-----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, B0tHyucxX0TW7OhKe+KcmjaedYF4csk6BOaDdTs3fP+IFVn0zqheHgW1df2Q47Ix eIILfu4vvxEtTDCQN0jQgg== 0000891618-97-001588.txt : 19970403 0000891618-97-001588.hdr.sgml : 19970403 ACCESSION NUMBER: 0000891618-97-001588 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970318 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970402 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SILICON VALLEY GROUP INC CENTRAL INDEX KEY: 0000712752 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 942264681 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11348 FILM NUMBER: 97573738 BUSINESS ADDRESS: STREET 1: 101 METRO DRIVE STREET 2: SUITE 400 CITY: SAN JOSE STATE: CA ZIP: 95110 BUSINESS PHONE: 4084675910 MAIL ADDRESS: STREET 1: 101 METRO DRIVE STREET 2: SUITE 400 CITY: SAN JOSE STATE: CA ZIP: 95110 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) March 18, 1997 Silicon Valley Group, Inc. (Exact name of the registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 0-11348 94-2264681 (Commission File Number) (I.R.S. Employer Identification No.) 101 Metro Drive, Suite 400, San Jose, California 95110 (Address of principal executive offices) (Zip Code) (408) 467-5910 (Registrant's telephone number, including area code) (Former name or former address, if changed since last report) 2 Item 5. Other Events. The Registrant purchased from International Business Machines Corporation ("IBM") for $3,000,000 their entire 6% minority interest position in SVG Lithography Systems, Inc. ("SVGL"). This transaction results in the Registrant owning substantially all of the voting securities of SVGL. In a separate transaction, the Registrant satisfied in full its royalty payment obligation of $38,000,000 to IBM in exchange for $23,000,000 of SVGL products, 489,296 shares of the Registrant's Common Stock valued at $10,000,000 and $5,000,000 in cash. The transaction will result in a before tax charge taken against the Registrant's earnings for the quarter ended March 31, 1997 of approximately $33,000,000. The Registrant expects to amortize the remainder of the charge over future periods. Item 7. Financial Statements and Exhibits. (c) Exhibits 4.1 Stock Purchase and Registration Rights Agreement dated as of March 18, 1997 among the Registrant and IBM 4.2 Stockholder Agreement dated as of March 18, 1997 among the Registrant, SVGL and IBM 99.1 Agreement for Payment in Connection with Development Agreement dated as of March 18, 1997 among the Registrant, SVGL and IBM -2- 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: April 2, 1997 SILICON VALLEY GROUP, INC. By: /s/ Russell G. Weinstock ----------------------------------------- Russell G. Weinstock Vice President and Chief Financial Officer -3- EX-4.1 2 STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT 1 Exhibit 4.1 March 18, 1997 STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 18, 1997 BETWEEN INTERNATIONAL BUSINESS MACHINES CORPORATION AND SILICON VALLEY GROUP, INC. 2 STOCK PURCHASE AGREEMENT, dated as of March 18, 1997 (the "Agreement"), between INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation ("Seller"), and SILICON VALLEY GROUP, INC., a Delaware corporation (the "Company"). WHEREAS, Seller is the record holder of 600,000 shares of SVG Lithography Systems, Inc.'s Common Stock, $.0l par value per share (the "Common Stock"); and WHEREAS, the Company is the record holder of 9,400,000 shares of SVG Lithography Systems, Inc.'s common stock, $.01 par value per share; and WHEREAS, Seller desires to sell and the Company desires to purchase the Common Stock upon the terms and conditions hereinafter provided; NOW, THEREFORE, it is hereby agreed as follows: 1. CERTAIN DEFINITIONS. (a) As used in this Agreement, the following terms shall have the meanings specified below: (i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. (ii) "NASD" shall mean the National Association of Securities Dealers, Inc. (iii) "NASDAQ" shall mean the National Association of Securities Dealers Automated Quotation System. (iv) "OPERATIVE AGREEMENTS" shall mean this Agreement, the Agreement for Payment in Connection with Development Agreement among Seller, the Company and SVG Lithography, Inc. ("SVGL") of even date herewith (the "Development Agreement") and the Stockholders Agreement among Seller, the Company and SVGL of even date herewith. (v) "PERSON" shall mean any individual, firm, corporation, partnership, trust, joint venture or other entity, and shall include any successor (by merger or otherwise) of such entity. (vi) "REGISTRATION SHARES" means (A) the Shares of common stock of the Company issued to Seller pursuant to the Agreement for Payment in connection with 3 2 Development Agreement, among Seller, the Company and SVG Lithography, Inc. ("SVGL") of even date herewith (the "Development Agreement"), which number of shares of common stock shall be calculated by dividing $10,000,000 (ten million dollars) by a share price equal to the average closing sales price (or the average closing bid price if no such sales were reported) as quoted on the NASDAQ for the five business days beginning on March 11, 1997 and ending on March 17, 1997; and (B) any securities issued or issuable with respect to any common stock referred to in clause (A) of this definition by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, which Registration Shares shall be registrable immediately upon the demand of Seller pursuant to the terms of Section 7 hereof. (vii) "SEC" shall mean the Securities and Exchange Commission or any successor commission or agency having similar powers. (viii) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the rules and regulations thereunder. (ix) "TAX" OR "TAXES" means all Federal, state, local and foreign taxes, assessments and other governmental charges, including (A) taxes based upon or measured by gross receipts, income, profits, sales, use or occupation and (B) value added, ad valorem, transfer, franchise, withholding with (C) all interest, penalties and additions imposed with respect to such amounts and (D any obligations under any agreements or arrangements with any other person with respect to such amounts. (b) The following terms are defined in the specified sections of this Agreement: DEFINED TERM SECTION DEFINED IN ------------ ------------------ Common Stock First Recital Clause Company Balance Sheet 4(i) Company SEC Documents 4(h) Demand Registration 7(a) Encumbrances 3(b) Piggyback Registration 7(b) Purchase Consideration 2(a) Registration Statement 7(i)(i) Securities Laws 4(g)(i) 2. PURCHASE AND SALE OF COMMON STOCK. (a) Seller hereby sells, conveys, transfers and delivers to the Company, and the Company hereby purchases from Seller, the Common Stock for the purchase consideration set forth in Section 2(b), below (the "Purchase Consideration"). 4 3 (b) The Purchase Consideration shall be $3,000,000 (three million dollars). 3. REPRESENTATIONS AND COVENANTS OF SELLER. Seller hereby represents, warrants and covenants to the Company as follows: (a) ORGANIZATION AND GOOD STANDING. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. (b) TITLE TO COMMON STOCK. Seller is the record holder and sole beneficial owner of the Common Stock being sold pursuant to this Agreement and such Common Stock is free and clear of any claim, lien, pledge, option, charge, security interest or encumbrance of any nature whatsoever (collectively "Encumbrances") with respect to Seller. (c) AUTHORITY; EXECUTION AND DELIVERY. Seller has full power and authority to enter into the Operative Agreements and to sell the Common Stock in accordance with the terms hereof. The execution, delivery and performance of the Operative Agreements have been duly authorized by Seller and no other actions on the part of Seller are required. The Operative Agreements have been duly executed and delivered by Seller and constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their respective terms. (d) CONSENTS; NO CONFLICTS. Neither the execution and delivery of the Operative Agreements, the consummation by Seller of the transactions contemplated by this Agreement nor compliance by Seller with any of the provisions hereof will (with or without the giving of notice or the passage of time), except where any such violation, conflict or lack of consent would not have a material adverse effect on the business of Seller or the consummation by Seller of the transactions contemplated hereby: (i) violate or conflict with any provision of the Certificate of Incorporation or By-Laws of Seller or any agreement, instrument, judgment, decree, statute or regulation applicable to Seller or any assets or properties of Seller; (ii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Seller or any assets or properties of Seller; or (iii) require the consent, approval, permission or other authorization of or by, or designation, declaration, filing, registration or qualification with, any court, arbitrator or governmental, administrative or self-regulatory authority or any other third party whatsoever. (e) LITIGATION. There is no litigation, proceeding, labor dispute, arbitral action or government investigation pending or, so far as known to Seller, 5 4 threatened against Seller with respect to the Common Stock or the Operative Agreements which if adversely determined could prohibit or prevent Seller from consummating the transactions contemplated hereby and thereby. There are no decrees, injunctions or orders of any court or governmental department or agency outstanding against Seller with respect to the Common Stock which prohibit or prevent Seller from consummating the transactions contemplated hereby. (f) NO BROKERS. Seller has not entered into and will not enter into any agreement, arrangement or understanding with any person or firm which will result in the obligation of the Company to pay any finder's fee, brokerage commission or similar payment in connection with the transactions contemplated hereby. Seller agrees to indemnify and hold the Company harmless from and against any and all claims, liabilities or obligations with respect to any finder's fees, brokerage commissions or similar payments asserted by any person on the basis of any act or statement alleged to have been made by Seller. (g) SECURITIES ACT. The Registration Shares are being acquired for investment only and not with a view to any public distribution thereof, and Seller will not offer to sell or otherwise dispose of the Registration Shares so acquired in violation of any of the registration requirements of the Securities Act or in violation of any state securities laws. 4. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company hereby represents, warrants and covenants to Seller as follows: (a) ORGANIZATION AND GOOD STANDING. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) AUTHORITY; EXECUTION AND DELIVERY. The Company has full power and authority to enter into the Operative Agreements, to purchase the Common Stock and to issue, sell, convey, transfer and deliver the Registration Shares and Purchase Consideration in accordance with the terms hereof and thereof. The execution, delivery and performance of the Operative Agreements have been duly authorized by the Company and no other actions on the part of the Company are required. The Operative Agreements have been duly executed and delivered by the Company and constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms. (c) CONSENTS; NO CONFLICTS. Neither the execution and delivery of the Operative Agreements, the consummation by the Company of the transactions contemplated hereby or thereby, nor compliance by the Company with any of the provisions hereof or thereof will (with or without the giving of notice or the passage of time) except where any such violation, conflict or lack of consent would not have a 6 5 material adverse effect on the business of the Company or the consummation by the Company of the transactions contemplated hereby : (i) violate or conflict with any provision of the Certificate of Incorporation or By-Laws of the Company or any agreement, instrument, judgment, decree, statute or regulation applicable to the Company or any assets or properties of the Company; (ii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any assets or properties of the Company; or (iii) require the consent, approval, permission or other authorization of or by, or designation, declaration, filing, registration or qualification with, any court, arbitrator or governmental, administrative or self-regulatory authority or any other third party whatsoever. (d) COMMON STOCK OF THE COMPANY. The Registration Shares are validly issued, fully paid, and nonassessable and will not have been issued in violation of, and will not be subject to, any preemptive or subscription rights and will not result in the antidilution provisions of any security of the Company becoming applicable. (e) LITIGATION. There is no litigation, proceeding, labor dispute, arbitral action or government investigation pending or, so far as known to the Company, threatened against the Company with respect to the Common Stock, the Registration Shares, the Purchase Consideration or the Operative Agreements which if adversely determined could prohibit or prevent the Company from consummating the transactions contemplated hereby or thereby. There are no decrees, injunctions or orders of any court or governmental department or agency outstanding against the Company with respect to the Common Stock, the Registration Shares or the Purchase Consideration which prohibit or prevent the Company from consummating the transactions contemplated hereby. (f) NO BROKERS. The Company has not entered into and will not enter into any agreement, arrangement or understanding with any person or firm which will result in the obligation of Seller to pay any finder's fee, brokerage commission or similar payment in connection with the transactions contemplated hereby. The Company agrees to indemnify and hold Seller harmless from and against any and all claims, liabilities or obligations with respect to any finder's fees, brokerage commissions or similar payments asserted by any person on the basis of any act or statement alleged to have been made by the Company. (g) SECURITIES ACT. (i) The Common Stock to be purchased by the Company pursuant to this Agreement is being acquired for investment only and not with a view to any public distribution thereof, and the Company will not offer to sell or otherwise dispose of the Common Shares so acquired in violation of any of the registration requirements of the 7 6 Securities Act or in violation of any state securities laws. The certificates evidencing the Common Stock will bear a legend substantially as follows: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR STATE SECURITIES LAWS (COLLECTIVELY "SECURITIES LAWS") AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT, DATED AS OF MARCH 18, 1997, BY AND AMONG SVG LITHOGRAPHY, INC., SILICON VALLEY GROUP, INC., INTERNATIONAL BUSINESS MACHINES CORPORATION AND THE PERKIN-ELMER CORPORATION AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SVG LITHOGRAPHY, INC., AND SVG LITHOGRAPHY, INC., WILL FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST AN WITHOUT CHARGE. (ii) The Company is the current owner of approximately ninety four percent (94%) of the outstanding shares of SVG Lithography, Inc. In addition, the Company has been furnished access to the business records of SVG Lithography, Inc. and such additional information and documents as the Company has requested, and has been given the opportunity to meet with officials of SVG Lithography, Inc. and to have such persons answer questions regarding the affairs and condition of SVG Lithography, Inc. (iii) The Company is an "accredited