As filed with the Securities and Exchange Commission on February 27, 2004
Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Tegal Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware 201 South McDowell Boulevard 68-0370244
(State or Other Jurisdiction of Petaluma, California 94954 (I.R.S. Employer
Incorporation or Organization) (707) 763-5600 Identification Number)
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Michael L. Parodi
Chairman of the Board, President & Chief Executive Officer
Tegal Corporation
2201 South McDowell Boulevard
Petaluma, California 94954
(707) 763-5600
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copy To:
Christopher L. Kaufman, Esq.
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, California 94025
(650) 328-4600
Fax: (650) 463-2600
Approximate date of commencement of proposed sale to the public:
From time to time after this registration statement becomes effective
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed Maximum Amount Of
Title Of Each Class Of Amount To Maximum Offering Aggregate Offering Registration
Securities To Be Registered Be Registered (1) Price Per Unit Price Fee
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Common Stock, par value $0.01 7,545,317 shares $2.31(2) $17,429,682 $2,208.34
per share
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(1) In the event of a stock split, stock dividend or similar transaction
involving the Common Stock, in order to prevent dilution, the number of
shares registered shall be automatically increased to cover the additional
shares in accordance with Rule 416(a) under the Securities Act of 1933.
(2) Estimated solely for the purpose of computing the registration fee
required by Section 6(b) of the Securities Act and computed pursuant to
Rule 457(c) under the Securities Act based upon the average ($2.31) of the
high ($2.38) and low ($2.24) prices of the common stock on February 26,
2004, as quoted on The Nasdaq SmallCap Market. It is not known how may
shares will be purchased under this registration statement or at what
price shares will be purchased.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and the selling stockholders
are not soliciting offers to buy these securities in any state where the offer
or sale is not permitted.
Subject to Completion, dated February 27, 2004
PROSPECTUS
TEGAL CORPORATION
7,545,317
Shares of Common Stock
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This prospectus may be used only for the resale of up to 7,545,317 shares of
Common Stock by Kingsbridge Capital Limited ("Kingsbridge"). Kingsbridge may
acquire these shares from us pursuant to a Common Stock Purchase Agreement, or
structured secondary offering facility (the "Structured Secondary"), and a
Warrant that we issued to Kingsbridge in connection with entering into such
Structured Secondary. Kingsbridge will receive all of the proceeds from the sale
of shares of Common Stock hereunder and will pay all underwriting discounts and
selling commissions, if any, applicable to the sale of such shares. We will pay
the expenses incurred in registering the shares, including legal and accounting
fees. However, we will receive the proceeds from the sale of shares of Common
Stock to Kingsbridge under the Common Stock Purchase Agreement, which provides
for the sale of up to $25 million of shares of our Common Stock.
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Kingsbridge is an "underwriter" within the meaning of the Securities Act of 1933
with respect to this offering.
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Our common stock is quoted on The Nasdaq SmallCap Market under the symbol
"TGAL." On February 26, 2004, the last reported sale price for our common stock
on The Nasdaq SmallCap Market was $2.31 per share.
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The securities offered involve a high degree of risk. See "Risk Factors"
commencing on page 2 for a discussion of some important risks you should
consider before buying any shares of our common stock.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2004
TABLE OF CONTENTS
Summary.......................................................................1
The Company...................................................................1
Risk Factors..................................................................2
Forward-Looking Statements...................................................10
The Structured Secondary Offering Facility...................................10
Use of Proceeds..............................................................13
Selling Stockholders.........................................................13
Plan of Distribution.........................................................14
Legal Matters................................................................17
Experts......................................................................17
Where You Can Find More Information..........................................17
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You should rely only on the information we have provided or incorporated by
reference in this prospectus. Neither we nor the selling stockholders have
authorized anyone to provide you with additional or different information. The
selling stockholders are not making an offer of these securities in any
jurisdiction where the offer is not permitted. You should assume that the
information in this prospectus is accurate only as of the date on the front of
the document and that any information we have incorporated by reference is
accurate only as of the date of the document incorporated by reference. In this
prospectus, unless otherwise indicated, "Tegal," "we," "us" or "our" refer to
Tegal and its subsidiaries.
i
SUMMARY
References in this prospectus to "us," "we," the "Company" or "Tegal"
shall mean Tegal Corporation and our consolidated subsidiaries, unless the
context indicates otherwise.
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, the selling stockholders may from time to time sell
their shares of our common stock in one or more offerings. This prospectus
provides you with a general description of the common stock being offered. You
should read this prospectus, including any documents incorporated herein by
reference, together with additional information described under the heading
"Where You Can Find More Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about us
and the securities offered under this prospectus. That registration statement
can be read at the Securities and Exchange Commission's offices mentioned under
the heading "Where You Can Find More Information."
We have not authorized any dealer, salesman or other person to give any
information or to make any representation other than those contained or
incorporated by reference in this prospectus and in any accompanying supplement
to this prospectus. You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus or any accompanying
prospectus supplement as if we had authorized it. This prospectus and any
accompanying supplement to this prospectus do not constitute an offer to sell or
the solicitation of an offer to buy any securities other than the registered
securities to which they relate, nor do this prospectus and any accompanying
supplement to this prospectus constitute an offer to sell or the solicitation of
an offer to buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. You should not
assume that the information contained in this prospectus and any accompanying
supplement to this prospectus is correct on any date after their respective
dates, even though this prospectus or any accompanying supplement is delivered
or securities are sold on a later date.
THE COMPANY
Tegal designs, manufactures, markets and services plasma etch systems used
in the fabrication of integrated circuits, memory devices, read-write heads for
the disk drive industry, printer heads, telecommunications equipment, small flat
panel displays, device-level packaging, mask/reticle formation and MEMS.
We were formed in December 1989 to acquire the operations of the former
Tegal Corporation, a division of Motorola, Inc. ("Motorola"). Our predecessor
company was founded in 1972 and acquired by Motorola in 1978. We completed our
initial public offering in October 1995.
Our executive offices are located at 2201 South McDowell Boulevard,
Petaluma, California 94954, and our telephone number is (707) 763-5600. All
service marks, brand names or trademarks appearing in this prospectus that do
not belong to us are the property of their respective holders.
1
RISK FACTORS
Investing in our common stock involves a significant amount of risk. You
should carefully consider the following risk factors, in addition to the other
information set forth in this prospectus and incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the fiscal year ended March 31,
2003 and our other filings with the SEC before deciding to purchase our common
stock.
RISK FACTORS
WE HAVE INCURRED OPERATING LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE; OUR
PLANS TO MAINTAIN AND INCREASE LIQUIDITY MAY NOT BE SUCCESSFUL; OUR AUDITORS'
REPORT INCLUDES A GOING CONCERN UNCERTAINTY EXPLANATORY PARAGRAPH; THE
ACCOUNTING FOR OUR DEBENTURES WILL RESULT IN SIGNIFICANT EXPENSE AMOUNTS.
We incurred net losses of $12.6 million and $8.7 million for the years
ended March 31, 2003 and 2002, respectively, and generated negative cash flows
from operations of $6.0 million and $3.6 million in these respective years. We
also incurred a net loss of $9.6 million and generated negative cash flows from
operations of $2.4 million during the nine months ended December 31, 2003. These
factors raise substantial doubt as to our ability to continue as a going
concern, and our auditors have included a going concern uncertainty explanatory
paragraph in their latest auditors' report dated June 10, 2003 which is included
in our 10-K for the year ended March 31, 2003. Our plans to maintain and
increase liquidity include the restructuring executed during fiscal 2002 and
2003, which reduced headcount from 155 employees to 81 employees and has reduced
our cost structure entering fiscal 2004. We believe the cost reduction,
additional financing and a projected increase in sales during fiscal 2005 will
generate sufficient cash flows to fund our operations through the end of fiscal
2005. However, these projected sales are to a limited number of new and existing
customers and are based, for the most part, on internal and customer provided
estimates of future demand, not firm customer orders. If the projected sales do
not materialize, we will need to reduce expenses further and raise additional
capital through the issuance of debt or equity securities. If additional funds
are raised through the issuance of preferred stock or debt, these securities
could have rights, privileges or preferences senior to those of our common
stock, and debt covenants could impose restrictions on our operations. The sale
of equity or debt will result in additional dilution to current stockholders,
and such financing may not be available to us on acceptable terms, if at all.
The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of recorded assets or the amount or
classification of liabilities or any other adjustments that might be necessary
should we be unable to continue as a going concern.
