-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J/A6lVZhxfMZQOt++gBnhNLGgRmub8iib+s35lysmftwWiZ0vtNWFzl9INYQSENM Xl9bTtotXBa2I/IB8oCj6w== 0000912057-02-009820.txt : 20020415 0000912057-02-009820.hdr.sgml : 20020415 ACCESSION NUMBER: 0000912057-02-009820 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20020313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VEECO INSTRUMENTS INC CENTRAL INDEX KEY: 0000103145 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 112989601 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-84252 FILM NUMBER: 02574425 BUSINESS ADDRESS: STREET 1: TERMINAL DR CITY: PLAINVIEW STATE: NY ZIP: 11803 BUSINESS PHONE: 5163498300 FORMER COMPANY: FORMER CONFORMED NAME: VACUUM ELECTRONIC MANUFACTURING CORP DATE OF NAME CHANGE: 19700408 S-3 1 a2068746zs-3.txt S-3 AS FILED WITH SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 2002 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------------------- VEECO INSTRUMENTS INC. (Exact name of Registrant as specified in its charter) ------------------------------------- DELAWARE 11-2989601 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 100 SUNNYSIDE BOULEVARD WOODBURY, NEW YORK 11797 (516) 677-0200 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ------------------------------------- GREGORY A. ROBBINS VICE PRESIDENT AND GENERAL COUNSEL VEECO INSTRUMENTS INC. 100 SUNNYSIDE BOULEVARD WOODBURY, NEW YORK 11797 (516) 677-0200 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Rory A. Greiss Kaye Scholer LLP 425 Park Avenue New York, New York 10022-3598 (212) 836-8261 ------------------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this registration statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] -------------------------------------
CALCULATION OF REGISTRATION FEE ===================================================================================================== TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE - ----------------------------------------------------------------------------------------------------- 4 1/8% Convertible Subordinated Notes Due 2008............ $220,000,000(1) 100% $220,000,000 $20,240.00 - ----------------------------------------------------------------------------------------------------- Common Stock, $0.01 par value (including the associated preferred share purchase rights)..... 9,755,783 shares(2) $30.83(3) $124,645,166(3) $11,467.36(4) ======================================================================================================
(1) Represents the aggregate principal amount of the Registrant's 4 1/8% Convertible Subordinated Notes due 2008 (the "Notes") issued by the Registrant prior to the date of this registration statement. (2) Such number includes 5,712,800 shares of the Registrant's Common Stock (including the associated preferred share purchase rights) that are initially issuable upon conversion of the Notes registered hereby. For purposes of estimating the number of shares of the Registrant's Common Stock issuable upon conversion of the Notes, the Registrant used a conversion price of $38.51 per share of such Common Stock, which is the initial conversion price under the Notes. Pursuant to Rule 416 under the Securities Act of 1933, as amended, in addition to the shares of the Registrant's Common Stock set forth in this table, the number of such shares registered hereby includes such additional indeterminate number of shares of the Registrant's Common Stock (including the associated preferred share purchase rights) as may be issuable from time to time upon conversion of the Notes as a result of stock splits, stock dividends and the anti-dilution provisions thereof. Also includes 4,042,983 shares of the Registrant's Common Stock (the "Additional Shares") being registered hereby for resale by certain selling securityholders in addition to the shares of the Registrant's Common Stock issuable upon conversion of the Notes described in the preceding sentences. (3) Relates only to the Additional Shares. Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, on the basis of the high and low selling prices per share of the Registrant's Common Stock on the Nasdaq National Market on March 7, 2002. (4) The indicated registration fee is payable only in connection with the registration of the Additional Shares. No additional consideration will be received by the Registrant for the shares of its Common Stock (or the associated preferred share purchase rights) issued upon conversion of the Notes registered hereby and therefore, pursuant to Rule 457(i) under the Securities Act of 1933, as amended, no registration fee is required for such shares (or the associated preferred share purchase rights). ------------------------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE PROSPECTUS [LOGO] VEECO INSTRUMENTS INC. $220,000,000 4 1/8% CONVERTIBLE SUBORDINATED NOTES DUE 2008, SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES AND 4,042,983 ADDITIONAL SHARES OF COMMON STOCK --------- We issued the notes in a private placement in December 2001. This prospectus will be used by selling securityholders to sell their notes and the shares of our common stock issuable upon conversion of their notes. This prospectus will also be used by certain other holders of our common stock to sell up to 4,042,983 shares of our common stock held by them. The notes are convertible, at the option of the holder, at any time on or prior to maturity into shares of our common stock. The notes are convertible at a conversion price of $38.51 per share, which is equal to a conversion rate of approximately 25.9656 shares per $1,000 principal amount of notes, subject to adjustment. On March 7, 2002, the closing bid price of our common stock on the Nasdaq National Market was $30.71 per share. We will pay interest on the notes on June 21 and December 21 of each year, beginning June 21, 2002. The notes will mature on December 21, 2008. We may redeem some or all of the notes at any time on or after December 21, 2004, at the redemption prices set forth in this prospectus. We pledged a portfolio of U.S. government securities as security for the first six scheduled interest payments on the notes. The notes are otherwise our general unsecured obligations. The notes are subordinated to all of our existing and future senior indebtedness and will be effectively subordinated to all of the indebtedness and liabilities of our subsidiaries. The indenture governing the notes does not limit the incurrence by us or our subsidiaries of senior indebtedness or other indebtedness or other liabilities. The notes were sold initially to qualified institutional buyers and are currently trading in the PORTAL market. Notes sold by means of this prospectus will not be eligible for trading in the PORTAL market. We do not intend to list the notes for trading on any national or other securities exchange or on the Nasdaq National Market. Our common stock is traded on the Nasdaq National Market under the symbol "VECO." We will not receive any proceeds from the sale by the selling securityholders of the notes, the shares of our common stock issuable upon conversion of the notes or the other shares of our common stock which are sold using this prospectus. Other than selling commissions and fees and stock transfer taxes, we will pay all expenses of the registration of the notes and the common stock and certain other expenses, as set forth in the registration rights agreement we have entered into with the holders of the notes and the registration rights agreement we have entered into with the other selling securityholders who may use this prospectus. INVESTING IN THE NOTES AND IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF THIS PROSPECTUS. --------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------- The date of this prospectus is _________, 2002. TABLE OF CONTENTS Summary......................................................................1 Risk Factors.................................................................5 Forward-Looking Statements..................................................16 Use of Proceeds.............................................................16 Description of the Notes....................................................16 Material United States Federal Income Tax Considerations....................34 Selling Securityholders.....................................................40 Plan of Distribution........................................................46 Legal Matters...............................................................48 Experts.....................................................................48 Where You Can Find Additional Information...................................49 ----------- You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The selling securityholders are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any documents incorporated by reference is accurate only as of the date on the front cover of the applicable document. Our business, financial condition, results of operations and prospects may have changed since that date. We are not making any representation to any purchaser of the notes or any shares of our common stock regarding the legality of an investment in the notes or such shares by such purchaser under any legal, investment or similar laws or regulations. You should not consider any information in this prospectus to be legal, business or tax advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the notes or our common stock. ----------- THE INFORMATION IN THIS PROSPECTUS MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS, AS WELL AS THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT DECISION. EXCEPT IN THE "DESCRIPTION OF THE NOTES" SECTION AND WHERE THE CONTEXT OTHERWISE INDICATES, AS USED IN THIS PROSPECTUS THE TERMS "VEECO," "WE," "OUR" AND "US" MEAN VEECO INSTRUMENTS INC. AND ALL ENTITIES OWNED OR CONTROLLED BY VEECO INSTRUMENTS INC. i SUMMARY THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS" SECTION, THE INCORPORATED FINANCIAL STATEMENTS AND THE RELATED NOTES AND THE DOCUMENTS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT DECISION. VEECO INSTRUMENTS INC. OUR BUSINESS Veeco designs, manufactures, markets and services a broad line of equipment primarily used by manufacturers in the telecommunications/wireless, data storage and semiconductor/research industries. These industries help create a wide range of information age products such as computer integrated circuits, personal computers, hard disc drives, network servers, fiber optic networks, digital cameras, wireless phones, TV set-top boxes and personal digital assistants. Our broad line of products featuring leading edge technology allows customers to improve time-to-market of next generation products. Our process equipment products precisely deposit or remove (etch) various materials in the manufacturing of advanced thin film magnetic heads for the data storage industry, specialty semiconductor products and telecommunications/wireless components. Our metrology equipment is used to provide critical surface measurements on semiconductor devices, thin film magnetic heads and disks used in hard drives and in telecommunications/wireless and research applications. This equipment allows customers to monitor their products throughout the manufacturing process in order to improve yields, reduce costs and improve product quality. Demand for our products has been driven by the increasing miniaturization of microelectronic components; the need for manufacturers to meet reduced time-to-market schedules while ensuring the quality of those components; and, in the data storage industry, the introduction of new giant magnetoresistive (GMR) thin film magnetic heads (TFMHs) which require additional manufacturing steps and the ability to conduct critical measurements for quality control and other purposes during the manufacturing process. The ability of our products to precisely deposit thin films, and/or etch sub-micron patterns and make critical surface measurements in these components enables manufacturers to improve yields and quality in the fabrication of advanced microelectronic devices, such as passive and active telecommunications components, wireless devices, TFMHs and semiconductor devices. We serve customers worldwide through our global sales and service organization located throughout the United States, Europe, Japan and Asia Pacific. As of December 31, 2001, we had approximately 1,450 employees, with manufacturing, research and development and engineering facilities located in New York, California, Minnesota, Colorado and Arizona. Veeco Instruments Inc. was incorporated in Delaware in 1989. Our principal offices are located at 100 Sunnyside Boulevard, Woodbury, New York 11797. Our telephone number is 516-677-0200. OUR STRATEGY We have pursued, and will continue to pursue, the following growth strategy: o capitalize on the long-term growth opportunities in the telecommunications/wireless industry by expanding process equipment and metrology solutions, o pursue focused market opportunities in the semiconductor industry in which we have specific technology leadership, o strengthen our position as a leading "one-stop shop" for etch, deposition and metrology equipment for the data storage industry, 1 o pursue organic growth, as well as strategic acquisitions, to further expand our breadth of product line, o leverage our technology and strategic customer relationships and assist our customers to reduce their total cost of ownership and time-to-market for their new products, and o utilize our industry-leading global sales and service network to further strengthen customer relationships. RECENT EVENTS On September 17, 2001, we completed a merger with Applied Epi, Inc., a leading worldwide supplier of molecular beam epitaxy equipment. Applied Epi's customers use its equipment and components to manufacture compound semiconductor devices for a wide variety of communications applications, including fiber optic modules and subsystems, mobile phones, wireless networks and satellites. In the merger, Applied Epi's former stockholders received approximately 4.0 million shares of our common stock and approximately $30.0 million in cash. We accounted for the merger using the purchase method of accounting. We recorded an aggregate restructuring charge during our fiscal quarter ended December 31, 2001 of approximately $19.0 million, resulting from the restructuring of our operations in response to the significant downturn in the telecommunications industry and the overall weak business environment. This charge consisted of an approximately $13.6 million write-off of inventory (included in cost of sales) related to order cancellations and the rationalization of certain product lines. Also included in this charge was approximately $2.0 million related to plant consolidations and a 15% workforce reduction initiated in our fiscal quarter ended December 31, 2001, as well as approximately $3.4 million write-down of certain of our intangible and fixed assets. In addition, Veeco has classified its Industrial Measurement business as a discontinued operation and incurred approximately $3.4 million of losses (net of taxes) related to such reclassification in our fiscal quarter ended December 31, 2001. On December 21, 2001, we completed a private placement of $200,000,000 in aggregate principal amount of the notes. On January 3, 2002, we issued an additional $20,000,000 in aggregate principal amount of the notes in connection with the initial purchasers' exercise in full of the overallotment option we granted to them. The net proceeds to us from the sale of the notes (after deducting expenses) was approximately $212.7 million. We used approximately $25.9 million of the net proceeds to purchase the U.S. government securities which we have pledged to secure payment of the first six scheduled interest payments on the notes, as described under the heading "Description of the Notes--Security." We intend to use the balance of the net proceeds primarily for working capital and general corporate purposes, including acquisitions. While we regularly evaluate acquisition opportunities for complementary businesses, products and technologies, we currently have no contract or arrangement with respect to any material acquisition. Pending these uses, we expect to invest the net proceeds in investment-grade, interest-bearing securities. 2 THE NOTES THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN TERMS OF THE NOTES. FOR A MORE COMPLETE DESCRIPTION OF THE TERMS OF THE NOTES SEE THE "DESCRIPTION OF THE NOTES" SECTION IN THIS PROSPECTUS. Issuer............... Veeco Instruments Inc. Notes offered........ $220,000,000 aggregate principal amount of 4 1/8% convertible subordinated notes due 2008. Maturity of notes.... December 21, 2008. Interest on notes.... 4 1/8% per year on the principal amount, payable semiannually on June 21 and December 21, beginning on June 21, 2002. Conversion rights.... The notes are convertible, at the option of the holder, at any time on or prior to maturity, unless the notes have previously been redeemed or repurchased, into shares of our common stock at a conversion price of $38.51 per share, which is equal to a conversion rate of approximately 25.9656 shares per $1,000 principal amount of notes. The conversion price is subject to adjustment. See "Description of the Notes--Conversion Rights." Security............. We purchased and pledged to the trustee under the indenture, as security for the exclusive benefit of the holders of the notes, U.S. government securities which will be sufficient upon receipt of scheduled principal and interest payments thereon to provide for the payment in full of the first six scheduled interest payments due on the notes. The notes are not otherwise secured. See "Description of the Notes--Security." Ranking.............. The notes are unsecured (except as we describe above) and subordinated to all of our existing and future senior indebtedness and effectively subordinated to all existing and future indebtedness and other liabilities of our subsidiaries. Excluding intercompany indebtedness, at December 31, 2001, we (excluding our subsidiaries) had no senior indebtedness and our subsidiaries had liabilities of approximately $82.0 million, including approximately $19.0 million of indebtedness for borrowed money. Because the notes are subordinated, in the event of bankruptcy, liquidation, dissolution or acceleration of payment on our senior indebtedness, holders of the notes will not receive any payment other than the amount pledged as security for the notes until holders of our senior indebtedness have been paid in full in cash. The indenture does not limit the incurrence by us or our subsidiaries of senior indebtedness or other indebtedness or liabilities. See "Description of the Notes--Subordination of Notes." Optional redemption.. We may redeem all or a portion of the notes at any time on or after December 21, 2004, at the redemption prices listed in this prospectus, plus accrued and unpaid interest up to, but not including, the redemption date. See "Description of the Notes--Optional Redemption." Change in control.... Upon certain changes in control, each holder of the notes may require us to repurchase some or all of its notes at a purchase price equal to 100% of the principal amount of the notes plus accrued and unpaid interest. We may, at our option, instead of paying the change in control purchase price in cash, pay it in shares of our common stock valued at 95% of the average of the closing sales prices of our common stock for the five consecutive trading days immediately preceding and including the third trading day prior to the date we are required to repurchase the notes. We cannot pay the change in control purchase price in common stock unless we satisfy the conditions described in the indenture under which the notes were issued. See "Description of the Notes--Repurchase at Option of Holders Upon a Change in Control." 3 DTC eligibility...... The notes were issued in fully registered form. The notes are evidenced by one or more global notes, deposited with the trustee under the indenture as custodian for The Depository Trust Company, or DTC, and registered in the name of Cede & Co., DTC's nominee. Beneficial interests in the global notes will be shown on, and transfers will be effected only through, records maintained by DTC and its participants. See "Description of the Notes--Global Notes; Book-Entry; Form." Registration rights.. Under a registration rights agreement, we agreed to file with the Securities and Exchange Commission, or the Commission, the shelf registration statement of which this prospectus forms a part, for the resale of the notes and the shares of our common stock issuable upon conversion of the notes. We have agreed with the noteholders, subject to certain exceptions, to use our best efforts to keep the registration statement effective until the earlier of January 3, 2004 and the date on which all holders of the notes and the common stock issuable upon conversion of the notes are able to sell their securities immediately pursuant to Rule 144(k) under the Securities Act of 1933, as amended, or the Securities Act. If we do not comply with these registration obligations, we will be required to pay liquidated damages to the holders of the notes or the common stock issuable upon conversion of the notes. See "Description of the Notes--Registration Rights." Certain holders of our common stock have also included shares held by them in the shelf registration statement of which this prospectus forms a part. Generally, these shares of common stock will be included in the registration statement only until September 17, 2002. Use of proceeds...... We will not receive any of the proceeds from the sale of any securities offered by this prospectus. Trading.............. The notes are currently trading in the PORTAL market. Notes sold by means of this prospectus will not be eligible for trading in the PORTAL market. We do not intend to list the notes for trading on any national or other securities exchange or on the Nasdaq National Market. Our common stock is quoted on the Nasdaq National Market under the symbol "VECO." Risk factors......... See "Risk Factors" and the other information included or incorporated by reference in this prospectus for a discussion of factors you should consider carefully before deciding to invest in the notes or shares of our common stock. RATIO OF EARNINGS TO FIXED CHARGES Our ratio of earnings to fixed charges for each of the periods indicated is as follows:
FISCAL YEAR ENDED DECEMBER 31, NINE MONTHS ENDED SEPTEMBER 30, ------------------------------ ------------------------------- 1996 1997 1998 1999 2000 2001 ---- ---- ---- ---- ---- ---- Ratio of earnings to fixed charges 22.8x 14.9x 6.2x 10.3x 3.2x 18.5x
The ratio of earnings to fixed charges is computed by dividing our income before provision for income taxes, discontinued operations and cumulative effect of change in accounting principle plus fixed charges, by fixed charges. Fixed charges consist of interest expense, the portion of rental expense under operating leases we deem to be representative of interest and amortization of debt issue costs. 4 RISK FACTORS AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND THE OTHER INFORMATION INCLUDED AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS BEFORE DECIDING TO PURCHASE THE NOTES OR SHARES OF OUR COMMON STOCK. THESE RISKS AND UNCERTAINTIES ARE NOT THE ONLY ONES WE FACE. OTHERS THAT WE DO NOT KNOW ABOUT, OR THAT WE DO NOT NOW THINK ARE IMPORTANT, MAY IMPAIR OUR BUSINESS OR THE TRADING PRICE OF OUR NOTES OR OUR COMMON STOCK. RISKS RELATED TO OUR BUSINESS WE DEPEND ON THE MICROELECTRONICS INDUSTRY AND THE CYCLICALITY OF THE TELECOMMUNICATIONS/WIRELESS, DATA STORAGE AND SEMICONDUCTOR/RESEARCH INDUSTRIES DIRECTLY AFFECTS OUR BUSINESS. Veeco's business depends in large part upon the capital expenditures of data storage, semiconductor and telecommunications/wireless manufacturers, which accounted for the following percentages of our net sales for the periods indicated:
YEAR ENDED DECEMBER 31, --------------------------------- 1999 2000 2001 ---- ---- ---- Data storage.................. 62% 44% 31% Telecommunications/wireless... 7% 23% 30% Semiconductor/research........ 31% 33% 39%
The telecommunications/wireless, data storage and semiconductor/research industries are cyclical. These industries have experienced significant economic downturns at various times in the last decade, characterized by diminished product demand, accelerated erosion of average selling prices and production overcapacity. A downturn in one or more of these industries or the businesses of one or more of our customers could have a material adverse effect on our business, prospects, financial condition and operating results. The current global downturn in general economic conditions and in the markets for our customers' products is resulting in a reduction in demand for some of our products, and during this downturn and any subsequent downturns we cannot assure you that our sales or margins will not decline. As a capital equipment provider, our revenues depend in part on the spending patterns of our customers, who often delay expenditures or cancel orders in reaction to variations in their businesses or general economic conditions. Because a high proportion of our costs are fixed, our ability to reduce expenses quickly in response to revenue short-falls is limited. In a prolonged economic downturn, we may not be able to reduce our significant fixed costs, such as continued investment in research and development or capital equipment requirements. In addition, during an economic downturn we may experience delays in collecting receivables, which may impose constraints on our working capital. OUR QUARTERLY OPERATING RESULTS FLUCTUATE SIGNIFICANTLY. Our quarterly results have fluctuated significantly in the past and we expect this trend to continue. Factors which affect our quarterly results include: o cyclical patterns of capital spending by customers, o changes in the market for personal computers, network servers, telecommunication/wireless devices or other products incorporating telecommunications/wireless, data storage or semiconductor/research technology, o market acceptance of our systems and our customers' products, o specific economic conditions in the telecommunications/wireless, data storage or semiconductor/research industries, o our acquisitions and financings, 5 o changes in product mix, o the timing of significant orders and customer acceptance of our products, o the introduction of new products and technological innovations by us and our competitors, o production and quality problems and resulting shipment delays, o changes in the cost of materials, and o disruption in our sources of supply. Many of these factors are beyond our control. If our new orders, net sales or operating results in a particular quarter do not meet expectations, our stock price may be adversely affected. OUR CUSTOMERS MAY BE ADVERSELY AFFECTED BY RAPID TECHNOLOGICAL CHANGE AND WE MAY BE UNABLE TO MAINTAIN TIMELY PRODUCT INTRODUCTION. The telecommunications/wireless, data storage and semiconductor/research manufacturing industries are subject to rapid technological change and new product introductions and enhancements. Our ability to remain competitive will depend in part upon our ability to develop in a timely and cost effective manner new and enhanced systems at competitive prices and to accurately predict technology transitions. In addition, new product introductions or enhancements by our competitors could cause a decline in sales or loss of market acceptance of our existing products. Increased competitive pressure could also lead to intensified price competition resulting in lower margins, which could materially and adversely affect our business, prospects, financial condition and operating results. Our success in developing, introducing and selling new and enhanced systems depends upon a variety of factors, including: o our product offerings, o timely and efficient completion of product design and development, o timely and efficient implementation of manufacturing processes, o effective sales, service and marketing, and o product performance in the field. Because new product development commitments must be made well in advance of sales, new product decisions must anticipate both the future demand for the products under development and the equipment required to produce such products. We cannot be certain that we will be successful in selecting, developing, manufacturing and marketing new products or in enhancing existing products. OUR BUSINESS AND FINANCIAL RESULTS FOR A PARTICULAR PERIOD COULD BE MATERIALLY AND ADVERSELY AFFECTED IF ORDERS ARE CANCELLED OR RESCHEDULED OR IF AN ANTICIPATED ORDER FOR EVEN ONE SYSTEM IS NOT RECEIVED IN TIME TO PERMIT SHIPPING DURING THE PERIOD. Customer purchase orders are subject to cancellation or rescheduling by the customer, generally with limited or no penalties. Therefore, backlog at any particular date is not necessarily representative of actual sales for any succeeding period. In addition, we derive a substantial portion of our net sales in any fiscal period from the sale of a relatively small number of high-priced systems. As a result, the timing of recognition of revenue for a single transaction could have a material effect on our sales and operating results for a particular fiscal period. WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS THAT OPERATE IN HIGHLY CONCENTRATED INDUSTRIES. We rely on our principal customers for a significant portion of our sales. Based on sales, Seagate Technology, Inc. and International Business Machines Corporation, or IBM, are our top two customers. The following table sets forth the percentage of our net sales to Seagate and IBM (our only customers with sales greater than 10% in any of the past three years) for the following periods: 6
YEAR ENDED DECEMBER 31, ----------------------- 1999 2000 2001 ---- ---- ---- Seagate................ 19% 18% 7% IBM.................... 12% 4% 9%
If any principal customer discontinues its relationship with us or suffers economic setbacks, our business, prospects, financial condition and operating results could be materially and adversely affected. Our ability to increase sales in the future will depend in part upon our ability to obtain orders from new customers. We cannot be certain that we will be able to do so. In addition, because a relatively small number of large manufacturers, many of whom are our customers, dominate the industries in which they operate, it may be especially difficult for us to replace these customers if we lose their business. A substantial portion of orders in our backlog are orders from our principal customers. VARIATIONS IN THE AMOUNT OF TIME IT TAKES FOR US TO SELL OUR SYSTEMS MAY CAUSE FLUCTUATIONS IN OUR OPERATING RESULTS. Variations in the length of our sales cycles could cause our net sales, and therefore our business, financial condition, operating results and cash flows, to fluctuate widely from period to period. These variations often are based upon factors partially or completely outside our control. The factors that affect the length of time it takes us to complete a sale depend upon many elements, including: o the efforts of our sales force and our independent sales representatives, o the history of previous sales to a customer, o the complexity of the customer's fabrication processes, o the internal technical capabilities and sophistication of the customer, and o the capital expenditure budget cycle of our customers. As a result of these and a number of other factors that influence our sales cycles with particular customers, the period between our initial contact with a potential customer and the time when we recognize revenue from that customer, if ever, varies widely. Our sales cycle typically can range up to twelve months. Sometimes our sales cycle can be much longer, particularly when the sales cycle involves developing new applications for our systems and technology. During these cycles, we commit substantial resources to our sales efforts before receiving any revenue, and we may never receive any revenue from a customer despite these sales efforts. In addition to lengthy and sometimes unpredictable sales cycles, the build cycle, or the time it takes us to build a product to customer specifications, typically ranges from one to six months. During this period, the customer may cancel its order, although generally it will be required to pay us a fee based on which stage of the build cycle we have completed. For many of our products, after a customer purchases one of our systems we provide an acceptance period during which the customer may evaluate the performance of the system and potentially reject the system. In addition, customers often evaluate the performance of one of our systems for a lengthy period before purchasing any additional systems. The number of additional products a customer may purchase from us, if any, often depends on many factors that are difficult for us to predict accurately, including a customer's capacity requirements and changing market conditions for its products. As a result of these evaluation periods and other factors, the period between a customer's initial purchase and subsequent purchases, if any, often varies widely, and variations in length of this period can cause further fluctuations in our operating results. WE CANNOT BE CERTAIN THAT WE WILL BE ABLE TO COMPETE SUCCESSFULLY IN OUR HIGHLY COMPETITIVE INDUSTRIES. The industries in which we operate are intensely competitive. Established companies, both domestic and foreign, compete with each of our product lines. Many of our competitors have greater financial, engineering, 7 manufacturing and marketing resources than us. A substantial investment is required by customers to install and integrate capital equipment into a production line. As a result, once a manufacturer has selected a particular vendor's capital equipment, we believe that the manufacturer generally relies upon that equipment for the specific production line application and frequently will attempt to consolidate its other capital equipment requirements with the same vendor. Accordingly, if a particular customer selects a competitor's capital equipment, we expect to experience difficulty selling to that customer for a significant period of time. We believe that our ability to compete successfully depends on a number of factors both within and outside of our control, including: o price, o product quality, o breadth of product line, o system performance, o cost of ownership, o global technical service and support, and o success in developing or otherwise introducing new products. WE ARE EXPOSED TO THE RISKS OF OPERATING A GLOBAL BUSINESS, INCLUDING RISKS ASSOCIATED WITH EXCHANGE RATE FLUCTUATIONS AND LEGAL AND REGULATORY CHANGES. In 2000, approximately 50% of our total net sales were generated from sales outside the United States, and in 2001, approximately 46% of our total net sales were generated from sales outside the United States. We expect sales from non-U.S. markets to continue to represent a significant, and possibly increasing portion of our total sales in the future. Our non-U.S. sales and operations are subject to risks inherent in conducting business abroad, many of which are outside our control, including: o periodic economic downturns and unstable political environments, o price and currency exchange controls, o fluctuations in the relative values of currencies, o difficulties protecting intellectual property, o unexpected changes in trading policies, regulatory requirements, tariffs and other barriers, and o difficulties in managing a global enterprise, including staffing, collecting accounts receivable, managing distributors and representatives and repatriation of earnings. Changes in the relative values of currencies occur from time to time and may, in some instances, have a material effect on our results of operations. In particular, a weakening of the euro or the yen could result in a weakening of our overall financial results. Although we attempt to mitigate our exposure to fluctuations in currency exchange rates, these hedging activities may not always be available or adequate to eliminate, or even mitigate, the impact of our exchange rate exposure. As a result of this exchange rate exposure, as well as the other factors listed above, we may experience a material adverse effect upon our business, prospects, financial condition and operating results. OUR OPERATING RESULTS ARE INFLUENCED BY THE PERFORMANCE OF ASIAN ECONOMIES, WHICH HAVE EXPERIENCED SIGNIFICANT DOWNTURNS DURING THE PAST FEW YEARS. In recent years, Asian economies (including Japan) have been highly volatile and recessionary, resulting in significant fluctuations in local currencies and other instabilities. Approximately 35% of our sales in 2000 and approximately 28% of our sales in 2001 were derived from this region. Instabilities in Asian economies (including Japan) may continue and recur again in the future, which could have a material adverse effect on our business, prospects, financial condition and operating results. Our exposure to the business risks presented by Asian economies (including Japan) will increase to the extent we continue to expand our operations in that region. 8 WE MAY BE SUBJECT TO CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT. Several of our competitors hold patents covering a variety of technologies included in some of our products. In addition, some of our customers may use our microelectronics products for applications that are similar to those covered by these patents. From time to time, we and our customers have received correspondence from our competitors claiming that some of our products, as used by our customers, may be infringing one or more of these patents. As of the date of this prospectus, none of these allegations has resulted in litigation. Competitors or others may, however, assert infringement claims against us or our customers in the future with respect to current or future products or uses, and these assertions may result in costly litigation or require us to obtain a license to use intellectual property rights of others. If claims of infringement are asserted against our customers, those customers may seek indemnification from us for damages or expenses they incur. If we become subject to infringement claims, we will evaluate our position and consider the available alternatives, which may include seeking licenses to use the technology in question or defending our position. These licenses, however, may not be available on satisfactory terms or at all. If we are not able to negotiate the necessary licenses on commercially reasonable terms or successfully defend our position, it could have a material adverse effect on our business, prospects, financial condition and operating results. WE ARE EXPOSED TO THE RISKS THAT THIRD PARTIES MAY VIOLATE OUR PROPRIETARY RIGHTS AND OUR INTELLECTUAL PROPERTY RIGHTS MAY NOT BE WELL PROTECTED IN FOREIGN COUNTRIES. Our success depends on the protection of our proprietary rights. In our industry, intellectual property is an important asset that is always at risk of infringement. We incur costs to obtain and maintain patents and defend our intellectual property. We rely upon the laws of the United States and of other countries in which we develop, manufacture or sell our products to protect our proprietary rights. However, these proprietary rights may not provide the competitive advantages that we expect, or other parties may challenge, invalidate or circumvent these rights. Further, our efforts to protect our intellectual property may be less effective in some countries where intellectual property rights are not as well protected as in the United States. Many U.S. companies have encountered substantial problems in protecting their proprietary rights against infringement in foreign countries. We derived approximately 50% of our sales from foreign countries in 2000, and approximately 46% of our sales from foreign countries in 2001. If we fail to adequately protect our intellectual property in these countries, it could be easier for our competitors to sell competing products. THE LOSS OF KEY MANAGEMENT OR OUR INABILITY TO ATTRACT AND RETAIN SUFFICIENT NUMBERS OF MANAGERIAL, ENGINEERING AND OTHER TECHNICAL PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS. Our continued success depends, in part, upon key managerial, engineering and technical personnel as well as our ability to continue to attract and retain additional personnel. In particular, we depend on our Chairman, President and Chief Executive Officer, Edward H. Braun. The loss of key personnel could have a material adverse effect on our business, prospects, financial condition or operating results. We may not be able to retain our key managerial, engineering and technical employees. Our growth is dependent on our ability to attract new highly skilled and qualified technical personnel, in addition to personnel that can implement and monitor our financial and managerial controls and reporting systems. Attracting qualified personnel is difficult, and we cannot assure you that our recruiting efforts to attract and retain these personnel will be successful. OUR RECENT ACQUISITIONS, AS WELL AS ADDITIONAL ACQUISITIONS IN THE FUTURE, SUBJECT US TO RISKS ASSOCIATED WITH INTEGRATING THESE BUSINESSES INTO OUR BUSINESS. We have made significant acquisitions during the past five years. In addition, we may make acquisitions of, or significant investments in, other businesses in the future. Acquisitions involve numerous risks, many of which are unpredictable and beyond our control, including: 9 o difficulties and increased costs in connection with integration of the personnel, operations, technologies and products of acquired companies, o diversion of management's attention from other operational matters, o the potential loss of key employees of acquired companies, o lack of synergy, or inability to realize expected synergies, resulting from the acquisition, and o acquired assets becoming impaired as a result of technological advancements or worse-than-expected performance by the acquired company. Our inability to effectively manage these acquisition risks could materially and adversely affect our business, prospects, financial condition and operating results. In addition, if we issue equity securities to pay for an acquisition, the ownership percentage of our then-existing shareholders would be reduced and the value of the shares held by our then-existing shareholders could be diluted, which could affect the trading price of our common stock and of the notes. If we use cash to pay for an acquisition, the payment could significantly reduce the cash that would be available to fund our operations or to use for other purposes, including making payments on the notes. Also, acquisition financing may not be available on favorable terms or at all. Future acquisitions may also require us to assume contingent liabilities that could have a material adverse effect on our business, prospects, financial condition or operating results. WE MAY NOT OBTAIN SUFFICIENT AFFORDABLE FUNDS TO FUND OUR FUTURE NEEDS FOR MANUFACTURING CAPACITY AND RESEARCH AND DEVELOPMENT. We need to continue to make significant capital expenditures to expand our operations and to enhance our manufacturing capability to keep pace with rapidly changing technologies. Also, our industry is characterized by the need for continued investment in research and development. If we fail to invest sufficiently in research and development, our products could become less attractive to potential customers. As a result of our emphasis on research and development and technological innovation, our operating costs may increase in the future. We expect our research and development expenses to increase as a percentage of our net sales for the foreseeable future. During the past few years, the markets for equity and debt securities have fluctuated significantly, especially with respect to technology-related companies, and during some periods offerings of those securities have been extremely difficult to complete. As a result, in the future we may not be able to obtain the additional funds required to fund our operations and invest sufficiently in research and development on reasonable terms, or at all. Such a lack of funds could have a material adverse effect on our business, prospects, financial condition and operating results. WE ARE SUBJECT TO COSTS AND OTHER RISKS ASSOCIATED WITH NON-COMPLIANCE WITH ENVIRONMENTAL REGULATIONS. We are subject to environmental regulations related to the disposal of hazardous wastes used in the development and manufacturing of our products. The failure or inability to comply with existing or future environmental regulations could result in significant remediation liabilities, the imposition of fines or the suspension or termination of production, each of which could have a material adverse effect on our business, prospects, financial condition and operating results. BECAUSE WE DO NOT HAVE LONG-TERM CONTRACTS WITH OUR CUSTOMERS, OUR CUSTOMERS MAY CEASE PURCHASING OUR PRODUCTS AT ANY TIME IF WE FAIL TO MEET THEIR NEEDS. We do not have long-term contracts with our customers. As a result, our agreements with our customers do not provide any assurance of future sales. Accordingly: o our customers can cease purchasing our products at any time without penalty, o our customers are free to purchase products from our competitors, o we are exposed to competitive price pressure on each order, and o our customers are not required to make minimum purchases. 10 OUR BUSINESS AND FUTURE OPERATING RESULTS ARE SUBJECT TO A WIDE RANGE OF UNCERTAINTIES ARISING OUT OF THE RECENT TERROR ATTACKS. Like other companies around the world, our business and operating results are subject to uncertainties arising out of the recent terrorist attacks on the United States, including the potential worsening or extension of the global economic slowdown, the economic consequences of military action or additional terrorist activities and associated political instability and the impact of heightened security concerns on domestic and international travel and commerce. In particular, due to these uncertainties, we are subject to: o greater risks of disruption in our international operations and more frequent instances of shipping delays, and o the risk that future tightening of immigration controls may adversely affect the residence status of non-U.S. engineers and other key technical employees in our U.S. facilities or our ability to hire new non-U.S. employees in such facilities. 11 RISKS RELATED TO THE SECURITIES BECAUSE THE NOTES ARE SUBORDINATED TO OUR SENIOR DEBT OBLIGATIONS, WE MAY NOT HAVE SUFFICIENT FUNDS TO PAY OUR OBLIGATIONS UNDER THE NOTES IF WE ENCOUNTER FINANCIAL DIFFICULTIES. The notes are unsecured (other than by the U.S. government securities we pledged for the benefit of the noteholders) and are subordinated in right of payment in full to all of our existing and future senior indebtedness. As a result, in the event of our bankruptcy, liquidation or reorganization or upon acceleration of the notes due to an event of default under the indenture and in certain other events, our assets will be available to pay obligations on the notes only after all senior indebtedness has been paid in full in cash. After retiring our senior indebtedness, we may not have sufficient assets remaining to pay amounts due on any or all of the notes then outstanding. If the notes are accelerated because of an event of default, holders of any senior indebtedness will be entitled to payment in full in cash or other payment satisfactory to holders of all senior indebtedness before the holders of the notes are entitled to receive any payment or distribution. The notes are also effectively subordinated to all existing and future indebtedness and other liabilities of our subsidiaries. Our right to receive assets of a subsidiary upon its liquidation or reorganization, and therefore the right of the holders of the notes to participate in those assets, will be subject to the claims of that subsidiary's creditors. As of December 31, 2001, excluding intercompany indebtedness, we, excluding our subsidiaries, had no senior indebtedness outstanding, and our subsidiaries had liabilities of approximately $82.0 million, including approximately $19.0 million of indebtedness for borrowed money. We can, however, borrow up to $100 million under our revolving credit facility (less the face amount of any letters of credit outstanding under that facility). Although no borrowings under this facility were outstanding as of December 31, 2001 or are outstanding under this facility as of the date of this prospectus, any future amounts we borrow under this facility would be senior indebtedness. The indenture governing the notes does not prohibit or limit our ability or the ability of our subsidiaries to incur additional senior indebtedness, other debt obligations or other liabilities. Our incurrence of additional debt and other liabilities could adversely affect our ability to pay our obligations under the notes. See "Description of the Notes--Subordination of Notes." THE HOLDERS OF THE NOTES ARE NOT PROTECTED BY RESTRICTIVE COVENANTS. The indenture governing the notes does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries. The indenture contains no covenants or other provisions to afford protection to holders of the notes in the event of a change in control involving Veeco, except for the change in control repurchase right described under "Description of the Notes--Repurchase at Option of Holders Upon a Change in Control." There are certain transactions which might otherwise be considered a change in control that would not, under the indenture, constitute a change in control that permits you to require us to repurchase your notes, but that could result in a change in our management or an increase in our indebtedness. WE MAY NOT HAVE SUFFICIENT FUNDS OR MAY BE RESTRICTED IN OUR ABILITY TO REPURCHASE THE NOTES UPON A CHANGE IN CONTROL. The indenture governing the notes contains provisions that apply to a change in our control. You may require us to repurchase all or any portion of your notes upon a change in control. We may not have sufficient funds to repurchase the notes upon a change in control. Our future debt agreements may prohibit us from paying the repurchase price. If we are prohibited from repurchasing the notes, we could seek consent from our lenders to repurchase the notes. If we are unable to obtain consent, we could attempt to refinance the notes or our senior indebtedness. If we are unable to obtain a consent or refinance, we would be prohibited from repurchasing the notes. If we are unable to repurchase the notes upon a change in control, it would result in an event of default under the indenture. An event of default under the indenture could result in a further event of default under our other then- 12 existing debt. In addition, the occurrence of the change in control may be an event of default under our other debt. In these circumstances, we would be prohibited from paying amounts due on the notes under the subordination provisions of the indenture. Our ability to repurchase the notes in such event may be limited by law, the indenture, or the terms of other agreements relating to our senior indebtedness. Although we are permitted to pay the repurchase price for notes in common stock if we satisfy certain conditions set forth in the indenture, we cannot assure you that we will satisfy those conditions. OUR ISSUANCE OF THE NOTES SUBSTANTIALLY INCREASED OUR INDEBTEDNESS, WHICH COULD ADVERSELY AFFECT OUR BUSINESS. As a result of the sale of the notes, we incurred $220 million of additional indebtedness. This additional indebtedness substantially increased our ratio of debt to total capitalization and significantly increased our interest expense and related debt service costs. We may incur substantial additional indebtedness in the future. The level of our indebtedness, among other things, could: o make it difficult for us to make payments on the notes, o make it difficult for us to obtain any necessary future financing for working capital, capital expenditures, debt service requirements, acquisitions or other purposes, o limit our flexibility in planning for, or reacting to changes in, our business, and o make us more vulnerable in the event of a downturn in our business. WE CONDUCT A SUBSTANTIAL PORTION OF OUR OPERATIONS THROUGH OUR SUBSIDIARIES, WHICH MAY AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE NOTES. Our subsidiaries are separate and distinct legal entities. Our subsidiaries have no obligation to pay any amounts due on the notes. Our subsidiaries are not required to provide us with funds for our payment obligations, whether by dividends, distributions, loans or other payments. In addition, any payment of dividends, distributions, loans or advances by our subsidiaries to us may be subject to statutory or contractual restrictions. Payments to us by our subsidiaries will also be contingent upon our subsidiaries' earnings and business considerations. Our right to receive any assets of any of our subsidiaries upon its liquidation or reorganization, and therefore the right of the holders of the notes to participate in those assets, will be effectively subordinated to the claims of that subsidiary's creditors, including trade creditors. In addition, even if we were a creditor of any of our subsidiaries, our rights as a creditor would be subordinate to any security interest in the assets of our subsidiaries and any indebtedness of our subsidiaries senior to that held by us. AN ACTIVE TRADING MARKET MAY NOT DEVELOP FOR THE NOTES. There is currently no public market for the notes. Although the notes that were sold to qualified institutional buyers under Rule 144A are eligible for trading on the PORTAL market, any notes resold under this prospectus will no longer trade on the PORTAL market. We cannot predict whether an active trading market for the notes will develop or, if such market develops, how liquid it will be. We do not intend to list the notes on any national or other securities exchange or on the Nasdaq National Market. If an active market for the notes fails to develop or to be sustained, the trading price of the notes could fall. Even if an active trading market were to develop, the notes could trade at prices that may be lower than the initial offering price of the notes, or the holders could experience difficulty or an inability to resell the notes. Whether or not the notes will trade at lower prices depends on many factors, including o prevailing interest rates and the markets for similar securities, o general economic conditions, and o the factors that affect the trading price of our common stock. 13 ANY ADVERSE RATING OF THE NOTES MAY CAUSE THEIR TRADING PRICE TO FALL. In the future, one or more rating agencies may rate the notes. If any rating agency rates the notes, it may assign a lower rating than that which is expected by investors. A rating agency, following any initial or subsequent rating, may also lower ratings on the notes. If a rating agency assigns a lower than expected rating on the notes or reduces its rating on the notes in the future, the trading price of the notes could decline. OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE. The trading price of our common stock has been and may continue to be subject to large fluctuations. This could cause the trading price of the notes to fluctuate significantly as well, which may result in losses to investors in the notes. Our stock price may increase or decrease in response to a number of events and factors, including those described elsewhere in this Risk Factors section. Part of this volatility in the trading price of our common stock is attributable to the current state of the stock market, in which wide price swings are common. This volatility in the stock market may adversely affect the trading prices of our common stock and the notes regardless of our business and operating performance. OUR ARTICLES OF INCORPORATION, BY-LAWS, SHAREHOLDER RIGHTS PLAN AND DELAWARE LAW MAY HAVE ANTI-TAKEOVER EFFECTS WHICH WILL MAKE AN ACQUISITION OF OUR COMPANY BY ANOTHER COMPANY MORE DIFFICULT. Our board of directors has the authority to issue up to 500,000 shares of preferred stock and to fix the rights, preferences, privileges and restrictions, including voting rights, of these shares without any further vote or action by the holders of our common stock. We have designated 30,000 of those shares as Series A Junior Preferred Stock for potential issuance under our shareholder rights plan described below. The rights of the holders of any preferred stock that may be issued in the future may adversely affect the rights of the holders of our common stock. The issuance of the preferred stock could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock, thereby delaying, deferring or preventing a change in control of Veeco that a holder of our common stock might consider in its best interest. Furthermore, such preferred stock may have other rights, including economic rights senior to our common stock and, as a result, the issuance of the preferred stock could have a material adverse effect on the market value of our common stock. Our board of directors is divided into three classes of directors with staggered terms. The existence of a classified board may render certain hostile takeovers more difficult and make it more difficult for a third party to acquire control of Veeco in certain instances, thereby delaying, deferring or preventing a change in control of Veeco that a holder of our common stock might consider in its best interest. Further, if shareholders are dissatisfied with the policies and/or decisions of our board of directors, the existence of a classified board will make it more difficult for the shareholders to change the composition (and therefore the policies) of our board of directors in a relatively short period of time. We have adopted a shareholder rights plan, under which we have granted to our shareholders rights to purchase shares of junior participating preferred stock. These rights could generally discourage a merger or tender offer for our common stock that is not approved by our board of directors by increasing the cost of effecting any such transaction and, accordingly, could have an adverse impact on a takeover attempt that a shareholder of Veeco might consider to be in its best interest. Furthermore, we have adopted and may in the future adopt certain other measures that may have the effect of delaying, deferring or preventing a change in control of Veeco. Certain of such measures may be adopted without any further vote or action by the holders of our common stock. These measures may have anti-takeover effects, which may delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest. In addition, certain other provisions of our certificate of incorporation and bylaws relating to, without limitation, (a) actions required to be taken at a meeting of shareholders rather than by written consent, (b) the percentage of shareholders required to call a special meeting of shareholders, (c) a limitation on the maximum number of directors, (d) removal of directors only for "cause," and (e) the percentage of shareholders required to 14 approve amendments to our bylaws, may have anti-takeover effects, which may delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest. We are subject to the provisions of Section 203 of the General Corporation Law of Delaware, which prohibits a Delaware corporation from engaging in any "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A "business combination" includes mergers, asset sales as well as certain transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an "interested stockholder" is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation's voting stock. The operation of Section 203 may have anti-takeover effects, which may delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest. A PROPOSED CHANGE IN THE ACCOUNTING TREATMENT FOR THE NOTES COULD REQUIRE US TO RECOGNIZE ADDITIONAL INTEREST EXPENSE. The Financial Accounting Standards Board has proposed a change in financial accounting standards that would apply to securities such as the notes that have both debt and equity components. We do not know whether this proposed accounting standard will be adopted. If it is adopted in its current form, this proposed new accounting standard would require us to value the equity component of the notes separately from the debt component of the notes at the time of issuance. We would be deemed to have issued the notes at a discount equal to the amount of the equity value, and we would be required to recognize the total amount of this discount as additional interest expense over the life of the notes. As proposed, the standard would be effective for fiscal years starting after June 15, 2002 and would require us to record a cumulative effect adjustment for a change in accounting principle for the period from the date of issuance of the notes through the date we adopt the new accounting standard. 15 FORWARD-LOOKING STATEMENTS This prospectus and the documents incorporated by reference herein include or may include "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may often, although not always, be identified by the use of words like "believes", "intends", "expects", "may", "will", "should" or "anticipates", or the negative equivalents of those words or comparable terminology, and by discussions of strategies that involve risks and uncertainties. Given the risks and uncertainties of our business, including those set forth in the "Risk Factors" section of this prospectus, actual results may differ materially from those expressed or implied by forward-looking statements. In addition, we base forward-looking statements on assumptions about future events, which may not prove to be accurate. In light of these risks, uncertainties and assumptions, you should be aware that the forward-looking events we describe in this prospectus and in the documents we incorporate by reference may not occur. You should not place undue reliance on our forward-looking statements. We cannot assure you that our future results, levels of activity and achievements will occur as we expect, and neither we nor any other person assumes responsibility for the accuracy and completeness of our forward-looking statements. We have no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. USE OF PROCEEDS The selling securityholders will receive all the proceeds from the sale of the notes and shares of our common stock sold under this prospectus. We will not receive any proceeds from the sale of these securities. DESCRIPTION OF THE NOTES We issued the notes under an indenture dated December 21, 2001 between us and State Street Bank and Trust Company, N.A., as trustee. The terms of the notes include those provided in the indenture and those provided in a registration rights agreement and a collateral pledge and security agreement, each of which we entered into on December 21, 2001. Copies of the form of the indenture, the form of note, the form of registration rights agreement and the form of collateral pledge and security agreement, each of which we describe below, are available upon request to us and are on file with the Commission. We have summarized portions of the indenture, the notes, the registration rights agreement and the collateral pledge and security agreement below. This summary is not complete. We urge you to read these documents in their entirety because they define your rights as a holder of the notes. Terms not defined in this description have the meanings given to them in the indenture or the form of note, as the case may be. In this section, "Veeco," "we," "our," or "us" each refers, unless the context otherwise requires, only to Veeco Instruments Inc. and not to any current or future subsidiaries of Veeco Instruments Inc. 16 GENERAL The notes are general unsecured (except to the extent described under "--Security" below) obligations of Veeco and are subordinated in right of payment to certain of our other obligations as described under "--Subordination of Notes" below. The notes are convertible into our common stock as described under "--Conversion Rights" below. The notes are limited to $220 million aggregate principal amount and will mature on December 21, 2008. The notes bear interest at the rate of 4 1/8% per year from December 21, 2001. Interest is payable semiannually on June 21 and December 21 of each year, commencing June 21, 2002, to holders of record at the close of business on the preceding June 6 and December 6, respectively. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. In the event of the maturity, conversion, purchase by us at the option of the holder or redemption of a note, interest will cease to accrue on the note under the terms of, and subject to the conditions of, the indenture. Principal will be payable, and the notes may be presented for conversion, registration of transfer and exchange, without service charge, at our office or agency in New York City, which shall initially be the office or agency of the trustee in New York, New York. See "--Global Notes; Book-Entry; Form." The indenture does not contain any financial covenants or restrictions on the payment of dividends, the repurchase of our securities or the incurrence of Senior Indebtedness, as defined below under "--Subordination of Notes," or any other indebtedness or other liabilities by us or any of our subsidiaries. The indenture also does not contain any covenants or other provisions to afford protection to holders of the notes in the event of a highly leveraged transaction or a change in control of Veeco, except to the extent described below under "--Repurchase at Option of Holders Upon a Change in Control." SECURITY We used a total of approximately $25.9 million of the net proceeds from our sale of the notes to purchase U.S. government securities which we have pledged to the collateral agent under the collateral pledge and security agreement as security for the exclusive benefit of the holders of the notes (and not for the benefit of our other creditors). These U.S. government securities will be sufficient upon receipt of scheduled interest on and principal payments of such securities to provide for payment in full of the first six scheduled interest payments due on the notes. The U.S. government securities have been pledged by us to the collateral agent for the exclusive benefit of the holders of the notes and are held by the collateral agent in a pledge account. Immediately prior to an interest payment date, the collateral agent will release from the pledge account proceeds sufficient to pay interest then due on the notes. A failure to pay interest on the notes when due through the first six scheduled interest payment dates will constitute an immediate event of default under the indenture, with no grace period. The pledged U.S. government securities and the pledge account will also secure the repayment of the principal amount on the notes. If prior to December 21, 2004 o an event of default under the notes occurs and is continuing, and o the trustee or the holders of 25% in aggregate principal amount of the notes accelerate the notes by declaring the principal amount of the notes to be immediately due and payable (by written consent, at a meeting of note holders or otherwise), except for the occurrence of an event of default relating to our bankruptcy, insolvency or reorganization, upon which event the notes will be accelerated automatically, then the proceeds from the pledged U.S. government securities will be released for payment to note holders, subject to the automatic stay provisions of bankruptcy law, if applicable. Distributions from the pledge account will be applied 17 o first, to any accrued and unpaid interest on the notes, and o second, to the repayment of a portion of the principal amount of the notes. However, if any event of default is cured prior to the acceleration of the notes by the trustee or holders of the notes as referred to above, the trustee and the holders of the notes will not be able to accelerate the notes as a result of that event of default. For example, if the first two interest payments were made when due but the third interest payment was not made when due (which would constitute an event of default) and the note holders exercised their right to declare the principal amount of the notes to be immediately due and payable, then, assuming that the automatic stay provisions of bankruptcy law are inapplicable and the proceeds of the pledged U.S. government securities are distributed from the pledge account, o an amount equal to the interest payment due on the third interest payment would be distributed from the pledge account as accrued interest, and o the balance of the proceeds of the pledge account would be distributed in repayment of a portion of the principal amount of the notes. In addition, note holders would have an unsecured claim against us for payment of the remainder of the principal amount of their notes. Once we make the first six scheduled interest payments on the notes, any remaining pledged U.S. government securities will be released to us from the pledge account and thereafter the notes will be unsecured. If Veeco makes an interest payment directly to the trustee because assets are not released from the pledge account in time to make the payment, or if the interest on the notes is lower than we currently anticipate because the principal amount of the notes outstanding has been reduced (as a result of the conversion of any notes or our repurchase and cancellation of notes), then the scheduled interest on and principal of the pledged securities may exceed the amount payable on the remaining of the first six scheduled interest payments due on the notes. In that event, we will notify the collateral agent of the amount of the excess and the collateral agent will release the excess pledged securities to us in compliance with the provisions of the collateral pledge and security agreement. Ernst & Young LLP or another firm of nationally recognized public accountants will verify the mathematical accuracy of our computations as to the amount of any such excess, as required under the collateral pledge and security agreement. We are obligated to pay reasonable compensation to the collateral agent and to indemnify the collateral agent against certain losses, liabilities or expenses incurred by it in connection with its duties under the collateral pledge and security agreement. CONVERSION RIGHTS You may, at any time prior to the close of business on the final maturity date of the notes, convert any outstanding notes, or portions thereof, into our common stock, initially at the conversion price set forth on the cover page of this prospectus, subject to adjustment as described below. However, if we call the notes for redemption, you may convert the notes only until the close of business on the business day preceding the day fixed for redemption, unless we fail to pay the redemption price. If you have submitted your notes for repurchase pursuant to a change in control repurchase right, you may convert your notes only if you withdraw your election to exercise your repurchase option in accordance with the terms of the indenture. You may convert your notes in part as long as that part is $1,000 principal amount or a whole multiple of $1,000. Notes surrendered for conversion on a date that occurs between the close of business on any regular record date and the opening of business on the interest payment date to which it relates, except notes to be redeemed on a date within that period, must be accompanied by payment of an amount equal to the interest on the surrendered notes scheduled to be received by the holder on that interest payment date. No payment will be required from a holder if we exercise our right to redeem such notes. We are not required to issue fractional shares of common stock upon conversion of notes and instead will pay a cash adjustment based upon the market price of our common stock 18 on the last business day before the date of conversion. In the case of notes called for redemption, conversion rights will expire at the close of business on the business day preceding the day fixed for redemption, unless we default in the payment of the redemption price. Notwithstanding the above, accrued but unpaid interest will be payable upon any conversion of notes at the option of the holder made concurrently with or after acceleration of the notes following an event of default described under "--Events of Default" below. A holder may exercise the right of conversion by delivering the note to be converted to the specified office of a conversion agent, with a completed notice of conversion, together with any funds that may be required as described in the preceding paragraph. The conversion date will be the date on which the notes, the notice of conversion and any required funds have been so delivered. A holder delivering a note for conversion will not be required to pay any taxes or duties relating to the issuance or delivery of the common stock for such conversion, but will be required to pay any tax or duty which may be payable relating to any transfer involved in the issuance or delivery of the common stock in a name other than the holder of the note. Certificates representing shares of common stock will be issued or delivered only after all applicable taxes and duties, if any, payable by the holder have been paid. If any note is converted within two years after its original issuance, the common stock issuable upon conversion will not be issued or delivered in a name other than that of the holder of the note unless the applicable restrictions on transfer have been satisfied. Any notes or shares of common stock into which the notes are convertible that are resold under this prospectus should be freely tradable after such resale without restriction, unless the holder of the notes or shares is an "affiliate" of Veeco, as that term is defined under the Securities Act. The initial conversion price will be adjusted as provided in the indenture for certain future events, including: (1) the issuance of our common stock as a dividend or a distribution on our common stock, (2) certain subdivisions or combinations of our common stock, (3) the issuance to all holders of our common stock of certain rights or warrants to purchase our common stock or securities convertible into our common stock at less than, or having a conversion price per share that is less than, the then current market price of our common stock, (4) dividends or other distributions to all holders of our common stock of shares of our capital stock, other than our common stock, or evidences of our indebtedness or our assets, including securities, but excluding o those rights and warrants referred to in clause (3) above, and o dividends and distributions in connection with a reclassification or change with respect to our common stock, merger, consolidation, statutory share exchange, other business combination, sale or conveyance resulting in a change in the conversion consideration, as described in the fourth succeeding paragraph below and dividends or distributions paid exclusively in cash, (5) dividends or other distributions consisting exclusively of cash to all holders of our common stock (excluding any cash that is distributed upon a reclassification or change of our common stock, merger, consolidation, statutory share exchange, other business combination, sale or conveyance resulting in a change in the conversion consideration, as described in the fourth succeeding paragraph below and subject to certain other limited exceptions) and purchases of our common stock pursuant to tender offers or exchange offers made by us or any of our subsidiaries where the sum of: o such dividends or other distributions within the preceding 12 months and in respect of which no prior adjustment under this clause (5) has been made, plus 19 o for each such tender offer and exchange offer, the excess of (i) the aggregate amount paid for the purchase of our common stock pursuant to such tender offer or exchange offer concluded within the preceding 12 months and in respect of which no prior adjustment under this clause (5) has been made over (ii) the product of (a) the average of the closing sales price of our common stock for each of the five trading days to and including the trading day immediately preceding the date of announcement of such tender offer or exchange offer multiplied by (b) the number of shares purchased pursuant to such tender offer or exchange offer, exceeds 10% of our market capitalization at (x) if the event giving rise to this calculation is a dividend or other distribution, the record date for the dividend or other distribution in respect of which such sum is calculated or (y) if the event giving rise to this calculation is a tender offer or exchange offer, the close of the market on the trading day immediately preceding such announcement date for such tender offer or exchange offer in respect of which such sum is calculated. The term "market capitalization" means the product of the then current market price of our common stock and the number of shares of our common stock then outstanding. In the event we pay a dividend or make a distribution on shares of our common stock consisting of capital stock of, or similar equity interests in (as described in clause (4) above), a subsidiary or other business unit of ours, the conversion rate will be adjusted based on the market value of the securities so distributed relative to the market value of our common stock, in each case based on the average sales price of those securities for the 10 trading days commencing on and including the fifth trading day after the date on which "ex-dividend trading" commences for such dividend or distribution on the Nasdaq National Market or such other national or regional exchange or market on which the securities are then listed or quoted. No adjustment in the conversion price will be required unless such adjustment would require a change of at least 1% in the conversion price then in effect. Any adjustment that would otherwise be required to be made, but for the application of the immediately preceding sentence, will be carried forward and taken into account in any subsequent adjustment. Under the indenture, if certain of the events described in clauses (1) through (5) above occur and, based on the facts and circumstances associated with such event an adjustment to the conversion price would not appropriately protect the holders of the notes from dilution, then the conversion price will not be adjusted, but rather, we must set aside cash, securities or other assets, as appropriate, at the time of the occurrence of the event, to be received by the holders of notes in the future upon conversion of their notes. Except as stated above, the conversion price will not be adjusted for the issuance of common stock or any securities convertible into or exchangeable for our common stock or carrying the right to repurchase any of the foregoing. In the case of: o any reclassification or change of our common stock (other than changes resulting from a subdivision or combination), o a consolidation, merger or other business combination involving us, o a sale or conveyance to another entity of all or substantially all of our property and assets, or o any statutory share exchange, in each case as a result of which holders of our common stock are entitled to receive stock, other securities, other property or assets (including cash or any combination thereof) with respect to or in exchange for our common stock, the holders of the notes then outstanding will be entitled thereafter to convert such notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that they would have owned or been entitled to receive upon such reclassification or change of our common stock, 20 consolidation, merger, combination, sale, conveyance or statutory share exchange had such notes been converted into our common stock immediately prior to such reclassification, change, consolidation, merger, combination, sale, conveyance or statutory share exchange. We may not become a party to any such transaction unless its terms are consistent with the foregoing. If a taxable distribution to holders of our common stock or a transaction occurs that results in any adjustment of the conversion price, the holders of the notes may, in certain circumstances, be deemed to have received a distribution subject to United States federal income tax as a dividend. In certain other circumstances, the absence of such an adjustment may result in a taxable dividend to the holders of common stock. See "Material United States Federal Income Tax Considerations." We may from time to time, to the extent permitted by law, reduce the conversion price applicable to the notes by any amount for any period of at least 20 days if our board of directors determines in good faith that the reduction is in the best interests of Veeco. In that case, we will give at least 15 days' notice of such reduction. We may make such reduction in the conversion price, in addition to those set forth above, as our board of directors deems advisable to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of stock or rights to acquire stock or from any event treated as such for income tax purposes. See "Material United States Federal Income Tax Considerations." OPTIONAL REDEMPTION There is no sinking fund for the notes. On or after December 21, 2004, we will be entitled to redeem some or all of the notes on at least 20 but not more than 60 days' notice to the holders, at the redemption price set forth below, together with accrued and unpaid interest to, but not including, the redemption date. However, if a redemption date is any date after a record date but on or prior to the related interest payment date, the semiannual payment of interest becoming due on such date will be payable to the holder of record as of the relevant record date and the redemption price will not include such interest payment. The table below sets forth redemption prices of a note per $1,000 principal amount if redeemed during the periods described below:
REDEMPTION PERIOD PRICE ------ ----------- December 21, 2004 through December 20, 2005......................... 102.36% December 21, 2005 through December 20, 2006......................... 101.77% December 21, 2006 through December 20, 2007......................... 101.18% Thereafter.......................................................... 100.59%
If we redeem some but not all of the notes, the trustee will select the notes to be redeemed in principal amounts of $1,000 or whole multiples of $1,000 by lot, on a pro rata basis or in accordance with any other method the trustee considers fair and appropriate. If any notes are to be redeemed in part only, a new note or notes in principal amount equal to the unredeemed principal portion thereof will be issued. If a portion of a holder's notes is selected for partial redemption and the holder converts a portion of its notes, the converted portion will be deemed to be taken from the portion selected for redemption. REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL If a change in control occurs, each holder of notes will have the right to require us to repurchase all of such holder's notes not previously called for redemption, or any portion of those notes in principal amounts of $1,000 or whole multiples of $1,000, on the date that is 45 business days after the date we give notice of the change in control at a repurchase price equal to 100% of the principal amount of the notes to be repurchased together with interest accrued and unpaid to, but excluding, the repurchase date; provided that, if such repurchase date occurs between the close of business on any regular record date and the opening of business on the interest payment date to which it relates, then the interest payable on such interest payment date will be paid to the holder of record of the notes on the relevant record date. 21 Instead of paying the repurchase price in cash, we may pay the repurchase price in common stock if we so elect in the notice referred to below. The number of shares of common stock a holder will receive will equal the repurchase price divided by 95% of the average of the closing sales prices of our common stock for the five consecutive trading days immediately preceding and including the third trading day prior to the repurchase date. However, we may not pay in common stock unless we satisfy certain conditions prior to the repurchase date as provided in the indenture. The common stock used to pay the repurchase price may be the common stock of the successor or purchasing corporation in the change in control. Within 30 business days after the change in control, we are required to give notice to all holders of record of notes, as provided in the indenture, of the occurrence of the change in control and of their resulting repurchase right. We must also deliver a copy of our notice to the trustee. In order to exercise the repurchase right, a holder of notes must deliver, on or before the 30th day after the date of our notice of the change in control, written notice to the trustee of the holder's exercise of its repurchase right, together with the notes with respect to which the right is being exercised. Under the indenture, a "change in control" of Veeco will be deemed to have occurred at such time after the original issuance of the notes when the following has occurred: o the acquisition, as evidenced by the filing with the Commission of an executed report on Schedule 13D, by any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, of beneficial ownership (determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of our capital stock entitling that person to exercise 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in elections of directors, other than any acquisition by us, any of our subsidiaries or any of our employee benefit plans, o our consolidation or merger with or into any other person, any merger of another person into us, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of our properties and assets to another person, other than: o any transaction (A) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our capital stock or (B) pursuant to which holders of our capital stock immediately prior to the transaction are entitled to exercise, directly or indirectly, 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in the election of directors of the continuing or surviving person immediately after the transaction, or o any merger solely for the purpose of changing our jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity, o during any consecutive two-year period, individuals who at the beginning of that two-year period constituted our board of directors (together with any new directors whose election to our board of directors, or whose nomination for election by our shareholders, was approved by a vote of a majority of the directors who were either directors at the beginning of such period or whose election or whose nomination for election was approved by the board of directors or a nominating committee thereof, the majority of the members of which meet the above criteria) cease for any reason to constitute a majority of our board of directors then in office, or o we are liquidated or dissolved or our shareholders pass a resolution approving a plan of liquidation or dissolution. Notwithstanding anything to the contrary set forth above, none of the foregoing events shall constitute a change in control if they occur in connection with a merger, consolidation, sale of all or substantially all of the assets of Veeco (whether or not followed by a liquidation or dissolution of Veeco) or similar business combination transaction, if all of the consideration received by holders of our common stock immediately prior to consummation of the transaction (excluding cash payments for fractional shares and for shares held by holders exercising statutory dissenters' rights) consists of common stock traded on a United States national securities exchange or quoted on the 22 Nasdaq National Market, or which will be so traded or quoted when issued or exchanged in connection with such business combination transaction, and as a result of such transaction the notes become convertible solely into such common stock. Rule 13e-4 under the Exchange Act requires the dissemination of information to security holders if an issuer tender offer occurs and may apply if the repurchase option becomes available to holders of the notes. We will comply with this rule to the extent applicable at that time. To the extent permitted by applicable law, we may at any time purchase notes in the open market or by tender at any price or by private agreement. Any note so purchased by us may, to the extent permitted by applicable law, be reissued or resold or may be surrendered to the trustee for cancellation. Any notes surrendered to the trustee may not be reissued or resold and will be canceled. Our ability to repurchase notes upon the occurrence of a change in control is subject to important limitations. The occurrence of a change in control could cause an event of default under, or be prohibited or limited by, the terms of existing or future Senior Indebtedness. As a result, any repurchase of the notes would, absent a waiver, be prohibited under the subordination provisions of the indenture until the Senior Indebtedness is paid in full in cash. Further, we cannot assure you that we would have the financial resources, or would be able to arrange financing, to pay the repurchase price for all the notes that might be delivered by holders of notes seeking to exercise the repurchase right. Any failure by us to repurchase the notes when required following a change in control would result in an event of default under the indenture, whether or not such repurchase is permitted by the subordination provisions of the indenture. Any such default may, in turn, cause a default under existing or future Senior Indebtedness. See "--Subordination of Notes" below. SUBORDINATION OF NOTES The payment of the principal of, premium, if any, and interest on the notes is subordinated in right of payment, as set forth in the indenture, to the prior payment in full, in cash, of all Senior Indebtedness, whether outstanding on the date of the indenture or incurred after that date. The notes also are effectively subordinated to all indebtedness and other liabilities, including trade payables and lease obligations, of our subsidiaries. In the event of any acceleration of the notes because of an event of default, the holders of any Senior Indebtedness then outstanding would be entitled to payment in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, of all obligations with respect to such Senior Indebtedness before the holders of notes are entitled to receive any payment or other distribution, except with respect to the U.S. government securities pledged as security for the notes as described above in "--Security." We are required under the indenture to promptly notify holders of Senior Indebtedness if payment of the notes is accelerated because of an event of default. In the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relating to Veeco or to its assets, or any liquidation, dissolution or other winding-up of Veeco, whether voluntary or involuntary, or any assignment for the benefit of creditors or other marshaling of assets or liabilities of Veeco, except in connection with the consolidation or merger of Veeco or its liquidation or dissolution following the conveyance, transfer or lease of its properties and assets substantially upon the terms and conditions described under "--Consolidation, Mergers and Sales of Assets" below, the holders of Senior Indebtedness will be entitled to receive the payment in full in cash of all Senior Indebtedness, or provision must be made for such payment in full in cash, before the holders of notes will be entitled to receive any payment or distribution of any kind or character, other than with respect to the U.S. government securities pledged as security for the notes as set forth in "--Security" above or any payment or distribution in the form of equity securities or subordinated securities of Veeco or any successor obligor that, in the case of any such subordinated securities, are subordinated in right of payment to all Senior Indebtedness that may at the time be outstanding to at least the same extent as the notes are so subordinated on account of principal of, or premium, if any, or interest on the notes. We refer to our equity securities and such subordinated securities as "Permitted Junior Securities." Any payment or distribution of assets of Veeco of any kind or character, whether in cash, property or securities other than a payment or distribution in the form of Permitted Junior Securities, by set-off or otherwise, to which the holders of the notes or the trustee would be entitled but for the provisions of the indenture relating to subordination will be paid by the liquidating trustee or agent or other person making such payment or distribution 23 directly to the holders of Senior Indebtedness or their representatives ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness to the extent necessary to make payment in full in cash of all Senior Indebtedness remaining unpaid, after giving effect to any current payment or distribution to the holders of such Senior Indebtedness. Upon the occurrence of any Payment Default on any Designated Senior Indebtedness and until such Payment Default has been cured or waived in writing or ceases to exist or such Designated Senior Indebtedness has been discharged or paid in full in cash, then, except as set forth above with respect to the U.S. government securities pledged to secure the notes, no payment or distribution of any of our assets of any kind or character, whether in cash, property or securities other than Permitted Junior Securities, may be made by or on behalf of us on account of principal of, premium, if any, or interest on the notes or on account of the purchase, redemption or other acquisition of notes. A "Payment Default" means a default in payment, whether at scheduled maturity, upon scheduled installment, by acceleration or otherwise, of principal of, or premium, if any, or interest on Designated Senior Indebtedness beyond any applicable grace period. Upon the occurrence of any default or event of default with respect to Designated Senior Indebtedness, other than any Payment Default pursuant to which the maturity thereof may be accelerated, and receipt by the trustee with respect to the notes of written notice thereof from the trustee or other representative of holders of Designated Senior Indebtedness, which we refer to as a "Non-Payment Default," no payment or distribution of any assets of Veeco of any kind or character, whether in cash, property or securities other than Permitted Junior Securities, may be made by or on behalf of Veeco on account of principal of, premium, if any, or interest on the notes or on account of the purchase, redemption or other acquisition of notes for the period specified below, which we refer to as a "Payment Blockage Period." The Payment Blockage Period will commence upon the date of receipt by the trustee of written notice from the trustee or such other representative of the holders of the Designated Senior Indebtedness in respect of which the Non-Payment Default exists and shall end on the earliest of: (1) 179 days thereafter; PROVIDED, that any Designated Senior Indebtedness as to which notice was given has not theretofore been accelerated, (2) the date on which such Non-Payment Default is cured, waived or ceases to exist, (3) the date on which such Designated Senior Indebtedness is discharged or paid in full in cash, and (4) the date on which such Payment Blockage Period has been terminated by written notice to the trustee or Veeco from the trustee or such other representative initiating such Payment Blockage Period, after which we will resume making any and all required payments in respect of the notes, including any missed payments unless a Payment Default then exists. In any event, not more than one Payment Blockage Period may be commenced during any period of 365 consecutive days. No Non-Payment Default that existed or was continuing on the date of the commencement of any Payment Blockage Period will be, or can be made, the basis for the commencement of a subsequent Payment Blockage Period, unless such Non-Payment Default has been cured or waived for a period of not less than 90 consecutive days subsequent to the commencement of such Payment Blockage Period. In the event that, notwithstanding the subordination and payment blockage provisions, any payment or distribution is received by the trustee or any holder of the notes which is prohibited by such provisions, then and in such event such payment must be paid over and delivered by such trustee or holder to the trustee or any other representative of holders of Senior Indebtedness, as their interests may appear, for application to Senior Indebtedness. After all Senior Indebtedness is paid in full in cash and until the notes are paid in full, holders of the notes will be subrogated equally and ratably with all other indebtedness that is equal in right of payment to the notes to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent 24 that distributions otherwise payable to the holders of the notes have been applied to the payment of Senior Indebtedness. See "--Events of Default" below. By reason of this subordination, in the event of liquidation, receivership, reorganization or insolvency of Veeco, holders of Senior Indebtedness may receive more, ratably, and holders of the notes may receive less, ratably, than our other creditors. The notes are also subordinated by operation of law to all indebtedness and other liabilities, including trade payables, of our subsidiaries. We are obligated to pay reasonable compensation to the trustee and to indemnify the trustee against certain losses, liabilities or expenses incurred by the trustee in connection with its duties relating to the notes. The trustee's claims for these payments will generally be senior to those of holders of notes in respect of funds collected or held by the trustee. "Indebtedness" means, with respect to any person, without duplication: (1) all indebtedness, obligations and other liabilities, contingent or otherwise, of such person for borrowed money, and whether or not the recourse of the obligee is to the whole of the assets of the person or only a portion of the assets, including overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection agreements, all obligations, contingent or otherwise, including reimbursement obligations, of such person in connection with any letters of credit, bank guarantees or bankers' acceptances issued under letter of credit facilities, acceptance facilities or other similar facilities, any loans or advances from banks, whether or not evidenced by notes or similar instruments and all obligations incurred, assumed or guaranteed by the person in connection with the acquisition by it or by a subsidiary of any business, assets or property, (2) all obligations and other liabilities, contingent or otherwise, of such person evidenced by credit or loan agreements, bonds, debentures, notes or other written obligations, whether or not the recourse of the lender is to all of our assets or to only a portion thereof, (3) all obligations and liabilities, contingent or otherwise, in respect of leases required, in conformity with generally accepted accounting principles, to be accounted for as capitalized lease obligations on such person's balance sheet, (4) all obligations evidenced by a note or similar instrument given in connection with the acquisition of any businesses, properties or assets of any kind, (5) all obligations issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable and accrued liabilities arising in the ordinary course of business, (6) all obligations and other liabilities, contingent or otherwise, in respect of leases or related documents, including a purchase agreement, of the person in connection with the lease of real property or improvements thereon (or any personal property included as part of any such lease), which provides that the person is contractually obligated to purchase or cause a third party to purchase the leased property or pay an agreed upon residual value of the leased property to the lessor and thereby guarantees a residual value of leased property to the lessor (whether or not such lease transaction is characterized as an operating lease or a capitalized lease in accordance with generally accepted accounting principles), (7) all obligations, contingent or otherwise, with respect to an interest rate, currency or other swap, cap, floor or collar agreement, hedge agreement, forward contract or other similar 25 instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement, (8) pension plan obligations, (9) all direct or indirect guarantees or similar agreements, and obligations or liabilities, contingent or otherwise, to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of indebtedness, obligations or liabilities of another person, including our subsidiaries, of the kind described in clauses (1) through (8) above, (10) any indebtedness or other obligations described in clauses (1) through (8) above secured by any mortgage, pledge, lien or other encumbrance existing on property owned or held by the person, regardless of whether the indebtedness or other obligation has been assumed by the person, and (11) any and all deferrals, renewals, extensions and refundings of, or amendments, modifications, supplements to, any indebtedness, obligation or liability of the kind described in clauses (1) through (10). "Senior Indebtedness" means all of our Indebtedness other than: o Indebtedness or any other obligations of ours that by their terms rank equal or junior in right of payment to the notes, o Indebtedness evidenced by the notes, o Indebtedness that is subordinate to our general unsecured obligations by operation of law, o accounts payable or other liabilities owed or owing by us to trade creditors including guarantees thereof or instruments evidencing such liabilities, o amounts owed by us for compensation to employees or for services rendered to us, o Indebtedness to any subsidiary or any other affiliate of ours or any of such affiliate's subsidiaries except if it is pledged as security for any Senior Indebtedness, o Indebtedness evidenced by any guarantee of any Indebtedness ranking equal or junior in right of payment to the notes, and o Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11 of the United States Code, is without recourse to us. "Designated Senior Indebtedness" means our current bank credit agreement and revolving credit facility and any other Senior Indebtedness in which the governing instrument or agreement expressly provides that the Senior Indebtedness shall be "Designated Senior Indebtedness" for purposes of the indenture. The governing instrument or agreement may place limitations and conditions on the right of Senior Indebtedness to exercise the rights of Designated Senior Indebtedness. The notes are exclusively obligations of Veeco. We conduct a substantial portion of our operations through our subsidiaries. As a result, our cash flow and our ability to service our debt, including the notes, depend upon the earnings of our subsidiaries. In addition, we depend on the distribution of earnings, loans or other payments by our subsidiaries to us. The notes will be effectively subordinated to all liabilities, including trade payables and lease obligations, if any, of our subsidiaries. Any right by us to receive the assets of any of our subsidiaries upon the liquidation or reorganization thereof, and the consequent right of the holders of the notes to participate in these assets, will be effectively subordinated to the claims of that subsidiary's creditors including trade creditors, except to the extent that we are recognized as a creditor of such subsidiary, in which case our claims would still be subordinate to any security interests in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by us. 26 Our subsidiaries are separate and distinct legal entities and have no obligations, contingent or otherwise, to pay any amounts due pursuant to the notes or to make any funds available therefor, whether by dividends, loans or other payments. In addition, the payment of dividends and the making of loans and advances to us by our subsidiaries may be subject to statutory, contractual or other restrictions and are dependent upon the earnings or financial condition of those subsidiaries and subject to various business considerations. As a result, we may be unable to gain access to the cash flow or assets of our subsidiaries. As of December 31, 2001, excluding intercompany indebtedness, we had no Senior Indebtedness outstanding and our subsidiaries had liabilities of approximately $82.0 million, including approximately $19.0 million of indebtedness for borrowed money. We can, however, borrow up to $100 million under our revolving credit facility (less the face amount of any letters of credit outstanding under that facility). Although no borrowings under this facility were outstanding as of December 31, 2001 or are outstanding under this facility as of the date of this prospectus, any future amounts we borrow under this facility would be senior indebtedness. The indenture does not limit the amount of additional indebtedness, including Senior Indebtedness, which we can create, incur, assume or guarantee, nor does the indenture limit the amount of indebtedness or other liabilities that our subsidiaries can create, incur, assume or guarantee. EVENTS OF DEFAULT Each of the following will constitute an "event of default" under the indenture: (1) our failure to pay when due the principal or premium, if any, on any of the notes at maturity, upon redemption or exercise of a repurchase right or otherwise, whether or not such payment is prohibited by the subordination provisions of the indenture, (2) our failure to pay when due an installment of interest, including liquidated damages, if any, on any of the notes that continues for 30 days after the date when due, whether or not such payment is prohibited by the subordination provisions of the indenture; provided that a failure to make any of the first six scheduled interest payments on the notes on the applicable interest payment dates will constitute an event of default with no grace or cure period, (3) our failure to deliver shares of our common stock, together with cash instead of fractional shares, when those shares of common stock or cash instead of fractional shares are required to be delivered upon conversion of a note, and that failure continues for ten days after such delivery date, (4) our failure to perform or observe any other term, covenant or agreement contained in the notes or the indenture for a period of 60 days after written notice of such failure, requiring us to remedy the same, has been given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the notes then outstanding, (5) our failure to make any payment by the end of the applicable grace period, if any, after the maturity of any Indebtedness (other than Excluded Indebtedness) in an aggregate amount in excess of $10 million, or there is an acceleration of Indebtedness (other than Excluded Indebtedness) in an aggregate amount in excess of $10 million because of a default with respect to such Indebtedness without such Indebtedness having been discharged or such acceleration having been cured, waived, recorded or annulled, in either case, for a period of 30 days after written notice to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the notes then outstanding, (6) certain events of bankruptcy, insolvency or reorganization of Veeco or that of any significant subsidiary, and 27 (7) our filing of a voluntary petition seeking liquidation, reorganization arrangement, readjustment of debts or for any other relief under the U.S. federal bankruptcy code. "Excluded Indebtedness" means: (a) Indebtedness of Veeco or a subsidiary of Veeco not in excess of $10 million secured by a mortgage in effect when we or that subsidiary acquires a business that owns the underlying property subject to the mortgage, and the acquisition results in a default on that mortgage according to its terms and (b) Indebtedness that was existing on December 21, 2001 not in excess of $8.5 million to the extent Veeco or a subsidiary of Veeco has established a cash collateral or similar account that is available to one or more holders of Senior Indebtedness to use to cure a default on such Indebtedness. The indenture provides that the trustee shall, within 90 days after the occurrence of a default, give to the registered holders of the notes notice of all uncured defaults of which the trustee is aware, but the trustee shall be protected in withholding such notice if it determines in good faith that withholding the notice is in the best interests of the holders, except in the case of a default in the payment of the principal of, or premium, if any, or interest on, any of the notes when due or in the payment of any redemption or repurchase obligation. If an event of default specified in clause (6) or clause (7) above occurs and is continuing, then the principal of all notes and the interest thereon shall automatically become immediately due and payable. If an event of default shall occur and be continuing, other than with respect to clause (6) or clause (7) above, the default not having been cured or waived as provided under "--Modification and Waiver" below, either the trustee or the holders of not less than 25% in aggregate principal amount of the notes then outstanding may declare the notes immediately due and payable at their principal amount together with accrued interest to the date of that declaration, and thereupon the trustee may, at its discretion, proceed to protect and enforce the rights of the holders of the notes by appropriate judicial proceedings. The notes may not be declared due and payable unless the trustee has given at least five days' prior notice to the holders of the Designated Senior Indebtedness. The declaration may be rescinded or annulled with the written consent of the holders of a majority in aggregate principal amount of the notes then outstanding upon the conditions provided in the indenture. The indenture contains a provision entitling the trustee, subject to the duty of the trustee during default to act with the required standard of care, to be indemnified by the holders of notes before proceeding to exercise any right or power under the indenture at the request of such holders. The indenture provides that the holders of a majority in aggregate principal amount of the notes then outstanding through their written consent may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred upon the trustee. We are required to furnish annually to the trustee a statement as to the fulfillment of our obligations under the indenture. CONSOLIDATION, MERGERS AND SALES OF ASSETS We may, without the consent of the holders of notes, consolidate with, merge into, engage in a statutory share exchange or transfer all or substantially all of our assets to any corporation, limited liability company, partnership or trust organized under the laws of the United States or any of its political subdivisions provided that: o we are the resulting or surviving corporation or, if not, the successor, transferee or lessee assumes all our obligations under the indenture and the notes, o at the time of such transaction, no event of default, and no event which, after notice or lapse of time, would become an event of default, shall have occurred and be continuing, and o an officers' certificate stating that the consolidation, merger, statutory share exchange or transfer complies with the provisions of the indenture and an opinion of counsel meeting the requirements of the indenture have each been delivered to the trustee. 28 MODIFICATION AND WAIVER The indenture, including the terms and conditions of the notes, may be modified or amended by us and the trustee, without the consent of the holder of any note, for the purposes of, among other things: o adding to our covenants for the benefit of the holders of notes, o surrendering any right or power conferred upon us, o providing for conversion rights of holders of notes if any reclassification or change of our common stock or any consolidation, merger, statutory share exchange or sale of all or substantially all of our assets occurs, o reducing the conversion price; provided that that reduction will not adversely affect the interests of holders of notes in any material respect, o complying with the requirements of the Commission in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended, o making any changes or modifications to the indenture necessary in connection with the registration of the notes under the Securities Act as contemplated by the registration rights agreement; provided that this action does not adversely affect the interests of the holders of the notes in any material respect, o curing any ambiguity, omission, inconsistency or correcting or supplementing any defective provision contained in the indenture; provided that such modification or amendment does not, in the good faith opinion of our board of directors and the trustee, adversely affect the interests of the holders of the notes in any material respect, or o adding or modifying any other provisions which we and the trustee may deem necessary or desirable and which will not adversely affect the interests of the holders of notes in any material respect. Modification and amendments to the indenture or to the terms and conditions of the notes may also be made, and noncompliance by us may be waived, with the written consent of the holders of at least a majority in aggregate principal amount of the notes at the time outstanding or by the adoption of a resolution at a meeting of holders at which a quorum is present by at least a majority in aggregate principal amount of the notes represented at the meeting. However, no such modification, amendment or waiver may, without the written consent of the holder of each note affected: o change the maturity of the principal of, or any installment of interest on, any note, including any payment of liquidated damages, o reduce the principal amount of, or any premium, if any, or interest on (including the amount of liquidated damages), any note, o reduce the interest rate or interest, including any liquidated damages, on any note, o change the currency of payment of principal of, premium, if any, or interest of any note, o impair the right to institute suit for the enforcement of any payment on or with respect to, or conversion of, any note, o except as otherwise permitted or contemplated by provisions of the indenture concerning corporate reorganizations, adversely affect the repurchase option of holders upon a change in control or the conversion rights of holders of the notes, o modify the provisions of the indenture relating to the pledge of securities as contemplated under "--Security" above in a manner that adversely affects the interests of the holders of notes, o modify the subordination provisions of the notes in a manner adverse to the holders of notes, or o reduce the percentage in aggregate principal amount of notes outstanding necessary to modify or amend the indenture or to waive any past default. 29 SATISFACTION AND DISCHARGE We may discharge our obligations under the indenture while notes remain outstanding, subject to certain conditions, if: o all outstanding notes will become due and payable at their scheduled maturity within one year, or o all outstanding notes have been called for redemption within one year, and, in either case, we have deposited with the trustee an amount sufficient to pay and discharge all outstanding notes on the date of their scheduled maturity or the scheduled date of redemption; provided that we shall remain obligated to issue shares upon conversion of the notes. GLOBAL NOTES; BOOK-ENTRY; FORM The notes are evidenced by global notes. We have deposited the global notes with or on behalf of DTC and have registered the global notes in the name of Cede & Co., as DTC's nominee. Except as set forth below, a global note may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee. Notes that were held as beneficial interests in a global note with DTC will remain beneficial interests in a global note after a sale of notes under this prospectus. A holder may hold its interest in a global note directly through DTC if such holder is a participant in DTC, or indirectly through organizations that are participants in DTC, which are referred to as "participants." Transfers between participants will be effected in the ordinary way in accordance with DTC rules and will be settled in clearing house funds. The laws of some states require that certain persons take physical delivery of securities in definitive form. As a result, the ability to transfer beneficial interests in the global note to such persons may be limited. Persons who are not participants may beneficially own interests in a global note held by DTC only through participants, or certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a participant, either directly or indirectly, which are referred to as "indirect participants." So long as Cede & Co., as the nominee of DTC, is the registered owner of a global note, Cede & Co., for all purposes, will be considered the sole holder of such global note. Except as provided below, owners of beneficial interests in a global note will: o not be entitled to have certificates registered in their names, o not receive physical delivery of certificates in definitive registered form, and o not be considered holders of the global note. We will pay interest on and the redemption price of a global note to Cede & Co., as the registered owner of the global note, by wire transfer of immediately available funds on each interest payment date or the redemption or repurchase date, as the case may be. Neither we, the trustee nor any paying agent will be responsible or liable: o for the records relating to, or payments made on account of, beneficial ownership interests in a global note, or o for maintaining, supervising or reviewing any records relating to the beneficial ownership interests. We have been informed that DTC's practice is to credit participants' accounts on any payment date with payments in amounts proportionate to their respective beneficial interests in the principal amount represented by a global note as shown on the records of DTC, unless DTC has reason to believe that it will not receive payment on that payment date. Payments by participants to owners of beneficial interests in the principal amount represented by a global note held through participants will be the responsibility of the participants, as is now the case with securities held for the accounts of customers registered in "street name." 30 Because DTC can only act on behalf of participants, who in turn act on behalf of indirect participants, the ability of a person having a beneficial interest in the principal amount represented by the global note to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate evidencing its interest. Neither we, the trustee, registrar, paying agent nor the conversion agent have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. DTC has advised us that it will take any action permitted to be taken by a holder of notes, including the presentation of notes for exchange, only at the direction of one or more participants to whose account with DTC interests in the global note are credited, and only in respect of the principal amount of the notes represented by the global note as to which the participant or participants has or have given such direction. DTC has advised us that it is: o a limited purpose trust company organized under the laws of the State of New York, o a member of the Federal Reserve System, o a "clearing corporation" within the meaning of the Uniform Commercial Code, and o a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants. Participants include securities brokers, dealers, banks, trust companies, clearing corporations and other organizations. Some of the participants or their representatives, together with other entities, own DTC. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. DTC has agreed to the foregoing procedures to facilitate transfers of interests in a global note among participants. However, DTC is under no obligation to perform or continue to perform these procedures, and may discontinue these procedures at any time. If DTC is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by us within 90 days, we will issue notes in certificated form in exchange for global notes. INFORMATION REGARDING THE TRUSTEE AND TRANSFER AGENT State Street Bank and Trust Company, N.A., as trustee under the indenture, has been appointed by us as collateral agent, paying agent, conversion agent, registrar and custodian with regard to the notes. American Stock Transfer & Trust Company is the transfer agent and registrar for our common stock. The trustee, the transfer agent or their affiliates may from time to time in the future provide banking and other services to us in the ordinary course of their business. REGISTRATION RIGHTS As required under our registration rights agreement with the noteholders, we have, at our expense, filed with the Commission a shelf registration statement on Form S-3, of which this prospectus is a part, covering resales by holders of all notes and the common stock issuable upon conversion of the notes. The former holders of Applied Epi common stock whose shares are offered by this prospectus are parties to a separate registration rights agreement, and they do not have the benefit of the covenants and the payment obligations we describe below. References in this section to the "registration rights agreement" and the rights of holders under the "registration rights agreement" refer only to the registration rights agreement with the holders of the notes and the common stock issuable upon conversion of the notes. We have summarized portions of that registration rights agreement below. 31 We will use our best efforts to: o cause the registration statement to become effective as promptly as is practicable, but in no event later than June 19, 2002, and o keep the registration statement effective until the earlier of (A) January 3, 2004; and (B) the sale pursuant to the registration statement of all notes and shares issuable upon conversion thereof registered thereunder. We are permitted to suspend the use of this prospectus under certain circumstances relating to pending corporate developments, public filings with the Commission and similar events. If we suspend the use of the prospectus for a period in excess of 45 days in any three-month period or in excess of an aggregate of 120 days in any 12-month period, we will be required to pay additional interest on the notes as liquidated damages as described below. We may establish regular suspension periods corresponding to our fiscal quarters. If we do so, we will give notice of the scheduled suspensions to the trustee, to be forwarded to the holders of the notes, and we will request the trustee to give periodic notice of the suspension to the holders. If: (1) on June 20, 2002, the registration statement is not declared effective, (2) except when we suspend the use of the prospectus as set forth in the first two sentences of this paragraph, the registration statement ceases to be effective or fails to be usable without being succeeded within five business days by a post-effective amendment or a report filed with the Commission pursuant to the Exchange Act that cures the failure of the registration statement to be effective or usable, or (3) we have suspended the use of this prospectus as described in the first two sentences of this paragraph longer than the period permitted by such sentences, each of which we refer to as a "registration default," additional interest as liquidated damages will accrue on the notes, from and including the day following the registration default to but excluding the day on which the registration default has been cured. Concurrent registration defaults will be deemed to be a single registration default. Liquidated damages will be paid semiannually in arrears, with the first semiannual payment due on the first interest payment date, as applicable, following the date on which such liquidated damages begin to accrue, and will accrue, in addition to the stated interest rate on the notes, at a rate equal to: o 0.25% per annum of the principal amount to and including the 90th day following the occurrence of the registration default, and o 0.5% per annum of the principal amount from and after the 91st day following the occurrence of the registration default, in each case so long as such registration default continues. In no event will liquidated damages accrue at a rate per year exceeding 0.5%. If a holder has converted some or all of its notes into common stock, the holder of that common stock will be entitled to receive equivalent amounts based on the principal amount of the notes converted. The following additional provisions apply to liquidated damages: o A holder will not be entitled to liquidated damages on account of a registration default described in clause (1) above if it has not provided all registration information required under the registration rights agreement to us, at least five business days prior to the effectiveness of the shelf registration statement. o Except as provided in the following bullet, a holder will not be entitled to liquidated damages on account of a registration default described in clauses (2) and (3) above with respect to any of its registrable securities that are not registered on the shelf registration statement during the period of a registration default described therein. 32 o A "registration default" shall be deemed to have occurred and be continuing if and for so long as we do not file an amendment to the shelf registration statement after it has been declared effective or a supplement to the related prospectus to permit a holder to deliver such prospectus, as contemplated above, on the fifth day following our receipt of the holder's registration information, but the registration default shall be applicable only to the affected holder and no other holder shall be entitled to liquidated damages on account of such registration default. o No liquidated damages will be payable to holders of notes or common stock purchased in transactions covered by the shelf registration statement or previously sold in transactions exempt from the registration requirements of the Securities Act in accordance with Rule 144. No liquidated damages will be payable with respect to any of our common stock issued to former Applied Epi stockholders. 33 MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following section discusses the material U.S. federal income tax consequences to holders of the notes or holders of our common stock (including common stock into which the notes may be converted). This discussion is for general information only and does not address all aspects of U.S. federal income taxation that may be relevant to you in light of your personal circumstances. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, applicable existing and proposed U.S. Treasury Regulations, and judicial authority and current administrative rulings and practice, all of which are subject to change, possibly on a retroactive basis, or to differing interpretation. This summary applies only to holders that hold the notes and our common stock (including common stock into which the notes may be converted) as capital assets within the meaning of Section 1221 of the Internal Revenue Code, which generally means that such securities are held for investment. It does not address tax consequences applicable to those holders that may be subject to special tax rules, such as: o financial institutions, o regulated investment companies, o tax-exempt organizations, o expatriates, o persons subject to the alternative minimum tax provisions of the Internal Revenue Code, o pension funds, o insurance companies, o dealers in securities or foreign currencies, o persons that will hold notes or common stock as a position in a hedging transaction, straddle, conversion transaction, constructive sale, integrated transaction or other risk reduction transaction for tax purposes, o persons who hold notes through a partnership or other pass-through entity, or o persons that have a primary form of currency other than the U.S. dollar, except as disclosed below under "Non-U.S. Holders." We have not sought any ruling from the Internal Revenue Service, or IRS, with respect to the statements we make and the conclusions we reach in the following summary, and we cannot assure you that the IRS will agree with our statements and conclusions. Moreover, this discussion does not address the effect of any applicable state, local or foreign tax laws. INVESTORS CONSIDERING THE PURCHASE OF NOTES OR THE SHARES OF OUR COMMON STOCK (INCLUDING COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES) SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME, GIFT AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY. For purposes of this discussion, the term "U.S. holder" means a beneficial owner of a note or our common stock that is for U.S. federal income tax purposes, (1) a citizen or resident of the U.S., (2) a corporation, partnership or other entity created or organized in or under the laws of the U.S., (3) an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or (4) a trust if (A) its administration is subject to the primary supervision of a court within the U.S. and one or more U.S. persons have authority to control all of its substantial decisions, or (B) it was in existence on August 20, 1996, and has elected to continue to be treated as a U.S. trust. For U.S. federal income tax purposes, income earned through a foreign or domestic partnership or similar entity is generally attributed to its owners. The term "non-U.S. holder" means a holder of a note or our common stock that is not a U.S. holder for United States federal income tax purposes. 34 U.S. HOLDERS The following is a summary of the material U.S. federal income tax consequences resulting from the ownership and disposition of the notes and our common stock by U.S. holders. PAYMENT OF INTEREST STATED INTEREST Any interest we pay on a note generally will be includable in your income as ordinary income at the time the time you receive or accrue the interest, in accordance with your method of accounting for U.S. federal income tax purposes. REPURCHASE AT OPTION OF HOLDERS UPON CHANGE IN CONTROL You may require us to redeem any and all of your notes if a change in control occurs, as that term is defined in "Description of the Notes--Repurchase at Option of Holders Upon a Change in Control." If we are required to repurchase your notes upon the occurrence of a change in control and we opt to pay the repurchase price in our common stock, we must issue you a number of shares of our common stock equal to the principal amount of the notes you submit to us for repurchase, plus accrued and unpaid interest up to but excluding the repurchase date, divided by 95% of the average of the closing sale price of our common stock measured over a five day period. We are treating the possibility of repurchasing all or any portion of your notes in exchange for our common stock upon the happening of a change in control as a remote and incidental contingency for U.S. federal income tax purposes, within the meaning of applicable Treasury Regulations. Accordingly, we believe that the possibility of repurchasing all or any portion of your notes in exchange for our common stock upon the happening of a change in control will not affect the yield to maturity on the notes, and therefore you will be taxable at the time repurchase payments, if any, are received or accrued by you in accordance with your method of accounting. Our determination that there is a remote likelihood that we will repurchase all or any portion of your notes in exchange for our common stock upon the happening of a change in control is binding on you unless you explicitly disclose in the manner required by applicable Treasury Regulations that your determination is different from ours. Our determination is not, however, binding on the IRS. SALE, EXCHANGE OR REDEMPTION OF THE NOTES Except as set forth below under "--Conversion of the Notes" and "--Market Discount," upon the sale, exchange or redemption of a note, including the repurchase of a note for cash pursuant to the exercise of a repurchase right in the event of a change in control, you generally will recognize capital gain or loss equal to the difference between the amount realized on the sale, exchange or redemption and your adjusted tax basis in that note. For these purposes, the amount realized on the sale, exchange or redemption of a note does not include any amount attributable to accrued but unpaid interest, which will be taxable as such unless previously taken into account. Subject to the market discount and amortizable premium rules discussed below, your adjusted tax basis in a note generally will be the U.S. dollar value of the purchase price of that note on the date of purchase, increased by any market discount previously included in income by you and reduced by any amortized premium. Gain or loss so recognized will generally be capital gain or loss, and will be long-term capital gain or loss if, at the time of the sale, exchange or redemption, you held the note for more than one year. In general, the maximum federal tax rate for noncorporate taxpayers on long-term capital gain is 20% with respect to capital assets (including the notes and common stock) and 18% if such capital assets are held for more than five years. Capital gain on assets having a holding period of one year or less at the time of their disposition is taxed as short-term capital gain at a current maximum federal rate of 38.6% in the hands of noncorporate taxpayers. However, under recently enacted tax legislation, the maximum federal tax rate for short-term capital gains will be reduced, over the next four years, from 38.6% to 35% by January 1, 2006. For individual taxpayers, the deductibility of capital losses is subject to limitations. For corporate taxpayers, both capital gains and ordinary income are subject to a maximum regular federal tax rate of 35%. 35 CONSTRUCTIVE DIVIDENDS ON NOTES We may adjust the conversion price of the notes under certain circumstances. See "Description of the Notes--Conversion Rights." Section 305 of the Internal Revenue Code treats certain actual or constructive distributions of stock with respect to stock or convertible securities as a distribution that is taxable as a dividend, to the extent of our current or accumulated earnings and profits. Under applicable Treasury Regulations, an adjustment of the conversion price may, under certain circumstances, be treated as a constructive dividend to the extent it increases your proportional interest as a holder of a note in our fully diluted common stock, whether or not you ever convert the note into our common stock. Generally, your tax basis in a note will be increased by the amount of any constructive dividend. Similarly, if we fail to adjust the conversion price of the notes to reflect a stock dividend or similar event, it could in some circumstances give rise to constructive dividend income to U.S. holders of common stock. CONVERSION OF THE NOTES You generally will not recognize any income, gain or loss upon conversion of a note into our common stock, and although not free from doubt, you generally should not recognize any income, gain or loss if we repurchase a note in the event of a change in control for common stock, except with respect to cash received in lieu of a fractional share of common stock, except to the extent that the common stock issued upon conversion is treated as attributable to accrued interest on the note, which will be treated as interest for federal income tax purposes, and except with respect to market discount, as described below under "--Market Discount." Your adjusted tax basis in the common stock received on conversion or repurchase of a note will be the same as your adjusted tax basis in the note at the time of conversion or repurchase, reduced by any basis allocable to a fractional share for which you received cash. The holding period for the common stock received on conversion or repurchase will generally include the holding period of the note converted or repurchased. However, your adjusted tax basis in shares of common stock attributable to accrued interest generally will equal the amount of accrued interest you include in income and the holding period will begin on the day following the date of conversion or repurchase. You should treat cash received in lieu of a fractional share of common stock upon conversion or repurchase of a note as a payment in exchange for a fractional share of common stock. Your receipt of cash in lieu of a fractional share of common stock generally will result in capital gain or loss measured by the difference between the cash you received for the fractional share and your adjusted tax basis in the fractional share. The fair market value of the shares of common stock you receive which is attributable to accrued interest will be taxable as ordinary income. DIVIDENDS ON COMMON STOCK If we make distributions on our common stock, those distributions will generally be treated as a dividend, subject to tax as ordinary income, to the extent of our current or accumulated earnings and profits as of the year of distribution, then as a tax-free return of capital to the extent of your adjusted tax basis in the common stock and thereafter as gain from the sale or exchange of that stock. In general, a dividend distribution to a corporate U.S. holder may qualify for a deduction equal to 70% of the dividends received deduction if the U.S. holder owns less than 20% of the voting power and value of our stock, other than any non-voting, non-convertible, non-participating preferred stock. A corporate U.S. holder that owns 20% or more of the voting power and value of our stock, other than any non-voting, non-convertible, non-participating preferred stock, generally will qualify for a deduction equal to 80% of the dividends received. SALE OF COMMON STOCK Upon the sale or exchange of our common stock, you generally will recognize capital gain or loss equal to the difference between (i) the amount of cash and the fair market value of any property you receive upon the sale or exchange and (ii) your adjusted tax basis in the common stock. That capital gain or loss will be long-term if your holding period is more than one year and will be short-term if your holding period is equal to or less than one year. In the case of certain noncorporate taxpayers, including individuals, long-term capital gains are taxed at a maximum 36 federal rate of 20%, which decreases to 18% if such capital assets are held for more than five years, and short-term capital gains are taxed at a current maximum federal rate of 38.6%. However, under recently enacted tax legislation, the maximum federal tax rate for short-term capital gains will be reduced, over the next four years, from 38.6% to 35% by January 1, 2006. Corporate taxpayers are subject to a maximum regular federal tax rate of 35% on all capital gains and ordinary income. Your adjusted tax basis and holding period in our common stock received upon conversion of a note are determined as discussed above under "Description of the Notes--Conversion Rights." Your adjusted tax basis in our common stock that you acquire other than upon conversion of a note generally will be the U.S. dollar value of the purchase price of such stock on the date of purchase. MARKET DISCOUNT Your resale of the notes may be affected by the impact on a purchaser of the market discount provisions of the Internal Revenue Code. For this purpose, the market discount on a note generally will equal the amount, if any, by which the stated redemption price at maturity of the note immediately after its acquisition, other than at original issue, exceeds the U.S. holder's adjusted tax basis in the note. Subject to a limited exception, these provisions generally require a U.S. holder who acquires a note at a market discount to treat as ordinary income any gain recognized on the disposition of that note to the extent of the accrued market discount on that note at the time of maturity or disposition, unless the U.S. holder elects to include accrued market discount in income over the life of the note. This election to include market discount in income over the life of the note, once made, applies to all market discount obligations acquired on or after the first taxable year to which the election applies and may not be revoked without the consent of the IRS. In general, market discount will be treated as accruing on a straightline basis over the remaining term of the note at the time of acquisition, or, at the election of the U.S. holder, under a constant yield method. If this latter election is made, it will apply only to the note with respect to which it is made, and may not be revoked. A U.S. holder who acquires a note at a market discount and who does not elect to include accrued market discount in income over the life of the note may be required to defer the deduction of a portion of the interest on any indebtedness incurred or maintained to purchase or carry the note until maturity or until the note is disposed of in a taxable transaction. If a U.S. holder acquires a note with market discount and receives common stock upon conversion of the note, the amount of accrued market discount not previously included in income with respect to the converted note through the date of conversion will be treated as ordinary income when the holder disposes of the common stock. AMORTIZABLE PREMIUM If you purchase a note at a premium over its stated principal amount, plus accrued interest, you generally may elect to amortize that premium, referred to as Section 171 premium, from the purchase date to the note's maturity date under a constant-yield method that reflects semiannual compounding based on the note's payment period, with a corresponding decrease in adjusted tax basis. Amortizable premium, however, will not include any premium attributable to a note's conversion feature. The premium attributable to the conversion feature is the excess, if any, of the note's purchase price over what the note's fair market value would be if there were no conversion feature. Amortized Section 171 premium is treated as an offset to interest income on a note and not as a separate deduction. Your election to amortize premium on a constant yield method, once made, applies to all debt obligations held or subsequently acquired by you on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the IRS. BACKUP WITHHOLDING AND INFORMATION REPORTING If you hold notes or common stock, you may be subject to backup withholding at a current rate of 30.0% with respect to certain reportable payments, including interest payments, dividend payments and, under certain circumstances, principal payments on the notes. This rate will be reduced over the next four years in accordance with recently enacted tax legislation. These backup withholding rules apply if you, among other things, (i) fail to furnish a social security number or other taxpayer identification number certified under penalties of perjury within a reasonable time after the request therefor, (ii) furnish an incorrect taxpayer identification number, (iii) fail to report properly interest or dividends, or (iv) under certain circumstances, fail to provide a certified statement, signed under penalties of perjury, that the taxpayer identification number furnished is the correct number and that you are not 37 subject to backup withholding. If you do not provide us with your correct taxpayer identification number, you may also be subject to penalties imposed by the IRS. Any amount withheld from a payment to you under the backup withholding rules is creditable against your federal income tax liability. Backup withholding will not apply, however, with respect to payments made to certain U.S. holders, including corporations and tax-exempt organizations; provided that their exemption from backup withholding is properly established. We will report to U.S. holders of notes and common stock and to the IRS the amount of any reportable payments for each calendar year and the amount of tax withheld, if any, with respect to those payments. NON-U.S. HOLDERS The following discussion is a summary of the principal U.S. federal income and estate tax consequences resulting from the ownership of the notes or our common stock by non-U.S. holders. PAYMENT OF INTEREST Generally, your interest income that is not effectively connected with a U.S. trade or business will be subject to a withholding tax at a 30% rate, or lower rate specified by an applicable income tax treaty. However, interest income you earn on the notes may qualify for an exemption, referred to as the portfolio interest exemption, and as a result should not be subject to U.S. federal income tax or withholding, subject to the discussion below of backup withholding. Interest we pay to you on the notes generally should qualify for the portfolio interest exemption if: (1) the interest is not effectively connected with the conduct of a trade or business within the U.S. by you, (2) you do not actually or constructively own 10% or more of the total voting power of all classes of our stock entitled to vote, (3) you are not a controlled foreign corporation that is related to us through stock ownership. For this purpose, you would be deemed to own constructively the common stock into which it could be converted, (4) you, under penalty or perjury, certify to us or our agent you are not a U.S. person and provide your name and address, or otherwise satisfy the applicable identification requirements, and (5) you are not a bank receiving interest pursuant to a loan agreement entered into in the ordinary course of your trade or business. If you satisfy certain requirements, the certification described above may be provided by a securities clearing organization, a bank, or other financial institution that holds customers' securities in the ordinary course of its trade or business. Recently revised Treasury Regulations have modified the certification and identification requirements. These regulations now require foreign partnerships and certain foreign trusts to provide additional documentation which (i) certifies that the individual partners, beneficiaries, or owners of the partnership or trust are not U.S. holders, and (ii) provides the individual partners', beneficiaries' or owners' names and addresses. If you are not exempt from tax under these rules, you will be subject to U.S. federal income tax withholding at a rate of 30% on payments of interest, unless the interest is effectively connected with the conduct of a U.S. trade or business by you or a lower treaty rate applies and, in either case, you provide us with proper certification as to your exemption from withholding. If the interest is effectively connected to the conduct of a U.S. trade or business, it will be subject to the U.S. federal income tax on net income that applies to U.S. persons generally, and with respect to corporate holders and under certain circumstances, the branch profits tax, which is generally imposed at a 30% rate. Non-U.S. holders should consult applicable income tax treaties, which may 38 provide different rules. Even though effectively connected interest is subject to income tax, and may be subject to the branch profits tax, it is not subject to withholding tax if the holder delivers a properly executed IRS Form W-8ECI to us or to our agent. CONVERSION OF THE NOTES You generally will not be subject to U.S. federal income tax on the conversion of a note into shares of our common stock. To the extent you receive cash in lieu of a fractional share of common stock on conversion, that cash may give rise to gain that would be subject to the rules described below with respect to the sale or exchange of a note or common stock. See "--Gain on Disposition of the Notes and Common Stock." CONSTRUCTIVE DIVIDENDS ON THE NOTES The conversion price of the notes may adjust in certain circumstances. See "Description of the Notes--Conversion Rights." An adjustment could potentially give rise to a deemed distribution to you if you hold notes for the reasons described under "--U.S. Holders--Constructive Dividends on Notes" above. In that case, the deemed distribution would be subject to the rules below regarding withholding of U.S. federal tax on dividends in respect of common stock. See "--Dividends" below. DIVIDENDS Subject to the discussion below of backup withholding, dividends, if any, paid on our common stock to you generally will be subject to a 30% U.S. federal withholding tax, subject to reduction if you are eligible for the benefits of certain income tax treaties. Dividends for this purpose may include dividends as discussed in "--U.S. Holders--Constructive Dividends on Notes" above. Under recently revised Treasury Regulations you will be required to satisfy certain certification requirements to claim treaty benefits. Except to the extent otherwise provided under an applicable tax treaty, you generally will be taxed in the same manner as a U.S. holder on dividends paid, or deemed paid, that are effectively connected with the conduct of a trade or business in the U.S. by you, and if required by a tax treaty, is attributable to a permanent establishment maintained in the U.S. If you are a foreign corporation, you may also be subject to a U.S. branch profits tax on that effectively connected income at a 30% rate or a lower rate as may be specified by an applicable income tax treaty. GAIN ON DISPOSITION OF THE NOTES AND COMMON STOCK You generally will not be subject to U.S. federal income tax or withholding tax on gain realized on the sale, exchange or redemption of a note, or the sale or exchange of common stock, unless: (1) if you are an individual, you are present in the U.S. for 183 days or more in the year of the sale, exchange or redemption and certain other requirements are met, or (2) the gain is effectively connected with the conduct of a U.S. trade or business of yours. However, if we were to become a U.S. real property holding corporation, or USRPHC, you could be subject to federal income tax withholding with respect to gain realized on the disposition of notes or shares of common stock. In that case, any withholding tax withheld pursuant to the rules applicable to dispositions of U.S. real property interests would be creditable against your U.S. federal income tax liability and could entitle you to a refund upon furnishing required information to the IRS. We do not believe that we are a USRPHC or will become a USRPHC in the future. BACKUP WITHHOLDING AND INFORMATION REPORTING We must report annually to the IRS and to each non-U.S. holder the amount of any interest or dividends paid to that non-U.S. holder, and tax withheld, if any, with respect to those payments. Copies of these information 39 returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or is incorporated. U.S. backup withholding and information reporting will not apply to payments of interest on the notes by us or our agent to a non-U.S. holder if you satisfy the certification or identification requirements described in "--Non-U.S. Holders--Payment of Interest," above, unless the payor knows or has reason to know that you are not entitled to an exemption from information reporting or backup withholding tax. The payment of the proceeds on the disposition of notes or shares of common stock to or through the U.S. office of a U.S. or foreign broker will be subject to information reporting and backup withholding unless the owner provides the certification described above or otherwise establishes an exemption. The proceeds of the disposition by you of notes or shares of common stock effected outside the U.S. to or through a foreign office of a broker generally will not be subject to backup withholding or information reporting. However, if the broker is a U.S. person or has certain connections to the U.S., information reporting requirements, but not backup withholding, will apply unless the broker has documentary evidence in its files of your non-U.S. status and has no actual knowledge, or reason to know, to the contrary or unless the holder otherwise establishes an exemption. THE COMPANY Generally, under Section 279 of the Internal Revenue Code, an interest deduction in excess of $5.0 million per year is not permitted with respect to certain "corporate acquisition indebtedness." Corporate acquisition indebtedness includes any indebtedness that is: o issued to provide consideration for the direct or indirect acquisition of stock or assets of another corporation, o subordinated to the claims of trade creditors of the issuing corporation generally, or expressly subordinated in right of payment to the payment of any substantial amount of unsecured indebtedness, whether outstanding or subsequently issued, of the issuing corporation, o convertible directly or indirectly into the stock of the issuing corporation, and o issued by a corporation that has a debt to equity ratio that exceeds 2 to 1. Our ability to deduct all of the interest payable on the notes will depend on the application of the foregoing tests to us. The availability of an interest deduction with respect to the notes was not determinative in our issuance of the notes to the initial purchasers. Under Section 163(l) of the Internal Revenue Code, no deduction is permitted for interest paid or accrued on any indebtedness of a corporation that is "payable in equity" of the issuer or a related party. Debt is treated as debt payable in equity of the issuer if the debt is part of an arrangement designed to result in payment of the instrument with or by reference to the equity. Such arrangements could include debt instruments that are convertible at the holder's option if it is substantially certain that the option will be exercised. The legislative history indicates that it is not expected this provision will affect debt with a conversion feature where the conversion price is significantly higher than the market price of the stock on the date of the debt issuance. Accordingly, we do not believe that our interest deduction with respect to interest payments on the notes will be adversely affected by these rules. SELLING SECURITYHOLDERS We originally sold the notes to Merrill Lynch, Pierce, Fenner and Smith Incorporated, Salomon Smith Barney Inc. and Thomas Weisel Partners LLC, as initial purchasers, in December 2001, in a private placement that was exempt from the registration requirements of the Securities Act. The notes were resold by the initial purchasers to persons reasonably believed by the initial purchasers to be "qualified institutional buyers," as defined in Rule 144A under the Securities Act, in transactions exempt from the registration requirements of the Securities Act. Selling securityholders who may use this prospectus from time to time to offer or sell any or all of their notes and shares of our common stock issuable upon conversion of the notes include the initial purchasers' transferees, pledgees, donees and their successors. 