<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 1999
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MKS INSTRUMENTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
MASSACHUSETTS 3823 04-2277512
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
SIX SHATTUCK ROAD
ANDOVER, MA 01810
(978) 975-2350
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN R. BERTUCCI
CHAIRMAN, CHIEF EXECUTIVE OFFICER, AND PRESIDENT
MKS INSTRUMENTS, INC.
SIX SHATTUCK ROAD
ANDOVER, MA 01810
(978) 975-2350
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MARK G. BORDEN, ESQ. DAVID C. CHAPIN, ESQ.
HALE AND DORR LLP ROPES & GRAY
60 STATE STREET ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
(617) 526-6000 (617) 951-7000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.
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, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF PROPOSED
SECURITIES TO BE AMOUNT TO BE MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED(1) OFFERING PRICE REGISTRATION FEE(2)
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<S> <C> <C> <C>
Common Stock, no par value per share........... shares $100,000,000 $27,800
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</TABLE>
(1) Includes shares which the underwriters have the option to purchase
from the company to cover over-allotments, if any. See "Underwriting."
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
The information contained in this prospectus is not complete and may be changed.
The underwriters may not confirm sales of these securities until the
registration statement filed with the Securities and Exchange Commission becomes
effective. This prospectus is not an offer to sell these securities, and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 28, 1999
SHARES
[MKS LOGO]
COMMON STOCK
MKS Instruments, Inc. ("MKS") is offering shares of its common
stock. This is MKS's initial public offering and no public market currently
exists for its shares. We have applied for approval for quotation on the Nasdaq
National Market under the symbol "MKSI" for the shares we are offering. We
estimate that the initial public offering price will be between
$ and $ .
After the close of this initial public offering, John R. Bertucci,
Chairman, Chief Executive Officer and President of MKS, and members of his
family will own approximately % of the outstanding common stock.
------------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
------------------------
<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price $ $
Discounts and Commissions to Underwriters $ $
Proceeds to MKS $ $
</TABLE>
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.
MKS has granted the underwriters a 30-day option to purchase up to an
additional shares of common stock to cover over-allotments. If the
underwriters exercise this right in full, the Public Offering Price will total
$ , the Discounts and Commissions to Underwriters will total
$ and the Proceeds to MKS will total $ .
------------------------
NATIONSBANC MONTGOMERY SECURITIES LLC
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
The date of this prospectus is , 1999
<PAGE> 3
[PICTURES]
MKS, MKS Instruments, Baratron and ORION are trademarks of MKS. This
prospectus contains trademarks, service marks and trade names of companies and
organizations other than MKS.
<PAGE> 4
MKS INSTRUMENTS, INC.
PROSPECTUS COVER
JANUARY 28, 1999
INSIDE FRONT COVER (PG. 2):
This page is produced in four-color process. Amidst a dark background, the MKS
logo appears at the top right of the page, and to the top left is the phrase "A
wide range of products made using MKS Process Control Instruments." Two
paragraphs describing the role MKS plays in complex advanced materials
manufacturing processes, such as semiconductor, also appear on this page, and
are as follows:
(first paragraph) "MKS Surrounds the Process. In semiconductor and other
industries involving advanced materials processing, products such as
semiconductor devices, CD ROMS, flat panel displays, and fiber optic cables are
the result of complex manufacturing processes. These processes build up very
thin layers of materials, step by step, through the interaction of specific
gases and materials inside tightly controlled process chambers. Maintaining
control of these complex steps throughout the entire manufacturing process is
critical to performance and yield. (second paragraph) MKS Process Control
Instruments are integrated into almost every step of gas-related
processes--managing the flow rates of gases entering and exiting the process
chamber, controlling the gas composition and pressure inside the chamber,
analyzing and monitoring the composition of the gases, and isolating the gases
from the outside environment."
In the center of the page is a photo montage, displaying images of semiconductor
devices, flat panel displays, fiber optic cables, solar panels, magnetic and
optical storage media and gas lasers. Each of these images has a text label
adjacent to it.
INSIDE SPREAD (PGS. 3 AND 4):
These pages are produced in four-color process. The main focus of the spread is
the illustration of a typical process chamber, with numerous MKS products
surrounding the chamber. At the top of the illustration, centered across the two
pages, is the title "MKS Instruments...Surrounding the Process." Each product is
described in a brief paragraph, and the paragraphs appear on both sides of the
illustration--left and right columns. The paragraphs are as follows:
DIRECT LIQUID INJECTION SUBSYSTEMS
For use in the delivery of a wide variety of new materials to the process
chamber that cannot be delivered using conventional thermal-based mass flow
controllers.
AUTOMATIC PRESSURE CONTROLLERS WITH INTEGRATED BARATRON(R) PRESSURE TRANSDUCERS
A compact, integrated measurement and control package for use in controlling
upstream or downstream process chamber pressure.
ULTRACLEAN MASS FLOW CONTROLLERS
For the precise measurement and control of mass flow rates of inert or corrosive
gases and vapors into the process chamber.
ULTRACLEAN MINI-BARATRON(R) PRESSURE TRANSDUCERS
For use in gas cabinets to feed ultra-pure gases to critical process systems.
PRESSURE CONTROL VALVES
To precisely control the flow of gases to a process chamber in a wide range of
flow rates.
IN SITU FLOW VERIFIERS
For fast verification of mass flow controller accuracy and repeatability during
a process.
DIGITAL COLD CATHODE IONIZATION AND CONVECTION VACUUM GAUGES
A variety of indirect pressure gauges for measuring very low chamber pressures
and conveying information digitally to host computers.
ORION(R) PROCESS MONITORS AND RESIDUAL GAS ANALYZERS
For the analysis of the composition of background and process gases inside a
process chamber.
PRESSURE SWITCHES
Provide protection of vacuum equipment and processes by signaling when
atmospheric pressure has been reached.
BARATRON(R) PRESSURE MEASURING INSTRUMENTS
For the accurate measurement and control of a wide range of process pressures.
IN SITU DIAGNOSTICS ACCESS VALVE
Allows for accurate calibration and diagnostics of vacuum gauges and pressure
transducers while directly mounted on the process chamber.
EXHAUST THROTTLE VALVES AND AUTOMATIC PRESSURE CONTROLLERS
For isolation and downstream control of process chamber pressures, and pressure
control within the exhaust systems.
HIGH VACUUM VALVES
To isolate the process chamber from both the pumps and from atmosphere.
HEATED PUMPING LINES
For the reduction of contaminants in the vacuum pump and pump exhaust stream.
VAPOR SUBLIMATION TRAP
To collect by-products and particulates that could otherwise contaminate devices
in the process chambers and damage vacuum pumps.
Prices of products shown above range from $400 to $80,000.
The above graphic depicts a typical process chamber and surrounding equipment
used in semiconductor manufacturing.
<PAGE> 5
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO
BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK. IN THIS PROSPECTUS, "MKS," "WE,"
"US" AND "OUR" REFER TO MKS INSTRUMENTS, INC. (UNLESS THE CONTEXT OTHERWISE
REQUIRES).
UNTIL , 1999, ALL DEALERS THAT BUY, SELL OR TRADE OUR COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS REQUIREMENT IS IN ADDITION TO THE DEALERS' OBLIGATION TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 6
S Corporation and Termination of S Corporation Status....... 13
Use of Proceeds............................................. 14
Dividend Policy............................................. 14
Capitalization.............................................. 15
Dilution.................................................... 16
Selected Consolidated Financial Data........................ 17
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 19
Business.................................................... 27
Management.................................................. 45
Certain Transactions........................................ 51
Principal Stockholders...................................... 52
Description of Capital Stock................................ 53
Shares Eligible for Future Sale............................. 55
Underwriting................................................ 56
Legal Matters............................................... 57
Experts..................................................... 57
Additional Information...................................... 58
Index to Consolidated Financial Statements.................. F-1
</TABLE>
2
<PAGE> 6
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
You should read this entire prospectus carefully. Unless otherwise indicated,
all information contained in this prospectus assumes that the underwriters will
not exercise their over-allotment option. This prospectus contains forward-
looking statements, which involve risks and uncertainties. MKS's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth under "Risk
Factors" and elsewhere in this prospectus. All information contained in this
prospectus reflects: (i) a 3-for-2 stock split of the common stock; and (ii)
amendments to MKS's Articles of Organization to be effected prior to the
effective date of this prospectus to: (a) increase the total number of
authorized shares of common stock to 30,000,000; (b) authorize 2,000,000 shares
of preferred stock; and (c) convert the shares of Class A common stock and Class
B common stock into a single class of common stock.
MKS INSTRUMENTS, INC.