Our debentures issued in June and September 2003 are convertible at a
conversion rate of $0.35 per share, which was lower than our common stock's
price at June 30, 2003, the commitment date for the first tranche, and September
8, 2003, the stockholder approval date for the second tranche. Additionally, we
granted a 20% warrant coverage to our debenture holders. The value of both the
beneficial conversion feature and warrants resulted in a significant debt
discount which will be accreted as interest expense over the eight-year life of
the debentures. This will result in substantial interest expense during fiscal
2004 and through fiscal 2011 or until the debentures are converted.
OUR DEBENTURES INCLUDE A MATERIAL ADVERSE CHANGE CLAUSE.
As disclosed in our Current Report on Form 8-K filed with the SEC on June
2, 2003, our 2% Convertible Secured Debentures Due 2011 that we sold on June 30,
2003 and September 9, 2003 include a material adverse change clause. This
material adverse change clause allows the debenture holders to demand the
immediate payment of all outstanding balances upon the debenture holders'
determination of the occurrence of deemed material adverse changes to our
financial condition, business or operations as determined by the debenture
holders based on required financial reporting and other criteria. Potential
material adverse changes causing us to default on the debentures may include any
significant adverse effect on our financial condition arising from an event not
previously disclosed in our SEC filings such as a significant litigation
judgment against Tegal, bankruptcy or termination of the majority of our
customer relationships. As of December 31, 2003, $3.3 million principal amount
of our 2% Convertible Secured Debentures Due 2011 plus accrued interest payable
in kind by issuance of additional debentures convertible into common stock in
the amount of such interest could be demanded for immediate payment by the
debenture holders upon such an event of default. In the event of such a demand,
Tegal would need to pursue immediate additional funding for repayment of such
amount, or risk insolvency.
2
THE CONVERSION OF OUR CONVERTIBLE SECURITIES AND THE EXERCISE OF OUTSTANDING
WARRANTS, OPTIONS AND OTHER RIGHTS TO OBTAIN OR PURCHASE ADDITIONAL SHARES WILL
DILUTE THE VALUE OF THE SHARES.
On June 30, 2003, we entered into agreements with investors to raise up to
$7.2 million in a private placement of convertible debt financing to be
completed in two tranches, the first of which was completed on June 30, 2003 for
$0.9 million and the second of which was completed on September 9, 2003 for $6.2
million following stockholder approval on September 8, 2003. As of December 31,
2003, there were $3,391,262 debentures convertible into 9,689,319 shares of our
common stock, all of which are based on a conversion price of $0.35 per share
and a cash payment in lieu of any fractional share, plus warrants issued in
connection with the debentures exercisable for approximately 4,229,050 shares of
our common stock, approximately 1,675,000 shares issuable as interest payment in
lieu of cash. In addition, we had, as of December 31, 2003, options outstanding
and exercisable for approximately 3,514,877 shares, and warrants outstanding
from previous offerings exercisable for approximately 1,668,552 shares of our
common stock.
The conversion of these convertible securities and the exercise of these
outstanding warrants and options will result in dilution in the value of the
shares of our outstanding common stock and the voting power represented thereby.
In addition, the conversion price of the debentures or the exercise price of the
warrants may be lowered under the price adjustment provisions in the event of a
"dilutive issuance," that is, if we issue common stock at any time prior to
their maturity at a per share price below such conversion or exercise price,
either directly or in connection with the issuance of securities that are
convertible into, or exercisable for, shares of our common stock. A reduction in
the exercise price may result in the issuance of a significant number of
additional shares upon the exercise of the warrants.
Neither the debentures nor the warrants establish a "floor" that would
limit reductions in such conversion price or exercise price. The downward
adjustment of the conversion price of these debentures and of the exercise price
of these warrants could result in further dilution in the value of the shares of
our outstanding common stock and the voting power represented thereby.
SALES OF SUBSTANTIAL AMOUNTS OF OUR SHARES OF COMMON STOCK COULD CAUSE THE PRICE
OF OUR COMMON STOCK TO GO DOWN.
To the extent the holders of our convertible securities and warrants
convert or exercise such securities and then sell the shares of our common stock
they receive upon conversion or exercise, our stock price may decrease due to
the additional amount of shares available in the market. The subsequent sales of
these shares could encourage short sales by our stockholders and others which
could place further downward pressure on our stock price. Moreover, holders of
these convertible securities and warrants may hedge their positions in our
common stock by shorting our common stock, which could further adversely affect
our stock price. The effect of these activities on our stock price could
increase the number of shares issuable upon future conversions of our
convertible securities or exercises of our warrants.
We received stockholder approval to increase the number of authorized
shares of common stock to 100,000,000 shares. We may also issue additional
capital stock, convertible securities and/or warrants to raise capital in the
future. In addition, we may elect to pay any accrued interest on the outstanding
$7.2 million principal amount of debentures with shares of our common stock.
Interest on the debentures is compounded quarter-annually, based on 2% per annum
on the principal amount outstanding. In addition, to attract and retain key
personnel, we may issue additional securities, including stock options. All of
the above could result in additional dilution of the value of our common stock
and the voting power represented thereby. No prediction can be made as to the
effect, if any, that future sales of shares of our common stock, or the
availability of shares for future sale, will have on the market price of our
common stock prevailing from time to time. Sales of substantial amounts of
shares of our common stock in the public market, or the perception that such
sales could occur, may adversely affect the market price of our common stock and
may make it more difficult for us to sell our equity securities in the future at
a time and price which we deem appropriate. Public or private sales of
substantial amounts of shares of our common stock by persons or entities that
have exercised options and/or warrants could adversely affect the prevailing
market price of the shares of our common stock.
3
THE SEMICONDUCTOR INDUSTRY IS CYCLICAL AND MAY EXPERIENCE PERIODIC DOWNTURNS
THAT MAY NEGATIVELY AFFECT CUSTOMER DEMAND FOR OUR PRODUCTS AND RESULT IN LOSSES
SUCH AS THOSE EXPERIENCED IN THE PAST.
Our business depends upon the capital expenditures of semiconductor
manufacturers, which in turn depend on the current and anticipated market demand
for integrated circuits. The semiconductor industry is highly cyclical and
historically has experienced periodic downturns, which often have had a
detrimental effect on the semiconductor industry's demand for semiconductor
capital equipment, including etch and deposition systems manufactured by us. In
response to the current prolonged industry slow-down, we have initiated a
substantial cost containment program and a corporate-wide restructuring to
preserve our cash. However, the need for continued investment in research and
development, possible capital equipment requirements and extensive ongoing
customer service and support requirements worldwide will continue to limit our
ability to reduce expenses in response to the current downturn.
OUR COMPETITORS HAVE GREATER FINANCIAL RESOURCES AND GREATER NAME RECOGNITION
THAN WE DO AND THEREFORE MAY COMPETE MORE SUCCESSFULLY IN THE SEMICONDUCTOR
CAPITAL EQUIPMENT INDUSTRY THAN WE CAN.
We believe that to be competitive, we will require significant financial
resources in order to offer a broad range of systems, to maintain customer
service and support centers worldwide and to invest in research and development.
Many of our existing and potential competitors, including, among others, Applied
Materials, Inc., Lam Research Corporation, Novellus and Tokyo Electron Limited,
have substantially greater financial resources, more extensive engineering,
manufacturing, marketing and customer service and support capabilities, larger
installed bases of current generation etch, deposition and other production
equipment and broader process equipment offerings, as well as greater name
recognition than we do. We cannot assure you that we will be able to compete
successfully against these companies in the United States or worldwide.
IF WE FAIL TO MEET THE CONTINUED LISTING REQUIREMENTS OF THE NASDAQ STOCK
MARKET, OUR STOCK COULD BE DELISTED.
Our stock is currently listed on The Nasdaq SmallCap Market. The Nasdaq
Stock Market's Marketplace Rules impose certain minimum financial requirements
on us for the continued listing of our stock. One such requirement is the
minimum bid price on our stock of $1.00 per share. Beginning in 2002, there have
been periods of time during which we have been out of compliance with the $1.00
minimum bid requirements of The Nasdaq SmallCap Market.
If we are out of compliance in the future with Nasdaq listing requirements,
we may take actions in order to achieve compliance, which actions may include a
reverse split of our common stock. If an initial delisting decision is made by
the Nasdaq's staff, we may appeal the decision as permitted by Nasdaq rules. If
we are delisted and cannot obtain listing on another major market or exchange,
our stock's liquidity would suffer, and we would likely experience reduced
investor interest. Such factors may result in a decrease in our stock's trading
price. Delisting also may restrict us from issuing additional securities or
securing additional financing.