investor" within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act and has substantial experience in business and financial matters and is capable of evaluating the merits and risks of its purchase of the Common Stock and is able to bear the economic risks of its investment. (h) SEC FILINGS; FINANCIAL STATEMENTS. The Company has furnished or made available to Seller true and complete copies of its Annual Report on Form 10-K for the fiscal year ended September 30, 1996, and each report (including any amendments and exhibits thereto and all material incorporated therein by reference) filed under the Exchange Act by the Company with the SEC since such date (the "Company SEC Documents"). None of the Company SEC Documents as of the dates they were filed with the SEC contained, or as of the date of this Agreement will contain, any untrue statement of a material fact or omitted, or as of the date of this Agreement will omit, to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent corrected by a subsequently filed Company SEC Document filed before the date hereof. Each of the consolidated balance sheets (including any related notes) for the fiscal year or periods ending on September 30, 1996, or thereafter included in the 8 7 Company SEC Documents filed before the date hereof, is complete in all material respects and fairly presents the financial position of the Company as of its date and each of the consolidated statements of income and changes in financial position (including any related notes) for the fiscal year or periods ending September 30, 1996, or thereafter included in the Company SEC Documents, is complete in all material respects and fairly presents the consolidated results of operations or changes in financial position, as the case may be, of the Company for the respective periods set forth therein, in accordance with, in the case of audited financial statements, generally accepted accounting principles consistently applied except as otherwise disclosed therein, or, in the case of unaudited financial statements, generally accepted accounting principles consistently applied, except as otherwise disclosed therein or as otherwise permitted by Form 10-Q of the SEC. All of the Company SEC Documents are in accordance with the books and records of the Company. (i) UNDISCLOSED LIABILITIES. To the knowledge of the Company except for liabilities (i) reflected on the most recent balance sheet included in the Company SEC Documents filed before the date hereof (the "Company Balance Sheet"), or reflected in the notes thereto; and (ii) incurred since the date of the Company Balance Sheet in the ordinary course of business, the Company does not have any liabilities or obligations of any nature (whether accrued, absolute, fixed, contingent, known or unknown, unasserted or otherwise) in either case which either individually or in the aggregate would have a material adverse effect on the business of the Company. (j) ABSENCE OF CERTAIN CHANGES. Except as set forth in a current report on Form 8-K filed with the SEC before the date hereof, and except for actions which individually or in the aggregate would not have a material adverse effect on the business of the Company , since the date of the Company Balance Sheet, the Company has not: (i) suffered any change or changes which, individually or in the aggregate, have had or may reasonably be expected to have a material adverse effect on the business or, to the Company's knowledge, the prospects of the Company; (ii) borrowed or agreed to borrow funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any liabilities except liabilities incurred in the ordinary course of business and consistent with past practice; (iii) paid, discharged or satisfied any liabilities other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the Company Balance Sheet or incurred subsequent to the date thereof in the ordinary course of business; (iv) to the knowledge of the Company, the Company has not become subject to any newly enacted or adopted law (whether before or after the date of the 9 8 Company Balance Sheet) which may reasonably be expected to have a material adverse effect on the business or prospects of the Company; (v) canceled or amended any debts or waived any claims or rights of substantial value, or sold, transferred, or otherwise disposed of any of its properties or assets (real, personal or mixed, tangible or intangible), except in the ordinary course of business and consistent with past practice; (vi) licensed, sold, transferred, pledged, modified, disclosed, disposed of or permitted to lapse any right to use any intellectual property right of the Company, except in the ordinary course of business and consistent with past practice; (vii) declared, paid or set aside for payment any dividend or other distribution in respect of its capital stock or other securities or, directly or indirectly, redeemed, purchased or otherwise acquired any shares of its capital stock or other securities (other than repurchase of stock from terminated employees); (viii) made any change in any method of accounting or accounting practice or any change in depreciation or amortization policies or rates theretofore adopted; (ix) entered into any other material transaction, contract, commitment or arrangement other than in the ordinary course of business and consistent with past practice; (x) sold, leased or otherwise disposed of any substantial part of its assets, except in the ordinary course of business and consistent with past practice; or (xi) agreed, whether in writing or otherwise, to take any action described in this Section. (k) DISCLOSURE. There is no fact which the Company has not disclosed to Seller in writing which materially affects adversely or, so far as the Company can now reasonably foresee, will materially affect adversely the ability of the Company to perform its obligations under this Agreement, or its obligations in respect of the Registration Shares. (l) COMPLIANCE WITH APPLICABLE LAWS. (i) The Company and each of its subsidiaries and each of their respective properties, assets, operations and businesses, are in compliance in all respect with all applicable statutes, laws, ordinances, rules and regulations of any governmental authority and any filing requirements relating thereto, except where the failure to be so in compliance would not have a material adverse effect on the business of the Company. 10 9 (ii) The Company and each of its subsidiaries has obtained all permits, licenses and other authorizations which are required with respect to the operation of its business and the ownership of its assets under applicable Federal, state, local and foreign laws, including laws relating to pollution or protection of the environment, except where the failure to have obtained such permits, licenses and other authorizations would not have a material adverse effect. The Company and each of its subsidiaries is in full compliance with all terms and conditions of such permits, licenses and authorizations, except where the failure to be so in compliance would not have a material adverse effect on the business of the Company. (iii) There are no past or present , conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or, to the best of the Company's knowledge will not in the future interfere with or prevent continued compliance by the Company or any of its subsidiaries with any laws relating to pollution or protection of the environment or with any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, except where the failure to be so in compliance would not have a material adverse effect on the business of the Company or the value of the Registration Shares, or which may give rise to any common law or legal liability of the Company or any of its subsidiaries, including liability under the Comprehensive Environment Response, Compensation and Liability Act of 1980 or similar state or local laws, or otherwise form the basis of any claim, action, demand, suit proceeding, hearing, notice of violation, study or investigation against or affecting the Company or any of its subsidiaries which would have a material adverse effect on the business of the Company or the value of the Registration Shares, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical or industrial, toxic or hazardous substance or waste. (m) TAXES. Neither the Company nor any of its subsidiaries is delinquent in the payment of any material Tax, except where the failure to pay such Tax on a timely basis would not have a material adverse effect on the business of the Company.. No material deficiencies for any Taxes have been asserted in writing or assessed against the Company or any of its subsidiaries, and no waivers of the time to assess any such Tax are in effect. As of the date of execution of this Agreement, none of the Federal income tax returns of the Company and its subsidiaries consolidated in such returns have been audited by the United States Internal Revenue Service. (n) ERISA. The Company is in compliance in all material respects with the provisions of the Employee Retirement Income Security 'Act of 1974, as amended, ("ERISA"), and the regulations and published interpretations thereunder. No Reportable Event, as that term is defined in Section 4043(b) of ERISA, has occurred with respect to any employee plan which is subject to the provisions of Title IV of ERISA and which is maintained for employees of the Company or any of its subsidiaries or any of its affiliates. There are no unfunded vested liabilities under any such employee plan. 11 10 (o) PATENTS, TRADEMARKS, ETC. The Company owns or has the right to use all patents, trademarks, trade names, service marks and copyrights used in or necessary for the conduct of its business, the lack of which would result in a material adverse effect on the business of the Company or the value of the Registration Shares, and is in compliance with all terms of any material license of software or technology except where noncompliance would not have a material adverse effect on the business of the Company.. Except where the failure to take such action would not have a material adverse effect on the business of the Company all of the patents, trademarks, trade names, service marks and copyrights of the Company have been duly registered and filed in or issued by the appropriate governmental authority in all appropriate jurisdictions , all necessary affidavits or continuing use have been filed, and all necessary maintenance fees have been paid to continue all such rights in effect. The Company has: (i) no notice or knowledge of any objection or claim being asserted by any person with respect to the ownership, validity, enforceability or use of any such patents, trademarks, trade names, service marks, copyrights, applications therefor, or trade secrets; and (ii) no reason to believe that any such right of the Company conflicts with or infringes upon the rights of any other person. (p) EMPLOYEES. To the Company's knowledge, no activity of any employee of the Company or any of its subsidiaries as or while an employee of the Company or any of its subsidiaries has caused a material violation of any term of any material employment contract, confidentiality agreement, patent disclosure agreement or any other similar contract or agreement or any term of any agreement relating to such employee's employment with the Company or such obligations to the Company with respect to confidentiality or nondisclosure, and, to the best of the Company's knowledge, the continued employment by the Company and its subsidiaries of their respective present employees will not result in any such violation, except where such violation would not result in a material adverse effect in a material adverse effect on the business of the Company . The Company either has obtained, or will use its best efforts to obtain within the next 30 days, from each person employed by the Company or any of its subsidiaries in a technical position, including all officers of the Company and its subsidiaries, an executed proprietary information agreement restricting such person's right to disclose proprietary information of the Company, its subsidiaries and their respective clients and an agreement relating to the assignment of patents, copyrights, or inventions to the Company. (q) LABOR RELATIONS. There is, except where such event would not result in a material adverse effect on the business of the Company : (i) no unfair labor practice complaint pending or asserted against the Company or any of its subsidiaries before the National Labor Relations Board and no 12 11 grievance or arbitration proceeding arising out of or under collective bargaining agreements is so pending or asserted; (ii) no strike, labor dispute, slowdown or stoppage pending or threatened against the Company or any of its subsidiaries; (iii) no union representation question existing with respect to the employees of the Company or any of its subsidiaries and, to the knowledge of the Company, no union organizing activities are taking place; and (iv) no existing collective bargaining agreement or other contract with a labor union to which the Company or any of its subsidiaries is a party. 5. DELIVERIES. On the date and upon execution hereof, Seller will make the delivery specified in clause (a) below and the Company will make the deliveries specified in clause (b) below. (a) Seller will deliver to the Company a certificate or certificates evidencing the Common Stock being purchased by the Company hereby, free and clear of Encumbrances, duly endorsed for transfer to the Company's order or accompanied by stock powers duly executed to the Company's order and with all requisite documentary or stock transfer tax stamps affixed. (b) The Company will deliver to Seller: (i) a certificate or certificates evidencing the Registration Shares free and clear of Encumbrances, validly issued in the Seller's name and with all requisite documentary or stock transfer tax stamps affixed; (ii) a copy of the charter of the Company, certified as of a recent date by the Secretary of State of Delaware; (iii) a certificate dated the date hereof of the secretary, assistant secretary or another appropriate authorized signatory of the Company certifying as to: (A) the absence of amendments since the date of the last amendment shown on the official evidence as to such charter furnished pursuant to clause (ii) above; (B) resolutions, delegations or other written evidence of corporate action of the appropriate authority within the Company and if applicable, the stockholders of the Company, duly authorizing or ratifying its execution, delivery and performance of this Agreement and the transactions contemplated by this Agreement and the absence of other resolutions, delegations or such other corporate action relating thereto; 13 12 (C) the absence of proceedings for the merger, consolidation, sale of all or substantially all assets, dissolution, liquidation or similar proceedings with respect to the Company; and (D) incumbency certificates, dated the date hereof, for the officers or authorized signatories of the Company executing this Agreement and the other documents and agreements contemplated by this Agreement. . 