Exhibit 4.4


 


NEITHER THESE SECURITIES NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE 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 AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. 
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.


 


	
   

  	
  Date of Issuance:

  
	
   

  	
   

  
	
   

  	
   

  	
  $

  



 


6.5% CONVERTIBLE DEBENTURE


DUE JUNE   , 2008


 


THIS DEBENTURE is one of a series of duly authorized and issued
debentures of Metron Technology N.V., a corporation incorporated under the laws
of The Netherlands, having a principal place of business at 4425 Fortran Drive,
San Jose, CA 94134 (the “Company”), designated as its 6.5% Convertible
Debentures, due June   , 2008 in the aggregate principal amount
of $6,000,000 (the “Debentures”).


 


FOR VALUE RECEIVED, the Company promises to pay to
                                                
or its registered assigns (the “Holder”), the principal sum of
$                              
on June       , 2008 or such earlier date as
the Debentures are required or permitted to be repaid as provided hereunder
(the “Maturity Date”) and to pay interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Debenture at the rate
of 6.5% per annum, payable quarterly on March 1, June 1,
September 1 and December 1, beginning on September 1, 2004 and
on each Conversion Date (as defined herein) (as to that principal amount then
being converted) and on the Maturity Date (except that, if any such date is not
a Business Day, then such payment shall be due on the next succeeding Business
Day) (each such date, an “Interest Payment Date”), in cash or shares of
Common Stock (as defined in Section 5) at the Interest Conversion Rate, or
a combination thereof; provided, however, payment in shares of
Common Stock may only occur if:  (i)
there is an effective Underlying Shares Registration Statement pursuant to
which the Holder is permitted to utilize the prospectus thereunder to resell
all of the shares of Common Stock to be issued in lieu of cash (and


 
















 


the Company believes, in good faith, that such effectiveness will
continue uninterrupted for the foreseeable future), (ii) the Common Stock is
listed for trading on a Principal Market (and the Company believes, in good
faith, that trading of the Common Stock on a Principal Market will continue
uninterrupted for the foreseeable future), (iii) a sufficient number of shares
of Common Stock is reserved from the Company’s authorized share capital (“maatschappelijk kapitaal”) to provide for the issuance of
all of the shares issuable pursuant to the Transaction Documents, including the
shares to be issued for interest in lieu of cash, (iv) there is then existing
no Event of Default or event which, with the passage of time or the giving of
notice, would constitute an Event of Default, as defined in Section 3
hereof and (v) the issuance of such shares, when added to the shares issued or
issuable upon conversion of the Debentures or issued or issuable upon exercise
of the Warrants, would not exceed any applicable limitations set forth in
Section 4(a)(ii)(B) of this Debenture. 
Except as otherwise permitted herein, the Company may not prepay any
portion of the principal amount or interest on this Debenture without the prior
written consent of the Holder.  Subject
to the terms and conditions herein, the decision whether to pay interest
hereunder in shares of Common Stock or cash shall be at the discretion of the
Company. Not less than 20 Trading Days (as defined in Section 5) prior to
each regularly scheduled Interest Payment Date, within two Trading Days after
receipt of a Conversion Notice if such Interest Payment Date arises due to
delivery of a Conversion Notice by the Holder to the Company, the Company shall
provide the Holder with written notice of its election to pay interest
hereunder either in cash or shares of Common Stock, or a specific combination
thereof (the Company may indicate in such notice that the election contained in
such notice shall continue for later periods until revised) provided, however,
that, regardless of the election above, if on any Interest Payment Date the
Interest Conversion Rate then in effect (converted into EURO based on the
USD/EURO exchange rate on the Interest Payment Date) is lower than the par
value of the Common Stock, the Company shall pay interest hereunder in cash and
shall not be required to provide notice to the Holder with respect to the form
of its interest payment for such Interest Payment Date, provided that the
Company must provide the Holder with at least 20 days’ prior written notice of
any changes to the par value of its Common Stock (currently EUR 0.44).  Subject to the aforementioned conditions,
failure to timely provide such written notice shall be deemed an election by
the Company to pay the interest on such Interest Payment Date in cash. Interest
paid in shares of Common Stock shall be paid as set forth in Section 4(a)(iii). Interest shall be calculated on the basis of a
360-day year and shall accrue daily commencing on the Original Issue Date (as
defined in Section 5) until payment in full of the principal sum, together
with all accrued and unpaid interest and other amounts which may become due
hereunder, has been made. Interest shall cease to accrue with respect to any
principal amount converted, provided that the Company in fact delivers the
Underlying Shares within the time period required by Section 4(b)(i) and will thereafter cease to accrue upon delivery of
such Underlying Shares.  Interest
hereunder will be paid to the Person (as defined in Section 5) in whose
name this Debenture is registered on the records of the Company regarding registration
and transfers of Debentures (the “Debenture Register”). Except as
otherwise provided herein, if at anytime the Company pays interest partially in
cash and partially in shares of Common Stock, then such payment shall be
distributed ratably among the Holders based upon the principal amount of
Debentures held by each Holder.  All
overdue accrued and unpaid interest to be paid hereunder shall entail a late
fee at the rate of 15% per annum (or such lower maximum amount of interest
permitted to be charged under applicable law) (“Late Fee”) which will
accrue daily, from the date such interest is due hereunder through and
including the date of payment.  The Company may not prepay any portion of the principal amount of this
Debenture without


 


2
















 


the prior written consent of the Holder;  provided,
however, if interest is paid in Common Stock, then no Late Fee shall
apply if the shares of Common Stock are delivered within 3 Trading Days of the
Interest Payment Date.


 


This Debenture is subject to the following additional provisions:


 


Section 1.               This Debenture is
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same.  No service charge will be made for such
registration of transfer or exchange.


 


Section 2.               This Debenture has
been issued subject to certain investment representations of the original
Holder set forth in the Subscription Agreement (as defined in Section 5)
and may be transferred or exchanged only in compliance with the Subscription
Agreement and applicable federal and state securities laws and
regulations.  Prior to due presentment to
the Company for transfer of this Debenture, the Company and any agent of the
Company may treat the Person (as defined in Section 5) in whose name this
Debenture is duly registered on the Debenture Register as the owner hereof for
the purpose of receiving payment as herein provided and for all other purposes,
whether or not this Debenture is overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.


 


Section 3.               Events
of Default.