We are a leading worldwide developer, manufacturer and supplier of
instruments and components used to measure, control and analyze gases in
semiconductor manufacturing and similar industrial manufacturing processes. We
offer a comprehensive line of products which are used to manufacture, among
other things:
- - semiconductors
- - flat panel displays
- - magnetic and optical storage devices and media, including:
-- compact disks
-- hard disk storage devices
-- magnetic devices for reading disk data
-- digital video disks
-- optical storage disks (laser readable disks)
- - solar cells which convert light into
electrical current
- - fiber optic cables for telecommunications
- - optical coatings (such as eyeglass coatings)
- - coatings for architectural glass
- - hard coatings to minimize wear on cutting tools
- - diamond thin films
Our products include:
- - instruments used to measure, control and analyze:
-- gas pressure
-- gas flow
-- gas composition
- - vacuum technology products:
-- vacuum gauges
-- vacuum valves and components
The ability of semiconductor device manufacturers to offer integrated
circuits with smaller geometries and greater functionality at higher speeds
requires continuous improvements in semiconductor process equipment and process
controls. Manufacturing a semiconductor, or a similar industrial product,
requires hundreds of process steps, many of which involve the precise
measurement and control of gases. In the fabrication of semiconductors, for
example, these process steps take place within a process chamber. Specific gas
mixtures at precisely controlled pressures are used in the process chamber to
control the required process atmosphere and are used as a source of material to
manufacture a semiconductor.
Given the complexity of the semiconductor manufacturing process, the value
of the products manufactured and the significant cost of semiconductor
manufacturing equipment and facilities, significant importance is placed upon:
- the amount of time that semiconductor manufacturing equipment is
available for processing (or uptime)
- the ratio of acceptable output to total output (or yield)
- the aggregate output that can be processed per hour (or throughput)
3
<PAGE> 7
The design and performance of instruments that control the pressure or flow of
gases are becoming more critical to the semiconductor manufacturing process
since they directly affect uptime, yield and throughput. In addition, the
increasing sophistication of semiconductor devices requires an increase in the
number of components and subsystems used in the design of semiconductor
manufacturing process tools. To address manufacturing complexity, improve
quality and reliability and ensure long-term service and support, semiconductor
device manufacturers and semiconductor capital equipment manufacturers are
increasingly seeking to reduce their supplier base and are, therefore, choosing
to work with suppliers that provide a broad range of integrated, technologically
advanced products backed by worldwide service and support.
We believe that we offer the widest range of pressure and vacuum
measurement and control products serving the semiconductor industry. Our
products measure pressures from as low as one trillionth of atmospheric pressure
to as high as two hundred times atmospheric pressure. Our objective is to be the
leading worldwide supplier of instruments and components used to measure,
control and analyze gases in semiconductor and other advanced thin-film
processing applications and to help semiconductor device manufacturers achieve
improvements in their return on investment capital. Our strategy to accomplish
this objective includes:
- extending our technology leadership
- continuing to broaden our comprehensive product offering
- building upon our close working relationships with customers
- expanding the application of our existing technologies to related markets
- leveraging our global infrastructure and world class manufacturing
capabilities
For over 25 years, we have focused on satisfying the needs of semiconductor
capital equipment manufacturers and semiconductor device manufacturers. As a
result, we have established long-term relationships with many of our customers.
We have over 4,000 active customers worldwide (all of which purchased products
during 1998) including:
- semiconductor capital equipment manufacturers
- semiconductor device manufacturers
- industrial manufacturing companies
- university, government and industrial research laboratories
Our customers include Applied Materials, Inc., Lam Research Corporation, Tokyo
Electron, Ltd., Air Products and Chemicals, Inc. and Motorola Inc. We sell our
products primarily through our sales force which consists of 118 employees in 22
offices in France, Germany, Japan, Korea, The Netherlands, Singapore, Taiwan,
the United Kingdom and the United States.
MKS Instruments, Inc. is a Massachusetts corporation organized in June
1961. Our principal executive offices are located at Six Shattuck Road, Andover,
MA 01810, and our telephone number is (978) 975-2350.
4
<PAGE> 8
THE OFFERING
Common stock offered by MKS........ shares
Common stock to be outstanding
after this offering................ shares
Use of proceeds.................... For distributions to current stockholders
and general corporate purposes. See "Use of
Proceeds" and "S Corporation and
Termination of S Corporation Status."
Proposed Nasdaq National Market
symbol............................. MKSI
The common stock to be outstanding after this offering is based on shares
outstanding as of December 31, 1998 and excludes 2,132,575 shares of common
stock issuable upon the exercise of options outstanding as of such date at a
weighted average exercise price of $5.19 per share. See "Capitalization" and
Note 8 of Notes to Consolidated Financial Statements.
SUMMARY CONSOLIDATED FINANCIAL DATA
MKS has been treated as an S corporation for federal income tax purposes
since July 1, 1987. As an S corporation, MKS has not been subject to federal,
and certain state, income taxes. The pro forma net income reflects the provision
for income taxes that would have been recorded had MKS been a C corporation,
assuming an effective tax rate of 38.0%. As a result of terminating its S
corporation status upon the closing of this offering, MKS will record a one-time
non-cash credit to historical earnings for additional deferred taxes. If this
credit to earnings had occurred at December 31, 1998, the amount would have been
approximately $3.9 million. This amount is expected to change through the
closing of this offering and is excluded from pro forma net income. See Notes 2
and 9 of Notes to Consolidated Financial Statements.
Pro forma balance sheet data set forth below reflects the liability for the
distribution of an estimated $35.9 million, calculated as of December 31, 1998,
of cumulative undistributed S corporation taxable income for which stockholders
of record prior to the closing of this offering have been or will be taxed. The
pro forma net income per share and weighted average common shares outstanding
which are set forth below reflect the effect of an assumed issuance of
sufficient shares to fund this distribution as of January 1, 1998. The
distribution will be made out of the proceeds of this offering. The actual
amount to be distributed is expected to increase based upon taxable earnings for
the period January 1, 1999 through the closing of this offering, subject to
certain limitations. See "S Corporation and Termination of S Corporation
Status." The pro forma as adjusted balance sheet data reflects the sale of
shares of common stock at an assumed initial public offering price of
$ per share, after deducting the estimated underwriting discount and
offering expenses payable by MKS.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................................................... $106,829 $157,164 $170,862 $188,080 $139,763
Gross profit................................................ 47,016 69,461 68,854 80,474 55,979
Income from operations...................................... 12,087 24,106 16,068 23,963 9,135
Net income.................................................. $ 10,003 $ 21,658 $ 12,503 $ 20,290 $ 7,186
PRO FORMA STATEMENT OF INCOME DATA(1):
Pro forma net income........................................ $ 5,044
Pro forma net income per share:
Basic..................................................... $ 0.25
Diluted................................................... $ 0.24
Pro forma weighted average common shares outstanding:
Basic..................................................... 20,166
Diluted................................................... 20,651
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 11,188 $ 11,188
Working capital (deficit)................................... 31,493 (4,433)
Total assets................................................ 96,232 96,232
Short-term obligations...................................... 12,819 12,819
Long-term obligations, less current portion................. 13,786 13,786
Stockholders' equity........................................ 54,826 18,900
</TABLE>
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(1) Data is computed on the same basis as Note 2 of Notes to Consolidated
Financial Statements.
5
<PAGE> 9
RISK FACTORS
You should consider carefully the risks described below before you decide
to buy our common stock. The risks and uncertainties described below are not the
only ones facing us. Additional risks and uncertainties that we do not presently
know about or that we currently believe are immaterial may also adversely impact
our business operations. If any of the following risks actually occur, our
business, financial condition or results of operations would likely suffer. In
such case, the trading price of our common stock could fall, and you may lose
all or part of the money you paid to buy our common stock.
This prospectus contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements are usually accompanied by words
such as "believes," "anticipates," "plans," "expects" and similar expressions.
Our actual results may differ materially from the results discussed in the
forward-looking statements because of factors such as the Risk Factors discussed
below.