IF OUR ADVANCED SYSTEMS DO NOT ACHIEVE SIGNIFICANT SALES OR VOLUME PRODUCTION
DUE TO A LACK OF FULL CUSTOMER ADOPTION, OUR BUSINESS, FINANCIAL CONDITION,
RESULTS OF OPERATIONS AND CASH FLOWS WILL BE MATERIALLY ADVERSELY AFFECTED.
We have designed our advanced etch and deposition products for customer
applications in emerging new films, polysilicon and metal which we believe to be
the leading edge of critical applications for the production of advanced
semiconductor and other microelectronic devices. Revenues from the sale of our
advanced etch and deposition systems accounted for 25% and 36% of total revenues
in fiscal 2003 and 2002, respectively. Our advanced systems are currently being
used primarily for research and development activities or low volume production.
For our advanced systems to achieve full market adoption, our customers must
utilize these systems for volume production. There can be no assurance that the
market for devices incorporating emerging films, polysilicon or metal will
develop as quickly or to the degree we expect.
4
OUR POTENTIAL CUSTOMERS MAY NOT ADOPT OUR PRODUCTS BECAUSE OF THEIR SIGNIFICANT
COST OR BECAUSE OUR POTENTIAL CUSTOMERS ARE ALREADY USING A COMPETITOR'S TOOL.
A substantial investment is required to install and integrate capital
equipment into a semiconductor production line. Additionally, we believe that
once a device manufacturer has selected a particular vendor's capital equipment,
that manufacturer generally relies upon that vendor's equipment for that
specific production line application and, to the extent possible, subsequent
generations of that vendor's systems. Accordingly, it may be extremely difficult
to achieve significant sales to a particular customer once that customer has
selected another vendor's capital equipment unless there are compelling reasons
to do so, such as significant performance or cost advantages. Any failure to
gain access and achieve sales to new customers will adversely affect the
successful commercial adoption of our products and could have a detrimental
effect on us.
OUR QUARTERLY OPERATING RESULTS MAY CONTINUE TO FLUCTUATE.
Our revenue and operating results have fluctuated and are likely to
continue to fluctuate significantly from quarter to quarter, and there can be no
assurance as to future profitability.
Our 900 series etch systems typically sell for prices ranging between
$250,000 and $600,000, while prices of our 6500 series critical etch systems and
our Endeavor deposition system typically range between $1.8 million and $3.0
million. To the extent we are successful in selling our 6500 and Endeavor series
systems, the sale of a small number of these systems will probably account for a
substantial portion of revenue in future quarters, and a transaction for a
single system could have a substantial impact on revenue and gross margin for a
given quarter.
Other factors that could affect our quarterly operating results include:
o our timing of new systems and technology announcements and releases
and ability to transition between product versions;
o seasonal fluctuations in sales;
o changes in the mix of our revenues represented by our various
products and customers;
o adverse changes in the level of economic activity in the United
States or other major economies in which we do business;
o foreign currency exchange rate fluctuations;
o expenses related to, and the financial impact of, possible
acquisitions of other businesses; and
o changes in the timing of product orders due to unexpected delays in
the introduction of our customers' products, due to lifecycles of
our customers' products ending earlier than expected or due to
market acceptance of our customers' products.
BECAUSE TECHNOLOGY CHANGES RAPIDLY, WE MAY NOT BE ABLE TO INTRODUCE OUR PRODUCTS
IN A TIMELY ENOUGH FASHION.
The semiconductor manufacturing industry is subject to rapid technological
change and new system introductions and enhancements. We believe that our future
success depends on our ability to continue to enhance our existing systems and
their process capabilities, and to develop and manufacture in a timely manner
new systems with improved process capabilities. We may incur substantial
unanticipated costs to ensure product functionality and reliability early in our
products' life cycles. There can be no assurance that we will be successful in
the introduction and volume manufacture of new systems or that we will be able
to develop and introduce, in a timely manner, new systems or enhancements to our
existing systems and processes which satisfy customer needs or achieve market
adoption.
5
SOME OF OUR SALES CYCLES ARE LENGTHY, EXPOSING US TO THE RISKS OF INVENTORY
OBSOLESCENCE AND FLUCTUATIONS IN OPERATING RESULTS.
Sales of our systems depend, in significant part, upon the decision of a
prospective customer to add new manufacturing capacity or to expand existing
manufacturing capacity, both of which typically involve a significant capital
commitment. We often experience delays in finalizing system sales following
initial system qualification while the customer evaluates and receives approvals
for the purchase of our systems and completes a new or expanded facility. Due to
these and other factors, our systems typically have a lengthy sales cycle (often
12 to 18 months in the case of critical etch and deposition systems) during
which we may expend substantial funds and management effort. Lengthy sales
cycles subject us to a number of significant risks, including inventory
obsolescence and fluctuations in operating results over which we have little or
no control.
WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY OR OBTAIN LICENSES FOR
THIRD PARTIES' INTELLECTUAL PROPERTY AND THEREFORE WE MAY BE EXPOSED TO
LIABILITY FOR INFRINGEMENT OR THE RISK THAT OUR OPERATIONS MAY BE ADVERSELY
AFFECTED.
Although we attempt to protect our intellectual property rights through
patents, copyrights, trade secrets and other measures, we may not be able to
protect our technology adequately and competitors may be able to develop similar
technology independently. Additionally, patent applications that we may file may
not be issued and foreign intellectual property laws may not protect our
intellectual property rights. There is also a risk that patents licensed by or
issued to us will be challenged, invalidated or circumvented and that the rights
granted thereunder will not provide competitive advantages to us. Furthermore,
others may independently develop similar systems, duplicate our systems or
design around the patents licensed by or issued to us.
Litigation could result in substantial cost and diversion of effort by us,
which by itself could have a detrimental effect on our financial condition,
operating results and cash flows. Further, adverse determinations in such
litigation could result in our loss of proprietary rights, subject us to
significant liabilities to third parties, require us to seek licenses from third
parties or prevent us from manufacturing or selling our systems. In addition,
licenses under third parties' intellectual property rights may not be available
on reasonable terms, if at all.
OUR CUSTOMERS ARE CONCENTRATED AND THEREFORE THE LOSS OF A SIGNIFICANT CUSTOMER
MAY HARM OUR BUSINESS.
Our top five customers accounted for 88.2%, 54.4% and 42.0% of our systems
revenues in fiscal 2003, 2002 and 2001, respectively. Four customers each
accounted for more than 10% of net systems sales in fiscal 2003. Although the
composition of the group comprising our largest customers may vary from year to
year, the loss of a significant customer or any reduction in orders by any
significant customer, including reductions due to market, economic or
competitive conditions in the semiconductor manufacturing industry, may have a
detrimental effect on our business, financial condition, results of operations
and cash flows. Our ability to increase our sales in the future will depend, in
part, upon our ability to obtain orders from new customers, as well as the
financial condition and success of our existing customers and the general
economy, which is largely beyond our ability to control.
WE ARE EXPOSED TO ADDITIONAL RISKS ASSOCIATED WITH INTERNATIONAL SALES AND
OPERATIONS.
International sales accounted for 66%, 67% and 61% of total revenue for
fiscal 2003, 2002 and 2001, respectively. International sales are subject to
certain risks, including the imposition of government controls, fluctuations in
the U.S. dollar (which could increase the sales price in local currencies of our
systems in foreign markets), changes in export license and other regulatory
requirements, tariffs and other market barriers, political and economic
instability, potential hostilities, restrictions on the export or import of
technology, difficulties in accounts receivable collection, difficulties in
managing representatives, difficulties in staffing and managing international
operations and potentially adverse tax consequences. There can be no assurance
that any of these factors will not have a detrimental effect on our operations,
financial results and cash flows.
We generally attempt to offset a portion of our U.S. dollar denominated
balance sheet exposures subject to foreign exchange rate remeasurement by
purchasing forward currency contracts for future delivery. There can be no
assurance that our future results of operations and cash flows will not be
adversely affected by foreign currency fluctuations. In addition, the laws of
certain countries in which our products are sold may not provide our products
and intellectual property rights with the same degree of protection as the laws
of the United States.
6
WE MUST INTEGRATE OUR ACQUISITIONS OF SPUTTERED FILMS AND SIMPLUS SYSTEMS
CORPORATION AND WE MAY NEED TO MAKE ADDITIONAL FUTURE ACQUISITIONS TO REMAIN
COMPETITIVE. THE PROCESS OF IDENTIFYING, ACQUIRING AND INTEGRATING FUTURE
ACQUISITIONS MAY CONSTRAIN VALUABLE MANAGEMENT RESOURCES, AND OUR FAILURE TO
EFFECTIVELY INTEGRATE FUTURE ACQUISITIONS MAY RESULT IN THE LOSS OF KEY
EMPLOYEES AND THE DILUTION OF STOCKHOLDER VALUE AND HAVE AN ADVERSE EFFECT ON
OUR OPERATING RESULTS.