 


(a)           “Event of Default”, wherever used
herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or
pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):


 


(i)            any default in the payment of the principal
of, interest (including any Late Fees) on or liquidated damages in respect of,
any Debentures, free of any claim of subordination, as and when the same shall
become due and payable (whether on a Conversion Date or the Maturity Date or by
acceleration or otherwise) which default is not cured, if possible to cure,
within 5 days of notice of such default sent by the Holder;


 


(ii)           the Company shall fail to observe or perform
in any material respect any other material covenant or material agreement
contained in, or otherwise materially breach any material covenant or agreement
contained in any of the Transaction Documents (as defined in
Section 5)(other than a breach by the Company of its obligations to
deliver shares of Common Stock to the Holder upon conversion or interest
payment which breach is addressed in clause (x) below) which is not cured, if
possible to cure, within 15 days of notice of such default sent by the Holder;


 


(iii)          the Company or any
of its Significant Subsidiaries shall commence a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company commences any other proceeding under any


 


3
















 


reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or any Significant
Subsidiary thereof or there is commenced against the Company or any Significant
Subsidiary thereof any such bankruptcy, insolvency or other proceeding which
remains undismissed for a period of 60 days; or the Company or any Significant
Subsidiary thereof is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; or the Company
or any Significant Subsidiary thereof suffers any appointment of any custodian
or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or the Company or any
Significant Subsidiary thereof makes a general assignment for the benefit of
creditors; or the Company or any Significant Subsidiary thereof shall call a
meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or the Company or any Significant Subsidiary
thereof shall by any act or failure to act expressly indicate its consent to,
approval of or acquiescence in any of the foregoing; or any corporate or other
action is taken by the Company or any Significant Subsidiary thereof for the
purpose of effecting any of the foregoing;


 


(iv)          the Company shall default in any of its
obligations under any other Debenture or any mortgage, credit agreement or
other facility, indenture agreement, factoring agreement or other instrument
under which there may be issued, or by which there may be secured or evidenced
any indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company in an amount exceeding $500,000, whether
such indebtedness now exists or shall hereafter be created and such default
shall result in such indebtedness being declared due and payable by the lender
prior to the date on which it would otherwise become due and payable;


 


(v)           the Common Stock shall not be eligible for
quotation on or quoted for trading on the Nasdaq SmallCap Market, New York
Stock Exchange, American Stock Exchange or the Nasdaq National Market (each, a
“Principal Market”) and shall not again be eligible for and quoted or
listed for trading thereon within ten (10) Trading Days;


 


(vi)          the Company shall be a party to any Change of
Control Transaction (as defined in Section 5), other than a Fundamental
Transaction (as defined in Section 4(c)(x)), or
shall redeem or repurchase more than 100,000 of its outstanding shares of
Common Stock or other equity securities of the Company (other than redemptions
of Underlying Shares (as defined in Section 5));


 


(vii)         the Company shall fail to use its best efforts
to cause the initial Underlying Shares Registration Statement (as defined in
Section 5) to be declared effective by the Commission (as defined in
Section 5) on or prior to the 180th calendar day after the Original Issue
Date;


 


4
















 


(viii)        if, during the Effectiveness Period (as defined
in the Registration Rights Agreement (as defined in Section 5)), the
effectiveness of the Underlying Shares Registration Statement lapses for any
reason or the Holder shall not be permitted to resell Registrable Securities
(as defined in the Registration Rights Agreement) (through no fault of Holder)
under the Underlying Shares Registration Statement, in either case, for more
than 30 consecutive Trading Days or 40 non-consecutive Trading Days during any
12 month period; provided, however, that in the event that the
Company is negotiating a merger, consolidation, acquisition or sale of all or
substantially all of its assets or a similar transaction and in the written
opinion of counsel to the Company, the Underlying Shares Registration
Statement, would be required to be amended to include information concerning
such transactions or the parties thereto that is not available or may not be
publicly disclosed at the time, the Company shall be permitted an additional 10
consecutive Trading Days during any 12 month period relating to such an event;


 


(ix)           an Event (as defined in the Registration
Rights Agreement) shall not have been cured to the reasonable satisfaction of
the Holder prior to the expiration of thirty days from the Event Date (as
defined in the Registration Rights Agreement) relating thereto (other than an
Event resulting from a failure of an Underlying Shares Registration Statement
to be declared effective by the Commission on or prior to the 180th calendar
day after the Original Issue Date, which shall be covered by
Section 3(a)(vii));


 


(x)            the Company shall fail for any reason to
deliver certificates to the Holder prior to the seventh Trading Day after a
Conversion Date pursuant to and in accordance with Section 4(b) or the
Company shall provide notice to the Holder, including by way of public
announcement, at any time, of its intention not to comply with requests for
conversions of any Debentures in accordance with the terms hereof;


 


(xi)           the Company shall fail for any reason to
deliver the payment in cash pursuant to a Buy-In (as defined herein) within
seven days after notice thereof is delivered hereunder; or


 


(xii)          any Person shall
breach the agreements delivered to the initial Holders pursuant to
Section 2.2(a)(vii) of the Subscription Agreement and the shareholders of
the Company do not approve the proposal referred to in Section 2.2(a)(vii)
of the Subscription Agreement.


 


(b)           If
any Event of Default occurs and is continuing, the full principal amount of
this Debenture (and, at the Holder’s option, all other Debentures then held by
such Holder), together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become at the Holder’s election,
immediately due and payable in cash.  The
aggregate amount payable upon an Event of Default shall be equal to the
Mandatory Prepayment Amount (as defined in Section 5).


 


5
















 


Interest shall accrue on the Mandatory Prepayment Amount hereunder from
the 5th day after such amount is due (being the date of an Event of
Default) through the date of prepayment in full thereof in an amount equal to
the Late Fee, to accrue daily from the date such payment is due hereunder
through and including the date of payment. 
All Debentures for which the full prepayment price hereunder shall have
been paid in accordance herewith shall promptly be surrendered to or as
directed by the Company.  The Holder need
not provide and the Company hereby waives any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration
of any grace period (other than any grace period set forth herein) enforce any
and all of its rights and remedies hereunder and all other remedies available
to it under applicable law.  Such
declaration of default may be rescinded and annulled by Holder at any time
prior to payment hereunder and the Holder shall have all rights as a Debenture
holder until such time, if any, as the full payment under this
Section shall have been received by it. 
No such rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.


 


Section 4.               Conversion.