OUR PERFORMANCE IS AFFECTED BY THE CYCLICALITY OF THE SEMICONDUCTOR INDUSTRY AND
CAN BE ADVERSELY AFFECTED BY THE INSTABILITY OF ASIAN ECONOMIES
We estimate that approximately 60% of our sales during 1997 and 1998 were
to semiconductor capital equipment manufacturers and semiconductor device
manufacturers, and we expect that sales to such customers will continue to
account for a substantial majority of our sales. Our business depends
substantially upon the capital expenditures of semiconductor device
manufacturers, which in turn depend upon the demand for semiconductors and other
products utilizing semiconductors. Historically, the semiconductor market has
been highly cyclical and has experienced periods of overcapacity, resulting in
significantly reduced demand for capital equipment. For example, in 1996 and
1998 the semiconductor industry experienced a significant decline, which caused
a number of our customers to reduce their orders. In addition, the financial
markets in Asia, one of our principal international markets, have experienced
significant turbulence. Our sales include both direct sales to the semiconductor
industry in Asia, as well as to semiconductor capital equipment manufacturers
that derive a significant portion of their revenue from sales to the Asian
semiconductor industry. Turbulence in the Asian markets began to adversely
affect the semiconductor device manufacturers and semiconductor capital
equipment manufacturers in the fourth quarter of 1997 and continued to adversely
affect them in 1998. We expect the turbulence in the Asian markets will continue
to adversely affect sales of semiconductor capital equipment manufacturers for
at least the first and second quarters of 1999. As a result, we currently expect
that our net sales and net income for each of the first and second quarters of
1999 will be less than net sales and net income for the first and second
quarters of 1998.
Our future sales also depend on the retrofitting, expansion and upgrade of
existing semiconductor fabrication facilities and the construction of new, large
semiconductor fabrication facilities. We cannot be certain that such retrofit,
expansion, upgrade and construction will occur. We also cannot be certain that
the current semiconductor downturn experienced in 1998 will not continue or that
the level of our customer orders will not decline further. The current reduction
in our orders, as well as any further decline in the level of orders as a result
of the current or any future downturn or slowdown in the semiconductor industry,
together with our inability to fully adjust expenses, would have a material
adverse effect on our business, financial condition and results of operations.
OUR QUARTERLY RESULTS ARE LIKELY TO FLUCTUATE
We have experienced and expect to continue to experience significant
fluctuations in our quarterly operating results. A substantial portion of our
shipments occur shortly after an order is received. Due to the short time
between receipt of orders and shipments, we operate with a low level of backlog.
Accordingly, backlog at the beginning of each quarter will not be sufficient to
meet our revenue expectations for that particular quarter. As a consequence of
the just-in-time nature of shipments and the low level of backlog, a decrease in
demand for our products from one or more customers could occur with limited
advance notice and could have a material adverse effect on our results of
operations in any particular period.
6
<PAGE> 10
Our business, financial condition and results of operations are also
affected by:
- - specific economic conditions in industries in which our customers operate
- - the timing of the receipt of orders from major customers
- - customer cancellations or shipment delays
- - price competition
- - disruption in sources of supply
- - seasonal variations of capital spending by customers
- - production capacity constraints
- - specific features requested by customers
- - exchange rate fluctuations
- - our or our competitors' introduction or announcement of new products
- - other factors, many of which are beyond our control
Our results of operations for a particular period would also be adversely
affected if an anticipated significant order was not received in time to permit
shipment during that period, as a portion of our operating expenses are fixed in
nature and planned expenditures are based in part on anticipated orders. In
addition, the need for continued expenditures for research and development would
make it difficult to reduce expenses in a particular period if our sales goals
for that period were not met. The inability to adjust spending quickly enough to
compensate for any revenue shortfall would magnify the adverse impact of such
revenue shortfall on our results of operations. For example, we were in the
process of increasing production capacity when the semiconductor capital
equipment market began to experience a significant downturn in 1996. This
downturn had a material adverse effect on our operating results in the second
half of 1996 and the first half of 1997. After an increase in business in the
latter half of 1997, the market experienced another downturn in 1998, which had
a material adverse effect on our 1998 operating results. As a result of the
factors discussed above, it is likely that we will in the future experience
quarterly or annual fluctuations and that, in one or more future quarters, our
operating results will fall below the expectations of public market analysts or
investors. In any such event, the price of our common stock could decline
significantly.
WE HAVE A HIGH DEGREE OF CUSTOMER CONCENTRATION
While we sold products to more than 4,000 customers in 1998, our five
largest customers in 1996, 1997 and 1998 accounted for approximately 26%, 32%
and 24%, respectively, of our net sales. During 1998, one customer, Applied
Materials, Inc., accounted for approximately 16% of our net sales. While we have
entered into a purchase contract with Applied Materials, Inc. that expires in
2000 (unless extended by mutual agreement), none of our significant customers,
including Applied Materials, Inc., has entered into an agreement requiring it to
purchase any minimum quantity of our products. The demand for our products from
our semiconductor capital equipment customers depends in part on orders received
by them from their semiconductor device manufacturer customers.
We sell products primarily to semiconductor capital equipment manufacturers
and, to a lesser extent, semiconductor device manufacturers. The number of our
potential customers in our primary market is limited. The loss of a major
customer or any reduction in orders by such customers, including reductions due
to market or competitive conditions, would likely have a material adverse effect
on our business, financial condition and results of operations. Attempts to
lessen the adverse effect of any such loss or reduction through the rapid
addition of new customers could be difficult because prospective customers
typically require lengthy qualification periods prior to placing volume orders
with a new supplier. Our future success will continue to depend upon:
- our ability to maintain relationships with existing key customers
- our ability to attract new customers
- the success of our customers in creating demand for their capital
equipment products which incorporate our products
7
<PAGE> 11
OUR MARKETS ARE HIGHLY COMPETITIVE
The markets for our products are highly competitive. Although no one
competitor competes with us across all product lines, our competitors could
consolidate and/or form alliances to offer a broader array of products to
compete against us. We currently encounter substantial competition in each of
our product lines from a number of competitors, including:
- competitors with greater financial and other resources
- small competitors with well-established specific product niches
- customers who develop in-house products that serve the functions of and
replace our products
In some cases, particularly with respect to mass flow controllers,
semiconductor device manufacturers may direct semiconductor capital equipment
manufacturers to use a specified supplier's product in their equipment.
Accordingly, for such products, our success will depend in part on our ability
to have semiconductor device manufacturers specify that our products be used at
their semiconductor fabrication facilities. In addition, we may encounter
difficulties in changing established relationships of competitors with a large
installed base of products at such semiconductor fabrication facilities. We
cannot be sure that our competitors will not develop products that offer price
or performance features superior to those of our products. To the extent that
our products do not achieve performance or other advantages over products
offered by our competitors, we are likely to experience increased price
competition or loss of market share with respect to such products. We believe
that the worldwide competitive pressures in our markets could result in a
decline in the prices of our products in the future. Declines in the selling
prices of our products, if not offset by reductions in the cost of producing
such products and increases in unit volume sales or by sales of products with
higher gross margins, could have a material adverse effect on our business,
financial condition and results of operations.
OUR MARKETS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGES
Our success depends in part upon our ability to develop new products and
product enhancements that keep pace with technological developments, achieve
market acceptance and respond to evolving customer requirements. New product
introductions may contribute to fluctuations in quarterly operating results, as
customers may defer ordering products from our existing product lines or may
purchase products from competitors. Any new product reliability or quality issue
could result in reduced orders, higher manufacturing costs and additional
service and warranty expense. Responding to rapid technological change and the
need to develop and introduce new products to meet customers' needs and evolving
industry standards will require us to make substantial investments in research
and product development. Any failure by us to anticipate or respond adequately
to technological developments and customer requirements or any significant
delays in product development or introduction could result in a loss of
competitiveness and could have a material adverse effect on our business,
financial condition and results of operations. We cannot be certain that we will
successfully develop and manufacture new products or that any product
enhancements or new products developed by us will gain market acceptance.
The semiconductor manufacturing industry is currently undergoing an
evolution from the manufacturing of 200mm wafers to 300mm wafers and from 0.25
micron to 0.18 micron line-widths. Semiconductor manufacturers are beginning to
establish pilot production lines and specifications for the use of 300mm wafers
and the production of less than 0.18 micron devices. We have developed, and are
developing, new products and product enhancements to address the expected
increasing demand for equipment capable of handling these new wafer sizes and
line-widths. We have supplied pre-production equipment to be incorporated into
semiconductor capital equipment manufacturers' 300mm pre-production
semiconductor wafer process equipment, which is expected to be included in pilot
production lines of semiconductor device manufacturers. We have also developed
equipment that is being used by research laboratories for devices using less
than 0.18 micron line-widths. However, we cannot be certain that our new
products and enhancements will be designed into production lines by our
customers. Our failure to develop products and
8
<PAGE> 12
enhancements for general acceptance by our customers in a timely manner would
have a material adverse effect on our business, financial condition and results
of operations.
