRED TO BE REFLECTED IN THE COMPANY’S
FINANCIAL STATEMENTS PURSUANT TO GAAP OR REQUIRED TO BE DISCLOSED IN FILINGS
MADE WITH THE COMMISSION, (III) THE COMPANY HAS NOT ALTERED ITS METHOD OF
ACCOUNTING OR THE IDENTITY OF ITS AUDITORS, (IV) THE COMPANY HAS NOT DECLARED OR
MADE ANY DIVIDEND OR DISTRIBUTION OF CASH OR OTHER PROPERTY TO ITS SHAREHOLDERS
OR PURCHASED, REDEEMED OR MADE ANY AGREEMENTS TO PURCHASE OR REDEEM ANY SHARES
OF ITS CAPITAL STOCK, AND (V) THE COMPANY HAS NOT ISSUED ANY EQUITY SECURITIES
TO ANY OFFICER, MANAGING DIRECTOR, SUPERVISORY DIRECTOR OR AFFILIATE, EXCEPT
PURSUANT TO EXISTING COMPANY STOCK OPTION OR SIMILAR PLANS.

 

(J)                                     LITIGATION.  THERE IS NO ACTION, SUIT,
INQUIRY, NOTICE OF VIOLATION, PROCEEDING OR INVESTIGATION PENDING OR, TO THE
KNOWLEDGE OF THE COMPANY, THREATENED AGAINST OR AFFECTING THE COMPANY, ANY
SUBSIDIARY OR ANY OF THEIR RESPECTIVE PROPERTIES BEFORE OR BY

 

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ANY COURT, ARBITRATOR, GOVERNMENTAL OR ADMINISTRATIVE AGENCY OR REGULATORY
AUTHORITY (DUTCH, U.S. FEDERAL, STATE, COUNTY, LOCAL OR OTHER FOREIGN)
(COLLECTIVELY, AN “ACTION”) WHICH: (I) ADVERSELY AFFECTS OR CHALLENGES THE
LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY OF THE TRANSACTION DOCUMENTS OR THE
SECURITIES OR (II) WOULD, IF THERE WERE AN UNFAVORABLE DECISION, INDIVIDUALLY OR
IN THE AGGREGATE, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT. NEITHER THE COMPANY NOR ANY SUBSIDIARY, NOR ANY SUPERVISORY DIRECTOR,
MANAGING DIRECTOR OR OFFICER THEREOF, IS OR HAS BEEN THE SUBJECT OF ANY ACTION
INVOLVING A CLAIM OF VIOLATION OF OR LIABILITY UNDER DUTCH, U.S. FEDERAL OR
STATE SECURITIES LAWS. THE  COMPANY DOES NOT HAVE PENDING BEFORE THE COMMISSION
ANY REQUEST FOR CONFIDENTIAL TREATMENT OF INFORMATION.  THERE HAS NOT BEEN, AND
TO THE KNOWLEDGE OF THE COMPANY, THERE IS NOT PENDING OR CONTEMPLATED, ANY
INVESTIGATION BY THE COMMISSION INVOLVING THE COMPANY OR ANY CURRENT OR FORMER
SUPERVISORY DIRECTOR, MANAGING DIRECTOR OR OFFICER OF THE COMPANY.  THE
COMMISSION HAS NOT ISSUED ANY STOP ORDER OR OTHER ORDER SUSPENDING THE
EFFECTIVENESS OF ANY REGISTRATION STATEMENT FILED BY THE COMPANY OR ANY
SUBSIDIARY UNDER THE EXCHANGE ACT OR THE SECURITIES ACT.

 

(K)                                  COMPLIANCE.  EXCEPT AS SET FORTH IN THE SEC
REPORTS, NEITHER THE COMPANY NOR ANY SUBSIDIARY: (I) IS IN DEFAULT UNDER OR IN
VIOLATION OF (AND NO EVENT HAS OCCURRED THAT HAS NOT BEEN WAIVED THAT, WITH
NOTICE OR LAPSE OF TIME OR BOTH, WOULD RESULT IN A DEFAULT BY THE COMPANY OR ANY
SUBSIDIARY UNDER), NOR HAS THE COMPANY OR ANY SUBSIDIARY RECEIVED NOTICE OF A
CLAIM THAT IT IS IN DEFAULT UNDER OR THAT IT IS IN VIOLATION OF, ANY INDENTURE,
LOAN OR CREDIT AGREEMENT OR ANY OTHER AGREEMENT OR INSTRUMENT TO WHICH IT IS A
PARTY OR BY WHICH IT OR ANY OF ITS PROPERTIES IS BOUND (WHETHER OR NOT SUCH
DEFAULT OR VIOLATION HAS BEEN WAIVED), (II) IS IN VIOLATION OF ANY ORDER OF ANY
COURT, ARBITRATOR OR GOVERNMENTAL BODY, OR (III) IS OR HAS BEEN IN VIOLATION OF
ANY STATUTE, RULE OR REGULATION OF ANY GOVERNMENTAL AUTHORITY, EXCEPT IN EACH
CASE AS WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO
HAVE OR RESULT IN A MATERIAL ADVERSE EFFECT.

 

(L)                                     LABOR RELATIONS.  NO MATERIAL LABOR
DISPUTE EXISTS OR, TO THE KNOWLEDGE OF THE COMPANY, IS IMMINENT WITH RESPECT TO
ANY OF THE EMPLOYEES OF THE COMPANY.

 

(M)                               REGULATORY PERMITS.  THE COMPANY AND THE
SUBSIDIARIES POSSESS ALL CERTIFICATES, AUTHORIZATIONS AND PERMITS ISSUED BY THE
APPROPRIATE DUTCH, U.S. FEDERAL, STATE, LOCAL OR OTHER FOREIGN REGULATORY
AUTHORITIES NECESSARY TO CONDUCT THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE
SEC REPORTS, EXCEPT WHERE THE FAILURE TO POSSESS SUCH PERMITS WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT (“MATERIAL PERMITS”), AND NEITHER THE COMPANY NOR ANY
SUBSIDIARY HAS RECEIVED ANY NOTICE OF PROCEEDINGS RELATING TO THE REVOCATION OR
MODIFICATION OF ANY MATERIAL PERMIT.

 

(N)                                 TITLE TO ASSETS.  THE COMPANY AND THE
SUBSIDIARIES HAVE GOOD AND MARKETABLE TITLE IN FEE SIMPLE TO ALL REAL PROPERTY
OWNED BY THEM THAT IS MATERIAL TO THE BUSINESS OF THE COMPANY AND THE
SUBSIDIARIES AND GOOD AND MARKETABLE TITLE IN ALL PERSONAL PROPERTY OWNED BY
THEM THAT IS MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SUBSIDIARIES, IN
EACH CASE FREE AND CLEAR OF ALL LIENS, EXCEPT FOR LIENS PURSUANT TO THE CREDIT
FACILITIES DISCLOSED IN THE SEC REPORTS AND OTHER LIENS AS DO NOT MATERIALLY
AFFECT THE VALUE OF SUCH PROPERTY AND DO NOT MATERIALLY INTERFERE WITH THE USE
MADE AND PROPOSED

 

11

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TO BE MADE OF SUCH PROPERTY BY THE COMPANY AND THE SUBSIDIARIES.  ANY REAL
PROPERTY AND FACILITIES HELD UNDER LEASE BY THE COMPANY AND THE SUBSIDIARIES ARE
HELD UNDER VALID, SUBSISTING AND ENFORCEABLE LEASES OF WHICH THE COMPANY AND THE
SUBSIDIARIES ARE IN COMPLIANCE.

 

(O)                                 PATENTS AND TRADEMARKS.  TO THE KNOWLEDGE OF
THE COMPANY, THE COMPANY AND THE SUBSIDIARIES HAVE, OR HAVE RIGHTS TO USE, ALL
PATENTS, PATENT APPLICATIONS, TRADEMARKS, TRADEMARK APPLICATIONS, SERVICE MARKS,
TRADE NAMES, COPYRIGHTS, LICENSES AND OTHER SIMILAR RIGHTS NECESSARY OR MATERIAL
FOR USE IN CONNECTION WITH THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC
REPORTS AND WHICH THE FAILURE TO SO HAVE WOULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT (COLLECTIVELY, THE “INTELLECTUAL PROPERTY RIGHTS”).  TO
THE KNOWLEDGE OF THE COMPANY, ALL SUCH INTELLECTUAL PROPERTY RIGHTS ARE
ENFORCEABLE AND THERE IS NO EXISTING INFRINGEMENT BY ANOTHER PERSON OF ANY OF
THE INTELLECTUAL PROPERTY RIGHTS.

 

(P)                                 INSURANCE.  THE COMPANY AND THE SUBSIDIARIES
ARE INSURED BY INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY AGAINST SUCH
LOSSES AND RISKS AND IN SUCH AMOUNTS AS ARE PRUDENT AND CUSTOMARY IN THE
BUSINESSES IN WHICH THE COMPANY AND THE SUBSIDIARIES ARE ENGAGED.  NEITHER THE
COMPANY NOR ANY SUBSIDIARY HAS ANY REASON TO BELIEVE IT WILL NOT BE ABLE TO
RENEW ITS EXISTING INSURANCE COVERAGE AS AND WHEN SUCH COVERAGE EXPIRES OR TO
OBTAIN SIMILAR COVERAGE FROM SIMILAR INSURERS AS MAY BE NECESSARY TO CONTINUE
ITS BUSINESS WITHOUT A SIGNIFICANT INCREASE IN COST.

 

(Q)                                 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. 
EXCEPT AS DISCLOSED IN THE SEC REPORTS OR AS IS SO MINOR AS TO NOT REQUIRE
DISCLOSURE UNDER THE EXCHANGE ACT AND APPLICABLE REGULATIONS, NONE OF THE
MANAGING DIRECTORS, SUPERVISORY DIRECTORS OR OFFICERS OF THE COMPANY AND, TO THE
KNOWLEDGE OF THE COMPANY, NONE OF THE EMPLOYEES OF THE COMPANY IS PRESENTLY A
PARTY TO ANY TRANSACTION WITH THE COMPANY OR ANY SUBSIDIARY (OTHER THAN FOR
SERVICES AS EMPLOYEES, OFFICERS, MANAGING DIRECTORS OR SUPERVISORY DIRECTORS),
INCLUDING ANY CONTRACT, AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR THE
FURNISHING OF SERVICES TO OR BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL
PROPERTY TO OR FROM, OR OTHERWISE REQUIRING PAYMENTS TO OR FROM ANY OFFICER,
DIRECTOR OR SUCH EMPLOYEE OR, TO THE KNOWLEDGE OF THE COMPANY, ANY ENTITY IN
WHICH ANY OFFICER, MANAGING DIRECTOR, SUPERVISORY DIRECTOR, OR ANY SUCH EMPLOYEE
HAS A SUBSTANTIAL INTEREST OR IS AN OFFICER, MANAGING DIRECTOR, SUPERVISORY
DIRECTOR, TRUSTEE OR PARTNER.