 


(a)           (i)
At any time after the Closing Date, this Debenture shall be convertible into
shares of Common Stock at the option of the Holder, in whole or in part at any
time and from time to time (subject to the limitations on conversion set forth
in Section 4(a)(ii) hereof); provided, however, that if the
Set Price (based on the USD/Euro Exchange rate on the Conversion Date) is lower
than the par value of the Common Stock, this Debenture may be converted at the
par value of the Common Stock.  The
Holder shall effect conversions by delivering to the Company the form of Notice
of Conversion attached hereto as Annex A (a “Conversion Notice”),
to Facsimile No (408) 719-0452, Attn: Chief Financial Officer) specifying
therein the principal amount of Debentures to be converted and the date on
which such conversion is to be effected (a “Conversion Date”) and shall
contain a completed schedule in the form of Schedule 1 to the
Conversion Notice (as amended on each Conversion Date, the “Conversion
Schedule”) reflecting the remaining principal amount of this Debenture and
all accrued and unpaid interest thereon subsequent to the conversion at
issue.  If no Conversion Date is
specified in a Conversion Notice, the Conversion Date shall be the date that
such Conversion Notice is provided hereunder. 
To effect conversions hereunder, the Holder shall not be required to
physically surrender Debentures to the Company unless the entire principal
amount of this Debenture plus all accrued and unpaid interest thereon has been
so converted. The Underlying Shares which are issuable by the Company based on
the Conversion Notice and subsection 4(a) (iii) (A) shall be deemed to be
paid up on the Conversion Date by way of set-off of the Holder’s obligation to
pay up the Underlying Shares against the Company’s obligation to pay the
principal amount of this Debenture so converted (the “Converted Amount”)
to the Holder. The amount, if any, by which Converted Amount exceeds (i) the
par value of the Underlying Shares, times (ii) the number of issuable
Underlying Shares, shall be considered as share premium (“agio”)
paid on the Underlying Shares. The Company shall, within two weeks after the
Conversion Date, deposit a bank statement as referred to in
Section 2:93(a)(6) of the Netherlands Civil Code, indicating the EURO
amount into which the Converted


 


6
















 


Amount is freely convertible based on the USD/EURO exchange rate on the
Conversion Date, with the Commercial Registry of the competent Chamber of
Commerce and Industry.  Conversions
hereunder shall have the effect of lowering the outstanding principal amount of
this Debenture in an amount equal to the applicable conversion, which shall be
evidenced by entries set forth in the Conversion Schedule.  The Holder and the Company shall maintain
records showing the principal amount converted and the date of such
conversions.  The Company shall deliver
any objection to the figures represented in the Conversion Schedules within 2
Business Days of receipt of such notice. 
In the event of any dispute or discrepancy, the Company shall honor the
conversion for the undisputed amount, and provide the Holder with a written
statement of its specific objections to Holder’s calculations within the time
period required for delivery of the Underlying Shares. The Company and the Holder
shall endeavor to resolve any discrepancy within five Business Days, and absent
such consensual resolution, the matter shall, within a further five Business
Days, be referred to the Company’s independent auditors, who shall be requested
in writing to resolve such dispute within ten Business Days, or as quickly
thereafter as possible; provided, however, that if the Company’s
position with respect to such discrepancy is successful, such liquidated
damages shall not accrue pursuant to Section 4(b)(ii) with respect to the
disputed amount of such Conversion Notice. 
The written decision of such independent auditors shall be final.  The Holder and any assignee, by acceptance of
this Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted principal amount of this Debenture may be less than the amount
stated on the face hereof.


 


(ii)           Certain Conversion Restrictions.


 


(A)          The Company shall not effect any conversion
of this Debenture, and the Holder shall not have the right to convert any
portion of this Debenture to the extent that after giving effect to such
conversion, the Holder (together with the Holder’s affiliates), as set forth on
the applicable Notice of Conversion, would beneficially own in excess of 4.99%
of the number of shares of the Common Stock outstanding immediately after
giving effect to such conversion (9.99% in the case of a Forced Conversion
pursuant to Section 4(b)(iv) and the Company may assume in such instance
that the Holder does not beneficially own any other shares of Common
Stock).  For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and its affiliates shall include
the number of shares of Common Stock issuable upon conversion of this Debenture
with respect to which the determination of such sentence is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(A) conversion of the remaining, nonconverted portion of this Debenture
beneficially owned by the Holder or any of its affiliates and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities
of the Company (including, without limitation, any other


 


7
















 


Debentures or the Warrants) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its affiliates.  Except as set forth in the preceding
sentence, for purposes of this Section 4(a)(ii)(A),
beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act.  To the extent that
the limitation contained in this section applies, the determination of whether
this Debenture is convertible (in relation to other securities owned by the
Holder) and of which a portion of this Debenture is convertible shall be in the
sole discretion of such Holder. To ensure compliance with this restriction, the
Holder will be deemed to represent to the Company each time it delivers a
Notice of Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Company shall have no
obligation to verify or confirm the accuracy of such determination.  For purposes of this
Section 4(a)(ii)(A), in determining the number of outstanding shares of
Common Stock, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as
the case may be, (y) a more recent public announcement by the Company or (z)
any other notice by the Company or the Company’s Transfer Agent setting forth
the number of shares of Common Stock outstanding.  Upon the written or
oral request of the Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then
outstanding.  In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Debenture, by the Holder or its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.  The provisions
of this Section 4(a)(ii)(A) may be waived by the
Holder upon, at the election of the Holder, not less than 61 days’ prior notice
to the Company, and the provisions of this Section 4(a) shall continue to
apply until such 61st day (or such later date, as determined by the
Holder, as may be specified in such notice of waiver).


 


(B)           Notwithstanding anything herein to the
contrary, if the Company has not obtained Shareholder Approval (as defined
below), if required by the applicable rules and regulations of the Principal
Market (or any successor entity), then the Company may not issue upon
conversion of the Debentures, in the aggregate, in excess of (i) 19.999% of the
number of shares of Common Stock outstanding on the Trading Day immediately
preceding the Original Issue Date, less
(ii) any shares of Common Stock
(a) issued as payment of interest on the Debentures, (b) issued upon prior
conversion of the Debentures, (c) issued upon prior exercise of the Warrants issued to the Holders of the Debentures on
the Original Issue Date pursuant to the Subscription Agreement or (d) issued
upon prior conversion of the 8% Convertible Debentures due February 25,
2007 (the “Old Debentures”) to the extent such issuance is a result of
the anti-dilution provisions in the Old


 


8
















 