7. REGISTRATION RIGHTS. (a) DEMAND REGISTRATION. After the date hereof, the Company shall, subject to the provisions of Section 7(o), below, upon the written demand of Seller, use its best efforts to effect the registration (the "Demand Registration") under the Securities Act of such number of Registration Shares held by Seller as shall be indicated in a written demand sent to the Company by Seller; provided that: (i) the Company shall be obligated to effect a total of no more than five (5) Demand Registrations; and (ii) a Demand Registration shall not count as such until it has become effective, except that if, after it has become effective, the offering of Registration Shares pursuant to such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental authority, such registration shall be deemed not to have been effected unless such stop order, injunction or other order or requirement shall subsequently have been vacated or otherwise removed. If a Demand Registration is initiated by Seller and the Company or any holder of registrable securities seeks to participate in such registration on the basis of piggyback registration rights or otherwise and the managing underwriters for such registration selected by Seller advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number which can be sold in the offering, the Company shall include in the registration first, the number of Registration Shares Seller proposes to sell and then the number of other securities that may be included in such registration shall be allocated among all holders who are exercising their piggyback registration rights in proportion as nearly as practicable to the respective amounts of securities entitled to inclusion therein. Upon receipt of Seller's written demand, the Company shall expeditiously (but in any event within 21 days) file a registration statement under the Securities Act for the Registration Shares and use its best efforts to have such registration declared effective as soon as practicable after the filing thereof. Seller shall have the right to select the underwriters, if any, for the Demand Registration. (b) PIGGYBACK REGISTRATIONS. (i) If the Company proposes to register any of its securities under the Securities Act for sale for cash (otherwise than in connection with the registration of securities issuable pursuant to an employee or director stock option, stock purchase or 14 13 similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act), the Company shall give Seller written notice of such proposed registration at least 30 days prior to the filing of a registration statement. At the written request of Seller delivered to the Company within 20 days after the receipt of the notice from the Company, which request shall state the number of Registration Shares that Seller wishes to sell or distribute publicly under the registration statement proposed to be filed by the Company, the Company shall use its best efforts to include such Registration Shares in such registration of securities (the "Piggyback Registration"). (ii) If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters thereof advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number which can be sold in the offering, the Company shall include in the registration as many shares as practicable in the determination of the underwriter, and the number of Registration Shares and other securities that may be included in such registration and underwriting shall be allocated among all holders in proportion as nearly as practicable to the respective amounts of securities such holders are entitled to include in such registration pursuant to this Section 7 and to similar registration rights in such registration held by all such holders at the time of filing of such registration statement. (iii) If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's securities who have demand registration rights and the managing underwriters thereof advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number which can be sold in the offering, the Company shall include in the registration: (A) first, that portion of the Registration Shares that Seller proposes to sell representing 25% of such offering; (B) second, the securities of the holders of the Company's securities who have exercised their demand registration rights; and (C) third, the securities any other security holders of the Company (including any additional Registration Shares Seller desires to sell) propose to sell in proportion to the number of securities each proposes to sell. In the event the Company subsequently desires to participate in such a registration of securities, the Company shall include in the registration: (D) first, that portion of the Registration Shares Sellers proposes to sell representing 25% of such offering; (E) second, the securities of the holders of the Company's securities who have exercised their demand registration rights; and 15 14 (F) third, the securities the Company and any other security holders of the Company propose to sell (including any additional Registration Shares Seller desires to sell) in proportion to the number of shares each proposes to sell. (c) INDEMNIFICATION BY THE COMPANY. In the event of any registration of any Registration Shares under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, in the case of any registration statement filed pursuant to Section 7(a) or 7(b), Seller, its directors, officers and employees, each other person who participates as an underwriter in the offering or sale of Registration Shares and each other person, if any, who controls Seller or any such underwriter within the meaning of Section 15 of the Securities Act, against: (i) any losses, claims, damages or liabilities, joint or several, to which Seller or any such director, officer, employee or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, 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 Registration Shares were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading; (ii) any violation by the Company of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the Company in connection with any such registration; and (iii) any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense: (A) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of Seller or such underwriter, as the case may be, specifically stating that it is for use in the preparation thereof; and (B) with respect to any person who participates as an underwriter in the offering or sale of Registration Shares or any other person, if any, who controls such underwriter within the meaning of the Securities Act, arises out of such person's failure 16 15 to send or give a copy of the final prospectus, as the same may be then supplemented or amended, to the person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registration Shares to such person if such statement or omission was corrected in such final prospectus. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Seller, or any such director, officer or controlling person and shall survive the transfer of the Registration Shares by Seller. (d) INDEMNIFICATION BY SELLER. The Company may require, as a condition to including any Registration Shares in any registration statement filed pursuant to Section 7(a) or 7(b), that the Company shall have received an undertaking reasonably satisfactory to it from Seller (or the holder of the Registration Shares), to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7(c)) the Company, each person who participates as an underwriter in the offering or sale of Registration Shares, each director of the Company, each officer of the Company who signs such registration statement and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information about Seller (or the holder of the Registration Shares) as a stockholder of the Company furnished to the Company through an instrument duly executed by Seller specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such underwriter, director, officer or controlling person and shall survive the transfer by Seller of the securities of the Company being registered. (e) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 7(c) or 7(d), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 7(c) or 7(d), except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and 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 for 17 16 any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall be liable for any settlement of any action or proceeding effected without its written consent. No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement without the prior written consent of the indemnified party.. (f) OTHER INDEMNIFICATION. Indemnification similar to that specified in this Section 7 (with appropriate modifications) shall be given by the Company and Seller with respect to any required registration or other qualification of Registration Shares under any Federal or state law or regulation of any Governmental Authority other than the Securities Act. (g) INDEMNIFICATION PAYMENTS. The indemnification required by this Section 7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred. (h) ADJUSTMENTS AFFECTING REGISTRATION SHARES. The Company shall not effect or permit to occur any combination, subdivision or other recapitalization of any of its securities: (i) which would materially adversely affect the ability of Seller to include its Registration Shares, in any registration of securities of the Company contemplated by this Section 7 ; or (ii) solely for the purpose of adversely affecting the marketability of such Registration Shares under any such registration. (i) REGISTRATION COVENANTS OF THE COMPANY. In the event that any Registration Shares of Seller are to be registered pursuant to Section 7(a) or 7(b), the Company covenants and agrees that it shall use its best efforts to effect the registration and cooperate in the sale of the Registration Shares to be registered and shall as expeditiously as reasonably possible: (i)(A) prepare and file with the SEC a registration statement with respect to the Registration Shares (as well as any necessary amendments or supplements thereto) (a "Registration Statement"); and (B) use its best efforts to cause the Registration Statement to become effective; (ii) prior to the filing described above in Section 7(i)(i), furnish to Seller a final draft or drafts of the Registration Statement and any amendments or supplements thereto and any prospectus forming a part thereof, which documents shall be subject to 18 17 the review of counsel for Seller (but not approval of such counsel except with respect to any statement in the Registration Statement which relates to Seller); (iii) notify Seller, promptly after the Company shall receive notice thereof, of the time when the Registration Statement becomes effective or when any amendment or supplement or any prospectus forming a part of the Registration Statement has been filed; (iv) notify Seller promptly of any request by the SEC for the amending or supplementing of the Registration Statement or prospectus or for additional information; (v)(A) advise Seller after the Company shall receive notice or otherwise obtain knowledge of the issuance of any order by the SEC suspending the effectiveness of the Registration Statement or any amendment thereto or of the initiation or threatening of any proceeding for that purpose; and (B) promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal promptly if a stop order should be issued; (vi)(A) prepare and file with the SEC such post-effective amendments and supplements to the Registration Statement and the prospectus forming a part thereof as may be necessary to keep the Registration Statement effective for the lesser of (I) a period of at least ninety (90) days from the effective date of such registration statement; or (II) the period of time necessary to permit Seller to dispose of all its Registration Shares registered under the Registration Statement; and (B) comply with the provision of the Securities Act with respect to the disposition of all Registration Shares covered by the Registration Statement during such period in accordance with the intended methods of disposition by Seller set forth in the Registration Statement; (vii) furnish to Seller such number of copies of the Registration Statement, each amendment and supplement thereto, the prospectus included in the Registration Statement (including each preliminary prospectus) and such other documents as Seller may reasonably request in order to facilitate the disposition of the Registration Shares owned by Seller; (viii) use its best efforts to register or qualify such Registration Shares under such other securities or blue sky laws of such jurisdictions as determined by the underwriters after consultation with the Company and Seller and do any and all other acts and things which may be reasonably necessary or advisable to enable Seller to consummate the disposition in such jurisdictions of the Registration Shares; (ix) notify Seller, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a 19 18 result of which the Registration Statement would contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, at the request of Seller, prepare a supplement or amendment to the Registration Statement so that the Registration Statement shall not, to the Company's knowledge, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (x) if the common stock of the Company comprising the Purchase Consideration is not then listed on a securities exchange, use its best efforts to facilitate the reporting of the Common Stock on NASDAQ or another nationally recognized securities exchange; (xi) provide a transfer agent and registrar, which may be a single entity, for all the Registration Shares not later than the effective date of the Registration Statement; (xii) enter into such customary agreements (including an underwriting agreement in customary form) and take all such other action, if any, as Seller or the underwriters shall reasonably request in order to expedite or facilitate the disposition of the Registration Shares; (xiii)(A) make available for inspection by Seller, any underwriter participating in any disposition pursuant to the Registration Statement and any attorney, accountant or other agent retained by Seller or such underwriter all financial and other records, pertinent corporate documents and properties of the Company and (B) cause the Company's officers, directors and employees to supply all information reasonably requested by Seller, such underwriter, attorney, accountant or agent in connection with the Registration Statement; (xiv) use its best efforts to cause the Registration Shares covered by the Registration Statement to be registered with or approved by such other Governmental Authorities as may be necessary to enable Seller to consummate the disposition of such Registration Shares; and (j) EXPENSES. The Company shall pay (on behalf of Seller) all expenses in connection with any Demand Registration and any Piggyback Registration, including all registration, filing, listing and NASD fees, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, all messenger and delivery expenses, the fees and disbursements of counsel for the Company and of its independent public accountants (including the expenses of comfort letters required by or incident to such performance and compliance), the reasonable fees and disbursements of not more than one counsel and accountants retained by Seller and disbursements of underwriters customarily paid by issuers or 20 19 sellers of securities, but excluding any underwriting discounts and commissions and transfer taxes, if any. In any underwriting, Seller (or the holder of the Registration Shares) shall pay its own underwriting discounts and commissions and transfer taxes. (k) ASSIGNMENT OF REGISTRATION RIGHTS. Seller may assign its rights under this Section 7 to one person to whom Seller sells, transfers or assigns over 50% of the Registration Shares it acquired pursuant to this Agreement; provided that no assignment shall increase the Company's obligations to effect a maximum of two Demand Registrations or to pay the expenses thereof. . (m) RULE 144. The Company shall take all actions reasonably necessary to enable Seller to sell the Registration Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC, including filing on a timely basis all reports required to be filed by the Exchange Act. Upon the request of Seller, the Company shall deliver to