WE HAVE A NUMBER OF RISKS ASSOCIATED WITH THE YEAR 2000
Many currently installed computer systems include software and hardware
products that are unable to distinguish 21st century dates from those in the
20th century. As a result, computer software and/or hardware used by many
companies and governmental agencies may need to be upgraded to comply with Year
2000 requirements or risk system failure or miscalculations that result in
disruptions to normal business activities. We have implemented a multi-phase
Year 2000 project consisting of assessment and remediation, and testing
following remediation. We have examined our internal computer software and
hardware, our facilities and manufacturing equipment, third-party compliance and
the compliance of our products. We have identified the following risks you
should be aware of:
- we cannot be sure that any of our assessments, remediation programs or
testing will identify and cure all of our Year 2000 compliance issues
- the entities on whom we rely for certain goods and services integral to
our business may be unsuccessful in addressing all of their software and
systems problems in order to operate without disruption in the year 2000
and beyond
- our customers or potential customers may be affected by Year 2000 issues
that may, in part:
-- cause a reduction, delay or cancelation of customer orders
-- cause a delay in payments for products shipped
-- cause customers to expend significant resources on Year 2000
compliance matters, rather than investing in our products
- we have not developed a contingency plan related to the failure of our or
a third-party's Year 2000 remediation efforts and may not be prepared for
such an event
Further, while we have made efforts to notify our customers who have
purchased potential non-compliant products, we cannot be sure that customers who
purchased such products will not assert claims against us alleging that such
products should have been Year 2000 compliant at the time of purchase, which
could result in costly litigation and divert management's attention.
The occurrence of any of these risks or uncertainties could result in a
material adverse effect on our business, financial condition and results of
operations.
WE MAY HAVE DIFFICULTY EXPANDING INTO NEW MARKETS
We plan to build upon our experience in manufacturing and selling gas
measurement, control and analysis products used by the semiconductor industry by
designing and selling such products for applications in other industries which
use production processes similar to those used in the semiconductor industry.
Our future success will depend in part on our ability to:
- identify new applications for our products
- adapt our products for such applications
- market and sell such products to customers
We have limited experience selling our products in certain markets outside
the semiconductor industry. We cannot be certain that we will be successful in
the expansion of our business outside the semiconductor industry. Any failure by
us to penetrate additional markets would limit our ability to reduce our
vulnerability to downturns in the semiconductor industry and could have a
material adverse effect on our business, financial condition and results of
operations.
9
<PAGE> 13
WE MAY HAVE DIFFICULTY EXPANDING OUR MANUFACTURING CAPACITY
During 1999, we plan to add manufacturing capacity to our Austin, Texas
operations and further equip our cleanroom facilities in Andover and Methuen,
Massachusetts. Our ability to increase sales of certain products depends in part
upon our ability to expand our manufacturing capacity for such products in a
timely manner. If we are unable to expand our manufacturing capacity on a timely
basis or to manage such expansion effectively, our rate of growth and market
share could be reduced and our business, financial condition and results of
operations could be adversely affected. Because the semiconductor industry is
subject to rapid demand shifts which are difficult to foresee, we may not be
able to increase capacity quickly enough to respond to a rapid increase in
demand in the semiconductor industry. Additionally, any capacity expansion will
increase our fixed operating expenses and if sales levels do not increase to
offset the additional expense levels associated with any such expansion, our
business, financial condition and results of operations would likely be
materially adversely affected.
WE FACE RISKS FROM INTERNATIONAL OPERATIONS AND SALES
We have manufacturing, sales and service facilities in Germany, Japan,
Korea and the United Kingdom and sales and service facilities in France, The
Netherlands, Singapore and Taiwan. In addition, we have established, through
agents and representatives, sales and service facilities in Canada, China,
India, Israel, and Italy.
International sales (which include sales by our foreign subsidiaries, but
exclude direct export sales which were less than 10% of our total net sales)
accounted for approximately 30.1%, 27.3% and 32.3% of net sales in 1996, 1997
and 1998, respectively. We anticipate that international sales will continue to
account for a significant portion of our net sales. In addition, certain of our
key domestic customers derive a significant portion of their revenues from sales
in international markets. As a result, our operations are subject to risks
inherent in international business activities, including, in particular:
- - economic conditions in each country
- - the overlap of different tax structures
- - management of a large organization spread over various countries
- - unexpected changes in regulatory requirements
- - compliance with a variety of foreign laws and regulations
- - longer accounts receivables payment cycles in certain countries
- - international sales subject to certain governmental restrictions and
regulations including the Export Administration Act
- - import and export licensing requirements
- - trade restrictions
- - changes in tariff and freight rates
- - currency fluctuations
A number of these risks also apply to sales to semiconductor capital
equipment manufacturers based in the United States that incorporate our products
into systems delivered outside the United States. Additionally, we base the
prices for products sold to and by our foreign subsidiaries on the currency of
the country in which these products are sold. Therefore, our operating results
attributable to these sales are exposed to fluctuations in the value of the
United States dollar versus other currencies. While we enter into forward
exchange contracts and local currency purchased options to reduce currency
exposure arising from these sales and associated intercompany purchases of
inventory, we cannot be certain that exchange rate fluctuations will not have an
adverse effect on our business, financial condition and results of operations,
or that we will not realize losses with respect to our hedging activities.
WE NEED TO RETAIN AND ATTRACT KEY PERSONNEL
Our success depends to a large extent upon the efforts and abilities of a
number of key employees and officers. The loss of key employees or officers
could have a material adverse effect on our business, financial condition and
results of operations. We believe that our future success will depend in part on
our
10
<PAGE> 14
ability to attract and retain highly skilled technical, financial, managerial
and marketing personnel. Competition for such personnel is intense, and we
cannot be certain that we will be successful in attracting and retaining such
personnel. We are the beneficiary of key-man life insurance policies on John R.
Bertucci, Chairman, Chief Executive Officer and President, in the amount of $7.2
million.
OUR SUCCESS DEPENDS ON PROTECTING OUR INTELLECTUAL PROPERTY
Although we seek to protect our intellectual property rights through
patents, copyrights, trade secrets and other measures, we cannot be certain
that:
- we will be able to protect our technology adequately
- competitors will not be able to develop similar technology independently
- any of our pending patent applications will be issued
- intellectual property laws will protect our intellectual property rights
Litigation may be necessary in order to enforce our patents, copyrights or
other intellectual property rights, to protect our trade secrets, to determine
the validity and scope of the proprietary rights of others or to defend against
claims of infringement. Such litigation could result in substantial costs and
diversion of resources and could have a material adverse effect on our business,
financial condition and results of operations.
In addition, we cannot be certain that any patent issued to us will not be
challenged, invalidated or circumvented, that the rights granted thereunder will
provide competitive advantages to us or that third parties may not assert that
our products infringe patent, copyright or trade secrets of such parties.
Furthermore, we cannot be sure that others will not independently develop
similar products or duplicate our products.
YOU WILL HAVE A NUMBER OF MARKET RISKS TYPICALLY ASSOCIATED WITH INITIAL PUBLIC
OFFERINGS
Prior to this offering, there has been no public market for our common
stock and there can be no assurance that an active public market for the common
stock will develop or continue after this offering. The initial public offering
price will be determined by negotiation between MKS and the underwriters.
Nevertheless, after this offering, you may not be able to resell your shares at
or above the initial public offering price due to a number of factors,
including:
- actual or anticipated fluctuations in our operating results
- changes in securities analysts' financial estimates
- changes in expectations as to our future financial performance
- announcements of new technological innovations and alliances by
competitors
- the operating and stock price performance of our competitors and other
comparable companies
In addition, the stock market has experienced extreme price and volume
fluctuations which have particularly affected the market prices for many high
technology companies. These broad market fluctuations may materially and
adversely affect the market price of our common stock. You should read the
"Underwriting" section of this prospectus for a more complete discussion of the
factors that the underwriters and we will consider in determining the initial
public offering price.
YOU WILL EXPERIENCE AN IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of common stock in this offering will incur immediate and
substantial dilution of $ in the pro forma net tangible book value per
share of common stock from the assumed initial public offering price or
$ per share.
11
<PAGE> 15
AFTER THIS OFFERING A LIMITED NUMBER OF STOCKHOLDERS WILL HAVE CONTROLLING
INTEREST IN MKS
Upon consummation of this offering, John R. Bertucci, Chairman, Chief
Executive Officer and President of MKS, and members of his family will, in the
aggregate, beneficially own approximately % of our outstanding common stock.