Debentures triggered by the issuance of the
Warrants and the Debentures (such number of shares, the “Issuable Maximum”).  In addition, notwithstanding anything herein
to the contrary, if the Company has not obtained Shareholder Approval (as
defined below), if required by the applicable rules and regulations of the
Principal Market (or any successor entity), then the Company may not issue to
any single Purchaser upon conversion of the Debentures, in the aggregate, in
excess of (i) 19.999% of the number of shares of Common Stock outstanding on
the Trading Day immediately preceding the Original Issue Date, less (ii) all
shares of Common Stock held by such Purchaser on the Original Issue Date or
issued to such Purchaser upon exercise or conversion of all Capital Share
Equivalents (as defined below) held by such Purchaser on the Original Issue
Date.  Each Holder shall be entitled to a
portion of the Issuable Maximum equal to the quotient obtained by dividing (x)
the aggregate principal amount of the Debenture(s)
issued and sold to such Holder on the Original Issue Date by (y) the aggregate principal amount of all Debentures
issued and sold by the Company on the Original Issue Date.  If any Holder shall no longer hold the Debenture(s), then such Holder’s
remaining portion of the Issuable Maximum shall be allocated pro-rata among the
remaining Holders.  If on any Conversion
Date: (A) the applicable Set Price then in effect is such that the shares issuable under this Debenture on any
Conversion Date together with the aggregate number of shares of Common
Stock that would then be issuable upon conversion in full of all then
outstanding Debentures would exceed the Issuable Maximum, and (B) the Company’s
shareholders shall not have previously approved the transactions contemplated
by the Transaction Documents, as may be required by the applicable rules and
regulations of the Principal Market (or any successor entity), if any (the “Shareholder Approval”), then the
Company shall issue to the Holder requesting a conversion a number of shares of
Common Stock equal to such Holder’s pro-rata portion (which shall be calculated
pursuant to the terms hereof) of the Issuable Maximum and, with respect to the
remainder of the aggregate principal amount of the Debentures (including any accrued interest) then
held by such Holder for which a conversion in accordance with the applicable
conversion price would result in an issuance of shares of Common Stock in
excess of such Holder’s pro-rata portion (which shall be calculated pursuant to
the terms hereof) of the Issuable Maximum (the “Excess Principal”), the Company shall be prohibited from converting such Excess Principal, and shall
notify the Holder of the reason therefor. This Debenture shall thereafter be
unconvertible until and unless Shareholder Approval is subsequently obtained or
is otherwise not required, but this Debenture shall otherwise remain in full
force and effect. The Company and the Holder understand and agree that
shares of Common Stock issued to and then held by the Holder as a result of
conversions of Debentures shall not be entitled to cast votes on any resolution
to obtain Shareholder Approval pursuant hereto. For clarity, the failure of the
Company to actually obtain Shareholder Approval shall not be a


 


9
















 


breach of
covenant or Event of Default under Section 3 of this Debenture.


 


(iii)          Underlying Shares Issuable Upon Conversion and Pursuant to Interest.


 


(A)          Conversion of Principal Amount.  The number of shares of Common Stock issuable
upon a conversion shall be determined by the quotient obtained by dividing (x)
the outstanding principal amount of this Debenture to be converted by (y) the
Set Price.


 


(B)           Payment of Interest in Underlying Shares.  If the Company elects to pay any interest in
shares of Common Stock (such amount of interest hereinafter referred to as the
“Converted Interest Amount”), either on a regularly scheduled Interest
Payment Date or upon receipt of a Conversion Notice from the Holder, the number
of shares of Common Stock issuable upon payment of interest under this
Debenture shall be the number determined by calculating (x) the product of (I)
the outstanding principal amount of this Debenture upon which interest is then
due and (II) the product of (aa) the quotient obtained by dividing 6.5% by 360
and (bb) the number of whole calendar months for which such principal amount
was outstanding multiplied by 30 plus the actual number of calendar days not
included within a whole month, divided by (y) the applicable Interest
Conversion Rate.


 


The Underlying Shares which are issuable by the Company as referred to
above shall be deemed to be paid up on the Interest Payment Date or, in case of
an election to pay interest in Common Shares upon receipt of a Conversion
Notice, on the Conversion Date as referred to in such Conversion Notice, by way
of set-off of the Holder’s obligation to pay up the Underlying Shares against
the Company’s obligation to pay the Converted Interest Amount to the Holder.
The amount, if any, by which Converted Interest Amount exceeds (i) the par
value of the Underlying Shares, times (ii) the number of issuable Underlying
Shares, shall be considered as share premium (“agio”)
paid on the Underlying Shares. The Company shall, within two weeks after the
Interest Payment Date or the Conversion Date, as the case may be, deposit a
bank statement as referred to in Section 2:93(a)(6)
of the Netherlands Civil Code, indicating the EURO amount into which the
Converted Amount is freely convertible based on the USD/EURO exchange rate on
the Interest Payment Date or the Conversion Date, as the case may be, with the
Commercial Registry of the competent Chamber of Commerce and Industry.


 


Not later than three Trading Days after any Interest Payment Date or
Conversion Date, the Company will deliver to the Holder (A) a certificate or
certificates representing the Underlying Shares which shall be free of
restrictive legends and trading restrictions (other than those required by the
Subscripton Agreement) representing the number of Common Shares being acquired
upon the election to pay interest in Common Shares.


 


10
















 


(C)           Certain Payments of Interest.  Notwithstanding
anything to the contrary contained herein, if on any Conversion Date the
Company elects to pay interest in Common Stock and so notifies the Holder, and
is not able to pay accrued interest in the form of Common Stock because it does
not then satisfy the conditions for payment in the form of Common Stock set
forth in the preamble to this Debenture, then, at the option of the Holder, the
Company, in lieu of delivering either shares of Common Stock pursuant to this
Section 4 or paying the regularly scheduled cash interest payment, shall
deliver, within three Trading Days of each applicable Conversion Date, an
amount in cash equal to the product of the number of shares of Common Stock
otherwise deliverable to the Holder in connection with the payment of interest
due such Conversion Date and the highest VWAP during the period commencing on
the Conversion Date and ending on the Trading Day prior to the date such
payment is made.


 


(b)           (i)            Subject to
subsection 4(a)(ii), not later than three Trading Days after any
Conversion Date, the Company will deliver to the Holder (A) a certificate or
certificates representing the Underlying Shares which shall be free of
restrictive legends and trading restrictions (other than those required by the
Subscription Agreement) representing the number of shares of Common Stock being
acquired upon the conversion of Debentures on such Conversion Date and (B) a
check in the amount of accrued and unpaid interest (if the Company has timely
elected or is required to pay accrued interest in cash). The Company shall,
upon request of the Holder, if available and if allowed under applicable
securities laws, use its commercially reasonable efforts to deliver any
certificate or certificates required to be delivered by the Company under this
Section electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions.  If in the case of any Conversion Notice such
certificate or certificates are not delivered to or as directed by the
applicable Holder by the fifth Trading Day after a Conversion Date, the Holder
shall be entitled by written notice to the Company at any time on or before its
receipt of such certificate or certificates thereafter, to rescind such
conversion, in which event the Company shall immediately return the certificates
representing the principal amount of Debentures tendered for conversion.