Seller a written statement as to whether it has complied with such requirements. (n) REGISTRATION ON FORM S-3. (i) The Company will use its best efforts to qualify for the registration of its securities on Form S-3 (or successor form). If the Company is a registrant eligible to use Form S-3 to register the Registration Shares, all demand registrations effected pursuant to Section 7(a), above, shall be registered on Form S-3. If Seller requests that the Company file a Registration Statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of Registration Shares the reasonably anticipated aggregate price to the public of which, net of underwriting discounts and commissions, would exceed $500,000 and the Company is a registrant entitled to use Form S-3 to register the Registration Shares for such an offering, the Company shall use its best efforts to cause such Registration Shares to be registered for the offering on such form and to cause such Registration Shares to be qualified in such jurisdictions as Seller may reasonably request; provided, however, that the Company shall not be required to effect more than five registrations at Seller's request pursuant to this Section 7(o)(i) or more than an aggregate of five total registrations at Seller's request pursuant to this Section 7(o)(i) and 7(a), above. (ii) Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 7(o)(i): (A) if the Company, within ten days of the receipt of the request of Seller pursuant to Section 7(o)(i), gives notice of its bona fide intention to effect the filing of a Registration Statement with the Commission within ninety days of receipt of such request (other than with respect to a registration statement relating to a Rule 145 transaction, an 21 20 offering solely to employees or any other registration which is not appropriate for the registration of Registration Shares); or (B) during the period starting with the date sixty days prior to the Company's estimated date of filing of, and effective date of any Registration Statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such Registration Statement to become effective. (iii) Seller agrees in connection with any registration of the Company's securities pursuant to which Seller is permitted to sell the number of Registration Shares that Seller desires to sell (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), upon the request of the Company or the underwriters managing any underwritten offering of the Company's securities, not to sell, make any short sale of, loan, grant any option for the purchase of or otherwise dispose of any Registrable Shares (other than those included in such registration and other than in a private sale of Registration Shares by Seller) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred thirty five (135) days) from the effective date of such registration statement as may be requested by the Company or such managing underwriters, provide that each of the Company's officers, directors, five percent (5%) stockholders and other stockholders selling shares of the Company pursuant to any such registration statement, shall have agreed to be bound by the same restrictions in connection with such offering. 8. MISCELLANEOUS. (a) EXPENSES. Each party shall be liable for its own expenses in connection with the transactions contemplated by this Agreement. (b) TAXES. The Company shall be responsible for all stock transfer and documentary taxes, if any, arising out of the transactions contemplated by this Agreement. (c) AMENDMENTS. All amendments or waivers of any provisions of this Agreement may only be made pursuant to a written instrument executed by the parties hereto or their successors and assigns. (d) RULE 144(K). The Company shall not be obligated to undertake a registration of the Seller's Registration Shares pursuant to Section 7 hereof at any time that Seller's counsel agrees that Seller may sell its Registration Shares pursuant to Rule 144(k) under the Securities Act. (e) SUCCESSORS AND ASSIGNS. All covenants and agreements in this Agreement contained by or on behalf of either of the parties hereto shall bind and inure to 22 21 the benefit of the respective successors and assigns of Seller and the Company, whether so expressed or not. (f) NOTICES. All notices, requests and other communications provided for hereunder shall be effective upon receipt, shall be in writing and shall be deemed to have been duly given if delivered in person or by courier, telegraph, telex or by facsimile transmission with electromechanical report of delivery: If to the Company: Silicon Valley Group, Inc. 101 Metro Drive, Suite #400 San Jose, CA 95120 Attention: Mr. Russell G. Weinstock With a copy to: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Pal Alto, CA 94304-1050 Attention: Larry W. Sonsini If to Seller: International Business Machines Corporation Old Orchard Road Armonk, New York, 10504 Attention: Mr. Lee A. Dayton Vice President, Corporate Development and Real Estate Telephone: (914) 765-7800 Facsimile: (914) 765-7803 23 22 With a copy to: Donald D. Westfall, Esq., Room 1C-63 Telephone: (914) 765-4478 Telecopier: (914) 765-6006 or to such other address with respect to either party as such party shall notify the other in writing. (g) GOVERNING LAW AND JURISDICTION. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York (without regard to the choice of law provisions thereof). (h) HEADINGS. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. (i) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. (j) PUBLIC ANNOUNCEMENTS. Neither Seller nor the Company will issue any press release or public announcement of the transactions contemplated hereby except: (i) as they may mutually agree in writing; or (ii) as may be required in the opinion of counsel under applicable law in which case the party so required to make such an announcement shall provide a draft of the proposed announcement and a copy of such opinion to the other party no less than two (2) business days prior to the date of the proposed announcement (unless it is unlawful or impracticable to do so). (k) COMPLETE AGREEMENT. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and, except as provided herein, supersedes all previous negotiations, commitments and writings. This Agreement is not intended to confer any benefit upon any person other than the parties hereto. 24 IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the date first above written. INTERNATIONAL BUSINESS MACHINES CORPORATION By: /s/ Lee A. Dayton -------------------------- Name: Lee A. Dayton Title: IBM Vice President, Corporate Development and Real Estate SILICON VALLEY GROUP, INC. By: /s/ Russell G. Weinstock -------------------------- Name: Russell G. Weinstock Title: Vice President and Chief Financial Officer EX-4.2 3 STOCKHOLDER AGREEMENT DATED AS OF MARCH 18, 1997 1 Exhibit 4.2 STOCKHOLDER AGREEMENT By and Among INTERNATIONAL BUSINESS MACHINES CORPORATION, SVG LITHOGRAPHY, INC. and SILICON VALLEY GROUP, INC. Dated: March 18, 1997 IBM Confidential 2 TABLE OF CONTENTS Page ---- ARTICLE I - CERTAIN DEFINITIONS......................... 5 ARTICLE II - RIGHT OF FIRST REFUSAL ON NEW ISSUANCES..... 16 2.1 Issuance of Voting Securities of SVGL........ 16 2.2 Exclusions From Right of First Refusal....... 16 2.3 Notice....................................... 17 2.4 Permitted Issuance........................... 18 ARTICLE III - RIGHT OF FIRST OFFER....................... 19 3.1 Notice....................................... 19 3.2 Election to Purchase......................... 19 3.3 Calculation of Pro Rata Share................ 20 3.4 Exclusions................................... 20 ARTICLE IV - IBM OPTION TO PURCHASE OR SELL UPON SVG CHANGE IN CONTROL.................... 21 4.1 SVG Change of Control........................ 21 4.2 Closing...................................... 23 ARTICLE V - SPECIAL COVENANTS AND AGREEMENTS SOLELY FOR THE BENEFIT OF IBM................. 23 5.1 Merger; Sale of Assets....................... 23 5.2 Liquidation.................................. 24 5.3 Priority Transactions........................ 24 ARTICLE VI - AFFIRMATIVE COVENANTS OF THE COMPANY........ 26 6.1 Accounting System............................ 26 6.2 Periodic Reports; Budgets.................... 26 6.3 Certificates of Noncompliance................ 29 6.4 Other Reports and Inspection................. 30 6.5 Insurance.................................... 30 6.6 Business and Properties...................... 31 6.7 Material Changes............................. 31 6.8 Agreements with Employees.................... 32 6.9 Compliance with Applicable Laws.............. 33 IBM Confidential 3 ARTICLE VII - BOARD OF DIRECTORS......................... 34 7.1 IBM Observer................................. 34 7.2 Notice of Meetings........................... 34 7.3 No Observer Fees or Expense.................. 35 7.4 Precedence................................... 35 ARTICLE VIII - LEGEND ON SHARE CERTIFICATES.............. 35 8.1 Legend....................................... 35 8.2 No Transfer.................................. 36 ARTICLE IX - AGREEMENT BY SUBSEQUENT PURCHASERS.......... 36 ARTICLE X - MISCELLANEOUS................................ 37 10.1 Assignment................................... 37 10.2 Consent to Jurisdiction...................... 38 10.3 Amendments; Waivers.......................... 38 10.4 Notices; Consents and Approvals.............. 39 10.5 Interpretation............................... 41 10.6 Counterparts................................. 41 10.7 Entire Agreement............................. 41 10.8 Severability................................. 41 10.9 Governing Law................................ 42 10.10 Specific Enforcement; Injunctive Relief...... 42 10.11 Governmental Approval........................ 42 10.12 SVG Pledge................................... 43 IBM Confidential 4 STOCKHOLDERS AGREEMENT dated as of March 18, 1997, by and among International Business Machines Corporation, a New York corporation ("IBM"), SVG Lithography, Inc., a New York corporation ("SVGL"), and Silicon Valley Group, Inc., a Delaware corporation ("SVG"). RECITALS A. SVG, IBM, SVGL, and The Perkin-Elmer Corporation, a New York Corporation entered into an Asset Transfer and Common Stock Purchase Agreement dated May 15, 1990 (the "Asset and Stock Agreement") pursuant to which, inter alia, IBM purchased 600,000 shares of Common Stock from SVGL, and a Stockholders Agreement dated May 15, 1990 (the "Previous Stockholders Agreement") whereby each party obtained certain rights. B. SVG, IBM and SVGL have entered into a Stock Purchase and Registration Rights Agreement dated as of March 18, 1997 (the "Stock Purchase Agreement"), pursuant to which SVG will purchase IBM's 600,000 shares of Common Stock of SVGL for three million dollars ($3,000,000). C. IBM is a current shareholder of 489,296 shares of Common Stock of SVG. D. SVG, IBM, and SVGL desire to provide for certain matters concerning the ownership and transfer of equity IBM Confidential 4 5 securities of SVG and SVGL, management of SVGL, registration rights and the other matters set forth herein. E. Execution of this Stockholders Agreement is a condition to the obligations of the parties under the Stock Agreement. AGREEMENT NOW THEREFORE, in consideration of the foregoing recitals and the agreements and covenants set forth herein, the parties agree as follows: ARTICLE I CERTAIN DEFINITIONS As used herein, the following terms shall have the following meanings: "Actual Voting Power" of any Person which is a corporation shall mean the total number of votes which may be cast in the election of directors of such Person at any meeting of stockholders of such Person if all shares of common stock and other securities of such Person entitled to vote generally in the election of directors of such Person were present and voted at such meeting, other than votes that may be cast only by one class or series of stock (other than common stock and any other class or series of stock of such Person to the extent that such class IBM Confidential 5 6 or series of stock is entitled to vote together as one class with the common stock) or upon the happening of a contingency. In determining the percentage of the Actual Voting Power of any issuing Person represented by Voting Securities of such issuing Person beneficially owned by any other Person, any such securities not outstanding which are subject to outstanding options, warrants or rights beneficially owned by such other Person shall be deemed to be outstanding for the purpose of computing the percentage of Actual Voting Power of the issuing Person represented by Voting Securities of the issuing Person beneficially owned by such other Person, and any securities not outstanding which are subject to outstanding options, warrants or rights not beneficially owned by such other Person shall not be deemed to be outstanding for the purpose of computing the percentage of the Actual Voting Power of the issuing Person represented by Voting Securities of the issuing Person beneficially owned by such other Person. "Affiliate" shall mean as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. "Affiliate Transferee" shall mean, with respect to a Stockholder, an Affiliate of such Stockholder to whom Voting IBM Confidential 6 7 Securities of SVGL have been transferred and continue to be owned by such Affiliate, unless such transfer was made in compliance with the provisions of Article III (but was not made pursuant to Section 3.5(v)) or in compliance with the provisions of Article IV. "Average Market Price" of the common stock of any issuer shall mean the average of the daily market price of such common stock for the twenty consecutive trading days immediately prior to the day in question. The "daily market price" of such common stock is the price per share of such common stock on the relevant day, determined on the basis of the last reported sale price, regular way, of such common stock as reported on the composite tape, or similar reporting system, for issues listed or admitted for trading on the New York Stock Exchange (or if such common stock has not been so listed or admitted for trading, on the principal national securities exchange on which such common stock is then listed or admitted for trading) or, if there is no such reported sale on the day in question, then the average of the closing bid and asked quotations as so reported or, if such common stock is not then listed or admitted for trading on any national securities exchange, then the closing price for a share of such common stock on such day as reported on NASDAQ or, if such closing prices shall not be reported on NASDAQ, then the average of the high bid and low asked quotations on the day in IBM Confidential 7 8 question in the over-the-counter market as reported by NASDAQ, or if not so quoted, as reported by the National Quotation Bureau, Incorporated, or a similar organization. A "trading day" with respect to such common stock is a day on which the principal national securities exchange on which such common stock is listed or admitted to trading is open for the transaction of business or, if such common stock is not listed or admitted to trading on any national securities exchange, a business day. A Person shall be deemed the "beneficial owner" of, and shall be deemed to "beneficially own", any securities (a) which such Person or any of its Affiliates is deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange Act or (b) which such Person or any of its Affiliates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of any right of conversion or exchange, warrant, option or otherwise. "Collateral" shall have the meaning set forth in Section 10.12. "Common Stock" shall mean the Common Stock, par value $.01 per share, of SVGL. "Competitor of