We acquired Sputtered Films, Inc. in August 2002. On December 5, 2003, we
acquired substantially all of the assets of Simplus Systems Corporation. We may
in the future seek to acquire or invest in additional businesses, products or
technologies that we believe could complement or expand our business, augment
our market coverage, enhance our technical capabilities or that may otherwise
offer growth opportunities. We may encounter problems with the assimilation of
Sputtered Films and Simplus or businesses, products or technologies acquired in
the future including:
o difficulties in assimilation of acquired personnel, operations,
technologies or products;
o unanticipated costs associated with acquisitions;
o diversion of management's attention from other business concerns and
potential disruption of our ongoing business;
o adverse effects on our existing business relationships with our
customers;
o potential patent or trademark infringement from acquired
technologies;
o adverse effects on our current employees and the inability to retain
employees of acquired companies;
o use of substantial portions of our available cash as all or a
portion of the purchase price;
o dilution of our current stockholders due to the issuance of
additional securities as consideration for acquisitions; and
o inability to complete acquired research and development projects.
If we are unable to successfully integrate our acquired companies or to
create new or enhanced products and services, we may not achieve the anticipated
benefits from our acquisitions. If we fail to achieve the anticipated benefits
from the acquisitions, we may incur increased expenses and experience a
shortfall in our anticipated revenues and we may not obtain a satisfactory
return on our investment. In addition, if a significant number of employees of
acquired companies fail to remain employed with us, we may experience
difficulties in achieving the expected benefits of the acquisitions.
Completing any potential future acquisitions could cause significant
diversions of management time and resources. Financing for future acquisitions
may not be available on favorable terms, or at all. If we identify an
appropriate acquisition candidate for any of our businesses, we may not be able
to negotiate the terms of the acquisition successfully, finance the acquisition
or integrate the acquired business, products, technologies or employees into our
existing business and operations. Future acquisitions may not be well-received
by the investment community, which may cause our stock price to fall. We have
not entered into any agreements or understanding regarding any future
acquisitions and cannot ensure that we will be able to identify or complete any
acquisition in the future.
If we acquire businesses, new products or technologies in the future, we
may be required to amortize significant amounts of identifiable intangible
assets and we may record significant amounts of goodwill that will be subject to
annual testing for impairment. If we consummate one or more significant future
acquisitions in which the consideration consists of stock or other securities,
our existing stockholders' ownership could be significantly diluted. If we were
to proceed with one or more significant future acquisitions in which the
consideration included cash, we could be required to use a substantial portion
of our available cash.
7
OUR WORKFORCE REDUCTIONS AND FINANCIAL PERFORMANCE MAY ADVERSELY AFFECT THE
MORALE AND PERFORMANCE OF OUR PERSONNEL AND OUR ABILITY TO HIRE NEW PERSONNEL.
We have made reductions in our workforce in order to reduce costs and
bring staffing in line with our anticipated requirements. There were costs
associated with the workforce reductions related to severance and other
employee-related costs, and our restructuring may yield unanticipated costs and
consequences, such as attrition beyond our planned reduction in staff. In
addition, our common stock has declined in value below the exercise price of
many options granted to employees pursuant to our stock option plans. Thus, the
intended benefits of the stock options granted to our employees, the creation of
performance and retention incentives, may not be realized. In addition,
workforce reductions and management changes create anxiety and uncertainty and
may adversely affect employee morale. As a result, we may lose employees whom we
would prefer to retain. As a result of these factors, our remaining personnel
may seek employment with larger, more established companies or companies
perceived as having less volatile stock prices.
PROVISIONS IN OUR AGREEMENTS, CHARTER DOCUMENTS, STOCKHOLDER RIGHTS PLAN AND
DELAWARE LAW MAY DETER TAKEOVER ATTEMPTS, WHICH COULD DECREASE THE VALUE OF YOUR
SHARES.
Our certificate of incorporation and bylaws and Delaware law contain
provisions that could make it more difficult for a third party to acquire us
without the consent of our board of directors. Our board of directors has the
right to issue preferred stock without stockholder approval, which could be used
to dilute the stock ownership of a potential hostile acquirer. Delaware law
imposes some restrictions on mergers and other business combinations between us
and any holder of 15% or more of our outstanding common stock. In addition, we
have adopted a stockholder rights plan that makes it more difficult for a third
party to acquire us without the approval of our board of directors. These
provisions apply even if the offer may be considered beneficial by some
stockholders.
POTENTIAL DISRUPTION OF OUR SUPPLY OF MATERIALS REQUIRED TO BUILD OUR SYSTEMS
COULD HAVE A NEGATIVE EFFECT ON OUR OPERATIONS AND DAMAGE OUR CUSTOMER
RELATIONSHIPS.
Materials delays have not been significant in recent years. Nevertheless,
we procure certain components and sub-assemblies included in our systems from a
limited group of suppliers, and occasionally from a single source supplier. For
example, we depend on MECS Corporation, a robotic equipment supplier, as the
sole source for the robotic arm used in all of our 6500 series systems. We
currently have no existing supply contract with MECS Corporation, and we
currently purchase all robotic assemblies from MECS Corporation on a purchase
order basis. Disruption or termination of certain of these sources, including
our robotic sub-assembly source, could have an adverse effect on our operations
and damage our relationship with our customers.
ANY FAILURE BY US TO COMPLY WITH ENVIRONMENTAL REGULATIONS IMPOSED ON US COULD
SUBJECT US TO FUTURE LIABILITIES.
We are subject to a variety of governmental regulations related to the
use, storage, handling, discharge or disposal of toxic, volatile or otherwise
hazardous chemicals used in our manufacturing process. We believe that we are
currently in compliance in all material respects with these regulations and that
we have obtained all necessary environmental permits generally relating to the
discharge of hazardous wastes to conduct our business. Nevertheless, our failure
to comply with present or future regulations could result in additional or
corrective operating costs, suspension of production, alteration of our
manufacturing processes or cessation of our operations.
THE STRUCTURED SECONDARY OFFERING FACILITY WE ENTERED INTO IN FEBRUARY 2004 MAY
HAVE A DILUTIVE IMPACT ON OUR STOCKHOLDERS, AND THE POTENTIAL UNAVAILABILITY OF
THIS FACILITY WOULD NEGATIVELY IMPACT OUR FINANCING ACTIVITIES.
On February 11, 2004, we entered into a structured secondary offering
facility (the "Structured Secondary") with Kingsbridge Capital Limited
("Kingsbridge"). Under the terms of a Common Stock Purchase Agreement (the
"Purchase Agreement") entered into by the Company and Kingsbridge on such date
with respect to the Structured Secondary, we may, at our sole discretion, sell
to Kingsbridge, and Kingsbridge would be obligated to purchase, up to $25
million of shares of our common stock, par value $0.01 per share. The price at
which we may sell shares of common stock under the Purchase Agreement is based
on a discount to the volume weighted average market price of the common stock
for a specified number of trading days following each of our respective
elections to sell shares thereunder. The lowest threshold price at which our
stock may be sold is at the sole discretion of the Company, but in no case may
be lower than $1.50 per share, and in the event the price of our common stock
falls below this $1.50 threshold, the Structured Secondary will not be an
available source of financing. We may utilize the Structured Secondary over the
next 24 months from time to time in our sole discretion, subject to various
conditions and terms contained in the Purchase Agreement. Among the terms of the
Purchase Agreement is a "Material Adverse Effect" clause which permits
Kingsbridge to terminate the Structured Secondary if Kingsbridge determines that
an event has occurred that results in any effect on the business, operations,
properties or financial condition of the Company and its subsidiaries that is
material and adverse to the Company and such subsidiaries, taken as a whole,
and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with our ability to perform any of our obligations under the
Purchase Agreement.
8
In connection with our entering into the Structured Secondary, we issued
to Kingsbridge a warrant (the "Warrant") to purchase 300,000 shares of common
stock at an exercise price of $4.11 per share. The Warrant will not be
exercisable until August 11, 2004, and will expire on August 11, 2009.