 

(R)                                    INTERNAL ACCOUNTING CONTROLS.  THE
COMPANY AND THE SUBSIDIARIES MAINTAIN 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 GAAP AND TO MAINTAIN ASSET ACCOUNTABILITY, (III)
ACCESS TO ASSETS IS PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR
SPECIFIC AUTHORIZATION, AND (IV) THE RECORDED ACCOUNTABILITY FOR ASSETS IS
COMPARED WITH THE EXISTING ASSETS AT REASONABLE INTERVALS AND APPROPRIATE ACTION
IS TAKEN WITH RESPECT TO ANY DIFFERENCES. THE COMPANY HAS ESTABLISHED DISCLOSURE
CONTROLS AND PROCEDURES (AS DEFINED IN EXCHANGE ACT RULES 13A-14 AND 15D-14) FOR
THE COMPANY AND DESIGNED SUCH DISCLOSURES CONTROLS AND PROCEDURES TO ENSURE THAT
MATERIAL INFORMATION RELATING TO THE

 

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COMPANY, INCLUDING ITS SUBSIDIARIES, IS MADE KNOWN TO THE CERTIFYING OFFICERS BY
OTHERS WITHIN THOSE ENTITIES, PARTICULARLY DURING THE PERIOD IN WHICH THE
COMPANY’S FORM 10-K OR 10-Q, AS THE CASE MAY BE, IS BEING PREPARED.  THE
COMPANY’S CERTIFYING OFFICERS HAVE EVALUATED THE EFFECTIVENESS OF THE COMPANY’S
DISCLOSURE CONTROLS AND PROCEDURES AS OF A DATE WITHIN 90 DAYS PRIOR TO THE
FILING DATE OF THE FORM 10-Q FOR THE QUARTER ENDED FEBRUARY 28, 2003 (SUCH DATE,
THE “EVALUATION DATE”).  THE COMPANY PRESENTED IN THE FORM 10-Q FOR THE QUARTER
ENDED FEBRUARY 28, 2003 THE CONCLUSIONS OF THE CERTIFYING OFFICERS ABOUT THE
EFFECTIVENESS OF THE DISCLOSURE CONTROLS AND PROCEDURES BASED ON THEIR
EVALUATIONS AS OF THE EVALUATION DATE.  SINCE THE EVALUATION DATE, THERE HAVE
BEEN NO SIGNIFICANT CHANGES IN THE COMPANY’S INTERNAL CONTROLS (AS SUCH TERM IS
DEFINED IN ITEM 307(B) OF REGULATION S-K UNDER THE EXCHANGE ACT) OR, THE
COMPANY’S KNOWLEDGE, IN OTHER FACTORS THAT WOULD REASONABLY BE EXPECTED TO
SIGNIFICANTLY AFFECT THE COMPANY’S INTERNAL CONTROLS.

 

(S)                                  SOLVENCY/INDEBTEDNESS.  EXCEPT AS DISCLOSED
IN THE SEC REPORTS, BASED ON THE FINANCIAL CONDITION OF THE COMPANY AS OF THE
CLOSING DATE: (I) THE FAIR MARKET VALUE OF THE COMPANY’S ASSETS EXCEEDS THE
AMOUNT THAT WILL BE REQUIRED TO BE PAID ON OR IN RESPECT OF THE COMPANY’S
EXISTING DEBTS AND OTHER LIABILITIES (INCLUDING KNOWN CONTINGENT LIABILITIES) AS
THEY MATURE; (II) THE COMPANY’S ASSETS DO NOT CONSTITUTE UNREASONABLY SMALL
CAPITAL TO CARRY ON ITS BUSINESS FOR THE CURRENT FISCAL YEAR AS NOW CONDUCTED
AND AS PROPOSED TO BE CONDUCTED INCLUDING ITS CAPITAL NEEDS TAKING INTO ACCOUNT
THE PARTICULAR CAPITAL REQUIREMENTS OF THE BUSINESS CONDUCTED BY THE COMPANY,
AND PROJECTED CAPITAL REQUIREMENTS AND CAPITAL AVAILABILITY THEREOF; AND (III)
THE CURRENT CASH FLOW OF THE COMPANY, TOGETHER WITH THE PROCEEDS THE COMPANY
WOULD RECEIVE, WERE IT TO LIQUIDATE ALL OF ITS ASSETS, AFTER TAKING INTO ACCOUNT
ALL ANTICIPATED USES OF THE CASH, WOULD BE SUFFICIENT TO PAY ALL AMOUNTS ON OR
IN RESPECT OF ITS DEBT WHEN SUCH AMOUNTS ARE REQUIRED TO BE PAID.  THE COMPANY
DOES NOT INTEND TO INCUR DEBTS BEYOND ITS ABILITY TO PAY SUCH DEBTS AS THEY
MATURE (TAKING INTO ACCOUNT THE TIMING AND AMOUNTS OF CASH TO BE PAYABLE ON OR
IN RESPECT OF ITS DEBT). THE COMPANY HAS NO KNOWLEDGE OF ANY FACTS OR
CIRCUMSTANCES WHICH LEAD IT TO BELIEVE THAT IT WILL FILE FOR REORGANIZATION OR
LIQUIDATION UNDER THE BANKRUPTCY OR REORGANIZATION LAWS OF ANY JURISDICTION
WITHIN ONE YEAR FROM THE CLOSING DATE.  THE SEC REPORTS SET FORTH AS OF THE
DATES THEREOF ALL MATERIAL OUTSTANDING SECURED AND UNSECURED INDEBTEDNESS OF THE
COMPANY OR ANY SUBSIDIARY, OR FOR WHICH THE COMPANY OR ANY SUBSIDIARY HAS
COMMITMENTS. FOR THE PURPOSES OF THIS AGREEMENT, “INDEBTEDNESS” SHALL MEAN (A)
ANY LIABILITIES FOR BORROWED MONEY OR AMOUNTS OWED IN EXCESS OF $50,000 (OTHER
THAN TRADE ACCOUNTS PAYABLE INCURRED IN THE ORDINARY COURSE OF BUSINESS), (B)
ALL GUARANTIES, ENDORSEMENTS AND OTHER CONTINGENT OBLIGATIONS RELATED TO
INDEBTEDNESS OF OTHERS, WHETHER OR NOT THE SAME ARE OR SHOULD BE REFLECTED IN
THE COMPANY’S BALANCE SHEET OR THE NOTES THERETO, IN EXCESS OF $50,000, EXCEPT
GUARANTIES BY ENDORSEMENT OF NEGOTIABLE INSTRUMENTS FOR DEPOSIT OR COLLECTION IN
THE ORDINARY COURSE OF BUSINESS, AND (C) THE PRESENT VALUE OF ANY LEASE PAYMENTS
IN EXCESS OF $50,000 DUE UNDER LEASES REQUIRED TO BE CAPITALIZED IN ACCORDANCE
WITH GAAP.  EXCEPT AS DISCLOSED IN THE SEC REPORTS, NEITHER THE COMPANY NOR ANY
SUBSIDIARY IS IN DEFAULT WITH RESPECT TO ANY INDEBTEDNESS.

 

(T)                                    CERTAIN FEES.  NO BROKERAGE OR FINDER’S
FEES OR COMMISSIONS ARE OR WILL BE PAYABLE BY THE COMPANY TO ANY BROKER,
FINANCIAL ADVISOR OR CONSULTANT, FINDER, PLACEMENT AGENT, INVESTMENT BANKER,
BANK OR OTHER PERSON WITH RESPECT TO THE TRANSACTIONS

 

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CONTEMPLATED BY THIS AGREEMENT, AND THE COMPANY HAS NOT TAKEN ANY ACTION THAT
WOULD CAUSE ANY PURCHASER TO BE LIABLE FOR ANY SUCH FEES OR COMMISSIONS.  THE
COMPANY AGREES THAT THE PURCHASERS SHALL HAVE NO OBLIGATION WITH RESPECT TO ANY
FEES OR WITH RESPECT TO ANY CLAIMS MADE BY OR ON BEHALF OF ANY PERSON FOR FEES
OF THE TYPE CONTEMPLATED BY THIS SECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.

 

(U)                                 PRIVATE PLACEMENT.  ASSUMING THE ACCURACY OF
THE REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS SET FORTH IN SECTIONS
3.2(B)-(E), THE OFFER, ISSUANCE AND SALE OF THE SECURITIES TO THE PURCHASERS AS
CONTEMPLATED HEREBY ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.  THE ISSUANCE AND SALE OF THE SECURITIES HEREUNDER DO NOT
CONTRAVENE THE RULES AND REGULATIONS OF THE PRINCIPAL MARKET, EXCEPT THAT
SHAREHOLDER APPROVAL IS REQUIRED FOR THE COMPANY TO ISSUE IN EXCESS OF 
2,521,689 SHARES OF COMMON STOCK UNDER THE TRANSACTION DOCUMENTS.

 

(V)                                 LISTING AND MAINTENANCE REQUIREMENTS.  THE
COMPANY HAS NOT, IN THE 12 MONTHS PRECEDING THE DATE HEREOF, RECEIVED NOTICE
FROM ANY PRINCIPAL MARKET ON WHICH THE COMMON STOCK IS OR HAS BEEN LISTED OR
QUOTED TO THE EFFECT THAT THE COMPANY IS NOT IN COMPLIANCE WITH THE LISTING OR
MAINTENANCE REQUIREMENTS OF SUCH PRINCIPAL MARKET. THE COMPANY IS, AND HAS NO
REASON TO BELIEVE THAT IT WILL NOT IN THE FORESEEABLE FUTURE CONTINUE TO BE, IN
COMPLIANCE WITH ALL SUCH LISTING AND MAINTENANCE REQUIREMENTS.

 

(W)                               REGISTRATION RIGHTS.  THE  COMPANY HAS NOT
GRANTED OR AGREED TO GRANT TO ANY PERSON ANY RIGHTS (INCLUDING “PIGGY-BACK”
REGISTRATION RIGHTS) TO HAVE ANY SECURITIES OF THE COMPANY REGISTERED WITH THE
COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY THAT  ARE REQUIRED TO BE INCLUDED
IN THE REGISTRATION STATEMENT(S) REQUIRED TO BE FILED BY THE COMPANY PURSUANT TO
THE TRANSACTION DOCUMENTS

 

(X)                                   APPLICATION OF TAKEOVER PROTECTIONS.  THE
COMPANY AND ITS SUPERVISORY BOARD HAVE TAKEN ALL NECESSARY ACTION, IF ANY, IN
ORDER TO RENDER INAPPLICABLE ANY CONTROL SHARE ACQUISITION, BUSINESS
COMBINATION, POISON PILL (INCLUDING ANY DISTRIBUTION UNDER A RIGHTS AGREEMENT)
OR OTHER SIMILAR ANTI-TAKEOVER PROVISION UNDER THE COMPANY’S ARTICLES OF
ASSOCIATION (OR SIMILAR CHARTER DOCUMENTS) OR THE LAWS OF ITS JURISDICTION OF
INCORPORATION THAT IS OR COULD BECOME APPLICABLE TO THE PURCHASERS AS A RESULT
OF THE PURCHASERS AND THE COMPANY FULFILLING THEIR OBLIGATIONS OR EXERCISING
THEIR RIGHTS UNDER THE TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION AS A
RESULT OF THE COMPANY’S ISSUANCE OF THE SECURITIES AND THE PURCHASERS’ OWNERSHIP
OF THE SECURITIES.

 

(Y)                                 SENIORITY.  EXCEPT FOR LIENS SECURING
INDEBTEDNESS DISCLOSED IN THE SEC REPORTS AND WITHOUT CONSIDERATION OF EQUITABLE
SUBORDINATION PRINCIPLES, AS OF THE CLOSING DATE, NO INDEBTEDNESS OF THE COMPANY
IS SENIOR TO THE DEBENTURES IN RIGHT OF PAYMENT, WHETHER WITH RESPECT TO
INTEREST OR UPON LIQUIDATION OR DISSOLUTION, OR OTHERWISE, OTHER THAN
INDEBTEDNESS SECURED BY PURCHASE MONEY SECURITY INTERESTS (WHICH IS SENIOR ONLY
AS TO UNDERLYING ASSETS COVERED THEREBY) AND CAPITAL LEASE OBLIGATIONS (WHICH IS
SENIOR ONLY AS TO THE PROPERTY COVERED THEREBY).