IBM" shall mean any Person that develops or has developed, manufactures and sells any product (including a IBM Confidential 8 9 wafer) which incorporates a semiconductor die, which die (or wafer) has been manufactured by such Person. "Control Transaction" shall mean (i) any sale, lease, exchange or other disposition (whether in one transaction or a series of related transactions) of forty percent (40%) or more of the assets of SVG or SVGL, as the case may be, (ii) any other transaction or series of transactions which results in or would result in the holders of the Voting Securities of SVG or SVGL, as the case may be, immediately prior to the first of such transactions continuing beneficially to own Voting Securities of SVG or SVGL, as the case may be, (or the successor or surviving entity) representing less than 70% of the Total Voting Power of SVG or SVGL, as the case may be, (or the successor or surviving entity) immediately after any of such transactions or (iii) entering into any agreement providing for any of the foregoing; provided, however, that neither the pledge by SVG of Collateral to any Lender in accordance with Section 10.12, the foreclosure by any such Lender on its interest in such Collateral in accordance with Section 10.12 nor the disposition of the Collateral in accordance with Section 10.12 shall be deemed to effect a Control Transaction. As used otherwise in this Agreement, "control" (including its correlative meanings "controlled by" and "under common control with") shall mean possession, directly or indirectly, of IBM Confidential 9 10 power to direct or cause the direction of management or policies (whether through ownership of securities or other ownership interests, by contract or otherwise). "Eligible Stockholder" shall mean IBM, so long as IBM, together with all its Affiliate Transferees, beneficially owns the applicable Minimum Equity whether or not it has held such Minimum Equity continuously; provided, however, that if IBM, together with all its Affiliate Transferees, fails to own beneficially the applicable Minimum Equity for a period of 24 consecutive months, then IBM shall not thereafter be an Eligible Stockholder, whether or not IBM again owns beneficially the applicable Minimum Equity after such period of 24 consecutive months. "Employee Shares" shall mean shares of Common Stock (i) issued to employees, directors or individual consultants of SVGL and still outstanding or (ii) issuable upon exercise of options approved by SVGL's Board of Directors or any duly authorized committee thereof and granted to employees, directors or individual consultants of SVGL. For purposes of determining the number of Employee Shares outstanding at any time, (a) shares of Common Stock issuable upon exercise of outstanding options at the time of determination shall be deemed outstanding, (b) shares of Common Stock which were previously issued to employees, directors or individual consultants of SVGL and which have been repurchased IBM Confidential 10 11 by SVGL at the per share price originally paid therefor shall not be deemed outstanding and (c) shares which were previously subject to outstanding options, but which have been returned to the stock plan unexercised upon the termination of such options, shall not be deemed outstanding. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. "Fair Market Value" of any Voting Securities of SVGL shall mean (i) if such Voting Securities of SVGL are then publicly traded, the Average Market Price of such Voting Securities of SVGL or (ii) if such Voting Securities of SVGL are not publicly traded, (x) the price mutually determined by SVGL, SVG and IBM or (y) if SVGL, SVG and IBM do not agree on such a price, the price established by an independent, nationally recognized investment banking firm acceptable to SVGL, SVG and IBM. Such Fair Market Value shall be adjusted following the date of determination thereof for any stock split, stock dividend, reverse stock split, recapitalization or other similar event occurring after such date and or prior to the relevant date of purchase of such Voting Securities. "First Offer Notice" shall have the meaning set forth in Section 3.1. "Governmental Authority" shall mean any court, administrative agency or commission or other governmental IBM Confidential 11 12 authority or instrumentality, domestic or foreign, of competent jurisdiction. "Law" or "Laws" means all laws, treaties, statutes, ordinances, rules, regulations, judgments, injunctions, stipulations, decrees and orders of any Governmental Authority. "Lender" shall have the meaning set forth in Section 10.12. "Loan Agreement" shall have the meaning set forth in Section 10.12 "Minimum Equity" shall mean any Voting Securities in SVG or SVGL. It is understood that any shares of Common Stock or other Voting Securities acquired or reacquired by IBM after March 18, 1997 will, upon such acquisition or reacquisition, be deemed to be owned beneficially by IBM for the purpose of determining whether IBM holds the applicable Minimum Equity. "NASDAQ" shall mean the National Association of Securities Dealers Automated Quotations System. "Offered Securities" shall have the meaning set forth in Section 3.1. "Person" shall mean any individual, partnership, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such Person. The terms "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the IBM Confidential 12 13 declaration or ordering of the effectiveness of such registration statement. "Related Company" of any Person shall mean a corporation, company, or other entity (i) more than 20% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, or other unincorporated association), but more than 20% of whose ownership interest representing the right to make decisions for, or designating the managing authority of, such other entity is, owned or controlled, directly or indirectly, by such Person at the time in question, but such corporation, company or other entity shall be deemed to be a Related Company only for so long as such ownership or control exists. "SEC" shall mean the Securities and Exchange Commission or any successor commission or agency having similar powers. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations thereunder. "sell" or "transfer" or any variation thereof shall mean, for purposes of this Agreement, to issue, assign, pledge, transfer otherwise dispose of. "Seller" shall mean any Stockholder who proposes to sell any Voting Securities of SVGL. IBM Confidential 13 14 "Stockholder" shall mean SVG and any Person who acquires beneficial ownership of any Voting Securities of SVGL (other than a Person who acquires ownership of any Voting Securities of SVGL pursuant to the exercise of an employee stock option) and signs the agreement required by Article IX below. "Subsidiary" of any Person shall mean a corporation, company, or other entity (i) more than 50% of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, or other unincorporated association), but more than 50% of whose ownership interest representing the right to make decisions for, or designating the managing authority of, such other entity is, owned or controlled, directly or indirectly, by such Person at the time in question, but such corporation, company or other entity shall be deemed to be a Subsidiary only for so long as such ownership or control exists. "SVG Change in Control" shall mean (a) (i) any sale, lease, exchange or other disposition (whether in one transaction or a series of related transactions) of forty percent (40%) or more of the assets of SVG (without regard to the assets of SVGL which may be included in the consolidated balance sheet of SVG or the Voting Securities of SVGL owned by SVG) to one or more IBM Confidential 14 15 Competitors of IBM or (ii) any other transaction or series of transactions with one or more Persons which results in, or would result in, one or more Competitors of IBM, beneficially owning, in the aggregate, Voting Securities of SVG (or the successor or surviving entity) representing 40% or more of the Total Voting Power of SVG (or the successor or surviving entity), (b) the failure of SVG to own beneficially all the Voting Securities and other equity interests of any Affiliate Transferee of SVG (except for directors' qualifying shares) or (c) entering into agreement providing for any of the foregoing. "Tax" or "Taxes" shall mean all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts. "Total Voting Power" of any Person shall mean the total number of votes that may be cast in the election of directors (or similar managing authority) of such Person at any meeting of IBM Confidential 15 16 stockholders (or equity owners) of such Person if all Voting Securities of such Person (assuming full conversion, exchange or exercise of all securities (including rights, warrants and options) convertible into, exchangeable for or exercisable for any securities entitled to vote generally in such election) were present and voted at such meeting, other than votes that may be cast only by one class or series of stock (other than common stock of such Person and any other class or series of stock to the extent that such other class or series is entitled to vote together as one class with such common stock) or only upon the happening of a contingency. "Voting Securities" shall mean, with respect to any Person, the shares of common stock (or other equity interests) and any other securities of such Person entitled to vote generally in the election of directors (or similar managing authority) of such Person, and any other securities (including rights, warrants, options and convertible debt) convertible into, exchangeable for or exercisable for any common stock or other securities refereed to above (whether or not presently convertible, exchangeable or exercisable). ARTICLE II RIGHT OF FIRST REFUSAL ON NEW ISSUANCES IBM Confidential 16 17 2.1 Issuance of Voting Securities of SVGL. SVGL hereby grants to IBM the right of first refusal to purchase all (or any part) of IBM's pro rata share of any Voting Securities of SVGL that SVGL may from time to time propose to sell or issue. IBM's pro rata share, for purposes of this Section 2.1, shall be the greater of: (a) the ratio of (X) the voting power represented by all Voting Securities of SVG (whether or not then outstanding) beneficially owned by IBM and its Affiliate Transferees immediately prior to such sale or issuance to (Y) the Actual Voting Power of SVG; and (b) the ratio of (X) the voting power represented by all Voting Securities of SVGL (whether or not then outstanding) beneficially owned by IBM and its Affiliate Transferees immediately prior to such sale or issuance to (y) the Actual Voting Power of SVGL. 2.2 Exclusions From Right of First Refusal. The right of first refusal set forth in this Article II shall not apply to the following sales or issuances of Voting Securities by SVGL: (a) Employee Shares or options to acquire Employee Shares; (b) Shares of Common Stock issued upon conversion of any convertible securities issued by SVGL in compliance with this Article II; (c) Voting Securities of SVGL offered to the public pursuant to a registration statement filed under the Securities IBM Confidential 17 18 Act (so long as the distribution pursuant to such registration statement represents a bona fide offer to the public.) (d) Voting Securities of SVGL issued to a Person that is neither a Competitor of IBM nor an Affiliate of a Competitor of IBM; (e) Voting Securities of SVGL issued pro rata to all holders of SVGL's equity securities in connection with any stock split, stock dividend, recapitalization or similar event by SVGL. 2.3 Notice. In the event that SVGL proposes to undertake a sale or issuance of Voting Securities of SVGL subject to Section 2.1 which is not excluded from IBM's right of first refusal pursuant to Section 2.2, it shall obtain a bona fide written offer from an unrelated third party with respect to such sale or issuance and shall give IBM written notice of its intention, describing the type and amount of Voting Securities of SVGL, the price and the other material terms upon which SVGL proposes to sell or issue the same, the identity of the Person or Persons to whom SVGL proposes to sell or issue the same and a copy of such offer. IBM shall have thirty (30) days after receipt of such notice to agree to purchase all or any part of its pro rata share of such Voting Securities of SVGL at the price and upon the terms specified in the notice by giving written notice to SVGL and stating therein the quantity of Voting Securities of SVGL to be purchased. If IBM elects to purchase any of the Voting IBM Confidential 18 19 Securities IBM agrees, by so electing, to make fully payment for such Voting Securities on or before seventy-five (75) days after receipt of the notice provided pursuant to this Section 2.3 subject to the provisions of Section 10.11 hereof. In the event IBM fails to pay the purchase price to SVGL within such seventy-five (75) days or upon such later date as may be determined as contemplated by Section 10.11, SVGL shall be free to sell, in accordance with Section 2.4, those Voting Securities for which full payment has not been made. 2.4 Permitted Issuances. To the extent that IBM fails to exercise in full the right of first refusal within the thirty (30) day period specified above, SVGL shall have one hundred eighty (180) days thereafter (subject to Section 10.11) to sell the Voting Securities of SVGL respecting that portion as to which IBM's rights were not exercised and purchased to the Person or Persons identified in the notice specified in Section 2.3 at a price and upon terms no more favorable to such Person or Persons than the terms specified in the SVGL's notice. In the event SVGL has not sold such Voting Securities of SVGL to such Person or Persons within such one hundred eighty (180) day (or longer, subject to Section 10.11) period, SVGL shall not thereafter issue or sell any Voting Securities of SVGL without first offering such Voting Securities of SVGL to IBM in the manner provided above. No such sale shall have the effect of waiving or diminishing any IBM Confidential 19 20 rights SVGL may have against IBM if IBM fails to pay for Voting Securities which IBM agreed to purchase pursuant to this Article II. ARTICLE III RIGHT OF FIRST OFFER Before any Seller may transfer any Voting Securities of SVGL to a Competitor of IBM, such Voting Securities shall first be offered by such Seller to IBM as set forth in this Article III. 3.1 Notice. The Seller shall deliver a notice (the "First Offer Notice") to IBM and SVGL stating (i) the Seller's bona fide intention to sell or transfer such Voting Securities of SVGL, (ii) the number of Voting Securities of SVGL to be sold or transferred (the "Offered Securities") and (iii) the price and other material terms on which the Seller proposes to offer to sell or transfer such Voting Securities of SVGL. 3.2 Election to Purchase. IBM may elect to purchase all (but not less than all) of the Offered Securities referenced in the First Offer Notice by delivering to the Seller within thirty (30) days after receipt of the First Offer Notice a written notice stating that IBM elects to purchase such Offered Securities. If IBM fails to deliver such a written notice within such thirty (30) days, IBM shall be deemed to have elected not to purchase any of the Offered Securities. If IBM elects to IBM Confidential 20 21 purchase the Offered Securities, IBM agrees, by so electing, to make full payment for such Offered Securities on or before seventy-five (75) days after receipt of the First Offer Notice, subject to the provisions of Section 10.11 hereof. In the event IBM fails to pay the purchase price to the Seller within such seventy-five (75) days or upon such later date as may be determined as contemplated by Section 10.11, the Seller shall be free to sell, in accordance with Section 3.3, the Offered Securities. No such sale shall have the effect of waiving or diminishing any rights the Seller may have against IBM if IBM fails to pay for Offered Securities which IBM agreed to purchase pursuant to this Article III. 3.3 Sales of Unsubscribed Voting Securities of SVGL. To the extent that IBM fails to exercise the right to purchase the Offered Securities or fails to purchase the Offered Securities as agreed, the Seller shall have one hundred eighty (180) days thereafter to sell the Offered Securities at a price and upon terms no more favorable to the purchaser thereof than specified in the notice; provided, that if the Seller has concluded an agreement within such one hundred eighty (180) day period to sell such Offered Securities, but such sale is subject to approval by any Governmental Authority, the one hundred eighty (180) day period within which the sale must be completed shall be extended in accordance with Section 10.11. Subject to such Section 10.11, IBM Confidential 21 22 in the event that the Seller has not sold such Offered Securities within such one hundred eighty (180) day period, the Seller shall not thereafter sell the Offered Securities without first offering such Offered Securities to IBM in the manner provided above. 