As a result, these stockholders, acting together, will be able to take any of
the following actions without the approval of our public stockholders:
- amend our Articles of Organization in certain respects or approve a
merger, sale of assets or other major corporate transaction
- defeat any non-negotiated takeover attempt that may be beneficial to our
public stockholders
- determine the amount and timing of dividends paid to themselves and to
our public stockholders
- otherwise control our management and operations and the outcome of all
matters submitted for a stockholder vote, including the election of
directors
WE ARE SUBJECT TO ANTITAKEOVER PROVISIONS
Certain provisions of our Articles of Organization, our By-Laws and
Massachusetts law could discourage potential acquisition proposals and could
delay or prevent a change in control of MKS. Such provisions could diminish the
opportunities for stockholders to participate in tender offers including tender
offers at a price above the then current market value of the common stock. Such
provisions may also inhibit increases in the market price of the common stock
that could result from takeover attempts. For example, while we have no present
plans to issue any preferred stock, the Board of Directors, without further
stockholder approval, may issue preferred stock that could have the effect of
delaying, deterring or preventing a change in control of MKS. The issuance of
preferred stock could adversely affect the voting power of the holders of common
stock including the loss of voting control to others. In addition, our By-Laws
will provide for a classified Board of Directors consisting of three classes.
This classified board could also have the effect of delaying, deterring or
preventing a change in control of MKS.
FUTURE SALES OF SHARES COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK
Sales of our common stock in the public market following this offering
could adversely affect the market price of the common stock. All of the shares
offered under this prospectus will be freely tradable in the open market. The
remaining shares of common stock are subject to lock-up agreements with the
underwriters. Persons subject to lock-up agreements have agreed not to sell
shares of common stock for a period of 180 days after the date of this
prospectus. Upon expiration of the lock-up agreements, shares of
common stock will be eligible for sale in the public market, subject to the
provisions of Rule 144 or 701 under the Securities Act of 1933. In addition, we
intend to register approximately 4,535,000 shares of common stock issuable under
our stock option and purchase plans upon the closing of this offering.
12
<PAGE> 16
S CORPORATION AND TERMINATION OF S CORPORATION STATUS
MKS has been treated as an S corporation for federal income tax purposes
since July 1, 1987. As a result, MKS currently pays no federal, and certain
state, income tax, and all of the earnings of MKS are subject to federal, and
certain state, income taxation directly at the stockholder level. MKS's S
corporation status will terminate upon the closing of this offering, at which
time MKS will become subject to corporate income taxation under Subchapter C of
the Internal Revenue Code and applicable state income taxation law. Pro forma
statement of income data set forth in this prospectus has been adjusted to
include pro forma income tax provisions as if MKS had been a C corporation
during the relevant periods.
In 1997 and 1998, MKS distributed $12.4 million and $6.2 million,
respectively, of undistributed S corporation earnings to its stockholders. As
soon as practicable following the closing of this offering, MKS intends to make
a distribution to the holders of record on the day prior to the closing of this
offering in an amount equivalent to the "accumulated adjustments account," as
defined in Section 1368(a)(1) of the Internal Revenue Code. As of December 31,
1998, the outstanding balance of the accumulated adjustments account was
estimated to be approximately $35.9 million, and such balance is estimated to
increase in the period from January 1, 1999 through the closing of this offering
to approximately $ million. The accumulated adjustments account is
cumulatively equal to financial reporting income, adjusted for differences
between the methods of accounting used for financial accounting and for federal
income tax purposes from July 1, 1987 through the date of termination of MKS's S
corporation status, that has not been previously distributed. Investors
purchasing shares in this offering will not receive any portion of the
distribution.
MKS expects to enter into a Tax Indemnification and S Corporation
Distribution Agreement with its existing stockholders providing for, among other
things, the indemnification of MKS by such stockholders for any federal and
state income taxes (including interest) incurred by MKS if for any reason MKS is
deemed to be treated as a C corporation during any period which it reported its
taxable income as an S corporation. The tax indemnification obligation of the
existing stockholders is limited to the amount of any reduction in their tax
liability as a result of any such determination. This agreement also provides
for the cross-indemnification by MKS of each existing stockholder for any losses
or liabilities with respect to certain additional taxes (including interest and
penalties) resulting from MKS's operations during the period in which it was an
S corporation. The agreement further provides for the payment, with interest, by
the existing stockholders or MKS, as the case may be, for the difference between
the amount to be distributed and the actual amount of accumulated adjustments
account on the day immediately preceding the closing of this offering. The
actual amount of the accumulated adjustments account on the day prior to the
closing of this offering cannot be determined until MKS calculates the amount of
its taxable income for the year ending December 31, 1999. Purchasers of common
stock in this offering will not be parties to the Tax Indemnification and S
Corporation Distribution Agreement.
13
<PAGE> 17
USE OF PROCEEDS
The net proceeds we will receive from the sale of the shares of
common stock offered by us are estimated to be $ ($
if the underwriters' over-allotment option is exercised in full), after
deducting the estimated underwriting discount and offering expenses payable by
us and assuming an initial public offering price of $ per share.
The principal purposes of this offering are:
- to increase our working capital and equity base
- to provide a public market for our common stock
- to facilitate future access by us to public equity markets
We will use approximately $ million of the net proceeds to
pay current stockholders our undistributed S corporation earnings through the
closing of this offering. The undistributed S corporation earnings were
estimated to be approximately $35.9 million (including approximately $34.4
million representing the share of Mr. Bertucci and members of his family) at
December 31, 1998, and are expected to increase from January 1, 1999 to the
closing of this offering to approximately $ million. See "S
Corporation and Termination of S Corporation Status." We expect to use the
remainder of the net proceeds for general corporate purposes, including working
capital, product development and capital expenditures.
A portion of the net proceeds after the S corporation distribution may also
be used for the acquisition of businesses, products and technologies that are
complementary to those of MKS. There are currently no active negotiations,
commitments or agreements with respect to any acquisition. Pending such uses, we
intend to invest the net proceeds from this offering in short-term,
investment-grade, interest-bearing securities.
DIVIDEND POLICY
We currently intend, subject to our contractual obligations under the Tax
Indemnification and S Corporation Distribution Agreement, to retain earnings for
the continued development of our business. Restrictions or limitations on the
payment of dividends may be imposed in the future under the terms of credit
agreements or under other contractual provisions. In the absence of such
restrictions or limitations, the payment of any dividends will be at the
discretion of our Board of Directors.
14
<PAGE> 18
CAPITALIZATION
The following table sets forth the capitalization of MKS (i) as of December
31, 1998, (ii) on a pro forma basis to reflect distributions and adjustments in
connection with MKS's S corporation status and (iii) as adjusted to reflect the
sale of shares of common stock by MKS at an assumed initial public
offering price of $ per share and the application of the net proceeds
therefrom. See "Use of Proceeds."
The pro forma data reflects the liability for distribution of an estimated
$35.9 million, calculated as of December 31, 1998, of cumulative undistributed S
corporation taxable income for which stockholders of record prior to the closing
of this offering have been or will be taxed. The actual amount to be distributed
is expected to increase based upon taxable earnings for the period from January
1, 1999 through the closing of this offering, subject to certain limitations.
See "S Corporation and Termination of S Corporation Status" and Notes 2 and 9 of
Notes to Consolidated Financial Statements. The pro forma as adjusted numbers
have been adjusted to reflect the issuance of shares of common stock
at an assumed initial public offering price of $ per share, after deducting
the estimated underwriting discount and offering expenses payable by MKS. The
remaining balance in retained earnings represents accumulated earnings prior to
MKS's conversion from a C corporation to an S corporation in 1987, accumulated
income in overseas subsidiaries and differences between book and tax accumulated
income.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------ --------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C>
Long-term obligations, less current portion............ $13,786 $13,786 $
Stockholders' equity:..................................
Preferred stock, $.01 par value; 2,000,000 shares
authorized, no shares issued or outstanding....... -- --
Common stock, no par value; 30,000,000 shares
authorized, 18,053,167 shares issued and
outstanding (actual and pro forma); shares
issued and outstanding (pro forma as adjusted).... 113 113
Additional paid-in capital........................... 48 48
Retained earnings.................................... 52,479 16,553
Accumulated other comprehensive income............... 2,186 2,186
------- ------- -------
Total stockholders' equity........................ 54,826 18,900
------- ------- -------
Total capitalization......................... $68,612 $32,686 $
======= ======= =======
</TABLE>
The common stock to be outstanding after this offering is based on shares
outstanding as of December 31, 1998 and excludes 2,132,575 shares of common
stock issuable upon the exercise of options outstanding as of such date at a
weighted average exercise price of $5.19 per share. See Note 8 of Notes to
Consolidated Financial Statements.