 

(Z)                                   DISCLOSURE.  THE COMPANY CONFIRMS THAT
NEITHER IT NOR ANY OTHER PERSON ACTING ON ITS BEHALF HAS PROVIDED ANY OF THE
PURCHASERS OR THEIR AGENTS OR COUNSEL WITH ANY

 

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INFORMATION THAT CONSTITUTES OR MIGHT CONSTITUTE MATERIAL, NONPUBLIC
INFORMATION, UNLESS PRIOR THERETO SUCH PURCHASER SHALL HAVE EXECUTED A WRITTEN
AGREEMENT REGARDING THE CONFIDENTIALITY AND USE OF SUCH INFORMATION.  THE
COMPANY UNDERSTANDS AND CONFIRMS THAT THE PURCHASERS WILL RELY ON THE FOREGOING
REPRESENTATIONS IN EFFECTING TRANSACTIONS IN SECURITIES OF THE COMPANY. ALL
DISCLOSURE PROVIDED TO THE PURCHASERS REGARDING THE COMPANY, ITS BUSINESS AND
THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING THE SCHEDULES TO THIS AGREEMENT,
FURNISHED BY OR ON BEHALF OF THE COMPANY WITH RESPECT TO THE REPRESENTATIONS AND
WARRANTIES MADE HEREIN ARE TRUE AND CORRECT WITH RESPECT TO SUCH REPRESENTATIONS
AND WARRANTIES AND DO NOT CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR
OMIT TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING. THE COMPANY ACKNOWLEDGES AND AGREES THAT NO PURCHASER MAKES OR HAS
MADE ANY REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY OTHER THAN THOSE SPECIFICALLY SET FORTH IN SECTION 3.2
HEREOF.

 

(AA)                            FORM S-3 ELIGIBILITY.  THE COMPANY IS ELIGIBLE
TO REGISTER THE RESALE OF THE UNDERLYING SHARES FOR RESALE BY THE PURCHASER ON
FORM S-3 PROMULGATED UNDER THE SECURITIES ACT.

 

(BB)                          TAX STATUS.  THE COMPANY AND EACH OF ITS
SUBSIDIARIES HAS MADE OR FILED ALL DUTCH, U.S. FEDERAL, STATE AND FOREIGN INCOME
AND ALL OTHER TAX RETURNS, REPORTS AND DECLARATIONS REQUIRED BY ANY JURISDICTION
TO WHICH IT IS SUBJECT (UNLESS AND ONLY TO THE EXTENT THAT THE COMPANY AND EACH
OF ITS SUBSIDIARIES HAS SET ASIDE ON ITS BOOKS PROVISIONS REASONABLY ADEQUATE
FOR THE PAYMENT OF ALL UNPAID AND UNREPORTED TAXES) AND HAS PAID ALL TAXES AND
OTHER GOVERNMENTAL ASSESSMENTS AND CHARGES THAT ARE MATERIAL IN AMOUNT, SHOWN OR
DETERMINED TO BE DUE ON SUCH RETURNS, REPORTS AND DECLARATIONS, EXCEPT THOSE
BEING CONTESTED IN GOOD FAITH AND HAS SET ASIDE ON ITS BOOKS PROVISIONS
REASONABLY ADEQUATE FOR THE PAYMENT OF ALL TAXES FOR PERIODS SUBSEQUENT TO THE
PERIODS TO WHICH SUCH RETURNS, REPORTS OR DECLARATIONS APPLY.  THERE ARE NO
UNPAID TAXES IN ANY MATERIAL AMOUNT CLAIMED TO BE DUE BY THE TAXING AUTHORITY OF
ANY JURISDICTION, AND THE OFFICERS OF THE COMPANY KNOW OF NO BASIS FOR ANY SUCH
CLAIM.  THE COMPANY HAS NOT EXECUTED A WAIVER WITH RESPECT TO THE STATUTE OF
LIMITATIONS RELATING TO THE ASSESSMENT OR COLLECTION OF ANY FOREIGN, DUTCH, U.S.
FEDERAL, STATE OR LOCAL TAX.  NONE OF THE COMPANY’S TAX RETURNS IS PRESENTLY
BEING AUDITED BY ANY TAXING AUTHORITY.

 

(CC)                            ACKNOWLEDGMENT REGARDING PURCHASERS’ PURCHASE OF
SECURITIES.  THE COMPANY ACKNOWLEDGES AND AGREES THAT THE PURCHASERS ARE ACTING
SOLELY IN THE CAPACITY OF ARM’S LENGTH PURCHASERS WITH RESPECT TO THIS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY FURTHER ACKNOWLEDGES THAT
NO PURCHASER IS ACTING AS A FINANCIAL ADVISOR OR FIDUCIARY OF THE COMPANY (OR IN
ANY SIMILAR CAPACITY) WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND ANY STATEMENT MADE BY ANY PURCHASER OR ANY OF THEIR
RESPECTIVE REPRESENTATIVES OR AGENTS IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY IS NOT ADVICE OR A RECOMMENDATION AND IS MERELY
INCIDENTAL TO THE PURCHASERS’ PURCHASE OF THE SECURITIES.  THE COMPANY FURTHER
REPRESENTS TO EACH PURCHASER THAT THE COMPANY’S DECISION TO ENTER INTO THIS
AGREEMENT HAS BEEN BASED SOLELY ON THE INDEPENDENT EVALUATION OF THE COMPANY AND
ITS REPRESENTATIVES.

 

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(DD)                          NO GENERAL SOLICITATION OR ADVERTISING IN REGARD
TO THIS TRANSACTION.  NEITHER THE COMPANY NOR, TO THE KNOWLEDGE OF THE COMPANY,
ANY OF ITS SUPERVISORY DIRECTORS, MANAGING DIRECTORS OR OFFICERS (I) HAS
CONDUCTED OR WILL CONDUCT ANY GENERAL SOLICITATION (AS THAT TERM IS USED IN RULE
502(C) OF REGULATION D) OR GENERAL ADVERTISING WITH RESPECT TO THE SALE OF THE
DEBENTURES, THE WARRANTS OR THE ENABLE WARRANTS, OR (II) MADE ANY OFFERS OR
SALES OF ANY SECURITY OR SOLICITED ANY OFFERS TO BUY ANY SECURITY UNDER ANY
CIRCUMSTANCES THAT WOULD REQUIRE REGISTRATION OF THE DEBENTURES, THE UNDERLYING
SHARES, THE WARRANTS OR THE ENABLE WARRANTS UNDER THE SECURITIES ACT OR MADE ANY
“DIRECTED SELLING EFFORTS” AS DEFINED IN RULE 902 OF REGULATION S.

 

(ee)                            No Disagreements with Accountants and Lawyers. 
The Company is current with respect to any fees owed to its accountants and
lawyers.

 

3.2                                 REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS.  EACH PURCHASER HEREBY, FOR ITSELF AND FOR NO OTHER PURCHASER,
REPRESENTS AND WARRANTS TO THE COMPANY AS FOLLOWS:

 

(A)                                  ORGANIZATION; AUTHORITY.  SUCH PURCHASER IS
AN ENTITY DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS
OF THE JURISDICTION OF ITS ORGANIZATION WITH THE REQUISITE CORPORATE OR
PARTNERSHIP POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS
OBLIGATIONS THEREUNDER. THE PURCHASE BY SUCH PURCHASER OF THE SECURITIES
HEREUNDER HAS BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF SUCH
PURCHASER.  EACH OF THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT HAS
BEEN DULY EXECUTED BY SUCH PURCHASER, AND WHEN DELIVERED BY SUCH PURCHASER IN
ACCORDANCE WITH THE TERMS HEREOF, WILL CONSTITUTE THE VALID AND LEGALLY BINDING
OBLIGATION OF SUCH PURCHASER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS
TERMS.

 

(B)                                 INVESTMENT INTENT.  SUCH PURCHASER IS
ACQUIRING THE SECURITIES AS PRINCIPAL FOR ITS OWN ACCOUNT FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR DISTRIBUTING OR RESELLING SUCH
SECURITIES OR ANY PART THEREOF, WITHOUT PREJUDICE, HOWEVER, TO SUCH PURCHASER’S
RIGHT, SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, AT ALL TIMES TO SELL OR
OTHERWISE DISPOSE OF ALL OR ANY PART OF SUCH SECURITIES PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR UNDER AN EXEMPTION FROM SUCH
REGISTRATION AND IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS.  NOTHING CONTAINED HEREIN SHALL BE DEEMED A REPRESENTATION OR WARRANTY BY
SUCH PURCHASER TO HOLD SECURITIES FOR ANY PERIOD OF TIME.  SUCH PURCHASER IS
ACQUIRING THE SECURITIES HEREUNDER IN THE ORDINARY COURSE OF ITS BUSINESS.  SUCH
PURCHASER DOES NOT HAVE ANY AGREEMENT OR UNDERSTANDING, DIRECTLY OR INDIRECTLY,
WITH ANY PERSON TO DISTRIBUTE ANY OF THE SECURITIES.

 

(C)                                  PURCHASER STATUS.  AT THE TIME SUCH
PURCHASER WAS OFFERED THE SECURITIES, IT WAS, AND AT THE DATE HEREOF IT IS, AND
ON EACH DATE ON WHICH IT EXERCISES ANY WARRANTS OR CONVERTS ANY DEBENTURES IT
WILL BE, AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(A) UNDER THE SECURITIES
ACT. SUCH PURCHASER HAS NOT BEEN FORMED SOLELY FOR THE PURPOSE OF ACQUIRING THE
SECURITIES.  SUCH PURCHASER IS NOT A REGISTERED BROKER-DEALER UNDER SECTION 15
OF THE EXCHANGE ACT.

 

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(D)                                 EXPERIENCE OF SUCH PURCHASER.  SUCH
PURCHASER, EITHER ALONE OR TOGETHER WITH ITS REPRESENTATIVES, HAS SUCH
KNOWLEDGE, SOPHISTICATION AND EXPERIENCE IN BUSINESS AND FINANCIAL MATTERS SO AS
TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT
IN THE SECURITIES, AND HAS SO EVALUATED THE MERITS AND RISKS OF SUCH
INVESTMENT.  SUCH PURCHASER IS ABLE TO BEAR THE ECONOMIC RISK OF AN INVESTMENT
IN THE SECURITIES AND, AT THE PRESENT TIME, IS ABLE TO AFFORD A COMPLETE LOSS OF
SUCH INVESTMENT.

 

(E)                                  GENERAL SOLICITATION.  SUCH PURCHASER IS
NOT PURCHASING THE SECURITIES AS A RESULT OF ANY ADVERTISEMENT, ARTICLE, NOTICE
OR OTHER COMMUNICATION REGARDING THE SECURITIES PUBLISHED IN ANY NEWSPAPER,
MAGAZINE OR SIMILAR MEDIA OR BROADCAST OVER TELEVISION OR RADIO OR PRESENTED AT
ANY SEMINAR OR ANY OTHER GENERAL SOLICITATION OR GENERAL ADVERTISEMENT.

 

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1                                 TRANSFER RESTRICTIONS.

