Document:

Exhibit 4.1

 

EXHIBIT A

 

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: August 25, 2003

 

$

 

 

8% CONVERTIBLE DEBENTURE

DUE FEBRUARY 25, 2007

 

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 8% Convertible Debentures, due February 25, 2007 in the
aggregate principal amount of $7,000,000 (the “Debentures”).

 

FOR VALUE RECEIVED, the Company promises to pay to
                                               
or its registered assigns (the “Holder”), the principal sum of
$                            
on February 25, 2007 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 8% per annum,
payable quarterly on March 1, June 1, September 1 and
December 1, beginning on December 1, 2003 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 or the Enable 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; provided,
however, if interest is paid in

 

2

 

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
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution,

 

3

 

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). 
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

 

5

 

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 Amount is freely
convertible based on the USD/EURO exchange rate on the Conversion Date, with
the Commercial Registry of the competent Chamber of

 

6

 

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)                              Except in connection with
a forced conversion pursuant to Section 4(b)(iv), 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 Debentures
or the Warrants) subject to a limitation on conversion or exercise

 

7

 

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, (ii) less any shares of Common Stock issued (a) as payment of
interest on the Debentures, (b) upon prior conversion of the Debentures, (c)
upon exercise of the Warrants issued to
the Holders of the Debentures on the Original Issue Date pursuant to the
Subscription Agreement or (d) upon exercise of the Enable Warrants (such
number of shares, the “Issuable
Maximum”).  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

 

8

 

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 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

 

9

 

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 8% 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.

 

(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

 

10

 

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 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.

 

11

 

(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
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.

 

12

 

(iv)                              Notwithstanding anything
herein to the contrary, if after the Effectiveness Date the VWAP for any twenty
(20) consecutive Trading Days (such period commencing only after the Effective
Date) exceeds $10.34, 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 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 Section 4(a)(ii)(B).

 

(c)                                  (i)  The conversion price in effect on any
Conversion Date shall be equal to $3.79 (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

 

13

 

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 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

 

14

 

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, 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

 

15

 

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, of 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 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

 

16

 

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”).  For purposes of any such conversion, the
determination of the Set Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable
in respect of one share of Common Stock in such Fundamental Transaction, and
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 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. If any Fundamental Transaction constitutes or
results in a Change of Control Transaction, then at the request of the Holder
delivered before the 90th day after such Fundamental Transaction, the Company
(or any such successor or surviving entity) will purchase the Debenture from
the Holder for a purchase price, payable in cash within five Trading Days after
such request (or, if later, on the effective date of the Fundamental
Transaction), equal to the 100% of the remaining unconverted principal amount
of this Debenture on the date of such request, plus all accrued and unpaid
interest thereon, plus all other accrued and unpaid amounts due hereunder.

 

(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

 

17

 

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, 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 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.

 

18

 

(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.

 

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

 

19

 

(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 (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 August 21, 2003, 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.

 

20

 

“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.

 

“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.

 

21

 

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 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

 

22

 

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 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.

 

 

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

 

23

 

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:

  	
   

  

 

24

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

 

The undersigned hereby elects to convert
principal and, if specified, interest under the 8%  Convertible Debenture of Metron Technology N.V., (the “Company”)
due on February 25, 2007, 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:

 

25

 

Schedule 1

 

CONVERSION
SCHEDULE

 

8% Convertible Debentures due on
February 25, 2007, 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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

26Exhibit 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.

 

1

 

“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.

 

2

 

“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

 

3

 

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.

 

4

 

“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:

 

5

 

(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;

 

6

 

(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

 

7

 

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

 

8

 

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

 

9

 

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

 

10

 

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

 

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

 

12

 

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

 

13

 

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

 

14

 

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.

 

15

 

(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.

 

16

 

(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

 

17

 

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

 

18

 

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.

 

19

 

(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

 

20

 

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,

 

21

 

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

 

22

 

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

 

23

 

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.

 

24

 

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

 

25

 

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.

 

26

 

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

 

27

 

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.

 

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

 

28

 

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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29

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