 


(ii)           If
the Company fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the fifth Trading Day after
the Conversion Date, the Company shall pay to such Holder, in cash, as
liquidated damages and not as a penalty, for each $5,000 of principal amount
being converted, $50 per Trading Day (increasing to $100 per Trading Day after
3 Trading Days and increasing to $200 per Trading Day 6 Trading Days after such
damages begin to accrue) for each Trading Day after such fifth Trading Day
until such certificates are delivered. 
Nothing herein shall limit a Holder’s right to pursue actual damages or
declare an Event of Default pursuant to Section 3 herein for the Company’s
failure to


 


11
















 


deliver
certificates representing shares of Common Stock upon conversion within the
period specified herein and such Holder shall have the right to pursue all
remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not
prohibit the Holders from seeking to enforce damages pursuant to any other
Section hereof or under applicable law. 
Notwithstanding anything herein to the contrary, in the event a Holder
is entitled to collect liquidated damages hereunder and liquidated damages
pursuant to Section 4.1(d) of the Subscription Agreement and/or Section 4(b)(iii) below, the Holder shall be limited to collect, at its
option, of such remedies, only one such remedy on any given occasion.


 


(iii)          The
Company’s obligations to issue and deliver the Underlying Shares upon
conversion of this Debenture in accordance with the terms hereof are absolute
and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder or any other Person of any
obligation to the Company or any violation or alleged violation of law by the
Holder or any other person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Company to the Holder in
connection with the issuance of such Underlying Shares; provided, however,
such delivery shall not operate as a waiver by the Company of any such action
the Company may have against the Holder. In addition to any other rights
available to the Holder, if the Company fails for any reason to deliver to the
Holder such certificate or certificates pursuant to Section 4(b)(i) by the
third Trading Day after the Conversion Date, and if after such third Trading
Day the Holder is required by its brokerage firm to purchase (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction of a sale by
such Holder of the Underlying Shares which the Holder anticipated receiving
upon such conversion (a “Buy-In”), then the Company shall (A) pay in
cash to the Holder (in addition to any remedies available to or elected by the
Holder) the amount by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the Common Stock so purchased exceeds (y)
the amount obtained by multiplying (1) the aggregate number of shares of Common
Stock that such Holder anticipated receiving from the conversion at issue times
(2) the price at which the sell order giving rise to such purchase obligation
was executed and (B) at the option of the Holder, either reissue Debentures in
principal amount equal to the principal amount of the attempted conversion or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its delivery requirements under
Section 4(b)(i).  For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of Debentures with
respect to which the aggregate sale price of the Underlying Shares on the date
of conversion was a total of $10,000 under clause (A) of the immediately
preceding sentence, the Company shall be required to pay the Holder
$1,000.  The Holder shall provide the
Company written notice indicating the


 


12
















 


amounts payable
to the Holder in respect of the Buy-In together with applicable confirmations
and other evidence reasonably requested by the Company.  Notwithstanding anything contained herein to
the contrary, if a Holder requires the Company to make payment in respect of a
Buy-In for the failure to timely deliver certificates hereunder and the Company
timely pays in full such payment, the Company shall not be required to pay such
Holder liquidated damages under Section 4(b)(ii) in respect of the
certificates resulting in such Buy-In. Notwithstanding anything to the contrary
herein, in the event a Holder is entitled to collect liquidated damages
hereunder and liquidated damages pursuant to Section 4.1(c) of the
Subscription Agreement and/or Section 4(b)(ii) above, the Holder shall be
limited to collect, at its option, of such remedies, only one such remedy on
any given occasion.


 


(iv)          Notwithstanding
anything herein to the contrary, if after the Effective Date the VWAP for any
twenty (20) consecutive Trading Days (such period commencing only after the
Effective Date) exceeds $11.00, as adjusted for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of the Subscription Agreement, the
Company may, within 3 Trading Days of the end of any such period, deliver a
notice to the Holder (a “Forced Conversion Notice” and the date such
notice is received by the Holder, the “Forced Conversion Notice Date”)
to cause the Holder to immediately convert all or part (and if part, pro-rata
in proportion to each Holders’ initial purchase of the Debentures) of the then
outstanding principal amount of Debentures pursuant to Section 4(a)(i) and
the Holder shall surrender (if the entire Debenture is converted) this
Debenture to the Company for conversion within 30 Trading Days of the Forced
Conversion Notice Date.  The provisions
of Section 4(a) (i) with respect to paying up the Underlying Shares and
the depositing of a bank statement shall be likewise applicable (whereby the
Forced Conversion Notice Date shall be regarded as the “Conversion Date”).  The Company may only effect a Forced
Conversion Notice if each of the following shall be true: (i) the Company shall
have duly honored all conversions occurring by virtue of one or more Conversion
Notices prior to the Forced Conversion Date, if any (ii) there is an effective
Underlying Shares Registration Statement pursuant to which the Holder is
permitted to utilize the prospectus thereunder to resell all of the Underlying
Shares issued to the Holder and all of the Underlying Shares as are issuable to
the Holder upon conversion in full of this Debenture subject to the Forced
Conversion Notice (and the Company believes, in good faith, that such
effectiveness will continue uninterrupted for the foreseeable future) or all
such Underlying Shares can be sold immediately pursuant to Rule 144, (iii) the
Common Stock is listed for trading on a Principal Market (and the Company
believes, in good faith, that trading of the Common Stock on a Principal Market
will continue uninterrupted for the foreseeable future), (iv) all liquidated
damages and other amounts owing in respect of the Debentures and Underlying
Shares shall have been paid or will, concurrently with the issuance of the
Underlying Shares, be paid in cash; (v) a sufficient number of shares of Common
Stock is reserved from the Company’s authorized share capital (“maatschappelijk kapitaal”) to provide for the issuance of
all the Underlying Shares as are issuable to the Holder upon conversion in


 


13
















 


full of the Debentures subject to the Forced Conversion Notice; (vi) no
Event of Default nor any event that with the passage of time would constitute
an Event of Default has occurred and is continuing and (vii) such issuance
would be permitted in full without violating the limitations set forth in
Sections 4(a)(ii)(A) and 4(a)(ii)(B). Notwithstanding
anything herein to the contrary, if the conversion of all or part of the
principal amount of this Debenture subject to a Forced Conversion Notice is limited
by virtue of Section 4(a)(ii)(A) under this Debenture (the “Unconverted
Debenture”), such Unconverted Debenture shall be automatically converted on
each 75th day anniversary of the Forced Conversion Notice Date to the extent
permitted pursuant to Section 4(a)(ii)(A) until all of the Holder’s
Debenture is converted, notwithstanding the market price of such stock on such
anniversary dates; provided, however, the Holder shall use best
efforts to reduce its beneficial ownership of the Common Stock to the extent
that on the next 75th day anniversary date the Holder shall be able to convert
all of its Unconverted Debenture. 
Notwithstanding anything in any of the Transaction Documents to the
contrary, immediately following the initial issuance of the Underlying Shares
to the Holder pursuant to a Forced Conversion Notice, (or the time that such
issuance would have occurred pursuant to this Section 4(b)(iv) but for the
limitations set forth in Section 4(a)(ii)(A)), this Debenture shall be
deemed to no longer be outstanding or held by the Holder for purposes of the
Transaction Documents, and any outstanding principal amount of the Unconverted
Debenture shall be treated, for all purposes, other than with respect to the
Company’s obligation hereunder to deliver such Underlying Shares, as Common
Stock and, as such, will not be subject to, among other things, the benefit of
accrual of interest or anti-dilution adjustments.