 

(A)                                  THE SECURITIES MAY ONLY BE DISPOSED OF IN
COMPLIANCE WITH STATE AND FEDERAL SECURITIES LAWS.  IN CONNECTION WITH ANY
TRANSFER (INCLUDING A PLEDGE) OF SECURITIES OTHER THAN PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, TO THE COMPANY OR TO AN AFFILIATE OF A PURCHASER, THE
COMPANY MAY REQUIRE THE TRANSFEROR THEREOF TO PROVIDE TO THE COMPANY AN OPINION
OF COUNSEL SELECTED BY THE TRANSFEROR AND REASONABLY SATISFACTORY TO THE
COMPANY, THE FORM AND SUBSTANCE OF WHICH OPINION SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH TRANSFER DOES NOT REQUIRE
REGISTRATION OF SUCH TRANSFERRED SECURITIES UNDER THE SECURITIES ACT.  AS A
CONDITION OF TRANSFER, ANY SUCH TRANSFEREE SHALL AGREE IN WRITING TO BE BOUND BY
THE TERMS OF THIS AGREEMENT AND SHALL HAVE THE RIGHTS OF A PURCHASER UNDER THIS
AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.

 

(B)                                 EACH PURCHASER AGREES TO THE IMPRINTING, SO
LONG AS IS REQUIRED BY THIS SECTION 4.1(B), OF THE FOLLOWING LEGEND ON ANY
CERTIFICATE EVIDENCING SECURITIES:

 

[NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, ALL AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY

 

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ACCEPTABLE TO THE COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement or grant a security interest in
some or all of the Securities and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties, subject to this Section 4.1.  Further, no notice
shall be required of such pledge.  At the appropriate Purchaser’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or
secured party of Securities may reasonably request in connection with a pledge
or transfer of the Securities, including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of Selling Shareholders thereunder.

 

(C)                                  CERTIFICATES EVIDENCING UNDERLYING SHARES
SHALL NOT BE ISSUED WITH ANY LEGEND (INCLUDING THE LEGEND SET FORTH IN
SECTION 4.1(B) HEREOF): (I) WHILE A REGISTRATION STATEMENT (INCLUDING THE
UNDERLYING SHARES REGISTRATION STATEMENT) COVERING THE RESALE OF SUCH SECURITY
IS EFFECTIVE UNDER THE SECURITIES ACT, OR (II) FOLLOWING ANY SALE OF SUCH
UNDERLYING SHARES PURSUANT TO RULE 144, OR (III) IF SUCH UNDERLYING SHARES ARE
ELIGIBLE FOR SALE UNDER RULE 144(K), OR (IV) IF SUCH LEGEND IS NOT REQUIRED
UNDER APPLICABLE REQUIREMENTS OF THE SECURITIES ACT (INCLUDING JUDICIAL
INTERPRETATIONS AND PRONOUNCEMENTS ISSUED BY THE STAFF OF THE COMMISSION);
PROVIDED, HOWEVER, IN CONNECTION WITH THE ISSUANCE OF THE UNDERLYING SHARES,
EACH PURCHASER, SEVERALLY AND NOT JOINTLY WITH THE OTHER PURCHASERS, HEREBY
AGREES TO ADHERE TO AND ABIDE BY ALL PROSPECTUS DELIVERY REQUIREMENTS UNDER THE
SECURITIES ACT AND COMMISSION REGULATIONS.  IF ALL OR ANY PORTION OF A DEBENTURE
OR WARRANT IS CONVERTED OR EXERCISED (AS APPLICABLE) AT A TIME WHEN THERE IS AN
EFFECTIVE REGISTRATION STATEMENT TO COVER THE RESALE OF THE UNDERLYING SHARES,
OR IF SUCH UNDERLYING SHARES MAY BE SOLD UNDER RULE 144(K) OR IF SUCH LEGEND IS
NOT OTHERWISE REQUIRED UNDER APPLICABLE REQUIREMENTS OF THE SECURITIES ACT
(INCLUDING JUDICIAL INTERPRETATIONS THEREOF) THEN SUCH UNDERLYING SHARES SHALL
BE ISSUED FREE OF ALL LEGENDS.  THE COMPANY AGREES THAT FOLLOWING THE EFFECTIVE
DATE OR AT SUCH TIME AS SUCH LEGEND IS NO LONGER REQUIRED UNDER THIS
SECTION 4.1(C), IT WILL, NO LATER THAN THREE TRADING DAYS FOLLOWING THE DELIVERY
BY A PURCHASER TO THE COMPANY OR THE COMPANY’S TRANSFER AGENT OF A CERTIFICATE
REPRESENTING UNDERLYING SHARES ISSUED WITH A RESTRICTIVE LEGEND (SUCH THIRD
TRADING DAY, THE “LEGEND REMOVAL DATE”), DELIVER OR CAUSE TO BE DELIVERED TO
SUCH PURCHASER A CERTIFICATE REPRESENTING SUCH SHARES THAT IS FREE FROM ALL
RESTRICTIVE AND OTHER LEGENDS.  THE COMPANY MAY NOT MAKE ANY NOTATION ON ITS
RECORDS OR GIVE INSTRUCTIONS TO ANY TRANSFER AGENT OF THE COMPANY THAT ENLARGE
THE RESTRICTIONS ON TRANSFER SET FORTH IN THIS SECTION.

 

(D)                                 IN ADDITION TO SUCH PURCHASER’S OTHER
AVAILABLE REMEDIES, THE COMPANY SHALL PAY TO A PURCHASER, IN CASH, AS LIQUIDATED
DAMAGES AND NOT AS A PENALTY, FOR EACH $1,000 OF UNDERLYING SHARES (BASED ON THE
VWAP OF THE COMMON STOCK ON THE DATE SUCH SECURITIES ARE SUBMITTED TO THE
COMPANY’S TRANSFER AGENT) DELIVERED FOR REMOVAL OF

 

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THE RESTRICTIVE LEGEND AND SUBJECT TO THIS SECTION 4.1(C), $10 PER TRADING DAY
(INCREASING TO $20 PER TRADING DAY 3 TRADING DAYS AFTER SUCH DAMAGES HAVE BEGUN
TO ACCRUE) FOR EACH TRADING DAY AFTER THE LEGEND REMOVAL DATE UNTIL SUCH
CERTIFICATE IS DELIVERED WITHOUT A LEGEND, UNLESS REQUIRED BY APPLICABLE LAW.

 

4.2                                 ACKNOWLEDGMENT OF DILUTION.  THE COMPANY
ACKNOWLEDGES THAT THE ISSUANCE OF THE SECURITIES MAY RESULT IN DILUTION OF THE
OUTSTANDING SHARES OF COMMON STOCK, WHICH DILUTION MAY BE SUBSTANTIAL UNDER
CERTAIN MARKET CONDITIONS.  THE COMPANY FURTHER ACKNOWLEDGES THAT ITS
OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION ITS
OBLIGATION TO ISSUE THE UNDERLYING SHARES PURSUANT TO THE TRANSACTION DOCUMENTS,
ARE UNCONDITIONAL AND ABSOLUTE AND NOT SUBJECT TO ANY RIGHT OF SET OFF,
COUNTERCLAIM, DELAY OR REDUCTION, REGARDLESS OF THE EFFECT OF ANY SUCH DILUTION
OR ANY CLAIM THE COMPANY MAY HAVE AGAINST ANY PURCHASER AND REGARDLESS OF THE
DILUTIVE EFFECT THAT SUCH ISSUANCE MAY HAVE ON THE OWNERSHIP OF THE OTHER
SHAREHOLDERS OF THE COMPANY; PROVIDED, HOWEVER, THE COMPANY’S FULFILLMENT OF ITS
OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS, INCLUDING ITS ISSUANCE OF THE
UNDERLYING SHARES PURSUANT TO THE TRANSACTION DOCUMENTS, SHALL NOT OPERATE AS A
WAIVER BY THE COMPANY OF ANY CLAIM IT MAY HAVE AGAINST THE PURCHASER.

 

4.3                                 FURNISHING OF INFORMATION.  AS LONG AS ANY
PURCHASER OWNS SECURITIES, THE COMPANY COVENANTS TO TIMELY FILE (OR OBTAIN
EXTENSIONS IN RESPECT THEREOF AND FILE WITHIN THE APPLICABLE GRACE PERIOD) ALL
REPORTS REQUIRED TO BE FILED BY THE COMPANY AFTER THE DATE HEREOF PURSUANT TO
THE EXCHANGE ACT.  UPON THE REQUEST OF ANY PURCHASER, THE COMPANY SHALL DELIVER
TO SUCH PURCHASER A WRITTEN CERTIFICATION OF A DULY AUTHORIZED OFFICER AS TO
WHETHER IT HAS COMPLIED WITH THE PRECEDING SENTENCE. AS LONG AS ANY PURCHASER
OWNS SECURITIES, IF THE COMPANY IS NOT REQUIRED TO FILE REPORTS PURSUANT TO SUCH
LAWS, IT WILL PREPARE AND FURNISH TO THE PURCHASERS AND MAKE PUBLICLY AVAILABLE
IN ACCORDANCE WITH RULE 144(C) SUCH INFORMATION AS IS REQUIRED FOR THE
PURCHASERS TO SELL THE SECURITIES UNDER RULE 144. THE COMPANY FURTHER COVENANTS
THAT IT WILL TAKE SUCH FURTHER ACTION AS ANY HOLDER OF SECURITIES MAY REASONABLY
REQUEST, ALL TO THE EXTENT REQUIRED FROM TIME TO TIME TO ENABLE SUCH PERSON TO
SELL SUCH SECURITIES WITHOUT REGISTRATION UNDER THE SECURITIES ACT WITHIN THE
LIMITATION OF THE EXEMPTIONS PROVIDED BY RULE 144.

 

4.4                                 INTEGRATION.  THE COMPANY SHALL NOT, AND
SHALL USE COMMERCIALLY REASONABLE EFFORTS TO ENSURE THAT NO AFFILIATE OF THE
COMPANY SHALL, SELL, OFFER FOR SALE OR SOLICIT OFFERS TO BUY OR OTHERWISE
NEGOTIATE IN RESPECT OF ANY SECURITY (AS DEFINED IN SECTION 2 OF THE SECURITIES
ACT) THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES IN A
MANNER THAT WOULD REQUIRE THE REGISTRATION UNDER THE SECURITIES ACT OF THE SALE
OF THE SECURITIES TO THE PURCHASERS, OR THAT WOULD BE INTEGRATED WITH THE OFFER
OR SALE OF THE SECURITIES FOR PURPOSES OF THE RULES AND REGULATIONS OF ANY
PRINCIPAL MARKET.

 

4.5                                 RESERVATION AND LISTING OF SECURITIES.

 

(A)                                  THE COMPANY SHALL RESERVE FROM ITS
AUTHORIZED SHARE CAPITAL (“MAATSCHAPPELIJK KAPITAAL”) SHARES OF COMMON STOCK FOR
ISSUANCE PURSUANT TO THE TRANSACTION DOCUMENTS IN SUCH AMOUNT AS MAY BE REQUIRED
TO FULFILL ITS OBLIGATIONS IN FULL UNDER THE TRANSACTION DOCUMENTS.