There are 7,545,317 million shares of our common stock that are reserved
for issuance under the Structured Secondary with Kingsbridge, 300,000 of which
are issuable under the Warrant we granted to Kingsbridge. The issuance of shares
under the Structured Secondary and upon exercise of the Warrant will have a
dilutive impact on other stockholders and the issuance or even potential
issuance of such shares could have a negative effect on the market price of our
common stock. In addition, if we draw down the Structured Secondary, we will
issue shares to Kingsbridge at a discount of 10% of the daily volume weighted
average prices of our common stock during a specified period of trading days
after initiation of each respective draw down. Issuing shares at such a discount
will further dilute the interests of other stockholders.
To the extent that Kingsbridge sells shares of our common stock issued
under the Structured Secondary to third parties, our stock price may decrease
due to the additional selling pressure in the market. The perceived risk of
dilution from sales of stock to or by Kingsbridge may cause holders of our
common stock to sell their shares, or it may encourage short sales. This could
contribute to a decline in our stock price.
THE STRUCTURED SECONDARY IMPOSES CERTAIN LIMITATIONS ON OUR ABILITY TO ISSUE
EQUITY OR EQUITY-LINKED SECURITIES.
During the two-year term of the Structured Secondary, we may not engage in
certain equity or equity-linked financings without the prior written consent of
Kingsbridge, which consent will not be unreasonably withheld, conditioned or
delayed. However, we may engage in the following capital raising transactions
without Kingsbridge's consent: (1) establish stock option or award plans or
agreements (for directors, employees, consultants and/or advisors) and amend
such plans or agreements, including increasing the number of shares available
thereunder, (2) use equity securities to finance the acquisition of other
companies, equipment, technologies or lines of business, (3) issue shares of
common stock and/or preferred stock in connection with our option or award
plans, stock purchase plans, rights plans, warrants or options, (4) issue shares
of common stock and/or preferred stock in connection with the acquisition of
products, licenses, equipment or other assets and strategic partnerships or
joint ventures (the primary purpose of which is not to raise equity capital);
(5) issue shares of common and/or preferred stock to consultants and/or advisors
as consideration for services rendered, (6) issue and sell shares in an
underwritten public offering of common stock, and (7) issue shares of common
stock to Kingsbridge under any other agreement entered into between our company
and Kingsbridge.
In addition, we may not issue securities that are, or may become,
convertible or exchangeable into shares of common stock where the purchase,
conversion or exchange price for such common stock is determined using a
floating or otherwise adjustable discount to the market price of the common
stock (including pursuant to an equity line or other financing that is
substantially similar to an equity line with an investor other than Kingsbridge)
during the two-year term of our agreement with Kingsbridge.
9
OUR STOCK PRICE IS VOLATILE AND COULD RESULT IN A MATERIAL DECLINE IN THE VALUE
OF YOUR INVESTMENT IN TEGAL.
We believe that factors such as announcements of developments related to
our business, fluctuations in our operating results, sales of our common stock
into the marketplace, failure to meet or changes in analysts' expectations,
general conditions in the semiconductor industry or the worldwide economy,
announcements of technological innovations or new products or enhancements by us
or our competitors, developments in patents or other intellectual property
rights, developments in our relationships with our customers and suppliers,
natural disasters and outbreaks of hostilities could cause the price of our
common stock to fluctuate substantially. In addition, in recent years the stock
market in general, and the market for shares of small capitalization stocks in
particular, have experienced extreme price fluctuations, which have often been
unrelated to the operating performance of affected companies. There can be no
assurance that the market price of our common stock will not experience
significant fluctuations in the future, including fluctuations that are
unrelated to our performance.
WE MAY ISSUE ADDITIONAL SHARES AND DILUTE YOUR OWNERSHIP PERCENTAGE.
Certain events over which you have no control could result in the issuance
of additional shares of our common stock, which would dilute your ownership
percentage in our company. As of February 26, 2004, there were 37,590,689 shares
of our common stock issued and outstanding and there were 8,354,326 shares of
common stock reserved for issuance under our equity incentive and stock purchase
plans. In addition, as of February 26, 2004, there were outstanding options,
warrants and other rights to acquire up to approximately 7,014,022 shares of
common stock. We may also issue additional shares of common stock or preferred
stock:
o to raise additional funds for working capital, commercialization,
production and marketing activities;
o upon the exercise or conversion of additional outstanding options
and warrants; and
o in lieu of cash payment of dividends.
FORWARD-LOOKING STATEMENTS
This prospectus includes or incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Forward-looking statements, which are based on
assumptions and describe our future plans, strategies and expectations, are
generally identifiable by the use of the words "anticipate," "believe,"
"estimate," "expect," "intend," "project," or similar expressions. These
forward-looking statements are subject to risks, uncertainties and assumptions
about us. Important factors that could cause actual results to differ materially
from the forward-looking statements we make in this prospectus are set forth
under the caption "Risk Factors" and elsewhere in this prospectus and the
documents incorporated by reference in this prospectus. If one or more of these
risks or uncertainties materialize, or if any underlying assumptions prove
incorrect, our actual results, performance or achievements may vary materially
from any future results, performance or achievements expressed or implied by
these forward-looking statements. All forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirely by
the cautionary statements in this paragraph.
THE STRUCTURED SECONDARY OFFERING FACILITY
On February 11, 2004, we entered into a Common Stock Purchase Agreement
(the "Purchase Agreement") with Kingsbridge Capital Limited, pursuant to which
we may issue and sell, from time to time, shares of our Common Stock for cash
consideration up to an aggregate of $25 million.
Until February 11, 2006, we may, from time to time, at our sole
discretion, and subject to certain conditions that we must satisfy, sell or
"draw down," shares of our Common Stock to Kingsbridge at a purchase price
having a discount of 10% off of the volume weighted average of the price of our
Common Stock for each of the 15 trading days following our election to sell
shares. Such discount will be determined as follows:
10
PERCENT OF VWAP
(APPLICABLE
VWAP* DISCOUNT)
- ------------------------------------------------ ---------------
At or greater than $1.50 per share 90% (10)%
- ----------
* As set forth in the Purchase Agreement, "VWAP" means the volume weighted
average price of our Common Stock during a trading day as reported by Bloomberg,
L.P. using the AQR function.
The maximum number of shares that we are permitted to issue pursuant to
the Structured Secondary is 7,245,317. An additional 300,000 shares are
registered hereunder with respect to a Warrant that we issued to Kingsbridge in
connection with our entering into the Structured Secondary. We will exercise our
right to draw down the Structured Secondary, if and to the extent available, at
such times as there is a need for additional capital and when sales of stock
under the Structured Secondary provide the most effective means of raising
capital.
We can make draw downs in amounts up to a maximum of 4.5% of our market
capitalization at the time of the draw down, provided that in no event can a
single draw down exceed $7,500,000. The lowest threshold price at which our
stock may be sold is determined at the sole discretion of the Company at each
draw down, but in no case may be lower than $1.50 per share. If we fail to draw
$3 million during the term of the Structured Secondary, a fee of $300,000 will
become due to Kingsbridge upon termination of the contract. In no event may we
sell to Kingsbridge under the Structured Secondary a number of shares exceeding
the applicable percentage under the rules of NASD which would require
stockholder approval, generally 20% of our issued and outstanding stock.
Dahlman Rose Weiss, LLC ("Dahlman") served as placement agent for the
Structured Secondary. As compensation for its services, at each draw down,
Dahlman will receive a fee of 6% of the proceeds of each draw down as it is paid
to the Company, plus a warrant to purchase a number of shares equal to 1% of the
number of shares issued to Kingsbridge at each draw down. The exercise price of
such warrant shall be determined at a mutually agreeable price.
The issuance of our Common Stock under the Structured Secondary will have
no effect on the rights or privileges of existing holders of Common Stock except
that the economic and voting interests of each stockholder will be diluted as a
result of such issuance. Although the number of shares of Common Stock that
stockholders presently own will not decrease, such shares will represent a
smaller percentage of our total shares that will be outstanding after such
events. If we satisfy the conditions that allow us to draw down the entire $25
million available under the Structured Secondary, and we choose to do so, then
generally, as the market price of our Common Stock decreases, the number of
shares we will have to issue increases, to a maximum of 7,245,317 shares.
The following are the material conditions that must be met before
Kingsbridge is obligated to buy any shares of our Common Stock pursuant to a
draw down:
o Each of our representations and warranties in the Purchase Agreement
shall be true and correct in all material respects as of the date
when made and as of the draw down exercise date as though made at
that time, except for representations and warranties that are
expressly made as of a particular date. One of the representations
provides that no event or series of events has or have occurred that
would individually or in the aggregate have a "Material Adverse
Effect" on the Company, defined as any effect on the business,
operations, properties or financial condition of the Company and its
consolidated subsidiaries that is material and adverse to the
Company and such subsidiaries, taken as a whole, and/or any
condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to perform any
of its obligations under the Purchase Agreement, the Registration
Rights Agreement or the Warrant in any material respect.