 


(c)           (i)            The
conversion price in effect on any Conversion Date shall be equal to $3.60 (subject to adjustment herein)(the “Set Price”).


 


(ii)           If
the Company, at any time while the Debentures are outstanding: (A) shall pay a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include (i)
any shares of Common Stock issued by the Company pursuant to this Debenture,
including interest thereon, or (ii) any Capital Share Equivalent issued pursuant
to a rights plan adopted by the Company’s Supervisory Board and commonly
referred to as a “poison pill” plan, but this exception shall not apply to any
subsequent exercise of any such Capital Share Equivalent, (B) subdivide
outstanding shares of Common Stock into a larger number of shares, (C) combine
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (D) issue by reclassification of shares of
the Common Stock any shares of capital stock of the Company, then the Set Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding after such event.  Any
adjustment made pursuant to this Section shall become effective
immediately after the record date for


 


14
















 


the determination
of shareholders entitled to receive such dividend or distribution (but shall
subsequently be reversed if such dividend or distribution is not actually made)
and shall become effective immediately after the effective date in the case of
a subdivision, combination or re-classification.


 


(iii)          If
the Company, at any time while Debentures are outstanding, shall issue rights,
options or warrants to all holders of Common Stock (and not to Holders)
entitling them to subscribe for or purchase shares of Common Stock or Common
Stock Equivalents (as defined in the Section below) at a price per share
less than the Set Price, the Set Price shall be reduced to equal the effective
purchase price for such Common Stock or Common Stock Equivalents (including any
reset provisions thereof) at issue; provided, however, that the
Company shall not take any action that would lower the Set Price (converted
into EURO based on the USD/EURO exchange rate on the date of such action) below
the par value of the Common Stock.  Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights, options or
warrants.


 


(iv)          If
the Company or any subsidiary thereof, as applicable, at any time while
Debentures are outstanding, shall sell or grant any option to purchase or sell
or grant any right to reprice its securities, or otherwise dispose of or issue
any Common Stock or any equity or equity equivalent securities (including any
equity, debt or other instrument that is at any time over the life thereof
convertible into or exchangeable for Common Stock) other than any Capital Share
Equivalent issued pursuant to a rights plan adopted by the Company’s
Supervisory Board (but this exception shall not apply to any subsequent
exercise of any such Capital Share Equivalent) (collectively, “Common Stock
Equivalents”) entitling any Person to acquire shares of Common Stock, at an
effective price per share less than the Set Price (“Dilutive Issuance”),
as adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalent so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued
in connection with such issuance, be entitled to receive shares of Common Stock
at an effective price per share which is less than the Set Price, such issuance
shall be deemed to have occurred for less than the Set Price), then, the Set
Price shall be reduced to equal the effective conversion, exchange or purchase
price for such Common Stock or Common Stock Equivalents (including any reset
provisions thereof) at issue; provided, however, that the Company
shall not make a Dilutive Issuance that would lower the Set Price (converted
into EURO based on the USD/EURO exchange rate on the date of such Dilutive
Issuance) below the par value of the Common Stock.  Such adjustment shall be made whenever such
Common Stock or Common Stock Equivalents are issued.


 


(v)           If
the Company, at any time while Debentures are outstanding, shall distribute to
all holders of Common Stock (and not to Holders) evidences of its indebtedness
or assets or rights or warrants to subscribe for or purchase
any security,


 


15
















 


the Set Price shall be reduced to equal the VWAP on such record date
less the then fair market value at such record date of the portion of such
assets or evidence of indebtedness so distributed applicable to one outstanding
share of the Common Stock as determined by the Supervisory Board in good faith;
provided, however, that the Company shall not take any action
that would lower the Set Price (converted into EURO based on the USD/EURO
exchange rate on the date of such action) below the par value of the Common
Stock.  In either case the adjustments
shall be described in a statement provided to the Holders of the portion of
assets or evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. 
Such adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned above.


 


(vi)          All calculations under this
Section 4 shall be made to the nearest cent or the nearest 1/100th of a
share, as the case may be. For purposes of this Section 4, the number of
shares of Common Stock outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding.


 


(vii)         Whenever
the Set Price is adjusted pursuant to any of Section 4(c)(ii)
- (v), the Company shall promptly mail to each Holder a notice setting forth
the Set Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. If the Company issues a variable rate
security, despite the prohibition thereon in the Subscription Agreement, the
Company shall be deemed to have issued Common Stock or Common Stock Equivalents
at the lowest possible conversion or exercise price at which such securities
may be converted or exercised in the case of a Variable Rate Transaction (as
defined in the Subscription Agreement), or the lowest possible adjustment price
in the case of an MFN Transaction (as defined in the Subscription Agreement).


 


(viii)        If
(A) the Company shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock; (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of any
rights; (D) the approval of any shareholders of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation
or merger to which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
property; (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then, in
each case, the Company shall, unless by doing so the Company would act in
violation of Section 46a of the Act of the Supervision of the Securities
Trade 1995 (“Wet toezicht effectenverkeer 1995”), cause to be filed at
each office or agency maintained for the purpose of conversion of the
Debentures, and shall cause


 


16
















 


to be mailed to the Holders at their last addresses as they shall
appear upon the stock books of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.  Holders are entitled to
convert Debentures during the 20-day period commencing the date of such notice
to the effective date of the event triggering such notice.