3.4 Exclusions. The provisions of Sections 3.1, 3.2, and 3.3 shall not apply to a transfer of any of Voting Securities of SVGL by a Seller (i) to the public pursuant to a registration statement declared effective under the Securities Act (so long as the distribution pursuant to such registration statement represents a bona fide offering to the public), (ii) through a broker (so long as such sale is through an ordinary "broker's transactions" as such term is defined in Rule 144 under the Securities Act or a transaction with a "market maker" as such term is defined in Section 3(a)(38) of the Exchange Act) when the Seller does not know the identity of the purchaser and does not direct the purchase, (iii) if the Seller is SVG, to an employee of SVG or SVGL, (iv) in a transaction effected in compliance with Section 5.1, (v) if such Seller is IBM or SVG, to any Affiliate of such Seller that is directly or indirectly wholly owned by such Seller, provided such Affiliate complies with the provisions of Article IX hereof by signing the document referred to in such Article or (vi) to any Person who is not a Competitor of IBM. ARTICLE IV IBM Confidential 22 23 IBM OPTION TO PURCHASE SVGL UPON SVG CHANGE IN CONTROL 4.1 SVG Change of Control. In the event that an SVG Change in Control should occur at a time when IBM is an Eligible Stockholder, SVG shall give IBM written notice of such SVG Change in Control (the "Change in Control Notice"). The Change in Control Notice shall specify the identity of the relevant Competitor of IBM and the percentage of Voting Securities of SVG owned by such Competitor of IBM following the SVG Change in Control. Promptly after IBM delivers a notice that it is exercising its appraisal rights hereunder, IBM and SVG shall mutually select a nationally recognized, independent investment banking firm acceptable to SVGL which shall determine the value of the outstanding Voting Securities of SVGL beneficially owned by SVG (together with its Affiliate Transferees). Such determination shall be set forth in writing and delivered to IBM, SVGL and SVG. For a period of 60 days following the determination of such value, IBM shall have the right to purchase all, but not less than all, Voting Securities of SVGL then beneficially owned by SVG (and its Affiliate Transferees) for a cash price equal to such value. Such investment banking firm shall take into account, and give appropriate valuation to, a control premium, if any, for the Voting Securities of SVGL held by SVG (and its Affiliate Transferees). SVGL shall cooperate fully in assisting any such investment banking firm in making its IBM Confidential 23 24 determinations, including giving such firm full access to the books and records of SVGL and providing it with such other information as such firm may reasonably request in connection with such determination. Each party hereto shall be free to make written presentations to such investment banking firm to assist it in making its determinations, as long as such party provides a copy of any such written presentation to the other parties. SVG and IBM shall each pay that fraction of the fees and expenses of any such investment banking firm as equals the fraction determined by dividing the voting power represented by the outstanding Voting Securities of SVGL then beneficially owned by such party by the voting power represented by all outstanding Voting Securities of SVGL then beneficially owned by IBM and SVG. 4.2 Closing. If IBM exercises its right to purchase all Voting Securities of SVGL held by SVG (and its Affiliate Transferees) following an SVG Change in Control, it shall give written notice of its election to SVG within 60 days following delivery of the investment banking firm's written determination of value pursuant to Section 4.1 and SVG (and its Affiliate Transferees) shall be obligated to sell all Voting Securities of SVGL held by them to IBM. The closing of such purchase and sale shall take place on a date mutually acceptable to IBM and SVG, which date shall be no more than 80 days following delivery of the investment banking firm's written determination of value IBM Confidential 24 25 pursuant to Section 4.1, subject to the provisions of Section 10.11 hereof. ARTICLE V SPECIAL COVENANTS AND AGREEMENTS SOLELY FOR THE BENEFIT OF IBM 5.1 Merger; Sale of Assets. So long as IBM is an Eligible Stockholder, without the prior written consent of IBM, SVGL shall not (a) become a party to any merger, consolidation or other reorganization with any Competitor of IBM, (b) sell, lease or otherwise dispose of (whether in one transaction or series of transactions) more than 5% of its assets to any Competitor of IBM or any of its Affiliates (other than the sale, lease or license of products to customers in the ordinary course of business) (c) enter into any other transaction or series of transactions with one or more Persons which results in or would result in one or more Competitors of IBM owning, in the aggregate, Voting Securities of SVGL representing 30% or more of the Total Voting Power of SVGL or (d) enter into any agreement providing for any of the foregoing. 5.2 Liquidation. So long as IBM is an Eligible Stockholder, without the prior written consent of IBM, SVGL shall not voluntarily dissolve, liquidate or wind up SVGL, carry out any partial liquidation of SVGL, file or consent to the filing of any IBM Confidential 25 26 petition in bankruptcy, consent to the appointment of a receiver for it or any substantial part of its assets, make any general assignment for the benefit of its creditors or take any similar action. For purposes of this Section 5.2 only, if SVGL has complied with Section 5.1 hereof, the sale of SVGL through any merger of consolidation of SVGL with or into any other corporation, or the acquisition by any other Person of SVGL through any merger of any other corporation or corporations into SVGL, or a sale of all or substantially all of the assets of SVGL shall not be deemed a violation of this Section 5.2. 5.3 Priority Transactions. In the event that SVG and/or SVGL contemplates entering into any transaction(s) with any Person(s) which has or will have the effect of granting any Person(s) priority with respect to receipt of tools which are intended to be made generally available to SVGL's customers, SVG and/or SVGL, as the case may be, will offer IBM the opportunity to participate in the transaction(s) on terms and conditions which are equivalent to the most favorable terms and conditions offered to the other Person(s) participating in the transaction(s). a. Notice. In the event that SVG and/or SVGL contemplates entering into a transaction of the type described in Section 5.3, it or they will give IBM written notice of its intention, describing the material terms of the transaction and identity of IBM Confidential 26 27 the proposed other Person(s). IBM shall have thirty (30) days after receipt of such notice to provide SVG and SVGL with notice of IBM interest in participating in the transaction. If IBM indicates such an interest, SVG and/or SVGL, as the case may be, agrees to include IBM in the negotiations of such transactions and allow IBM to participate in the transaction as provided in Section 5.3. In the event IBM fails to provide notice of such interest, SVG and/or SVGL shall be free to proceed with the transaction without IBM's participation as provided in Section 5.3(b). b. Permitted Transactions. To the extent that IBM fails to provide notice as specified above, SVG and/or SVGL shall have one hundred eighty (180) days thereafter (subject to Section 10.11) to conclude the proposed transaction with the Person(s) specified in SVG and/or SVGL's notice, upon terms no more favorable to such Person or Persons than the terms specified in the such notice. In the event SVG and/or SVGL, as the case may be, has not concluded the propose transaction with such Person(s) within such one hundred eighty (180) day (or longer, subject to Section 10.11) period, neither SVG nor SVGL shall thereafter enter into such a transaction without first offering IBM the ability to participate therein in the manner provided above. ARTICLE VI IBM Confidential 27 28 AFFIRMATIVE COVENANTS OF THE COMPANY For purposes of this Article VI, SVGL shall cause each of its Subsidiaries to comply with the obligations of SVGL (except in respect of Sections 6.2 and 6.3). 6.1 Accounting System. SVGL shall maintain all its financial records in accordance with generally accepted accounting principles consistently applied. 6.2 Periodic Reports; Budgets. (a) SVGL shall furnish to IBM as soon as practicable and in any event within 60 days after the end of each fiscal year of SVGL, beginning with the fiscal year ending on September 30, 1997, an annual report of SVGL, including an audited balance sheet as of the end of such fiscal year and the related audited statements of operations, stockholders' equity and cash flows for such fiscal year (similar statements if the foregoing statements change as the result of changes in generally accepted accounting principles) setting forth in each case in comparative form the corresponding figures for the preceding fiscal year and for the budget the fiscal year just completed (provided, however, that information as to the budgeted figures need not be audited), all of which shall fairly present the financial condition of SVGL as of the dates shown and the results of its operations for the periods then ended. Such financial statements shall be accompanied by the report thereon of nationally recognized IBM Confidential 28 29 independent public accountants to the effect that such financial statements have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with prior years (except as otherwise specified in such report). SVGL shall conduct its business so that such report of the independent public accountants shall not contain any qualifications as to the scope of the audit or with respect to SVGL's compliance with generally accepted accounting principles consistently applied, except for changes in methods of accounting in which such accountants concur. SVGL shall also include with such financial statements a calculation of primary and, if applicable, fully diluted earnings per share and a schedule of sales or repurchases of securities of SVGL showing the amount and type of, the price paid for and the conversion prices of, with respect to convertible securities, such security and the seller and purchaser. (b) SVGL shall furnish to IBM as soon as practicable and in any event within 30 days after the end of each calendar quarter, a quarterly report of SVGL consisting of an unaudited balance sheet as of the end of such quarter and the related unaudited statements of operations and cash flows for quarter and for the fiscal year to date, setting forth in each case in comparative form the corresponding figures for the preceding fiscal year and for the budget for the current fiscal year. All IBM Confidential 29 30 such reports shall be certified by SVGL's chief financial officer as fairly presenting the financial condition of SVGL as of the date shown and its results of operations for the periods then ended and to have been prepared in conformity with generally accepted accounting principles consistently applied, except for normal, recurring year-end audit adjustments. (c) SVGL shall furnish to IBM, as soon as practicable and in any event within 30 days after the end of each calendar month, a monthly report of SVGL consisting of an unaudited balance sheet as of the end of such month and the related unaudited statements of operations and cash flows for such month and the fiscal year to date, setting forth in each case in comparative form the corresponding figures for the budget for the current fiscal year. The reports for each calendar month shall include a narrative discussion prepared by SVGL describing the business operations of SVGL during such calendar period. (d) SVGL shall furnish to IBM, for so long as IBM is an Eligible Stockholder, as soon as practicable and in any event not less than 30 days prior to the commencement of each fiscal year of SVGL (A) an annual operating budget for SVGL, approved by the Board of Directors of SVGL, for the succeeding fiscal year, containing projections of profit and loss, cash flow and ending balance sheets for each quarter and each month of such fiscal year, (B) an annual summary budget for the three fiscal years IBM Confidential 30 31 following the next fiscal year, containing projections of profit and loss for each of such years, and (C) a business plan for SVGL relating to the succeeding fiscal year setting forth a development plan, financial plan, marketing plan and budgeted and projected figures. Promptly upon preparation thereof, SVGL shall furnish to IBM, for as so long as IBM is an Eligible Stockholder, any other operating budgets or business plans that SVGL may prepare and which are submitted to or approved by the Board of Directors and any revisions of such previously furnished budgets or business plans so approved. (e) SVGL's obligations pursuant to Section 6.2 (a) and (b) shall be suspended for so long as the Common Stock is registered pursuant to Section 12 of the Exchange Act of SVGL is required to file reports with the SEC pursuant to Section 15(d) of the Exchange Act; provided that SVGL timely files its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and provides a copy thereof to each Stockholder. 6.3 Certificates of Noncompliance. SVGL covenants that promptly after the occurrence of any material default (with or without notice or lapse of time or both) under, or material breach of, this Agreement or any material agreement or obligation, it shall deliver to IBM for so long as IBM is an Eligible Stockholder, a certificate of an officer of SVGL specifying in detail the nature and period of existence thereof IBM Confidential 31 32 and what actions SVGL has taken and proposes to take with respect thereto. 6.4 Other Reports and Inspection. SVGL shall furnish promptly to IBM (i) copies of any financial statements or financial or other reports or compliance certificates prepared by SVGL for or otherwise furnished to or filed with its stockholders or any lender to SVGL of the SEC and (ii) such other documents, reports, financial data and other information as IBM may reasonably request. SVGL shall, upon reasonable prior notice, make available to IBM or its representatives or designees all properties, assets, books of accounts, corporate records and contracts (subject to the confidentiality provisions of such contracts) of SVGL reasonably requested by IBM, and any other material reasonably requested by IBM, for inspection and shall use its best efforts to make available to IBM, the directors, officers, employees, customers, independent accountants and vendors of SVGL for interviews at reasonable times to verify all information furnished and otherwise to become familiar with SVGL and its business, operations, properties and assets. 