11
o We shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by
the Purchase Agreement, the Registration Rights Agreement and the
Warrant to be performed, satisfied or complied with by us.
o We shall have complied in all material respects with all applicable
federal, state and local governmental laws, rules, regulations and
ordinances in connection with the execution, delivery and
performance of the Purchase Agreement and the consummation of the
transactions contemplated by such agreement.
o The registration statement, of which this prospectus is part, shall
have previously become effective and shall remain effective. Neither
the Company nor Kingsbridge shall have received notice that the
Securities and Exchange Commission (the "Commission") has issued or
intends to issue a stop order with respect to the registration
statement or that the Commission otherwise has suspended or
withdrawn effectiveness of the registration statement, either
temporarily or permanently, or intends or has threatened to do so
(unless the Commission's concerns have been addressed and
Kingsbridge is reasonably satisfied that the Commission no longer is
considering or intends to take such action). No other suspension of
the use or withdrawal of the effectiveness of the registration
statement or prospectus shall exist.
o We shall not have knowledge of any event more likely than not to
have the effect of causing the registration statement applicable to
the resale of shares of our Common Stock by the investor issued
under the Structured Secondary arrangement to be suspended or
otherwise ineffective.
o Trading in our Common Stock shall not have been suspended by the
Commission, the Nasdaq SmallCap Market or the National Association
of Securities Dealers and trading in securities generally on the
Nasdaq SmallCap Market shall not have been suspended or limited.
o We shall have no knowledge of any event more likely than not to have
the effect of causing the registration statement registering the
offer and sale of the shares to be suspended or otherwise
ineffective (which event is more likely than not to occur within
fifteen trading days following the trading day on which a draw down
notice is delivered).
o The number of shares of our Common Stock beneficially owned by
Kingsbridge, together with those shares that we propose to sell to
Kingsbridge in connection with a draw down, cannot exceed 9.9% of
the total amount of our Common Stock that would be outstanding upon
completion of the draw down.
o No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction
which prohibits the consummation of any of the transactions
contemplated by the Purchase Agreement.
o No action, suit or proceedings before any arbitrator or any
governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been
threatened, against the Company or any subsidiary, or any of the
officers, directors or affiliates of the Company or any subsidiary
seeking to enjoin, prevent or change the transactions contemplated
by the Purchase Agreeement.
There is no guarantee that we will be able to meet these or any other
conditions under the Purchase Agreement or that we will be able to draw down any
portion of the $25 million Structured Secondary.
12
In connection with the Purchase Agreement, we issued to Kingsbridge a
Warrant to purchase 300,000 shares of Common Stock at an exercise price of $4.11
per share. Such warrant will not be exercisable until August 11, 2004, and will
expire on August 11, 2009.
We also entered into a Registration Rights Agreement with Kingsbridge in
connection with the Structured Secondary. As contemplated by the Registration
Rights Agreement, we have filed a registration statement, of which this
prospectus is part, with the Securities and Exchange Commission relating to the
resale by Kingsbridge of 7,545,317 shares of Common Stock purchased by
Kingsbridge under the Purchase Agreement or issued to Kingsbridge as a result of
the exercise of the Warrant. The effectiveness of such registration statement is
a condition precedent to our ability to sell Common Stock to Kingsbridge under
the Purchase Agreement.
The foregoing summary of the Structured Secondary does not purport to be
complete and is qualified in its entirety by reference to the Common Stock
Purchase Agreement, the Registration Rights Agreement and the Warrant, copies of
which are filed as exhibits to our Current Report on Form 8-K (SEC File No.
000-26824), filed on February 13, 2004, and are incorporated by reference
herein.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of our
Common Stock by Kingsbridge pursuant to this prospectus. Any proceeds from the
sale of the shares by us to Kingsbridge under the Common Stock Purchase
Agreement or received in connection with the exercise of the Warrant will be
used for support of recent and future acquisitions and other corporate
development activities. Pending the application of the proceeds from the sale of
the shares by us to Kingsbridge, we expect to invest such proceeds in
short-term, interest-bearing instruments or other investment-grade securities.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock by Kingsbridge as of February 26, 2004.
Kingsbridge has not had a material relationship with our company within the past
three years, except as a result of entering into the Structured Secondary
described herein.
Common Stock Beneficially Common Stock Beneficially
Owned Prior to Offering (1) Owned After Offering (2)
--------------------------- ------------------------
Common Stock to
Number Percent be Sold Number Percent
------ ------- --------------- ------ -------
Kingsbridge Capital Limited(3) 7,545,317 16.72%(4) 7,545,317 0 0
- ----------
(1) The number of shares of Common Stock beneficially owned by Kingsbridge
prior to the offering is deemed to include 7,245,317 shares of Common
Stock registered hereunder and issuable in connection with the Purchase
Agreement (16.05% of our Common Stock) and 300,000 shares of Common Stock
that may be acquired by Kingsbridge pursuant to the Warrant (0.66% of our
Common Stock).
(2) Assumes that all shares registered hereunder are sold pursuant to this
prospectus and that Kingsbridge does not acquire any additional shares of
Common Stock.
(3) We have been advised that Kingsbridge is controlled by Valentine
O'Donoghue and does not accept third party investments. Accordingly, Mr.
O'Donoghue beneficially owns the shares of Common Stock acquired by
Kingsbridge.
(4) Based on the 37,590,689 issued and outstanding shares of Common Stock as
of February 26, 2004, plus the 7,245,317 shares of Common Stock issuable
in connection with the Purchase Agreement and the 300,000 shares of Common
Stock that may be acquired by Kingsbridge pursuant to the Warrant.
13
PLAN OF DISTRIBUTION
We are registering 7,545,317 shares of Common Stock under this prospectus
on behalf of Kingsbridge. All or a portion of the shares offered hereby by
Kingsbridge may be delivered and/or sold in transactions from time to time on
the Nasdaq SmallCap Market, on the over-the-counter market, in
privately-negotiated transactions, or a combination of such methods of sale, at
market prices prevailing at the time, at prices related to such prevailing
prices or at negotiated prices. Kingsbridge may effect such transactions by
selling to or through one or more broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from Kingsbridge. Kingsbridge is an "underwriter" within the meaning
of the Securities Act. Kingsbridge has advised us that it will effect resales of
our common stock through any one or more of the following registered broker
dealers: Brean Murray & Co., Inc. and Dahlman Rose Weiss LLC. Dahlman Rose Weiss
LLC served as the placement agent for the Structured Secondary. Each such broker
dealer is an underwriter in respect of such shares sold by it on behalf of
Kingsbridge. We have agreed to indemnify Kingsbridge with respect to the shares
offered hereby against certain liabilities, including, without limitation,
certain liabilities under the Securities Act, or, if such indemnity is
unavailable, to contribute toward amounts required to be paid in respect of such
liabilities.
Any broker-dealer participating in such transactions as agent may receive
commissions from Kingsbridge (and, if they act as agent for the purchaser of
such shares, from such purchaser). Broker-dealers may agree with Kingsbridge to
sell a specified number of shares at a stipulated price per share, and, to the
extent such a broker-dealer is unable to do so acting as agent for Kingsbridge,
to purchase as principal any unsold shares at the price required to fulfill the
broker-dealer commitment to Kingsbridge. Broker-dealers who acquire shares as
principal may thereafter resell such shares from time to time in transactions
(which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above) on the Nasdaq SmallCap Market, on the over-the-counter market, in
privately-negotiated transactions or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above. To the extent required under the Securities Act, a supplemental
prospectus will be filed, disclosing:
o the name of any such broker-dealers;
o the number of shares involved;
o the price at which such shares are to be sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable;
o that such broker-dealers did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, as supplemented; and
o other facts material to the transaction.
Kingsbridge and any other persons participating in the sale or
distribution of the shares will be subject to the applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations under such Act,
including, without limitation, Regulation M. These provisions may restrict
certain activities of, and limit the timing of, purchases by the selling
stockholder or other persons or entities. Furthermore, under Regulation M,
persons engaged in a distribution of securities are prohibited from
simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions, subject to specified exceptions or
exemptions. All of these limitations may affect the marketability of the shares.
Kingsbridge will pay all commissions, transfer taxes, and certain other
expenses associated with the sale of securities. The shares offered hereby are
being registered pursuant to contractual obligations and we have paid the
expenses of the preparation of this prospectus.