 


(ix)           If,
at any time while this Debenture is outstanding, (A) the Company effects any
merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions, (C) any tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Company effects any reclassification
of the Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other securities,
cash or property (in any such case, a “Fundamental Transaction”, provided,
however, that a “Fundamental Transaction” shall not include a merger,
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 securities),
then upon any subsequent conversion of this Debenture, the Holder shall have
the right to receive, for each Underlying Share that would have been issuable
upon such conversion absent such Fundamental Transaction, the same kind and
amount of securities, cash or property as it would have been entitled to
receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of one share of
Common Stock (the “Alternate Consideration”).  The Company shall apportion the Set Price
among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Debenture following such
Fundamental Transaction.  To the extent necessary
to effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental


 


17
















 


Transaction shall issue to the Holder a new debenture consistent with
the foregoing provisions and evidencing the Holder’s right to convert such
debenture into Alternate Consideration. 
The terms of any agreement pursuant to which a Fundamental Transaction
is effected shall include terms requiring any such successor or surviving
entity to comply with the provisions of this paragraph (c) and insuring that
this Debenture (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.


 


(xi) Notwithstanding the foregoing, no adjustment will be made under
this subsection (c) in respect of (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
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) upon 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 of the Subscription
Agreement to increase the type or number of securities issuable with respect
thereto or decrease the exercise or conversion price of such securities, (E)
acquisitions, business partnerships, joint ventures, real property leasing
arrangements or other strategic investments, the primary purpose of which is
not to raise capital and not to a Person whose primary business is investing in
securities, or commercial credit arrangements or debt financings from a bank or
similar financial institution, (F) leasing arrangements from a bank or similar
financial institution approved by the Company’s Supervisory Board or (G) any
Capital Shares Equivalents issued pursuant to a rights plan adopted by the
Company’s Supervisory Board commonly referred to as a “poison pill” plan, but
this exception shall not apply to any subsequent exercise of any such Capital
Shares Equivalents; and no single event that causes an adjustment pursuant to
this subsection (c) shall cause an adjustment under more than one of the
paragraphs set forth above.


 


(d)           The Company covenants that it will at all
times reserve from its authorized share capital (“maatschappelijk
kapitaal”) a sufficient number of Common Shares solely for the
purpose of issuance upon conversion of the Debentures and payment of interest
on the Debentures, each as herein provided, free from preemptive rights or any
other actual contingent purchase rights of persons other than the Holders, not
less than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares set
forth in the Subscription Agreement) be issuable (taking into account the
adjustments and restrictions of Section 4(b)) upon the conversion of the
outstanding principal amount of the Debentures and payment of interest
hereunder.  The Company covenants that
all shares of Common Stock that shall be so issuable shall, upon


 


18
















 


issue, be duly and validly authorized, validly issued and, fully paid-up
(“volgestort”) and, if the Underlying Shares Registration Statement is
then effective under the Securities Act, registered for public sale in
accordance with such Underlying Shares Registration Statement.


 


(e)           Upon a conversion hereunder the Company shall
not be required to issue stock certificates representing fractions of shares of
the Common Stock, but may if otherwise permitted, make
a cash payment in respect of any final fraction of a share based on the VWAP at
such time.


 


(f)            The issuance of certificates for shares of
the Common Stock on conversion of the Debentures shall be made without charge
to the Holders thereof for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such certificate, provided that
the Company shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate
upon conversion in a name other than that of the Holder of such Debentures so
converted and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.


 


(g)           Any and all notices or other communications
or deliveries to be provided by the Holders hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service or sent by certified or registered mail, postage prepaid, addressed to
the Company, at the address set forth above, facsimile number (408) 719-0452, Attn: Chief Financial Officer or
such other address or facsimile number as the Company may specify for such
purposes by notice to the Holders delivered in accordance with this
Section.  Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be
in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service or sent by certified or registered mail,
postage prepaid, addressed to each Holder at the facsimile telephone number or
address of such Holder appearing on the books of the Company, or if no such
facsimile telephone number or address appears, at the principal place of
business of the Holder.  Any notice or
other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 4:00 p.m. (New York City time) on a
Trading Day, (ii) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified in this Section later than 4:00 p.m. (New York City time)
on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) four days after deposit in the United States mail or (iv) the Business
Day following the date of mailing, if sent by nationally recognized overnight
courier service.  To the extent that
either party hereto shall deliver notice by facsimile, concurrently with the
transmission of such facsimile the party delivering notice shall confirm by
phone that such facsimile was received by at least one of the designated
persons for notice.


 


19
















 


Section 5.               Definitions. 
For the purposes hereof, in addition to the terms defined elsewhere in
this Debenture: (a) capitalized terms not otherwise defined herein have the
meanings given to such terms in the Subscription Agreement, and (b) the
following terms shall have the following meanings:


 


“Business Day” means any day except
Saturday, Sunday and any day which shall be a federal legal holiday in the
United States or a day on which banking institutions in the State of New York
are authorized or required by law or other government action to close.


 


“Change of Control Transaction”  means the occurrence after the date hereof of
any of (i) an acquisition after the date hereof by an individual or legal
entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in
excess of 50% of the voting securities of the Company, or (ii) a replacement at
one time or within a one year period of more than one-half of the members of
the Company’s Supervisory Board which is not approved by a majority of those
individuals who are members of the Supervisory Board at the commencement of
such one year period (or by those individuals who are serving as members of the
Supervisory Board on any date whose nomination to the Supervisory Board was
approved by a majority of the members of the Supervisory Board who are members
at the commencement of such one year period), or (iii) the execution by the
Company of an agreement to which the Company is a party or by which it is
bound, providing for any of the events set forth above in (i) or (ii).


 


“Commission” means the Securities and
Exchange Commission.


 


“Common Stock” means the common
shares, (based on application of Section 2:67c of the Netherlands Civil
Code) EUR 0.44 par value per share, of the Company and stock of any other class
into which such shares may hereafter have been reclassified or changed.


 


“Conversion Date” shall have the
meaning set forth in Section 4(a)(i).


 


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


 


“Interest Conversion Rate” means 90%
of the average of each of the 20 VWAPs immediately prior to the applicable
Interest Payment Date.


 


“Mandatory Prepayment Amount” for any
Debentures shall equal the sum of (i) the greater of: (A) 120% of the principal
amount of Debentures to be prepaid, plus all accrued and unpaid interest
thereon, plus all other accrued and unpaid amounts due hereunder, or (B) the
principal amount of Debentures to be prepaid, plus all accrued and unpaid
interest thereon, plus all other accrued and unpaid amounts due hereunder,
divided by the Set Price on (x) the date the Mandatory Prepayment Amount is
demanded or otherwise due or (y) the date the Mandatory Prepayment Amount is paid
in full, whichever is less, multiplied by the VWAP on (x) the date the
Mandatory Prepayment Amount is demanded or otherwise due or 


 


20
















 


(y) the date the Mandatory Prepayment Amount
is paid in full, whichever is greater, and (ii) all other amounts, costs,
expenses and liquidated damages due in respect of such Debentures.