15
<PAGE> 19
DILUTION
As of December 31, 1998, MKS had a net tangible book value of $54,826,000,
or $3.04 per share of common stock. Without taking into account any changes in
such net tangible book value subsequent to December 31, 1998, other than to give
effect to the sale by MKS of shares of common stock offered hereby at
an assumed initial public offering price of $ per share (after
deducting the estimated underwriting discount and offering expenses) and the
application of the estimated net proceeds therefrom, including the distribution
of an estimated $35.9 million of cumulative undistributed S corporation taxable
income for which stockholders have been or will be taxed, as of December 31,
1998, the pro forma net tangible book value of MKS as of December 31, 1998 would
have been $ , or $ per share. This represents an immediate
increase in net tangible book value to existing stockholders attributable to new
investors of $ per share and the immediate dilution of $ per
share to new investors. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $
Net tangible book value per share at December 31, 1998.... $
Decrease per share attributable to the S corporation
distribution...........................................
Increase per share attributable to new investors.......... $
Pro forma net tangible book value per share after this
offering..................................................
Dilution per share to new investors......................... $
=======
</TABLE>
The following table sets forth, on a pro forma basis as of December 31,
1998, the number of shares of common stock purchased from MKS, the total
consideration paid to MKS, and the average price paid per share by existing
stockholders and by the new investors purchasing shares of common stock in this
offering (before deducting the estimated underwriting discount and offering
expenses), at an assumed initial public offering price of $ per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders................ 18,053,167 % $161,000 % $0.009
New investors........................
---------- ----- -------- -----
Total...................... 100.0% 100.0%
========== ===== ======== =====
</TABLE>
As of December 31, 1998, there were options outstanding to purchase a total
of 2,132,575 shares of common stock, at a weighted average exercise price of
$5.19 per share and 2,401,793 additional shares reserved for future grants of
issuances under MKS's stock option and stock purchase plans. To the extent that
any of these options are exercised, there will be further dilution to new
investors.
16
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data as of December 31, 1997 and 1998 and
for the years ended December 31, 1996, 1997 and 1998 have been derived from
MKS's financial statements, included elsewhere in this prospectus, which have
been audited by PricewaterhouseCoopers LLP, independent accountants, as
indicated in their report. The selected financial data as of December 31, 1994,
1995 and 1996 and for the years ended December 31, 1994 and 1995 are derived
from financial statements, which were also audited by PricewaterhouseCoopers
LLP, not included herein. The data should be read in conjunction with the
Consolidated Financial Statements, including the Notes thereto, and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus.
MKS has been treated as an S corporation under the applicable provisions of
the Internal Revenue Code since July 1, 1987. As an S corporation, MKS has not
been subject to federal, and certain state, income taxes. The pro forma net
income set forth below reflects the provision for income taxes that would have
been recorded had MKS been a C corporation, assuming an effective tax rate of
38.0%. As a result of terminating its S corporation status upon the closing of
this offering, MKS will record a one-time non-cash credit to historical earnings
for additional deferred taxes. If this credit to earnings had occurred at
December 31, 1998, the amount would have been approximately $3.9 million. This
amount is expected to change through the closing of this offering and is
excluded from pro forma net income. See Notes 2 and 9 of Notes to Consolidated
Financial Statements. Pro forma balance sheet data reflects the liability for
the distribution of an estimated $35.9 million, calculated as of December 31,
1998, of cumulative undistributed S corporation taxable income for which
stockholders of record prior to the closing of this offering have been or will
be taxed. The actual amount to be distributed is expected to increase based upon
taxable earnings for the period January 1, 1999 through the closing of this
offering, subject to certain limitations. Pro forma net income per share
reflects the effect of an assumed issuance of sufficient shares to fund the
distribution, as of January 1, 1998. See "S Corporation and Termination of S
Corporation Status" and Note 2 of Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $106,829 $157,164 $170,862 $188,080 $139,763
Cost of sales....................... 59,813 87,703 102,008 107,606 83,784
-------- -------- -------- -------- --------
Gross profit........................ 47,016 69,461 68,854 80,474 55,979
Research and development............ 8,036 10,935 14,195 14,673 12,137
Selling, general and
administrative.................... 26,893 34,420 37,191 41,838 34,707
Restructuring....................... -- -- 1,400 -- --
-------- -------- -------- -------- --------
Income from operations.............. 12,087 24,106 16,068 23,963 9,135
Interest expense, net............... 1,284 1,448 2,286 1,861 1,187
Other income (expense), net......... -- -- (479) 166 187
-------- -------- -------- -------- --------
Income before income taxes.......... 10,803 22,658 13,303 22,268 8,135
Provision for income taxes.......... 800 1,000 800 1,978 949
-------- -------- -------- -------- --------
Net income.......................... $ 10,003 $ 21,658 $ 12,503 $ 20,290 $ 7,186
======== ======== ======== ======== ========
</TABLE>
17
<PAGE> 21
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------
1998
----------------------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C>
PRO FORMA STATEMENT OF INCOME DATA (UNAUDITED):
Historical income before income taxes....................... $8,135
Pro forma provision for income taxes........................ 3,091
------
Pro forma net income........................................ $5,044
======
Pro forma net income per common share:
Basic................................................... $ 0.25
======
Diluted................................................. $ 0.24
======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, 1998
------------------------------------------ ---------------------
1994 1995 1996 1997 ACTUAL PRO FORMA
------- -------- ------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents.............. $ 4,059 $ 3,650 $ 3,815 $ 2,511 $ 11,188 $ 11,188
Working capital
(deficit)................ 25,078 32,202 22,404 30,321 31,493 (4,433)
Total assets............... 72,320 104,511 95,000 106,536 96,232 96,232
Short-term obligations..... 9,246 15,192 16,124 13,852 12,819 12,819
Long-term obligations, less
current portion.......... 14,948 20,462 18,899 15,624 13,786 13,786
Stockholders' equity....... 37,272 48,392 45,498 52,848 54,826 18,900
</TABLE>
18
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that involve
risks and uncertainties. MKS's actual results could differ materially from those
discussed in the forward-looking statements as a result of certain factors
including those set forth under "Risk Factors" and elsewhere in this prospectus.
The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Consolidated Financial Statements
and Notes thereto appearing elsewhere in this prospectus.
OVERVIEW
MKS was founded in 1961. MKS develops, manufactures and supplies
instruments and components used to measure, control and analyze gases in
semiconductor manufacturing and similar industrial manufacturing processes.
During 1997 and 1998, MKS estimates that approximately 60% of its net sales were
to semiconductor capital equipment manufacturers and semiconductor device
manufacturers. MKS expects that sales to such customers will continue to account
for a substantial majority of its sales. MKS has more than 4,000 active
customers worldwide (all of which purchased products during 1998), including
semiconductor capital equipment manufacturers, semiconductor device
manufacturers, industrial manufacturing companies and university, government and
industrial research laboratories. In 1996, 1997, and 1998, sales to MKS's top
five customers accounted for approximately 26%, 32% and 24%, respectively, of
MKS's net sales. During 1998, Applied Materials, Inc. accounted for
approximately 16% of MKS's net sales. MKS typically enters into contracts with
its semiconductor equipment manufacturer customers that provide for quantity
discounts. MKS recognizes revenues, and accrues for anticipated returns and
warranty costs, upon shipment.
In the third quarter of 1996, as a result of the downturn in the
semiconductor industry, MKS recorded a restructuring charge of $1.4 million. The
charge was primarily related to a reduction of personnel and the closure of
certain facilities and included the cost of severance, lease commitments and the
write-off of leasehold improvements.
A significant portion of MKS's sales are to operations in international
markets. International sales by MKS's foreign subsidiaries were 27.3% and 32.4%
of net sales for 1997 and 1998, respectively. MKS does not classify export sales
made directly by MKS as international sales. Such sales have generally been less
than 10% of net sales. MKS currently uses, and plans to continue to use, forward
exchange contracts and local currency purchased options to reduce currency
exposure arising from foreign denominated sales associated with the intercompany
purchases of inventory. Gains and losses on derivative financial instruments
that qualify for hedge accounting are classified in cost of sales. Gains and
losses on derivative financial instruments that do not qualify for hedge
accounting are marked-to-market and recognized immediately in other income. See
Note 3 to Notes to Consolidated Financial Statements.
MKS has been treated as an S corporation for federal income tax purposes
since July 1, 1987. MKS's S corporation status will terminate upon the closing
of this offering, at which time MKS will become subject to federal, and certain
state, income taxation as a C corporation. The pro forma net income reflects a
pro forma effective tax rate of 38.0% to reflect federal and state income taxes
which would have been payable for 1998 had MKS been taxed as a C corporation.
See "S Corporation and Termination of S Corporation Status."