 

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(B)                                 IF, ON ANY DATE, THE NUMBER OF SHARES OF
COMMON STOCK WHICH CAN BE ISSUED WITHOUT INCREASING THE AUTHORIZED SHARE CAPITAL
(“MAATSCHAPPELIJK KAPITAAL”) OF THE COMPANY IS LESS THAN 150% OF THE ACTUAL
MINIMUM ON SUCH DATE, THEN THE SUPERVISORY BOARD OF THE COMPANY SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO AMEND THE COMPANY’S ARTICLES OF ASSOCIATION
TO INCREASE THE AUTHORIZED SHARE CAPITAL (“MAATSCHAPPELIJK KAPITAAL”) SUCH THAT
THE NUMBER OF SHARES OF COMMON STOCK WHICH CAN BE ISSUED EQUALS AT LEAST THE
REQUIRED MINIMUM AT SUCH TIME (MINUS THE NUMBER OF SHARES OF COMMON STOCK
PREVIOUSLY ISSUED PURSUANT TO THE TRANSACTION DOCUMENTS), AS SOON AS POSSIBLE
AND IN ANY EVENT NOT LATER THAN THE 90TH DAY AFTER SUCH DATE; PROVIDED THAT THE
COMPANY WILL NOT BE REQUIRED AT ANY TIME TO AUTHORIZE A NUMBER OF SHARES OF
COMMON STOCK GREATER THAN THE MAXIMUM REMAINING NUMBER OF SHARES OF COMMON STOCK
THAT COULD POSSIBLY BE ISSUED AFTER SUCH TIME PURSUANT TO THE TRANSACTION
DOCUMENTS.

 

(C)                                  THE COMPANY SHALL: (I) PRIOR TO CLOSING,
PREPARE AND FILE WITH SUCH PRINCIPAL MARKET AN ADDITIONAL SHARES LISTING
APPLICATION COVERING A NUMBER OF SHARES OF COMMON STOCK AT LEAST EQUAL TO THE
REQUIRED MINIMUM ON THE DATE OF SUCH APPLICATION, (II) TAKE ALL STEPS NECESSARY
TO CAUSE SUCH SHARES OF COMMON STOCK TO BE APPROVED FOR LISTING ON THE PRINCIPAL
MARKET AS SOON AS POSSIBLE THEREAFTER, (III) PROVIDE TO THE PURCHASERS EVIDENCE
OF SUCH LISTING, AND (IV) MAINTAIN THE LISTING OF SUCH COMMON STOCK ON SUCH
PRINCIPAL MARKET OR ANOTHER PRINCIPAL MARKET AT LEAST EQUAL TO THE REQUIRED
MINIMUM.  IN ADDITION, THE COMPANY SHALL HOLD A MEETING OF SHAREHOLDERS (WHICH
MAY ALSO BE THE ANNUAL MEETING OF SHAREHOLDERS) AT THE EARLIEST PRACTICAL DATE,
BUT IN NO EVENT LATER THAN NOVEMBER 30, 2003, FOR THE PURPOSE OF OBTAINING
SHAREHOLDER APPROVAL, WITH THE RECOMMENDATION OF THE COMPANY’S SUPERVISORY BOARD
THAT SUCH PROPOSAL BE APPROVED, AND THE COMPANY SHALL SOLICIT PROXIES FROM ITS
SHAREHOLDERS IN CONNECTION THEREWITH IN THE SAME MANNER AS ALL OTHER MANAGEMENT
PROPOSALS IN SUCH PROXY STATEMENT AND ALL MANAGEMENT-APPOINTED PROXYHOLDERS
SHALL VOTE THEIR PROXIES IN FAVOR OF SUCH PROPOSAL.

 

4.6                                 Conversion and Exercise Procedures.  The
form of Notice of Exercise included in the Warrants and the form of Notice of
Conversion included in the Debentures set forth the totality of the procedures
required of the Purchasers in order to exercise the Warrants or convert the
Debentures.  No additional legal opinion or other information or instructions
shall be required of the Purchasers to exercise their Warrants or convert their
Debentures. The Company shall honor exercises of the Warrants and conversions of
the Debentures and shall deliver Underlying Shares in accordance with the terms,
conditions and time periods set forth in the Transaction Documents.

 

4.7                                 Future Financings.  From the date hereof
until 90 days after the Effective Date, other than as contemplated by this
Agreement, neither the Company nor any Subsidiary shall issue or sell any
Capital Shares or Capital Shares Equivalents.  Notwithstanding anything to the
contrary herein, this Section 4.7 shall not apply to the following (each of
which, an “Exempt Transaction”): (a) the granting of options or the issuance of
shares of Common Stock to employees, officers and directors of the Company
pursuant to any stock option plan, share purchase plan or similar plan duly
adopted by a majority of the non-employee members of the Supervisory Board of
the Company or a majority of the members of a committee of non-employee

 

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directors established for such purpose, (b) the issuance of up to 150,000 shares
of Common Stock or Capital Shares Equivalents, in the aggregate, to consultants
or advisors to the Company for services rendered to the Company by such
consultants or advisors subsequent to the date hereof, (c) the issuance or
deemed issuance of any security by the Company pursuant to the Transaction
Documents, or (d) the exercise of or conversion of any convertible securities,
options or warrants issued and outstanding on the Closing Date, provided that
such securities have not been amended since the date hereof to increase the type
or number of securities issuable with respect thereto or decrease the exercise
or conversion price of such securities, or (e) acquisitions, business
partnerships, joint ventures, real property leasing arrangements or other
strategic investments, the primary purpose of which is not to raise capital, or
commercial credit arrangements or debt financings from a bank or similar
financial institution, (f) firm commitment underwritten public offerings,
commercial credit arrangements, debt financing from a commercial bank or similar
financial institutions or (g) leasing arrangements from a bank or similar
financial institution approved by the Company’s Supervisory Board.

 

4.8                                 SECURITIES LAWS DISCLOSURE; PUBLICITY.  THE
COMPANY SHALL, BY 8:30 A.M. EASTERN TIME ON THE TRADING DAY FOLLOWING THE
CLOSING DATE, ISSUE A PRESS RELEASE OR FILE A CURRENT REPORT ON FORM 8-K
REASONABLY ACCEPTABLE TO EACH PURCHASER DISCLOSING ALL MATERIAL TERMS OF THE
TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY AND THE PURCHASERS SHALL CONSULT
WITH EACH OTHER IN ISSUING ANY PRESS RELEASES WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY.  NOTWITHSTANDING THE FOREGOING, OTHER THAN IN ANY
REGISTRATION STATEMENT FILED PURSUANT TO THE REGISTRATION RIGHTS AGREEMENT AND
FILINGS RELATED THERETO, THE COMPANY SHALL NOT PUBLICLY DISCLOSE THE NAME OF ANY
PURCHASER, OR INCLUDE THE NAME OF ANY PURCHASER IN ANY FILING WITH THE
COMMISSION OR ANY REGULATORY AGENCY OR PRINCIPAL MARKET, WITHOUT THE PRIOR
WRITTEN CONSENT OF SUCH PURCHASER, EXCEPT TO THE EXTENT SUCH DISCLOSURE IS
REQUIRED BY LAW OR PRINCIPAL MARKET REGULATIONS, IN WHICH CASE THE COMPANY SHALL
PROVIDE EACH PURCHASER WITH PRIOR NOTICE OF SUCH DISCLOSURE.

 

4.9                                 NON-PUBLIC INFORMATION.  THE COMPANY
COVENANTS AND AGREES THAT OTHER THAN AS IT RELATES TO THE TRANSACTION DOCUMENTS
NEITHER IT NOR ANY OTHER PERSON ACTING ON ITS BEHALF WILL PROVIDE ANY PURCHASER
OR ITS AGENTS OR COUNSEL WITH ANY INFORMATION THAT THE COMPANY BELIEVES
CONSTITUTES MATERIAL NON-PUBLIC INFORMATION, UNLESS PRIOR THERETO SUCH PURCHASER
SHALL HAVE EXECUTED A WRITTEN AGREEMENT REGARDING THE CONFIDENTIALITY AND USE OF
SUCH INFORMATION.  THE COMPANY UNDERSTANDS AND CONFIRMS THAT EACH PURCHASER
SHALL BE RELYING ON THE FOREGOING REPRESENTATIONS IN EFFECTING TRANSACTIONS IN
SECURITIES OF THE COMPANY.

 

4.10                           USE OF PROCEEDS.  THE COMPANY SHALL USE THE NET
PROCEEDS FROM THE SALE OF THE SECURITIES HEREUNDER FOR WORKING CAPITAL PURPOSES,
BUT NOT TO REDEEM ANY COMPANY EQUITY OR EQUITY-EQUIVALENT SECURITIES. PRIOR TO
THE RECEIPT OF SHAREHOLDER APPROVAL, THE COMPANY SHALL NOT DECLARE OR PAY ANY
CASH DIVIDEND ON ITS SHARES OF COMMON STOCK WHILE ANY DEBENTURES REMAIN
OUTSTANDING.

 

4.11                           REIMBURSEMENT.  IF ANY PURCHASER BECOMES INVOLVED
IN ANY CAPACITY IN ANY PROCEEDING BY OR AGAINST ANY PERSON WHO IS A SHAREHOLDER
OF THE COMPANY, SOLELY AS A RESULT OF SUCH PURCHASER’S ACQUISITION OF THE
SECURITIES UNDER THIS AGREEMENT AND WITHOUT CAUSATION BY ANY OTHER ACTIVITY,
OBLIGATION, CONDITION OR LIABILITY PERTAINING TO SUCH PURCHASER, THE COMPANY
WILL REIMBURSE SUCH PURCHASER, TO THE EXTENT SUCH REIMBURSEMENT IS NOT PROVIDED
FOR IN SECTION 4.12,

 

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FOR ITS REASONABLE LEGAL AND OTHER EXPENSES (INCLUDING THE COST OF ANY
INVESTIGATION, PREPARATION AND TRAVEL IN CONNECTION THEREWITH) INCURRED IN
CONNECTION THEREWITH, AS SUCH EXPENSES ARE INCURRED. THE REIMBURSEMENT
OBLIGATIONS OF THE COMPANY UNDER THIS PARAGRAPH SHALL BE IN ADDITION TO ANY
LIABILITY WHICH THE COMPANY MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS
AND CONDITIONS TO ANY AFFILIATES OF THE PURCHASERS WHO ARE ACTUALLY NAMED IN
SUCH ACTION, PROCEEDING OR INVESTIGATION, AND PARTNERS, DIRECTORS, AGENTS,
EMPLOYEES AND CONTROLLING PERSONS (IF ANY), AS THE CASE MAY BE, OF THE
PURCHASERS AND ANY SUCH AFFILIATE, AND SHALL BE BINDING UPON AND INURE TO THE
BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE
COMPANY, THE PURCHASERS AND ANY SUCH AFFILIATE AND ANY SUCH PERSON.  IF THE
COMPANY IS ALSO INVOLVED IN ANY SUCH PROCEEDING, THEN ABSENT A CONFLICT OF
INTEREST, PURCHASERS AGREE TO USE COMPANY’S COUNSEL IN CONNECTION THEREWITH. 
THE COMPANY ALSO AGREES THAT NEITHER THE PURCHASERS NOR ANY SUCH AFFILIATES,
PARTNERS, DIRECTORS, AGENTS, EMPLOYEES OR CONTROLLING PERSONS SHALL HAVE ANY
LIABILITY TO THE COMPANY OR ANY PERSON ASSERTING CLAIMS ON BEHALF OF OR IN RIGHT
OF THE COMPANY SOLELY AS A RESULT OF ACQUIRING THE SECURITIES UNDER THIS
AGREEMENT.