 


“Original Issue Date” shall mean the
date of the first issuance of the Debentures regardless of the number of
transfers of any Debenture and regardless of the number of instruments which
may be issued to evidence such Debenture.


 


“Person” means a corporation, an
association, a partnership, organization, a business, an individual, a
government or political subdivision thereof or a governmental agency.


 


“Subscription Agreement” means the
Subscription Agreement, dated as of May 26, 2004, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms. All capitalized terms used but not defined
in this Debenture shall have the meanings assigned to them in the Subscription
Agreement.


 


“Registration Rights Agreement” means
the Registration Rights Agreement, dated as of the date of the Subscription
Agreement, to which the Company and the original Holder are parties, as
amended, modified or supplemented from time to time in accordance with its
terms.


 


“Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Set Price” shall have the meaning set
forth in Section 4(c)(i).


 


“Signficant Subsidiaries” or “Significant
Subsidiary” means any “Significant Subsidiary” of the Company as such term
is defined under Rule 1-02(w) of Regulation S-X of the Commission.


 


“Trading Day” means (a) a day on
which the shares of Common Stock are traded on a Principal Market on which the
shares of Common Stock are then listed or quoted, or (b) if the shares of
Common Stock are not quoted on a Principal Market, a day on which the shares of
Common Stock are quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided, that in the
event that the shares of Common Stock are not listed or quoted as set forth in
(a) and (b) hereof, then Trading Day shall mean a Business Day.


 


“Transaction Documents” shall have the
meaning set forth in the Subscription Agreement.


 


“Underlying Shares” means the shares
of Common Stock issuable upon conversion of Debentures or as payment of
interest in accordance with the terms hereof.


 


21
















 


“Underlying Shares Registration Statement”
means a registration statement meeting the requirements set forth in the
Registration Rights Agreement, covering among other things the resale of the
Underlying Shares and naming the Holder as a “selling stockholder” thereunder.


 


“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 or the OTC Bulletin
Board (or any successor market), the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Principal
Market (or OTC Bulletin Board or any successor 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. ET to 4:02 p.m. Eastern Time) using the VAP
function; (b)  if the Common Stock is not then listed or quoted on a
Principal Market or the OTC Bulletin Board (or any successor market) 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 (c) in all other cases, the fair
market value of a share of Common Stock as determined by a nationally recognized
independent appraiser selected in good faith by Purchasers holding a majority
of the outstanding principal amount of Debentures and reasonably acceptable to
the Company.


 


Section 6.  Except as expressly provided herein, no
provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, interest
and liquidated damages (if any) on, this Debenture at the time, place, and
rate, and in the coin or currency, herein prescribed.  This Debenture is a direct obligation of the
Company.  This Debenture ranks pari
passu with all other Debentures now or hereafter issued under the terms
set forth herein.  As long as there are
Debentures outstanding, the Company shall not and shall cause it subsidiaries
not to, without the consent of the Holder, (a) amend its articles of
association, bylaws or other charter documents so as to adversely affect any
rights of the Holder; (b) repay, repurchase or offer to repay, repurchase or
otherwise acquire more than 100,000 shares of its Common Stock or other equity
securities in the aggregate other than as to the Underlying Shares to the
extent permitted or required under the Transaction Documents; or (c) enter into
any agreement with respect to any of the foregoing.


 


Section 7.  If this Debenture shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, and indemnity, if requested,
all reasonably satisfactory to the Company.


 


Section 8.  [Intentionally Omitted].


 


Section 9.  All questions concerning the construction,
validity, enforcement and interpretation of this Debenture shall be governed by
and construed and enforced in accordance with the internal laws


 


22
















 


of the State of California, without regard
to the principles of conflicts of law thereof. 
Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by any of the
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts of Santa Clara County, California
(the “California Courts”).  Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
California Courts 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, or such California Courts are 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 Debenture and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Debenture or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of this Debenture, 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.


 


Section 10.  Any waiver by the Company or the Holder of a
breach of any provision of this Debenture shall not operate as or be construed
to be a waiver of any other breach of such provision or of any breach of any
other provision of this Debenture.  The
failure of the Company or the Holder to insist upon strict adherence to any
term of this Debenture on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Debenture.  Any waiver must be in writing.


 


Section 11.  If any provision of this Debenture is
invalid, illegal or unenforceable, the balance of this Debenture shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and
circumstances.  If it shall be found that
any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Company from paying all or any portion of
the principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any


 


23
















 


power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.


 


Section 12.  Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day.


 


 


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


 


24
















 


IN WITNESS WHEREOF, the Company has caused this Convertible Debenture
to be duly executed by a duly authorized officer as of the date first above
indicated.


 


	
   

  	
  METRON TECHNOLOGY N.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 
















 


ANNEX A


 


NOTICE OF CONVERSION


 


The undersigned hereby elects to convert principal and, if specified,
interest under the 6.5% Convertible Debenture of Metron Technology N.V., (the “Company”)
due on June       , 2008, into shares of
common stock, (based on application of Section 2:67c of the Netherlands
Civil Code) EUR 0.44 par value per share (the “Common Stock”), of the
Company according to the conditions hereof, as of the date written below.  If shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith.  No fee will be charged to the holder for any
conversion, except for such transfer taxes, if any.


 


By the delivery of this Notice of Conversion the undersigned represents
and warrants to the Company that its ownership of the Company’s Common Stock
does not exceed the amounts determined in accordance with Section 13(d) of
the Exchange Act, specified under Section 4 of this Debenture.


 


The undersigned agrees to comply with the prospectus delivery
requirements under the applicable securities laws in connection with any
transfer of the aforesaid shares of Common Stock.


 


Conversion calculations:


 


Date to Effect Conversion:


 


Principal Amount of Debentures to be Converted:


 


Number of shares of Common Stock to be Issued:


 


Applicable Set Price:


 


Name of Broker:


 


Broker’s DTC Number:


 


Signature:


 


Name:


 


Address:


 
















 


Schedule 1


 


CONVERSION SCHEDULE


 


6.5% Convertible Debentures due on
June       , 2008, in the aggregate
principal amount of
$                        
issued by Metron Technology N.V.  This
Conversion Schedule reflects conversions made under Section 4 of the
above referenced
Debenture.


 


Dated:


 




	
  Date
  of

  Conversion

  (or for first

  entry, Original

  Issue Date)

  	
   

  	
  Amount of

  Conversion

  	
   

  	
  Aggregate

  Principal

  Amount

  Remaining

  Subsequent to

  Conversion

  (or original

  Principal

  Amount)

  	
   

  	
  Company Attest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  






 


25