6.5 Insurance. SVGL shall maintain valid policies of workers' compensation, fire and casualty, liability and other forms of insurance with financially sound and reputable insurers, in such amounts, with such deductibles and against such risk and losses as are reasonable for the business and assets of SGL, and IBM Confidential 32 33 SVGL shall maintain such other insurance as may be required by law. The activities and operations of SVGL shall be conducted in a manner so as to conform in all material respects to all applicable provisions of such insurance policies. 6.6 Business and Properties. SVGL shall obtain, preserve, renew and keep in full force and effect all rights, licenses, permits, patents, copyrights, trademarks, trade names and other authorizations which shall be necessary in any material respect to the conduct of its business; provided that SVGL shall not be deemed to be in breach of this Section 6.6 with respect to any such rights, licenses, permits, patents, copyrights, trademarks and trade names which are not in full force and effect but are contested diligently and in good faith by SVGL. SVGL shall maintain and preserve all property material to the conduct of its business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times. 6.7 Material Changes. SVGL shall promptly notify IBM, so long as IBM is an Eligible Stockholder, of (i) any material adverse change in the business, properties, assets, condition (financial or otherwise), operations or prospects of SVGL, and IBM Confidential 33 34 (ii) any lawsuit, claim, proceeding or investigation, pending or, to the best knowledge of SVGL, threatened, or any judgment, order or decree involving SVGL and which, if the result were adverse to SVGL, might have a material effect on the business, properties, assets, condition (financial or otherwise) operations or prospects of the SVGL. 6.8 Agreements with Employees. The Board of Directors shall cause all members of management and all professional employees of SVGL to enter into agreements as the Board of Directors determines from time to time, relating to (A) nondisclosure of confidential information; (B) assignment of patents, trademarks and copyrights to SVGL; and (C) noncompetition. 6.9 Compliance with Applicable Laws. SVGL shall comply in all material respects with all applicable statutes, laws, ordinances, rules and regulations of any Governmental Authority (whether now in effect or hereafter enacted) and any filing requirements relating thereto. Such obligation shall include complying in all material respects with the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, and filing in a timely manner (within any applicable extension periods) all material returns, reports and forms required to be filed under the Internal Revenue Code of 1986, as amended, or under applicable state, local or foreign laws IBM Confidential 34 35 relating to taxes and timely paying all taxes required to be paid in respect of the periods covered by such returns, reports and forms, except to the extent such statues, laws, ordinances, rules, regulations or filing requirements are being contested diligently and in good faith by SVGL (or in the case of taxes, adequate reserves for payment thereof have been set up and if SVGL receives an assessment for additional taxes from any taxing authority, such taxes are being contested diligently and in good faith). SVGL shall do all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and authority necessary to continue its business. Notwithstanding the foregoing, this Section 6.9 does not apply with respect to: (i) any environmental matter which is defined in the Environmental Matters Agreement as Specified Environmental Permits and Specified Environmental Actions, or which constitutes a breach of representation and warranty contained in the Environmental Matters Agreement, or (ii) any matter (other than any environmental matter) to the extent it represents a substantial continuation (or would represent a substantial continuation but for the passage of time) of the state of affairs, activities or conduct (or the consummation of transactions or events) that existed, occurred, or was contemplated prior to the May 15, 1990 (but not to the extent a matter formerly in compliance becomes noncompliant by reason of a IBM Confidential 35 36 change in the law). For the purposes of this Section 6.9, the term "Environmental Matters Agreement" has the meaning set forth in the Asset and Stock Agreement. SVGL agrees to use its reasonable best efforts to correct expeditiously any noncompliance with law existing immediately following March 18, 1997. This Section 6.9 shall in no way affect the rights and remedies of the parties pursuant to the Environmental Matters Agreement and any other written, executed agreements in place between the parties. ARTICLE VII BOARD OF DIRECTORS 7.1 IBM Observer. IBM shall be entitled to designate a nonvoting observer who shall be entitled to attend all SVGL Board of Directors and committee meetings. IBM acknowledges and agrees that the observer nominated by IBM will be under an obligation to IBM not to disclose to any Person outside of IBM, or use in other than IBM's business, any confidential information or material relating to the business of IBM or its Subsidiaries and therefore no such information or material will be disclosed SVGL even if such disclosure would be of interest or value to SVGL. 7.2 Notice of Meetings. For so long as IBM has the right to designate a nonvoting observer entitled to attend all SVGL Board and Committee meetings, it shall have the right to receive IBM Confidential 36 37 reasonable prior notice of (with such notice to be sent to the address provided in Section 10.4 below if it has not designated a specific individual), and have its observer, attend, all meetings of the Board of Directors of SVGL or any committee thereof and SVGL will promptly deliver to the observer designated, by IBM copies of all minutes and other records of action by, and all written information furnished to, the Board or such committee; provided that SVGL may, to the extent permitted by applicable law, withhold specific information regarding proprietary technology of SVGL which would (in the good faith opinion of the Board of Directors of SVGL) if disclosed to IBM, result in a competitive disadvantage to SVGL. 7.3 No Observer Fees or Expense. SVGL will not reimburse any observer sent by IBM or IBM for expenses incurred in connection with attending any meeting of SVGL's Board of Directors. 7.4 Precedence. To the extent, if any, that any provision of this Article VII is inconsistent with the provisions of Section 10.12, the provisions of Section 10.12 shall control. ARTICLE VIII LEGEND ON SHARE CERTIFICATES IBM Confidential 37 38 8.1 Legend. Each certificate representing Voting Securities of SVGL owned by any Stockholder or any transferee shall bear the following legends (in addition to any legends required under applicable state securities laws), except that such certificate shall not be required to bear the first such restrictive legend if the Stockholder shall provide to SVGL a legal opinion of such Stockholder's counsel, in form and substance reasonably satisfactory to counsel for SVGL, to the effect that such legend is not required in order to establish compliance with any provisions of the Securities Act or any applicable state securities or Blue Sky laws, and shall not bear the second such restrictive legend to the extent no longer required under this Agreement. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR STATE SECURITIES LAWS (COLLECTIVELY "SECURITIES LAWS") AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT, DATED AS OF MARCH 18, 1997, BY AND AMONG SVG LITHOGRAPHY, INC., ("SVGL") SILICON VALLEY GROUP, INC., AND INTERNATIONAL BUSINESS MACHINES CORPORATION AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SVGL, AND SVGL WILL FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT CHARGE. 8.2 No Transfer. SVGL agrees not to register the transfer of any certificate so legended if SVGL has not received a IBM Confidential 38 39 certificate from the transferring party as to compliance with all provisions of this Agreement (or if SVGL knows that such provisions have not been (or after giving effect to such transfer would not be) complied with). The holder of each certificate bearing the second of such legends by acceptance thereof agrees to comply in all respects with the provisions of this Agreement. No holder will offer to sell or otherwise dispose of Voting Securities of SVGL or any other security of SVGL other than pursuant the registration requirements of the Securities Act or an exemption therefrom. ARTICLE IX AGREEMENT BY SUBSEQUENT PURCHASERS SVGL agrees to deliver to each Stockholder, and each Stockholder agrees to deliver to all other Stockholders of SVGL and SVGL prior to issuing or making any transfer of Voting Securities of SVGL to any Person not a party to this Agreement, an appropriate document duly executed and delivered by such Person in which such Person agrees that it shall be bound by, and that its beneficial ownership of any Voting Securities of SVGL shall be subject to, all the terms and conditions of this Agreement applicable to (i) a Stockholder generally and (ii) in the case of a sale to a Person who, after giving effect to such sales, would be an Affiliate Transferee, and Affiliate IBM Confidential 39 40 Transferee. Upon such delivery and transfer, such Person shall become a Stockholder will all the rights hereunder of a Stockholder generally and all other rights hereunder, if any, assigned to it pursuant to Section 10.1. ARTICLE X MISCELLANEOUS 10.1 Assignment. This Agreement and the rights hereunder shall not be assignable or transferable by any party hereto (except by operation of law in connection with a merger, consolidation or sale of all or substantially all the assets of such party or pursuant to Section 10.12) without the prior written consent of the other parties hereto and any purported assignment without such consent shall be void; provided, however, that, without such consent, subject to compliance with the provisions of Article IX, any Stockholder may assign all or any part of its rights and obligations hereunder to an Affiliate or to any transferee (provided such assignment shall not relieve it of its obligations hereunder). This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors, heirs, legatees and assigns. The assignment by any Stockholder on a nonexclusive basis of any rights under this Agreement to any transferee of Voting Securities acquired hereunder shall not affect or diminish IBM Confidential 40 41 the rights or obligations of such Stockholder under this Agreement. 10.2 Consent to Jurisdiction. The parties hereto and each other Stockholder irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby or thereby. 10.3 Amendments; Waivers. No amendment to this Agreement shall be effective unless it shall be in writing and signed by the parties hereto and any other Stockholders of SVGL. Any failure of a Person to comply with any obligation, covenant, agreement or condition contained in this Agreement may be waived by the Person entitled to the benefits thereof only by a written instrument signed by the Person granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure of compliance. The rights and remedies of each of the parties hereto and any other Stockholders of SVGL hereunder are cumulative and are not exclusive of any rights or remedies such Person would otherwise have. 10.4 Notices; Consents and Approvals. IBM Confidential 41 42 (a) All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally or three days after being mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a Person as shall be specified by like notice to the parties hereto and nay other Stockholders of SVGL): (i) if to IBM, International Business Machines Corporation Microelectronics Division P.O. Box 1580 Hopewell Junction, NY 12533 Attention: M. J. Attardo General Manager with copy to: International Business Machines Corporation Microelectronics Division P.O. Box 1580 Hopewell Junction, NY 12533 Attention: John T. Higgins Associate General Counsel (ii) if to SVGL, SVG Lithography, Inc. 77 Danbury Road Wilton, Connecticut 06897 Attention: President with copy to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304-1050 Attention: Larry W. Sonsini (iii) if to SVG, IBM Confidential 42 43 Silicon Valley Group, Inc. 101 Metro Drive, Suite 400 San Jose, California 95110 Attention: President with a copy to: Wilson Sonsini Goodrich &Rosati 650 Page Mill Road Palo Alto, California 94304-1050 Attention: Larry W. Sonsini (b) Any consent or approval required to be obtained hereunder from any party (or any action that is required hereunder to be acceptable to a party before it may be undertaken) shall be deemed not to have been given (and such action shall be deemed not to have been acceptable) unless such consent or approval or acceptance is evidenced by a writing signed on behalf of such party by one of the following officers or employees (or such other Person as shall be specified in a written notice from such party to all other parties): (i) In the case of IBM: IBM Microelectronics Division General Manager or any Vice President (ii) In the case of SVGL: The President (iii)In the case of SVG: The President or any Vice President Without limiting the generality of the foregoing, resolutions adopted by the Board of Directors of SVGL (whether at IBM Confidential 43 44 a meeting or by written consent) shall not constitute any such consent or approval, which consent or approval must be separately obtained. 10.5 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 10.6 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties. 10.7 Entire Agreement. This Agreement and the Stock Purchase Agreement contain the entire agreement and understanding among the parties hereto with respect to matters covered hereby and supersede all prior agreements and understandings, written or oral, among the parties with respect to the subject matter hereof prior to the date hereof, except as specifically set forth in the Stock Purchase Agreement. 10.8 Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdictions, such invalidity, illegality or unenforceability shall not affect any other provision hereof. IBM Confidential 44 45 10.9 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed entirely within such state, without regard to the conflict of laws principles of such state, except as to matters required by applicable law to be governed by and construed in accordance with the General Corporation Law of the State of Delaware. 10.10 Specific Enforcement; Injunctive Relief. The parties and any other Stockholders of SVGL acknowledge that damages would be an inadequate remedy for any breach of the provisions of this Agreement. Therefore, the obligations of the parties and any other Stockholders of SVGL hereunder shall be specifically enforceable and each of SVGL, SVG and IBM and any other Stockholders of SVGL agree that each of them shall be entitled to an injunction, restraining order or other equitable relief from any court of competent jurisdiction, restraining any party from committing any violations of the provisions of this Agreement. 