40 On September 17, 2001, we completed a merger with Applied Epi, Inc., in which Applied Epi's stockholders received, in addition to certain cash payments, approximately 4.0 million shares of our common stock. Also, in connection with the Applied Epi merger, certain warrants and options to purchase Applied Epi common stock were assumed by Veeco and converted into options and warrants to purchase Veeco common stock. Pursuant to the registration rights agreement we entered into in connection with the Applied Epi merger, we have included in this prospectus the shares of our common stock received in the Applied Epi merger by certain former stockholders of Applied Epi and shares of our common stock issuable upon the exercise of warrants we assumed in the Applied Epi merger. Our references in this prospectus to the "selling securityholders" include these former Applied Epi stockholders and warrantholders. Generally, the selling securityholders who are former Applied Epi stockholders and warrantholders may use this prospectus for the sale of their common stock only until September 17, 2002. The following table sets forth information with respect to the selling securityholders and the respective principal amounts of notes and shares of our common stock beneficially owned by each selling securityholder that may be offered under this prospectus. The information is based on information that has been provided to us by or on behalf of the selling securityholders after we issued the notes in December 2001. Unless otherwise indicated below, none of the selling securityholders has, or within the past three years has had, any position, office or other material relationship with us or any of our predecessors or affiliates. Because the selling securityholders may from time to time use this prospectus to offer all or some portion of the notes or the common stock offered hereby, we cannot provide an estimate as to the amount or percentage of any such type of security that will be held by any selling securityholder upon termination of any particular offering or sale under this prospectus. In addition, the selling securityholders identified below may have sold, transferred or otherwise disposed of all or a portion of any such securities since the date on which they provided us information regarding their holdings, in transactions exempt from the registration requirements of the Securities Act. For the purposes of the following table, the number and percentage of shares of our common stock beneficially owned has been calculated based on 29,023,830 shares issued and outstanding as of February 28, 2002 and has been determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and such information is not necessarily indicative of beneficial ownership for any other purpose. Under Rule 13d-3, beneficial ownership includes any shares as to which a selling securityholder has sole or shared voting power or investment power and also any shares which that selling securityholder has the right to acquire within 60 days of the date of this prospectus through the exercise of any stock option, warrant or other rights. 41
NUMBER OF SHARES OF PRINCIPAL AMOUNT OF NOTES(1) COMMON STOCK(1)(2) ------------------------------------ ------------------------------------ BENEFICIALLY OWNED PRIOR TO THE BENEFICIALLY OFFERING AND PERCENTAGE OWNED PRIOR TO OFFERED OF NOTES THE SELLING SECURITYHOLDER(1) HEREBY OUTSTANDING OFFERING OFFERED HEREBY - -------------------------------- --------- ----------- -------------- -------------- Holders of Convertible Notes or Shares Issuable Upon Conversion Thereof - ------------------------------- Amaranth LLC 35,150,000 16.0% 912,749 912,749 American Samoa Government 22,000 * 571 571 AXP Bond Fund, Inc. 5,500,000 2.5% 142,820 142,820 AXP Variable Portfolio-Bond Fund, a series of AXP Variable Portfolio Income Series, Inc. 2,200,000 1.0% 57,128 57,128 AXP Variable Portfolio-Managed Fund, a series of AXP Variable Portfolio Managed Series, Inc. 1,200,000 * 31,160 31,160 BP Amoco PLC, Master Trust 938,000 * 24,357 24,357 Calamos Market Neutral Fund- Calamos Investment Trust 4,000,000 1.8% 103,869 103,869 Chilton New Era International, LP 652,734 * 16,949 16,949 Chilton New Era Partners, LP 347,266 * 9,017 9,017 Chrysler Corporation Master Retirement Trust 2,330,000 1.1% 60,503 60,503 Delta Air Lines Master Trust 610,000 * 15,840 15,840 Delta Pilots D&S Trust 300,000 * 7,790 7,790 Deutsche Banc Alex Brown Inc. 1,114,000 * 28,927 28,927 Estate of James Campbell 141,000 * 3,661 3,661 Fidelity Commonwealth Trust: Fidelity Mid-Cap Stock Fund 13,250,000 6.0% 344,066 344,066 Fidelity Financial Trust: Fidelity Convertible Securities Fund 1,070,000 * 27,784 27,784 First Union Securities 1,500,000 * 38,950 38,950 Grace Brothers, Ltd. 1,000,000 * 25,967 25,967 Grace Brothers Management, LLC 2,000,000 * 51,934 51,934 Highbridge International LLC 7,000,000 3.2% 181,770 181,770 Hotel Union & Hotel Industry of Hawaii 239,000 * 6,206 6,206 Income Portfolio, a series of IDS Life Series Fund, Inc. 100,000 * 2,596 2,596 James Campbell Corporation 188,000 * 4,881 4,881 Jefferies & Company 5,000 * 129 129 Microsoft Corporation 1,315,000 * 34,146 34,146 Motion Picture Industry Health Plan - Active Member Fund 180,000 * 4,674 4,674 Motion Picture Industry Health Plan - Retiree Member Fund 85,000 * 2,207 2,207
42
NUMBER OF SHARES OF PRINCIPAL AMOUNT OF NOTES(1) COMMON STOCK(1)(2) ------------------------------------ -------------------------------- BENEFICIALLY OWNED PRIOR TO THE BENEFICIALLY OFFERING AND PERCENTAGE OWNED PRIOR TO OFFERED OF NOTES THE SELLING SECURITYHOLDER(1) HEREBY OUTSTANDING OFFERING OFFERED HEREBY - -------------------------------- --------- ----------- -------------- -------------- Holders of Convertible Notes or Shares Issuable Upon Conversion Thereof - ------------------------------- OCM Convertible Trust 1,300,000 * 33,757 33,757 Partner Reinsurance Company Ltd. 375,000 * 9,737 9,737 Qwest Occupational Health Trust 130,000 * 3,375 3,375 RAM Trading Ltd. 4,500,000 2.0% 116,852 116,852 SG Hambros Trust Company LTD as Trustee of the LYXOR Master Fund 500,000 * 12,983 12,983 Silverado Arbitrage Trading, Ltd. 500,000 * 12,983 12,983 Spinner Global Technology Fund 2,000,000 * 221,934 51,934 State Employees' Retirement Fund of the State of Delaware 880,000 * 22,851 22,851 State of Connecticut Combined Investment Funds 1,825,000 * 47,390 47,390 Sunride Partners LLC 20,350,000 9.3% 528,434 528,434 TD Securities (USA) Inc. 1,000,000 * 25,967 25,967 Thomas Weisel Partners LLC 1,000,000 * 25,967 25,967 Total Return Portfolio, a series of Growth and Income Trust 1,000,000 * 25,967 25,967 Tribeca Investments LLC 9,200,000 4.2% 238,898 238,898 Vanguard Convertible Securities Fund, Inc. 4,100,000 1.9% 106,465 106,465 Viacom Inc. Pension Plan Master Trust 24,000 * 623 623 Zurich Institutional Benchmarks 443,000 * 11,503 11,503 Any other selling securityholder of notes or future transferee from any such holder (3) 88,436,000 40.2% 2,296,442 (4) 2,296,442 -------------------------------------------------------------------------------- Subtotal $220,000,000 100% 5,882,800 5,712,800 -------------------------------------------------------------------------------- Former Applied Epi Stockholders - ------------------------------- Chorus L.P./Paul Colombo(5)(8) -- -- 3,808,398 3,808,398 Adriana I. Akhtar -- -- 8,283 8,283 Jane Benik -- -- 490 490 Marlin A. Braun (7) -- -- 7,078 3,539 Claire Colombo -- -- 490 490 Roger M. Colombo -- -- 490 490 Virginia Colombo -- -- 490 490 Robert J. Doppelhammer (7) -- -- 4,070 2,035 Patricia Dougherty -- -- 490 490 Frank C. Kraemer (6)(7) -- -- 87,053 71,425 Angelina Lawton -- -- 8,283 8,283
43
NUMBER OF SHARES OF PRINCIPAL AMOUNT OF NOTES(1) COMMON STOCK(1)(2) ------------------------------------ -------------------------------- BENEFICIALLY OWNED PRIOR TO THE BENEFICIALLY OFFERING AND PERCENTAGE OWNED PRIOR TO OFFERED OF NOTES THE SELLING SECURITYHOLDER(1) HEREBY OUTSTANDING OFFERING OFFERED HEREBY - -------------------------------- --------- ----------- -------------- -------------- Former Applied EPI Stockholders -- -- - ------------------------------- Blake Nixon -- -- 4,167 4,167 Mark Rahn -- -- 8,283 8,283 Noel P. Rahn (6)(8) -- -- 45,493 37,326 Noel P. Rahn, Jr. -- -- 8,283 8,283 David G. Reamer (6)(7) -- -- 158,072 71,246 Thomas Steven Sagissor -- -- 8,285 8,285 --------------------------------------------- Subtotal -- -- 4,159,178 4,042,983 --------------------------------------------- -------------------------------------------------------------------------------- Convertible Note Holders and Former Applied Epi Holders Combined $220,000,000 100% 10,041,957 9,755,762 --------------------------------------------------------------------------------
- ---------- * Less than 1%. (1) Information concerning the selling securityholders may change from time to time. Any such changed information will be set forth in supplements to this prospectus if and when necessary. The amount of notes and the number of shares of our common stock issuable upon conversion of the notes indicated may be in excess of the total amount registered under the shelf registration statement of which this prospectus forms a part, due to sales or transfers by selling securityholders of such notes or shares in transactions exempt from the registration requirements of the Securities Act after the date on which they provided us information regarding their holdings of notes and such shares of common stock. (2) For purposes of presenting the number of shares of our common stock beneficially owned by holders of notes, we assume a conversion price under the notes of $38.51 per share of our common stock, and a cash payment in lieu of the issuance of any fractional share interest. However, the conversion price is subject to adjustment as described under "Description of the Notes--Conversion Rights." As a result, the number of shares of common stock issuable upon conversion of the notes, and as a consequence, the number of shares beneficially owned by the holders of notes, may increase or decrease in the future. (3) We are unable to provide the names of certain selling securityholders who hold notes and/or shares of our common stock issuable upon conversion of the notes at this time, because these selling securityholders have not provided us with information and/or their notes are evidenced by a global note that has been deposited with DTC and registered in the name of Cede & Co., as DTC's nominee. Information concerning any such selling securityholders who are not listed in the above table will be set forth in prospectus supplements from time to time, if and when required. (4) Assumes that any other holder of notes or any future transferee from any such holder does not beneficially own any shares of our common stock other than the shares issuable upon conversion of the notes at the initial conversion rate. (5) Chorus L.P., a limited partnership controlled by Mr. Paul Colombo, founder and a former stockholder of Applied Epi, is the registered holder of 3,440,344 shares of our common stock, representing approximately 11.9% of our outstanding common stock. These shares may be deemed to be beneficially owned by Mr. Colombo. Mr. Colombo also owns directly warrants to acquire 161,429 shares of our common stock as well as 206,625 shares of our common stock which he has deposited in escrow as security for certain indemnity claims that Veeco may have in connection with the Applied Epi merger. Such escrowed shares are not expected to be distributed to Mr. 44 Colombo from the escrow until at least June 30, 2003, and under the terms of the related escrow agreement some or all of such shares may be held in escrow for a longer period if and to the extent Veeco has any pending claims for indemnification as of that date. The aggregate 3,808,398 shares of our common stock referred to in the preceding sentences which may be deemed to be beneficially owned by Mr. Colombo, and which are being offered hereby, represents approximately 13.1% of our outstanding common stock. Mr. Colombo also acts as representative for Messrs. Reamer, Kraemer and Rahn under the Applied Epi escrow agreement. Accordingly, an aggregate of 39,375 shares of our common stock which Messrs. Reamer, Kraemer and Rahn have deposited in escrow as security for indemnity claims that Veeco may have under the Applied Epi merger agreement are represented by a certificate issued in Mr. Colombo's name in his capacity as their representative. The number of shares presented in the above table for Mr. Colombo and Chorus L.P. does not include such shares of Messrs. Reamer, Kraemer and Rahn. (6) Shares beneficially owned include 15,628, 15,580 and 8,167 shares of our common stock which may be deemed to be beneficially owned by Messrs. Reamer, Kraemer and Rahn, respectively. Such shares are being held in escrow as security for certain indemnity claims that Veeco may have in connection with the Applied Epi merger, as described in note (5) above. Such escrowed shares are not expected to be distributed to Messrs. Reamer, Kraemer and Rahn from the escrow until at least June 30, 2003, by which time such selling securityholders will no longer be permitted to use this prospectus to offer or sell the shares of our common stock held by them. (7) Such selling securityholder is a former stockholder of Applied Epi and was prior to the closing of the Applied Epi merger, and is currently, an employee of Applied Epi, Inc. From and after the closing of the Applied Epi merger, Applied Epi, Inc. has been a wholly-owned subsidiary of Veeco. (8) Such selling securityholder is a former stockholder of Applied Epi and was prior to the closing of the Applied Epi merger an employee and/or director of Applied Epi, Inc. From and after the closing of the Applied Epi merger, Applied Epi, Inc. has been a wholly-owned subsidiary of Veeco. 45 PLAN OF DISTRIBUTION We will not receive any of the proceeds of the sale of the notes, our common stock issuable upon conversion of the notes or the other shares of our common stock offered by this prospectus. The notes and common stock offered by this prospectus may be sold from time to time to purchasers: o directly by the selling securityholders, or o through underwriters, broker-dealers or agents who may receive compensation in the form of discounts, concessions or commissions from the selling securityholders or the purchasers of the notes or the common stock offered by this prospectus. The aggregate proceeds to the selling securityholders from the sale of the notes or shares of common stock offered by this prospectus will be the purchase price paid for such securities, less discounts and commissions, if any. Each of the selling securityholders reserves the right to accept and, together with their agents from time to time, reject, in whole or in part any proposed purchase of notes or common stock to be made directly or through agents. The selling securityholders and any such broker-dealers or agents who participate in the distribution of the notes or common stock offered by this prospectus may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act. As a result, any profits on the sale of such securities by selling securityholders and any discounts, commissions or concessions received by any such broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. Selling securityholders who are deemed to be underwriters may be subject to certain statutory liabilities, including, but not limited to, those under Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. Selling securityholders who are deemed to be underwriters will also be subject to the prospectus delivery requirements of the Securities Act. If the notes or common stock are sold through underwriters or broker-dealers, the selling securityholders will be responsible for underwriting discounts or commissions or agent's commissions. The notes and the common stock may be sold in one or more transactions at: o fixed prices, o prevailing market prices at the time of sale or prices related to prevailing market prices at the time of sale, o varying prices determined at the time of sale, or o negotiated prices. These sales may be effected in transactions: o on any national securities exchange or quotation service on which the common stock may be listed or quoted at the time of the sale, including the Nasdaq National Market, o in the over-the-counter market, o in transactions otherwise than on such exchanges or services or in the over-the-counter market, or o through the writing of options. These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade. In no event may any such method of distribution take the form of an underwritten offering without the prior agreement of Veeco and an undertaking from the relevant selling securityholder(s) to pay certain expenses relating to such offering. 46 In connection with sales of the notes and common stock offered by this prospectus or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers. These broker-dealers may in turn engage in short sales of the notes and common stock in the course of hedging their positions. The selling securityholders may also sell the notes and common stock short and deliver notes and common stock to close out short positions, or loan or pledge notes and common stock to broker-dealers that in turn may sell the notes and common stock. To our knowledge, there are currently no plans, arrangements or understandings between any selling securityholders and any underwriter, broker-dealer or agent regarding the sale of the notes or common stock offered hereby. Selling securityholders might not sell any or all of the notes or the common stock offered by them using this prospectus. Any selling securityholder might instead transfer, devise or gift any such securities by other means not described in this prospectus. In addition, any such securities covered by this prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. Our common stock trades on the Nasdaq National Market under the symbol "VECO." The notes are currently designated for trading on the PORTAL market. Notes sold by means of this prospectus will not be eligible for trading on the PORTAL market. We do not intend to list the notes on any national or other securities exchange or on the NASDAQ National Market. No assurance can be given as to the development of liquidity or any trading market for the notes. See "Risk Factors--An active trading market may not develop for the notes." The selling securityholders and any other person participating in a distribution of securities offered by this prospectus will be subject to the Exchange Act. The Exchange Act rules include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the notes and common stock by the selling securityholders and any other such person. In addition, Regulation M of the Exchange Act may restrict the ability of any person engaged in the distribution of the notes and common stock to engage in market-making activities with respect to the particular notes and common stock being distributed for a period of up to five business days prior to the commencement of such distribution. This may affect the marketability of the notes and common stock and the ability of any person or entity to engage in market-making activities with respect to the notes and common stock. To the extent required, the specific notes or shares of common stock to be sold, the names of the selling securityholders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment, to the shelf registration statement of which this prospectus forms a part. In order to comply with the securities laws of some states, if applicable, the notes and shares of common stock offered by this prospectus may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states, the notes and shares of common stock offered by this prospectus may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with. Pursuant to the registration rights agreements filed as exhibits to this registration statement, each of Veeco and the selling securityholders will be indemnified by the other against certain liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection with these liabilities. Subject to certain exceptions, we have agreed to pay substantially all of the expenses incidental to the registration, offering and sale of the notes and underlying common stock to the public other than commissions, fees and discounts of underwriters, brokers, dealers and agents. With the exception of Mr. Paul Colombo and certain entities controlled by him, selling securityholders who are former stockholders of Applied Epi may offer common stock pursuant to this prospectus only until September 17, 2002. We may suspend the use of this prospectus for any period and at any time, including, without limitation, in the event of pending corporate developments, public filings with the Commission, and similar events. 47 LEGAL MATTERS The validity of the issuance of the notes offered hereby, the shares of common stock issuable upon conversion thereof and the other shares of common stock offered hereby will be passed upon for us by Kaye Scholer LLP, New York, New York. EXPERTS The consolidated financial statements and schedule of Veeco Instruments Inc. as of December 31, 2000 and 1999, and for each of the three years in the period ended December 31, 2000, incorporated by reference in this prospectus, have been audited by Ernst & Young LLP, independent auditors, as stated in their report incorporated by reference herein which, is based in part on the report of PricewaterhouseCoopers LLP, independent auditors. The consolidated financial statements referred to above are incorporated by reference herein in reliance on such reports given on the authority of such firms as experts in accounting and auditing. The consolidated financial statements of Applied Epi, Inc. and subsidiaries as of and for the years ended December 31, 2000 and 1999, incorporated in this prospectus by reference to Veeco's Amendment No. 3 to Current Report on Form 8-K/A filed with the Commission on November 30, 2001, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is so incorporated herein by reference, and has been incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 48 WHERE YOU CAN FIND ADDITIONAL INFORMATION We are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the Commission. You may read and copy all or any portion of any materials we file with the Commission at the Commission's public reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may request copies of these documents upon payment of a duplicating fee by writing to the Commission. Please call the Commission at 1-800-SEC-0330 for further information on the operation of its public reference room. Our filings are also available to you on the Commission's Web site. The address of this site is http://www.sec.gov. Our filings are also available at the offices of the Nasdaq National Market, 1730 K Street, N.W., Washington, D.C. 20006-1500. We are incorporating by reference in this prospectus the information that we file with the Commission referred to below and therefore refer you to those documents. The information we incorporate by reference is an important part of this prospectus. We incorporate by reference the documents listed below and any future filings made by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until this offering is complete. o Annual Report on Form 10-K for the year ended December 31, 2000 and documents (or portions thereof) expressly incorporated by reference therein, o Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2001, o Current Reports on Form 8-K and amendments thereto filed with the Commission on February 16, 2001, March 12, 2001, March 15, 2001, September 14, 2001, September 21, 2001, October 1, 2001, October 2, 2001, November 30, 2001 and December 26, 2001, o Definitive Proxy Statement on Schedule 14A filed on April 16, 2001, o The description of our common stock which is contained in our Registration Statement on Form S-1 filed with the Commission on June 27, 1995, and any amendments or reports filed for the purpose of updating such description, and o Registration Statement on Form 8-A12G and amendments thereto filed on March 15, 2001 and September 21, 2001 which contains a description of certain preferred share purchase rights associated with our common stock, and any amendments or reports filed for the purpose of updating such description. You may request a copy of these filings, at no cost, by writing or telephoning us at the following address: Investor Relations, Veeco Instruments Inc., 100 Sunnyside Boulevard, Woodbury, New York 11797, (516) 677-0200. Any statement contained in a document that is incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus (or in any other document that is subsequently filed with the Commission and incorporated by reference) modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded. This prospectus is part of a registration statement we filed with the Commission. 49 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the fees and expenses in connection with the issuance and distribution of the securities being registered hereunder. Except for the SEC registration fee, all amounts are estimates. SEC registration fee $ 31,707 Accounting fees and expenses $ 75,000 Legal fees and expenses $250,000 Printing and engraving expenses $150,000 Miscellaneous expenses $193,293 -------- TOTAL $700,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law ("DGCL") provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Section 145 further provides that a Delaware corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor, against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or such other court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Article 10 of Veeco's certificate of incorporation entitles officers and directors of Veeco to indemnification to the fullest extent permitted by Section 145 of the DGCL, as the same may be supplemented from time to time. Section 102(b)(7) of the DGCL permits a corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. Veeco's certificate of incorporation provides that its directors shall not be liable to Veeco or its stockholders for monetary damages for breach of fiduciary duty as a director except to the extent that exculpation from liabilities is not permitted under the DGCL as in effect at the time such liability is determined. Veeco's certificate of incorporation further provides that Veeco will indemnify its directors and officers to the fullest extent permitted by the DGCL. II-1 These indemnification provisions may be sufficiently broad to permit indemnification of Veeco's officers, directors, and other corporate agents for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933. Reference is made to Veeco's certificate of incorporation, as amended and filed as an exhibit to Veeco's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, Veeco's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 and the Veeco's Annual Report on Form 10-K for the year ended December 31, 2000, each of which is incorporated herein by reference. ITEM 16. EXHIBITS. Exhibits: EXHIBIT NUMBER DESCRIPTION 3.1 Amended and Restated Certificate of Incorporation of Veeco dated December 1, 1994, as amended June 2, 1997 and July 25, 1997(1) 3.2 Amendment to Certificate of Incorporation of Veeco dated May 29, 1998(2) 3.3 Amendment to Certificate of Incorporation of Veeco dated May 5, 2000(3) 3.4 Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of Veeco(4) 3.5 Third Amended and Restated Bylaws of Veeco(5) 4.1 Indenture between Veeco and State Street Bank and Trust Company, N.A., as trustee, dated December 21, 2001(6) 5.1 Opinion of Kaye Scholer LLP* 10.1 Collateral Pledge and Security Agreement among Veeco, State Street Bank and Trust Company, N.A., as trustee, State Street Bank and Trust Company, N.A., as collateral agent, and State Street Bank and Trust Company, as securities intermediary, dated as of December 21, 2001(6) 10.2 Registration Rights Agreement among Veeco and Merrill Lynch, Pierce, Fenner and Smith Incorporated, Smith Barney Inc. and Thomas Weisel Partners LLC, as the initial purchasers of Veeco's 4 1/8% Convertible Subordinated Notes due 2008, dated as of December 21, 2001(6) 10.3 Supplement No. 1 to Collateral Pledge and Security Agreement among Veeco, State Street Bank and Trust Company, N.A., as trustee, State Street Bank and Trust Company, N.A., as collateral agent, and State Street Bank and Trust Company, as securities intermediary, dated as of January 3, 2002(6) 10.4 Registration Rights Agreement among Veeco and the Company Stockholders (defined therein), dated as of September 17, 2001(6) 12.1 Statement Regarding Computation of Ratios of Earnings to Fixed Charges(6) 23.1 Consent of Kaye Scholer LLP (contained in Exhibit 5.1)* 23.2 Consent of Ernst & Young LLP, Independent Auditors(6) 23.3 Consent of Deloitte & Touche LLP, Independent Auditors(6) 23.4 Consent of PricewaterhouseCoopers LLP, Independent Auditors(6) 24.1 Power of Attorney(6) 25 Statement of Eligibility of the Trustee on Form T-1(6) - ---------- * To be filed by amendment. II-2 (1) Incorporated by reference to Exhibit 3.1 to Veeco's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (2) Incorporated by reference to Exhibit 3.2 to Veeco's Annual Report on Form 10-K for the year ended December 31, 2000. (3) Incorporated by reference to Exhibit 3.1 to Veeco's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. (4) Incorporated by reference to Exhibit 3.1 to Veeco's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. (5) Incorporated by reference to Exhibit 4.3 to Veeco's Registration Statement on Form S-8 filed November 7, 2000. (6) Filed herewith. ITEM 17. UNDERTAKINGS. Veeco hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by Veeco pursuant to Section 13 or Section 15(d) of the Exchange Act, that are incorporated by reference in this Registration Statement. (2) That, for the purposes of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Veeco hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of Veeco's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities II-3 offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Veeco pursuant to the indemnification provisions described herein, or otherwise, Veeco has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Veeco of expenses incurred or paid by a director, officer or controlling person of Veeco in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Veeco will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. Veeco hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Woodbury, State of New York, on March 13, 2002. VEECO INSTRUMENTS INC. By: /s/ EDWARD H. BRAUN ----------------------------------- Edward H. Braun Chairman, Chief Executive Officer and President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed as of March 13, 2002 by the following persons in the capacities indicated: SIGNATURES TITLE ---------- ----- /s/ Edward H. Braun Director, Chairman, Chief Executive ----------------------------- Officer and President (principal Edward H. Braun executive officer) * Director ----------------------------- Richard A. D'Amore * Director ----------------------------- Joel A. Elftmann * Director ----------------------------- Heinz K. Fridrich * Director ----------------------------- Douglas A. Kingsley II-5 * Director ----------------------------- Dr. Paul R. Low * Director ----------------------------- Roger D. McDaniel * Director ----------------------------- Irwin H. Pfister * Director ----------------------------- Walter J. Scherr /s/ John F. Rein, Jr. Executive Vice President, Chief -------------------------------- Financial Officer, Treasurer and John F. Rein, Jr. Secretary (principal financial officer) /s/ John P. Kiernan Vice President-Finance and ------------------------------- Corporate Controller (principal John P. Kiernan accounting officer) *By: /s/ Gregory A. Robbins Attorney-in-Fact ------------------------- Gregory A. Robbins II-6 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 3.1 Amended and Restated Certificate of Incorporation of Veeco dated December 1, 1994, as amended June 2, 1997 and July 25, 1997(1) 3.2 Amendment to Certificate of Incorporation of Veeco dated May 29, 1998(2) 3.3 Amendment to Certificate of Incorporation of Veeco dated May 5, 2000(3) 3.4 Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of Veeco(4) 3.5 Third Amended and Restated Bylaws of Veeco(5) 4.1 Indenture between Veeco and State Street Bank and Trust Company, N.A., as trustee, dated December 21, 2001(6) 5.1 Opinion of Kaye Scholer LLP* 10.1 Collateral Pledge and Security Agreement among Veeco, State Street Bank and Trust Company, N.A., as trustee, State Street Bank and Trust Company, N.A., as collateral agent, and State Street Bank and Trust Company, as securities intermediary, dated as of December 21, 2001(6) 10.2 Registration Rights Agreement among Veeco and Merrill Lynch, Pierce, Fenner and Smith Incorporated, Smith Barney Inc. and Thomas Weisel Partners LLC, as the initial purchasers of Veeco's 4 1/8% Convertible Subordinated Notes due 2008, dated as of December 21, 2001(6) 10.3 Supplement No. 1 to Collateral Pledge and Security Agreement among Veeco, State Street Bank and Trust Company, N.A., as trustee, State Street Bank and Trust Company, N.A., as collateral agent, and State Street Bank and Trust Company, as securities intermediary, dated as of January 3, 2002(6) 10.4 Registration Rights Agreement among Veeco and the Company Stockholders (defined therein), dated as of September 17, 2001 (6) 12.1 Statement Regarding Computation of Ratios of Earnings to Fixed Charges(6) 23.1 Consent of Kaye Scholer LLP (contained in Exhibit 5.1)* 23.2 Consent of Ernst & Young LLP, Independent Auditors(6) 23.3 Consent of Deloitte & Touche LLP, Independent Auditors(6) 23.4 Consent of PricewaterhouseCoopers LLP, Independent Auditors(6) 24.1 Power of Attorney(6) 25 Statement of Eligibility of the Trustee on Form T-1(6) - ------------- * To be filed by amendment. (1) Incorporated by reference to Exhibit 3.1 to Veeco's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (2) Incorporated by reference to Exhibit 3.2 to Veeco's Annual Report on Form 10-K for the year ended December 31, 2000. (3) Incorporated by reference to Exhibit 3.1 to Veeco's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000. (4) Incorporated by reference to Exhibit 3.1 to Veeco's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. (5) Incorporated by reference to Exhibit 4.3 to Veeco's Registration Statement on Form S-8 filed November 7, 2000. (6) Filed herewith. II-7 EX-4.1 3 a2068746zex-4_1.txt EXHIBIT 4.1 Exhibit 4.1 VEECO INSTRUMENTS INC. 4-1/8% Convertible Subordinated Notes due 2008 ---------------------------------------------------------- INDENTURE Dated as of December 21, 2001 STATE STREET BANK AND TRUST COMPANY, N.A., TRUSTEE --------------------------------------------------------- TABLE OF CONTENTS ----------------- PAGE ---- ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01 Definitions....................................................1 SECTION 1.02 Other Definitions.............................................11 SECTION 1.03 Incorporation by Reference of Trust Indenture Act.............12 SECTION 1.04 Rules of Construction.........................................12 SECTION 1.05 Acts of Holders...............................................12 ARTICLE 2 THE NOTES SECTION 2.01 Form and Dating...............................................14 SECTION 2.02 Execution and Authentication..................................16 SECTION 2.03 Registrar, Paying Agent and Conversion Agent..................16 SECTION 2.04 Paying Agent to Hold Money and Notes in Trust.................17 SECTION 2.05 Noteholder Lists..............................................17 SECTION 2.06 Transfer and Exchange.........................................17 SECTION 2.07 Replacement Notes.............................................19 SECTION 2.08 Outstanding Notes; Determinations of Holders' Action..........19 SECTION 2.09 Temporary Notes...............................................20 SECTION 2.10 Cancellation..................................................21 SECTION 2.11 Persons Deemed Owners.........................................21 SECTION 2.12 Global Notes..................................................21 SECTION 2.13 CUSIP Numbers.................................................26 SECTION 2.14 Defaulted Interest............................................26 SECTION 2.15 Registration Default..........................................26 ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.01 [Reserved]....................................................26 SECTION 3.02 Optional Redemption...........................................26 SECTION 3.03 Notice of Trustee.............................................27 SECTION 3.04 Selection of Notes to be Redeemed.............................27 SECTION 3.05 Notice of Redemption..........................................28 SECTION 3.06 Effect of Notice of Redemption................................28 SECTION 3.07 Deposit of Redemption Price...................................29 SECTION 3.08 Notes Redeemed in Part........................................29 SECTION 3.09 Conversion Arrangement on Call for Redemption.................29 SECTION 3.10 Repurchase of Notes at Option of the Holder upon Change in Control........................................30 SECTION 3.11 Effect of Change in Control Repurchase Notice.................35 i TABLE OF CONTENTS ----------------- (continued) PAGE ---- SECTION 3.12 Deposit of Change in Control Repurchase Price.................35 SECTION 3.13 Notes Purchased in Part.......................................36 SECTION 3.14 Covenant to Comply with Securities Laws upon Purchase of Notes.........................................................36 SECTION 3.15 Repayment to the Company......................................36 ARTICLE 4 COVENANTS SECTION 4.01 Payment of Principal, Premium, Interest on the Notes..........36 SECTION 4.02 SEC and Other Reports.........................................37 SECTION 4.03 Compliance Certificate........................................37 SECTION 4.04 Further Instruments and Acts..................................37 SECTION 4.05 Maintenance of Office or Agency...............................37 SECTION 4.06 Delivery of Certain Information...............................38 ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.01 When Company May Merge or Transfer Assets.....................38 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01 Events of Default.............................................39 SECTION 6.02 Acceleration..................................................41 SECTION 6.03 Other Remedies................................................42 SECTION 6.04 Waiver of Past Defaults.......................................42 SECTION 6.05 Control by Majority...........................................42 SECTION 6.06 Limitation on Suits...........................................42 SECTION 6.07 Rights of Holders to Receive Payment..........................43 SECTION 6.08 Collection Suit by Trustee....................................43 SECTION 6.09 Trustee May File Proofs of Claim..............................43 SECTION 6.10 Priorities....................................................44 SECTION 6.11 Undertaking for Costs.........................................44 SECTION 6.12 Waiver of Stay, Extension or Usury Laws.......................44 ARTICLE 7 TRUSTEE SECTION 7.01 Duties and Responsibilities of the Trustee; During Default; Prior to Default..............................................45 SECTION 7.02 Certain Rights of the Trustee.................................46 SECTION 7.03 Trustee Not Responsible for Recitals, Disposition of Notes or Application of Proceeds Thereof......................47 ii TABLE OF CONTENTS ----------------- (continued) PAGE ---- SECTION 7.04 Trustee and Agents May Hold Notes; Collections, etc...........47 SECTION 7.05 Moneys Held by Trustee........................................47 SECTION 7.06 Compensation and Indemnification of Trustee and Its Prior Claim...........................................47 SECTION 7.07 Right of Trustee to Rely on Officers' Certificate, etc........48 SECTION 7.08 Conflicting Interests.........................................48 SECTION 7.09 Persons Eligible for Appointment as Trustee...................48 SECTION 7.10 Resignation and Removal; Appointment of Successor Trustee.....48 SECTION 7.11 Acceptance of Appointment by Successor Trustee................49 SECTION 7.12 Merger, Conversion, Consolidation or Succession to Business of Trustee........................................50 SECTION 7.13 Preferential Collection of Claims Against the Company.........50 SECTION 7.14 Reports by the Trustee........................................51 SECTION 7.15 Trustee to Give Notice of Default, But May Withhold in Certain Circumstances.....................51 ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.01 Discharge of Liability on Notes...............................51 SECTION 8.02 Repayment of the Company......................................51 ARTICLE 9 AMENDMENTS SECTION 9.01 Without Consent of Holders....................................52 SECTION 9.02 With Consent of Holders.......................................52 SECTION 9.03 Compliance with Trust Indenture Act...........................53 SECTION 9.04 Revocation and Effect of Consents, Waivers and Actions........53 SECTION 9.05 Notation on or Exchange of Notes..............................54 SECTION 9.06 Trustee to Sign Supplemental Indentures.......................54 SECTION 9.07 Effect of Supplemental Indentures.............................54 SECTION 9.08 Reference in Notes to Supplemental Indentures.................54 ARTICLE 10 CONVERSION SECTION 10.01 Conversion Right and Conversion Price.........................54 SECTION 10.02 Exercise of Conversion Right..................................55 SECTION 10.03 Fractions of Shares...........................................56 SECTION 10.04 Adjustment of Conversion Price................................56 SECTION 10.05 Notice of Adjustments of Conversion Price.....................64 SECTION 10.06 Notice Prior to Certain Actions...............................65 SECTION 10.07 Company to Reserve Common Stock...............................66 SECTION 10.08 Taxes on Conversions..........................................66 iii TABLE OF CONTENTS ----------------- (continued) PAGE ---- SECTION 10.09 Covenant as to Common Stock...................................66 SECTION 10.10 Cancellation of Converted Notes...............................66 SECTION 10.11 Effect of Reclassification, Consolidation, Merger or Sale.....66 SECTION 10.12 Adjustment for Other Distributions............................67 SECTION 10.13 Responsibility of Trustee for Conversion Provisions...........68 ARTICLE 11 SUBORDINATION SECTION 11.01 Agreement to Subordinate......................................69 SECTION 11.02 Liquidation; Dissolution; Bankruptcy..........................69 SECTION 11.03 Default on Designated Senior Indebtedness.....................69 SECTION 11.04 Acceleration of Notes.........................................70 SECTION 11.05 When Distribution Must Be Paid Over...........................71 SECTION 11.06 Notice by the Company.........................................71 SECTION 11.07 Subrogation...................................................71 SECTION 11.08 Relative Rights...............................................71 SECTION 11.09 Subordination May Not Be Impaired by the Company..............72 SECTION 11.10 Distribution or Notice to Representative......................72 SECTION 11.11 Rights of Trustee and Paying Agent............................72 ARTICLE 12 SECURITY SECTION 12.01 Security......................................................73 ARTICLE 13 MEETINGS OF HOLDERS OF NOTES SECTION 13.01 Purposes for Which Meetings May Be Called.....................75 SECTION 13.02 Call, Notice and Place of Meetings............................75 SECTION 13.03 Persons Entitled to Vote at Meetings..........................75 SECTION 13.04 Quorum; Action................................................76 SECTION 13.05 Determination of Voting Rights; Conduct and Adjournment of Meetings...................................76 SECTION 13.06 Counting Votes and Recording Action of Meetings...............77 ARTICLE 14 MISCELLANEOUS SECTION 14.01 Trust Indenture Act Controls..................................78 SECTION 14.02 Notices.......................................................78 SECTION 14.03 Communication by Holders with Other Holders...................79 SECTION 14.04 Certificate and Opinion as to Conditions Precedent............79 iv TABLE OF CONTENTS ----------------- (continued) PAGE ---- SECTION 14.05 Statements Required in Certificate or Opinion.................79 SECTION 14.06 Separability Clause...........................................80 SECTION 14.07 Rules by Trustee, Paying Agent, Conversion Agent and Registrar.................................................80 SECTION 14.08 Benefits of Indenture.........................................80 SECTION 14.09 Legal Holidays................................................80 SECTION 14.10 GOVERNING LAW.................................................80 SECTION 14.11 No Recourse Against Others....................................80 SECTION 14.12 Successors....................................................80 SECTION 14.13 Multiple Originals............................................81 EXHIBITS Exhibit A-1 Form of Face of Global Note Exhibit A-2 Form of Certificated Note Exhibit B-1 Transfer Certificate Exhibit C-1 Registration Rights Agreement v INDENTURE dated as of December 21, 2001 between VEECO INSTRUMENTS INC., a Delaware corporation (the "Company"), and STATE STREET BANK AND TRUST COMPANY, N.A., a national banking association, as Trustee hereunder (the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its 41/8% Convertible Subordinated Notes due 2008 (herein called the "Notes") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Notes, when the Notes are executed by the Company and authenticated and delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. Further, all things necessary to duly authorize the issuance of the Common Stock of the Company issuable upon the conversion of the Notes, and to duly reserve for issuance the number of shares of Common Stock issuable upon such conversion, have been done. The Notes will be partially secured pursuant to the terms of the Pledge Agreement (as defined herein) by Pledged Securities (as defined herein). This Indenture is subject to, and shall be governed by, the provisions of the Trust Indenture Act of 1939, as amended, that are required to be a part of and to govern indentures qualified under the Trust Indenture Act of 1939, as amended. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows: ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01 DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; and (3) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. 1 "ADDITIONAL PLEDGED SECURITIES" has the meaning specified in the Pledge Agreement. "AFFILIATE" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "APPLICABLE PROCEDURES" means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of the Depositary for such Note, in each case to the extent applicable to such transaction and as in effect from time to time. "BOARD OF DIRECTORS" means either the board of directors of the Company or any duly authorized committee of such board. "BOARD RESOLUTION" means a resolution duly adopted by the Board of Directors, a copy of which, certified by the Secretary or an Assistant Secretary of the Company to be in full force and effect on the date of such certification, shall have been delivered to the Trustee. "BUSINESS DAY" means each day of the year other than a Saturday or a Sunday on which banking institutions are not required or authorized to close in the City of New York or the city in which the principal corporate trust office of the Trustee is located. "CAPITAL STOCK" of any corporation means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that corporation. "CERTIFICATED NOTES" means Notes that are in the form of the Notes attached hereto as Exhibit A-2. "CLOSING PRICE" of any security on any date of determination means: (1) the closing sale price (or, if no closing sale price is reported, the last reported sale price) of such security on the New York Stock Exchange on such date; (2) if such security is not listed for trading on the New York Stock Exchange on any such date, the closing sale price as reported in the composite transactions for the principal U.S. securities exchange on which such security is so listed; (3) if such security is not so listed on a U.S. national or regional securities exchange, the closing sale price as reported by the NASDAQ National Market; 2 (4) if such security is not so reported, the last quoted bid price for such security in the over-the-counter market as reported by the National Quotation Bureau or similar organization; or (5) if such bid price is not available, the average of the mid-point of the last bid and ask prices of such security on such date from at least three nationally recognized independent investment banking firms retained for this purpose by the Company. "CLOSING TIME" has the meaning specified in the Purchase Agreement. "COLLATERAL ACCOUNT" means an account established with the Collateral Agent pursuant to the terms of the Pledge Agreement for the deposit of the Pledged Securities to be purchased by the Company with a portion of the proceeds from the sale of the Notes. "COLLATERAL AGENT" means, initially, State Street Bank and Trust Company, N.A., a national banking association, as collateral agent under the Pledge Agreement. "COMMON STOCK" means the Common Stock, par value $0.01 per share, of the Company authorized at the date of this instrument as originally executed. Subject to the provisions of Section 10.11, shares issuable on conversion or repurchase of Notes shall include only shares of Common Stock or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of Notes shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "COMMON STOCK" means any stock of any class of capital stock which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the issuer. "COMPANY" means the party named as the "Company" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture, and, thereafter, "Company" shall mean such successor. The foregoing sentence shall likewise apply to any subsequent such successor or successors. "COMPANY REQUEST" or "COMPANY ORDER" means a written request or order signed in the name of the Company by any two Officers. "CONVERSION AGENT" means any person authorized by the Company to convert Notes in accordance with Article 10 hereof. "CORPORATE TRUST OFFICE" means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 61 Broadway, 15th Floor, New York, New York 10006, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal 3 corporate trust office of any successor Trustee (or such other address as a successor Trustee may designate from time to time by notice to the Holders and the Company). "DATE OF DELIVERY" has the meaning specified in the Purchase Agreement. "DEFAULT" means any event which is, or after notice or passage of time or both would be, an Event of Default. "DESIGNATED SENIOR INDEBTEDNESS" means the Company's Credit Agreement, dated as of April 19, 2001, by and among the Company and Fleet National Bank, as administrative agent, The Chase Manhattan Bank, as syndication agent, HSBC Bank USA, as documentation agent and the lenders party thereto, as amended from time to time, and any other Senior Indebtedness in which the governing instrument or agreement expressly provides that such Senior Indebtedness, subject to limitations and conditions in such instrument or agreement, shall be "Designated Senior Indebtedness" for purposes of the Indenture. "DOLLAR" or "U.S.$" means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "EXCLUDED INDEBTEDNESS" means (a) Indebtedness of the Company or any Subsidiary with a principal amount not in excess of $10.0 million which is secured (in whole or part) by a mortgage in effect when the Company or any Subsidiary acquires a business that owns the real property subject to the mortgage, where the acquisition resulted in a default on the mortgage in accordance with its terms and (b) Indebtedness existing on the date hereof not in excess of $8.5 million to the extent the Company or any Subsidiary has established a cash collateral or similar account that is available to one or more holders of Senior Indebtedness to use to cure a default on such Indebtedness. "GAAP" means United States generally accepted accounting principles as in effect from time to time. "GLOBAL NOTES" means Notes that are in the form of the Notes attached hereto as Exhibit A-1. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, contingent or otherwise, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "HOLDER" or "NOTEHOLDER" means a person in whose name a Note is registered on the Registrar's books. "INDEBTEDNESS" means, with respect to any Person, without duplication: (1) all indebtedness, obligations and other liabilities, contingent or otherwise, of such person for borrowed money, and whether or not the recourse of the obligee is to the whole of the assets of the person or only a portion of the assets (including overdrafts, 4 foreign exchange contracts, currency exchange agreements and interest rate protection agreements), all obligations, contingent or otherwise, including reimbursement obligations, of such Person in connection with any letters of credit, bank guarantees or bankers' acceptances issued under letter of credit facilities, acceptance facilities or other similar facilities, any loans or advances from banks, whether or not evidenced by notes or similar instruments and all obligations incurred, assumed or guaranteed by the person in connection with the acquisition by it or by any Subsidiary of any business, assets or property; (2) all obligations and other liabilities, contingent or otherwise, of such person evidenced by credit or loan agreements, bonds, debentures, notes or other written obligations, whether or not the recourse of the lender is to all of the assets of the Person or to only a portion thereof; (3) all obligations and liabilities, contingent or otherwise, in respect of leases of the person required, in conformity with GAAP, to be accounted for as capitalized lease obligations on the balance sheet of the Person; (4) all obligations evidenced by a note or similar instrument given in connection with acquisition of any businesses, properties or assets of any kind; (5) all obligations issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable and accrued liabilities arising in the ordinary course of business; (6) all obligations and other liabilities, contingent or otherwise, in respect of leases or related documents, including a purchase agreement, of the person in connection with the lease of real property or improvements thereon (or any personal property included as part of any such lease), which provides that the person is contractually obligated to purchase or cause a third party to purchase the leased property or pay an agreed upon residual value of the leased property to the lessor and thereby guarantees a residual value of the leased property to the lessor (whether or not such lease transaction is characterized as an operating lease or a capitalized lease in accordance with GAAP), (7) all obligations, contingent or otherwise, with respect to an interest rate, currency or other swap, cap, floor or collar agreement, hedge agreement, forward contract or similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement; (8) pension plan obligations; (9) all direct or indirect guarantees or similar agreements, and obligations or liabilities, contingent or otherwise, to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of indebtedness, obligations or liabilities of another person, including a Subsidiary, of the kind described in clauses (1) through (8); (10) any indebtedness or other obligations described in clauses (1) through (8) above secured by any mortgage, pledge, lien or other encumbrance existing on property 5 owned or held by the person, regardless of whether the indebtedness or other obligation has been assumed by the person; and (11) any and all deferrals, renewals, extensions and refundings of, or amendments, modifications, supplements to, any indebtedness, obligation or liability of the kind described in clauses (1) through (10). "INDENTURE" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof, including the provisions of the TIA that are deemed to be a part hereof. "INITIAL PLEDGED SECURITIES" has the meaning specified in the Pledge Agreement. "INITIAL PURCHASERS" means Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Thomas Weisel Partners LLC. "INTEREST PAYMENT DATE" means the Stated Maturity of an installment of interest on the Notes. "INTEREST RATE" means 4 1/8% per annum. "ISSUE DATE" of any Note means the date on which the Note was originally issued or deemed issued as set forth on the face of the Note. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset given to secure Indebtedness, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction with respect to any such lien, pledge, charge or security interest). "NOTES" has the meaning ascribed to it in the first paragraph under the caption "Recitals of the Company". "OFFICER" means the Chairman of the Board, the Vice Chairman, the Chief Executive Officer, the President, any Executive Vice President, any Senior Vice President, any Vice President, the Treasurer or the Secretary or any Assistant Treasurer or Assistant Secretary of the Company. "OFFICERS' CERTIFICATE" means a written certificate containing the information specified in Sections 14.04 and 14.05, signed in the name of the Company by any two Officers, and delivered to the Trustee. An Officers' Certificate given pursuant to Section 4.03 shall be signed by one authorized financial or accounting Officer of the Company but need not contain the information specified in Sections 14.04 and 14.05. 6 "144A GLOBAL NOTE" means a permanent Global Note in the form of the Note attached hereto as Exhibit A-1, and that is deposited with and registered in the name of the Depositary, representing Notes sold in reliance on Rule 144A under the Securities Act. "OPINION OF COUNSEL" means a written opinion, in form and substance reasonably satisfactory to the Trustee, containing the information specified in Sections 14.04 and 14.05, from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of, or counsel to, the Company or the Trustee. "OVER-ALLOTMENT OPTION" means the over-allotment option granted by the Company to the Initial Purchasers to purchase up to an additional $20,000,000 aggregate principal amount of Notes to cover over-allotments pursuant to the Purchase Agreement. "PERSON" or "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof, including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business. "PLEDGE AGREEMENT" means the Collateral Pledge and Security Agreement, dated as of December 21, 2001, among the Company, the Trustee, the Collateral Agent and the Securities Intermediary, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. "PLEDGED SECURITIES" means the U.S. Government Obligations to be purchased by the Company and held in the Collateral Account in accordance with the Pledge Agreement. "PRINCIPAL" of a Note means the principal amount due on the Stated Maturity as set forth on the face of the Note. "PURCHASE AGREEMENT" means the Purchase Agreement, dated as of December 18, 2001, among the Company and the Initial Purchasers. "REDEEMABLE CAPITAL STOCK" means any class of the Company's Capital Stock that, either by its terms, by the terms of any securities into which it is convertible or exchangeable or by contract or otherwise, is, or upon the happening of an event or passage of time would be, required to be redeemed (whether by sinking fund or otherwise) prior to the date that is 91 days after the Stated Maturity of the Notes or is redeemable at the option of the Holder thereof at any time prior to such date, or is convertible into or exchangeable for debt securities at any time prior to such date (unless it is convertible or exchangeable solely at the Company's option). "REDEMPTION DATE" or "REDEMPTION DATE" means the date specified for redemption of the Notes in accordance with the terms of the Notes and this Indenture. "REDEMPTION PRICE" or "REDEMPTION PRICE" shall have the meaning set forth in paragraph 5 on the reverse side of the Notes. 7 "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement of even date herewith among the Company and the Initial Purchasers attached hereto as Exhibit C-1. "REGULAR RECORD DATE" means, with respect to the interest payable on any Interest Payment Date, the close of business on June 6 or December 6 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "RESPONSIBLE OFFICER" means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject. "RESTRICTED NOTE" means a Note required to bear the restrictive legend set forth in the form of Note set forth in Exhibits A-1 and A-2 of this Indenture. "RESTRICTION TERMINATION DATE" means, with respect to any Note or Common Stock issued upon conversion of any Note, the date that is two years after the later of: (1) the Issue Date of the Note, or, in the case of Common Stock, the Issue Date of the Note upon the conversion of which such Common Stock was issued; and (2) the last date on which any "affiliate," as defined in Rule 144 (or successor provision) under the Securities Act, of the Company was the owner of such Note or Common Stock. "RULE 144A" means Rule 144A under the Securities Act (or any successor provision), as it may be amended from time to time. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the United States Securities Act of 1933 (or any successor statute), as amended from time to time. "SENIOR INDEBTEDNESS" means the principal of, premium, if any, interest (including all interest accruing subsequent to the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowable as a claim in such proceeding) and rent payable on or in connection with, and all fees, costs, expenses and other amounts accrued or due or in connection with, Indebtedness of the Company, whether outstanding on the date of this Indenture or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company (including all deferrals, renewals, extensions or refundings of, or amendments, modifications or supplements to, the foregoing), provided that the following shall not constitute Senior Indebtedness : (1) Indebtedness or any other obligations of the Company that by their terms rank equal or junior in right of payment to the Notes; 8 (2) Indebtedness evidenced by the Notes; (3) Indebtedness of the Company that is subordinate to its general unsecured obligations by operation of law; (4) accounts payable or other liabilities owed or owing by the Company to trade creditors including guarantees thereof or instruments evidencing such liabilities; (5) amounts owed by the Company for compensation to employees or for services rendered to it; (6) Indebtedness of the Company to any Subsidiary or any other Affiliate of the Company or any of such Affiliate's Subsidiaries, but excluding any such Indebtedness pledged as security for any Senior Indebtedness; (7) Indebtedness of the Company evidenced by any guarantee of any Indebtedness ranking equal or junior in right of payment to the Notes; and (8) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11 of the United States Code, is without recourse to the Company. whether outstanding on the date of this Indenture or thereafter created or incurred (including all amendments to or refinancings of the foregoing). Without limitation, "Senior Indebtedness" includes all amounts payable on or in connection with, and all fees, costs, expenses and other amounts accrued or due on or in connection with, Indebtedness of the Company under the Company's Credit Agreement, dated as of April 19, 2001, by and among the Company and Fleet National Bank, as Administrative Agent, The Chase Manhattan Bank, as Syndication Agent, HSBC Bank USA, as Documentation Agent and the Lenders Party thereto, as amended from time to time. "SIGNIFICANT SUBSIDIARY" means, as of any date of determination, a Subsidiary of the Company, including its Subsidiaries, that meets any of the following conditions as of such date: (i) the Company's and its other Subsidiaries' investments in and advances to the Subsidiary exceed 10 percent of the total assets of the Company and its Subsidiaries consolidated as of the end of of the most recently completed fiscal year; or (ii) the Company's and its other Subsidiaries' proportionate share of the total assets of the Subsidiary exceeds 10 percent of the total assets of the Company and its Subsidiaries consolidated as of the end of the most recently completed fiscal year; or (iii) the Company's and its other Subsidiaries' equity in the income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principles of the Subsidiary exceeds 10 percent of such income of 9 the Company and its Subsidiaries consolidated as of the end of the most recently completed fiscal year. "STATED MATURITY", when used with respect to any Note or any installment of interest thereon, means the date specified in such Note as the fixed date on which the principal of such Note or such installment of interest is due and payable. "SUBSIDIARY" means, as of any date of determination (i) a corporation, a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is directly or indirectly owned by the Company, by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries of the Company, (ii) a partnership in which the Company or a Subsidiary of the Company holds a majority interest in the equity capital or profits of such partnership, or (iii) any other person (other than a corporation) in which the Company, a Subsidiary of the Company or the Company and one or more Subsidiaries of the Company, directly or indirectly has (x) at least a majority ownership interest or (y) the power to elect or direct the election of a majority of the directors or other governing body of such person. "TIA" means the Trust Indenture Act of 1939 as in effect on the date of this Indenture, provided, however, that in the event the TIA is amended after such date, TIA means, to the extent required by any such amendment, the TIA as so amended. "TRADING DAY" means a day during which trading in the Common Stock generally occurs on the New York Stock Exchange or, if the Common Stock is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded. "TRUSTEE" means the party named as the "Trustee" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. The foregoing sentence shall likewise apply to any subsequent such successor or successors. "UNITED STATES" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction (its "possessions" including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands). "U.S. GOVERNMENT OBLIGATIONS" means securities that are (i) direct obligations of the United States of America, the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by or acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof at any time prior to the Stated Maturity of the Notes, and shall also include a depository receipt issued by a bank or trust company as custodian 10 with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation for the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. SECTION 1.02 Other Definitions. Defined in Term Section - ---- ------- "Act"...................................................................1.05(a) "Agent Members".........................................................2.12 "Bankruptcy Law"........................................................6.01 "Change in Control".....................................................3.10(a) "Change in Control Repurchase Date".....................................3.10(a) "Change in Control Repurchase Notice"...................................3.10(d) "Change in Control Repurchase Price"....................................3.10(a) "Conversion Change Event"..............................................10.11 "Conversion Date"......................................................10.02 "Conversion Price".....................................................10.01 Conversion Right"......................................................10.01 "Current Market Price".................................................10.04(g) "Custodian".............................................................6.01 "Depositary"............................................................2.01(a) "DTC"...................................................................2.01(a) "Event of Default"......................................................6.01 "Exchange Act"..........................................................3.10(a) "excluded securities"..................................................10.04(d) "fair market value"....................................................10.04(f) "Legal Holiday"........................................................14.09 "Legend"................................................................2.06(f) "Non-Electing Share"...................................................10.11 "Non-Payment Default"..................................................11.03(b) "Notice of Default".....................................................6.01 "Paying Agent"..........................................................2.03 "Payment Blockage Period"..............................................11.03(b) "Payment Default"......................................................11.03(a) "Permitted Junior Securities" .........................................11.02 "QIB"...................................................................2.01(a) "Record Date"..........................................................10.04(f) "Reference Period".....................................................10.04(d) "Registrar".............................................................2.03 "Rule 144A Information".................................................4.06 "Trigger Event"........................................................10.04(d) 11 SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture Notes" means the Notes. "indenture Note holder" means a Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture Notes means the Company. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. SECTION 1.04 RULES OF CONSTRUCTION. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP as in effect from time to time; (c) "or" is not exclusive; (d) "including" means including, without limitation; and (e) words in the singular include the plural, and words in the plural include the singular. SECTION 1.05 ACTS OF HOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by (i) one or more instruments of substantially similar tenor signed by such Holders in person or by their agent or proxy duly appointed in writing, (ii) the record of Holders of Notes voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Notes duly called and held in accordance with the provisions of Article 13 or (iii) a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record are delivered to the Trustee and, where it is hereby expressly required, to the Company. The Trustee shall promptly deliver to the Company copies of all such instruments and records delivered to the Trustee with a courtesy copy to the Company's counsel at the address listed in Section 14.02 and, if pertaining to any conversion notice, with a courtesy 12 copy to the Common Stock transfer agent at American Stock Transfer & Trust Company. Such instrument or instruments and record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of Holders signing such instrument or instruments and so voting at such meeting pursuant to Section 13.06. Proof of execution of any such instrument or of a writing appointing any such agent or proxy shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such officer the execution thereof. Where such execution is by a signer acting in a capacity other than such signer's individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer's authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. The ownership of Notes shall be proved by the register for the Notes or by a certificate of the Registrar. (c) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note. (d) If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, or seek the vote of the Holders, the Company may, at its option, by or pursuant to a resolution of the Board of Directors, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for purposes of determining whether Holders of the requisite proportion of outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. Upon receipt by the Trustee from any Holder of (i) any notice of default or breach referred to in Section 6.01(4), if such default or breach has occurred and is continuing and the Trustee shall not have given such a notice to the Company, (ii) any declaration of acceleration referred to in Section 6.02, if an Event of Default has occurred and is continuing and the Trustee shall not have given such a declaration to the Company, or (iii) any direction referred to in 13 Section 6.05, if the Trustee shall not have taken the action specified in such direction, then a record date shall automatically, and without any action by the Company or the Trustee, be set for determining the Holders entitled to join in such notice, declaration or direction, which record date shall be the close of business on the tenth day (or, if such day is not a Business Day, the first Business Day thereafter) following the day on which the Trustee receives such notice, declaration or direction. Promptly after such receipt by the Trustee, and as soon as practicable thereafter, the Trustee shall notify the Company and the Holders of any such record date so fixed. The Holders on such record date (or their duly appointed agents or proxies), and only such Persons, shall be entitled to join in such notice, declaration or direction, whether or not such Holders remain Holders after such record date; PROVIDED that, unless such notice, declaration or direction shall have become effective by virtue of Holders of the requisite principal amount of Notes on such record date (or their duly appointed agents or proxies) having joined therein on or prior to the 90th day after such record date, such notice, declaration or direction shall automatically, and without any action by any Person, be canceled and of no further effect. Nothing in this paragraph shall be construed to prevent a Holder (or a duly appointed agent or proxy thereof) from giving, before or after the expiration of such 90-day period, a notice, declaration or direction contrary to or different from, or, after the expiration of such period, identical to, the notice, declaration or direction to which such record date relates, in which event a new record date in respect thereof shall be set pursuant to this paragraph. In addition, nothing in this paragraph shall be construed to render ineffective any notice, declaration or direction of the type referred to in this paragraph given at any time to the Trustee and the Company by Holders (or their duly appointed agents or proxies) of the requisite principal amount of Notes on the date such notice, declaration or direction is so given. (e) The provisions of this Section 1.05 are subject to the provisions of Section 13.05. ARTICLE 2 THE NOTES SECTION 2.01 FORM AND DATING. The Notes and the Trustee's certificate of authentication to be borne by such Notes shall be substantially in the form annexed hereto as Exhibits A-1 and A-2, which are incorporated in and made a part of this Indenture. The terms and provisions contained in the form of Note shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends and endorsements as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the notes may be listed or designated for issuance, or to conform to usage. 14 (a) GLOBAL NOTES. Notes offered and sold within the United States to qualified institutional buyers as defined in Rule 144A ("QIBs") in reliance on Rule 144A shall be issued, initially in the form of a 144A Global Note, which shall be deposited with the Trustee at its Corporate Trust Office, as custodian for, and registered in the name of, The Depository Trust Company ("DTC") or the nominee thereof (such depositary, or any successor thereto, and any such nominee being hereinafter referred to as the "Depositary"), duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the 144A Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary as hereinafter provided. (b) GLOBAL NOTES IN GENERAL. Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions, repurchases and conversions. Any adjustment of the aggregate principal amount of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depositary. (c) BOOK-ENTRY PROVISIONS. This Section 2.01(c) shall apply only to Global Notes deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 2.01(c), authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depositary, (b) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions and (c) shall bear legends substantially to the following effect: "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF 15 THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF." (d) RESTRICTIVE LEGENDS. Until the Restriction Termination Date, all Global Notes and all Certificated Notes shall bear the Legend, unless such Notes have been transferred pursuant to a registration statement that has been declared effective under the Securities Act. Until the Restriction Termination Date, the Company covenants that any stock certificate representing shares of Common Stock delivered by the Company upon conversion of any Notes will bear the Legend, unless such shares have been sold pursuant to a registration statement that has been declared effective under the Securities Act. (e) CERTIFICATED NOTES. Notes not issued as interests in the Global Notes will be issued in certificated form substantially in the form of Exhibit A-2 attached hereto. SECTION 2.02 EXECUTION AND AUTHENTICATION. The Notes shall be executed on behalf of the Company by any Officer, under its corporate seal reproduced thereon. The signature of the Officer on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at the time of the execution of the Notes the proper Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of authentication of such Notes. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. The Trustee shall authenticate and deliver Notes for original issue in an aggregate principal amount of up to $200,000,000, or an aggregate principal amount of up to $220,000,000 if the Over-Allotment Option is exercised fully, upon a Company Order without any further action by the Company. The aggregate principal amount of Notes outstanding at any time may not exceed the amount set forth in the foregoing sentence, except as provided in Section 2.07. The Notes shall be issued only in registered form without coupons and only in denominations of $1,000 in principal amount and any integral multiple thereof. SECTION 2.03 REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar"), an office or agency where Notes may be presented for purchase or payment ("Paying Agent") and an office or agency where Notes may be presented for conversion ("Conversion Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may have one or more co-registrars, one or more additional paying agents and one or more additional conversion agents. The term Paying Agent includes any additional paying agent, including any named pursuant to Section 4.05. The term 16 Conversion Agent includes any additional conversion agent, including any named pursuant to Section 4.05. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar (other than the Trustee). The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee in writing of the name and address of any such agent. If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.06. The Company or any Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar, Conversion Agent or co-registrar. The Company initially appoints the Trustee as Registrar, Conversion Agent and Paying Agent in connection with the Notes. SECTION 2.04 PAYING AGENT TO HOLD MONEY AND NOTES IN TRUST. Except as otherwise provided herein, on or prior to each due date of payments in respect of any Note, the Company shall deposit with the Paying Agent a sum of money (in immediately available funds if deposited on the due date) sufficient to make such payments when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by the Paying Agent for the making of payments in respect of the Notes and shall notify the Trustee in writing of any default by the Company in making any such payment. At any time during the continuance of any such default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money so held in trust. If the Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by it. Upon doing so, the Paying Agent shall have no further liability for the money. SECTION 2.05 NOTEHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders. If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee at least semiannually on June 6 and December 6 a listing of Noteholders dated within 13 days of the date on which the list is furnished and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders. SECTION 2.06 TRANSFER AND EXCHANGE. Subject to Section 2.12, (a) upon surrender for registration of transfer of any Note, together with a written instrument of transfer satisfactory to the Registrar duly executed by the Noteholder or such Noteholder's attorney duly authorized in writing, at the office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.03, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination or denominations, of a like aggregate principal amount. The Company shall not charge a service charge for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other 17 governmental charges that may be imposed in connection with the transfer or exchange of the Notes from the Noteholder requesting such transfer or exchange. At the option of the Holder, Notes may be exchanged for other Notes of any authorized denomination or denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged, together with a written instrument of transfer satisfactory to the Registrar duly executed by the Noteholder or such Noteholder's attorney duly authorized in writing, at such office or agency. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes which the Holder making the exchange is entitled to receive. The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Notes selected for redemption (except, in the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or any Notes in respect of which a Change in Control Repurchase Notice (as defined in Section 3.10(d)) has been given and not withdrawn by the Holder thereof in accordance with the terms of this Indenture (except, in the case of Notes to be purchased in part, the portion thereof not to be purchased) or any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed. (b) Notwithstanding any provision to the contrary herein, so long as a Global Note remains outstanding and is held by or on behalf of the Depositary, transfers of a Global Note, in whole or in part, shall be made only in accordance with Section 2.12 and this Section 2.06(b). Transfers of a Global Note shall be limited to transfers of such Global Note in whole, or in part, to nominees of the Depositary or to a successor of the Depositary or such successor's nominee. (c) Successive registrations and registrations of transfers and exchanges as aforesaid may be made from time to time as desired, and each such registration shall be noted on the register for the Notes. (d) Any Registrar appointed pursuant to Section 2.03 shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Notes upon transfer or exchange of Notes. (e) No Registrar shall be required to make registrations of transfer or exchange of Notes during any periods designated in the text of the Notes or in this Indenture as periods during which such registration of transfers and exchanges need not be made. (f) If Notes are issued upon the transfer, exchange or replacement of Notes subject to restrictions on transfer and bearing the legends set forth on the form of Note attached hereto as Exhibits A-1 and A-2 setting forth such restrictions (collectively, the "Legend"), or if a request is made to remove the Legend on a Note, the Notes so issued shall bear the Legend, or the Legend shall not be removed, as the case may be, unless there is delivered to the Company and the Registrar such satisfactory evidence, which shall include an Opinion of Counsel, as may be reasonably required by the Company and the Registrar, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 under the Securities Act or that such Notes are not 18 "restricted" within the meaning of Rule 144 under the Securities Act. Upon (i) provision of such satisfactory evidence, or (ii) notification by the Company to the Trustee and Registrar of the sale of such Note pursuant to a registration statement that is effective at the time of such sale, the Trustee, at the written direction of the Company, shall authenticate and deliver a Note that does not bear the Legend. If the Legend is removed from the face of a Note and the Note is subsequently held by an Affiliate of the Company, the Legend shall be reinstated. SECTION 2.07 REPLACEMENT NOTES. If (a) any mutilated Note is surrendered to the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and there is delivered to the Company and the Trustee such Note or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, or is about to be purchased by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Note, pay or purchase such Note, as the case may be. Upon the issuance of any new Notes under this Section 2.07, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Note issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section 2.07 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.08 OUTSTANDING NOTES; DETERMINATIONS OF HOLDERS' ACTION. Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it or delivered to it for cancellation, those paid pursuant to Section 2.07 and those described in this Section 2.08 as not outstanding. A Note does not cease to be outstanding because the Company or an Affiliate thereof holds the Note; provided, however, that in determining whether the Holders of the requisite principal amount of the outstanding Notes are present at a meeting of Holders for quorum purposes have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining 19 whether the Trustee shall be protected in making such calculation or in relying upon any such determination as to the presence of a quorum or relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or such other obligor. Subject to the foregoing, only Notes outstanding at the time of such determination shall be considered in any such determination (including, without limitation, determinations pursuant to Articles 6 and 9). If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, or on the Business Day following the Change in Control Repurchase Date, or on Stated Maturity, money or securities, if permitted hereunder, sufficient to pay Notes payable on that date, then immediately after such Redemption Date, Change in Control Repurchase Date or Stated Maturity, as the case may be, such Notes shall cease to be outstanding and interest on such Notes shall cease to accrue; provided that, if such Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor reasonably satisfactory to the Trustee has been made. If a Note is converted in accordance with Article 10, then from and after the time of conversion on the conversion date, such Note shall cease to be outstanding and interest shall cease to accrue on such Note. SECTION 2.09 TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as conclusively evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for such purpose pursuant to Section 2.03, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes. 20 SECTION 2.10 CANCELLATION. All Notes surrendered for payment, purchase by the Company pursuant to Article 3, conversion, redemption or registration of transfer or exchange shall, if surrendered to any person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. The Company may not issue new Notes to replace Notes it has paid or delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article 10. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 2.10, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be destroyed by the Trustee and the Trustee shall, upon request, deliver a certificate of destruction to the Company. SECTION 2.11 PERSONS DEEMED OWNERS. Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of the Note or the payment of any Redemption Price or Change in Control Repurchase Price in respect thereof, and interest thereon, for the purpose of conversion and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 2.12 GLOBAL NOTES. (a) Notwithstanding any other provisions of this Indenture or the Notes, (A) transfers of a Global Note, in whole or in part, shall be made only in accordance with Section 2.06 and Section 2.12(a)(i), (B) transfer of a beneficial interest in a Global Note for a Certificated Note shall comply with Section 2.06 and Section 2.12(a)(ii) below, and (C) transfers of a Certificated Note shall comply with Section 2.06 and Sections 2.12(a)(iii) and (iv) below. (i) TRANSFER OF GLOBAL NOTE. A Global Note may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person may be registered; provided that this clause (i) shall not prohibit any transfer of a Note that is issued in exchange for a Global Note but is not itself a Global Note. No transfer of a Note to any Person shall be effective under this Indenture or the Notes unless and until such Note has been registered in the name of such Person. Nothing in this Section 2.12(a)(i) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Note effected in accordance with the other provisions of this Section 2.12(a). (ii) RESTRICTIONS ON TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A CERTIFICATED NOTE. A beneficial interest in a Global Note may not be exchanged for a Certificated Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of notice of a transfer of a beneficial interest in a Global Note in accordance with Applicable Procedures for a Certificated Note in the form satisfactory to the Trustee, together with: 21 (a) so long as the Notes are Restricted Notes, certification, in the form set forth in Exhibit B-1; (b) written instructions to the Trustee to make, or direct the Registrar to make, an adjustment on its books and records with respect to such Global Note to reflect a decrease in the aggregate principal amount of the Notes represented by the Global Note, such instructions to contain information regarding the Depositary account to be credited with such decrease; and (c) if the Company or Registrar so requests, an opinion of counsel or other evidence reasonably satisfactory to them as to the compliance with the restrictions set forth in the Legend, then the Trustee shall cause, or direct the Registrar to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Registrar, the aggregate principal amount of Notes represented by the Global Note to be decreased by the aggregate principal amount of the Certificated Note to be issued, shall issue such Certificated Note and shall debit or cause to be debited to the account of the Person specified in such instructions a beneficial interest in the Global Note equal to the principal amount of the Certificated Note so issued. (iii) TRANSFER AND EXCHANGE OF CERTIFICATED NOTES. When Certificated Notes are presented to the Registrar with a request: (x) to register the transfer of such Certificated Notes; or (y) to exchange such Certificated Notes for an equal principal amount of Certificated Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Certificated Notes surrendered for transfer or exchange: (a) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (b) so long as such Notes are Restricted Notes, such Notes are being transferred or exchanged pursuant to an effective registration statement under the Securities Act or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable: (A) if such Certificated Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or (B) if such Certificated Notes are being transferred to the Company, a certification to that effect; or 22 (C) if such Certificated Notes are being transferred pursuant to an exemption from registration, (i) a certification to that effect (in the form set forth in Exhibits B-1, if applicable) and (ii) if the Company or Registrar so requests, an opinion of counsel or other evidence reasonably satisfactory to them as to the compliance with the restrictions set forth in the Legend. (iv) RESTRICTIONS ON TRANSFER OF A CERTIFICATED NOTE FOR A BENEFICIAL INTEREST IN A GLOBAL NOTE. A Certificated Note may not be exchanged for a beneficial interest in a Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Certificated Note, duly endorsed or accompanied by appropriate instruments of transfer, in form reasonably satisfactory to the Trustee, together with: (a) so long as the Notes are Restricted Notes, certification, in the form set forth in Exhibit B-1, that such Certificated Note is being transferred to a QIB in accordance with Rule 144A; and (b) written instructions directing the Trustee to make, or to direct the Registrar to make, an adjustment on its books and records with respect to such Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Global Note, such instructions to contain information regarding the Depositary account to be credited with such increase, then the Trustee shall cancel such Certificated Note and cause, or direct the Registrar to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Registrar, the aggregate principal amount of Notes represented by the Global Note to be increased by the aggregate principal amount of the Certificated Note to be exchanged, and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Note equal to the principal amount of the Certificated Note so cancelled. If no Global Notes are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Global Note in the appropriate principal amount. (b) Subject to the succeeding paragraph, every Note shall be subject to the restrictions on transfer provided in the Legend including the delivery of an Opinion of Counsel, if so provided. Whenever any Restricted Note is presented or surrendered for registration of transfer or for exchange for a Note registered in a name other than that of the Holder, such Note must be accompanied by a certificate in substantially the form set forth in Exhibit B-1, dated the date of such surrender and signed by the Holder of such Note, as to compliance with such restrictions on transfer. The Registrar shall not be required to accept for such registration of transfer or exchange any Note not so accompanied by a properly completed certificate. (c) The restrictions imposed by the Legend upon the transferability of any Note shall cease and terminate when such Note has been sold pursuant to an effective registration statement under the Securities Act or transferred in compliance with Rule 144 under the 23 Securities Act (or any successor provision thereto) or, if earlier, upon the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision). Any Note as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon a surrender of such Note for exchange to the Registrar in accordance with the provisions of this Section 2.12 (accompanied, in the event that such restrictions on transfer have terminated by reason of a transfer in compliance with Rule 144 or any successor provision, by an opinion of counsel having substantial experience in practice under the Securities Act and otherwise reasonably acceptable to the Company, addressed to the Company and in form acceptable to the Company, to the effect that the transfer of such Note has been made in compliance with Rule 144 or such successor provision), be exchanged for a new Note, of like tenor and aggregate principal amount, which shall not bear the restrictive Legend. The Company shall give notice to the Trustee in writing of the filing of any registration statement registering the Notes under the Securities Act and at least 15 business days notice prior to the effectiveness of any such registration statement, and shall direct the Trustee to forward a copy of each notice to the Holders. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among DTC participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned opinion of counsel or registration statement. (d) In the event that Rule 144(k) as promulgated under the Securities Act is amended to shorten the two-year restriction period, then restrictions on transfer on the Notes and the Common Stock will be deemed to refer to the shortened restriction period. The Company undertakes to inform the Trustee in writing if such change to Rule 144(k) occurs and the effect (if any) to the restrictions on transfer applicable to the Notes and Common Stock and shall provide additional information (including an Opinion of Counsel and/or an Officers' Certificate) if so requested by the Trustee. (e) As used in the preceding two paragraphs of this Section 2.12, the term "transfer" encompasses any sale, pledge, transfer, hypothecation or other disposition of any Note. (f) The provisions of clauses (1), (2), (3) and (4) below shall apply only to Global Notes: (1) Notwithstanding any other provisions of this Indenture or the Notes, except as provided in Section 2.12(a)(i), a Global Note shall not be exchanged in whole or in part for a Note registered in the name of any Person other than the Depositary or one or more nominees thereof, provided that a Global Note may be exchanged for Notes registered in the names of any person designated by the Depositary in the event that (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Note or such Depositary has ceased to be a "clearing agency" registered under the 24 Exchange Act, and a successor Depositary is not appointed by the Company within 90 days or (ii) an Event of Default has occurred and is continuing with respect to the Notes. Any Global Note exchanged pursuant to clause (i) above shall be so exchanged in whole and not in part, and any Global Note exchanged pursuant to clause (ii) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Note issued in exchange for a Global Note or any portion thereof shall be a Global Note; provided that any such Note so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Note. (2) Notes issued in exchange for a Global Note or any portion thereof shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Note or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Note to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar. With regard to any Global Note to be exchanged in part, either such Global Note shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Note, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Note issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. (3) Subject to the provisions of clause (5) below, the registered Holder may grant proxies and otherwise authorize any Person, including Agent Members (as defined below) and persons that may hold interests through Agent Members, to take any action which a holder is entitled to take under this Indenture or the Notes. (4) In the event of the occurrence of any of the events specified in clause (1) above, the Company will promptly make available to the Trustee a reasonable supply of Certificated Notes in definitive, fully registered form, without interest coupons. (5) Neither any members of, or participants in, the Depositary (collectively, the "Agent Members") nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Note registered in the name of the Depositary or any nominee thereof, or under any such Global Note, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Note. 25 SECTION 2.13 CUSIP NUMBERS. The Company in issuing the Notes may use "CUSIP" numbers and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers. SECTION 2.14 DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay, or shall deposit with the Paying Agent money in immediately available funds sufficient to pay, the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date. A special record date, as used in this Section 2.14 with respect to the payment of any defaulted interest, shall mean the 15th day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day. At least 15 days before the subsequent special record date, the Company shall mail to each Holder and to the Trustee a notice that states the subsequent special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.15 REGISTRATION DEFAULT. The interest rate borne by the Notes shall be increased upon a Registration Default as provided in the Registration Rights Agreement. If a Registration Default occurs, the Company shall deliver to the Trustee an Officers' Certificate stating (1) the increase in the Interest Rate, (2) when such increase is effective, (3) the Holders which are entitled to receive additional interest and the amount payable to each such Holder and (4) when such additional interest is payable. Unless and until a Responsible Officer of the Trustee receives such an Officer's Certificate, the Trustee shall assume there has been no increase in the Interest Rate. ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.01 [Reserved]. SECTION 3.02 OPTIONAL REDEMPTION. The Notes are not redeemable prior to December 21, 2004. On and after December 21, 2004, the Company may, at its option, redeem the Notes in whole at any time or in part from time to time, on any date prior to Stated Maturity, upon notice as set forth in Section 3.05, at the redemption price (expressed as percentages of the principal amount) set forth in the table below: 26 PERIOD REDEMPTION PRICE ------ ---------------- December 21, 2004 through December 20, 2005 102.36% December 21, 2005 through December 20, 2006 101.77% December 21, 2006 through December 20, 2007 101.18% Thereafter 100.59% (the "Optional Redemption Price"), plus any interest accrued but not paid prior to (but not including) the optional Redemption Date. SECTION 3.03 NOTICE OF TRUSTEE. If the Company elects to redeem Notes pursuant to the redemption provisions of Section 3.02, it shall notify the Trustee in writing at least 30 days prior but not more than 60 days prior to the Redemption Date of such intended Redemption Date, the principal amount of Notes to be redeemed and the CUSIP numbers of the Notes to be redeemed. SECTION 3.04 SELECTION OF NOTES TO BE REDEEMED. If fewer than all the Notes are to be redeemed, the Trustee shall select the particular Notes to be redeemed from the outstanding Notes by a method that complies with the requirements of any exchange on which the Notes are listed, or, if the Notes are not listed on an exchange, on a pro rata basis or by lot or in accordance with any other method the Trustee considers fair and appropriate. Notes and portions thereof that the Trustee selects shall be in principal amounts equal to $1,000 or any whole multiple thereof. If any Note selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Note so selected, the converted portion of such Note shall be deemed to be the portion selected for redemption (provided, however, that the Holder of such Note so converted and deemed redeemed shall not be entitled to any additional interest payment as a result of such deemed redemption than such Holder would have otherwise been entitled to receive upon conversion of such Note). Notes which have been converted during a selection of Notes to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection. The Trustee shall promptly notify the Company and the Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed. 27 SECTION 3.05 NOTICE OF REDEMPTION. Notice of redemption shall be given in the manner provided in Section 14.02 to the Holders of Notes to be redeemed. Such notice shall be given not less than 20 nor more than 60 days prior to the Redemption Date for redemption pursuant to Section 3.02. All notices of redemption shall state: (1) the Redemption Date; (2) the Redemption Price and interest accrued and unpaid to, but not including, the Redemption Date, if any; (3) whether the Redemption Price will be payable in cash or Common Stock or a combination thereof (if the Company elects to make such payment with a combination of cash and Common Stock, such notice shall provide the proportion of cash and Common Stock) pursuant to the formula set forth in Section 3.10(a); (4) if fewer than all the outstanding Notes are to be redeemed, the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes which will be outstanding after such partial redemption; (5) that on the Redemption Date the Redemption Price and interest accrued and unpaid to, but not including, the Redemption Date, if any, will become due and payable upon each such Note to be redeemed, and that interest thereon shall cease to accrue on and after such date; (6) the Conversion Price, the date on which the right to convert the principal of the Notes to be redeemed will terminate and the places where such Notes may be surrendered for conversion; (7) the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued and unpaid interest, if any; and (8) the CUSIP number of the Notes. The notice given shall specify the last date on which exchanges or transfers of Notes may be made pursuant to Section 2.06, and shall specify the serial numbers of Notes and the portions thereof called for redemption. Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company to the Trustee pursuant to Section 3.03, who shall give notice to the Holders. SECTION 3.06 EFFECT OF NOTICE OF REDEMPTION. Notice of redemption having been given as provided in Section 3.05, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued and unpaid interest) such Notes shall cease to bear interest. Upon surrender of any 28 such Note for redemption in accordance with such notice, such Note shall be paid by the Company at the Redemption Price plus accrued and unpaid interest, if any, to, but not including, the Redemption Date; provided, however, that the installments of interest on Notes whose Stated Maturity is prior to or on the Redemption Date shall be payable to the Holders of such Notes, or one or more predecessor Notes, registered as such on the relevant Record Date according to their terms and the provisions of Section 2.01. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal and premium, if any, shall, until paid, bear interest from the Redemption Date at the Interest Rate. SECTION 3.07 DEPOSIT OF REDEMPTION PRICE. Prior to or on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent an amount of money sufficient to pay the Redemption Price of all the Notes to be redeemed on that Redemption Date, other than any Notes called for redemption on that date which have been converted prior to the date of such deposit, and accrued and unpaid interest, if any, on such Notes. If any Note called for redemption is converted, any money deposited with the Trustee or with a Paying Agent or so segregated and held in trust for the redemption of such Note shall (subject to any right of the Holder of such Note or any predecessor Note to receive interest as provided in Section 4.01) be paid to the Company on Company Request or, if then held by the Company, shall be discharged from such trust. SECTION 3.08 NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 4.05 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by the Holder thereof or the Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. SECTION 3.09 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection with any redemption of Notes, the Company may arrange for the purchase and conversion of any Notes called for redemption by an agreement with one or more investment banks or other purchasers to purchase such Notes by paying to the Trustee in trust for the Holders, on or prior to 11:00 a.m. New York City time on the Redemption Date, an amount that, together with any amounts deposited with the Trustee by the Company for the redemption of such Notes, is not less than the Redemption Price of such Notes. The Company shall promptly notify the Trustee in writing of any such agreement. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the Redemption Price of such Notes shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any Notes not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything 29 to the contrary contained in Article 10) surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid. The Trustee shall hold and pay to the Holders whose Notes are selected for redemption any such amount paid to it for purchase and conversion in the same manner as it would moneys deposited with it by the Company for the redemption of Notes. Without the Trustee's prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Notes shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee as set forth in this Indenture, and the Company agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Notes between the Company and such purchasers, including the costs and expenses incurred by the Trustee in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture, except to the extent such loss, liability, expense or cost results from Trustee's gross negligence or willful misconduct. SECTION 3.10 REPURCHASE OF NOTES AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL. (a) If there shall have occurred a Change in Control, all or any portion of the Notes of any Holder equal to $1,000 or a whole multiple of $1,000, not previously called for redemption, shall be repurchased by the Company, at the option of such Holder, at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, together with interest accrued and unpaid to, but excluding, the repurchase date (the "Change in Control Repurchase Price"), on the date (the "Change in Control Repurchase Date") that is 45 Business Days after the Change in Control Repurchase Notice; provided, however, if such Change in Control Repurchase Date occurs between the close of business on any Regular Record Date and the opening of business on the next succeeding Interest Payment Date, then the interest payable on such date shall be paid to the Holders of such Notes, or one or more predecessor Notes, registered as such on the relevant Regular Record Date according to their terms. Subject to the fulfillment by the Company of the conditions set forth in Section 3.10(b), the Company may elect to pay the Change in Control Repurchase Price (to the extent not paid in cash) by delivering the number of shares of Common Stock equal to (i) the Change in Control Repurchase Price divided by (ii) 95% of the average of the Closing Prices per share of Common Stock for the five consecutive Trading Days immediately preceding and including the third Trading Day prior to the Change in Control Repurchase Date. As used in this Section 3.10, the term "Common Stock" means the Common Stock or the common stock of the successor or purchasing corporation, as the case may be. Whenever in this Indenture (including Sections 2.01, 6.01(a) and 6.07) or Exhibit A-1 annexed hereto there is a reference, in any context, to the principal of any Note as of any time, such reference shall be deemed to include reference to the Change in Control Repurchase Price payable in respect to such Note to the extent that such Change in Control Repurchase Price is, was or would be so payable at such time, and express mention of the Change in Control Repurchase Price in any provision of this Indenture shall not be construed as excluding the Change in Control Repurchase Price in those provisions of this Indenture when such express 30 mention is not made; provided, however, that, for the purposes of Article 11 hereof, such reference shall be deemed to include reference to the Change in Control Repurchase Price only to the extent the Change in Control Repurchase Price is payable in cash or Common Stock or a combination thereof. A "Change in Control" of the Company shall be deemed to have occurred at such time after the original issuance of Notes when any of the following events has occured: (i) the acquisition, as evidenced by the filing with the Commission of an executed report on Schedule 13D, by any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial ownership (determined in accordance with Rule 13d-3 under the Exchange Act), directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of the Capital Stock of the Company entitling that person to exercise 50% or more of the total voting power of all shares of such Capital Stock entitled to vote generally in elections of directors, other than any acquisition by the Company, any of its Subsidiaries or any employee benefit plans of the Company; (ii) any consolidation or merger of the Company with or into any other person, any merger of another person into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the Company's properties and assets to another person, other than: (A) any transaction (1) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of the Capital Stock of the Company or (2) pursuant to which holders of the Capital Stock of the Company immediately prior to the transaction are entitled to exercise, directly or indirectly, 50% or more of the total voting power of all shares of the Capital Stock of the Company entitled to vote generally in the election of directors of the continuing or surviving person immediately after the transaction; or (B) any merger solely for the purpose of changing the Company's jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving entity; (iii) during any consecutive two-year period, individuals who at the beginning of that two-year period constituted the Board of Directors (together with any new directors whose election to the Board of Directors, or whose nomination for election by the shareholders of the Company, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was approved by the Board of Directos or a nominating committee thereof, the majority of the members of which meet the above criteria) cease for any reason to constitute a majority of the Board of Directors then in office; or 31 (iv) the Company is liquidated or dissolved or a resolution is passed by the Company's stockholders approving a plan of liquidation or dissolution of the Company other than in a transaction which complies with the provisions described in Article 5 of this Indenture. Notwithstanding anything to the contrary set forth above, none of the foregoing events shall constitute a Change in Control of the Company if they occur in connection with a merger, consolidation, statutory share exchange, sale of all or substantially all of the assets of the Company (whether or not followed by a liquidation or dissolution of the Company) or similar business combination transaction, if all of the consideration received by holders of Common Stock immediately prior to consummation of the transaction (excluding cash payments for fractional shares and for shares held by holders exercising statutory dissenters rights) consists of common stock traded on a United States national securities exchange or quoted on the Nasdaq National Market, or which will be so traded or quoted when issued or exchanged in connection with such business combination transaction, and as a result of such transaction the Notes become convertible solely into such common stock. (b) The following are conditions to the Company's election to pay for the Change in Control Repurchase Price in Common Stock: (i) The shares of Common Stock to be issued upon repurchase of Notes hereunder: (A) shall not require registration under any federal securities law before such shares may be freely transferable without being subject to any transfer restrictions under the Securities Act upon repurchase or, if such registration is required, such registration shall be completed and shall become effective prior to the Change in Control Repurchase Date; and (B) shall not require registration with, or approval of, any governmental authority under any state law or any other federal law before shares may be validly issued or delivered upon repurchase or if such registration is required or such approval must be obtained, such registration shall be completed or such approval shall be obtained prior to the Change in Control Repurchase Date. (ii) The shares of Common Stock to be issued upon repurchase of Notes hereunder are, or shall have been, approved for listing on the Nasdaq National Market or the New York Stock Exchange or listed on another national securities exchange, in any case, prior to the Change in Control Repurchase Date. (iii) All shares of Common Stock which may be issued upon repurchase of Notes will be issued out of the Company's (or its successors) authorized but unissued Common Stock and will, upon issue, be duly and validly issued and fully paid and nonassessable and free of any preemptive or similar rights granted by the Company. 32 (iv) If any of the conditions set forth in clauses (i) through (iii) of this Section 3.08(b) are not satisfied in accordance with the terms thereof, the Change in Control Repurchase Price shall be paid by the Company only in cash. (c) Unless the Company shall have theretofore called for redemption all of the outstanding Notes, prior to or on the 30th day after the occurrence of a Change in Control, the Company, or, at the written request and expense of the Company prior to or on the 30th day after such occurrence, the Trustee, shall give to all Holders, in the manner provided in Section 14.02, notice of the occurrence of the Change in Control and of the repurchase right set forth herein arising as a result thereof. The Company shall also deliver a copy of such notice of a repurchase right to the Trustee. The notice shall include a form of Change in Control Repurchase Notice (as defined in Section 3.10(d)) to be completed by the Holder and shall state: (1) briefly, the events causing a Change in Control and the date of such Change in Control; (2) the date by which the Change in Control Repurchase Notice pursuant to this Section 3.10 must be given; (3) the Change in Control Repurchase Date; (4) the Change in Control Repurchase Price; (5) the name and address of the Paying Agent and the Conversion Agent; (6) the Conversion Price and any adjustments thereto; (7) that Notes as to which a Change in Control Repurchase Notice has been given may be converted pursuant to Article 10 only if the Change in Control Repurchase Notice has been withdrawn in accordance with the terms of this Indenture; (8) that Notes must be surrendered to the Paying Agent to collect payment; (9) that the Change in Control Repurchase Price for any Note as to which a Change in Control Repurchase Notice has been duly given and not withdrawn will be paid promptly following the later of the Change in Control Repurchase Date and the time of surrender of such Note as described in (8) above; (10) briefly, the procedures the Holder must follow to exercise rights under this Section 3.10; (11) briefly, the conversion rights of the Notes; (12) the procedures for withdrawing a Change in Control Repurchase Notice; (13) that, unless the Company defaults in making payment of such Change in Control Repurchase Price, interest on Notes called for redemption will cease to accrue on and after the Change in Control Repurchase Date; 33 (14) the CUSIP number of the Notes; and (15) whether the Change of Control Repurchase Price shall be paid by the Company in cash or by delivery of shares of Common Stock or a combination thereof, and if a combination thereof, such notice shall provide the proportion of cash and Common Stock. (d) A Holder may exercise its rights specified in Section 3.10(a) hereof upon delivery of a written notice of purchase (a "Change in Control Repurchase Notice") to the Trustee on or prior to the 30th day after the date of the Company's notice pursuant to 3.10(c) above, stating: (1) the certificate number of the Note which the Holder will deliver to be purchased; (2) the portion of the principal amount of the Note which the Holder will deliver to be purchased, which portion must be $1,000 or any whole multiple thereof; and (3) that such Note shall be purchased pursuant to the terms and conditions specified in paragraph 6 on the reverse side of the Notes. The delivery of such Note to the Paying Agent prior to, on or after the Change in Control Repurchase Date (together with all necessary endorsements) at the offices of the Paying Agent shall be a condition to the receipt by the Holder of the Change in Control Repurchase Price therefor; provided, however, that such Change in Control Repurchase Price shall be so paid pursuant to this Section 3.10 only if the Note so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Change in Control Repurchase Notice. The Company shall purchase from the Holder thereof, pursuant to this Section 3.10, a portion of a Note if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Note also apply to the purchase of such portion of such Note. Any purchase by the Company contemplated pursuant to the provisions of this Section 3.10 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Change in Control Repurchase Date and the time of delivery of the Note to the Paying Agent in accordance with this Section 3.10. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Change in Control Repurchase Notice contemplated by this Section 3.10(d) shall have the right to withdraw such Change in Control Repurchase Notice at any time prior to the close of business on the Change in Control Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.11. The Paying Agent shall promptly notify the Company of the receipt by it of any Change in Control Repurchase Notice or written withdrawal thereof. 34 SECTION 3.11 EFFECT OF CHANGE IN CONTROL REPURCHASE NOTICE. Upon receipt by the Paying Agent of the Change in Control Repurchase Notice specified in Section 3.10(d), the Holder of the Note in respect of which such Change in Control Repurchase Notice was given shall (unless such Change in Control Repurchase Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Change in Control Repurchase Price with respect to such Note. Such Change in Control Repurchase Price shall be paid to such Holder, subject to receipt of consideration for the Notes and/or Notes from the Holders by the Paying Agent, promptly following the later of (x) the Change in Control Repurchase Date with respect to such Note (provided the conditions in Section 3.10(d) have been satisfied) and (y) the time of delivery of such Note to the Paying Agent by the Holder thereof in the manner required by Section 3.10(d). Notes in respect of which a Change in Control Repurchase Notice has been given by the Holder thereof may not be converted pursuant to Article 10 on or after the date of the delivery of such Change in Control Repurchase Notice unless such Change in Control Repurchase Notice has first been validly withdrawn as specified in the following two paragraphs. A Change in Control Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Change in Control Repurchase Notice at any time prior to the close of business on the Change in Control Repurchase Date specifying: (1) the certificate number of the Note in respect of which such notice of withdrawal is being submitted, (2) the principal amount of the Note with respect to which such notice of withdrawal is being submitted, and (3) the principal amount, if any, of such Note which remains subject to the original Change in Control Repurchase Notice and which has been or will be delivered for purchase by the Company. There shall be no repurchase of any Notes pursuant to Section 3.10 if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Notes, of the required Change in Control Repurchase Notice) and is continuing an Event of Default (other than a default in the payment of the Change in Control Repurchase Price with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Notes (x) with respect to which a Change in Control Repurchase Notice has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Change in Control Repurchase Price with respect to such Notes) in which case, upon such return, the Change in Control Repurchase Notice with respect thereto shall be deemed to have been withdrawn. SECTION 3.12 DEPOSIT OF CHANGE IN CONTROL REPURCHASE PRICE. Prior to 11:00 a.m. (New York City time) on the Business Day following the Change in Control Repurchase Date the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an amount of money (in immediately 35 available funds if deposited on such Business Day) or Common Stock, or a combination thereof, if permitted hereunder, sufficient to pay the aggregate Change in Control Repurchase Price of all the Notes or portions thereof which are to be purchased as of the Change in Control Repurchase Date. SECTION 3.13 NOTES PURCHASED IN PART. Any Note which is to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered which is not purchased. SECTION 3.14 COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE OF NOTES. In connection with any offer to purchase or repurchase of Notes under Section 3.10 hereof (provided that such offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), the Company shall (i) comply with Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which may then be applicable, (ii) file the related Schedule TO (or any successor schedule, form or report) or any other schedule required under the Exchange Act, and (iii) otherwise comply with all federal and state securities laws so as to permit the rights and obligations under Section 3.10 to be exercised in the time and in the manner specified in Section 3.10. SECTION 3.15 REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall return to the Company any cash or shares of Common Stock that remain unclaimed as provided in paragraph 12 of the Notes, together with interest or dividends, if any, thereon, held by them for the payment of the Change in Control Repurchase Price; provided, however, that to the extent that the aggregate amount of cash or shares of Common Stock deposited by the Company pursuant to Section 3.12 exceeds the aggregate Change in Control Repurchase Price of the Notes or portions thereof which the Company is obligated to purchase as of the Change in Control Repurchase Date then promptly after the Business Day following the Change in Control Repurchase Date the Trustee shall return any such excess to the Company together with interest or dividends, if any, thereon. ARTICLE 4 COVENANTS SECTION 4.01 PAYMENT OF PRINCIPAL, PREMIUM, INTEREST ON THE NOTES. The Company will duly and punctually pay the principal of and premium, if any, and interest at the Interest Rate in respect of the Notes in accordance with the terms of the Notes and this Indenture. The Company will deposit or cause to be deposited with the Trustee as directed by the Trustee, no later than 11:00 a.m., New York time on the day of the Stated Maturity of any Note or installment of interest, all payments so due in immediatley available funds. Principal amount, 36 Redemption Price, Change in Control Repurchase Price and cash interest shall be considered paid on the applicable date due if at 11:00 a.m., New York time on such date (or, in the case of a Change in Control Repurchase Price, on the Business Day following the applicable Change in Control Repurchase Date) the Trustee or the Paying Agent holds, in accordance with this Indenture, money or Notes, if permitted hereunder, sufficient to pay all such amounts then due. The Company shall, to the extent permitted by law, pay cash interest on overdue amounts at the rate per annum set forth in paragraph 1 on the reverse side of the Notes, compounded semiannually, which interest shall accrue from the date such overdue amount was originally due to the date payment of such amount, including interest thereon, has been made or duly provided for. All such overdue interest shall be payable on demand. SECTION 4.02 SEC AND OTHER REPORTS. The Company shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If at any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, such reports shall be provided at the times the Company would have been required to provide reports had it continued to have been subject to such reporting requirements. The Company also shall comply with the other provisions of TIA Section 314(a). SECTION 4.03 COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2002) an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. SECTION 4.04 FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. SECTION 4.05 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in The Borough of Manhattan, the City of New York, an office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer, exchange, purchase, redemption or conversion and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The office of State Street Bank and Trust Company, N.A., located at 61 Broadway, 15th Floor, New York, New York 10006, attention: Corporate Trust Administration, shall initially be such office or agency for all of the aforesaid purposes. The Company shall give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency (other than a change in the location of the office of the Trustee). If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, 37 surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 14.02. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York, for such purposes. SECTION 4.06 DELIVERY OF CERTAIN INFORMATION. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder or any beneficial holder of Notes or shares of Common Stock issued upon conversion thereof, the Company will promptly furnish or cause to be furnished Rule 144A Information (as defined below) to such Holder or any beneficial holder of Notes or holder of shares of Common Stock issued upon conversion of Notes, or to a prospective purchaser of any such security designated by any such holder, as the case may be, to the extent required to permit compliance by such Holder or holder with Rule 144A under the Securities Act in connection with the resale of any such security. "Rule 144A Information" shall be such information as is specified pursuant to Rule 144A(d)(4) under the Securities Act. ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.01 WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. The Company shall not consolidate with, merge with or into any other person, engage in a statutory share exchange or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless: (a) either (1) the Company shall be the continuing corporation or (2) the person (if other than the Company) formed by such consolidation or into which the Company is merged or the person which acquires by conveyance, transfer or lease the properties and assets of the Company substantially as an entirety (i) shall be organized and validly existing under the laws of the United States and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company under the Notes and this Indenture; (b) at the time of such transaction, no Event of Default and no event which, after notice or lapse of time, would become an Event of Default, shall have happened and be continuing; and (c) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, statutory share exchange, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 38 5 and that all conditions precedent herein provided for relating to such transaction have been satisfied. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more Subsidiaries (other than to the Company or another Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. The successor person formed by such consolidation or into which the Company is merged or the successor person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of a lease and obligations the Company may have under a supplemental indenture pursuant to Section 10.11, the Company shall be discharged from all obligations and covenants under this Indenture and the Notes. Subject to Section 9.06, the Company, the Trustee and the successor person shall enter into a supplemental indenture to evidence the succession and substitution of such successor person and such discharge and release of the Company. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01 EVENTS OF DEFAULT. An "Event of Default" occurs if: (1) the Company fails to pay when due the principal of or premium, if any, on any of the Notes at maturity, upon redemption or exercise of a repurchase right or otherwise, whether or not such payment is prohibited by Article 11 of this Indenture; (2) the Company fails to pay an installment of interest (including additional interest, if any) on any of the Notes that continues for 30 days after the date when due, whether or not such payment is prohibited by Article 11 of this Indenture; provided that a failure to make any of the first six scheduled interest payments on the Notes on the applicable Interest Payment Dates will constitute an event of default with no grace period or cure period; (3) the Company fails to deliver shares of Common Stock, together with cash in lieu of fractional shares, when such Common Stock or cash in lieu of fractional shares is required to be delivered upon conversion of a Note and such failure continues for 10 days after such delivery date; (4) the Company fails to perform or observe any other term, covenant or agreement contained in the Notes or this Indenture for a period of 60 days after receipt by the Company of a Notice of Default (as defined in this Section 6.01); (5) (A) one or more defaults in the payment of principal of or premium, if any, on any of the Company's Indebtedness (other than Excluded Indebtedness) aggregating 39 $10.0 million or more, when the same becomes due and payable at the scheduled maturity thereof, and such default or defaults shall have continued after any applicable grace period and shall not have been cured or waived within a 30-day period after the date of a Notice of Default or (B) any of the Company's Indebtedness (other than Excluded Indebtedness) aggregating $10.0 million or more shall have been accelerated or otherwise declared due and payable, or required to be prepaid or repurchased (other than by regularly scheduled required prepayment) prior to the scheduled maturity thereof and such acceleration is not rescinded or annulled within a 30-day period after a Notice of Default; (6) the Company, or any Significant Subsidiary, or any Subsidiaries of the Company which in the aggregate would constitute a Significant Subsidiary pursuant to or under or within the meaning of any Bankruptcy Law: (A) commences a voluntary case or proceeding; (B) consents to the entry of an order for relief against it in an involuntary case or proceeding or the commencement of any case against it; (C) consents to the appointment of a Custodian of it or for any substantial part of its property; (D) makes a general assignment for the benefit of its creditors; (E) files a petition in bankruptcy or answer or consent seeking reorganization or relief; or (F) consents to the filing of such a petition or the appointment of or taking possession by a Custodian; or (7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any Significant Subsidiary or any Subsidiaries of the Company which in the aggregate would constitute a Significant Subsidiary in an involuntary case or proceeding, or adjudicates the Company or any Significant Subsidiary or any Subsidiaries of the Company which in the aggregate would constitute a Significant Subsidiary insolvent or bankrupt; (B) appoints a Custodian of the Company or any Significant Subsidiary or any Subsidiaries of the Company which in the aggregate would constitute a Significant Subsidiary or for any substantial part of its or their properties; or 40 (C) orders the winding up or liquidation of the Company or any Significant Subsidiary or any Subsidiaries of the Company which in the aggregate would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 days. "Bankruptcy Law" means Title 11, United States Code, or any similar federal or state law for the relief of debtors. "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law; A Default under clause (4) or (5) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate principal amount of the Notes at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (4) or (5) above after actual receipt of such notice. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company will deliver to the Trustee, within five Business Days of becoming aware of the occurrence of an event specified in (1) through (7) above, written notice thereof. In addition, the Company shall deliver to the Trustee, within 30 days after it becomes aware of the occurrence thereof, written notice of any event which with the lapse of time would become an Event of Default under clause (4) or (5) above, its status and what action the Company is taking or proposes to take with respect thereto. SECTION 6.02 ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7)) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Notes at the time outstanding by notice to the Company and the Trustee, may declare the Notes due and payable at their principal amount together with accrued interest; provided, that the Notes may not be declared due and payable unless the Trustee has given at least five days prior notice to all of the holders of Designated Senior Indebtedness known to the Trustee. Upon a declaration of acceleration, such principal and accrued and unpaid interest to the date of payment shall be immediately due and payable. If an Event of Default specified in Section 6.01(6) or (7) above occurs and is continuing, then the principal and the interest on all the Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Noteholders. The Holders of a majority in aggregate principal amount of the Notes at the time outstanding, by notice to the Trustee (and without notice to any other Noteholder) may rescind or annul an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the principal and any accrued cash interest that have become due solely as a result of acceleration and if all amounts due to the Trustee under Section 7.06 have been paid. No such rescission shall affect any subsequent Default or impair any right consequent thereto. 41 SECTION 6.03 OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the principal, the premium, if any, and any accrued cash interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if the Trustee does not possess any of the Notes or produce any of the Notes in the proceeding. A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of, or acquiescence in, the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04 WAIVER OF PAST DEFAULTS. The Holders of a majority in aggregate principal amount of the Notes at the time outstanding, by notice to the Trustee (and without notice to any other Holder), may waive an existing Default and its consequences except (1) an Event of Default described in Section 6.01(1) or (2), (2) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Holder affected or (3) a Default which constitutes a failure to convert any Note in accordance with the terms of Article 10. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. This Section 6.04 shall be in lieu of Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.05 CONTROL BY MAJORITY. The Holders of a majority in aggregate principal amount of the Notes at the time outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Holders or would involve the Trustee in personal liability unless the Trustee is offered indemnity reasonably satisfactory to it against loss, liability or expense. This Section 6.05 shall be in lieu of Section 316(a)1(A) of the TIA and such Section 316(a)1(A) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.06 LIMITATION ON SUITS. A Holder may not pursue any remedy with respect to this Indenture or the Notes unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 25% in aggregate principal amount of the Notes at the time outstanding make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of such notice, request and offer of security or indemnity; and 42 (5) the Holders of a majority in aggregate principal amount of the Notes at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period. A Noteholder may not use this Indenture to prejudice the rights of any other Holder or to obtain a preference or priority over any other Holder. SECTION 6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal amount, premium, if any, plus Redemption Price, Change in Control Repurchase Price or any accrued cash interest in respect of the Notes held by such Holder, on or after the respective due dates expressed in the Notes or any Redemption Date or Change in Control Repurchase Date, and to convert the Notes in accordance with Article 10, or to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, shall not be impaired or affected adversely without the consent of such Holder. SECTION 6.08 COLLECTION SUIT BY TRUSTEE. If an Event of Default described in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount owing with respect to the Notes and the amounts provided for in Section 7.06. SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal amount, Redemption Price, Change in Control Repurchase Price or any accrued cash interest in respect of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of the principal amount, Redemption Price, Change in Control Repurchase Price or any accrued cash interest and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel or any other amounts due the Trustee under Section 7.06) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, 43 disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.06. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10 PRIORITIES. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: (1) to the Trustee for amounts due under Section 7.06; (2) to Holders for amounts due and unpaid on the Notes for the principal amount, Redemption Price, Change in Control Repurchase Price or any accrued cash interest as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Notes; and (3) the balance, if any, to the Company. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. At least 15 days before such record date, the Trustee shall mail to each Holder and the Company a notice that states the record date, the payment date and the amount to be paid. SECTION 6.11 UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant (other than the Trustee) in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate principal amount of the Notes at the time outstanding. This Section 6.11 shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.12 WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the principal amount, Redemption Price, Change in Control Repurchase Price or any accrued cash interest in respect of Notes, or any interest on such amounts, as contemplated herein, or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, 44 but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING DEFAULT; PRIOR TO DEFAULT. The Trustee, prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all such Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default hereunder has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that (a) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all such Events of Default which may have occurred: (i) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 6.05 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. 45 None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it. The provisions of this Section 7.01 are in furtherance of and subject to Sections 315 and 316 of the TIA. SECTION 7.02 CERTAIN RIGHTS OF THE TRUSTEE. In furtherance of and subject to the TIA and subject to Section 7.01: (a) the Trustee may rely, and shall be protected in acting or refraining from acting upon, any resolution, Officers' Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, Note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Company; (c) the Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture with the request, order or direction of any of the Noteholders pursuant to the provisions of this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; (f) prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all such Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing to do so by the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee 46 by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Company or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Company upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. SECTION 7.03 TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITION OF NOTES OR APPLICATION OF PROCEEDS THEREOF. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any of the Notes or of the proceeds thereof. SECTION 7.04 TRUSTEE AND AGENTS MAY HOLD NOTES; COLLECTIONS, ETC. The Trustee or any agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee or such agent and, subject to Sections 7.08 and 7.13, if operative, may otherwise deal with the Company and receive, collect, hold and retain collections from the Company with the same rights it would have if it were not the Trustee or such agent. SECTION 7.05 MONEYS HELD BY TRUSTEE. Subject to the provisions of Section 8.02 hereof, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the Company or the Trustee shall be under any liability for interest on any moneys received by it hereunder. SECTION 7.06 COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR CLAIM. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) to be agreed to in writing by the Trustee and the Company, and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including (i) the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ and (ii) interest at the prime rate on any disbursements and advances made by the Trustee and not paid by the Company within 5 days after receipt of an invoice for such disbursement or advance) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee and each predecessor Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its 47 part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim of liability in the premises. The obligations of the Company under this Section 7.06 to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Notes, and the Notes are hereby effectively subordinated to such senior claim to such extent. The provisions of this Section 7.06 shall survive the termination of this Indenture. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01 (6) and (7), the expenses (including the reasonable fees and expenses of its counsel) and the compensation for services in connection therewith are to constitute expenses of administration under any bankruptcy law. SECTION 7.07 RIGHT OF TRUSTEE TO RELY ON OFFICERS' CERTIFICATE, ETC. Subject to Sections 7.01 and 7.02, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee. SECTION 7.08 CONFLICTING INTERESTS. If the Trustee has or shall acquire a conflicting interest within the meaning of the TIA, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the TIA. SECTION 7.09 PERSONS ELIGIBLE FOR APPOINTMENT AS TRUSTEE. The Trustee shall at all times be a corporation or banking association and the Trustee and its parent corporation shall at all times have a combined capital and surplus of at least $10,000,000. If such corporation or banking association publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then, for the purposes of this Section 7.09, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.09, the Trustee shall resign immediately in the manner and with the effect specified in Section 7.10. SECTION 7.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE. (a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or all series of Notes by giving written notice of resignation to the Company and by mailing notice thereof by first class mail to the Holders of Notes at their last addresses as they shall appear on the Note register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees by written instrument in duplicate, executed by authority of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed and have accepted appointment within 30 days 48 after the mailing of such notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Noteholder who has been a bona fide Holder of a Note for at least six months may, subject to the provisions of Section 7.11, on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 7.08 with respect to any Notes after written request therefor by the Company or by any Noteholder who has been a bona fide Holder of a Note for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 7.09 and shall fail to resign after written request therefor by the Company or by any Noteholder; or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors of the Company, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.11, any Noteholder who has been a bona fide Holder of a Note for at least six months may on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. If no successor trustee shall have been appointed and have accepted appointment within 30 days after a notice of removal has been given, the removed trustee may petition a court of competent jurisdiction for the appointment of a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Notes at the time outstanding may at any time remove the Trustee and appoint a successor trustee by delivering to the Trustee so removed, to the successor trustee so appointed and to the Company the evidence provided for in Section 1.05 of the action in that regard taken by the Noteholders. (d) Any resignation or removal of the Trustee and any appointment of a successor trustee pursuant to any of the provisions of this Section 7.10 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.11. SECTION 7.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE. Any successor trustee appointed as provided in Section 7.10 shall execute and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all 49 rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee hereunder; but, nevertheless, on the written request of the Company or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 7.06. No successor trustee shall accept appointment as provided in this Section 7.11 unless at the time of such acceptance such successor trustee shall be qualified under the provisions of Section 7.08 and eligible under the provisions of Section 7.09. Upon acceptance of appointment by any successor trustee as provided in this Section 7.11, the Company shall mail notice thereof by first class mail to the Holders of Notes at their last addresses as they shall appear in the register. If the acceptance of appointment is substantially contemporaneous with the resignation, then the notice called for by the preceding sentence may be combined with the notice called for by Section 7.10. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of the Company. SECTION 7.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE. Any corporation or banking association into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or banking association resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or banking association succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation or banking association shall be qualified under the provisions of Section 7.08 and eligible under the provisions of Section 7.09, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Notes so authenticated; and, in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force and effect that this Indenture provides for the certificate of authentication of the Trustee; provided, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. SECTION 7.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The Trustee shall comply with the provisions of Section 311 of the TIA. 50 SECTION 7.14 REPORTS BY THE TRUSTEE. (a) The Trustee shall transmit to Holders and other persons such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the TIA on or before July 15 in each year that such report is required, such reports to be dated as of the immediately preceding May 15. (b) A copy of each such report shall, at the time of such transmission to Holders, be furnished to the Company and be filed by the Trustee with each stock exchange upon which the Notes are listed and also with the SEC. The Company agrees to notify the Trustee when and as the Notes become admitted to trading on any national securities exchange. SECTION 7.15 TRUSTEE TO GIVE NOTICE OF DEFAULT, BUT MAY WITHHOLD IN CERTAIN CIRCUMSTANCES. The Trustee shall transmit to the Holders, as the names and addresses of such Holders appear on the Note register, notice by mail of all Defaults which have occurred, such notice to be transmitted within 90 days after the occurrence thereof, unless such defaults shall have been cured before the giving of such notice; provided that, except in the case of Default in the payment of the principal of, interest on, or other similar obligation with respect to, any of the Notes, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the best interests of the Holders. ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.01 DISCHARGE OF LIABILITY ON NOTES. When (i) all outstanding Notes will become due and payable within one year of their Stated Maturity or (ii) all outstanding Notes are scheduled for redemption within one year and, in either case, the Company has deposited with the Trustee cash sufficient to pay and discharge all outstanding Notes on the date of their Stated Maturity or the scheduled date of redemption, then the Company may discharge its obligations under this Indenture while Notes remain outstanding; provided that the Company shall remain obligated to issue shares upon conversion of the Notes. The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and Opinion of Counsel and at the cost and expense of the Company. SECTION 8.02 REPAYMENT OF THE COMPANY. The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Notes that remains unclaimed for two years, subject to applicable unclaimed property law. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person and the Trustee and the Paying Agent shall have no further liability to the Noteholders with respect to such money or securities for that period commencing after the return thereof. 51 ARTICLE 9 AMENDMENTS SECTION 9.01 WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may amend this Indenture or the Notes without the consent of any Holder for the purposes of, among other things: (1) adding to the Company's covenants for the benefit of the Holders; (2) surrendering any right or power conferred upon the Company; (3) providing for conversion rights of Holders if any reclassification or change of Common Stock or any consolidation, merger, statutory share exchange or other business combination or sale of all or substantially all of the Company's assets occurs; (4) reducing the Conversion Price, provided that the reduction will not adversely affect the interests of Holders in any material respect; (5) complying with the requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (6) making any changes or modifications to this Indenture necessary in connection with the registration of the Notes under the Securities Act as contemplated by the Registration Rights Agreement, provided that this action does not adversely affect the interests of the Holders in any material respect; (7) curing any ambiguity, omission, inconsistency or correcting or supplementing any defective provision contained in this Indenture; provided that such modification or amendment does not, in the good faith opinion of the Board of Directors and the Trustee, adversely affect the interests of the Holders in any material respect; or (8) adding or modifying any other provisions which the Company and the Trustee may deem necessary or desirable and which will not adversely affect the interests of the Holders in any material respect; (9) complying with Article 5; or (10) providing for uncertificated Notes in addition to the Certificated Notes so long as such uncertificated Notes are in registered form for purposes of the Internal Revenue Code of 1986, as amended. SECTION 9.02 WITH CONSENT OF HOLDERS. With the written consent of the Holders of at least a majority in aggregate principal amount of the Notes at the time outstanding or by the adoption of a resolution at a meeting of Holders at which a quorum is present by at least a majority in aggregate principal amount of the Notes represented at the meeting, the Company may modify and amend this Indenture or the Notes and waive noncompliance by the 52 Company. However, without the consent of each Holder affected, a modification, amendment or waiver to this Indenture or the Notes may not: (1) change the maturity of the principal of or any installment of interest on any Note (including any payment of additional interest); (2) reduce the principal amount of, or premium, if any, or interest on (including any payment of additional interest), any Note; (3) reduce the Interest Rate or interest (including additional interest) on any Note; (4) change the currency of payment of principal of, premium, if any, or interest of any Note; (5) impair the right to institute suit for the enforcement of any payment on or with respect to, or conversion of, any Note; (6) except as otherwise permitted or contemplated by provisions of this Indenture concerning corporate reorganizations, adversely affect the repurchase option of Holders upon a Change in Control or the conversion rights of Holders; (7) modify the provisions of this Indenture relating to the pledge of securities as contemplated in Article 12 in a manner adverse to the Holders; (8) modify the subordination provisions of the Notes in a manner adverse to the Holders; or (9) reduce the percentage in aggregate principal amount of Notes outstanding necessary to modify or amend this Indenture or to waive any past default. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. After an amendment under this Section 9.02 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment. SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall comply with the TIA. SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS. Until an amendment, waiver or other action by Holders becomes effective, a consent thereto by a Holder of a Note hereunder is a continuing consent by the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same obligation as the consenting Holder's Note, even if notation of the consent, waiver or action is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder's Note or portion of the Note if the Trustee receives written notice of revocation before the date 53 the amendment, waiver or action becomes effective. After an amendment, waiver or action becomes effective, it shall bind every Noteholder. SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Notes. SECTION 9.06 TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. The Trustee shall sign any supplemental indenture authorized pursuant to this Article 9 if the amendment contained therein does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign such supplemental indenture. In signing such supplemental indenture the Trustee shall be entitled to receive, and (subject to the provisions of Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. SECTION 9.07 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 9.08 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Company and the Trustee, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Notes. ARTICLE 10 CONVERSION SECTION 10.01 CONVERSION RIGHT AND CONVERSION PRICE. Subject to and upon compliance with the provisions of this Article, at the option of the Holder thereof, any Note or any portion of the principal amount thereof which is $1,000 or a whole multiple of $1,000 may be converted (the "Conversion Right") at the principal amount thereof, or of such portion thereof, into duly authorized, fully paid and nonassessable shares of Common Stock, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Right shall expire, subject to the immediately following paragraph, at the close of business on the date of the Stated Maturity of the Notes. 54 In case a Note or portion thereof is called for redemption, the Conversion Right in respect of the Note or the portion so called shall expire at the close of business on the Business Day immediately preceding the Redemption Date, unless the Company defaults in making the payment due upon redemption. In the case of a Change in Control for which the Holder exercises its repurchase right with respect to a Note or portion thereof, the Conversion Right in respect of the Note or portion thereof shall expire at the close of business on the Business Day immediately preceding the Change in Control Repurchase Date. The price at which shares of Common Stock shall be delivered upon conversion (the "Conversion Price") shall be initially equal to $38.51 per share of Common Stock. The Conversion Price shall be adjusted in certain instances as provided in paragraphs (a), (b), (c), (d), (e), (f), (h) and (i) of Section 10.04 and Section 10.12 hereof. SECTION 10.02 EXERCISE OF CONVERSION RIGHT. To exercise the Conversion Right, the Holder of any Note to be converted shall surrender such Note duly endorsed or assigned to the Company or in blank, at the office of any Conversion Agent, accompanied by a duly signed conversion notice substantially in the form attached to the Note to the Company stating that the Holder elects to convert such Note or, if less than the entire principal amount thereof is to be converted, the portion thereof to be converted. Notes surrendered for conversion during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date shall be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest to be received on such succeeding Interest Payment Date on the principal amount of Notes being surrendered for conversion. Notes duly converted pursuant to this Article 10 shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Notes for conversion in accordance with the foregoing provisions (the "Conversion Date"), and at such time the rights of the Holders of such Notes as Holders shall cease, and the Person or Persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the Conversion Date, the Company shall cause to be issued and delivered to such Conversion Agent a certificate or certificates for the number of full shares of Common Stock issuable upon conversion, together with payment in lieu of any fraction of a share as provided in Section 10.03. In the case of any Note which is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Note or Notes of authorized denominations in aggregate principal amount equal to the unconverted portion of the principal amount of such Notes. If shares of Common Stock to be issued upon conversion of a Restricted Note, or shares of Common Stock and Notes to be issued upon conversion of a Restricted Note in part only, are to be registered in a name other than that of the Holder of such Restricted Note, such Holder must deliver to the Conversion Agent a certificate in substantially the form set forth in the form of Note set forth in Exhibit A annexed hereto, dated the date of surrender of such 55 Restricted Note and signed by such Holder, as to compliance with the restrictions on transfer applicable to such Restricted Note. Neither the Trustee nor any Conversion Agent, Registrar or Transfer Agent shall be required to register in a name other than that of the converting Holder, shares of Common Stock or Notes issued upon conversion of any such Restricted Note not so accompanied by a properly completed certificate. If a certificate of Common Stock is issued upon the conversion of a Note that is subject to restrictions on transfer and bearing the Legend or the transfer, exchange or replacement of a certificate of Common Stock subject to restrictions on transfer and bearing the Legend, or if a request is made to remove the Legend on a certificate of Common Stock, the certificate of Common Stock so issued shall bear the Legend, or the Legend shall not be removed, as the case may be, unless there is delivered to the Company and the Common Stock transfer agent (currently, American Stock Transfer & Trust Company), such satisfactory evidence, which shall include an Opinion of Counsel, as may be reasonably required by the Company, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 under the Securities Act or that such certificate of Common Stock is not "restricted" within the meaning of Rule 144 under the Securities Act. Upon (i) provision of such satisfactory evidence, or (ii) notification by the Company to the Common Stock transfer agent of the sale of such Common Stock pursuant to a registration statement that is effective at the time of such sale, the Common Stock transfer agent, at the written direction of the Company, shall deliver a certificate of Common Stock that does not bear the Legend. If the Legend is removed from the certificate of Common Stock and the Common Stock is subsequently held by an Affiliate of the Company, the Legend shall be reinstated. The Company hereby initially appoints the Trustee as the Conversion Agent. SECTION 10.03 FRACTIONS OF SHARES. No fractional shares of Common Stock shall be issued upon conversion of any Note or Notes. If more than one Note shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issued upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof) so surrendered. Instead of any fractional share of Common Stock which would otherwise be issued upon conversion of any Note or Notes (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fraction (calculated to the nearest one-100th of a share) in an amount equal to the same fraction of the Closing Price per share of the Common Stock as of the Trading Day immediately preceding the date of Conversion Date. SECTION 10.04 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be subject to adjustments, calculated by the Company, from time to time as follows: (a) In case the Company shall hereafter pay a dividend or make distribution to all holders of the outstanding Common Stock in shares of Common Stock, the Conversion Price in effect at the opening of business on the Record Date shall be reduced by multiplying such Conversion Price by a fraction: 56 (1) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Record Date (as defined in Section 10.4(f)) fixed for such determination, and (2) the denominator of which shall be the sum of such number of shares of Common Stock and the total number of shares of Common Stock constituting such dividend or other distribution. Such reduction shall become effective immediately after the opening of business on the day following the Record Date. If any dividend or distribution giving rise to an adjustment pursuant to described in this Section 10.04(a) is declared but not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (b) In case the outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day immediately following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock shall be combined into a lesser number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day immediately following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day immediately following the day upon which such subdivision or combination becomes effective. (c) In case the Company shall issue rights or warrants (other than any rights or warrants referred to in Section 10.04(d)) to all holders of its outstanding shares of Common Stock entitling such holders to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price per share (or having a conversion price per share) that is less than the Current Market Price (as defined in Section 10.04(g)) on the Record Date fixed for the determination of stockholders entitled to receive such rights or warrants, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect at the opening of business on the date after such Record Date by a fraction: (1) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Record Date plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase (or the aggregate conversion price of the convertible securities so offered) would purchase at such Current Market Price, and (2) the denominator of which shall be the number of shares of Common Stock outstanding on the close of business on the Record Date plus the total number of additional shares of Common Stock so offered for subscription or purchase (or into which the convertible securities so offered are convertible). 57 Such adjustment shall become effective immediately after the opening of business on the day immediately following the Record Date fixed for determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock (or securities convertible into Common Stock) are not delivered pursuant to such rights or warrants, upon the expiration or termination of such rights or warrants the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered thereunder. In the event that, after the Record Date is fixed, such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any and all consideration received for such rights or warrants, the value of such consideration if other than cash, to be determined by the Board of Directors. (d) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock shares of any class of capital stock of the Company (other than any dividends or distributions to which Section 10.04(a) applies) or evidences of its indebtedness or other assets, including securities, but excluding (1) any rights or warrants referred to in Section 10.04(c), (2) any dividends or distributions in connection with a Conversion Change Event (as defined in Section 10.11) to which Section 10.11 applies and (3) dividends and distributions paid exclusively in cash (the securities described in the foregoing clauses (1), (2) and (3) hereinafter in this Section 10.04(d) called the "excluded securities"), then, in each such case, subject to the second succeeding paragraph of this Section 10.04(d), the Conversion Price shall be adjusted so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Record Date with respect to such distribution by a fraction: (1) the numerator of which shall be the Current Market Price (determined as provided in Section 10.04(g)) on such date less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) on such date of the portion of the securities so distributed (other than excluded securities) applicable to one share of Common Stock (determined on the basis of the number of shares of the Common Stock outstanding on the Record Date), and (2) the denominator of which shall be such Current Market Price. Such reduction shall become effective immediately prior to the opening of business on the day immediately following the Record Date. However, in the event that the then fair market value (as so determined by the Board of Directors) of the portion of the securities so distributed (other than excluded securities) applicable to one share of Common Stock is equal to or greater than the Current Market Price on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Note (or any portion thereof) an amount of the securities so distributed (other than excluded securities) equal to the amount that such Holder would have received had such Holder converted such Note 58 (or portion thereof) immediately prior to such Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 10.04(d) by reference to the actual or when issued trading market for any securities comprising all or part of such distribution (other than excluded securities), it must in doing so consider the prices in such market over the same period (the "Reference Period") used in computing the Current Market Price pursuant to Section 10.04(f) to the extent possible, unless the Board of Directors in a Board Resolution determines in good faith that determining the fair market value during the Reference Period would not be in the best interest of the Holder. Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"): (i) are deemed to be transferred with such shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 10.04(d) (and no adjustment to the Conversion Price under this Section 10.04(d) will be required) until the occurrence of the earliest Trigger Event. If the exercisability of such right or warrant is subject to subsequent events, upon the occurrence of which such right or warrant shall become exercisable to purchase different securities, evidences of indebtedness or other assets or entitle the holder to purchase a different number or amount of the foregoing or to purchase any of the foregoing at a different purchase price, then the occurrence of each such event shall be deemed to be the date of issuance and Record Date with respect to a new right or warrant (and a termination or expiration of the existing right or warrant without exercise by the holder thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto, that resulted in an adjustment to the Conversion Price under this Section 10.04(d): (1) in the case of the distribution by the Company of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder of Common Stock with respect to such rights or warrant (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and 59 (2) in the case of the distribution by the Company of such rights or warrants all of which shall have expired or been terminated without exercise, the Conversion Price shall be readjusted as if such rights and warrants had never been issued. The provisions of this paragraph shall not apply to the Company's preferred stock purchase rights issuable pursuant to the rights agreement dated as of March 13, 2001, as amended as of September 6, 2001, between the Company and American Stock Transfer & Trust Company, as rights agent. For purposes of this Section 10.04(d) and Sections 10.04(a), 10.04(b) and 10.04(c), any dividend or distribution to which this Section 10.04(d) is applicable that also includes shares of Common Stock, a subdivision or combination of Common Stock to which Section 10.04(b) applies, or rights or warrants to subscribe for or purchase shares of Common Stock to which Section 10.04(c) applies (or any combination thereof), there shall be deemed instead to be: (3) a dividend or distribution of the evidences of indebtedness, assets, shares of capital stock, rights or warrants other than such shares of Common Stock or such rights or warrants or such subdivision or combination to which Sections 10.04(a), 10.04(b) and 10.04(c) apply, respectively (and any Conversion Price reduction required by this Section 10.04(d) with respect to such dividend or distribution shall then be made), immediately followed by (4) a dividend or distribution of such shares of Common Stock or such rights or warrants or such subdivision or combination(and any further Conversion Price reduction required by Sections 10.04(a), 10.04(b) and 10.04(c) with respect to such dividend or distribution shall then be made), except: (A) the Record Date of such dividend or distribution shall be substituted as (x) "the date fixed for the determination of stockholders entitled to receive such dividend or other distribution", "Record Date fixed for such determinations" and "Record Date" within the meaning of Section 10.04(a), (y) "the day upon which such subdivision becomes effective" and "the day upon which such combination becomes effective" within the meaning of Section 10.04(b), and (z) as "the date fixed for the determination of stockholders entitled to receive such rights or warrants", "the Record Date fixed for the determination of the stockholders entitled to receive such rights or warrants" and such "Record Date" within the meaning of Section 10.04(c), and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of Section 10.04(a) and any reduction or increase in the number of shares of Common Stock resulting from such subdivision or combination shall be disregarded in connection with such dividend or distribution. 60 (e) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding any cash that is distributed upon a Conversion Change Event to which Section 10.11 applies or as part of a distribution referred to in Section 10.04(d)) or the Company or any of its Subsidiaries purchase any of the Common Stock pursuant to tender offers or exchange offers, in an aggregate amount that, together with: (1) the aggregate amount of any other such dividends and distributions to all holders of Common Stock made exclusively in cash within the 12 months immediately preceding the date of payment of such distribution, and in respect of which no adjustment pursuant to this Section 10.04(e) has been made, and (2) the excess of (i) the aggregate of any cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) of any non-cash consideration payable in respect of any tender offer or exchange offer by the Company or any of its Subsidiaries for all or any portion of the Common Stock concluded within the 12 months immediately preceding the date of such distribution, and in respect of which no adjustment pursuant to this Section 10.04(e) hereof has been made over (ii) the product of (A) the average of the Closing Prices of the Common Stock for each of the five Trading Days to and including the Trading Day immediately preceding the date of announcement of such tender offer or exchange offer multiplied by (B) the number of shares of Common Stock purchased pursuant to such tender offer or exchange offer, exceeds 10% of the product of the Current Market Price of the Common Stock (determined as provided in Section 10.04(f)) on, as applicable, (x) the Record Date with respect to such dividend or distribution times the number of shares of Common Stock outstanding on such date or (y) the Trading Day immediately preceding such announcement date for such tender offer or exchange offer in respect of which such sum is calculated times the number of shares of Common Stock outstanding on such date, then and in each such case, immediately after the close of business on such date, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on such Record Date or Trading Day by a fraction: (i) the numerator of which shall be equal to the Current Market Price on the Record Date or the Trading Day immediately preceding the date of announcement of such tender offer or exchange offer, as applicable, less an amount equal to the quotient of (x) the excess of such combined amount over such 10% and (y) the number of shares of Common Stock outstanding on such Record Date or Trading Day, and (ii) the denominator of which shall be equal to the Current Market Price on such date. However, in the event that the quotient of clauses (x) and (y) in clause (i) above is equal to or greater than the Current Market Price on the Record Date or the Trading Day immediately preceding such announcement date for such tender offer or exchange offer, as applicable, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Note (or any portion thereof) the amount of cash such Holder would have received had such Holder converted such Note (or portion thereof) immediately prior to such Record Date or Trading Day. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. 61 Such reduction (if any) shall become effective immediately prior to the opening of business on the day following the later of the Record Date and the Trading Day immediately preceding such announcement date for such tender offer or exchange offer . In the event that the Company is obligated to purchase shares pursuant to any such tender offer or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender offer or exchange offer had not been made. If the application of this Section 10.04(e) to any tender offer or exchange offer would result in an increase in the Conversion Price, no adjustment shall be made for such tender offer or exchange offer under this Section 10.04(e). (f) For purposes of this Section 10.04, the following terms shall have the meanings indicated: (1) "Current Market Price" shall mean the average of the daily Closing Prices per share of Common Stock for the ten consecutive Trading Days immediately prior to the date in question; provided, however, that if: (i) the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 10.04(a), (b), (c), (d), or (e) occurs during such ten consecutive Trading Days, the Closing Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such other event; (ii) the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 10.04(a), (b), (c), (d), or (e) occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event; and (iii) the "ex" date for the issuance or distribution requiring such computation is prior to the day in question, after taking into account any adjustment required pursuant to clause (i) or (ii) of this proviso, the Closing Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of Section 10.04(d) or (e), whose determination shall be conclusive and set forth in a Board Resolution) of the evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. 62 For purposes of any computation under Section 10.04(e), the Current Market Price of the Common Stock on any date shall be deemed to be the average of the daily Closing Prices per share of Common Stock for such day and the next two succeeding Trading Days; provided, however, that if the "ex" date for any event (other than the tender offer requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 10.04(a), (b), (c), (d), or (e) occurs on or after the last time tenders or exchanges could have been made pursuant to the tender or exchange offer requiring such computation and prior to the day in question, the Closing Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Closing Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, when used: (A) with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Price was obtained without the right to receive such issuance or distribution; (B) with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (C) with respect to any tender or exchange offer, means the first date on which the Common Stock trades regular way on such exchange or in such market after the as of the last time tenders or exchanges could have been made pursuant to such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called for pursuant to this Section 10.04, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Section 10.04 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors. (2) "fair market value" shall mean the amount which a willing buyer would pay a willing seller in an arm's length transaction. (3) "Record Date" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). (g) The Company may make such reductions in the Conversion Price, in addition to those required by Section 10.04(a), (b), (c), (d) or (e), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. 63 To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days and the reduction is irrevocable during the period and the Board of Directors determines in good faith that such reduction would be in the best interests of the Company, which determination shall be conclusive and set forth in a Board Resolution. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to the Trustee and each Holder at the address of such Holder as it appears in the Register a notice of the reduction at least 15 days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period during which it will be in effect. (h) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided, however, that any adjustments which by reason of this Section 10.04(h) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 10 shall be made by the Company and shall be made to the nearest cent or to the nearest one hundredth of a share, as the case may be. No adjustment need be made for a change in the par value or no par value of the Common Stock. (i) In any case in which this Section 10.04 provides that an adjustment shall become effective immediately after a Record Date for an event, the Company may defer until the occurrence of such event (i) issuing to the Holder of any Note converted after such Record Date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such Holder any amount in cash in lieu of any fraction of a share of Common Stock pursuant to Section 10.03. (j) For purposes of this Section 10.04, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. SECTION 10.05 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the Conversion Price is adjusted as herein provided (other than in the case of an adjustment pursuant to the second paragraph of Section 10.04(g) for which the notice required by such paragraph has been provided), the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers' Certificate setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based. Promptly after delivery of such Officers' Certificate, the Company shall prepare a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price and the date on which each adjustment becomes effective, and shall mail such notice to each Holder at the address of such Holder as it appears in the Register within 20 days of the effective date of such adjustment. Failure to deliver such notice shall not affect the legality or validity of any such adjustment. 64 SECTION 10.06 NOTICE PRIOR TO CERTAIN ACTIONS. In case at any time after the date hereof: (1) the Company shall declare a dividend (or any other distribution) on its Common Stock payable otherwise than in cash out of its capital surplus or its consolidated retained earnings; (2) the Company shall authorize the granting to all holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class (or of securities convertible into shares of capital stock of any class) or of any other rights; (3) there shall occur any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, a change in par value, a change from par value to no par value or a change from no par value to par value), or any merger, consolidation, statutory share exchange or other business combination to which the Company is a party and for which approval of any stockholders of the Company is required, or the sale, transfer or conveyance of all or substantially all of the assets of the Company; or (4) there shall occur the voluntary or involuntary dissolution, liquidation or winding up of the Company; the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of Notes pursuant to Section 4.05, and shall cause to be provided to the Trustee and all Holders in accordance with Section 12.02, at least 20 days (or 10 days in any case specified in clause (1) or (2) above) prior to the applicable record or effective date hereinafter specified, a notice stating: (A) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined, or (B) the date on which such reclassification, merger, consolidation, statutory share exchange, business combination, sale, transfer, conveyance, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, merger, consolidation, statutory share exchange, business combination, sale, transfer, conveyance, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings or actions described in clauses (1) through (4) of this Section 10.06. 65 SECTION 10.07 COMPANY TO RESERVE COMMON STOCK. The Company shall at all times use its best efforts to reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock, for the purpose of effecting the conversion of Notes, the full number of shares of fully paid and nonassessable Common Stock then issuable upon the conversion of all Notes outstanding. SECTION 10.08 TAXES ON CONVERSIONS. Except as provided in the next sentence, the Company will pay any and all taxes (other than taxes on income) and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Notes pursuant hereto. A Holder delivering a Note for conversion shall be liable for and will be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the Holder of the Note or Notes to be converted, and no such issue or delivery shall be made unless the Person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid. SECTION 10.09 COVENANT AS TO COMMON STOCK. The Company covenants that all shares of Common Stock which are issued upon conversion of Notes will upon issue be fully paid and nonassessable and, except as provided in Section 10.08, the Company will pay all taxes, liens and charges with respect to the issue thereof. SECTION 10.10 CANCELLATION OF CONVERTED NOTES. All Notes delivered for conversion shall be delivered to the Trustee to be canceled by or at the direction of the Trustee, which shall dispose of the same as provided in Section 2.10. SECTION 10.11 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If any of following events occur, namely: (1) any reclassification or change of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (2) any merger, consolidation, statutory share exchange or other business combination of the Company with another corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock or (3) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, (each of the foregoing a "Conversion Change Event") the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the TIA as in force at the date of execution of such supplemental indenture if such supplemental indenture is then required to so comply) providing that each Note shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) which such Holder would have been entitled to 66 receive upon such Conversion Change Event had such Notes been converted into Common Stock immediately prior to such Conversion Change Event assuming such holder of Common Stock did not exercise its rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such Conversion Change Event (provided that, if the kind or amount of securities, cash or other property receivable upon such Conversion Change Event is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("Non-Electing Share"), then for the purposes of this Section 10.11 the kind and amount of securities, cash or other property receivable upon such Conversion Change Event for each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 10. If, in the case of any such Conversion Change Event, the stock or other securities and assets receivable thereupon by a holder of shares of Common Stock includes shares of stock or other securities and assets of a corporation other than the successor or purchasing corporation, as the case may be, in such Conversion Change Event, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including to the extent practicable the provisions providing for the repurchase rights set forth in Section 3.10 hereof. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the Register, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. The above provisions of this Section 10.11 shall similarly apply to successive reclassifications, changes in Common Stock, mergers, consolidations, statutory share exchanges, other business combinations, sales and conveyances. If this Section 10.11 applies to any event or occurrence, Section 10.04 hereof shall not apply. SECTION 10.12 ADJUSTMENT FOR OTHER DISTRIBUTIONS. If, after the Issue Date of the Securities, the Company pays a dividend or makes a distribution to all holders of its Common Stock consisting of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit of the Company, the Conversion Price shall be adjusted in accordance with the formula: P' = P x 1/(1 + F/M) where: P' = the adjusted Conversion Price. P = the current Conversion Price. M = the average of the Post-Distribution Prices of the Common Stock for the 10 trading days commencing on and including the fifth trading day after the date on which "ex-dividend 67 trading" commences for such dividend or distribution on the principal United States exchange or market on which such securities are then listed or quoted (the "Ex-Dividend Date"). F = the fair market value of the securities distributed in respect of each share of Common Stock, which shall mean the number of securities distributed in respect of each share of Common Stock multiplied by the average of the Post-Distribution Prices of those securities distributed for the 10 trading days commencing on and including the fifth trading day after the Ex-Dividend Date. "Post-Distribution Price" of Capital Stock or any similar equity interest on any date means the closing per unit sale price (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date for trading of such units on a "when issued" basis without due bills (or similar concept) as reported in the composite transactions for the principal United States securities exchange or market on which such Capital Stock or equity interest is traded or, if the Capital Stock or equity interest, as the case may be, is not listed on a United States national or regional securities exchange or market, as reported by the National Association of Securities Dealers Automated Quotation System or by the National Quotation Bureau Incorporated; provided that if on any date such units have not traded on a "when issued" basis, the Post-Distribution Price shall be the closing per unit sale price (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date for trading of such units on a "regular way" basis without due bills (or similar concept) as reported in the composite transactions for the principal United States securities exchange on which such Capital Stock or equity interest is traded or, if the Capital Stock or equity interest, as the case may be, is not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System or by the National Quotation Bureau Incorporated. In the absence of such quotation, the Company shall be entitled to determine the Post-Distribution Price on the basis of such quotations, which reflect the post-distribution value of the Capital Stock or equity interests as it considers appropriate. SECTION 10.13 RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS. The Trustee, subject to the provisions of Section 7.01, and any Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Notes to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or intent of any such adjustments when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee, subject to the provisions of Section 7.01, nor any Conversion Agent shall be accountable with respect to the validity or value (of the kind or amount) of any Common Stock, or of any other securities or property, which may at any time be issued or delivered upon the conversion of any Note; and it or they do not make any representation with respect thereto. Neither the Trustee, subject to the provisions of Section 7.01, nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of stock or share certificates or other securities or property upon the surrender of any Note for the purpose of conversion; and the Trustee, subject to the provisions of Section 7.01, and any Conversion Agent shall not be responsible or liable for any failure of the Company to comply with any of the covenants of the Company contained in this Article. 68 ARTICLE 11 SUBORDINATION SECTION 11.01 AGREEMENT TO SUBORDINATE. The Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness, interest and other obligations of any kind evidenced by the Notes and this Indenture are subordinated in right of payment, to the extent and in the manner provided in this Article 11, to the prior payment in full in cash of all Senior Indebtedness (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that such subordination is for the benefit of the holders of Senior Indebtedness. SECTION 11.02 LIQUIDATION; DISSOLUTION; BANKRUPTCY. In the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relating to the Company or to its assets, or any liquidation, dissolution or other winding-up of the Company, whether voluntary or involuntary, or any assignment for the benefit of creditors or other marshaling of assets or liabilities of the Company (except in connection with the consolidation or merger of the Company or its liquidation or dissolution following the conveyance, transfer or lease of its properties and assets substantially upon the terms and conditions described in Article 5), the holders of Senior Indebtedness will be entitled to receive payment in full in cash of all Senior Indebtedness, or provision shall be made for such payment in full, before the Noteholders will be entitled to receive any payment or distribution of any kind or character (other than with respect to the Initial Pledged Securities pledged as security for the Notes as set forth in Article 12 or any payment or distribution in the form of equity securities or subordinated securities of the Company or any successor obligor that, in the case of any such subordinated securities, are subordinated in right of payment to all Senior Indebtedness that may at the time be outstanding to at least the same extent as the Notes are so subordinated (such equity securities or subordinated securities hereinafter being "Permitted Junior Securities")) on account of principal of, or premium, if any, or additional interest, if any, or interest on the Notes; and any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than a payment or distribution in the form of Permitted Junior Securities), by set-off or otherwise, to which the Noteholders or the Trustee would be entitled but for the provisions of this Article 11 shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. SECTION 11.03 DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS. (a) No payment or distribution of any assets of the Company of any kind or character, whether in cash, property or securities (other than Permitted Junior Securities), may be made by or on behalf of the Company on account of principal of, premium, if any, or interest on the Notes or on account of the purchase, redemption or other acquisition of Notes upon the occurrence of any Payment Default until such Payment Default shall have been cured or waived in writing or shall have 69 ceased to exist or such Designated Senior Indebtedness shall have been discharged or paid in full in cash, except with respect to the Initial Pledged Securities as set forth in Section 11.04. "Payment Default" shall mean a default in payment, whether at scheduled maturity, upon scheduled installment, by acceleration or otherwise, of principal of, or premium, if any, or interest on Designated Senior Indebtedness beyond any applicable grace period. Upon the occurrence of any default or event of default with respect to Designated Senior Indebtedness, other than any Payment Default pursuant to which the maturity thereof may be accelerated (a "Non-Payment Default") and receipt by the Trustee with respect to the Notes of written notice thereof from the trustee or other representative of holders of Designated Senior Indebtedness, of a Non-Payment Default, no payment or distribution of any assets of the Company of any kind or character, whether in cash, property or securities (other than Permitted Junior Securities), may be made by or on behalf of the Company on account of principal of, premium, if any, or interest on the Notes or on account of the purchase, redemption or other acquisition of Notes during a Payment Blockage Period (as defined below). The Payment Blockage Period shall mean the period (each, a "Payment Blockage Period") that will commence upon the date of receipt by the Trustee of written notice from the trustee or such other representative of the holders of the Designated Senior Indebtedness in respect of which the Non-Payment Default exists and shall end on the earliest of: (i) 179 days thereafter (provided that any Designated Senior Indebtedness as to which notice was given shall not theretofore have been accelerated); (ii) the date on which such Non-Payment Default is cured, waived or ceases to exist; (iii) the date on which such Designated Senior Indebtedness is discharged or paid in full; and (iv) the date on which such Payment Blockage Period shall have been terminated by written notice to the Trustee or the Company from the trustee or such other representative initiating such Payment Blockage Period, after which the Company will resume making any and all required payments in respect of the Notes, including any missed payments unless a Payment Default then exists. In any event, not more than one Payment Blockage Period may be commenced during any period of 365 consecutive days. No Non-Payment Default that existed or was continuing on the date of the commencement of any Payment Blockage Period will be, or can be made, the basis for the commencement of a subsequent Payment Blockage Period, unless such Non-Payment Default has been cured or waived for a period of not less than 90 consecutive days subsequent to the commencement of such initial Payment Blockage Period. SECTION 11.04 ACCELERATION OF NOTES. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration. The holders of Senior Indebtedness, outstanding at the time of acceleration, shall be entitled to payment in full, in cash or other payment satisfactory to the holders of Senior Indebtedness, of all obligations with respect to such Senior Indebtedness before 70 the Holders of Notes are entitled to receive any payment or other distribution, except with respect to the Initial Pledged Securities pledged as security pursuant to Article 12. SECTION 11.05 WHEN DISTRIBUTION MUST BE PAID OVER. In the event that, notwithstanding the provisions of Sections 11.02 and 11.03, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder which is prohibited by such provisions, then and in such event such payment shall be held in trust for the benefit of, and shall be paid over and delivered by such Trustee or Holder to, the trustee or any other representative of holders of Senior Indebtedness, as their interest may appear, for application to Senior Indebtedness remaining unpaid until all such Senior Indebtedness has been paid in full in cash after giving effect to any concurrent distribution to or for the holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 11, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 11, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 11.06 NOTICE BY THE COMPANY. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any obligations with respect to the Notes to violate this Article 11, but failure to give such notice shall not affect the subordination of the Notes to the Senior Indebtedness as provided in this Article 11. SECTION 11.07 SUBROGATION. After all Senior Indebtedness is paid in full and until the Notes are paid in full, Holders shall be subrogated (equally and ratably with all other Indebtedness that is equal in right of payment to the Notes) to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Holders have been applied to the payment of Senior Indebtedness. A distribution made under this Article 11 to holders of Senior Indebtedness that otherwise would have been made to Holders is not, as between the Company and Holders, a payment by the Company of the Notes. SECTION 11.08 RELATIVE RIGHTS. This Article 11 defines the relative rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (ii) affect the relative rights of Holders and creditors of Holders other than their rights in relation to holders of Senior Indebtedness; or (iii) prevent the Trustee or any Holder from exercising its available remedies upon a Default or Event of Default, subject to the notice requirement in Section 6.02 and to rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to Holders of Notes. If the Company fails because of this 71 Article 11 to pay principal of or interest on a Note on the Stated Maturity date, the failure is still a Default or Event of Default. SECTION 11.09 SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture. Without in any way limiting the generality of this Section 11.09, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article 11 or the obligations hereunder of the Holders to the holders of Senior Indebtedness, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding or secured; (b) sell, exchange, release, foreclose against or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c) release any Person liable in any manner for the collection of Senior Indebtedness; and (d) exercise or refrain from exercising any rights against the Company, and Subsidiary thereof or any other Person. SECTION 11.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of any Senior Indebtedness, the distribution may be made and the notice given to their trustee or representative. Upon any payment or distribution of assets of the Company referred to in this Article 11, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such representative(s) or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, all holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 11. SECTION 11.11 RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding the provisions of this Article 11 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless a Responsible Officer of the Trustee shall have received at its Corporate Trust Office at least three Business Days prior to the date of such payment written notice of facts that would cause the payment of any obligations with respect to the Notes to violate this Article 11. Only the Company or a representative of the holders of Designated Senior Indebtedness may give the notice. Nothing in this Article 11 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.06. The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. 72 ARTICLE 12 SECURITY SECTION 12.01 SECURITY. (a) At the Closing Time, the Company shall (i) enter into the Pledge Agreement and comply with the terms and provisions thereof and (ii) purchase the Initial Pledged Securities to be pledged to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders in such amount as will be sufficient upon receipt of scheduled interest and principal payments of such Initial Pledged Securities, as computed by the Company and verified for mathematical accuracy by Ernst & Young LLP, independent public accountants, or another nationally recognized firm of independent public accountants selected by the Company, to provide for payment in full of the first six scheduled interest payments due on the Notes. The Initial Pledged Securities shall be pledged by the Company to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders and shall be held by the Collateral Agent in the Collateral Account pending disposition pursuant to the Pledge Agreement. (b) On each relevant Date of Delivery (if such Date of Delivery is different from the Closing Time), the Company shall (i) enter into a supplement to the Pledge Agreement and comply with the terms and provisions thereof and (ii) purchase the Additional Pledged Securities to be pledged to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders in such amount as will be sufficient upon receipt of scheduled interest and principal payments of such Additional Pledged Securities, as computed by the Company and verified for mathematical accuracy by Ernst & Young LLP, independent public accountants, or another nationally recognized firm of independent public accountants selected by the Company, to provide for payment in full of the first six scheduled interest payments due on the Notes issued in connection therewith, or transfer to the Collateral Account the cash necessary to enable the Collateral Agent to purchase the Additional Pledged Securities in accordance with the provisions of the Pledge Agreement. The Additional Pledged Securities shall be pledged by the Company to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders and shall be held by the Collateral Agent in the Collateral Account pending disposition pursuant to the Pledge Agreement. (c) Each Holder, by its acceptance of a Note, consents and agrees to the terms of the Pledge Agreement (including, without limitation, the provisions providing for foreclosure and release of the Pledged Securities) as the same may be in effect or may be amended from time to time in writing by the parties thereto (provided that no amendment that would materially adversely affect the rights of the Holders may be effected without the consent of each Holder affected thereby), and authorizes and directs the Trustee and the Collateral Agent to enter into the Pledge Agreement and to perform its respective obligations and exercise its respective rights thereunder in accordance therewith. The Company will do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Pledge Agreement, to assure and confirm to the Trustee and the Collateral Agent the security interest in the Pledged Securities contemplated hereby, by the Pledge Agreement or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purpose herein expressed. The Company shall take, or shall cause to be taken, upon request of the Trustee or 73 the Collateral Agent, any and all actions reasonably required to cause the Pledge Agreement to create and maintain, as security for the obligations of the Company under this Indenture and the Notes as provided in the Pledge Agreement, valid and enforceable first priority perfected liens in and on all the Pledged Securities, in favor of the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders, superior to and prior to the rights of third Persons and subject to no other Liens. (d) The release of any Pledged Securities pursuant to the Pledge Agreement will not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Pledged Securities are released pursuant to this Indenture and the Pledge Agreement. To the extent applicable, the Company shall cause Section 314(d) of the TIA relating to the release of property or securities from the Lien and security interest of the Pledge Agreement and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Pledge Agreement to be complied with. Any certificate or opinion required by Section 314(d) of the TIA may be made by an Officer of the Company, except in cases where Section 314(d) of the TIA requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected by the Company. (e) The Company shall cause Section 314(b) of the TIA, relating to Opinions of Counsel regarding the Lien under the Pledge Agreement, to be complied with. The Trustee may, to the extent permitted by Section 7.01 and 7.02 hereof, accept as conclusive evidence of compliance of the foregoing provisions the appropriate statements contained in such Opinions of Counsel. (f) The Trustee and the Collateral Agent may, in their sole discretion and without the consent of the Holders, on behalf of the Holders, take all actions it deems necessary or appropriate in order to (i) enforce any of the terms of the Pledge Agreement and (ii) collect and receive any and all amounts payable in respect of the obligations of the Company thereunder. The Trustee and the Collateral Agent shall have the authority necessary in order to institute and maintain such suits and proceedings as the Trustee and the Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders in the Pledged Securities (including the authority to institute and maintain suits or proceedings to restrain the enforcement of, or compliance with, any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders, the Collateral Agent or the Trustee). (g) Beyond the exercise of reasonable care in the custody and preservation thereof, the Trustee and the Collateral Agent shall have no duty as to any Pledged Securities in their possession or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto, and the Trustee and the Collateral Agent shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Pledged Securities. The Trustee and the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Securities in its possession if the Pledged Securities are accorded treatment substantially equal to 74 that which it accords its own property or property held in similar accounts and shall not be liable or responsible for any loss or diminution in the value of any of the Pledged Securities, by reason of the act or omission of the Collateral Agent, any carrier, forwarding agency or other agent or bailee selected by the Trustee in good faith. (h) The Trustee shall not be responsible for the existence, genuineness or value of any of the Pledged Securities or for the validity, perfection, priority or enforceability of the Liens in any of the Pledged Securities, whether impaired by operation of law or otherwise, for the validity or sufficiency of the Pledged Securities or any agreement or assignment contained therein, for the validity of the title of the Company to the Pledged Securities, for insuring the Pledged Securities or for the payment of taxes, charges, assessments or Liens upon the Pledged Securities or otherwise as to the maintenance of the Pledged Securities. The Trustee shall have no duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture or the Pledge Agreement by the Company or the Collateral Agent. ARTICLE 13 MEETINGS OF HOLDERS OF NOTES SECTION 13.01 PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Holders of Notes may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Notes. SECTION 13.02 CALL, NOTICE AND PLACE OF MEETINGS. (a) The Trustee may at any time call a meeting of Holders of Notes for any purpose specified in Section 13.01, to be held at such time and at such place in the Borough of Manhattan, The City of New York as the Trustee shall determine. Notice of every meeting of Holders of Notes, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 14.02, not less than 20 nor more than 90 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in aggregate principal amount at Stated Maturity of the outstanding Notes shall have requested the Trustee to call a meeting of the Holders of Notes for any purpose specified in Section 13.01, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 20 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Notes in the amount specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York for such meeting and may call such meeting for such purposes by giving notice thereof as provided in paragraph (a) of this Section. SECTION 13.03 PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled to vote at any meeting of Holders of Notes, a Person shall be (a) a Holder of one or more outstanding Notes on the applicable record date or (b) a Person appointed by an instrument in writing as 75 proxy for a Holder or Holders of one or more outstanding Notes by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 13.04 QUORUM; ACTION. The Persons entitled to vote a majority in aggregate principal amount at Stated Maturity of the outstanding Notes shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Notes, be dissolved. In any other case, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such reconvened meeting, such reconvened meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such reconvened meeting (subject to repeated applications of this sentence). Notice of the reconvening of any adjourned meeting shall be given as provided in Section 13.02(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage of the principal amount at Stated Maturity of the outstanding Notes which shall constitute a quorum. Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum, the Persons entitled to vote 25% in aggregate principal amount at Stated Maturity of the outstanding Notes at the time shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters (except as limited by the proviso to Section 10.02) shall be effectively passed and decided if passed or decided by not less than a majority in aggregate principal amount at Stated Maturity of the outstanding Notes represented and entitled to vote at such meeting. Any resolution passed or decisions taken at any meeting of Holders of Notes duly held in accordance with this Section shall be binding on all the Holders of Notes, whether or not present or represented at the meeting. The Trustee shall, in the name and at the expense of the Company, notify all the Holders of Notes of any such resolutions or decisions pursuant to Section 14.02. SECTION 13.05 DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Notes in regard to proof of the holding of Notes and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any 76 such regulations, the holding of Notes shall be proved in the manner specified in Section 1.05 and the appointment of any proxy shall be proved in the manner specified in Section 1.05. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman (which may be the Trustee) of the meeting, unless the meeting shall have been called by the Company or by Holders of Notes as provided in Section 13.02(b), in which case the Company or the Holder of Notes calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in aggregate principal amount at Stated Maturity of the outstanding Notes represented at the meeting. (c) At any meeting, each Holder of a Note or proxy shall be entitled to one vote for each $1,000 principal amount at Stated Maturity of Notes held or represented by him; PROVIDED, HOWEVER, that no vote shall be cast or counted at any meeting in respect of any Note challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Note or proxy. (d) Any meeting of Holders of Notes duly called pursuant to Section 13.02 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in aggregate principal amount at Stated Maturity of the outstanding Notes represented at the meeting, and the meeting may be held as so adjourned without further notice. SECTION 13.06 COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The vote upon any resolution submitted to any meeting of Holders of Notes shall be by written ballots on which shall be subscribed the signatures of the Holders of Notes or of their representatives by proxy and the principal amounts and serial numbers of the outstanding Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of Holders of Notes shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 14.02 and, if applicable, Section 14.04. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. 77 ARTICLE 14 MISCELLANEOUS SECTION 14.01 TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control. SECTION 14.02 NOTICES. Any request, demand, authorization, notice, waiver, consent, election, communication or other act of Noteholders shall be in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by guaranteed overnight courier) to the following addresses: if to the Company: Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, NY 11797 Attention: Gregory A. Robbins Telephone No.: (516) 677-0200 Facsimile No.: (516) 677-0380 with a copy to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Rory A. Greiss Telephone No.: (212) 836-8261 Facsimile No.: (212) 836-8689 if to the Trustee: State Street Bank and Trust Company, N.A. 61 Broadway, 15th Floor, New York, New York 10006 Attention: Corporate Trust Administration (Veeco Instruments Convertible Subordinated Notes due 2008) Telephone No.: (212) 612-3267 Facsimile No.: (212) 612-3202 The Company or the Trustee by notice given to the other in the manner provided above may designate additional or different addresses for subsequent notices or communications. Any notice or communication given to a Noteholder shall be in writing and mailed to the Noteholder, by first-class mail, postage prepaid, at the Noteholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed 78 within the time prescribed. Such notice shall be conclusively deemed to have been given and received by Noteholders when such notice is mailed, whether or not such Noteholder receives such notice. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee. In case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification of Noteholders as shall be made with the approval of the Trustee, which approval shall not be unreasonably withheld, shall constitute a sufficient notification to such Noteholders for every purpose hereunder. If the Company mails a notice or communication to the Noteholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar. SECTION 14.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of TIA Section 312(c). SECTION 14.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee or any Paying Agent to take any action under this Indenture, the Company shall furnish to the Trustee or the Paying Agent: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with; except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such application or request, no additional certificate or opinion need be furnished. SECTION 14.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each Officers' Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture (excluding certificates provided by officers as to defaults) shall include: (1) a statement that each person making such Officers' Certificate or Opinion of Counsel has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers' Certificate or Opinion of Counsel are based; 79 (3) a statement that, in the opinion of each such person, that he or she has made such examination or investigation as is necessary to enable such person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of such person, such covenant or condition has been complied with. SECTION 14.06 SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14.07 RULES BY TRUSTEE, PAYING AGENT, CONVERSION AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Noteholders. The Registrar, Conversion Agent and the Paying Agent may make reasonable rules for their functions. SECTION 14.08 BENEFITS OF INDENTURE. Except as provided in the next sentence, nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns hereunder and the Holders of Notes, any benefit or legal or equitable right, remedy or claim under this Indenture. The provisions of Article 11 are intended to be for the benefit of, and shall be enforceable directly by, the holders of Senior Indebtedness. SECTION 14.09 LEGAL HOLIDAYS. A "Legal Holiday" is any day other than a Business Day. If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding business day that is not a Legal Holiday, and, if the action to be taken on such date is a payment in respect of the Notes, no interest, if any, shall accrue for the intervening period. SECTION 14.10 GOVERNING LAW. THIS INDENTURE AND THE NOTES WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. SECTION 14.11 NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Noteholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Notes. SECTION 14.12 SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. 80 SECTION 14.13 MULTIPLE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. 81 IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written. VEECO INSTRUMENTS INC. By: /s/ John F. Rein, Jr. ----------------------------------------- Name: John F. Rein, Jr. Title: Executive Vice President, Chief Financial Officer and Secretary STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee By: /s/ Jean Clarke ------------------------------------------ Name: Jean Clarke Title: Assistant Vice President EXHIBIT A-1 [FORM OF FACE OF GLOBAL NOTE] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION AS SET FORTH BELOW. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE INITIAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH VEECO INSTRUMENTS INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUED UPON CONVERSION OF SUCH NOTE, EXCEPT (A) TO THE COMPANY OR ANY AFFILIATE THEREOF, (B) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TO A REGISTRATION A-1-1 STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS NOTE TO STATE STREET BANK AND TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). THE HOLDER MUST, PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE), FURNISH TO STATE STREET BANK AND TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) ABOVE OR UPON OR AFTER THE RESTRICTION TERMINATION DATE. A-1-2 VEECO INSTRUMENTS INC. 4 1/8% Convertible Subordinated Notes due 2008 CUSIP NO. __________ No.: __ Issue Date: December 21, 2001 VEECO INSTRUMENTS INC., a Delaware corporation, promises to pay to Cede & Co. or registered assigns, the principal sum of [_______________] DOLLARS ($[_____________]) on December 21, 2008. This Note shall bear interest as specified on the other side of this Note. This Note is convertible as specified on the other side of this Note. Additional provisions of this Note are set forth on the other side of this Note. Dated: December 21, 2001 VEECO INSTRUMENTS INC. By --------------------------------- Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee, certifies that this is one of the Notes referred to in the within-mentioned Indenture (as defined on the other side of this Note). By --------------------------------------- Authorized Signatory Dated: ----------------------------------- A-1-3 [FORM OF REVERSE SIDE OF NOTE] 4 1/8% Convertible Subordinated Note due 2008 Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture unless otherwise indicated. 1. Cash Interest. The Company promises to pay interest at the Interest Rate in cash on the principal amount of this Note. The Company will pay cash interest semiannually in arrears on June 21 and December 21 of each year (each an "Interest Payment Date"), beginning on June 21, 2002, to Holders of record at the close of business on the preceding June 6 and December 6 (whether or not a business day) (each a "Regular Record Date"), as the case may be, immediately preceding such Interest Payment Date. Cash interest on the Notes will accrue from the most recent date to which interest has been paid or duly provided or, if no interest has been paid, from the Issue Date. Cash interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company shall pay cash interest on overdue principal, or if shares of Common Stock (or cash in lieu of fractional shares) in respect of a conversion of this Note in accordance with the terms of Article 10 of the Indenture are not delivered when due, at the rate borne by the Notes, and it shall pay interest in cash on overdue installments of cash interest at the same rate to the extent lawful. All such overdue cash interest shall be payable on demand. Upon a Registration Default, the interest rate borne by the Notes shall be increased as provided in the Registration Rights Agreement. Any amount of additional interest will be payable in cash semiannually, in arrears, on each Interest Payment Date and will cease to accrue on the date the Registration Default is cured. The Holder of this Security is entitled to the benefits and is subject to the obligations of the Registration Rights Agreement. 2. Method of Payment. Subject to the terms and conditions of the Indenture, the Company will make payments in respect of the principal of, premium, if any, and cash interest on this Note and in respect of Redemption Prices and Change in Control Repurchase Prices to Holders who surrender Notes to a Paying Agent to collect such payments in respect of the Notes. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. A Holder with an aggregate principal amount in excess of $5,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder. Any payment required to be made on any day that is not a Business Day will be made on the next succeeding Business Day. 3. Paying Agent, Conversion Agent and Registrar. Initially, State Street Bank and Trust Company, N.A. (the "Trustee"), will act as Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any Paying A-1-4 Agent, Conversion Agent, Registrar or co-registrar without notice, other than notice to the Trustee except that the Company will maintain at least one Paying Agent in the State of New York, City of New York, The Borough of Manhattan, which shall initially be an office or agency of the Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar. 4. Indenture. The Company issued the Notes under an Indenture dated as of December 21, 2001 (the Indenture"), between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as in effect from time to time (the "TIA"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the TIA for a statement of those terms. The Notes are general unsecured obligations of the Company (except as provided in Paragraph 16 hereof) limited to $200,000,000 aggregate principal amount, or $220,000,000 aggregate principal amount if the Over-Allotment Option is exercised fully (subject to Section 2.07 of the Indenture). The Indenture does not limit other indebtedness of the Company, secured or unsecured. Optional Redemption. This Note is not redeemable prior to December 21, 2004. This Note may be redeemed in whole or in part, upon not less than 20 nor more than 60 days notice, at any time on or after December 21, 2004 and prior to Stated Maturity, at the option of the Company, at the redemption price (expressed as percentages of the principal amount) set forth in the table below if redeemed during the periods below, plus any interest accrued but not paid prior to (but not including) the Optional Redemption Date. PERIOD REDEMPTION PRICES ------ ----------------- December 21, 2004 through December 20, 2005 102.36% December 21, 2005 through December 20, 2006 101.77% December 21, 2006 through December 20, 2007 101.18% Thereafter 100.59% If fewer than all the Notes are to be redeemed, the Trustee shall select the particular Notes to be redeemed from the outstanding Notes by the methods as provided in the Indenture. If any Note selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Note so selected, the converted portion of such Note shall be deemed to be the portion selected for redemption (provided, however, that the Holder of such Note so converted and deemed redeemed shall not be entitled to any additional A-1-5 interest payment as a result of such deemed redemption than such Holder would have otherwise been entitled to receive upon conversion of such Note). Notes which have been converted during a selection of Notes to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection. On and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption, unless the Company defaults in the payment of the Redemption Price and accrued and unpaid interest. Notice of redemption will be given by the Company to the Holders as provided in the Indenture. No sinking fund is provided for the Notes. 6. Repurchase by the Company at the Option of the Holder. If a Change in Control occurs, the Holder, at the Holder's option, shall have the right, in accordance with the provisions of the Indenture, to require the Company to repurchase the Notes (or any portion of the principal amount hereof that is at least $1,000 or any whole multiple thereof, provided that the portion of the principal amount of this Note to be outstanding after such repurchase is at least equal to $1,000) at the Change in Control Repurchase Price in cash or Common Stock or a combination thereof, plus any interest accrued and unpaid to the Change in Control Repurchase Date. Subject to the conditions provided in the Indenture, the Company may elect to pay the Change in Control Repurchase Price (to the extent not paid in cash) by delivering a number of shares of Common Stock equal to (i) the Change in Control Repurchase Price divided by (ii) 95% of the average of the Closing Prices per share for the five consecutive Trading Days immediately preceding and including the third Trading Day prior to the Change in Control Repurchase Date. No fractional shares of Common Stock will be issued upon repurchase of any Notes. Instead of any fractional share of Common Stock which would otherwise be issued upon conversion of such Notes, the Company shall pay a cash adjustment as provided in the Indenture. A Change in Control Repurchase Notice will be given by the Company to the Holders as provided in the Indenture. To exercise a repurchase right, a Holder must deliver to the Trustee a written notice as provided in the Indenture. Holders have the right to withdraw any Change in Control Repurchase Notice by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. 7. Notice of Redemption. Notice of an optional redemption will be mailed at least 20 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at the Holder's registered address. If money sufficient to pay the Redemption Price of all Notes (or portions A-1-6 thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, immediately after such Redemption Date interest ceases to accrue on such Notes or portions thereof. Notes in denominations larger than $1,000 of principal amount may be redeemed in part but only in whole multiples of $1,000 of principal amount. 8. Conversion. Subject to the next two succeeding sentences, a Holder of a Note may convert it into Common Stock of the Company at any time before the close of business on December 21, 2008. If the Note is called for redemption, the Holder may convert it at any time before the close of business on the Business Day preceding the Redemption Date. A Note in respect of which a Holder has delivered a Change in Control Repurchase Notice exercising the option of such Holder to require the Company to purchase such Note may be converted only if such notice of exercise is withdrawn in accordance with the terms of the Indenture. The initial Conversion Price shall be equal to $38.51 per share of Common Stock, subject to adjustment in certain events described in the Indenture. The Company shall pay a cash adjustment as provided in the Indenture in lieu of any fractional share of Common Stock. To convert a Note, a Holder must (1) complete and manually sign the conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Note to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if required. 9. Conversion Arrangement on Call for Redemption. Any Notes called for redemption, unless surrendered for conversion before the close of business on the Business Day preceding the Redemption Date, may be deemed to be purchased from the Holders of such Notes at an amount not less than the Redemption Price, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Notes from the Holders, to convert them into Common Stock of the Company and to make payment for such Notes to the Trustee in trust for such Holders. 10. Denominations; Transfer; Exchange. The Notes are in fully registered form, without coupons, in denominations of $1,000 of principal amount and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes in respect of which a Change in Control Repurchase Notice has been given and not withdrawn (except, in the case of a Note to be purchased in part, the portion of the Note not to be purchased) or any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed. 11. Persons Deemed Owners. A-1-7 The registered Holder of this Note may be treated as the owner of this Note for all purposes. 12. Unclaimed Money or Notes. The Trustee and the Paying Agent shall return to the Company upon written request any money or Notes held by them for the payment of any amount with respect to the Notes that remains unclaimed for two years, subject to applicable unclaimed property law. After return to the Company, Holders entitled to the money or Notes must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 13. Amendment; Waiver. Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Notes may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes at the time outstanding and (ii) certain Defaults may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Notes at the time outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Noteholder, the Company and the Trustee may amend the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes or to make any change that does not adversely affect the rights of any Noteholder, or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA. 14. Defaults and Remedies. Under the Indenture, Events of Default include (1) the Company fails to pay when due the principal of or premium, if any, on any of the Notes at maturity, upon redemption or exercise of a repurchase right or otherwise, whether or not such payment is prohibited by Article 11 of the Indenture; (2) the Company fails to pay an installment of interest (including additional interest, if any) on any of the Notes that continues for 30 days after the date when due, whether or not such payment is prohibited by Article 11 of the Indenture; provided that a failure to make any of the first six scheduled interest payments on the Notes on the applicable Interest Payment Dates will constitute an event of default with no grace period or cure period; (3) the Company fails to deliver shares of Common Stock, together with cash in lieu of fractional shares, when such Common Stock or cash in lieu of fractional shares is required to be delivered upon conversion of a Note and such failure continues for 10 days after such delivery date; (4) the Company fails to perform or observe any other term, covenant or agreement contained in the Notes or the Indenture for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; (5) (A) one or more defaults in the payment of principal of or premium, if any, on any of the Company's Indebtedness (other than Excluded Indebtedness) aggregating $10.0 million or more, when the same becomes due and payable at the scheduled maturity thereof, and such default or defaults shall have continued after any applicable grace period and shall not have been cured or waived within a 30-day period after the date of such default or (B) any of the Company's Indebtedness (other than Excluded Indebtedness) aggregating $10.0 million or more A-1-8 shall have been accelerated or otherwise declared due and payable, or required to be prepaid or repurchased (other than by regularly scheduled required prepayment) prior to the scheduled maturity thereof and such acceleration is not rescinded or annulled within a 30-day period after the date of such acceleration; and (6) certain events of bankruptcy, insolvency or reorganization with respect to the Company or any Significant Subsidiary or any Subsidiaries of the Company which in the aggregate would constitute a Significant Subsidiary. If an Event of Default (other than an Event of Default specified in clause (6) or (7) of Section 6.01 of the Indenture) occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate principal amount of the Notes at the time outstanding, may declare all the Notes to be due and payable immediately after giving at least five days prior notice to the holders of Designated Senior Indebtedness. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes becoming due and payable immediately upon the occurrence of such Events of Default. Noteholders may not enforce the Indenture or the Notes, except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives reasonable indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes at the time outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Noteholders notice of any continuing Default (except a Default in payment of amounts specified in clause (1) or (2) above) if it determines that withholding notice is in their interests. 15. Subordination The payment of principal of, premium, if any, and interest on the Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full in cash of all Senior Indebtedness whether outstanding on the date of the Indenture or thereafter incurred. 16. Trustee Dealings with the Company. Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. Security The Company has entered into the Pledge Agreement and purchased and pledged to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders Pledged Securities in an amount sufficient upon receipt of scheduled interest and principal payments on such securities to provide for the payment in full of the first six scheduled interest payments due on the Notes. The Pledged Securities will be pledged by the Company to the Collateral Agent for the ratable benefit of the Holders and will be held by the Collateral Agent in the Collateral Account pending disbursement pursuant to the Pledge Agreement. 18. No Recourse Against Others. A-1-9 A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Noteholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 19. Authentication. This Note shall not be valid until an authorized signatory of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Note. 20. Abbreviations. Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 21. GOVERNING LAW. THE INDENTURE AND THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. ---------------------- The Company will furnish to any Noteholder upon written request and without charge a copy of the Indenture which has in it the text of this Note in larger type. Requests may be made to: Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, NY 11797 Attention: Investor Relations A-1-10
ASSIGNMENT FORM CONVERSION NOTICE To assign this Note, fill in the form below: To convert this Note into Common Stock of the Company, check the box: I or we assign and transfer this Note to /_/ - ------------------------------------------------------- - ------------------------------------------------------- To convert only part of this Note, state the principal amount to be converted (which must be $1,000 or an (Insert assignee' soc. sec. or tax ID no.) integral multiple of $1,000): $ - ------------------------------------------------------- ------------------------- - ------------------------------------------------------- If you want the stock certificate made out in another person's name, fill in the form below: - ------------------------------------------------------- (Print or type assignee's name, address and zip code) ----------------------------------------------------- ----------------------------------------------------- (Insert other person's social sec. or tax ID no.) And irrevocably appoint ----------------------------------------------------- _____________________ agent to transfer this Note on the books of the Company. The agent may substitute another to ----------------------------------------------------- act for him. ----------------------------------------------------- ----------------------------------------------------- (Print or type other person's name, address and zip code)
- -------------------------------------------------------------------------------- Date: _____________________ Your Signature:___________________________________ - -------------------------------------------------------------------------------- (Sign exactly as your name appears on the other side of this Note) Signature Guarantee*:_______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee A-1-11 EXHIBIT A-2 [Form of Certificated Note] THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. TBY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE INITIAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON WHICH VEECO INSTRUMENTS INC. (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUED UPON CONVERSION OF SUCH NOTE, EXCEPT (A) TO THE COMPANY OR ANY AFFILIATE THEREOF, (B) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION DATE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS NOTE TO STATE STREET BANK AND TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). THE HOLDER MUST, PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE), FURNISH TO STATE STREET BANK AND TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM A-2-1 THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 2(D) ABOVE OR UPON OR AFTER THE RESTRICTION TERMINATION DATE. [THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.] A-2-2 VEECO INSTRUMENTS INC. 4 1/8% Convertible Subordinated Notes due 2008 CUSIP NO. No.: Issue Date: VEECO INSTRUMENTS INC., a Delaware corporation, promises to pay to Cede & Co. or registered assigns, the principal sum of [___________] DOLLARS ($[__________]) on December 21, 2008. This Note shall bear interest as specified on the other side of this Note. This Note is convertible as specified on the other side of this Note. Additional provisions of this Note are set forth on the other side of this Note. Dated: VEECO INSTRUMENTS INC. By -------------------------------- Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee, certifies that this is one of the Notes referred to in the within-mentioned Indenture (as defined on the other side of this Note). By ------------------------------------- Authorized Signatory Dated: --------------------------------- A-2-3 [Text of Reverse Side of Note] Use Exhibit A-1 Text A-2-4 EXHIBIT B-1 Transfer Certificate In connection with any transfer of any of the Notes within the period prior to the expiration of the holding period applicable to the sales thereof under Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act") (or any successor provision), the undersigned registered owner of this Note hereby certifies with respect to $____________ principal amount of the above-captioned Notes presented or surrendered on the date hereof (the "Surrendered Notes") for registration of transfer, or for exchange or conversion where the Notes issuable upon such exchange or conversion are to be registered in a name other than that of the undersigned registered owner (each such transaction being a "transfer"), that such transfer complies with the restrictive legend set forth on the face of the Surrendered Notes for the reason checked below: /_/ A transfer of the Surrendered Notes is made to the Company or any Subsidiaries; or /_/ The transfer of the Surrendered Notes complies with Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"); or /_/ The transfer of the Surrendered Notes is pursuant to an effective registration statement under the Securities Act, or /_/ The transfer of the Surrendered Notes is pursuant to another available exemption from the registration requirement of the Securities Act. and unless the box below is checked, the undersigned confirms that, to the undersigned's knowledge, such Notes are not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act (an "Affiliate"). /_/ The transferee is an Affiliate of the Company. DATE: Signature(s) (If the registered owner is a corporation, partnership or fiduciary, the title of the Person signing on behalf of such registered owner must be stated.) A-2-1 EXHIBIT C-1 Registration Rights Agreement C-1-1 EX-10.1 4 a2068746zex-10_1.txt EXHIBIT 10.1 EXECUTION COPY Exhibit 10.1 COLLATERAL PLEDGE AND SECURITY AGREEMENT Dated as of December 21, 2001 among VEECO INSTRUMENTS INC. as Pledgor, STATE STREET BANK AND TRUST COMPANY, N.A. as Trustee, STATE STREET BANK AND TRUST COMPANY, N.A. as Collateral Agent, and STATE STREET BANK AND TRUST COMPANY as Securities Intermediary This Collateral Pledge and Security Agreement (as supplemented from time to time, this "Pledge Agreement") is made and entered into as of December 21, 2001 among VEECO INSTRUMENTS INC., a Delaware corporation (the "Pledgor"), having its principal offices at 100 Sunnyside Boulevard, Woodbury, New York 11797, STATE STREET BANK AND TRUST COMPANY, N.A., a national banking association, having its principal corporate trust office at 61 Broadway, 15th Floor, New York, New York, 10006, as trustee (in such capacity, the "Trustee") for the holders (the "Holders") of the Notes (as defined herein) issued by the Pledgor under the Indenture referred to below, STATE STREET BANK AND TRUST COMPANY, N.A., a national banking association, having a corporate trust office at 61 Broadway, 15th Floor, New York, New York, 10006, as collateral agent for the Trustee and the holders from time to time of the Notes referred to below (in such capacity, the "Collateral Agent"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, having an office where it maintains securities accounts for customers at Two Avenue de Lafayette, 6th Floor. Boston, Massachusetts 02110, as securities intermediary (in such capacity, the "Securities Intermediary"). W I T N E S S E T H: WHEREAS, the Pledgor and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Thomas Weisel Partners LLC (collectively, the "Initial Purchasers") are parties to a Purchase Agreement dated December 18, 2001 (the "Purchase Agreement"), pursuant to which the Pledgor will issue and sell to the Initial Purchasers $200,000,000 aggregate principal amount of 41/8% Convertible Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Pledgor and the Trustee have entered into that certain indenture dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the "Indenture"), pursuant to which the Pledgor is issuing the Notes on the date hereof; WHEREAS, pursuant to the Indenture, the Pledgor is required to purchase, or cause the purchase of, and pledge to the Collateral Agent for the benefit of the Trustee and the Holders, at the Closing Time (as defined in the Purchase Agreement) or the relevant Date of Delivery (as defined in the Purchase Agreement), U.S. Government Obligations (as defined in the Indenture) in an amount that will be sufficient upon receipt of scheduled interest and principal payments on such securities, as determined by the Pledgor and verified, as to mathematical accuracy, in the written opinion of Ernst & Young LLP (the form of which is attached hereto as Exhibit A; and for the purposes hereof, the "opinion" referred to in Sections 6(d) and (e) shall mean the determination by the Pledgor and verification by a firm in substantially the form of Exhibit A) or another nationally recognized firm of independent public accountants selected by the Pledgor and delivered to the Trustee, to provide for payment in full of the first six scheduled interest payments due on the Notes (such obligation, together with the obligation to repay the principal, premium, if any, and interest (including additional interest, if any) on the Notes in the event that the Notes become due and payable prior to such time as the first six scheduled interest payments thereon shall have been paid in full, being collectively referred to herein as the "Obligations"); WHEREAS, the Collateral Agent has caused the Securities Intermediary to establish an account (the "Collateral Account") with the Securities Intermediary, at its office at Two Avenue de Lafayette, 6th Floor, Boston, Massachusetts 02110, Account No. 129248-002, in the name of State Street Bank and Trust Company, N.A., as Collateral Agent for the benefit of the Trustee and holders of the 41/8 % Convertible Subordinated Notes Due 2008 of Veeco Instruments Inc. and designated as "STATE STREET BANK COLL AGENT FOR Veeco"; and WHEREAS, it is a condition precedent to the purchase of the Notes by the Initial Purchasers pursuant to the Purchase Agreement that the Pledgor apply certain of the proceeds of the offering of the Notes to the purchase of the Pledged Securities (as defined below) and deposit, or cause to be deposited, the Pledged Securities into the Collateral Account to be held therein subject to the terms of this Pledge Agreement and that the Pledgor shall have granted the assignment and security interest and made the pledge and assignment contemplated by this Pledge Agreement. NOW, THEREFORE, in consideration of the premises herein contained, and in order to induce the Initial Purchasers to purchase the Notes, the Pledgor, the Trustee, the Collateral Agent and the Securities Intermediary hereby agree, for the benefit of the Initial Purchasers and for the ratable benefit of the Holders, as follows: SECTION 1. Definitions; Appointment; Deposit and Investment. 1.1 Definitions. (a) Unless otherwise defined in this Pledge Agreement, terms defined or referenced in the Indenture are used in this Pledge Agreement as such terms are defined or referenced therein. (b) Unless otherwise defined in the Indenture or in this Pledge Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in effect in the State of New York ("N.Y. Uniform Commercial Code") from time to time and/or in Section 357.2 of the Treasury Regulations (as defined in Section 1.1(c)) are used in this Pledge Agreement as such terms are defined in such Article 8 or 9 and/or such Section 357.2. (c) In this Pledge Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Additional Pledged Securities" has the meaning specified in Section 1.3 hereof. "Cash Equivalents" means, to the extent owned by the Pledgor free and clear of all Liens other than Liens created hereunder, U.S. Government Obligations. "C.F.R." means U.S. Code of Federal Regulations. "Closing Time" has the meaning specified in the Purchase Agreement. "Collateral" has the meaning specified in Section 1.3 hereof. "Collateral Account" has the meaning specified in the recitals of the parties hereto. "Collateral Agent" has the meaning specified in the recitals of the parties hereto. 2 "Collateral Investments" has the meaning specified in Section 5 hereof. "Date of Delivery" has the meaning specified in the Purchase Agreement. "entitlement holder" has the meaning specified in N.Y. Uniform Commercial Code Section 8-102(a)(7) or, in respect of any Book-entry Security, the meaning specified for "Entitlement Holder" in 31 C.F.R. Section 357.2 or, as applicable to such Book-entry Security, the corresponding federal book-entry regulations. "FRBB" means Federal Reserve Bank of Boston. "FRBB Account" means the FRBB Member Securities Account maintained in the name of the Securities Intermediary by the FRBB. "FRBB Member" means any Person that is eligible to maintain (and that maintains) with the FRBB one or more FRBB Member Securities Accounts in such Person's name. "FRBB Member Securities Account" means, in respect of any Person, the Participant's Securities Account maintained in the name of such Person at the FRBB, to which account U.S. Government Obligations held for such Person are or may be credited. "Holders" has the meaning specified in the recitals of the parties hereto. "Initial Pledged Securities" has the meaning specified in Section 1.3 hereof. "Initial Purchasers" has the meaning specified in the recitals of the parties hereto. "Notes" has the meaning specified in the recitals of the parties hereto. "N.Y. Uniform Commercial Code" has the meaning specified in Section 1.1(b). "Obligations" has the meaning specified in the recitals of the parties hereto. "Pledge Agreement" has the meaning specified in the recitals of the parties hereto. "Pledged Securities" has the meaning specified in Section 1.3 hereof. "Pledgor" has the meaning specified in the recitals of the parties hereto. "Purchase Agreement" has the meaning specified in the recitals of the parties hereto. "Securities Intermediary" has the meaning specified in the recitals of the parties hereto. "securities intermediary" means a Person that is a "securities intermediary" (as defined in N.Y. Uniform Commercial Code Section 8-102(a)(14)) and, in respect of any Book-entry Security, a "Securities Intermediary" (as defined in 31 C.F.R. Section 357.2 or, as applicable to such Book-entry Security, as defined in the corresponding federal book-entry regulations). 3 "security" has the meaning specified in Section 8-102(a)(15) of the N.Y. Uniform Commercial Code or, in respect of any Book-entry Security, has the meaning specified for "Security" in 31 C.F.R. Section 357.2 (or, as applicable to such Book-entry Security, the corresponding federal book-entry regulations). "security entitlement" has the meaning specified in N.Y. Uniform Commercial Code Section 8-102(a)(17) or, in respect of any Book-entry Security, has the meaning specified for "Security Entitlement" in 31 C.F.R. Section 357.2 (or, as applicable to such Book-entry Security, the corresponding federal book-entry regulations). "Settlement Date" means, as to any U.S. Government Obligations, the date on which the purchase of such U.S. Government Obligations shall have been settled. "Supplement" has the meaning specified in Section 1.3 hereof, and shall be substantially in the form of Exhibit B hereto. "Termination Date" means the earlier of (a) the date of the payment in full in cash of each of the first six scheduled interest payments due on the Notes under the terms of the Indenture and (b) the date of the payment in full in cash of all obligations due and owing under this Pledge Agreement, the Indenture and the Notes, in the event such obligations become due and payable prior to the payment of the first six scheduled interest payments on the Notes. "Treasury Regulations" means (a) the federal regulations contained in 31 C.F.R. Part 357 (including, without limitation, Section 357.2, Section 357.10 through Section 357.14 and Section 357.41 through Section 357.44 of 31 C.F.R.) and (b) to the extent substantially identical to the federal regulations referred to in clause (a) above (as in effect from time to time) the federal regulations governing other U.S. Government Obligations. "Trustee" has the meaning specified in the recitals of parties hereto. "uncertificated security" has the meaning specified in Section 8-102(a)(18) of the N.Y. Uniform Commercial Code. 1.2 Appointment of the Collateral Agent. The Trustee hereby appoints the Collateral Agent as Collateral Agent in accordance with the terms and conditions set forth herein and the Collateral Agent hereby accepts such appointment. 1.3 Pledge and Grant of Security Interest. As security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, the Pledgor hereby assigns and pledges to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders and hereby grants to the Collateral Agent for the benefit of the Trustee and for the ratable benefit of the Holders, a lien on and first priority perfected security interest in all of the Pledgor's right, title and interest in, to and under the following property: (a) (i) the U.S. Government Obligations identified by CUSIP No. in Schedule I to this Pledge Agreement (the "Initial Pledged Securities") and (ii) the U.S. Government Obligations, if any, identified by CUSIP No. in a supplement or supplements (each, a "Supplement," the form of which is attached hereto as Exhibit B) to the Pledge Agreement (the "Additional Pledged Securities" and, together with the Initial Pledged Securities, the "Pledged 4 Securities") and the certificates representing the Pledged Securities (if any), the scheduled payments of principal and interest thereon which will be sufficient to provide for payment in full of the first six scheduled interest payments due on the Notes, (b) the Collateral Account, all security entitlements from time to time carried in the Collateral Account, all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing the Collateral Account, (c) all Collateral Investments (as hereinafter defined) from time to time and all certificates and instruments, if any, representing or evidencing the Collateral Investments, and any and all security entitlements to the Collateral Investments, and any and all related securities accounts in which any security entitlements to the Collateral Investments are carried, (d) all notes, certificates of deposit, deposit accounts, checks and other instruments, if any, from time to time hereafter delivered to or otherwise possessed by the Collateral Agent for or on behalf of the Pledgor and specifically designated by the Pledgor to be in substitution for any or all of the then existing Collateral, (e) all interest, dividends, cash, instruments and other property, if any, from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Collateral and (f) all proceeds of any and all of the foregoing Collateral (including, without limitation, proceeds that constitute property of the types described in clauses (a)-(e) of this Section 1.3) and, to the extent not otherwise included, all (i) payments under insurance (whether or not the Trustee or the Collateral Agent is the loss payee thereof) or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral and (ii) cash proceeds of any and all of the foregoing Collateral (such property described in clauses (a) through (f) of this Section 1.3 being collectively referred to herein as the "Collateral"). Without limiting the generality of the foregoing, this Pledge Agreement secures the payment of all amounts that constitute part of the Obligations and would be owed by the Pledgor to the Trustee under the Notes, the Indenture, this Pledge Agreement and any other transaction documents related thereto but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Pledgor. SECTION 2. Establishment and Maintenance of Collateral Account. (a) Prior to or concurrently with the execution and delivery hereof, the Collateral Agent shall cause the Securities Intermediary to establish the Collateral Account on its books as a separate account segregated from all other custodial or collateral accounts at its office at Two Avenue de Lafayette, 6th Floor, Boston, Massachusetts 02110. The Collateral Agent will cause the Securities Intermediary to maintain the Collateral Account as a securities account with the Securities Intermediary. The following provisions shall apply to the establishment and maintenance of the Collateral Account: (i) The Collateral Agent shall cause the Collateral Account to be, and the Collateral Account shall be, separate from all other accounts maintained for the Collateral Agent. (ii) The Collateral Agent shall, in accordance with all applicable laws, have sole dominion and control over the Collateral Account. (iii) It shall be a term and condition of the Collateral Account, and the Pledgor irrevocably instructs the Collateral Agent and the Securities Intermediary, 5 notwithstanding any other term or condition to the contrary in any other agreement, that no amount (including interest on Collateral Investments) shall be released to or for the account of, or withdrawn by or for the account of, the Pledgor or any other Person except as expressly provided in this Pledge Agreement. (b) On (i) or prior to the Closing Time, the Pledgor shall purchase, directly or indirectly, the U.S. Government Obligations listed on Schedule I hereto and, at the Closing Time, the Pledgor shall, directly or indirectly, deliver such U.S. Government Obligations to the Securities Intermediary for credit to the Collateral Account at the Closing Time, and (ii) the relevant Date of Delivery, if any, the Pledgor shall transfer, or cause to be transferred, to the Collateral Agent, an amount in cash to be set forth in the relevant Supplement to the Pledge Agreement, which amount shall be sufficient for the Collateral Agent to purchase the Additional Pledged Securities by depositing all such funds into the Collateral Account. The Collateral Account shall be subject to such applicable laws, and such applicable regulations of the Board of Governors of the Federal Reserve System and of any other appropriate banking or governmental authority, as may now or hereafter be in effect. (c) As soon as practicably possible after receipt of the amount referred to in Section 2(b)(ii) (and not later than the Business Day following the relevant Date of Delivery, (i) the Collateral Agent shall cause the Securities Intermediary to apply such amount to purchase the U.S. Government Obligations (in the name of the Securities Intermediary) listed on the relevant Supplement to the Pledge Agreement hereto, and credit such U.S. Government Obligations to the Collateral Account as Collateral hereunder; and (ii) the Collateral Agent shall cause the Securities Intermediary to ensure that, on the Settlement Date of such U.S. Government Obligations, the FRBB indicates by book-entry that those U.S. Government Obligations being settled on such date are credited to the FRBB Account. (d) The obligations of the Pledgor under Section 2(b)(ii) above and the obligations of the Collateral Agent under Section 2(c) above may be fulfilled by the Pledgor purchasing, directly or indirectly, the U.S. Government Obligations specified under Section 2(c) above for the amount set forth under Section 2(b)(ii) above, and delivering, directly or indirectly, such U.S. Government Obligations to the Securities Intermediary for credit to the Collateral Account at the relevant Date of Delivery. (e) The Collateral Agent will, from time to time, reinvest the proceeds of Collateral that may mature or be sold in such Collateral Investments (in the name of the Securities Intermediary) as it will be directed in writing by the Pledgor, and cause such Collateral Investments to be credited by the Securities Intermediary to the Collateral Account as Collateral hereunder. Any such proceeds that the Pledgor directs the Collateral Agent in writing not to reinvest in Collateral Investments shall be held in the Collateral Account. SECTION 3. Delivery and Control of Collateral. (a) All certificates or instruments representing or evidencing Collateral shall be delivered to and held by or on behalf of the Collateral Agent pursuant hereto and shall be in suitable form 6 for transfer or delivery, or, at the request of the Collateral Agent, shall be accompanied by duly executed instruments of transfer or assignment in blank. In addition, the Collateral Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Collateral for certificates or instruments of smaller or larger denominations. (b) With respect to any Collateral that constitutes a security and is not represented or evidenced by a certificate or instrument, the Pledgor shall cause the issuer thereof either (i) to register the Collateral Agent as the registered owner of such security or (ii) to agree in writing with the Collateral Agent and the Pledgor that such issuer will comply with instructions with respect to such security originated by the Collateral Agent without further consent of the Pledgor, the terms of such agreement to be consistent with the terms of this Agreement (if applicable). (c) With respect to any Collateral that constitutes a security entitlement, the Pledgor shall cause the securities intermediary with respect to such security entitlement either (i) to identify in its records the Collateral Agent as the entitlement holder of such security entitlement against such securities intermediary or (ii) to agree in writing with the Pledgor and the Collateral Agent that such securities intermediary will comply with entitlement orders (that is, notifications communicated to such securities intermediary directing transfer or redemption of the financial asset to which Pledgor has a security entitlement) originated by the Collateral Agent without further consent of the Pledgor, the terms of such agreement to be consistent with the terms of this Agreement (if applicable). (d) With respect to any Collateral that constitutes a securities account, the Pledgor will comply with subsection (c) of this Section 3 with respect to all security entitlements carried in such securities account. (e) Notwithstanding the foregoing, Collateral consisting of U.S. Government Obligations will be deemed delivered to the Collateral Agent when the Securities Intermediary (i) shall indicate by book entry that such securities have been credited to the Collateral Account or (ii) shall receive such security (or a financial asset based on such security) for the Collateral Account from or at the direction of the Pledgor, and shall accept such security (or such financial asset) for credit to the Collateral Account. (f) Concurrently with the execution and delivery of this Pledge Agreement, the Collateral Agent is delivering, and concurrently with the execution and delivery of any Supplement to the Pledge Agreement, the Collateral Agent will deliver, to the Pledgor and the Initial Purchasers a duly executed certificate, in the form of Exhibit C hereto, of an officer of the Collateral Agent. (g) Pledgor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in the Office of the Secretary of State of Delaware and any other filing office in the United States any initial financing statements and amendments thereto that (a) contain a description of collateral of an equal or lesser scope as the Collateral described in this Pledge Agreement or any Supplement to the Pledge Agreement, but such description may contain greater detail than is contained in this Pledge Agreement or any such Supplement, and (b) contain any other information required by part 5 of Article 9 of the Uniform Commercial Code 7 as in effect in any applicable jurisdiction for the sufficiency or filing office acceptance of any financing statement or amendment therein, including whether the Pledgor is an organization, the type of organization and any organization identification number issued to the Pledgor. The Pledgor agrees to furnish any such information to the Collateral Agent promptly upon request. The Pledgor also ratifies its authorization for the Collateral Agent to have filed in any Uniform Commercial Code jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Pledgor agrees that, at the request of the Collateral Agent, Pledgor shall file any financing statement or amendment thereto that the Collateral Agent is authorized to file pursuant to this Pledge Agreement. SECTION 4. Delivery of Collateral Other than U.S. Government Obligations. (a) Collateral consisting of cash will be deemed to be delivered to the Collateral Agent (such that the Collateral Agent will have an enforceable lien and security interest thereon and therein) when it has been (and for so long as it shall remain) deposited in or credited to the Collateral Account. (b) [RESERVED]. (c) Collateral consisting of uncertificated securities (other than U.S. Government Obligations) will be deemed delivered to the Collateral Agent when the Securities Intermediary (A) shall indicate by book entry that such securities have been credited to the Collateral Account or (B) shall receive such security (or a financial asset based on such security) for the Collateral Account from or at the direction of the Pledgor, and shall accept such security (or such financial asset) for credit to the Collateral Account. (d) Collateral consisting of securities, and represented or evidenced by certificates or instruments (other than U.S. Government Obligations), will be deemed delivered to the Collateral Agent when all such certificates or instruments representing or evidencing the Collateral, including, without limitation, amounts invested as provided in Section 5, shall be delivered to the Collateral Agent and held by or on behalf of the Collateral Agent pursuant hereto and shall be in registered form and specially indorsed to the Collateral Agent by an effective indorsement, all in form and substance sufficient to convey a valid security interest in such Collateral to the Collateral Agent or shall be credited to the Collateral Account. SECTION 5. Investing of Amounts in the Collateral Account. The Collateral Agent shall advise the Pledgor if, at any time, any amounts shall exist in the Collateral Account uninvested, and if directed in writing by the Pledgor, the Collateral Agent will, subject to the provisions of Section 6 and Section 13, (a) invest such amounts on deposit in the Collateral Account in such Cash Equivalents in the name of the Collateral Agent as the Pledgor may select, and (b) invest interest paid on the Cash Equivalents referred to in clause (a) above, and reinvest other proceeds of any such Cash Equivalents that may mature or be sold, in each case in such Cash Equivalents in the name of the Collateral Agent, as the Pledgor may select (the Cash 8 Equivalents referred to in clauses (a) and (b) above, together with the Pledged Securities, being collectively referred to herein as "Collateral Investments"); provided, however, that the amount in cash and Pledged Securities on deposit in the Collateral Account, collectively, at any time during the term of this Pledge Agreement, is sufficient to provide for the payment in full of the remaining interest payments at such time on the Notes up to and including the sixth scheduled interest payment. Interest and proceeds that are not invested or reinvested in Collateral Investments as provided above shall be deposited and held in the Collateral Account. Except as otherwise provided in Sections 11 and 12, the Collateral Agent shall not be liable for any loss in the investment or reinvestment of amounts held in the Collateral Account. The Collateral Agent is not at any time under any duty to advise or make any recommendation for the purchase, sale, retention or disposition of the Collateral Investments. SECTION 6. Disbursements. The Collateral Agent shall hold the Collateral in the Collateral Account and release the same, or a portion thereof, only as follows: (a) Prior to each of the first six scheduled interest payments on the Notes, the Collateral Agent shall release from the Collateral Account and pay to the Trustee for the benefit of, and payment to, the Holders of the Notes in accordance with the provisions of the Indenture an amount sufficient to pay the interest due on the Notes on such interest payment date and will take any action necessary to provide for the payment of the interest on the Notes to the Holders in accordance with the payment provisions of the Indenture from (and to the extent of) proceeds of the Collateral in the Collateral Account. Nothing in this Section 6 shall affect the Collateral Agent's rights to apply the Collateral to the payments of amounts due on the Notes upon acceleration thereof. (b) If, prior to the date on which the sixth scheduled interest payment on the Notes is due: (i) an Event of Default under the Notes occurs and is continuing and (ii) the Trustee or the Holders of 25% in aggregate principal amount of the Notes accelerate the Notes by declaring the principal amount of the Notes to be immediately due and payable in accordance with the provisions of the Indenture, except for the occurrence and continuance of an Event of Default under Section 6.01(6) or (7) of the Indenture, upon which the Notes will be accelerated automatically pursuant to the Indenture, then the Collateral Agent shall promptly, subject to applicable bankruptcy laws, release the proceeds from the Collateral Account and pay to the Trustee for the benefit of, and payment to, the Holders of the Notes in accordance with the provisions of the Indenture. Distributions from the Collateral Account shall be applied, for the ratable benefit of the Holders, as follows: (x) first, to any accrued and unpaid interest on the Notes and (y) second, to the extent available, to the repayment of the remaining Obligations, including the principal amount of the Notes. Any surplus of such proceeds held by the Collateral Agent and remaining after payment in full of all of the Obligations shall be paid over to the Pledgor. 9 (c) [RESERVED] (d) In the event that the Collateral held in the Collateral Account is less than 100% of the amount sufficient, in the written opinion of Ernst & Young LLP or another nationally recognized firm of independent public accountants selected by the Pledgor, to provide for payment in full of the first six scheduled interest payments due on the Notes (or, in the event an interest payment or payments have been made, an amount sufficient to provide for payment in full of all interest payments remaining, up to and including the sixth scheduled interest payment), the Pledgor shall deposit cash in to the Collateral Account in the amount of such deficiency. (e) In the event that the Collateral held in the Collateral Account exceeds 100% of the amount sufficient, in the opinion of Ernst & Young LLP or another nationally recognized firm of independent public accountants selected by the Pledgor, to provide for payment in full of the first six scheduled interest payments due on the Notes (or, in the event an interest payment or payments have been made, an amount sufficient to provide for payment in full of all interest payments remaining, up to and including the sixth scheduled interest payment), the Collateral Agent shall release to the Pledgor, at the Pledgor's written request, accompanied by a written opinion prepared by Ernst & Young LLP or such other nationally recognized firm of independent public accountants, any such excess Collateral. (f) Upon the release of any Collateral from the Collateral Account, in accordance with the terms of this Pledge Agreement, the security interest and lien evidenced by this Pledge Agreement in such released Collateral will automatically terminate and be of no further force and effect; provided that the foregoing shall not affect the security interest and lien on any Collateral not so released. (g) Except as expressly provided in this Section 6, nothing contained in this Pledge Agreement shall (i) afford the Pledgor any right to issue entitlement orders with respect to any security entitlement to the Pledged Securities or Collateral Investments or any securities account in which any such security entitlement may be carried, or otherwise afford the Pledgor control of any such security entitlement or (ii) otherwise give rise to any rights of the Pledgor with respect to the Collateral Investments, any security entitlement thereto or any securities account in which any such security entitlement may be carried, other than the Pledgor's rights under this Pledge Agreement as the beneficial owner of Collateral pledged to and subject to the exclusive dominion and control (including, without limitation, securities control) of the Collateral Agent. The Pledgor acknowledges, confirms and agrees that the Collateral Agent holds a first priority perfected security interest, lien and security entitlement to the Collateral Investments solely as collateral agent for the Trustee and the Holders and not as a securities intermediary for the Pledgor. SECTION 7. Representations and Warranties. The Pledgor hereby represents and warrants, as of the date hereof, that: (a) The execution and delivery by the Pledgor of, and the performance by the Pledgor of its obligations under, this Pledge Agreement will not contravene any provision of applicable law or the certificate of incorporation, bylaws or equivalent organizational instruments of the Pledgor or any material agreement or other material instrument binding upon the Pledgor or any of its 10 subsidiaries or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Pledgor or any of its subsidiaries, or result in the creation or imposition of any Lien on any assets of the Pledgor, except for the lien and security interests granted under this Pledge Agreement; no consent, approval, authorization or order of, or qualification with, and no notice to or filing with, any governmental body or agency or other third party is required (i) for the performance by the Pledgor of its obligations under this Pledge Agreement, (ii) for the pledge by the Pledgor of the Collateral pursuant to this Pledge Agreement or for the execution, delivery or performance of this Agreement by the Pledgor or (iii) for the perfection or maintenance of the pledge, assignment and security interest created hereby (including the first priority nature of such pledge, assignment or security interest), except for the filing of financing and continuation statements under the Uniform Commercial Code of applicable jurisdictions which financing statements have been delivered pursuant to Section 3(g) hereof, or (iv) except for any such consents, approvals, authorizations or orders required to be obtained by the Collateral Agent (or the Holders) for reasons other than the consummation of this transaction, for the exercise by the Collateral Agent of the rights provided for in this Pledge Agreement or the remedies in respect of the Collateral pursuant to this Pledge Agreement. (b) The Pledgor is the legal and beneficial owner of the Collateral, free and clear of any Lien or claims of any Person (except for the lien and security interests granted under this Pledge Agreement). No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any public office other than the financing statements, if any, to be filed pursuant to this Pledge Agreement. (c) This Pledge Agreement has been duly authorized, validly executed and delivered by the Pledgor and (assuming the due authorization and valid execution and delivery of this Pledge Agreement by each of the Trustee, the Collateral Agent and the Securities Intermediary and enforceability of the Pledge Agreement against each of the Trustee, the Collateral Agent and the Securities Intermediary in accordance with its terms) constitutes a valid and binding agreement of the Pledgor, enforceable against the Pledgor in accordance with its terms, except as (i) the enforceability hereof may be limited by bankruptcy, insolvency, fraudulent conveyance, preference, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting the rights or remedies of creditors generally, (ii) the availability of equitable remedies may be limited by equitable principles of general applicability and the discretion of the court before which any proceeding therefor may be brought, (iii) the exculpation provisions and rights to indemnification hereunder may be limited by U.S. federal and state securities laws and public policy considerations and (iv) the waiver of rights and defenses contained in Section 13(b), Section 17.11 and Section 17.15 hereof may be limited by applicable law. (d) Upon the delivery to the Collateral Agent of the Collateral in accordance with the terms hereof and the filing of the financing statements referred to in Section 3(g) hereof, the pledge of and grant of a security interest in the Collateral securing the payment of the Obligations for the benefit of the Trustee and the Holders will constitute a valid, first priority, perfected security interest in such Collateral (except, with respect to proceeds, only to the extent permitted by Section 9-315 of the N.Y. Uniform Commercial Code), enforceable as such against all creditors of the Pledgor and any persons purporting to purchase any of the Collateral from the Pledgor other than as permitted by the Indenture. Upon filing of the financing statements 11 described in Section 3(g) hereof, all filings and other actions necessary or desirable to perfect and protect such security interest will have been duly taken. (e) There are no legal or governmental proceedings pending or, to the best of the Pledgor's knowledge, threatened to which the Pledgor or any of its subsidiaries is a party or to which any of the properties of the Pledgor or any of its subsidiaries is subject that would materially adversely affect the power or ability of the Pledgor to perform its obligations under this Pledge Agreement or to consummate the transactions contemplated hereby. (f) The pledge of the Collateral pursuant to this Pledge Agreement is not prohibited by law or governmental regulation (including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System) applicable to the Pledgor. (g) No Event of Default exists. (h) The Pledgor is a corporation duly organized and validly existing under the laws of the State of Delaware. The Pledgor's name as it appears in official filings in the State of Delaware is VEECO INSTRUMENTS INC. The Pledgor's organizational identification number issued by the State of Delaware is 2204392. SECTION 8. Further Assurances. The Pledgor will, promptly upon the request by the Collateral Agent (which request the Collateral Agent may submit at the direction of the Holders of a majority in aggregate principal amount of the Notes then outstanding), execute and deliver or cause to be executed and delivered, or use its reasonable best efforts to procure, all assignments, instruments and other documents, deliver any instruments to the Collateral Agent and take any other actions that are necessary or desirable to perfect, continue the perfection of, or protect the first priority of the Trustee's security interest in and to the Collateral, to protect the Collateral against the rights, claims or interests of third persons (other than any such rights, claims or interests created by or arising through the Collateral Agent) or to effect the purposes of this Pledge Agreement. Without limiting the generality of the foregoing, the Pledgor will, if any Collateral shall be evidenced by a promissory note or other instrument, deliver to the Collateral Agent in pledge hereunder such note or instrument duly indorsed and accompanied by duly executed instruments of transfer or assignment; and execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary, or as the Collateral Agent may reasonably request, in order to perfect and preserve the pledge, assignment and first priority perfected security interest granted or purported to be granted hereby. The Pledgor will promptly pay all reasonable costs incurred in connection with any of the foregoing within 45 days of receipt of an invoice therefor. The Pledgor also agrees, whether or not requested by the Collateral Agent, to use its reasonable best efforts to perfect or continue the perfection of, or to protect the first priority of, the Trustee's security interest in and to the Collateral, and to protect the Collateral against the rights, claims or interests of third persons (other than any such rights, claims or interests created by or arising through the Collateral Agent). SECTION 9. Covenants. The Pledgor covenants and agrees with the Collateral Agent, Trustee and the Holders that from and after the date of this Pledge Agreement until the Termination Date: 12 (a) it will not (i) (and will not purport to) sell or otherwise dispose of, or grant any option or warrant with respect to, any of the Collateral nor (ii) create or permit to exist any Lien upon or with respect to any of the Collateral (except for the liens and security interests granted under this Pledge Agreement and any Lien created by or arising through the Collateral Agent) and at all times will be the sole beneficial owner of the Collateral; (b) it will not (i) enter into any agreement or understanding that restricts or inhibits or purports to restrict or inhibit the Trustee's or the Collateral Agent's rights or remedies hereunder, including, without limitation, the Collateral Agent's right to sell or otherwise dispose of the Collateral or (ii) fail to pay or discharge any tax, assessment or levy of any nature with respect to its beneficial interest in the Collateral not later than three Business Days prior to the date of any proposed sale under any judgment, writ or warrant of attachment with respect to the Collateral; (c) it will maintain its jurisdiction of organization in the State of Delaware, or upon 30 days' prior written notice to the Collateral Agent, in another jurisdiction where all actions required by Sections 3(g) and 8 have been taken with respect to the Collateral; (d) it will, and will cause the Trustee and the Collateral Agent to, execute and deliver on or prior to any Date of Delivery, a Supplement to this Pledge Agreement substantially in the form of Exhibit B hereto, and take such other actions as shall be necessary to grant to the Collateral Agent, for the benefit of the Trustee and the ratable benefit of the Holders, a valid assignment of and security interest in the Additional Pledged Securities and the related security entitlements; and (e) it will not, and acknowledges that it is not authorized to, file any financing statement or amendment or termination statement with respect to any financing statement in favor of the Collateral Agent without the prior written consent of Collateral Agent and agrees that it will not do so without the prior written consent of Collateral Agent, subject to the Pledgor's rights under Section 9-509(d)(2) of the N.Y. Uniform Commercial Code. SECTION 10. Power of Attorney; Agent May Perform. (a) Subject to the terms of this Pledge Agreement, the Pledgor hereby appoints and constitutes the Collateral Agent as the Pledgor's attorney-in-fact (with full power of substitution) to exercise to the fullest extent permitted by law all of the following powers upon and at any time after the occurrence and during the continuance of an Event of Default: (i) collection of proceeds of any Collateral; (ii) conveyance of any item of Collateral to any purchaser thereof; (iii) giving of any notices or recording of any Liens hereof; and (iv) paying or discharging taxes or Liens levied or placed upon the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Collateral Agent in its sole reasonable discretion, and such payments made by the Collateral Agent to become part of the Obligations secured hereby, due and payable immediately upon 13 demand. The Collateral Agent's authority under this Section 10 shall include, without limitation, the authority to endorse and negotiate any checks or instruments representing proceeds of Collateral in the name of the Pledgor, execute and give receipt for any certificate of ownership or any document constituting Collateral, transfer title to any item of Collateral, sign the Pledgor's name on all financing statements (to the extent permitted by applicable law) or any other documents necessary or appropriate to preserve, protect or perfect the security interest in the Collateral and to file the same, prepare, file and sign the Pledgor's name on any notice of Lien (to the extent permitted by applicable law), and to take any other actions arising from or necessarily incident to the powers granted to the Trustee or the Collateral Agent in this Pledge Agreement. This power of attorney is coupled with an interest and is irrevocable by the Pledgor. (b) If the Pledgor fails to perform any agreement contained herein, the Collateral Agent may, but is not obligated to, after providing to the Pledgor notice of such failure and five Business Days to effect such performance, itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by the Pledgor under Section 14. SECTION 11. No Assumption of Duties; Reasonable Care. The rights and powers granted to the Collateral Agent hereunder are being granted in order to preserve and protect the security interest of the Collateral Agent for the benefit of the Trustee and the Holders in and to the Collateral granted hereby and shall not be interpreted to, and shall not impose any duties on, the Collateral Agent in connection therewith other than those expressly provided herein or imposed under applicable law. Except as provided by applicable law or by the Indenture, the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Collateral Agent accords similar property held by the Collateral Agent for similar accounts, it being understood that the Collateral Agent in its capacity as such (a) may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and (b) shall not have any responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities or other matters relative to any Collateral, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, (ii) taking any necessary steps for the existence, enforceability or perfection of any security interest of the Collateral Agent or to preserve rights against any parties with respect to any Collateral or 14 (iii) except as otherwise set forth in Section 5, investing or reinvesting any of the Collateral. In no event shall the Collateral Agent be liable for the existence, validity, enforceability or perfection of any security interest of the Collateral Agent, or for special indirect or consequential damages or lost profits or loss of business, arising in connection with this Agreement. SECTION 12. Indemnity. The Pledgor shall fully indemnify, hold harmless and defend the Collateral Agent and its directors and officers from and against any and all claims, losses, actions, obligations, liabilities and expenses, including reasonable defense costs, reasonable investigative fees and costs, and reasonable legal fees, expenses, and damages arising from the Collateral Agent's appointment and performance as Collateral Agent under this Pledge Agreement, except to the extent that such claim, action, obligation, liability or expense is directly caused by the bad faith, gross negligence or willful misconduct of such indemnified person. The provisions of this Section 12 shall survive termination of this Pledge Agreement and the resignation and removal of the Collateral Agent. SECTION 13. Remedies upon Event of Default. Subject to Section 6(b), if any Event of Default under the Indenture shall have occurred and be continuing and the Notes shall have been accelerated in accordance with the provisions of the Indenture: (a) The Trustee, the Collateral Agent and the Holders shall have, in addition to all other rights given by law or by this Pledge Agreement or the Indenture, all of the rights and remedies with respect to the Collateral of a secured party upon default under the N.Y. Uniform Commercial Code (whether or not the N.Y. Uniform Commercial Code applies to the affected Collateral) at that time. In addition, with respect to any Collateral that shall then be in or shall thereafter come into the possession or custody of the Collateral Agent, the Collateral Agent may and, at the written direction of the Trustee or the Holders of a majority in aggregate principal amount of the Notes then outstanding, shall appoint a broker or other expert to sell or cause the same to be sold at any broker's board or at public or private sale, in one or more sales or lots, at such price or prices such broker or other expert may deem commercially reasonable, for cash or on credit or for future delivery, without assumption of any credit risk. The purchaser of any or all Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever created by or through the Pledgor. Unless any of the Collateral threatens, in the reasonable judgment of the Collateral Agent, to decline speedily in value, the Collateral Agent will give the Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made. Any sale of the Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies, commercial finance companies, or other financial institutions disposing of property similar to the Collateral shall be deemed to be commercially reasonable. Any requirements of reasonable notice shall be met if notice of the time and place of any public sale or the time after which any private sale is to be made is given to the Pledgor as provided in Section 17.1 hereof at least ten (10) days before the time of the sale or disposition. The Collateral Agent or any Holder may, in its own name or in the name of a designee or nominee, buy any of the Collateral at any public sale and, if permitted by applicable law, at any private sale. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale 15 having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. All expenses (including court costs and reasonable attorneys' fees, expenses and disbursements) of, or incident to, the enforcement of any of the provisions hereof shall be recoverable from the proceeds of the sale or other disposition of the Collateral. (b) The Pledgor further agrees to use its reasonable best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Collateral pursuant to this Section 13 valid and binding and in compliance with any and all other applicable requirements of law. The Pledgor further agrees that a breach of any of the covenants contained in this Section 13 will cause irreparable injury to the Trustee and the Holders, that the Trustee and the Holders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 13 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred. (c) All cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Collateral Agent or the Trustee pursuant to Section 14) by the Collateral Agent for the ratable benefit of the Holders first against any accrued and unpaid interest on the Notes and thereafter against the remaining Obligations. Any surplus of such cash or cash proceeds held by the Collateral Agent and remaining after payment in full of all of the Obligations shall be paid over to the Pledgor. (d) The Collateral Agent may, but is not obligated to, exercise any and all rights and remedies of the Pledgor in respect of the Collateral. (e) Subject to and in accordance with the terms of this Pledge Agreement, all payments received by the Pledgor in respect of the Collateral shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of the Pledgor and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary indorsement). (f) The Collateral Agent may, without notice to the Pledgor except as required by law and at any time or from time to time, charge, set-off and otherwise apply all or any part of the Obligations against the Collateral Account or any part thereof. (g) The Pledgor shall cease to be entitled to direct the investment of amounts held in the Collateral Account under Section 5 hereof and the Collateral Agent shall not accept any direction from the Pledgor to invest amounts held in the Collateral Account. SECTION 14. Fees and Expenses. Pledgor agrees to pay to Collateral Agent the fees as may be agreed upon from time to time in writing. The Pledgor will upon demand pay to the Trustee and the Collateral Agent the amount of any and all expenses, including, without limitation, the reasonable fees, expenses and disbursements of counsel, experts and agents 16 retained by the Trustee and the Collateral Agent, that the Trustee and the Collateral Agent may incur in connection with (a) the review, negotiation and administration of this Pledge Agreement, (b) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (c) the exercise or enforcement of any of the rights of the Collateral Agent, the Trustee and the Holders hereunder or (d) the failure by the Pledgor to perform or observe any of the provisions hereof. SECTION 15. Security Interest Absolute. All rights of the Collateral Agent, the Trustee and the Holders and security interests hereunder, and all obligations of the Pledgor hereunder, shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of the Indenture or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Indenture; (c) any exchange, surrender, release or non-perfection of any Liens on any other collateral for all or any of the Obligations; (d) any change, restructuring or termination of the corporate structure or the existence of the Pledgor or any of its subsidiaries; (e) to the extent permitted by applicable law, any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Pledgor in respect of the Obligations or of this Pledge Agreement; or (f) any manner of application of other collateral, or proceeds thereof, to all or any item of the Obligations, or any manner of sale or other disposition of any item of Collateral for all or any of the Obligations. SECTION 16. Securities Intermediary's Representations, Warranties and Covenants. The Securities Intermediary represents and warrants that it is as of the date hereof, and it agrees that for so long as it maintains the Collateral Account and acts as the Securities Intermediary pursuant to this Pledge Agreement it shall be a securities intermediary and a FRBB Member. In furtherance of the foregoing, the Securities Intermediary hereby: (a) represents and warrants that it is a commercial bank that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity hereunder and with respect to the Collateral Account; 17 (b) represents and warrants that it maintains the FRBB Account with the FRBB; (c) agrees that the Collateral Account shall be an account to which financial assets may be credited, and undertakes to treat the Collateral Agent as entitled to exercise rights that comprise (and entitled to the benefits of) such financial assets, and entitled to exercise the rights of an entitlement holder in the manner contemplated by the N.Y. Uniform Commercial Code; (d) hereby represents that, subject to applicable law, it has not granted, and covenants that so long as it acts as a securities intermediary hereunder it shall not grant, control (including without limitation, securities control) over or with respect to any Collateral credited to any Collateral Account from time to time to any other Person other than the Collateral Agent; (e) covenants that it shall not, subject to applicable law, knowingly take any action inconsistent with, and represents and covenants that it is not and so long as this Pledge Agreement remains in effect will not knowingly become, party to any agreement the terms of which are inconsistent with, the provisions of this Pledge Agreement; (f) agrees that any item of property credited to the Collateral Account shall be treated as a financial asset; (g) agrees that any item of Collateral credited to the Collateral Account shall not be subject to any security interest, Lien or right of set-off in favor of it as securities intermediary, except as may be expressly permitted under the Indenture and this Pledge Agreement; (h) agrees to maintain the Collateral Account and maintain appropriate books and records in respect thereof in accordance with its usual procedures and subject to the terms of this Pledge Agreement; and (i) agrees that, with respect to any Collateral that constitutes a security entitlement, it shall comply with the provisions of Section 3(c)(i) or (ii) of this Pledge Agreement and, with respect to any Collateral that constitutes a securities account, it shall comply with the provisions of Section 3(c)(i) or (ii) of this Pledge Agreement with respect to all security entitlements carried in such securities account. SECTION 17. Securities Intermediary's Jurisdiction. The parties hereby agree that, notwithstanding the location of the office of the Securities Intermediary at which the Collateral Account is maintained, the Securities Intermediary's jurisdiction for purposes of Section 8-110(e) of the N.Y. Uniform Commercial Code and Section 357.11 of the Treasury Regulations or the corresponding U.S. federal regulations as they pertain to this Pledge Agreement, the Collateral Account and the security entitlements relating thereto, shall be the State of New York. SECTION 18. Miscellaneous Provisions. 18.1 Notices. Any notice, approval, direction, consent or other communication shall be sufficiently given if in writing and delivered in person or mailed by first class mail, commercial courier service or telecopier communication, addressed as follows: 18 if to the Pledgor: Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, New York 11797 Attention: General Counsel Telecopier No.: (516) 677-0380 if to the Collateral Agent: State Street Bank and Trust Company, N.A., 61 Broadway, 15th Floor New York, New York, 10006 Attention: Corporate Trust Administration (Veeco Instruments Convertible Subordinated Notes Due 2008) Telecopier No.: (212) 612-3202 if to the Trustee: State Street Bank and Trust Company, N.A., 61 Broadway, 15th Floor New York, New York, 10006 Attention: Corporate Trust Administration (Veeco Instruments Convertible Subordinated Notes Due 2008) Telecopier No.: (212) 612-3202 if to the Securities Intermediary: State Street Bank and Trust Company Two Avenue de Lafayette, 6th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Administration (Veeco Instruments Convertible Subordinated Notes Due 2008) Telecopier No.: (617) 662-1463 or, as to any such party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this Section. All such notices and other communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt is confirmed, if telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. 18.2 No Adverse Interpretation of Other Agreements. This Pledge Agreement may not be used to interpret another pledge, security or debt agreement of the Pledgor or any subsidiary thereof. No such pledge, security or debt agreement (other than the Indenture) may be used to interpret this Pledge Agreement. 19 18.3 Severability. The provisions of this Pledge Agreement are severable, and if any clause or provision shall be held invalid, illegal or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect in that jurisdiction only such clause or provision, or part thereof, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of this Pledge Agreement in any jurisdiction. 18.4 Headings. The headings in this Pledge Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. 18.5 Counterpart Originals. This Pledge Agreement may be signed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same agreement. 18.6 Benefits of Pledge Agreement. Nothing in this Pledge Agreement, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Pledge Agreement. 18.7 Amendments, Waivers and Consents. Any amendment or waiver of any provision of this Pledge Agreement and any consent to any departure by the Pledgor, the Trustee or the Collateral Agent from any provision of this Pledge Agreement shall be effective only if made or duly given in compliance with all of the terms and provisions of the Indenture, and none of the Trustee, the Collateral Agent, the Pledgor, or any Holder shall be deemed, by any act, delay, indulgence, omission or otherwise, to have waived any right or remedy hereunder or to have acquiesced in any default or Event of Default or in any breach of any of the terms and conditions hereof. Failure of the Trustee, the Pledgor, the Collateral Agent or any Holder to exercise, or delay in exercising, any right, power or privilege hereunder shall not preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Trustee, the Pledgor, the Collateral Agent or any Holder of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Trustee, the Pledgor, the Collateral Agent or such Holder would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 18.8 [RESERVED] 18.9 Continuing Security Interest; Termination. (a) This Pledge Agreement shall create a continuing first priority perfected security interest in and to the Collateral and shall, unless otherwise provided in the Indenture or in this Pledge Agreement, remain in full force and effect until the Termination Date. This Pledge Agreement shall be binding upon the parties hereto and their respective transferees, successors and assigns, and shall inure, together with the rights and remedies of the Trustee and the Collateral Agent hereunder, to the benefit of the Trustee, the Collateral Agent, the Pledgor, the Holders and their respective successors, transferees and assigns. 20 (b) Upon the Termination Date, the pledge, assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Pledgor. At such time, the Collateral Agent shall, in accordance with the Pledgor's instructions, promptly reassign and redeliver to the Pledgor all of the Collateral hereunder that has not been sold, disposed of, retained or applied by the Collateral Agent in accordance with the terms of this Pledge Agreement and the Indenture and execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence such termination. Such reassignment and redelivery shall be without warranty by or recourse to the Collateral Agent or the Trustee in its capacity as such, except as to the absence of any Liens on the Collateral created by or arising through the Collateral Agent or the Trustee, and shall be at the reasonable expense of the Pledgor. 18.10 Survival Provisions. All representations, warranties and covenants contained herein shall survive the execution and delivery of this Pledge Agreement, and shall terminate only upon the termination of this Pledge Agreement. The obligations of the Pledgor under Sections 12 and 14 hereof and the obligations of the Collateral Agent under Section 17.9(b) hereof shall survive the termination of this Pledge Agreement. 18.11 Waivers. The Pledgor waives presentment and demand for payment of any of the Obligations, protest and notice of dishonor or default with respect to any of the Obligations, and all other notices to which the Pledgor might otherwise be entitled, except as otherwise expressly provided herein or in the Indenture. 18.12 Authority of the Collateral Agent. (a) The Collateral Agent shall have and be entitled to exercise all powers hereunder that are specifically granted to the Collateral Agent by the terms hereof, together with such powers as are reasonably incident thereto. The Collateral Agent may perform any of its duties hereunder or in connection with the Collateral by or through agents or attorneys, shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder and shall be entitled to retain counsel and to act in reliance upon the advice of counsel concerning all such matters. Except as otherwise expressly provided in this Pledge Agreement or the Indenture, neither the Collateral Agent nor any director, officer, employee, attorney or agent of the Collateral Agent shall be liable to the Pledgor for any action taken or omitted to be taken by the Collateral Agent, in its capacity as Collateral Agent, hereunder, except for its own bad faith, gross negligence or willful misconduct, and the Collateral Agent shall not be responsible for the validity, effectiveness or sufficiency hereof or of any document or security furnished pursuant hereto. The Collateral Agent and its directors, officers, employees, attorneys and agents shall be entitled to rely conclusively on any communication, instrument or document believed by it or them to be genuine and correct and to have been signed or sent by the proper Person or Persons. The Collateral Agent shall have no duty to cause any financing statement or continuation statement to be filed in respect of the Collateral. (b) The Pledgor acknowledges that the rights and responsibilities of the Collateral Agent under this Pledge Agreement with respect to any action taken by the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Pledge Agreement shall, as between the Collateral Agent and the Holders, be governed by the Indenture and by such other 21 agreements with respect thereto as may exist from time to time among them, but, as between the Collateral Agent and the Pledgor, the Collateral Agent shall be conclusively presumed to be acting as agent for the Trustee and the Holders with full and valid authority so to act or refrain from acting, and the Pledgor shall not be obligated or entitled to make any inquiry respecting such authority. 18.13 Final Expression. This Pledge Agreement, together with the Indenture and any other agreement executed in connection herewith, is intended by the parties as a final expression of this Pledge Agreement and is intended as a complete and exclusive statement of the terms and conditions thereof. 18.14 Rights of Holders. No Holder shall have any independent rights hereunder other than those rights granted to individual Holders pursuant to Sections 6.05, 6.06 and 6.07 of the Indenture; provided that nothing in this subsection shall limit any rights granted to the Trustee under the Notes or the Indenture. 18.15 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; WAIVER OF DAMAGES. (a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE, THE COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. NOTWITHSTANDING THE FOREGOING, THE MATTERS IDENTIFIED IN 31 C.F.R. SECTIONS 357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS PLEDGE AGREEMENT) SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN AND THE MATTERS IDENTIFIED IN SECTION 9305(a)(3) OF THE N.Y. UNIFORM COMMERCIAL CODE WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. (b) THE PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT AND FOR ACTIONS BROUGHT UNDER THE U.S. FEDERAL OR STATE SECURITIES LAWS BROUGHT IN ANY FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK (EACH A "NEW YORK COURT") AND CONSENTS THAT ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE MADE BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO 22 THE PLEDGOR AT THE ADDRESS INDICATED IN SECTION 17.1. EACH OF THE PARTIES HERETO SUBMITS TO THE JURISDICTION OF ANY NEW YORK COURT AND TO THE COURTS OF ITS CORPORATE DOMICILE WITH RESPECT TO ANY ACTIONS BROUGHT AGAINST IT AS DEFENDANT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THE PLEDGOR, THE TRUSTEE, THE COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH THIS PLEDGE AGREEMENT, AND EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LAYING OF VENUE, INCLUDING ANY PLEADING OF FORUM NON CONVENIENS, WITH RESPECT TO ANY SUCH ACTION AND WAIVES ANY RIGHT TO WHICH IT MAY BE ENTITLED ON ACCOUNT OF PLACE OF RESIDENCE OR DOMICILE. (c) THE PLEDGOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PLEDGOR OR THE COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE COLLATERAL, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED. (d) THE PLEDGOR AGREES THAT NEITHER ANY HOLDER NOR (EXCEPT AS OTHERWISE PROVIDED IN THIS PLEDGE AGREEMENT OR THE INDENTURE) THE COLLATERAL AGENT IN ITS CAPACITY AS COLLATERAL AGENT SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS PLEDGE AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT OR SUCH HOLDERS, AS THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. (e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PLEDGOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE, THE COLLATERAL AGENT OR ANY HOLDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT 23 ORDER PERTAINING TO THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE, THE COLLATERAL AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR, ON THE ONE HAND, AND THE TRUSTEE, THE COLLATERAL AGENT AND/OR THE HOLDERS, ON THE OTHER HAND. 18.16 Effectiveness. This Pledge Agreement shall become effective upon the effectiveness of the Indenture. 24 IN WITNESS WHEREOF, the Pledgor, the Trustee and the Collateral Agent have each caused this Pledge Agreement to be duly executed and delivered as of the date first above written. Pledgor: VEECO INSTRUMENTS INC. By: /s/ John F. Rein, Jr. ---------------------------------------------- Name: John F. Rein, Jr. Title: Executive Vice President, Chief Financial Officer and Secretary Trustee: STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee By: /s/ Jean Clarke ---------------------------------------------- Name: Jean Clarke Title: Assistant Vice President Collateral Agent: STATE STREET BANK AND TRUST COMPANY, N.A., as Collateral Agent By: /s/ Jean Clarke ---------------------------------------------- Name: Jean Clarke Title: Assistant Vice President Securities Intermediary: STATE STREET BANK AND TRUST COMPANY, as Securities Intermediary By: /s/ Jean Clarke ---------------------------------------------- Name: Jean Clarke Title: Assistant Vice President SCHEDULE I
PLEDGED SECURITIES Original Principal/ Description of Debt CUSIP No(s). Final Maturity Interest Amount Cost at Closing Time ------------------- ------------ -------------- --------------- -------------------- Treasury Bill 912795JZ5 06/20/02 4,125,000 4,088,705.73 Treasury Coupon Strip 912833FR6 11/15/02 4,125,000 4,057,143.75 Treasury Coupon Strip 912833FS4 05/15/03 4,125,000 3,981,161.25 Treasury Principal Strip 912820DJ3 11/15/03 4,125,000 3,898,042.50 Treasury Principal Strip 912820BJ5 05/15/04 4,125,000 3,803,415.00 Treasury Principal Strip 912803AB9 11/15/04 4,125,000 3,690,967.50 ============== $23,519,435.73
I-1 EXHIBIT A [Letterhead of Ernst & Young LLP] Report of Independent Accountants To the Management of Veeco Instruments Inc. In our opinion, the assertions of Veeco Instruments Inc. referred to above are fairly stated, in all material respects. A-1 EXHIBIT B [Form of Supplement to the Pledge Agreement] SUPPLEMENT NO. __ dated as of _________, 2001, to the COLLATERAL PLEDGE AND SECURITY AGREEMENT dated as of December 21, 2001 (as supplemented from time to time, the "Pledge Agreement") among Veeco Instruments Inc., a Delaware corporation (the "Pledgor"), State Street Bank and Trust Company, N.A., a national banking association, as trustee (in such capacity, the "Trustee") for the holders (the "Holders") of the Notes issued by the Pledgor under the Indenture referred to below, State Street Bank and Trust Company, N.A., a national banking association, as collateral agent (in such capacity, the "Collateral Agent") and State Street Bank and Trust Company, a Massachusetts trust company, as securities intermediary. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Pledge Agreement. WHEREAS, the Pledgor and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney. (collectively, the "Initial Purchasers") are parties to a Purchase Agreement dated December 18, 2001 (the "Purchase Agreement"), pursuant to which the Pledgor have granted the Initial Purchasers an overallotment option to purchase up to $20 million aggregate principal amount of the Pledgor's 4 1/8% Convertible Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Pledgor and the Trustee have entered into that certain indenture dated as of December 21, 2001 (as amended, restated, supplemented or otherwise modified from time to time, the "Indenture"), pursuant to which the Issuers are issuing the Notes on the date hereof; WHEREAS, pursuant to the Indenture, the Pledgor is required to purchase, or cause the purchase of, and pledge to the Collateral Agent for the benefit of the Trustee and the Holders, on the relevant Date of Delivery (as defined in the Purchase Agreement), Pledged Securities in an amount that will be sufficient upon receipt of scheduled interest and principal payments of such securities, in the written opinion of Ernst & Young LLP or another nationally recognized firm of independent public accountants selected by the Pledgor and delivered to the Trustee, to provide for payment in full of the first six scheduled interest payments due on the Notes; WHEREAS, the Pledgor, the Trustee and the Collateral Agent have entered into the Pledge Agreement, pursuant to which the Pledgor has previously pledged certain Pledged Securities to the Collateral Agent for the benefit of the Holders in connection with the purchase by the Initial Purchasers of $200 million aggregate principal amount of Notes; WHEREAS, the Initial Purchasers have exercised their overallotment option under the Purchase Agreement to purchase $20 million aggregate principal amount of Notes; WHEREAS, it is a condition precedent to the purchase of the Notes by the Initial Purchasers pursuant to the overallotment option granted in the Purchase Agreement that the Pledgor apply certain of the proceeds of the offering of the Notes to purchase the Additional Pledged Securities and deposit such Additional Pledged Securities into the Collateral Account to be held therein subject to the terms of the Pledge Agreement and shall have granted the B-1 assignment and security interest and made the pledge and assignment contemplated by the Pledge Agreement; NOW, THEREFORE, in consideration of the premises herein contained, and in order to induce the Initial Purchasers to purchase the Notes, the Pledgor, the Trustee and the Collateral Agent hereby agree, for the benefit of the Initial Purchasers and for the ratable benefit of the Holders, as follows: SECTION 1. PLEDGE AND GRANT OF SECURITY INTEREST. Pursuant to Section 1.3 of the Pledge Agreement, as security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, the Pledgor hereby assigns and pledges to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders and hereby grants to the Collateral Agent for the benefit of the Trustee and for the ratable benefit of the Holders, a lien on and security interest in all of the Pledgor's right, title and interest in, to and under the following property: (a) the U.S. Government Obligations identified by CUSIP No. in Part I of Schedule I hereto (the "Additional Pledged Securities") and the certificates representing the Additional Pledged Securities, the scheduled payments of principal and interest thereon which will be sufficient to provide for payment in full of the first six scheduled interest payments due on the Notes issued in connection herewith and (b) the security entitlements described in Part II of Schedule I hereto, with respect to the financial assets described, the securities intermediary named, and the securities account referred to therein. The Pledge Agreement is hereby incorporated herein by reference. SECTION 2. SUPPLEMENT TO SCHEDULE I. The parties hereto agree that Schedule I to the Pledge Agreement shall be supplemented by Schedule I hereto. SECTION 3. DEPOSIT OF PROCEEDS FROM THE OFFERING. Pursuant to Section 2(b)(ii) of the Pledge Agreement, on the date hereof, the Pledgor agrees to transfer, or caused to be transferred, an amount equal to $___________, which amount shall be sufficient for the Collateral Agent to purchase the Additional Pledged Securities, by depositing such funds into the Collateral Account. The Collateral Agent agrees to apply such amount to purchase the Additional Pledged Securities as contemplated under Section 2(c) of the Pledge Agreement. SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor hereby represents and warrants to the Trustee and the Collateral Agent that: (a) Each of this Supplement and the Pledge Agreement as supplemented hereby has been duly authorized, validly executed and delivered by the Pledgor and (assuming the due authorization and valid execution and delivery of this Supplement by each of the Trustee and the Collateral Agent) constitutes a valid and binding agreement of the Pledgor, enforceable against the Pledgor in accordance with its terms, except as (i) the enforceability hereof and thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, preference, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting the rights or remedies of creditors generally, (ii) the availability of equitable remedies may be limited by equitable principles of general applicability and the discretion of the court before which any proceeding therefor may be B-2 brought, (iii) the exculpation provisions and rights to indemnification under the Pledge Agreement may be limited by U.S. federal and state securities laws and public policy considerations and (iv) the waiver of rights and defenses contained in Section 13(b), Section 17.11 and Section 17.15 of the Pledge Agreement may be limited by applicable law and (b) the representations and warranties of the Pledgor set forth in Section 7 of the Pledge Agreement are true and correct in all material respects with the same effect as if made on and as of the date hereof. SECTION 5. EXECUTION IN COUNTERPARTS. This Supplement may be signed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same agreement. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the Pledgor, the Trustee and the Collateral Agent. SECTION 6. EFFECT OF SUPPLEMENT. Except as expressly supplemented hereby, the Pledge Agreement shall remain in full force and effect. SECTION 7. GOVERNING LAW. This Supplement shall governed by and construed in accordance with the laws of the State of New York. B-3 IN WITNESS WHEREOF, the Pledgor, the Trustee and the Collateral Agent have each caused this Supplement to be duly executed and delivered as of the date first above written. Pledgor: VEECO INSTRUMENTS INC. By: ---------------------------------------- Name: Title: Trustee: STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee By: ---------------------------------------- Name: Title: Collateral Agent: STATE STREET BANK AND TRUST COMPANY, N.A., as Collateral Agent By: ---------------------------------------- Name: Title: Securities Intermediary: STATE STREET BANK AND TRUST COMPANY, as Securities Intermediary By: ---------------------------------------- Name: B-4 SCHEDULE I TO SUPPLEMENT NO. __ TO PLEDGE AGREEMENT
PLEDGED SECURITIES Original Principal Cost at Date of Description of Debt CUSIP No(s). Final Maturity Amount Delivery - ------------------- ------------ -------------- ------------------ --------
B-5 EXHIBIT C STATE STREET BANK AND TRUST COMPANY, N.A. OFFICER'S CERTIFICATE Pursuant to Section 3(e) of the Collateral Pledge and Security Agreement (as supplemented from time to time, the "Pledge Agreement") dated as of December 21, 2001, among Veeco Instruments Inc., a Delaware corporation (the "Pledgor"), State Street Bank and Trust Company, N.A., a national banking association, as trustee (the "Trustee") for the holders of the $200 million aggregate principal amount (or up to $220 million aggregate principal amount if the Initial Purchaser's overallotment option is exercised) of 4 1/8% Convertible Subordinated Notes Due 2008 of the Pledgor, State Street Bank and Trust Company, N.A., a national banking association, as collateral agent (the "Collateral Agent") and State Street Bank and Trust Company, a Massachusetts trust company, as securities intermediary, the undersigned officer of the Collateral Agent, on behalf of the Collateral Agent, makes the following certifications to the Pledgor and the Initial Purchasers. Capitalized terms used and not defined in this Officer's Certificate have the meanings set forth or referred to in the Pledge Agreement. 1. Substantially contemporaneously with the execution and delivery of this Officer's Certificate, the Collateral Agent has acquired its security entitlement to the [Initial Pledged Securities] [the Additional Pledged Securities identified on Supplement No. __ to the Pledge Agreement] or through a "securities account" (as defined in Section 8-501(a) of the N.Y. Uniform Commercial Code) maintained by the Collateral Agent, for value and without notice of any adverse claim thereto. Without limiting the generality of the foregoing, the Collateral Account, the Pledged Securities and the other Collateral are not, and the Collateral Agent's security entitlement to the Collateral is not, to the actual knowledge of the corporate trust officer having responsibility for the administration of the Pledge Agreement on behalf of the Collateral Agent, subject to any Lien granted by or to or arising through or in favor of any securities intermediary (including, without limitation, State Street Bank and Trust Company or the Federal Reserve Bank of Boston) through which the Collateral Agent derives its security entitlement to the Collateral. 2. The Collateral Agent has not knowingly caused or permitted the Collateral Account or its security entitlement thereto to become subject to any Lien created by or arising through the Collateral Agent. C-1 IN WITNESS WHEREOF, the undersigned officer has executed this Officer's Certificate on behalf of State Street Bank and Trust Company, N.A., as Collateral Agent this 21st day of December, 2001. STATE STREET BANK AND TRUST COMPANY, N.A., as Collateral Agent By: ---------------------------------- Name: Title: C-2 EX-10.2 5 a2068746zex-10_2.txt EXHIBIT 10.2 EXECUTION COPY Exhibit 10.2 ------------------------------------- REGISTRATION RIGHTS AGREEMENT Dated as of December 21, 2001 among Veeco Instruments Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Thomas Weisel Partners LLC ------------------------------------- REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is made and entered into this 21st day of December, 2001, among Veeco Instruments Inc., a Delaware corporation (the "COMPANY"), Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Thomas Weisel Partners LLC (each, an "INITIAL PURCHASER," and collectively, the "INITIAL PURCHASERS"). This Agreement is made pursuant to that certain Purchase Agreement, dated December 18, 2001, among the Company and the Initial Purchasers (the "PURCHASE AGREEMENT"), which provides for the sale by the Company to the Initial Purchasers of up to an aggregate of $220,000,000 principal amount of the Company's 4 1/8% Convertible Subordinated Notes due 2008 (the "Notes"), including $20,000,000 aggregate principal amount of Notes as to which the Initial Purchasers have an over-allotment option as set forth in Section 2(b) of the Purchase Agreement. In order to induce the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the Initial Purchasers' obligations thereunder, the Company has agreed to provide to the Initial Purchasers and their direct and indirect transferees and assigns the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. DEFINITIONS. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "1933 ACT" shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "1934 ACT" shall mean the Securities Exchange Act of l934, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "ADDITIONAL INTEREST" shall have the meaning set forth in Section 2.4 hereof. "CLOSING DATE" shall mean the Closing Time as defined in the Purchase Agreement. "COMMON STOCK" shall mean common stock, $0.01 par value per share, of the Company. "COMPANY" shall have the meaning set forth in the preamble to this Agreement and also includes the Company's successors. "DEPOSITARY" shall mean The Depository Trust Company, or any other depositary appointed by the Company; provided, however, that any such depositary must have an address in The Borough of Manhattan, The City of New York. "EFFECTIVENESS PERIOD" shall have the meaning set forth in Section 2.1(a) hereof. "EFFECTIVENESS TARGET DATE" shall mean the one hundred eightieth (180th) day after the Closing Date. "EVENT DATE" shall have the meaning set forth in Section 2.4 hereof. "FILING DATE" shall mean the ninetieth (90th) day after the Closing Date. "HOLDER" shall mean an Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture. "HOLDER EXPENSES" shall have the meaning set forth in Section 2.2, together with underwriting discounts and commissions and any transfer taxes relating to the sale or distribution of Registrable Securities by a Holder. "INDENTURE" shall mean the Indenture relating to the Securities, dated as of December 21, 2001, between the Company and State Street Bank and Trust Company, N.A., as trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof. "INITIAL PURCHASER" or "INITIAL PURCHASERS" shall have the meaning set forth in the preamble to this Agreement. "MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate principal amount of Registrable Securities outstanding; provided, that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or any of its affiliates (as such term is defined in Rule 405 under the 1933 Act) shall be disregarded in determining whether such consent or approval was given by the Holders of such required percentage. "NASD" shall mean the National Association of Securities Dealers, Inc. "NOTES" shall have the meaning set forth in the preamble to this Agreement. "PERSON" shall mean an individual, partnership, corporation, limited liability company, joint venture, trust or unincorporated organization, or a government or agency or political subdivision thereof. "PROSPECTUS" shall mean the prospectus included in any Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to any such prospectus, including post-effective amendments, and in each case including all material incorporated or deemed to be incorporated by reference therein. "PURCHASE AGREEMENT" shall have the meaning set forth in the preamble to this Agreement. 2 "REGISTRABLE SECURITIES" shall mean the Notes and the shares of Common Stock into which the Notes are convertible, upon original issuance of the Notes, and at all times subsequent thereto; provided, however, that any Securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to such Securities shall have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to such Registration Statement, (ii) such Securities shall have been sold to the public pursuant to Rule l44 (or any similar provision then in force, but not Rule 144A) under the 1933 Act, or (iii) such Securities shall have ceased to be outstanding. "REGISTRATION DEFAULT" shall have the meaning set forth in Section 2.4 hereof. "REGISTRATION EXPENSES" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC, stock exchange or NASD registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state or other securities or blue sky laws and compliance with the rules of the NASD (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with qualification of any Registrable Securities under state or other securities or blue sky laws and any filing with and review by the NASD), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements, certificates representing the Securities and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges or on any quotation system, (v) all rating agency fees, (vi) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vii) the fees and disbursements of counsel for the Company and the fees and expenses of independent public accountants for the Company or for any other Person, business or assets whose financial statements are included in any Registration Statement or Prospectus, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, (viii) the fees and expenses of a "qualified independent underwriter" as defined by Conduct Rule 2720 of the NASD (if required by the NASD rules) and the fees and disbursements of its counsel, (ix) the fees and expenses of the Trustee, any registrar, any depositary, any paying agent, any escrow agent or any custodian, in each case including their respective counsel, (x) the reasonable fees and disbursements of one law firm representing the Holders of Registrable Securities and (xi) the reasonable fees and expenses of the Initial Purchasers in connection with the Shelf Registration, including the reasonable fees and expenses of one counsel to the Initial Purchasers, and (xii) any fees and disbursements of the underwriters customarily paid by issuers or sellers of securities and the fees and expenses of any special experts retained by the Company in connection with any Registration Statement, but excluding underwriting discounts and commissions and any transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "REGISTRATION STATEMENT" shall mean the registration statement of the Company filed with the SEC pursuant to the provisions of Section 2 of this Agreement that covers all of the Registrable Securities on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained 3 therein, all exhibits thereto and all material incorporated or deemed to be incorporated by reference therein. If the Company elects in its sole discretion to file one or more additional registration statements to comply with its obligations under this Agreement, then the term "Registration Statement" shall include such additional registration statement(s). "REQUISITE INFORMATION" shall have the meaning set forth in Section 2.1(c) hereof. "SEC" shall mean the Securities and Exchange Commission or any successor agency or government body performing the functions currently performed by the United States Securities and Exchange Commission. "SECURITIES" shall mean the Notes and the shares of Common Stock into which the Notes are convertible, upon original issuance thereof and at all times subsequent thereto. "SHELF REGISTRATION" shall have the meaning set forth in Section 2.1(a) hereof. "TIA" shall mean the Trust Indenture Act of 1939, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "TRUSTEE" shall mean the trustee with respect to the Securities under the Indenture. "UNDERWRITERS" shall have the meaning set forth in Section 4(a) hereof. For purposes of this Agreement, (i) all references in this Agreement to any Registration Statement or Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval system; (ii) all references in this Agreement to financial statements and schedules and other information which is "contained", "included" or "stated" in any Registration Statement or Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated or deemed to be incorporated by reference in such Registration Statement or Prospectus, as the case may be; and (iii) all references in this Agreement to amendments or supplements to any Registration Statement or Prospectus shall be deemed to mean and include the filing of any document under the 1934 Act which is incorporated or deemed to be incorporated by reference in such Registration Statement or Prospectus, as the case may be. "UNDERWRITTEN OFFERING" shall have the meaning set forth in Section 3(m)(ii) hereof. 2. REGISTRATION UNDER THE 1933 ACT. 2.1. SHELF REGISTRATION. (a) As promptly as practicable, but no later than the Filing Date, the Company shall file with the SEC, a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 under the 1933 Act covering all of the Registrable Securities (the "SHELF REGISTRATION"). The Shelf Registration shall be on Form S-3 under the 1933 Act or another appropriate form permitting registration of such Registrable Securities for resale by the Holders in the manner or manners reasonably designated by them (including, without limitation, the 4 Underwritten Offering). The Company shall use its best efforts to cause the Registration Statement to be declared effective by the SEC as promptly as practicable, but no later than the Effectiveness Target Date, and to keep such Registration Statement continuously effective, supplemented and amended as required, in order to permit the Prospectus forming a part thereof to be useable by the Holders until the earliest of (i) the date that is two years after the last date of original issuance of any of the Notes and (ii) all of the Registrable Securities covered by the Registration Statement have been sold pursuant to the Registration Statement (the "EFFECTIVENESS PERIOD"); provided, however, that the Effectiveness Period in respect of the Registration Statement shall be extended to the extent required to permit dealers to comply with the applicable prospectus delivery requirements of Rule 174 under the 1933 Act and as otherwise provided herein. (b) Notwithstanding any other provisions hereof, the Company shall use its best efforts to ensure that (i) the Registration Statement and any amendment thereto and any Prospectus forming a part thereof and any supplements thereto complies in all material respects with the 1933 Act, (ii) the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming a part of the Registration Statement and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) SELLING SECURITYHOLDER INFORMATION. Each Holder wishing to sell Registrable Securities pursuant to the Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire that confirms such Holder's agreement to be bound by the terms of this Agreement and includes such information regarding it and the distribution of its Registrable Securities as is required by law to be disclosed by the Holder in the Registration Statement (the "Requisite Information"), together with such other information as the Company may reasonably request (the Requisite Information, together with such other information, the "Holder Information"), to the Company at least five business days prior to the effectiveness of the Registration Statement. The Company shall not be required to include in the Registration Statement and related Prospectus the Registrable Securities of any Holder that does not provide the Company with the Holder Information in accordance with this Section 2(c). After the effectiveness of the Registration Statement, the Company shall file with the SEC, within five business days after the receipt of the Holder Information from any Holder after the date five days prior to the effectiveness of the Registration Statement, a Prospectus supplement pursuant to Rule 424 or otherwise amend or supplement such Registration Statement to include in the Prospectus the Requisite Information as to such Holder (and the Registrable Securities held by such Holder), shall take all reasonable action and perform all reasonable acts to ensure that the SEC declares any amendment effective as soon as possible after the filing thereof and the Company shall provide such Holder not later than seven business days after receipt of such Requisite Information with a copy of such Prospectus as so amended or supplemented containing the Requisite Information in order to permit such Holder to comply with the prospectus delivery requirements of the Securities Act in a timely manner with respect to any proposed disposition of such Holder's Registrable Securities, provided, that no amended or supplemented Prospectus may be used by the Holder until any amendment to the Registration Statement is declared 5 effective if required by the Securities Act. Each Holder shall promptly notify the Company of any material changes to the Requisite Information contained in the Notice and Questionnaire provided to the Company by such Holder. If the Company shall fail to file the appropriate supplement or amendment within five business days of receipt of such notice, the Company shall pay the Holder additional interest in the manner set forth in Section 2.4. If any such Registration Statement refers to any Holder by name or otherwise as the holder of any securities of the Company, then such Holder shall have the right to require, in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar successor Federal statute then in force, the deletion of the reference to such Holder in such Registration Statement at any time subsequent to the time that such reference ceases to be required. (d) The Company further agrees, if necessary, to supplement or amend the Registration Statement, as required by Section 3(b) below, and to furnish to the Holders of Registrable Securities included in the Registration Statement copies of any such supplement or amendment promptly after its being filed with the SEC. 2.2. EXPENSES. The Company shall pay all Registration Expenses in connection with the Shelf Registration, but specifically excluding the Registration Expenses identified in clauses (viii), (x), (xi) and (xii) and in the parenthetical included in clause (ii) and expenses relating to underwriting agreements and securities sales agreements (together, "Holder Expenses"). Each Holder shall pay all Holder Expenses applicable to it individually and such Holder's ratable portion of Holder Expenses applicable to all Holders participating in the Underwritten Offering. 2.3. EFFECTIVENESS. (a) The Company shall be deemed not to have used its best efforts to cause the Registration Statement to become, or to remain, effective during the requisite period set forth herein if the Company voluntarily takes any action that would, or omits to take any action which omission would result in any such Registration Statement not being declared effective or remaining effective, or in the Holders of Registrable Securities covered thereby not being able to offer and sell such Registrable Securities during that period as and to the extent contemplated hereby, unless such action is required by applicable law. (b) The Registration Statement shall not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the offering of Registrable Securities pursuant to the Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement shall be deemed not to have been effective during the period of such interference, until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. 2.4. INTEREST. In the event that (a) the Registration Statement has not been filed with the SEC on or prior to the Filing Date, (b) the Registration Statement is not declared effective by the SEC on or prior to the Effectiveness Target Date, (c) the Registration Statement has been declared effective by the SEC and such Registration Statement ceases to be effective or usable at any time during the Effectiveness Period for any reason without being succeeded within five 6 business days by a post-effective amendment to such Registration Statement or a report filed with the SEC pursuant to the 1934 Act that cures such failure or (d) the Company suspends the use of any Prospectus related to the Registration Statement for a period exceeding forty-five (45) days in any consecutive three-month period or exceeding an aggregate of one hundred twenty (120) days in any consecutive twelve-month period (each such event referred to in clauses (a) through (d) above, a "REGISTRATION DEFAULT"), then the interest rate borne by the Notes shall be increased ("ADDITIONAL INTEREST") by one quarter of one percent (0.25%) per annum upon the occurrence of each Registration Default, which rate will increase by an additional one quarter of one percent (0.25%) from and after the ninety-first (91st) day following the occurrence of such Registration Default, provided that the Additional Interest rate will in no event exceed one half of one percent (0.50%) per annum, in each case for so long as such Registration Default continues. Concurrent Registration Defaults shall be deemed to be a single registration default. Additional Interest will accrue from and including the day following the Registration Default to but excluding the day on which the Registration Default has been cured. Upon the cure of such Registration Default, the accrual of Additional Interest will cease and the interest rate will revert to the original rate so long as no other Registration Default shall have occurred and shall be continuing at such time; provided, however, that, if after any such reduction in interest rate, one or more Registration Defaults shall again occur, Additional Interest shall again be payable pursuant to the foregoing provisions. A Registration Default under clause (a) above shall be cured on the date that the Shelf Registration is filed with the SEC; a Registration Default under clause (b) above shall be cured on the date that the Shelf Registration is declared effective by the SEC; a Registration Default under clause (c) above shall be cured on the date the Shelf Registration is declared effective or useable; and a Registration Default under clause (d) above shall be cured on the date the Prospectus is declared useable by the Company. The Company is permitted to suspend the use of any Prospectus related to the Registration Statement for any period and at any time, provided, that it is required to pay Additional Interest if the suspension results in a Registration Default. As part of the periods set forth in clause (d) above, the Company, at its option, may establish regular suspension periods corresponding to its fiscal quarters. If the Company establishes such suspensions, the Company shall give notice to the trustee under the Indenture of such regular suspensions, to be forwarded to the Holders, and shall request such trustee to give periodic notice of the suspension to the Holders. A Holder will not be entitled to Additional Interest: (i) on account of a Registration Default described in clause (b) above if it has not provided all Requisite Information to the Company at least five business days prior to the effectiveness of the Registration Statement; (ii) on account of a Registration Default described in clauses (c) and (d) above with respect to any of its Registrable Securities that are not registered on the Registration Statement during the period of a Registration Default, provided, that from the sixth business day following the Company's receipt of such Holder's Holder Information, such Holder shall be entitled to Additional Interest on account of such Registration Default; and 7 (iii) if such Holder purchased such Notes or Common Stock in transactions covered by the Registration Statement or previously sold in transactions exempt from the registration requirements of the Securities Act in accordance with Rule 144. The Company shall not be deemed to have failed to use its best efforts, as required by Section 2.3(a), and there shall not be deemed to be a Registration Default, if the sole reason for the failure to have an effective Registration Statement or the related Prospectus is not useable is the inclusion therein of the Requisite Information of a Holder. If the Company determines that the Registration Statement must be revised in order to obtain or continue effectiveness, to have a stop order, injunction or other order lifted or to have the Prospectus useable, the Company shall promptly give notice to the subject Holder and, if the Company and the Holder are not able to agree to the necessary amendment to the Registration Statement or amendment or supplement to the related Prospectus within five business days of the notice to the Holder, the Company may make any revision it deems necessary to obtain effectiveness, to have the order lifted or to make the Prospectus useable, including, without limitation, removing the Holder's Registrable Securities from the Registration Statement. The Company shall notify the Trustee within three business days after each and every date on which a Registration Default occurs (an "EVENT DATE"). Additional Interest shall be paid by the Company to the Holders by depositing with the Trustee, in trust, for the benefit of the Holders of Registrable Securities, on or before the applicable semiannual interest payment date, immediately available funds in sums sufficient to pay the Additional Interest then due. The Additional Interest due shall be payable on each interest payment date to the record Holder of Securities entitled to receive the interest payment to be paid on such date as set forth in the Indenture. 2.5. SPECIFIC ENFORCEMENT. Without limiting the remedies available to the Initial Purchasers and the Holders, the Company acknowledges that any failure by the Company to comply with its obligations under this Section 2 may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it would not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under this Section 2. 3. REGISTRATION PROCEDURES. In connection with the obligations of the Company with respect to the Shelf Registration and the Registration Statement pursuant to Section 2 hereof, the Company shall: (a) prepare and file with the SEC a Registration Statement within the period specified in Section 2, on the appropriate form under the 1933 Act, which form (i) shall be selected by the Company, (ii) shall be available for the sale of the Registrable Securities by the selling Holders thereof (provided that such Holder completes and delivers its Holder Information to the Company at least five business days prior to the effectiveness of the Registration Statement) , and (iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the SEC to be filed therewith or 8 incorporated by reference therein, and use its best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary under applicable law to keep such Registration Statement effective for the applicable period; cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provision then in force) under the 1933 Act; and comply with the provisions of the 1933 Act and the 1934 Act with respect to the disposition of all securities covered by a Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the selling Holders thereof; (c) (i) notify each Holder of Registrable Securities that a Registration Statement with respect to the Registrable Securities has been filed, further notify each Holder of Registrable Securities, at least fifteen business days prior to effectiveness, that such Registration Statement will become effective and request that such Holder complete and deliver the Holder Information to the Company at least five business days prior to effectiveness and advising such Holders that the distribution of Registrable Securities will be made in accordance with the method elected by the Majority Holders that deliver Holder Information in time to be included in the Registration Statement; (ii) subject to the Holder's requirements to pay all Holder Expenses, furnish to each Holder of Registrable Securities, to counsel for the Holders, to counsel for the Initial Purchasers and to each underwriter of the Underwritten Offering of Registrable Securities, if any, without charge subject to the Holder's requirements to pay all Holder Expenses, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder, counsel or underwriter may reasonably request, including financial statements and schedules and, if such Holder, counsel or underwriter so requests, all exhibits (including those incorporated by reference) in order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) the Company hereby consents to the use of the Prospectus, including each preliminary Prospectus, or any amendment or supplement thereto by each of the Holders and underwriters of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by any Prospectus or any amendment or supplement thereto; (d) use its best efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions in the United States as any Holder of Registrable Securities covered by the Registration Statement and each underwriter of the Underwritten Offering of Registrable Securities shall reasonably request, to cooperate with the Holders and the underwriters of any Registrable Securities in connection with any filings required to be made with the NASD, to keep each such registration or qualification effective during the period such Registration Statement is required to be effective, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such U.S. jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) qualify as a foreign 9 corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d) or (ii) take any action which would subject it to general service of process or taxation in any such jurisdiction if it is not then so subject; (e) notify each Holder of Registrable Securities and counsel for such Holder (if known to the Company) promptly and, if requested by such Holder or counsel, confirm such advice in writing promptly (i) when a Registration Statement has become effective and when any post-effective amendments and supplements thereto become effective, (ii) of any request by the SEC or any state securities authority for post-effective amendments or supplements to a Registration Statement or Prospectus or for additional information with respect to the Registration Statement after a Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if between the effective date of the Registration Statement and the closing of any sale of Registrable Securities covered thereby, PROVIDED, the Company knows when the sale is to occur, the representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to such offering cease to be true and correct in all material respects, (v) of the happening of any event as a result of which the Prospectus, as then in effect, makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which constitutes an omission to state a material fact in such Registration Statement or Prospectus or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading in light of the circumstances then existing, (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (vii) of any determination by the Company that a post-effective amendment to a Registration Statement would be appropriate; (f) in the event of an underwritten offering, furnish counsel for any underwriters of Registrable Securities copies of any comment letters received from the SEC or any other request by the SEC or any state securities authority for amendments or supplements to a Registration Statement and Prospectus or for additional information received during the occurrence of the underwritten offering; (g) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement as soon as practicable and provide immediate notice to each selling Holder of the withdrawal of any such order; (h) furnish to each selling Holder of Registrable Securities, and each underwriter, if any, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto, including financial statements and schedules (without documents incorporated or deemed to be incorporated therein by reference or exhibits thereto, unless requested); 10 (i) cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and cause such Registrable Securities to be in such denominations (consistent with the provisions of the Indenture) and in a form eligible for deposit with the Depositary and registered in such names as the selling Holders or the underwriters, if any, may reasonably request in writing at least three business days prior to the closing of any sale of Registrable Securities; (j) upon the occurrence of any event or the discovery of any facts, each as contemplated by Sections 3(e)(v) and 3(e)(vi) hereof, as promptly as practicable after the occurrence of such an event, use its best efforts to prepare a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated or deemed to be incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company agrees to notify each Holder to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and each Holder hereby agrees to suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission. At such time as such public disclosure is otherwise made or the Company determines that such disclosure is not necessary, in each case to correct any misstatement of a material fact or to include any omitted material fact, the Company agrees promptly to notify each Holder of such determination and to furnish each Holder such number of copies of the Prospectus, as amended or supplemented, as such Holder may reasonably request; (k) obtain CUSIP numbers for all Registrable Securities not later than the effective date of the Registration Statement, and provide the Trustee with printed certificates for the Registrable Securities in a form eligible for deposit with the Depositary; (l) (i) cause the Indenture to be qualified under the TIA in connection with the registration of the Registrable Securities, (ii) cooperate with the Trustee and the Holders to effect such changes, if any, to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and (iii) execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes, if any, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; (m) in connection with not more than one Underwritten Offering during the period of effectiveness of the Registration Statement (the "Underwritten Offering") enter into an underwriting agreement and agreements ancillary thereto and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection; 11 (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar Underwritten Offerings as may be reasonably requested by such Holders and underwriters; (ii) in connection with the Underwritten Offering, seek to obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and the Holders of a majority in principal amount of the Registrable Securities being sold) addressed to each selling Holder (where reasonably possible) and the underwriters, if any, covering the matters customarily covered in opinions requested in sales of securities or Underwritten Offerings and such other matters as may be reasonably requested by such Holders and underwriters; (iii) in connection with the Underwritten Offering, seek to obtain "comfort letters" and updates thereof with respect to such Registration Statement and the Prospectus included therein, all amendments and supplements thereto and all documents incorporated or deemed to be incorporated by referenced therein from the Company's independent certified public accountants and (where reasonably possible) from the independent certified public accountants for any other Person or any business or assets whose financial statements are included or incorporated by reference in the Registration Statement or Prospectus, each addressed to the underwriters, if any, and (where reasonably possible) to have such letter addressed to the selling Holders of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in "comfort letters" to underwriters in connection with similar Underwritten Offerings; (iv) if an underwriting agreement is entered into in the case of the Underwritten Offering, cause the same to set forth indemnification and contribution provisions and procedures substantially equivalent to the indemnification and contribution provisions and procedures set forth in Section 4 hereof with respect to the underwriters and all other parties to be indemnified pursuant to Section 4 hereof or, at the request of any underwriters, in the form customarily provided to such underwriters in similar types of transactions; and (v) deliver such other documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the Holders of a majority in principal amount of the Registrable Securities being sold and the managing underwriters, if any. The above shall be done at (i) the effectiveness of any required post-effective amendment to the Registration Statement and (ii) the closing under the underwriting agreement as and to the extent required thereunder; 12 (n) to the extent required to enable the Holders and the underwriters to comply with their due diligence obligations, make available for inspection by representatives of the Holders of the Registrable Securities and any underwriters participating in any disposition pursuant to a Registration Statement and any counsel or accountant retained by such Holders or underwriters, all financial and other records, documents and properties of the Company reasonably requested by any such Persons, and cause the respective officers, directors, employees, and any other agents of the Company to supply all information reasonably requested by any such representative, underwriter, special counsel or accountant in connection with the Registration Statement, and make such representatives of the Company available for discussion of such documents as shall be reasonably requested by the Initial Purchasers, PROVIDED, that such persons (other than the Initial Purchasers) enter into appropriate confidentiality agreements with the Company; (o) a reasonable time prior to filing any amendment to the Registration Statement or amendment or supplement to such Prospectus in connection with an Underwritten Offering, provide copies of such document upon request to the underwriter or underwriters of the Underwritten Offering of Registrable Securities, if any, and to counsel for any such underwriters, and make such changes in any such document prior to the filing thereof as the underwriter or underwriters or any of their respective counsel may reasonably request, provided that the Company shall have no obligation to make any change in the description of its business or its financial statements or other information contained in its Exchange Act filings; cause the representatives of the Company to be available for discussion of such documents as shall be reasonably requested by any underwriter; and shall not at any time make any filing of any such document of which such underwriter shall not have previously been advised and furnished a copy or to which the underwriter shall reasonably object within a reasonable time period; (p) otherwise comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable, an earnings statement covering at least twelve (12) months which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder; and (q) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter and its counsel (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD). The Company may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Securities to furnish to the Company such information regarding such Holder and the proposed distribution by such Holder of such Registrable Securities as the Company may from time to time reasonably request in writing, including the completion and delivery of the Requisite Information at least five days prior to the effectiveness of the Registration Statement. 