 

4.12                           INDEMNIFICATION OF PURCHASERS.  SUBJECT TO THE
PROVISIONS OF THIS SECTION 4.12, THE COMPANY WILL INDEMNIFY AND HOLD THE
PURCHASERS AND THEIR DIRECTORS, OFFICERS, SHAREHOLDERS, PARTNERS, EMPLOYEES AND
AGENTS (EACH, A “PURCHASER PARTY”) HARMLESS FROM ANY AND ALL LOSSES,
LIABILITIES, OBLIGATIONS, CLAIMS, CONTINGENCIES, DAMAGES, COSTS AND EXPENSES,
INCLUDING ALL JUDGMENTS, AMOUNTS PAID IN SETTLEMENTS, COURT COSTS AND REASONABLE
ATTORNEYS’ FEES AND COSTS OF INVESTIGATION THAT ANY SUCH PURCHASER PARTY MAY
SUFFER OR INCUR AS A RESULT OF OR RELATING TO ANY BREACH OF ANY OF THE
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS MADE BY THE COMPANY IN THIS
AGREEMENT OR IN THE OTHER TRANSACTION DOCUMENTS.  IF ANY ACTION SHALL BE BROUGHT
AGAINST ANY PURCHASER PARTY IN RESPECT OF WHICH INDEMNITY MAY BE SOUGHT PURSUANT
TO THIS AGREEMENT, SUCH PURCHASER PARTY SHALL PROMPTLY NOTIFY THE COMPANY IN
WRITING, AND THE COMPANY SHALL HAVE THE RIGHT TO ASSUME THE DEFENSE THEREOF WITH
COUNSEL OF ITS OWN CHOOSING.  ANY PURCHASER PARTY SHALL HAVE THE RIGHT TO EMPLOY
SEPARATE COUNSEL IN ANY SUCH ACTION AND PARTICIPATE IN THE DEFENSE THEREOF, BUT
THE FEES AND EXPENSES OF SUCH COUNSEL SHALL BE AT THE EXPENSE OF SUCH PURCHASER
PARTY EXCEPT TO THE EXTENT THAT (I) THE EMPLOYMENT THEREOF HAS BEEN SPECIFICALLY
AUTHORIZED BY THE COMPANY IN WRITING, (II) THE COMPANY HAS FAILED AFTER A
REASONABLE PERIOD OF TIME TO ASSUME SUCH DEFENSE AND TO EMPLOY COUNSEL OR (III)
IN SUCH ACTION THERE IS, IN THE REASONABLE OPINION OF SUCH SEPARATE COUNSEL, A
MATERIAL CONFLICT ON ANY MATERIAL ISSUE BETWEEN THE POSITION OF THE COMPANY AND
THE POSITION OF SUCH PURCHASER PARTY.  THE COMPANY WILL NOT BE LIABLE TO ANY
PURCHASER PARTY UNDER THIS AGREEMENT (I) FOR ANY SETTLEMENT BY AN PURCHASER
PARTY EFFECTED WITHOUT THE COMPANY’S PRIOR WRITTEN CONSENT, WHICH SHALL NOT BE
UNREASONABLY WITHHELD OR DELAYED; OR (II) TO THE EXTENT, BUT ONLY TO THE EXTENT
THAT A LOSS, CLAIM, DAMAGE OR LIABILITY IS ATTRIBUTABLE TO ANY PURCHASER PARTY’S
BREACH OF ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS MADE
BY THE PURCHASERS IN THIS AGREEMENT OR IN THE OTHER TRANSACTION DOCUMENTS.

 

4.13                           SHAREHOLDERS RIGHTS PLAN.  IN THE EVENT THAT A
SHAREHOLDERS RIGHTS PLAN IS ADOPTED BY THE COMPANY, NO CLAIM WILL BE MADE OR
ENFORCED BY THE COMPANY OR ANY OTHER PERSON THAT ANY PURCHASER IS AN “ACQUIRING
PERSON” UNDER THE PLAN OR IN ANY WAY COULD BE DEEMED TO TRIGGER THE PROVISIONS
OF SUCH PLAN BY VIRTUE OF RECEIVING SECURITIES UNDER THE TRANSACTION DOCUMENTS.

 

4.14                           PARTICIPATION IN FUTURE FINANCING.  (A) FROM THE
DATE HEREOF UNTIL SUCH TIME AS A PURCHASER NO LONGER HOLDS ANY DEBENTURES, AND
EXCEPT FOR EXEMPT TRANSACTIONS, THE COMPANY SHALL NOT EFFECT A FINANCING OF ITS
CAPITAL SHARES OR CAPITAL SHARES EQUIVALENTS (A “SUBSEQUENT

 

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FINANCING”) UNLESS (I) THE COMPANY DELIVERS TO EACH PURCHASER A WRITTEN NOTICE
AT LEAST 5 TRADING DAYS PRIOR TO THE CLOSING OF SUCH SUBSEQUENT FINANCING (THE
“SUBSEQUENT FINANCING NOTICE”) OF ITS INTENTION TO EFFECT SUCH SUBSEQUENT
FINANCING, WHICH SUBSEQUENT FINANCING NOTICE SHALL DESCRIBE IN REASONABLE DETAIL
THE PROPOSED TERMS OF SUCH SUBSEQUENT FINANCING, THE AMOUNT OF PROCEEDS INTENDED
TO BE RAISED THEREUNDER, THE PERSON WITH WHOM SUCH SUBSEQUENT FINANCING IS
PROPOSED TO BE EFFECTED, AND ATTACHED TO WHICH SHALL BE A TERM SHEET OR SIMILAR
DOCUMENT RELATING THERETO AND (II) A PURCHASER  SHALL NOT HAVE NOTIFIED THE
COMPANY BY 6:30 P.M. (NEW YORK CITY TIME) ON THE FIFTH (5TH) TRADING DAY AFTER
ITS RECEIPT OF THE SUBSEQUENT FINANCING NOTICE OF ITS WILLINGNESS TO PROVIDE (OR
TO CAUSE ITS DESIGNEE TO PROVIDE), SUBJECT TO COMPLETION OF MUTUALLY ACCEPTABLE
DOCUMENTATION, ALL OR PART OF SUCH FINANCING TO THE COMPANY ON THE SAME TERMS
SET FORTH IN THE SUBSEQUENT FINANCING NOTICE. IF ONE OR MORE PURCHASERS SHALL
FAIL TO SO NOTIFY THE COMPANY OF THEIR WILLINGNESS TO PARTICIPATE IN THE
SUBSEQUENT FINANCING, THE COMPANY MAY EFFECT THE REMAINING PORTION OF SUCH
SUBSEQUENT FINANCING ON THE TERMS AND TO THE PERSONS SET FORTH IN THE SUBSEQUENT
FINANCING NOTICE; PROVIDED THAT THE COMPANY MUST PROVIDE THE PURCHASERS WITH A
SECOND SUBSEQUENT FINANCING NOTICE, AND THE PURCHASERS WILL AGAIN HAVE THE RIGHT
OF FIRST REFUSAL SET FORTH ABOVE IN THIS SECTION 4.14, IF THE SUBSEQUENT
FINANCING SUBJECT TO THE INITIAL SUBSEQUENT FINANCING NOTICE IS NOT CONSUMMATED
FOR ANY REASON ON THE TERMS SET FORTH IN SUCH SUBSEQUENT FINANCING NOTICE WITHIN
60 TRADING DAYS AFTER THE DATE OF THE INITIAL SUBSEQUENT FINANCING NOTICE WITH
THE PERSON IDENTIFIED IN THE SUBSEQUENT FINANCING NOTICE, AND IF THE COMPANY
STILL DESIRES TO EFFECT SUCH FINANCING.  IN THE EVENT THE COMPANY RECEIVES
RESPONSES TO SUBSEQUENT FINANCING NOTICES FROM PURCHASERS SEEKING TO PURCHASE
MORE THAN THE FINANCING SOUGHT BY THE COMPANY IN THE SUBSEQUENT FINANCING SUCH
PURCHASERS SHALL HAVE THE RIGHT TO PURCHASE THEIR PRO RATA PORTION (AS DEFINED
BELOW) OF THE CAPITAL SHARES OR CAPITAL SHARES EQUIVALENTS TO BE ISSUED IN SUCH
SUBSEQUENT FINANCING.  “PRO RATA PORTION” IS THE RATIO OF (X) THE PRINCIPAL
AMOUNT OF DEBENTURES PURCHASED BY A PURCHASER AND (Y) THE SUM OF THE AGGREGATE
PRINCIPAL AMOUNT OF DEBENTURES ISSUED HEREUNDER.  IF ANY PURCHASER NO LONGER
HOLDS ANY DEBENTURES, THEN THE RIGHT OF PARTICIPATION GRANTED UNDER THIS
SECTION 4.14 SHALL NO LONGER APPLY TO SUCH PURCHASER AND THE PRO RATA PORTION OF
SUCH PURCHASER SHALL BE RE-ALLOCATED AMONG THE REMAINING PURCHASERS. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS SECTION 4.14 SHALL NOT
APPLY TO THE FOLLOWING (A) THE GRANTING OF OPTIONS TO EMPLOYEES, OFFICERS AND
DIRECTORS OF THE COMPANY PURSUANT TO ANY STOCK OPTION PLAN DULY ADOPTED BY A
MAJORITY OF THE NON-EMPLOYEE MEMBERS OF THE SUPERVISORY BOARD OF THE COMPANY OR
A MAJORITY OF THE MEMBERS OF A COMMITTEE OF NON-EMPLOYEE DIRECTORS ESTABLISHED
FOR SUCH PURPOSE, OR (B) THE CONVERSION OR EXERCISE OF THE DEBENTURES OR ANY
OTHER SECURITY ISSUED BY THE COMPANY IN CONNECTION WITH THE OFFER AND SALE OF
THIS COMPANY’S SECURITIES PURSUANT TO THIS AGREEMENT, OR (C) THE EXERCISE OF OR
CONVERSION OF ANY CONVERTIBLE SECURITIES, OPTIONS OR WARRANTS ISSUED AND
OUTSTANDING ON THE ORIGINAL ISSUE DATE, PROVIDED SUCH SECURITIES HAVE NOT BEEN
AMENDED SINCE THE DATE HEREOF, OR (D) ACQUISITIONS OR STRATEGIC INVESTMENTS, THE
PRIMARY PURPOSE OF WHICH IS NOT TO RAISE CAPITAL.

 

(B)                                 FROM THE DATE HEREOF UNTIL SUCH TIME AS
THERE ARE NO LONGER ANY DEBENTURES, THE COMPANY SHALL BE PROHIBITED FROM
EFFECTING OR ENTER INTO AN AGREEMENT TO EFFECT ANY SUBSEQUENT FINANCING
INVOLVING A “VARIABLE RATE TRANSACTION” OR AN “MFN TRANSACTION” (EACH AS DEFINED
BELOW).  THE TERM “VARIABLE RATE TRANSACTION” SHALL MEAN A TRANSACTION IN WHICH
THE COMPANY ISSUES OR SELLS (I) ANY DEBT OR EQUITY SECURITIES THAT ARE
CONVERTIBLE INTO, EXCHANGEABLE OR EXERCISABLE FOR, OR INCLUDE THE RIGHT TO
RECEIVE ADDITIONAL SHARES OF COMMON STOCK EITHER (A) AT A CONVERSION, EXERCISE
OR EXCHANGE RATE OR OTHER PRICE THAT IS BASED UPON AND/OR VARIES WITH THE
TRADING PRICES OF OR QUOTATIONS FOR THE SHARES OF COMMON STOCK AT ANY TIME AFTER
THE INITIAL

 

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ISSUANCE OF SUCH DEBT OR EQUITY SECURITIES, OR (B) WITH A CONVERSION, EXERCISE
OR EXCHANGE PRICE THAT IS SUBJECT TO BEING RESET AT SOME FUTURE DATE AFTER THE
INITIAL ISSUANCE OF SUCH DEBT OR EQUITY SECURITY OR UPON THE OCCURRENCE OF
SPECIFIED OR CONTINGENT EVENTS DIRECTLY OR INDIRECTLY RELATED TO THE BUSINESS OF
THE COMPANY OR THE MARKET FOR THE COMMON STOCK.  THE TERM “MFN TRANSACTION”
SHALL MEAN A TRANSACTION IN WHICH THE COMPANY ISSUES OR SELLS ANY SECURITIES IN
A CAPITAL RAISING TRANSACTION OR SERIES OF RELATED TRANSACTIONS WHICH GRANTS TO
AN INVESTOR THE RIGHT TO RECEIVE ADDITIONAL SHARES BASED UPON FUTURE
TRANSACTIONS OF THE COMPANY ON TERMS MORE FAVORABLE THAN THOSE GRANTED TO THE
SUCH INVESTOR IN SUCH OFFERING.