10.11 Governmental Approval. The period of time provided in this Agreement for the closing of the purchase of securities by any party shall be extended, at the option of the purchaser, for a period not to exceed six months beyond the end of the applicable exercise period, as and if necessary in order to permit such purchaser to comply with all applicable laws, rules and regulations of any Governmental Authority provided the IBM Confidential 45 46 purchaser uses its reasonable best efforts to obtain such approvals as soon as practicable. Notwithstanding anything to the contrary herein, such purchaser may elect not to proceed with such purchase if, in its good faith opinion, such compliance would be burdensome or unduly expensive. 10.12 SVG Pledge. (a) Notwithstanding anything herein to the contrary, SVG may pledge all, or any portion of, its right, title and interest in the Common Stock, Voting Securities or other equity interest in SVGL now owned or hereafter acquired and, in connection therewith, may assign its right, title and interest in and to this Agreement and/or the Stock Purchase Agreement (collectively, the "Collateral") to any commercial bank lender of group of lenders to SVG (individually and collectively, a "Lender"), to secure (along with a security interest in substantially all of SVG's other assets) SVG's obligations under a loan agreement (the "Loan Agreement") between SVG and any such Lender, provided, however, that any such Lender shall agree in a writing in substantially the form attached hereto as Exhibit A that (i) the Lender's respective rights in the Collateral (and those of any subsequent transferee of the Collateral) shall be subject to all of the rights and obligations of the Stockholders under this Stockholders Agreement, except that the Lender (or such transferee) shall have no obligation to make any payment required by this Agreement or to purchase any further interest in IBM Confidential 46 47 SVGL, (ii) the Lender will take action to foreclose its interest in the Collateral only concurrently with or subsequent to other action to generally foreclose upon other collateral held by the Lender securing the Loan Agreement (i.e., concurrently with or subsequent to actions such as foreclosure upon the share of other Subsidiaries of SVG or its successor, providing notices to the obligors on accounts receivable to make payments directly to the Lender, institution of proceedings to foreclose on equipment, providing notices to bailees of cash equivalent accounts to hold funds, and the like), except to the extent that so to do would, in the Lender's reasonable judgment, impair or threaten to impair the Lender's interest in any material item of Collateral as a result of any legal consequences arising from the order in which the Collateral shall be realized upon (iii) all votes to be taken by the Stockholders following the Lender's acquisition of voting power with respect to the Collateral shall be required to be unanimous among the Stockholders before the subject action shall be deemed approved except that the Lender will be entitled to elect one director to SVGL's board of directors, such nominee to be subject to the prior written consent of IBM, which consent shall not be unreasonably withheld, (iv) if the Lender shall, upon any default, propose to retain the Collateral in satisfaction of the obligations secured thereby or determine to purchase the Collateral at any public or private sale or IBM Confidential 47 48 otherwise acquires the Collateral, such retention, purchase or other acquisition and any subsequent disposition by such Lender shall not be subject to the provisions of Article III for a period of five years from the date such Lender so acquires the Collateral, (v) the Lender agrees to grant IBM the option (exercisable by IBM by written notice to the Lender and all Stockholders) to purchase for cash (without recourse to the transferor) all but not less than all of the Collateral acquired by the Lender in any foreclosure or otherwise, at any time and from time to time following such acquisition, the purchase price for the purchase of such Collateral being the appraised value determined in accordance with Section 4.1 of this Agreement as if an SVG Change in Control had occurred, except that the Lender shall act in the stead of SVG for purposes of selecting the investment banking firm referred to therein, the closing of such purchase to take place within 15 days following such determination (subject to 10.11 hereof), and if any such notice exercising such option shall be given by IBM, then the other shall have 30 days (and no more than 30 days) from receipt of such notice by the party exercising such option, to exercise its option to purchase the Collateral hereunder and the pro rata share to be purchase by IBM in such event shall be determined pursuant to Section 3.3 hereof, (vi) the Lender shall agree to a confidentiality agreement pertaining to SVGL substantially in the IBM Confidential 48 49 form furnished by SVG to the other parties hereto concurrently herewith and each Lender shall also agree that it will not transfer any interest in the Collateral (whether by sale, participation or otherwise) to any other Person who shall not have entered into such a confidentiality agreement and (vii) the Lender shall not have access to any information which in the reasonable judgment of the SVGL or IBM is proprietary technological or other nonfinancial operation information of SVGL or IBM. The agent acting on behalf of the Lender with respect to the Collateral shall at all times not be a Competitor of IBM (determined without reference to the last proviso of the definition of such term). (b) IBM agrees that (i) the pledge by SVG to any Lender of the Collateral pursuant to the terms hereof and (ii) the retention, purchase or other acquisition by any Lender (but no other Person) of any of the Collateral foreclosed upon by any Lender and (iii) the subsequent disposition by the Lender of any of the Collateral to another Person in a transaction in which IBM has been afforded by the Lender a right of first refusal to purchase such Collateral, but has not elected to purchase the same, shall not, by virtue of (X) such foreclosure or (Y) any Lender or any other such Person so obtaining beneficial ownership of such Collateral, give rise to the right of IBM to terminate the Environmental Matters Agreement. The right of first refusal IBM Confidential 49 50 described in the preceding sentence shall be effected by a written notice from the Lender to IBM specifying the identity of the proposed purchaser of the Collateral and the price and other material terms on which the Lender proposes to sell or transfer such Collateral, after receipt of which notice IBM shall have 30 days to elect, by written notice to the Lender, to purchase all, but not less than all, of such Collateral at the price and on the terms described in such notice from the Lender, the closing of such purchase to occur within 15 days of the Lender's receipt of IBM's notice of election to purchase such Collateral, subject to the provisions of Section 10.11 hereof. In the event that IBM shall fail to deliver such a written notice to the Lender within such 30 day period, or, if IBM has delivered such notice, but shall fail to tender the required purchase price for the Collateral within such 15 day period, subject to Section 10.11 hereof, then the Lender shall be fee to sell the Collateral in the transaction described in the original notice from the Lender. This Section 10.12(b), however, shall not affect or diminish IBM's other rights or remedies under any other agreement or otherwise or, except as set forth in the preceding sentence, limit or act as a waiver of IBM's rights or remedies under any other agreement or otherwise, nor shall it affect IBM's rights under this Agreement with respect to any Collateral which shall be transferred by any Lender to another Person. IBM Confidential 50 51 (c) SVG consents to the grant of the option by any Lender contemplated to be granted pursuant to Section 10.12(a) and the purchase price for the Collateral contemplated thereby. (d) Each Stockholder agrees that the provisions of Article III shall not apply to the grant of the option by any Lender referred to in Section 10.12(a) or to the exercise by IBM of its or their rights in respect thereof. IN WITNESS WHEREOF, the parties have caused this Stockholders Agreement to be duly executed as of the date first written above. INTERNATIONAL BUSINESS MACHINES CORPORATION By: /s/ Patrick J. Glennon --------------------------------- Patrick J. Glennon Manager of Business Alliance and Headquarter Operations March 18, 1997 SVG LITHOGRAPHY, INC. By: /s/ Russell G. Weinstock --------------------------------- Russell G. Weinstock Vice President and Chief Financial Officer March 18, 1997 SILICON VALLEY GROUP, Inc. By: /s/ Russell G. Weinstock --------------------------------- Russell G. Weinstock Vice President and Chief Financial Officer March 18, 1997 IBM Confidential 51 52 Exhibit A LETTER AGREEMENT FROM: [LENDER] TO: International Business Machines Corporation RE: Stockholders Agreement dated as of March __, 1990 (the "Stockholders Agreement"), among SVG Lithography, Inc. (the "Company"), Silicon Valley Group, Inc. ("SVG"), and International Business Machines Corporation ("IBM"). Capitalized terms used herein and not defined herein have the meanings assigned in the Stockholders Agreement. DATE: ________________ Dear Sirs: IBM Confidential 52 53 We hereby agree with IBM as follows: 1. We agree that our interest in the Collateral shall be subject to the terms and provisions of Paragraph 10.12(a) of the Stockholders Agreement, which are, mutatis mutandis, hereby incorporated herein by reference. 2. We hereby confirm the grant to IBM of the option in respect of the Collateral described in Paragraph 10.12(a) of the Stockholders Agreement. 3. We agree, effective upon our acquisition of ownership of the Collateral pursuant to a foreclosure or otherwise of all or any part of the Collateral, to be bound by, and that the ownership of such Collateral shall be subject to, all the terms and conditions of the Stockholders Agreement applicable to a Stockholder generally, but in no event shall we have any obligation to make any payment required by the Agreement or to purchase any further interest in the Company. 4. All notices and communications under this Letter Agreement shall be in writing, mailed by registered or certified mail (return receipt requested), postage prepaid to the party at its address (or at such other addresses as shall be specified in a like notice to the other party) set forth below its signature. 5. The provisions of Sections 10.7, 10.8, 10.9 and 10.10 of the Stockholders Agreement are, mutatis mutandis, hereby incorporated herein by reference. IBM Confidential 53 54 Very truly yours, [LENDER] By:_____________________ Title: Address: Accepted and Agreed as of the date first above written: INTERNATIONAL BUSINESS MACHINES CORPORATION By:____________________________ Title: Address: 54 EX-99.1 4 AGREEMENT FOR PAYMENT 1 AGREEMENT FOR PAYMENT IN CONNECTION WITH DEVELOPMENT AGREEMENT REFERENCE: Development Agreement ("Development Agreement") between International Business Machines Corporation and SVG Lithography, Inc. dated May 15, 1990. Agreement between International Business Machines Corporation and SVG Lithography Systems, Inc. for the development, production and purchase of nineteen (19) Micrascan I tools dated ("Purchase Agreement") May 15, 1990. Whereas the Development Agreement requires certain payments by SVG Lithography, Inc. ("SVGL") to International Business Machines Corporation ("IBM") in connection with the IBM development funding as provided for in detail in Section 10 and Attachment D of such Agreement, and Whereas SVGL and IBM ("the Parties") desire to settle such obligation at this time. Now therefore, the Parties agree that in consideration for (i) the payment by SVGL to IBM of $5,000,000.00 (five million dollars) by wire transfer upon the execution of this Agreement to the financial institution ("Financial Institution") specified below which specification shall be deemed to amend pro tanto Section 17 of the Development Agreement (ii) and the application by SVGL of the below specified credit against IBM purchases from SVGL, and (iii) the delivery of a number of shares of SVG Common Stock equal to $10,000,000 (ten million dollars) divided by the average closing price of SVG Common Stock as reported in the Wall Street Journal for the five (5) trading days preceding the date hereof (which stock transfer shall be pursuant to the Stock Purchase and Registration Rights Agreement by and between the parties), all of which SVGL and Silicon Valley Group, Inc. ("SVG") agree hereby to do, SVGL's payment obligation in connection with the aforementioned development funding has been settled in full by SVGL with IBM and that the term of the Development Agreement has ended pursuant to Section 11.1 thereof, subject to the survival of provisions of the Development Agreement which have a longer period through the end of such 1 2 longer period. Notwithstanding the foregoing provision regarding survival, Section 11.5 of the Development Agreement shall not survive the execution of this Agreement. Similarly, the term of the Purchase Agreement shall be hereby adjusted by making Section 28 (Term) of such Agreement read a date even with the date upon which the term of the Development Agreement ends as provided for above. The aforementioned credit against IBM purchases from SVGL agreed to hereby is a credit from SVGL of $23,000,000.00 (twenty three million dollars) which IBM may, at IBM's option, utilize as a deduction from the price of any and all products or services that (i) IBM has purchased for which payment has not been made by IBM to SVGL at the time of execution of this Agreement, or (ii) IBM will purchase in the future from SVGL. Such credit shall not be assignable by IBM. The foregoing credit may be applied by IBM in any amount up to 100% (one hundred percent) of the purchase price of any and all such SVGL products or services until said credit is exhausted. SVGL shall have no obligation to refund to IBM any of the foregoing unused credit. Financial Institution: Chase Manhattan Bank 4 New York Plaza, 15th Floor New York, NY 10004 IBM Concentration Account Account #323-213499 ABA Routing #021000021 Chemical Bank Contact: Ms. Joyce Leary-Bates (212) 552-5684 Each party represents and warrants that it has full right and authority to enter into this Agreement. This Agreement will not be binding upon the parties until it has been signed by or on behalf of each party, in which event, it shall be effective as of the date last below written. No amendment or modification hereof shall be valid or binding upon the parties unless made in writing and signed as aforesaid. This Agreement represents the entire agreement between the parties 2 3 regarding the subject matter hereof and shall supersede all previous communications, representations, understandings and agreements, whether oral or written, by or between the Parties or any officers or representatives thereof with respect to the subject matter of this Agreement. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties. ACCEPTED AND AGREED: INTERNATIONAL BUSINESS MACHINES CORPORATION: By: /s/ Patrick J. Glennon ---------------------------- Patrick J. Glennon Manager of Business Alliance and Headquarter Operations March 18, 1997 SILICON VALLEY GROUP, INC. By: /s/ Russell G. Weinstock ---------------------------- Russell G. Weinstock Vice President and Chief Financial Officer March 18, 1997 SVG LITHOGRAPHY, INC. By: /s/ Russell G. Weinstock ---------------------------- Russell G. Weinstock Vice President and Chief Financial Officer March 18, 1997 3 -----END PRIVACY-ENHANCED MESSAGE-----