14
We have also agreed to reimburse the selling stockholders for certain
costs and expenses incurred in connection with this offering. These may include
the fees, expenses and disbursements of counsel for the selling stockholder
incurred in the preparation of the Common Stock Purchase Agreement and
associated documentation and the registration statement of which this prospectus
forms a part.
The selling stockholders, which term includes their transferees, pledgees
or donees or their successors, may sell the common stock directly to purchasers
or through underwriters, broker-dealers or agents, who may receive compensation
in the form of discounts, concessions or commissions from the selling
stockholders or the purchasers. These discounts, concessions or commissions as
to any particular underwriter, broker-dealer or agent may be in excess of those
customary in the types of transactions involved.
The common stock may be sold in one or more transactions at:
o fixed prices;
o prevailing market prices at the time of sale;
o prices related to the prevailing market prices;
o varying prices determined at the time of sale; or
o negotiated prices.
These sales may be effected in transactions:
o on any national securities exchange or quotation service on which
our common stock may be listed or quoted at the time of sale,
including The Nasdaq SmallCap Market;
o in the over-the-counter market;
o otherwise than on such exchanges or services or in the
over-the-counter market;
o through the writing of options, whether the options are listed on an
options exchange or otherwise; or
o through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as agent on both sides of the trade.
In connection with the sale of the common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions. These broker-dealers or financial institutions may in
turn engage in short sales of the common stock in the course of hedging the
positions they assume with selling stockholders. The selling stockholders may
also sell the common stock short and deliver these securities to close out such
short positions, or loan or pledge the common stock to broker-dealers that in
turn may sell these securities.
The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them hereby will be the purchase price of the common
stock less discounts and commissions, if any. Each of the selling stockholders
reserves the right to accept and, together with their agents from time to time,
to reject, in whole or in part, any proposed purchase of common stock to be made
directly or through agents. We will not receive any of the proceeds from this
offering.
Our outstanding common stock is listed for trading on The Nasdaq SmallCap
Market.
15
In order to comply with the securities laws of some states, if applicable,
the common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain jurisdictions, the common
stock may not be offered or sold unless they have been registered or qualified
for sale or an exemption is available and complied with.
Broker-dealers or agents that participate in the sale of the common stock
may be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Selling stockholders that participate in the sale of the common
stock may also be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act. Profits on the sale of the common stock by selling
stockholders and any discounts, commissions or concessions received by any
broker-dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act. Selling stockholders who are deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. To the
extent the selling stockholders may be deemed to be "underwriters," they may be
subject to statutory liabilities, including, but not limited to, Sections 11, 12
and 17 of the Securities Act.
The selling stockholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder. Regulation M of the Exchange Act may limit
the timing of purchases and sales of any of the securities by the selling
stockholders and any other person. In addition, Regulation M may restrict the
ability of any person engaged in the distribution of the securities to engage in
market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
The selling stockholders have acknowledged that they understand their
obligations to comply with the provisions of the Exchange Act and the rules
thereunder relating to stock manipulation, particularly Regulation M, and have
agreed that they will not engage in any transaction in violation of such
provisions.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling stockholder and any underwriter,
broker-dealer or agent regarding the sale of the common stock by the selling
stockholders.
A selling stockholder may decide not to sell any common stock described in
this prospectus. We cannot assure holders that any selling stockholder will use
this prospectus to sell any or all of the common stock. Any securities covered
by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of
the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant
to this prospectus. In addition, a selling stockholder may transfer, devise or
gift the common stock by other means not described in this prospectus.
With respect to a particular offering of the common stock, to the extent
required, an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part will be prepared and will set forth the following information:
o the specific common stock to be offered and sold;
o the names of the selling stockholders;
o the respective purchase prices and public offering prices and other
material terms of the offering;
o the names of any participating agents, broker-dealers or
underwriters; and
o any applicable commissions, discounts, concessions and other items
constituting, compensation from the selling stockholders.
We entered into a registration rights agreement for the benefit of holders
of our common stock to register their common stock under applicable federal and
state securities laws under certain circumstances and at certain times. The
registration rights agreement provides that the selling stockholders and Tegal
will indemnify each other and their respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the common stock, including liabilities under the Securities Act, or
will be entitled to contribution in connection with those liabilities. We will
pay all of our expenses and specified expenses incurred by the selling
stockholders incidental to the registration, offering and sale of the common
stock to the public, but each selling stockholder will be responsible for
payment of commissions, concessions, fees and discounts of underwriters,
broker-dealers and agents.
16
LEGAL MATTERS
Certain legal matters relating to the offering will be passed upon for
Tegal by Latham & Watkins LLP, San Francisco, California. Certain legal matters
will be passed upon for any agents or underwriters by counsel for such agents or
underwriters identified in the applicable prospectus supplement.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended March 31, 2003 have been so
incorporated in reliance on the report (which contains an explanatory paragraph
relating to the ability of Tegal Corporation to continue as a going concern, as
described in Note 1 to the financial statements) of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended. Accordingly, we file annual, quarterly and periodic
reports, proxy statements and other information with the SEC relating to our
business, financial statements and other matters. You may read and copy any
documents we have filed with the SEC at prescribed rates at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, DC 20549. You can obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Our SEC filings are also available to you free of charge at the
SEC's web site at http://www.sec.gov and at our web site at
http://www.tegal.com. Information contained in our web site is not part of this
prospectus.
This prospectus is only part of a registration statement on Form S-3 that
we have filed with the SEC under the Securities Act, and therefore omits certain
information contained in the registration statement. We have also filed exhibits
with the registration statement that are not included in this prospectus, and
you should refer to the applicable exhibit for a compete description of any
statement referring to any contract or other document. A copy of the
registration statement, including the exhibits thereto, may be inspected without
charge at the Public Reference Room of the SEC described above, and copies of
such material may be obtained from such office upon payment of the fees
prescribed by the SEC.
We have elected to "incorporate by reference" certain information into
this prospectus. By incorporating by reference, we can disclose important
information to you by referring you to another document we have filed with the
SEC. The information incorporated by reference is deemed to be part of this
prospectus, except for information incorporated by reference that is superseded
by information contained in this prospectus. This prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC:
Tegal Corporation SEC Filings Period Ended
----------------------------- ------------
Annual Report on Form 10-K (including information specifically incorporated by
reference into our Form 10-K from our 2003 Annual Report to Stockholders and
Proxy Statement for our 2003 Annual Meeting of Stockholders)................ March 31, 2003
Quarterly Reports on Form 10-Q................................................. June 30, 2003
September 30, 2003
December 31, 2003
Current Reports on Form 8-K.................................................... filed on July 2, 2003
filed on December 9, 2003
filed on February 13, 2004
The description of our common stock as set forth in our Registration Statement
on Form 8-A................................................................. filed on September 21, 1995
17
All documents that we file with the SEC pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act from the date of this prospectus to the end of
the offering of the common stock under this prospectus shall also be deemed to
be incorporated in this prospectus by reference.
You may obtain copies of these documents from us without charge (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents) by writing to us at Tegal
Corporation, 2201 South McDowell Boulevard, Petaluma, California 94954 or
calling us at (707) 763-5600.
18
7,545,317 SHARES OF COMMON STOCK
TEGAL CORPORATION
PROSPECTUS
We have not authorized any dealer, salesman or other person to give any
information or to make any representation other than those contained or
incorporated by reference in this prospectus and any applicable supplement to
this prospectus. You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus or any applicable
supplement to this prospectus. Neither this prospectus nor any applicable
supplement to this prospectus constitutes an offer to sell or the solicitation
of an offer to buy any securities other than the registered common stock to
which it relates, nor does this prospectus or any supplement to this prospectus
constitute an offer to sell or the solicitation of an offer to buy securities in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. You should not assume that the information
contained in this prospectus or any supplement to this prospectus is accurate on
any date subsequent to the date set forth on the front of this prospectus or any
supplement to this prospectus or that any information we have incorporated by
reference is correct on any date subsequent to the date of the document
incorporated by reference, even though this prospectus and any applicable
supplement to this prospectus is delivered or securities issued on a later date.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the
registrant in connection with the registration for resale of our common stock.
All of the amounts shown are estimates except the Securities and Exchange
Commission (the "Commission") registration fee.
Amount
-----------
Commission Registration Fee........................................ $ 2,208.34
*Costs of Printing................................................. 10,000.00
*Legal Fees and Expenses........................................... 50,000.00
*Accounting Fees and Expenses...................................... 30,000.00
*Miscellaneous Expenses............................................ 10,000.00
-----------
*Total........................................................ $102,208.34
*Estimated
ITEM 15. LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS.