19
<PAGE> 23
Results of Operations
The following table sets forth for the periods indicated the percentage of
total net sales of certain line items included in MKS's consolidated statement
of income data:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Net sales................................................... 100.0% 100.0% 100.0%
Cost of sales............................................... 59.7 57.2 59.9
----- ----- -----
Gross profit................................................ 40.3 42.8 40.1
Research and development.................................... 8.3 7.8 8.7
Selling, general and administrative......................... 21.8 22.3 24.9
Restructuring............................................... 0.8 -- --
----- ----- -----
Income from operations...................................... 9.4 12.7 6.5
Interest expense, net....................................... 1.3 1.0 0.8
Other income (expense), net................................. (0.3) 0.1 0.1
----- ----- -----
Income before income taxes.................................. 7.8 11.8 5.8
Provision for income taxes.................................. 0.5 1.0 0.7
----- ----- -----
Net income.................................................. 7.3% 10.8% 5.1%
===== ===== =====
Pro forma data:
Historical income before income taxes..................... 5.8%
Pro forma provision for income taxes...................... 2.2
-----
Pro forma net income...................................... 3.6%
=====
</TABLE>
YEAR ENDED 1998 COMPARED TO 1997
Net Sales. Net sales decreased 25.7% to $139.8 million for 1998 from
$188.1 million for 1997. International net sales were approximately $45.3
million in 1998 (32.4% of net sales) and $51.4 million in 1997 (27.3% of net
sales). The decrease in net sales was primarily due to decreased sales volume of
MKS's existing products in the United States and in Asia caused by the 1998
downturn in the semiconductor capital equipment market.
Gross Profit. Gross profit as a percentage of net sales decreased to 40.1%
for 1998 from 42.8% in 1997. The change was primarily due to manufacturing
overhead costs being a higher percentage of net sales due to lower sales volume
in 1998.
Research and Development. Research and development expenses decreased
17.3% to $12.1 million (8.7% of net sales) for 1998 from $14.7 million (7.8% of
net sales) for 1997. The decrease was primarily due to reduced spending for
development materials required for certain projects that were completed during
1998.
Selling, General and Administrative. Selling, general and administrative
expenses decreased 17.0% to $34.7 million (24.9% of net sales) for 1998 from
$41.8 million (22.3% of net sales) for 1997. The decrease was due primarily to a
decrease of approximately $4.2 million in compensation expense along with
decreased selling related expenses.
Interest Expense, Net. Net interest expense decreased to $1.2 million for
1998 from $1.9 million for 1997 primarily due to lower debt outstanding during
1998.
Other Income (Expense), Net. Other income of $0.2 million in 1998
primarily represents foreign exchange translation gains on intercompany payables
of $1.0 million offset by $0.7 million for costs associated with MKS's planned
initial public offering in early 1998 which was postponed. Other income of
20
<PAGE> 24
$0.2 million in 1997 represents gains of $1.2 million from foreign exchange
contracts that did not qualify for hedge accounting, offset by a foreign
exchange translation loss on an intercompany payable.
Pro Forma Provision for Income Taxes. The pro forma provision for income
taxes for 1998 reflects the estimated tax expense MKS would have incurred had it
been subject to federal and state income taxes as a C corporation under the
Internal Revenue Code. The pro forma provision reflects a pro forma tax rate of
38.0%, which differs from the federal statutory rate due primarily to the
effects of state and foreign taxes and certain tax credits.
YEAR ENDED 1997 COMPARED TO 1996
Net Sales. Net sales increased 10.1% to $188.1 million for 1997 from
$170.9 million for 1996. International net sales were approximately $51.4
million in both 1997 (27.3% of net sales) and 1996 (30.1% of net sales). The
increase in net sales was primarily due to increased sales volume of MKS's
existing products in the United States.
Gross Profit. Gross profit as a percentage of net sales increased to 42.8%
for 1997 from 40.3% for 1996. The change was due primarily to the reduction in
fixed costs resulting from the restructuring effected in the third quarter of
1996 and the resulting increase in operational efficiencies.
Research and Development. Research and development expenses increased 3.4%
to $14.7 million (7.8% of net sales) for 1997 from $14.2 million (8.3% of net
sales) for 1996. The increase was primarily due to an increase in staffing
throughout 1997 for certain development projects.
Selling, General and Administrative. Selling, general and administrative
expenses increased 12.5% to $41.8 million (22.2% of net sales) for 1997 from
$37.2 million (21.8% of net sales) for 1996. The increase was due primarily to
increased compensation expense, including increased staffing levels.
Restructuring. In the third quarter of 1996, as a result of the downturn
in the semiconductor industry, MKS recorded a restructuring charge of $1.4
million. The charge included $0.4 million of severance pay, $0.7 million of
lease commitments, and $0.3 million for the write-off of leasehold improvements.
Interest Expense, Net. Net interest expense decreased to $1.9 million for
1997 from $2.3 million for 1996 primarily due to lower debt outstanding during
1997.
Other Income (Expense), Net. Other expense for 1996 and other income for
1997 reflect losses and gains of $0.5 million and $1.2 million, respectively,
from foreign exchange contracts that did not qualify for hedge accounting, and a
foreign exchange translation loss on an intercompany payable from MKS's Korean
subsidiary of $1.0 million related to the devaluation of the Korean won in the
fourth quarter of 1997.
21
<PAGE> 25
Selected Quarterly Operating Results
The following tables present unaudited consolidated financial information
for the eight quarters ended December 31, 1998. In the opinion of management,
this information has been presented on the same basis as the audited
Consolidated Financial Statements appearing elsewhere in this Prospectus and all
adjustments (consisting only of normal recurring adjustments) which management
considers necessary for a fair presentation of the results of such periods have
been included in the amounts stated below to present fairly the unaudited
quarterly results when read in conjunction with MKS's Consolidated Financial
Statements and Notes thereto. The results for any quarter are not necessarily
indicative of future quarterly results of operations.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1997 1997 1998 1998 1998 1998
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................ $40,520 $45,749 $48,360 $53,451 $46,163 $34,026 $28,834 $30,740
Cost of sales.................... 24,277 26,413 27,766 29,150 26,757 20,265 18,140 18,622
------- ------- ------- ------- ------- ------- ------- -------
Gross profit..................... 16,243 19,336 20,594 24,301 19,406 13,761 10,694 12,118
Research and development......... 2,994 3,563 3,779 4,337 3,794 3,107 2,568 2,668
Selling, general and
administrative................. 9,612 10,321 10,816 11,089 10,112 9,045 7,808 7,742
------- ------- ------- ------- ------- ------- ------- -------
Income from operations........... 3,637 5,452 5,999 8,875 5,500 1,609 318 1,708
Interest expense, net............ 494 527 445 395 375 337 234 241
Other income (expense), net...... 275 (447) 632 (294) (281) 123 77 268
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes....... 3,418 4,478 6,186 8,186 4,844 1,395 161 1,735
Provision for income taxes....... 289 378 523 788 565 163 19 202
------- ------- ------- ------- ------- ------- ------- -------
Net income....................... $ 3,129 $ 4,100 $ 5,663 $ 7,398 $ 4,279 $ 1,232 $ 142 $ 1,533
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1997 1997 1997 1997 1998 1998 1998 1998
--------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF NET SALES:
Net sales........................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................... 59.9 57.7 57.4 54.5 58.0 59.6 62.9 60.6
------- ------- ------- ------- ------- ------- ------- -------
Gross profit..................... 40.1 42.3 42.6 45.5 42.0 40.4 37.1 39.4
Research and development......... 7.4 7.8 7.8 8.1 8.2 9.1 8.9 8.6
Selling, general and
administrative................. 23.7 22.6 22.4 20.8 21.9 26.6 27.1 25.2
------- ------- ------- ------- ------- ------- ------- -------
Income from operations........... 9.0 11.9 12.4 16.6 11.9 4.7 1.1 5.6
Interest expense, net............ 1.2 1.1 0.9 0.7 0.8 1.0 0.8 0.8
Other income (expense), net...... 0.6 (1.0) 1.3 (0.6) (0.6) 0.4 0.3 0.8
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes....... 8.4 9.8 12.8 15.3 10.5 4.1 0.6 5.6
Provision for income taxes....... 0.7 0.8 1.1 1.5 1.2 0.5 0.1 0.6
------- ------- ------- ------- ------- ------- ------- -------
Net income....................... 7.7% 9.0% 11.7% 13.8% 9.3% 3.6% 0.5% 5.0%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
MKS's quarterly operating results have varied significantly and are likely
to continue to vary significantly due to a number of factors including specific
economic conditions in the industries in which MKS's customers operate,
particularly the semiconductor industry; the timing of the receipt of orders
from major customers; customer cancellations or shipment delays; price
competition; disruption in sources of supply; seasonal variations of capital
spending by customers; production capacity constraints; specific features
requested by customers; exchange rate fluctuations; the introduction or
announcement of new products by MKS or its competitors; and other factors, many
of which are beyond MKS's control.