13 Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event or the discovery of any facts, each of the kind described in Sections 3(e)(ii), 3(e)(iii) or 3(e)(v) through 3(e)(vii) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until receipt by such Holder of (i) the copies of the supplemented or amended Prospectus contemplated by Section 3(j) hereof or (ii) written notice from the Company that the Shelf Registration is once again effective or that no supplement or amendment is required. If so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Nothing in this paragraph shall prevent that accrual of Additional Interest on any Securities. In the event that the Company fails to file any Registration Statement and maintain the effectiveness of any such Registration Statement as provided herein, the Company shall not file any Registration Statement with respect to any securities (within the meaning of Section 2(1) of the 1933 Act) of the Company other than Registrable Securities. If any of the Registrable Securities covered by any Registration Statement are to be sold in the Underwritten Offering, the underwriter or underwriters and manager or managers that will manage such offering will be selected by the Majority Holders of such Registrable Securities included in such offering and shall be reasonably acceptable to the Company. No Holder of Registrable Securities may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. The Holders of Registrable Securities that participate in the Underwritten Offering shall be required to pay on a ratable basis all Registration Expenses associated with or arising as a result of the Underwritten Offering, including, without limitation, any Registration Expenses incurred in connection with any amendment to the Registration Statement or amendment or supplement to the related Prospectus requested or required by the underwriter. 4. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify and hold harmless the Initial Purchasers, each Holder, each Person who participates as an underwriter (each, an "UNDERWRITER") and each Person, if any, who controls any Initial Purchaser, Holder or Underwriter within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or any omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the 14 statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or any omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 4(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the reasonable fees and disbursements of counsel chosen by any indemnified party), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Initial Purchasers, any Holder or Underwriter expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). (b) Each Holder, severally but not jointly, agrees to indemnify and hold harmless the Company, the Initial Purchasers, each Underwriter and the other selling Holders, and each of their respective directors and officers, and each Person, if any, who controls the Company, the Initial Purchasers, any Underwriter or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by such Holder expressly for use in the Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided, however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not 15 relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii) effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. (e) If the indemnification provided for in this Section 4 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party or parties on the one hand and the indemnified party or parties on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or parties or such indemnified party or parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (f) The Company, the Holders and the Initial Purchasers agree that it would not be just or equitable if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other 16 method of allocation that does not take account of the equitable considerations referred to in paragraph (e) above. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 4, no Initial Purchaser, Holder or Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which Registrable Securities sold by it pursuant to a Registration Statement were offered exceeds the amount of any damages that such Initial Purchaser, Holder or Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4, each Person, if any, who controls an Initial Purchaser, Holder or Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser, Holder or Underwriter, as the case may be, and each director of the Company, each officer of the Company who signed the Registration Statement and each Person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The respective obligations of the Initial Purchasers, Holders, and Underwriters to contribute pursuant to this Section 4 are several in proportion to the principal amount of Securities sold by them pursuant to a Registration Statement and not joint. The indemnity and contribution provisions contained in this Section 4 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser, Holder or Underwriter or any Person controlling any Initial Purchaser, Holder or Underwriter, or by or on behalf of the Company, its officers, or directors or any Person controlling the Company, and (iii) any sale of Registrable Securities pursuant to a Registration Statement. 5. MISCELLANEOUS. 5.1. RULE 144 AND RULE 144A. For so long as the Company is subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the Company covenants that it will file all reports required to be filed by it under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and regulations adopted by the SEC thereunder, that if it ceases to be so required to file such reports, it will upon the request of any Holder or beneficial owner of Registrable Securities (a) make publicly available such information (including, without limitation, the information specified in Rule 144A(d)(4) under the 1933 Act) as is necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver or cause to be delivered, promptly following a request by any Holder or beneficial owner of Registrable Securities or any 17 prospective purchaser or transferee designated by such Holder or beneficial owner, such information (including, without limitation, the information specified in Rule 144A(d)(4) under the 1933 Act) as is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it will take such further action as any Holder or beneficial owner of Registrable Securities may reasonably request, and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Registrable Securities without registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder or beneficial owner of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. 5.2. NO INCONSISTENT AGREEMENTS. The Company has not entered into nor will the Company on or after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not and will not in any way conflict with and are not and will not be inconsistent with the rights granted to the holders of any of the Company's other issued and outstanding securities under any other agreements entered into by the Company or any of its subsidiaries. 5.3. AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure. 5.4. NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, telecopier or any courier guaranteeing overnight delivery (a) if to a Holder (other than the Initial Purchasers), at the address set forth in the Required Information or the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 5.4, (b) if to an Initial Purchaser, at the most current address given by such Initial Purchaser to the Company by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the Purchase Agreement with respect to such Initial Purchaser, (c) if to the Company, initially at the Company's address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 5.4, and (d) if to any Underwriter, at the most current address given by such Underwriter to the Company by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the applicable underwriting agreement. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; two business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery. 18 Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. 5.5. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities, such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof. 5.6. THIRD PARTY BENEFICIARIES. The Initial Purchasers (even if the Initial Purchasers are not Holders of Registrable Securities) shall be third party beneficiaries of the agreements made hereunder between the Company, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. Each Holder of Registrable Securities shall be a third party beneficiary to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder. 5.7. HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 5.8. SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICT OF LAWS THEREOF. 5.10. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 19 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. VEECO INSTRUMENTS INC. By: /s/ John F. Rein, Jr. --------------------------------------- Name: John F. Rein, Jr. Title: Executive Vice President, Chief Financial Officer and Secretary Confirmed and accepted as of the date first above written: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED SALOMON SMITH BARNEY INC. THOMAS WEISEL PARTNERS LLC BY: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Rex Sherry ----------------------------------------------------------- Name: Rex Sherry Title: Managing Director EX-10.3 6 a2068746zex-10_3.txt EXHIBIT 10.3 Exhibit 10.3 SUPPLEMENT NO. 1 TO THE COLLATERAL PLEDGE AND SECURITY AGREEMENT Dated as of January 3, 2002 among VEECO INSTRUMENTS INC. as Pledgor, STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee, STATE STREET BANK AND TRUST COMPANY, N.A., as Collateral Agent, and STATE STREET BANK AND TRUST COMPANY, as Securities Intermediary SUPPLEMENT NO. 1 dated as of January 3, 2002, to the COLLATERAL PLEDGE AND SECURITY AGREEMENT, dated as of December 21, 2001 (as supplemented from time to time, the "Pledge Agreement"), among Veeco Instruments Inc., a Delaware corporation (the "Pledgor"), State Street Bank and Trust Company, N.A., a national banking association, as trustee (in such capacity, the "Trustee") for the holders (the "Holders") of the Notes (as defined below) issued by the Pledgor under the Indenture (as defined below), State Street Bank and Trust Company, N.A., a national banking association, as collateral agent (in such capacity, the "Collateral Agent"), and State Street Bank and Trust Company, a Massachusetts trust company, as securities intermediary (the "Securities Intermediary"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Pledge Agreement. WHEREAS, the Pledgor and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Thomas Weisel Partners LLC (collectively, the "Initial Purchasers") are parties to a Purchase Agreement dated December 18, 2001 (the "Purchase Agreement"), pursuant to which the Pledgor has granted the Initial Purchasers an overallotment option to purchase up to $20 million aggregate principal amount of the Pledgor's 4 1/8% Convertible Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Pledgor and the Trustee have entered into that certain Indenture dated as of December 21, 2001 (as amended, restated, supplemented or otherwise modified from time to time, the "Indenture"), pursuant to which the Pledgor is issuing $20 million aggregate principal amount of Notes on the date hereof; WHEREAS, pursuant to the Indenture and the Pledge Agreement, the Pledgor is required to purchase, or cause the purchase of, on or prior to the relevant Date of Delivery (as defined in the Purchase Agreement), and pledge to the Collateral Agent for the benefit of the Trustee and the Holders, on such relevant Date of Delivery, Pledged Securities in an amount that will be sufficient upon receipt of scheduled interest and principal payments of such securities, as determined by the Pledgor and verified, as to mathematical accuracy, in the written opinion of Ernst & Young LLP (in substantially the form attached as Exhibit A to the Pledge Agreement) or another nationally recognized firm of independent public accountants selected by the Pledgor and delivered to the Trustee, to provide for payment in full of the first six scheduled interest payments due on the Notes; WHEREAS, the Pledgor, the Trustee, the Collateral Agent and the Securities Intermediary have entered into the Pledge Agreement, pursuant to which the Pledgor has previously pledged certain Pledged Securities to the Collateral Agent for the benefit of the Holders in connection with the purchase by the Initial Purchasers of $200 million aggregate principal amount of Notes; WHEREAS, the Initial Purchasers have exercised their overallotment option in full under the Purchase Agreement and are purchasing on the date hereof $20 million aggregate principal amount of Notes; WHEREAS, it is a condition precedent to the purchase of the Notes by the Initial Purchasers pursuant to the overallotment option granted in the Purchase Agreement that the 1 Pledgor apply certain of the proceeds from the sale of such Notes to purchase the Additional Pledged Securities (as defined below) and deliver such Additional Pledged Securities to the Securities Intermediary for credit to the Collateral Account to be held subject to the terms of the Pledge Agreement and shall have granted the assignment and security interest and made the pledge and assignment contemplated by the Pledge Agreement; NOW, THEREFORE, in consideration of the premises herein contained, and in order to induce the Initial Purchasers to purchase the Notes, the Pledgor, the Trustee, the Collateral Agent and the Securities Intermediary hereby agree, for the benefit of the Initial Purchasers and for the ratable benefit of the Holders, as follows: SECTION 1. PLEDGE AND GRANT OF SECURITY INTEREST. Pursuant to Section 1.3 of the Pledge Agreement, as security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, the Pledgor hereby assigns and pledges to the Collateral Agent for the benefit of the Trustee and the ratable benefit of the Holders, and hereby grants to the Collateral Agent for the benefit of the Trustee and for the ratable benefit of the Holders, a lien on and security interest in all of the Pledgor's right, title and interest in, to and under the U.S. Government Obligations identified by CUSIP No. in Schedule I hereto (the "Additional Pledged Securities") and the certificates representing the Additional Pledged Securities, the scheduled payments of principal and interest thereon which will be sufficient to provide for payment in full of the first six scheduled interest payments due on the Notes being issued by the Pledgor to the Initial Purchasers on the date hereof. The Pledge Agreement is hereby incorporated herein by reference. SECTION 2. SUPPLEMENT TO SCHEDULE I. The parties hereto agree that Schedule I to the Pledge Agreement shall be supplemented by Schedule I hereto. SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor hereby represents and warrants to the Trustee, the Collateral Agent and the Securities Intermediary that: (a) Each of this Supplement and the Pledge Agreement as supplemented hereby has been duly authorized, validly executed and delivered by the Pledgor and (assuming the due authorization and valid execution and delivery of this Supplement and the Pledge Agreement by each of the Trustee, the Collateral Agent and the Securities Intermediary) constitutes a valid and binding agreement of the Pledgor, enforceable against the Pledgor in accordance with its terms, except as (i) the enforceability hereof and thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, preference, reorganization, moratorium or similar laws now or hereafter in effect relating to or affecting the rights or remedies of creditors generally, (ii) the availability of equitable remedies may be limited by equitable principles of general applicability and the discretion of the court before which any proceeding therefor may be brought, (iii) the exculpation provisions and rights to indemnification under the Pledge Agreement may be limited by U.S. federal and state securities laws and public policy considerations and (iv) the waiver of rights and defenses contained in Section 13(b), Section 18.11 and Section 18.15 of the Pledge Agreement may be limited by applicable law; and 2 (b) the representations and warranties of the Pledgor set forth in Section 7 of the Pledge Agreement are true and correct in all material respects with the same effect as if made on and as of the date hereof. SECTION 4. EXECUTION IN COUNTERPARTS. This Supplement may be signed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same agreement. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the Pledgor, the Trustee, the Collateral Agent and the Securities Intermediary. SECTION 5. EFFECT OF SUPPLEMENT. Except as expressly supplemented hereby, the Pledge Agreement shall remain in full force and effect in the form initially executed and delivered by the parties thereto. SECTION 6. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, ANY DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE PLEDGOR, THE TRUSTEE, THE COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH THIS PLEDGE AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. NOTWITHSTANDING THE FOREGOING, THE MATTERS IDENTIFIED IN 31 C.F.R. SECTIONS 357.10 AND 357.11 (AS IN EFFECT ON THE DATE OF THIS SUPPLEMENT) SHALL BE GOVERNED SOLELY BY THE LAWS SPECIFIED THEREIN AND THE MATTERS IDENTIFIED IN SECTION 9305(a)(3) OF THE N.Y. UNIFORM COMMERCIAL CODE WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. 3 IN WITNESS WHEREOF, the Pledgor, the Trustee, the Collateral Agent and the Securities Intermediary have each caused this Supplement to be duly executed and delivered as of the date first above written. Pledgor: VEECO INSTRUMENTS INC. By: /s/ John F. Rein, Jr. --------------------------------------------- Name: John F. Rein, Jr. Title: Executive Vice President, Chief Financial Officer and Secretary Trustee: STATE STREET BANK AND TRUST COMPANY, N.A., as Trustee By: /s/ Jean Clarke --------------------------------------------- Name: Jean Clarke Title: Assistant Vice President Collateral Agent: STATE STREET BANK AND TRUST COMPANY, N.A., as Collateral Agent By: /s/ Jean Clarke --------------------------------------------- Name: Jean Clarke Title: Assistant Vice President Securities Intermediary: STATE STREET BANK AND TRUST COMPANY, as Securities Intermediary By: /s/ Jean Clarke --------------------------------------------- Name: Jean Clarke Title: Assistant Vice President 4 SCHEDULE I TO SUPPLEMENT NO. 1 TO PLEDGE AGREEMENT
PLEDGED SECURITIES Original Principal Cost at Date of Description of Debt CUSIP No(s). Final Maturity Amount Delivery ------------------- ------------ -------------- ------ -------- Treasury Bill 912795JZ5 06/20/02 $413,000 $ 409,607.89 Treasury Coupon Strip 912833FR6 11/15/02 412,000 405,667.56 Treasury Coupon Strip 912833FS4 05/15/03 413,000 399,015.82 Treasury Principal Strip 912820DJ3 11/15/03 412,000 390,032.16 Treasury Principal Strip 912820BJ5 05/15/04 413,000 381,174.22 Treasury Principal Strip 912803AB9 11/15/04 412,000 369,259.12 ============= $2,354,756.77
5 EX-10.4 7 a2068746zex-10_4.txt EXHIBIT 10.4 EXHIBIT 10.4 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), is made as of September 17, 2001, among Veeco Instruments Inc., a Delaware corporation (the "COMPANY"), and the stockholders set forth on the signature pages hereto (collectively, the "COMPANY STOCKHOLDERS"). WHEREAS, the Company, Veeco Acquisition Corp., a Minnesota corporation and a wholly-owned subsidiary of the Company ("ACQUISITION"), Applied Epi, Inc., a Minnesota corporation ("APPLIED EPI"), each of the Company Stockholders and Paul E. Colombo, as Stockholders' Representative, have entered into an Agreement and Plan of Merger, dated as of September 6, 2001 (the "MERGER AGREEMENT"), pursuant to which Acquisition will merge with and into Applied Epi with the result that Applied Epi will be the surviving corporation (the "MERGER"); and WHEREAS, pursuant to the Merger, the Stockholders' shares of common stock of Applied Epi will be converted into the right to receive the Company's Shares; and WHEREAS, in connection with the Merger and pursuant to the Merger Agreement, the Company has agreed to provide the Stockholders with certain registration rights as set forth herein. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS The following terms, as used in this Agreement, have the following respective meanings: "ACQUISITION" has the meaning set forth in the recitals to this Agreement. "AGREEMENT" has the meaning set forth in the first paragraph of this Agreement. "BOARD OF DIRECTORS" means the board of directors of the Company. "CHANGE IN CONTROL" means any of the following: (i) any Person or group of Persons, other than the stockholders of record of the Company as of the date hereof, becomes the beneficial owner of 30% or more of any Equity Securities of the Company entitled to vote for the election of directors; (ii) a change in the composition of the Board of Directors during the Shelf Period such that the Continuing Directors cease to constitute a majority of the Board of Directors; (iii) someone other than Edward H. Braun serves as the Chairman of the Company, or (iv) the Company's stockholders approve an agreement to merge or consolidate with or into another corporation under circumstances in which the Company is not the surviving party, or an agreement to sell, lease, exchange, transfer or otherwise dispose, either directly or indirectly, of all or substantially all of the Company's assets in one transaction or in a series of related transactions (including a plan of liquidation), PROVIDED, however, that no Change in Control shall have occurred under this subparagraph (iv) if the consideration received by the stockholders pursuant to, or in connection with, such transaction (or series of transactions, as the case may be) consists of cash, publicly traded securities or any combination thereof. For purposes of this Agreement, "BENEFICIAL OWNERSHIP" by a Person or group of Persons shall be determined in accordance with Regulation 13D (or any similar successor regulation) promulgated by the Commission pursuant to the Exchange Act and may be established by any reasonable method. "COMMISSION" means the Securities and Exchange Commission. "COMPANY" has the meaning set forth in the first paragraph of this Agreement. "COMPANY STOCKHOLDERS" has the meaning set forth in the first paragraph of this Agreement. "CONTINUING DIRECTORS" means those members of the Board of Directors who either were directors at the beginning of the Shelf Period, or were elected by, or on nominations or recommendations of, a majority of the then-existing members of the Board of Directors or by a committee of directors, a majority of which are then-existing members of the Board of Directors. "EQUITY SECURITIES" means any (i) capital stock or any securities representing any other equity interest or (ii) any securities convertible into or exchangeable for capital stock or any other rights, warrants or options to acquire any of the foregoing securities. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "MERGER" has the meaning set forth in the recitals to this Agreement. "MERGER AGREEMENT" has the meaning set forth in the recitals to this Agreement. "MERGER SHARES" means all or any Shares received by the Stockholders in connection with the Merger. "NASDAQ" has the meaning set forth in Section 2.7. "PERSON" means any natural person, corporation, limited partnership, general partnership, a limited liability company, joint stock company, joint venture, association, company, trust, bank, trust 2 company, land trust, business trust or other organization, whether or not a legal entity, and any government agency or political subdivision thereof. "PRIOR REGISTRATION RIGHTS AGREEMENTS" means (i) the Registration Rights Agreement, dated as of December 6, 1994, among the Company and the investors and management shareholders named therein, (ii) the Registration Rights Agreement, dated as of July 25, 1997, between the Company and John Hayes, James C. Wyant and Louise Wyant, (iii) the Registration Rights Agreement, dated as of May 29, 1998, between the Company and the Persons identified on the signature pages thereto, (iv) the Registration Rights Agreement, dated as of November 4, 1999, between the Company and the Persons identified on the signature pages thereto, and (v) the Registration Rights Agreement, dated as of January 31, 2000, between the Company and the Persons identified on the signature pages thereto. "REGISTRABLE SECURITIES" means (i) the Merger Shares, and (ii) any Shares issued as a dividend or distribution or issuable upon the conversion or exercise of any warrant, right or other security which is issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the Merger Shares. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SHARES" means shares of the Company's common stock, par value $0.01 per share. "SHELF PERIOD" means the period commencing on the date hereof and ending on the second anniversary of the date hereof. "SHELF SECURITIES" has the meaning set forth in Section 2.2(a). "STOCKHOLDERS" has the meaning ascribed to such term in the Merger Agreement. ARTICLE II REGISTRATION RIGHTS 2.1 INCIDENTAL REGISTRATION. (a) If, at any time after the date hereof, the Company proposes to register any equity securities under the Securities Act for sale to the public (other than pursuant to a registration statement on Form S-4 or Form S-8 (or any successor forms) or any other forms not available for registering Registrable Securities for sale to the public or any shelf registration effected pursuant to the Prior Registration Rights Agreements), either for the Company's account or for the account of others, the Company shall, not less than 30 nor more than 90 days prior to the proposed date of filing of a registration statement under the Securities Act, give written notice to all holders of Registrable Securities of its intention to do so. Upon the written request of any holder of Registrable Securities given 3 within 30 days after transmittal by the Company of such notice, the Company, subject to its obligations under the Prior Registration Rights Agreements, will use its best efforts to cause the Registrable Securities requested to be registered to be so registered under the Securities Act. A request pursuant to this Section 2.1(a) shall state the number of Registrable Securities requested to be registered and the intended method of disposition thereof. The rights granted in this Section 2.1(a) shall apply in each case where the Company proposes to register equity securities regardless of whether such rights may have been exercised previously. (b) Nothing in this Agreement shall be deemed to require the Company to proceed with any registration of its securities pursuant to Section 2.1 after giving the notice provided in paragraph (a) above. 2.2 SHELF REGISTRATION. (a) In the event that a Change in Control shall have occurred, at any time during the Shelf Period any Company Stockholder may submit a written request to the Company requesting that the Company file with the Commission a registration statement under the Securities Act for the offering on a continuous or delayed basis in the future of up to the number of Registrable Securities outstanding as of the date of such request (the "SHELF SECURITIES"), as requested by the Company Stockholder(s) (collectively, the "SHELF REGISTRATION"), and, subject to the provisions hereof, the Company shall use its best efforts to comply with such request. The Shelf Registration shall be on an appropriate form and the Shelf Registration and any form of prospectus included therein or prospectus supplement relating thereto shall reflect such plan of distribution or method of sale as the Company Stockholder(s) may from time to time notify the Company, including the sale of some or all of the Shelf Securities in a public offering. The Company shall use its best efforts to keep the Shelf Registration continuously effective for the period beginning on the date on which the Shelf Registration is declared effective and ending on the first to occur of (1) the expiration of the Shelf Period and (2) on the first date that all Shelf Securities have been sold. During the period during which the Shelf Registration is effective, the Company shall promptly supplement or make amendments to the Shelf Registration, if required by the Securities Act or if reasonably requested by the Company Stockholder(s) or an underwriter of Registrable Securities, including to reflect any specific plan of distribution or method of sale, and shall use its reasonable best efforts to have such supplements and amendments declared effective, if required, as soon as practicable after filing. A request made by any Company Stockholder pursuant to this Section 2.2(a) shall state the number of Registrable Securities requested to be registered and the intended manner of distribution thereof. (b) Notwithstanding anything to the contrary contained herein, the Company shall not be required to file or otherwise effect any registration under Section 2.2(a) (i) at any time commencing on the 16th day of each of March, June, September and December and ending 48 hours following public release by the Company of its earnings for the quarter in which such 16th day occurs or (ii) at any time that the Company reasonably believes in good faith that the use of the Shelf Registration would require the disclosure of a pending financing, acquisition, corporate reorganization or other material corporate development which has not been previously publicly disclosed. No Stockholder(s) may use the Shelf Registration to effect a distribution of any Shelf Securities during any of the periods referred to in (i) 4 and (ii) above and may only distribute any Shelf Securities pursuant to the Shelf Registration if the Company shall have received a notice from such Stockholder(s) under this Section 2.2(b) of its intention to make such a distribution and is not advised by the Company within two business days of the date of its notice that such Stockholder(s) may not use the Shelf Registration. (c) The Company shall not be obligated or required to effect any registration pursuant to this Section 2.2 during the period commencing on the date falling thirty (30) days prior to the Company's estimated date of filing of, and ending on the earlier of (i) the Company's decision not to file, (ii) the withdrawal by the Company of a filed registration statement and (iii) the date one hundred eighty (180) days following the effective date of, any registration statement pertaining to any underwritten registration initiated by the Company, for the account of the Company, if the Company shall have advised holders of Registrable Securities prior to the occurrence of a Change in Control that the Company is contemplating commencing an underwritten registration initiated by the Company; provided, however, that the Company will use reasonable efforts to cause any such registration statement to be filed and to become effective as expeditiously as shall be reasonably possible. 2.3 REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions of this Article II to use its best efforts to effect the registration of any securities under the Securities Act, the Company will within the time periods provided herein: (a) prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for a period of time required for the disposition of such securities by the holders thereof; (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such registration statement until (i) in the case of registration statements filed in accordance with Section 2.1(a), the earlier of such time as all of such securities have been disposed of and the date which is ninety (90) days after the date of initial effectiveness of such registration statement and (ii) in the case of a registration statement filed in accordance with Section 2.2(a), until the earlier of the expiration of the Shelf Period and the first date upon which all Shelf Securities have been sold. (c) furnish to each seller and to each duly authorized underwriter of each seller such number of authorized copies of a prospectus, including copies of a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such seller or underwriter may reasonably request in order to facilitate the public sale or other disposition of the securities owned by such seller; 5 (d) use its best efforts to register or qualify the securities covered by such registration statement under such securities or blue sky laws of such jurisdictions as each seller shall request, and do any and all other acts and things which may be necessary under such securities or blue sky laws to enable such seller to consummate the public sale or other disposition in such jurisdictions of the securities to be sold by such seller, except that the Company shall not for any such purpose be required to qualify to do business in any jurisdiction wherein it is not qualified or to file any general consent to service of process in any such jurisdiction; (e) before filing the registration statement or prospectus or amendments or supplements thereto or any other documents related thereto, furnish to counsel selected by the holders of Registrable Securities included in such registration statement copies of all such documents proposed to be filed, all of which shall be subject to the reasonable approval of such counsel; (f) furnish, at the request of any seller, (1) to the underwriters, on the date that such seller's securities are delivered to the underwriters for sale pursuant to such registration, an opinion of the independent counsel representing the Company for the purposes of such registration addressed to such underwriters and to such seller, in such form and content as the underwriters and such seller may reasonably request, or (2) if such securities are not being sold through underwriters, then to the sellers, on the date that the registration statement with respect to such securities becomes effective, an opinion, dated such date, of the independent counsel representing the Company for the purposes of such registration in such form and content as such seller may reasonably request; and in the case of clauses (1) and (2) above, a letter dated such date, from the independent certified public accountants of the Company addressed to the underwriters, if any, and if such securities are not being sold through underwriters, then to the sellers and, if such accountants refuse to deliver such letter to such sellers, then to the Company, stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the registration statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act and covering such other matters as are customarily covered in accountant's "comfort" letters; (g) enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such securities; (h) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement; (i) notify the holders of Registrable Securities included in such registration statement, at any time when a prospectus relating thereto covered by such registration statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus 6 included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and, at the request of such holders properly prepare and furnish to such holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made; (j) use its best efforts to list all Registrable Securities covered by such registration statement on any securities exchange on which the Shares are then listed; and (k) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the registration statement, an earnings statement covering the period of at least 12 months beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. 2.4 EXPENSES. All expenses incurred in effecting the registrations provided for in this Article II (excluding underwriters' discounts and commissions, which shall be borne pro rata by those holders for whom Registrable Securities are being registered and, other than as provided in the last sentence of this Section 2.4, fees of counsel to the holders of Registrable Securities), including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD Regulation, Inc. and any securities exchange), printing expenses, fees and disbursements of counsel for the Company, fees of the Company's independent auditors and accountants, expenses of any audits incident to or required by any such registration and expenses of complying with the securities or blue sky laws of any jurisdictions pursuant to Section 2.3(d) hereof, shall be paid by the Company. In addition, the Company shall pay the fees and disbursements of one counsel reasonably satisfactory to the Company for the holders of Registrable Securities for performance of the normal and customary functions of counsel for selling shareholders in each registration provided for in this Article II. 2.5 MARKETING RESTRICTIONS. (a) If (i) any holder of Registrable Securities requests registration of Registrable Securities under Section 2.1, (ii) the offering proposed to be made is to be an underwritten public offering and (iii) the managing underwriters of such public offering furnish a written opinion that the total amount of securities to be included in such offering would exceed the maximum amount of securities (as specified in such opinion) which can be marketed at a price reasonably related to the then current market value of such securities and without materially and adversely affecting such offering; then the rights of the Company and the holders of Registrable Securities and other securities having the right to include such securities in such registration to participate in such offering shall be in the following order of priority: 7 FIRST: The Company shall be entitled to participate in accordance with the number of securities requested to be registered by the Company; and then SECOND: Subject to the rights of the holders of "Registrable Securities" (as defined in the Prior Registration Rights Agreements), all holders of securities, including holders of Registrable Securities (as defined herein), having the right to include such securities in such registration shall be entitled to participate pro rata among themselves in accordance with the number of securities requested to be registered by each such holder; and no securities (issued or unissued) other than those registered and included in the underwritten offering shall be offered for sale or other disposition by the holders of Registrable Securities in a transaction which would require registration under the Securities Act until the expiration of 180 days after the effective date of the registration statement in which Registrable Securities were included pursuant to Section 2.1 or such shorter period as may be acceptable to the Company. (b) If (i) any holder of Registrable Securities wishes to register any Registrable Securities in a registration made pursuant to Section 2.2 hereof, (ii) the offering proposed to be made by such holder or holders is to be an underwritten public offering, (iii) the Company or one or more holders of securities other than Registrable Securities to whom the Company has granted registration rights wish to register securities in such registration and (iv) the managing underwriters of such public offering furnish a written opinion that the total amount of securities to be included in such offering would exceed the maximum amount of securities (as specified in such opinion) which can be marketed in such offering at a price which such holders of Registrable Securities are prepared to sell and without materially and adversely affecting such offering; then the rights of holders of Registrable Securities, the Company and the holders of other securities with registration rights to participate in such offering shall be in the following order of priority: FIRST: Subject to the rights of the holders of "Registrable Securities" (as defined in the Prior Registration Rights Agreements), the holders of Registrable Securities requesting registration shall be entitled to participate in proportion to the number of Registrable Securities so requested to be registered by each such holder; and then SECOND: The Company and all holders of securities other than Registrable Securities having the right to include such securities in such registration shall be entitled to participate pro rata among themselves in accordance with the number of securities requested to be registered by the Company and each such holder; and no securities (issued or unissued) other than those registered and included in the underwritten offering shall be offered for sale or other disposition by the Company in a transaction which would require registration under the Securities Act (including any additional offering which is to be registered pursuant to 8 Section 2.1) until the expiration of 180 days after the effective date of the registration statement requested pursuant to Section 2.2 or such shorter period as may be acceptable to the holders of Registrable Securities participating in such underwritten offering. 2.6 TIME LIMITATIONS; TERMINATION OF RIGHTS. In addition to the expiration of any rights to registration any holder of Registrable Securities may have under Section 2.2 upon the expiration of the Shelf Period, the rights to registration shall terminate as to any particular Registrable Securities when (i) such Registrable Securities shall have been effectively registered under the Securities Act and sold by the holder thereof in accordance with such registration, (ii) such Registrable Securities shall have been sold in compliance with Rule 144 promulgated under the Securities Act or (iii) written opinions from counsel reasonably acceptable to the Company and the holder of such Registrable Securities, to the effect that such Registrable Securities may be sold without registration under the Securities Act or applicable state law and without restriction as to the volume and timing of such sales, shall have been received from either counsel to the Company or counsel to the holders thereof. 2.7 COMPLIANCE WITH RULE 144. At the request of any holder of Registrable Securities who proposes to sell Registrable Securities in compliance with Rule 144 promulgated under the Securities Act, assuming that at such time the provisions of such Rule are applicable to such holder and, in the event such holder is or could be deemed to be an "affiliate" of the Company within the meaning of the Securities Act, and the Company is then required to file reports under Section 13 or 15(d) of the Exchange Act, the Company shall (a) forthwith furnish to such holder a written statement as to its compliance with the filing requirements of the Commission as set forth in such Rule, as such Rule may be amended from time to time, and (b) promptly make such additional filings of reports with the Commission as will enable the holder to make sales of Registrable Securities pursuant to such Rule. At all times during which this Agreement is effective, the Company shall file with the Commission and, if applicable, The Nasdaq Stock Market, Inc. ("NASDAQ"), in a timely manner, all reports and other documents required to be filed by the Company, (i) with the Commission pursuant to the Exchange Act and (ii) with Nasdaq pursuant to its rules and regulations. 2.8 COMPANY'S INDEMNIFICATION. In the event of any registration under the Securities Act of any Registrable Securities pursuant to this Article II, the Company hereby agrees to execute an agreement with any underwriter participating in the offering thereof containing such underwriter's standard representations and indemnification provisions and to indemnify and hold harmless each holder disposing of Registrable Securities, each Person, if any, who controls such holder within the meaning of the Securities Act and each other Person (including each underwriter and each Person who controls such underwriter) who participates in the offering of Registrable Securities, against any losses, claims, damages or liabilities, joint or several, to which such holder, controlling Person or participating Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which the Registrable Securities are registered under the Securities Act, in any preliminary prospectus or final prospectus contained therein, or in any 9 amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each such holder, controlling Person and participating Person for any legal or other expenses reasonably incurred in connection with investigating or defending any such loss, claim, damage, liability or proceeding; provided, however, that the Company will not be liable in any case to any such holder, controlling Person or participating Person to the extent that any loss, claim, damage or liability results from any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, preliminary or final prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such holder or any other Person who participates as an underwriter in the offering or sale of such securities, in either case, specifically stating that it is for use in the preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any holder disposing of Registrable Securities or any such underwriter or controlling Person and shall survive the transfer of such securities by such holder and the expiration or termination of this Agreement. 2.9 INDEMNIFICATION BY HOLDER. As a condition of the Company's obligation under this Article II to effect any registration under the Securities Act, there shall be delivered to the Company an agreement or agreements duly executed by each holder for whom Registrable Securities are to be so registered, whereby such holder agrees to indemnify and hold harmless (in the same manner as set forth in Section 2.8 above) the Company, each Person referred to in clause (1), (2) or (3) of Section 11(a) of the Securities Act in respect of the registration statement, each other holder for whom Registrable Securities (as defined in the Prior Registration Rights Agreements and as defined herein) are to be registered and each other Person, if any, who controls the Company within the meaning of the Securities Act, with respect to any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which the Registrable Securities are to be registered under the Securities Act, in any preliminary prospectus or final prospectus contained therein or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which, in each case, is made in or omitted from the registration statement, preliminary or final prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such holder specifically for use in the preparation thereof; provided, however, that the indemnification obligations of each such holder shall be limited to the net proceeds received by such holder from the sale of Registrable Securities pursuant to such registration. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any Person indemnified by virtue of this Section 2.9 and shall survive the transfer of such securities by such holder and the expiration or termination of this Agreement. (b) At the request of the managing underwriter in connection with any underwritten offering of the Company's securities, each holder for whom Registrable Securities are being registered shall enter into an indemnity agreement in customary form with such underwriter. 10 2.10 CONTRIBUTION. If the indemnification provided for in Section 2.8 or 2.9 from the indemnifying party is unavailable to an indemnified party hereunder, or is insufficient to hold harmless an indemnified party, in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.10 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation. 2.11 NOTIFICATION OF AND PARTICIPATION IN ACTIONS. Promptly after receipt by an indemnified party under this Article II of oral or written notice of a claim or the commencement of any proceeding against it, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under such Article, give written notice to the indemnifying party of the commencement thereof, but the failure so to notify the indemnifying party shall not relieve it of any liability that it may have to any indemnified party except to the extent the indemnifying party demonstrates that the defense of such action is prejudiced thereby. In case any such proceeding shall be brought against an indemnified party and it shall give notice to the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish (unless the indemnifying party is also a party to such proceeding and the indemnified party determines in good faith that joint representation would be inappropriate) to assume the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such Article for any fees of other counsel or any other expenses with respect to the defense of such proceeding, in each case, subsequently incurred by such indemnified party in connection with the defense thereof. If an indemnifying party assumes the defense of such proceeding, (a) no compromise or settlement thereof may be effected by the indemnifying party without the indemnified party's reasonable consent unless (i) there 11 is no finding or admission of any violation of law or any violation of the rights of any Person and no effect on any other claims that may be made against the indemnified party and (ii) the sole relief provided is monetary damages that are paid in full by the indemnifying party and (b) the indemnifying party shall have no liability with respect to any compromise or settlement thereof effected without its consent. If notice is given to an indemnifying party of the commencement of any proceeding and it does not, within fifteen (15) business days after the indemnified party's notice is given, give notice to the indemnified party of its election to assume the defense thereof, the indemnifying party shall be bound by any determination made in such action or any compromise or settlement thereof effected by the indemnified party. Notwithstanding the foregoing, if an indemnified party determines in good faith that there is a reasonable probability that a proceeding may adversely affect it or its affiliates other than as a result of monetary damages, such indemnified party may, by notice to the indemnifying party, assume the exclusive right to defend, compromise or settle such proceeding, but the indemnifying party shall not be bound by any determination of a proceeding so defended or any compromise or settlement thereof effected without its consent (which shall not be unreasonably withheld). All indemnification obligations of the parties hereto shall survive any termination of this Agreement pursuant to Section 2.6 hereof. 2.12 UNDERWRITING REQUIREMENTS. (a) In the event of an underwritten offering of the Company's securities, each holder for whom Registrable Securities are being registered pursuant to Sections 2.1 or 2.2 hereof shall, as a condition to inclusion of such Registrable Securities in such registration, execute and deliver to the underwriter(s) an underwriting agreement in customary form. The underwriter(s) for offerings of Registrable Securities under Section 2.1 shall be selected by the Company and the managing underwriter(s) for offerings under Section 2.2 shall be reasonably acceptable to the Company. (b) At the request of the managing underwriter in connection with any underwritten offering of the Company's securities, the holders for whom Registrable Securities are being registered shall enter into customary "lock-up" agreements pursuant to which each such holder will agree to not effect any sale or distribution of Registrable Securities for a period of no more than 180 days beginning on the effective date of any such registration (except as part of such registration). 2.13 FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Article II that the holders requesting registration of Registrable Securities furnish to the Company such information regarding them, the Registrable Securities held by them and the intended method of disposition of such securities as the Company shall reasonably request and as shall be required in connection with the action to be taken by the Company. 12 ARTICLE III BENEFITS OF AGREEMENT 3.1 PERMITTED TRANSFERS. The registration rights granted herein may only be transferred to a transferee who acquires Registrable Securities from any Stockholder and is (i) the spouse or member of the immediate family of a Stockholder; (ii) a trust for the benefit of a Stockholder or any member of such Stockholder's immediate family; or (iii) a corporation, partnership or other entity the only owners of which are one or more Stockholders and members of their immediate families; PROVIDED that any transferring Stockholder gives written notice at the time of such transfer to the Company stating the name and address of the transferee and identifying the Registrable Securities so transferred, accompanied by a signature page to this Agreement pursuant to which such transferee agrees to be bound by the terms and conditions hereof. ARTICLE IV MISCELLANEOUS 4.1 NO INCONSISTENT AGREEMENTS. The Company will not, at any time after the effective date of this Agreement, enter into, and is not now a party to or otherwise bound by, any agreement or contract (whether written or oral) with respect to any of its securities which is inconsistent in any respect with the registration rights granted by the Company pursuant to this Agreement; PROVIDED, HOWEVER, that the rights of the holders of Registrable Securities hereunder are subject to the rights of holders of Registrable Securities (as defined in the Prior Registration Rights Agreements to the extent provided in the Prior Registration Rights Agreements). 4.2 NO OTHER GRANT OF REGISTRATION RIGHTS. The Company will not at any time grant to any other Persons any rights with respect to the registration of any securities of the Company which have priority over or are inconsistent with the registration rights granted by the Company pursuant to this Agreement. 4.3 NOTICES. Notices and other communications provided for herein shall be in writing and shall be given in the manner and with the effect provided in the Merger Agreement. Such notices and communications shall be addressed if to a holder of Registrable Securities, to its address as shown on the transfer records of the Company, unless such holder shall notify the Company that notices and communications should be sent to a different address (or facsimile number), in which case notices and communications shall be sent to the address (or such facsimile number) specified by such holder. 4.4 WAIVERS; AMENDMENTS. No failure or delay of any holder of Registrable Securities in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right 13 or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of such holder are cumulative and not exclusive of any rights or remedies which it would otherwise have. The provisions of this Agreement may be amended, modified or waived only by an agreement in writing and any such waiver shall be effective only in the specific instance and for the purpose for which given. Notwithstanding the foregoing, no amendment, modification or waiver of any provision of this Agreement shall be effective against a holder of Registrable Securities unless agreed to in writing by such holder. No notice or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. 4.5 GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of New York without giving effect to the conflicts of law principles thereof. 4.6 COVENANTS TO BIND SUCCESSORS AND ASSIGNS. All the covenants, stipulations, promises and agreements in this Agreement made by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not. 4.7 SEVERABILITY. In case any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 4.8 SECTION HEADINGS. The section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of or be taken into consideration in interpreting this Agreement. 4.9 EXPENSES. Except as expressly otherwise provided herein, each party shall bear its own expenses incurred in connection with the preparation, execution and performance of this Agreement and the transactions contemplated hereby, including all fees and expenses of agents, representatives, counsel and accountants. 4.10 COUNTERPARTS. This Agreement may be executed in multiple counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 4.11 FURTHER AGREEMENTS. The parties agree that they will execute any further instruments and perform any acts that may become necessary or desirable to carry out this Agreement. 14 IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly executed, all as of the day and year above written. VEECO INSTRUMENTS INC. By: /s/ Gregory A. Robbins ------------------------------------------- Name: Gregory A. Robbins Title: Vice President and General Counsel COMPANY STOCKHOLDERS: /s/ Paul E. Colombo ---------------------------------------------- Paul E. Colombo /s/ David G. Reamer ---------------------------------------------- David G. Reamer /s/ Frank C. Kraemer ---------------------------------------------- Frank C. Kraemer /s/ Noel P. Rahn ---------------------------------------------- Noel P. Rahn 15 EX-12.1 8 a2068746zex-12_1.txt EXHIBIT 12.1 EXHIBIT 12.1 Veeco Instruments Inc. Ratio of Earnings to Fixed Charges ($ in thousands, except ratio data)
NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ------------------------------------------------------------------ 1996 1997 1998 1999 2000 2001 ------------------------------------------------------------------ FIXED CHARGES: Interest expense, including amortization of debt issue costs $ 1,108 $1,892 $2,875 $3,002 $2,374 $1,324 Portion of rental expense deemed to represent interest 631 855 869 1,351 1,529 1,037 ------------------------------------------------------------------ Total fixed charges $ 1,739 $2,747 $3,744 $4,353 $3,903 $2,361 ================================================================== EARNINGS BEFORE FIXED CHARGES: Income before income taxes, discontinued operations and cumulative effect of change in accounting principle $37,913 $38,279 $19,652 $40,404 $8,445 $41,208 Fixed charges 1,739 2,747 3,744 4,353 3,903 2,361 ------------------------------------------------------------------ Total earnings before fixed charges $39,652 $41,026 $23,396 $44,757 $12,348 $43,569 ================================================================== RATIO OF EARNINGS TO FIXED CHARGES 22.802X 4.935x 6.249x 10.282x 3.164x 18.454x ==================================================================
EX-23.2 9 a2068746zex-23_2.txt EXHIBIT 23.2 Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of Veeco Instruments Inc. for the registration of $220,000,000 4 1/8% convertible subordinated notes due 2008 and 9,755,783 shares of common stock and to the incorporation by reference therein of our report dated February 5, 2001, with respect to the consolidated financial statements and schedule of Veeco Instruments Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2000, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Melville, New York March 11, 2002 EX-23.3 10 a2068746zex-23_3.txt EXHIBIT 23.3 Exhibit 23.3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Veeco Instruments Inc. on Form S-3 of our report dated March 16, 2001 (September 17, 2001 as to the last paragraph of Note 11), appearing in Amendment No. 3 to Current Report on Form 8-K/A of Veeco Instruments Inc. filed on November 30, 2001, and to the reference to us under the heading "Experts" in the prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP Minneapolis, Minnesota March 8, 2002 EX-23.4 11 a2068746zex-23_4.txt EXHIBIT 23.4 EXHIBIT 23.4 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of Veeco Instruments Inc. of our report dated October 19, 1999 relating to the financial statements of CVC, Inc., which appears in Veeco Instruments Inc.'s Annual Report on Form 10-K for the year ended December 31, 2000. PRICEWATERHOUSECOOPERS LLP Rochester, New York March 8, 2002 EX-24.1 12 a2068746zex-24_1.txt EXHIBIT 24.1 Exhibit 24.1 POWER OF ATTORNEY Each of the undersigned, in the capacities relative to Veeco Instruments Inc. ("Veeco") stated below, hereby appoints each of Edward H. Braun, John F. Rein, Jr. and Gregory A. Robbins, acting individually, his true and lawful attorney-in-fact, with full power of substitution and resubstitution, to sign and file with the Securities and Exchange Commission (a) a Registration Statement on Form S-3 relating to $220 million aggregate principal amount of Veeco's 4-1/8% Convertible Subordinated Notes due 2008 (the "Notes"), shares of common stock of Veeco issuable upon conversion of the Notes and certain additional shares of common stock of Veeco, and (b) any and all amendments, including post-effective amendments, to such Registration Statement; in each case, with full power and authority to do and perform each act required in connection therewith, as fully as he might do in person. The undersigned has executed this Power of Attorney as of January 25, 2002. SIGNATURES CAPACITY /s/ EDWARD H. BRAUN Director, Chairman, Chief Executive - ---------------------------------------- Officer and President (principal Edward H. Braun executive officer) /s/ RICHARD A. D'AMORE Director - ---------------------------------------- Richard A. D'Amore /s/ JOEL A. ELFTMANN Director - ---------------------------------------- Joel A. Elftmann /s/ HEINZ K. FRIDRICH Director - ---------------------------------------- Heinz K. Fridrich /s/ DOUGLAS A. KINGSLEY Director - ---------------------------------------- Douglas A. Kingsley /s/ DR. PAUL R. LOW Director - ---------------------------------------- Dr. Paul R. Low /s/ ROGER D. MCDANIEL Director - ---------------------------------------- Roger D. McDaniel /s/ IRWIN H. PFISTER - ---------------------------------------- Irwin H. Pfister Director /s/ WALTER J. SCHERR - ---------------------------------------- Walter J. Scherr Director EX-25 13 a2068746zex-25.txt EXHIBIT 25 Exhibit 25 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 --------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) STATE STREET BANK AND TRUST COMPANY, N.A. (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) UNITED STATES 13-3191724 (JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.) STATE STREET BANK AND TRUST COMPANY, N.A. 61 BROADWAY, 15TH FLOOR NEW YORK, NEW YORK 10006 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) 212-612-3267 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) VEECO INSTRUMENTS INC. (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) DELAWARE 11-2989601 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 100 SUNNYSIDE BOULEVARD 11797 WOODBURY, NEW YORK (ZIP CODE) (Address of principal executive offices) 4 1/8% CONVERTIBLE SUBORDINATED NOTES (TITLE OF INDENTURE SECURITIES) GENERAL ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT. Office of the Comptroller of the Currency, Washington, D.C. Federal Deposit Insurance Corporation, Washington, D.C. 1. WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee or of its parent, State Street Bank and Trust Company. (See Notes) ITEM 3. THROUGH ITEM 15. NOT APPLICABLE. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. Items 1 through 5 below were filed with and are incorporated by reference to the Form T-1 in Registration Statement No. 333-53759 filed by Columbus McKinnon Corporation effective July 1, 1998: 1. COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE. 2. COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS. 3. COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS. 4. COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE. 5. THE CONSENT OF TRUSTEE AS REQUIRED BY SECTION 321(b) OF THE ACT. 6. COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE FILED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY FILED AS EXHIBIT A. NOTES In answering any item of this Statement of Eligibility that relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, N.A., a corporation organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City and State of New York, on the 4th day of March, 2002. STATE STREET BANK AND TRUST COMPANY, N.A. By: /s/ Jean Clarke ------------------------------------- NAME: JEAN CLARKE TITLE: ASSISTANT VICE PRESIDENT CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by VEECO INSTRUMENTS INC. 4 1/8% CONVERTIBLE SUBORDINATED NOTES we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY, N.A. By: /s/ Jean Clarke ------------------------------------- NAME: JEAN CLARKE TITLE: ASSISTANT VICE PRESIDENT Exhibit A State Street Bank and Trust Company, National Association FFIEC 041 61 BROADWAY Consolidated Report of Condition NEW YORK CITY, NY 10006 for September 30, 2001 FDIC Certificate Number: 24938 Web Address as of: 11/21/2001 http://www.statestreet.com THE WEB ADDRESS IS AS PROVIDED BY THE INSTITUTION. PLEASE CONTACT THE INSTITUTION DIRECTLY WITH ANY QUESTIONS REGARDING THE DATA OR THE WEB ADDRESS. INFORMATION PAGE SEARCH Consolidated Report of Condition for Insured Commercial and State - Chartered Savings Banks for September 30, 2001 All Schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC -- Balance Sheet DOLLAR AMOUNTS IN THOUSANDS ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A) a. Noninterest-bearing balances and currency and coin(1) RCON 0081 19,233 b. Interest-bearing balances(2) RCON 0071 0 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A) RCON 1754 0 b. Available-for-sale securities (from Schedule RC-B, column D) RCON 1773 0 3. Federal funds sold and securities purchased under agreements to resell RCON 1350 0 4. Loans and lease financing receivables (from Schedule RC-C): a. LOANS AND LEASES HELD FOR SALE RCON 5369 0 b. LOANS AND LEASES, NET OF UNEARNED INCOME RCON B528 0 c. LESS: Allowance for loan and lease losses RCON 3123 0
d. LOANS AND LEASES, NET OF UNEARNED INCOME AND ALLOWANCE (item 4.b minus 4.c) RCON B529 0 5. Trading assets (from Schedule RC-D) RCON 3545 0 6. Premises and fixed assets (including capitalized leases) RCON 2145 581 7. Other real estate owned (from Schedule RC-M) RCON 2150 0 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) RCON 2130 0 9. Customers' liability to this bank on acceptances outstanding RCON 2155 0 10. Intangible assets: a. GOODWILL RCON 3163 0 b. OTHER INTANGIBLE ASSETS (from Schedule RC-M) RCON 0426 0 11. Other assets (from Schedule RC-F) RCON 2160 1,441 12. Total assets (sum of items 1 through 11) RCON 2170 21,255 LIABILITIES: 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E) RCON 2200 0 (1) Noninterest-bearing(3) RCON 6631 0 (2) Interest-bearing RCON 6636 0 b. Not applicable 14. Federal funds purchased and securities sold under agreements to repurchase RCON 2800 0 15. Trading liabilities (from Schedule RC-D) RCON 3548 0 16. OTHER BORROWED MONEY (includes mortgage indebtedness and obligations under capitalized leases) (from Schedule RC-M) RCON 3190 0 17. Not applicable 18. Bank's liability on acceptances executed and outstanding RCON 2920 0 19. Subordinated notes and debentures(4) RCON 3200 0 20. Other liabilities (from Schedule RC-G) RCON 2930 7,864 21. Total liabilities (sum of items 13 through 20) RCON 2948 7,864 22. MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES RCON 3000 0 EQUITY CAPITAL 23. Perpetual preferred stock and related surplus RCON 3838 0 24. Common stock RCON 3230 500 25. Surplus (exclude all surplus related to preferred stock) RCON 3839 2,000 26. a. Retained earnings RCON 3632 10,891
b. ACCUMULATED OTHER COMPREHENSIVE INCOME (5) RCON B530 0 27. OTHER EQUITY CAPITAL COMPONENTS(6) RCON A130 0 28. Total equity capital (sum of items 23 through 27) RCON 3210 13,391 29. Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28) RCON 3300 21,255 Memorandum TO BE REPORTED WITH THE MARCH REPORT OF CONDITION. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by the independent external auditors as of any date during 2000 RCON 6724 N/A
1 Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 ATTESTATION ON BANK MANAGEMENT'S ASSERTION ON THE EFFECTIVENESS OF THE BANK'S INTERNAL CONTROL OVER FINANCIAL REPORTING BY A CERTIFIED PUBLIC ACCOUNTING FIRM 4 Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 5 Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 6 Review of the bank's financial statements by external auditors 7 Compilation of the bank's financial statements by external auditors 8 Other audit procedures (excluding tax preparation work) 9 No external audit work - ------------------ (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. (3) Includes total demand deposits and noninterest-bearing time and savings deposits. (4) Includes limited-life preferred stock and related surplus. (5) Includes net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, and minimum pension liability adjustments. (6) Includes treasury stock and unearned Employee Stock Ownership Plan shares. -----END PRIVACY-ENHANCED MESSAGE-----