We are a Delaware corporation. Subsection (b)(7) of Section 102 of the
Delaware General Corporation Law (the "DGCL"), enables a corporation in its
original certificate of incorporation or an amendment thereto to eliminate or
limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of the director's fiduciary duty,
except (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the DGCL (providing for liability of directors for unlawful
payment of dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which the director derived an improper personal benefit.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any present or former director, officer, employee or agent of the
corporation, or any individual serving at the corporation's request as a
director, officer, employee or agent of another organization, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding provided that such director, officer, employee
or agent acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, provided further that such director, officer,
employee or agent had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
present or former director, officer, employee or agent who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such
action or suit provided that such director, officer, employee or agent acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such director, officer,
employee or agent shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all of the circumstances of the
case, such director or officer is fairly and reasonably entitled to indemnity
for such expenses which the Court of Chancery or such other court shall deem
proper.
II-1
Section 145 further provides that to the extent a director, officer,
employee or agent has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification and advancement of expenses provided
for, by, or granted pursuant to, Section 145 shall not be deemed exclusive of
any other rights to which the indemnified party may be entitled; and empowers
the corporation to purchase and maintain insurance on behalf of a present or
former director, officer, employee or agent of the corporation, or any
individual serving at the corporation's request as a director, officer or
employee of another organization, against any liability asserted against him or
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
Our Certificate of Incorporation provides that to the fullest extent
permitted by the Delaware General Corporation Law ("DGCL"), a director of Tegal
shall not be liable to Tegal or its stockholders for monetary damages for breach
of fiduciary duty as a director.
ITEM 16. INDEX TO EXHIBITS.
Number Exhibit
------ -------
4.1 Tegal's Certificate of Incorporation, as amended, filed as
Exhibits 3(i)1 and 3(i)2 to Tegal's Registration Statement on Form
S-1 (SEC File No. 033-84702) filed on October 3, 1994 and
incorporated herein by reference.
4.2 Tegal's Certificate of Amendment to the Certificate of
Incorporation, filed as Exhibit 4.2 to Tegal's Registration
Statement on Form S-3 (SEC File. No. 333-108921), filed on
September 18, 2003 and incorporated herein by reference.
4.3 Tegal's By-Laws, as amended, filed as Exhibit 3(ii) to Tegal's
Registration Statement on Form S-1 (SEC File No. 033-84702) filed
on October 3, 1994 and incorporated herein by reference.
4.4 Rights Agreement between Tegal and ChaseMellon Shareholder
Services, LLC, as Rights Agent, dated as of June 11, 1996, filed
as Exhibit 4.1 to Tegal's Current Report on Form 8-K (SEC File No.
000-26824) filed on June 28, 1996 and incorporated herein by
reference.
4.5 First Amendment to Rights Agreement between Tegal and ChaseMellon
Shareholder Services, LLC, as Rights Agent, dated as of January
15, 1999, filed as Exhibit 99.1 to Tegal's Current Report on Form
8-K (SEC File No. 000-26824) filed on January 15, 1999 and
incorporated herein by reference.
4.6 Registration Rights Agreement by and between Tegal Corporation and
Kingsbridge Capital Limited, dated as of February 11, 2004, filed
as Exhibit 10.2 to Tegal's Current Report on Form 8-K (SEC File
No. 000-26824) filed on February 13, 2004 and incorporated herein
by reference.
4.7 Form of Certificate for Common Stock filed as Exhibit 4.1 to
Tegal's Registration Statement on Form S-1 (SEC File No.
033-84702), filed on October 3, 1994 and incorporated herein by
reference.
10.1 Common Stock Purchase Agreement by and between Kingsbridge Capital
Limited and Tegal Corporation, dated as of February 11, 2004,
filed as Exhibit 10.1 to Tegal's Current Report on Form 8-K (SEC
File No. 000-26824) filed on February 13, 2004 and incorporated
herein by reference.
10.2 Warrant to purchase 300,000 shares of Common Stock of Tegal
Corporation, issued to Kingsbridge Capital Limited, dated February
11, 2004, filed as Exhibit 10.3 to Tegal's Current Report on Form
8-K (SEC File No. 000-26824) filed on February 13, 2004 and
incorporated herein by reference.
5.1 Opinion of Latham & Watkins LLP.*
23.1 Consent of Latham & Watkins LLP (included in Exhibit 5.1).*
II-2
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.*
24.1 Power of Attorney (included on signature page).*
- ----------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. The undersigned registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period for any subscription
rights, to set forth the results of the subscription offer, the transactions by
the underwriters during the subscription period, the amount of unsubscribed
securities to be purchased by the underwriters, and the terms of any subsequent
reoffering thereof. If any public offering by the underwriters is to be made on
terms differing from those set forth on the cover page of the prospectus with
respect to a subscription rights offering, a post-effective amendment will be
filed to set forth the terms of such offering.
II-3
D. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Petaluma, state of California, on this 27th day of
February, 2004.
TEGAL CORPORATION
By /s/ Michael L. Parodi
--------------------------------------
Michael L. Parodi
Chairman of the Board,
President & Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael L. Parodi, and Thomas R. Mika,
and each or either of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the 27th day of February, 2004.
SIGNATURE TITLE
--------- -----
/s/ Michael L. Parodi Chairman of the Board, President & Chief Executive Officer
- ----------------------------------------- (Principal Executive Officer)
Michael L. Parodi
/s/ Thomas R. Mika Executive Vice President & Chief Financial Officer
- ---------------------------------------- (Principal Financial and Accounting Officer)
Thomas R. Mika
Director
- ----------------------------------------
Edward A. Dohring
/s/ Jeffrey M. Krauss Director
- ----------------------------------------
Jeffrey M. Krauss
/s/ H. Duane Wadsworth Director
- ----------------------------------------
H. Duane Wadsworth
II-5
Number Exhibit
------ -------
4.1 Tegal's Certificate of Incorporation, as amended, filed as
Exhibits 3(i)1 and 3(i)2 to Tegal's Registration Statement on Form
S-1 (SEC File No. 033-84702) filed on October 3, 1994 and
incorporated herein by reference.
4.2 Tegal's Certificate of Amendment to the Certificate of
Incorporation, filed as Exhibit 4.2 to Tegal's Registration
Statement on Form S-3 (SEC File. No. 333-108921), filed on
September 18, 2003 and incorporated herein by reference.
4.3 Tegal's By-Laws, as amended, filed as Exhibit 3(ii) to Tegal's
Registration Statement on Form S-1 (SEC File No. 033-84702) filed
on October 3, 1994 and incorporated herein by reference.
4.4 Rights Agreement between Tegal and ChaseMellon Shareholder
Services, LLC, as Rights Agent, dated as of June 11, 1996, filed
as Exhibit 4.1 to Tegal's Current Report on Form 8-K (SEC File No.
000-26824) filed on June 28, 1996 and incorporated herein by
reference.
4.5 First Amendment to Rights Agreement between Tegal and ChaseMellon
Shareholder Services, LLC, as Rights Agent, dated as of January
15, 1999, filed as Exhibit 99.1 to Tegal's Current Report on Form
8-K (SEC File No. 000-26824) filed on January 15, 1999 and
incorporated herein by reference.
4.6 Registration Rights Agreement by and between Tegal Corporation and
Kingsbridge Capital Limited, dated as of February 11, 2004, filed
as Exhibit 10.2 to Tegal's Current Report on Form 8-K (SEC File
No. 000-26824) filed on February 13, 2004 and incorporated herein
by reference.
4.7 Form of Certificate for Common Stock filed as Exhibit 4.1 to
Tegal's Registration Statement on Form S-1 (SEC File No.
033-84702), filed on October 3, 1994 and incorporated herein by
reference.
10.1 Common Stock Purchase Agreement by and between Kingsbridge Capital
Limited and Tegal Corporation, dated as of February 11, 2004,
filed as Exhibit 10.1 to Tegal's Current Report on Form 8-K (SEC
File No. 000-26824) filed on February 13, 2004 and incorporated
herein by reference.
10.2 Warrant to purchase 300,000 shares of Common Stock of Tegal
Corporation, issued to Kingsbridge Capital Limited, dated February
11, 2004, filed as Exhibit 10.3 to Tegal's Current Report on Form
8-K (SEC File No. 000-26824) filed on February 13, 2004 and
incorporated herein by reference.
5.1 Opinion of Latham & Watkins LLP.*
23.1 Consent of Latham & Watkins LLP (included in Exhibit 5.1).*
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.*
24.1 Power of Attorney (included on signature page).*
- ----------
* Filed herewith.
E-1