 

ARTICLE V
MISCELLANEOUS

 

5.1                                 TERMINATION.  THIS AGREEMENT MAY BE
TERMINATED BY ANY PURCHASER, BY WRITTEN NOTICE TO THE OTHER PARTIES, IF THE
CLOSING HAS NOT BEEN CONSUMMATED ON OR BEFORE AUGUST 29, 2003; PROVIDED THAT NO
SUCH TERMINATION WILL AFFECT THE RIGHT OF ANY PARTY TO SUE FOR ANY BREACH BY THE
OTHER PARTY (OR PARTIES).

 

5.2                                 FEES AND EXPENSES.  THE COMPANY HAS AGREED
TO REIMBURSE $40,000 TO MIDSUMMER CAPITAL, LLC (“MIDSUMMER”) (OF WHICH $15,000
HAS BEEN RECEIVED) AS REIMBURSEMENT FOR ITS LEGAL, ADMINISTRATIVE AND DUE
DILIGENCE FEES AND EXPENSES INCURRED TO PREPARE AND NEGOTIATE THE TRANSACTION
DOCUMENTS.  ON THE CLOSING DATE, THE COMPANY SHALL WIRE $25,000 TO MIDSUMMER AS
PAYMENT OF THE REMAINING PORTION OF THE $40,000 REFERENCED ABOVE.  EXCEPT AS
EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY
SHALL PAY THE FEES AND EXPENSES OF ITS ADVISERS, COUNSEL, ACCOUNTANTS AND OTHER
EXPERTS, IF ANY, AND ALL OTHER EXPENSES INCURRED BY SUCH PARTY INCIDENT TO THE
NEGOTIATION, PREPARATION, EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT.  THE COMPANY SHALL PAY ALL TRANSFER AGENT FEES, STAMP TAXES AND OTHER
TAXES AND DUTIES LEVIED IN CONNECTION WITH THE ISSUANCE OF ANY SECURITIES.

 

5.3                                 ENTIRE AGREEMENT.  THE TRANSACTION
DOCUMENTS, TOGETHER WITH THE EXHIBITS AND SCHEDULES THERETO, CONTAIN THE ENTIRE
UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, WITH RESPECT
TO SUCH MATTERS, WHICH THE PARTIES ACKNOWLEDGE HAVE BEEN MERGED INTO SUCH
DOCUMENTS, EXHIBITS AND SCHEDULES.

 

5.4                                 NOTICES.  ANY AND ALL NOTICES OR OTHER
COMMUNICATIONS OR DELIVERIES REQUIRED OR PERMITTED TO BE PROVIDED HEREUNDER
SHALL BE IN WRITING AND SHALL BE DEEMED GIVEN AND EFFECTIVE ON THE EARLIEST OF
(A) THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA
FACSIMILE AT THE FACSIMILE NUMBER SPECIFIED ON THE SIGNATURE PAGE ATTACHED
HERETO PRIOR TO 5:30 P.M. (NEW YORK CITY TIME) ON A TRADING DAY, (B) THE NEXT
TRADING DAY AFTER THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS
DELIVERED VIA FACSIMILE AT THE FACSIMILE NUMBER SPECIFIED IN THIS SECTION ON A
DAY THAT IS NOT A TRADING DAY OR LATER THAN 5:30 P.M. (NEW YORK CITY TIME) ON
ANY TRADING DAY, OR (C) THE TRADING DAY FOLLOWING THE DATE OF MAILING, IF SENT
BY U.S. NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE. THE ADDRESSES FOR SUCH
NOTICES AND COMMUNICATIONS ARE THOSE SET FORTH ON THE SIGNATURE PAGES HEREOF, OR
SUCH OTHER ADDRESS AS MAY BE DESIGNATED IN WRITING HEREAFTER, IN THE SAME
MANNER, BY SUCH PERSON.

 

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5.5                                 AMENDMENTS; WAIVERS.  NO PROVISION OF THIS
AGREEMENT MAY BE WAIVED OR AMENDED EXCEPT IN A WRITTEN INSTRUMENT SIGNED, IN THE
CASE OF AN AMENDMENT, BY THE COMPANY AND EACH OF THE PURCHASERS OR, IN THE CASE
OF A WAIVER, BY THE PARTY AGAINST WHOM ENFORCEMENT OF ANY SUCH WAIVER IS
SOUGHT.  NO WAIVER OF ANY DEFAULT WITH RESPECT TO ANY PROVISION, CONDITION OR
REQUIREMENT OF THIS AGREEMENT SHALL BE DEEMED TO BE A CONTINUING WAIVER IN THE
FUTURE OR A WAIVER OF ANY SUBSEQUENT DEFAULT OR A WAIVER OF ANY OTHER PROVISION,
CONDITION OR REQUIREMENT HEREOF, NOR SHALL ANY DELAY OR OMISSION OF EITHER PARTY
TO EXERCISE ANY RIGHT HEREUNDER IN ANY MANNER IMPAIR THE EXERCISE OF ANY SUCH
RIGHT.

 

5.6                                 CONSTRUCTION.  THE HEADINGS HEREIN ARE FOR
CONVENIENCE ONLY, DO NOT CONSTITUTE A PART OF THIS AGREEMENT AND SHALL NOT BE
DEEMED TO LIMIT OR AFFECT ANY OF THE PROVISIONS HEREOF.  THE LANGUAGE USED IN
THIS AGREEMENT WILL BE DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO
EXPRESS THEIR MUTUAL INTENT, AND NO RULES OF STRICT CONSTRUCTION WILL BE APPLIED
AGAINST ANY PARTY.

 

5.7                                 SUCCESSORS AND ASSIGNS.  THIS AGREEMENT
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES AND THEIR
SUCCESSORS AND PERMITTED ASSIGNS.  THE COMPANY MAY NOT ASSIGN THIS AGREEMENT OR
ANY RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE
PURCHASERS; PROVIDED, HOWEVER THAT NO SUCH CONSENT SHALL BE REQUIRED IN
CONNECTION WITH:  (A) A CONSOLIDATION OR MERGER OF THE COMPANY WITH OR INTO
ANOTHER CORPORATION OR OTHER ENTITY OR A SALE, TRANSFER OR OTHER DISPOSITION OF
ALL OR SUBSTANTIALLY ALL THE COMPANY’S PROPERTY, ASSETS OR BUSINESS TO ANOTHER
CORPORATION OR OTHER ENTITY; OR (B) A REORGANIZATION OR OTHER TRANSACTION THE
PRIMARY PURPOSE OF WHICH IS TO CHANGE THE JURISDICTION OF ORGANIZATION AND/OR
CORPORATE FORM OF THE COMPANY, PROVIDED THAT SUCH MERGER, REORGANIZATION OR
OTHER TRANSACTION DOES NOT HAVE AN ADVERSE TAX IMPACT UPON THE PURCHASERS WITH
RESPECT TO THEIR PURCHASE OR SALE OF THE SECURITIES.  ANY PURCHASER MAY ASSIGN
ITS RIGHTS UNDER THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT TO ANY
PERSON TO WHOM SUCH PURCHASER ASSIGNS OR TRANSFERS ANY SECURITIES.

 

5.8                                 NO THIRD-PARTY BENEFICIARIES.  THIS
AGREEMENT IS INTENDED FOR THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS AND PERMITTED ASSIGNS AND IS NOT FOR THE BENEFIT OF, NOR MAY ANY
PROVISION HEREOF BE ENFORCED BY, ANY OTHER PERSON, EXCEPT AS OTHERWISE SET FORTH
IN SECTIONS 4.12.

 

5.9                                 GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. 
ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.  EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF SANTA
CLARA COUNTY, CALIFORNIA FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER
OR INCONVENIENT VENUE FOR SUCH PROCEEDING.  EACH PARTY HEREBY IRREVOCABLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED
MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN

 

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SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY
PROCEEDING BROUGHT UNDER ANY OF THE TRANSACTION DOCUMENTS.  IF EITHER PARTY
SHALL COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS OF THIS
AGREEMENT, THEN THE PREVAILING PARTY IN SUCH ACTION OR PROCEEDING SHALL BE
REIMBURSED BY THE OTHER PARTY FOR ITS ATTORNEYS FEES AND OTHER COSTS AND
EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH
ACTION OR PROCEEDING.

 

5.10                           SURVIVAL.  THE REPRESENTATIONS, WARRANTIES,
AGREEMENTS AND COVENANTS CONTAINED HEREIN SHALL SURVIVE THE CLOSING AND THE
DELIVERY, EXERCISE AND/OR CONVERSION OF THE SECURITIES, AS APPLICABLE, FOR THE
APPLICABLE STATUTE OF LIMITATIONS.

 

5.11                           EXECUTION.  THIS AGREEMENT MAY BE EXECUTED IN TWO
OR MORE COUNTERPARTS, ALL OF WHICH WHEN TAKEN TOGETHER SHALL BE CONSIDERED ONE
AND THE SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN
SIGNED BY EACH PARTY AND DELIVERED TO THE OTHER PARTY, IT BEING UNDERSTOOD THAT
BOTH PARTIES NEED NOT SIGN THE SAME COUNTERPART.  IN THE EVENT THAT ANY
SIGNATURE IS DELIVERED BY FACSIMILE TRANSMISSION, SUCH SIGNATURE SHALL CREATE A
VALID AND BINDING OBLIGATION OF THE PARTY EXECUTING (OR ON WHOSE BEHALF SUCH
SIGNATURE IS EXECUTED) WITH THE SAME FORCE AND EFFECT AS IF SUCH FACSIMILE
SIGNATURE PAGE WERE AN ORIGINAL THEREOF.

 

5.12                           SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT
IS HELD TO BE INVALID OR UNENFORCEABLE IN ANY RESPECT, THE VALIDITY AND
ENFORCEABILITY OF THE REMAINING TERMS AND PROVISIONS OF THIS AGREEMENT SHALL NOT
IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY AND THE PARTIES WILL ATTEMPT TO AGREE
UPON A VALID AND ENFORCEABLE PROVISION THAT IS A REASONABLE SUBSTITUTE THEREFOR,
AND UPON SO AGREEING, SHALL INCORPORATE SUCH SUBSTITUTE PROVISION IN THIS
AGREEMENT.

 

5.13                           RESCISSION AND WITHDRAWAL RIGHT.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN (AND WITHOUT LIMITING ANY SIMILAR
PROVISIONS OF) THE TRANSACTION DOCUMENTS, WHENEVER ANY PURCHASER EXERCISES A
RIGHT, ELECTION, DEMAND OR OPTION UNDER A TRANSACTION DOCUMENT AND THE COMPANY
DOES NOT TIMELY PERFORM ITS RELATED OBLIGATIONS WITHIN THE PERIODS THEREIN
PROVIDED, THEN SUCH PURCHASER MAY RESCIND OR WITHDRAW, IN ITS SOLE DISCRETION
FROM TIME TO TIME UPON WRITTEN NOTICE TO THE COMPANY, ANY RELEVANT NOTICE,
DEMAND OR ELECTION IN WHOLE OR IN PART WITHOUT PREJUDICE TO ITS FUTURE ACTIONS
AND RIGHTS, PROVIDED, HOWEVER, IN THE CASE OF A RESCISSION OF A CONVERSION OF A
DEBENTURE OR EXERCISE OF A WARRANT, THE PURCHASER SHALL BE REQUIRED TO RETURN
ANY SHARES OF COMMON STOCK SUBJECT TO ANY SUCH CONVERSION OR EXERCISE NOTICE.

 

5.14                           REPLACEMENT OF SECURITIES.  IF ANY CERTIFICATE OR
INSTRUMENT EVIDENCING ANY SECURITIES IS MUTILATED, LOST, STOLEN OR DESTROYED,
THE COMPANY SHALL ISSUE OR CAUSE TO BE ISSUED IN EXCHANGE AND SUBSTITUTION FOR
AND UPON CANCELLATION THEREOF, OR IN LIEU OF AND SUBSTITUTION THEREFOR, A NEW
CERTIFICATE OR INSTRUMENT, BUT ONLY UPON RECEIPT OF EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY OF SUCH LOSS, THEFT OR DESTRUCTION AND CUSTOMARY AND
REASONABLE INDEMNITY, IF REQUESTED.  THE APPLICANTS FOR A NEW CERTIFICATE OR
INSTRUMENT UNDER SUCH CIRCUMSTANCES SHALL ALSO PAY ANY REASONABLE THIRD-PARTY
COSTS ASSOCIATED WITH THE ISSUANCE OF SUCH REPLACEMENT SECURITIES.

 

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5.15                           REMEDIES.  IN ADDITION TO BEING ENTITLED TO
EXERCISE ALL RIGHTS PROVIDED HEREIN OR GRANTED BY LAW, INCLUDING RECOVERY OF
DAMAGES, EACH OF THE PURCHASERS AND THE COMPANY WILL BE ENTITLED TO SPECIFIC
PERFORMANCE UNDER THE TRANSACTION DOCUMENTS.  THE PARTIES AGREE THAT MONETARY
DAMAGES MAY NOT BE ADEQUATE COMPENSATION FOR ANY LOSS INCURRED BY REASON OF ANY
BREACH OF OBLIGATIONS DESCRIBED IN THE FOREGOING SENTENCE AND HEREBY AGREES TO
WAIVE IN ANY ACTION FOR SPECIFIC PERFORMANCE OF ANY SUCH OBLIGATION THE DEFENSE
THAT A REMEDY AT LAW WOULD BE ADEQUATE. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, THE COMPANY EXPRESSLY AGREES THAT ITS BREACH OF THE FIRST SENTENCE OF
SECTION 4.7 WOULD CAUSE EACH PURCHASER IRREPARABLE HARM, AND CONSENTS TO THE
GRANTING OF INJUNCTIVE RELIEF BY ANY COURT HAVING JURISDICTION TO PRECLUDE ANY
SUCH ISSUANCE OF SECURITIES.

 

5.16                           PAYMENT SET ASIDE. TO THE EXTENT THAT THE COMPANY
MAKES A PAYMENT OR PAYMENTS TO ANY PURCHASER PURSUANT TO ANY TRANSACTION
DOCUMENT OR A PURCHASER ENFORCES OR EXERCISES ITS RIGHTS THEREUNDER, AND SUCH
PAYMENT OR PAYMENTS OR THE PROCEEDS OF SUCH ENFORCEMENT OR EXERCISE OR ANY PART
THEREOF ARE SUBSEQUENTLY INVALIDATED, DECLARED TO BE FRAUDULENT OR PREFERENTIAL,
SET ASIDE, RECOVERED FROM, DISGORGED BY OR ARE REQUIRED TO BE REFUNDED, REPAID
OR OTHERWISE RESTORED TO THE COMPANY, A TRUSTEE, RECEIVER OR ANY OTHER PERSON
UNDER ANY LAW (INCLUDING, WITHOUT LIMITATION, ANY BANKRUPTCY LAW, STATE OR
FEDERAL LAW, COMMON LAW OR EQUITABLE CAUSE OF ACTION), THEN TO THE EXTENT OF ANY
SUCH RESTORATION THE OBLIGATION OR PART THEREOF ORIGINALLY INTENDED TO BE
SATISFIED SHALL BE REVIVED AND CONTINUED IN FULL FORCE AND EFFECT AS IF SUCH
PAYMENT HAD NOT BEEN MADE OR SUCH ENFORCEMENT OR SETOFF HAD NOT OCCURRED.

 

5.17                           USURY.  TO THE EXTENT IT MAY LAWFULLY DO SO, THE
COMPANY HEREBY AGREES NOT TO INSIST UPON OR PLEAD OR IN ANY MANNER WHATSOEVER
CLAIM, AND WILL RESIST ANY AND ALL EFFORTS TO BE COMPELLED TO TAKE THE BENEFIT
OR ADVANTAGE OF, USURY LAWS WHEREVER ENACTED, NOW OR AT ANY TIME HEREAFTER IN
FORCE, IN CONNECTION WITH ANY CLAIM, ACTION OR PROCEEDING THAT MAY BE BROUGHT BY
ANY PURCHASER IN ORDER TO ENFORCE ANY RIGHT OR REMEDY UNDER ANY TRANSACTION
DOCUMENT.  NOTWITHSTANDING ANY PROVISION TO THE CONTRARY CONTAINED IN ANY
TRANSACTION DOCUMENT, IT IS EXPRESSLY AGREED AND PROVIDED THAT THE TOTAL
LIABILITY OF THE COMPANY UNDER THE TRANSACTION DOCUMENTS FOR PAYMENTS IN THE
NATURE OF INTEREST SHALL NOT EXCEED THE MAXIMUM LAWFUL RATE AUTHORIZED UNDER
APPLICABLE LAW (THE “MAXIMUM RATE”), AND, WITHOUT LIMITING THE FOREGOING, IN NO
EVENT SHALL ANY RATE OF INTEREST OR DEFAULT INTEREST, OR BOTH OF THEM, WHEN
AGGREGATED WITH ANY OTHER SUMS IN THE NATURE OF INTEREST THAT THE COMPANY MAY BE
OBLIGATED TO PAY UNDER THE TRANSACTION DOCUMENTS EXCEED SUCH MAXIMUM RATE.  IT
IS AGREED THAT IF THE MAXIMUM CONTRACT RATE OF INTEREST ALLOWED BY LAW AND
APPLICABLE TO THE TRANSACTION DOCUMENTS IS INCREASED OR DECREASED BY STATUTE OR
ANY OFFICIAL GOVERNMENTAL ACTION SUBSEQUENT TO THE DATE HEREOF, THE NEW MAXIMUM
CONTRACT RATE OF INTEREST ALLOWED BY LAW WILL BE THE MAXIMUM RATE APPLICABLE TO
THE TRANSACTION DOCUMENTS FROM THE EFFECTIVE DATE FORWARD, UNLESS SUCH
APPLICATION IS PRECLUDED BY APPLICABLE LAW.  IF UNDER ANY CIRCUMSTANCES
WHATSOEVER, INTEREST IN EXCESS OF THE MAXIMUM RATE IS PAID BY THE COMPANY TO ANY
PURCHASER WITH RESPECT TO INDEBTEDNESS EVIDENCED BY THE TRANSACTION DOCUMENTS,
SUCH EXCESS SHALL BE APPLIED BY SUCH PURCHASER TO THE REDEMPTION OF THE
DEBENTURES OR BE REFUNDED TO THE COMPANY, THE MANNER OF HANDLING SUCH EXCESS TO
BE AT SUCH PURCHASER’S ELECTION.

 

5.18                           INDEPENDENT NATURE OF PURCHASERS’ OBLIGATIONS AND
RIGHTS.  THE OBLIGATIONS OF EACH PURCHASER UNDER ANY TRANSACTION DOCUMENT ARE
SEVERAL AND NOT JOINT WITH THE OBLIGATIONS OF ANY OTHER PURCHASER, AND NO
PURCHASER SHALL BE RESPONSIBLE IN ANY WAY FOR THE

 

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PERFORMANCE OF THE OBLIGATIONS OF ANY OTHER PURCHASER UNDER ANY TRANSACTION
DOCUMENT.  NOTHING CONTAINED HEREIN OR IN ANY TRANSACTION DOCUMENT, AND NO
ACTION TAKEN BY ANY PURCHASER PURSUANT THERETO, SHALL BE DEEMED TO CONSTITUTE
THE PURCHASERS AS A PARTNERSHIP, AN ASSOCIATION, A JOINT VENTURE OR ANY OTHER
KIND OF ENTITY, OR CREATE A PRESUMPTION THAT THE PURCHASERS ARE IN ANY WAY
ACTING IN CONCERT OR AS A GROUP WITH RESPECT TO SUCH OBLIGATIONS OR THE
TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENT.  EACH PURCHASER SHALL BE
ENTITLED TO INDEPENDENTLY PROTECT AND ENFORCE ITS RIGHTS, INCLUDING WITHOUT
LIMITATION THE RIGHTS ARISING OUT OF THIS AGREEMENT OR OUT OF THE OTHER
TRANSACTION DOCUMENTS, AND IT SHALL NOT BE NECESSARY FOR ANY OTHER PURCHASER TO
BE JOINED AS AN ADDITIONAL PARTY IN ANY PROCEEDING FOR SUCH PURPOSE.  EACH
PURCHASER HAS BEEN REPRESENTED BY ITS OWN SEPARATE LEGAL COUNSEL IN THEIR REVIEW
AND NEGOTIATION OF THE TRANSACTION DOCUMENTS.  FOR REASONS OF ADMINISTRATIVE
CONVENIENCE ONLY, PURCHASERS AND THEIR RESPECTIVE COUNSEL HAVE CHOSEN TO
COMMUNICATE WITH THE COMPANY THROUGH FW.  FW DOES NOT REPRESENT ALL OF THE
PURCHASERS BUT ONLY MIDSUMMER.  THE COMPANY HAS ELECTED TO PROVIDE ALL
PURCHASERS WITH THE SAME TERMS AND TRANSACTION DOCUMENTS FOR THE CONVENIENCE OF
THE COMPANY AND NOT BECAUSE IT WAS REQUIRED OR REQUESTED TO DO SO BY THE
PURCHASERS.

 

5.19                           LIQUIDATED DAMAGES.  THE COMPANY’S OBLIGATIONS TO
PAY ANY LIQUIDATED DAMAGES OR OTHER AMOUNTS OWING UNDER THE TRANSACTION
DOCUMENTS IS A CONTINUING OBLIGATION OF THE COMPANY AND SHALL NOT TERMINATE
UNTIL ALL UNPAID LIQUIDATED DAMAGES AND OTHER AMOUNTS HAVE BEEN PAID
NOTWITHSTANDING THE FACT THAT THE INSTRUMENT OR SECURITY PURSUANT TO WHICH SUCH
LIQUIDATED DAMAGES OR OTHER AMOUNTS ARE DUE AND PAYABLE SHALL HAVE BEEN
CANCELED.

 

***********************

 

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IN WITNESS WHEREOF, the parties hereto have caused this Subscription Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

 

 

 

METRON TECHNOLOGY N.V.

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

Address for Notice:

 

4425 Fortran Drive

 

San Jose, California 94134

 

Attn:  Chief Financial Officer

 

Tel:  (408) 719-0456

 

Fax:  (408) 719-0452

 

 

 

 

With a copy to:

Cooley Godward LLP

 

Attn: Suzanne Sawochka Hooper

 

5 Palo Alto Square

 

3000 El Camino Real

 

Palo Alto, CA 94306

 

Tel: 650-843-5000

 

Fax: 650- 849-7400

 

 

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