MKS's net sales have fluctuated over the past eight quarters primarily due
to the decline in the semiconductor capital equipment market and the
semiconductor device market in 1998 that adversely affected sales of MKS's
products in each of the quarters of 1998. See "Risk Factors -- Our quarterly
results are likely to fluctuate." MKS expects that the decline in worldwide
semiconductor capital equipment orders in the second half of 1998 and the
instability of the Asian markets will continue to adversely affect sales of
semiconductor capital equipment manufacturers for at least the first and second
quarters of 1999. As a result, MKS currently expects that its net sales and net
income for each of the first
22
<PAGE> 26
and second quarters of 1999 will be less than net sales and net income for the
first and second quarters of 1998.
Gross profit as a percentage of net sales increased in each quarter of 1997
primarily as a result of fuller utilization of existing manufacturing capacity
as a result of increased net sales. Gross profit as a percentage of net sales
decreased in each of the first three quarters of 1998 as a result of
manufacturing overhead costs becoming a higher percentage of net sales due to
lower sales volume.
The increase in research and development expenses for the second, third and
fourth quarters of 1997 was primarily due to increased staffing levels. The
decrease in research and development expenses for the first, second, and third
quarters of 1998 was primarily due to reduced spending for development materials
required for certain projects that were completed during 1998.
Selling, general and administrative expenses increased in the second, third
and fourth quarters of 1997 primarily due to increased compensation expense and
the write-off of certain abandoned assets. The decrease in selling, general and
administrative expenses in the first, second, and third quarters of 1998 was
primarily due to a decrease in compensation expense along with other selling
related expenses.
Other income primarily represents gains and losses on foreign exchange
contracts and a foreign exchange translation loss on an intercompany payable
from MKS's Korean subsidiary of $1.0 million in the fourth quarter of 1997
related to the devaluation of the Korean won. Other expenses in the first
quarter of 1998 include $0.7 million for costs associated with MKS's planned
initial public offering in early 1998 which was postponed.
LIQUIDITY AND CAPITAL RESOURCES
MKS has financed its operations and capital requirements through a
combination of cash provided by operations, long-term real estate financing,
capital lease financing and short-term lines of credit.
Operations provided cash of $26.3 million, $16.8 million and $23.0 million
for 1996, 1997 and 1998, respectively, primarily impacted in each period by net
income, depreciation and changes in the levels of inventory and accounts
receivable. Investing activities utilized cash of $10.2 million, $3.3 million
and $2.1 million in 1996, 1997 and 1998, respectively, primarily for the
purchase of property and equipment in each period. Financing activities utilized
cash of $15.6 million, $16.2 million and $11.8 million in 1996, 1997 and 1998,
respectively, primarily for stockholder distributions in each period. Cash flows
from financing activities for each period were primarily from short-term and
long-term borrowings.
Working capital was $31.5 million as of December 31, 1998. MKS has a
combined $30.0 million line of credit with two banks, expiring December 31,
1999, all of which is available. MKS also has lines of credit through its
foreign subsidiaries with several financial institutions totaling $15.0 million
at December 31, 1998. The total unused balance under these lines of credit was
$5.3 million at December 31, 1998. These lines generally expire and are renewed
at six month intervals. In addition, MKS has outstanding term loans and mortgage
loans from banks totaling $12.0 million (net of the current portion) at December
31, 1998. See Notes 6 and 13 of Notes to Consolidated Financial Statements.
In 1997 and 1998, MKS distributed $12.4 million and $6.2 million,
respectively, of undistributed S corporation earnings to its stockholders. As
soon as practicable following the closing of this offering, MKS intends to make
a distribution to the holders of record on the day prior to the closing of this
offering in an amount equivalent to the accumulated adjustments account. The
accumulated adjustments account is cumulatively equal to financial reporting
income, adjusted for differences between the methods of accounting used for
financial accounting and for federal income tax purposes from July 1, 1987
through the date of termination of MKS's S corporation status, that has not been
previously distributed. Investors purchasing shares in this offering will not
receive any portion of the distribution. As of December 31, 1998, the
outstanding balance of the accumulated adjustments account was estimated to be
approximately $35.9 million, and such balance is estimated to increase in the
period from January 1, 1999 through the closing of this offering to
approximately $ million.
23
<PAGE> 27
MKS believes that the net proceeds from this offering, together with the
cash anticipated to be generated from operations and funds available from
existing credit facilities, will be sufficient to satisfy its estimated working
capital and planned capital expenditure requirements through at least the next
12 months.
Effect of Currency Exchange Rates and Exchange Rate Risk Management.
A significant portion of MKS's business is conducted outside of the United
States through its foreign subsidiaries. The foreign subsidiaries maintain their
accounting records in their local currencies. Consequently, period to period
comparability of results of operations is affected by fluctuations in exchange
rates. MKS derives a significant portion of its cash flows from foreign
denominated revenue. To the extent the dollar value of foreign denominated
revenue is diminished as a result of a strengthening dollar, MKS's results of
operations and cash flows could be adversely affected. To reduce the risks
associated with foreign currency rate fluctuations, MKS has entered into forward
exchange contracts and local currency purchased options on a continuing basis in
amounts and timing consistent with the underlying currency exposures. Gains on
forward exchange contracts and local currency purchased options, qualifying for
hedge accounting, amounted to $2.5 million, $1.2 million and $0.3 million for
the years ended December 31, 1996, 1997 and 1998, respectively, and are
classified in cost of sales. Losses of $0.5 million, gains of $1.2 million and
losses of $0.2 million on forward exchange contracts that did not qualify for
hedge accounting were recognized in earnings for 1996, 1997 and 1998,
respectively, and are classified in other income (expense), net. These amounts
are net of a foreign exchange translation loss of $1.0 million and a gain of
$1.0 million on intercompany payables from its subsidiaries in 1997 and 1998
respectively. Foreign exchange translation gains and losses from unhedged
intercompany balances were not material in 1996. While MKS does not issue or
hold derivative financial instruments for trading purposes, there can be no
assurance that any losses realized on such instruments will be fully offset by
gains on the underlying exposure. Prospectively, MKS plans to continue to use
forward exchange contracts and local currency purchased options to seek to
mitigate the impact of exchange rate fluctuations. See Notes 2 and 3 of Notes to
Consolidated Financial Statements.
Market Risk and Sensitivity Analysis on Exchange Rate Risk Management
The potential fair value loss for a hypothetical 10% adverse change in
forward currency exchange rates on MKS's forward exchange contracts at December
31, 1998 would be $949,000. The potential loss was estimated by calculating the
fair value of the forward exchange contracts at December 31, 1998 and comparing
that with those calculated using the hypothetical forward currency exchange
rates.
The value of the local currency purchased options at December 31, 1998 was
immaterial. Any loss related to the local currency purchased options is limited
to the unamortized premium of $155,000 at December 31, 1998.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
See Note 2 of Notes to Consolidated Financial Statements for a discussion
of the impact of recently issued accounting pronouncements.
YEAR 2000 COMPLIANCE
The Year 2000 problem stems from the fact that many currently installed
computer systems include software and hardware products that are unable to
distinguish 21st century dates from those in the 20th century. As a result,
computer software and/or hardware used by many companies and governmental
agencies may need to be upgraded to comply with Year 2000 requirements or risk
system failure or miscalculations causing disruptions to normal business
activities.
24
<PAGE> 28
State of Readiness
MKS designed and began implementation of a multi-phase Year 2000 project
which consists of: (i) assessment of the corporate systems and operations that
could be affected by the Year 2000 problem, (ii) remediation of non-compliant
systems and components, and (iii) testing of systems and components following
remediation. MKS, under the guidance of its Information Technology Steering
Committee, has focused its Year 2000 review on four areas: (a) internal computer
software and hardware, (b) product compliance, (c) facilities and manufacturing
equipment and (d) third-party compliance.
Internal Computer Software and Hardware. MKS uses information technology
for its internal infrastructure, which consists of its main enterprise systems
(the systems used, in part, for purchase orders, invoicing, shipping and
accounting), individual workstations, including personal computers, and its
network systems.
Because MKS's business and manufacturing systems, such as its main
enterprise systems, are essential to its business, financial condition and
results of operations, MKS began its assessment of these systems prior to its
other non-critical information technology systems. MKS began its assessment in
the fall of 1997, and in November 1997, MKS developed a remediation plan for all
identified noncompliant business and manufacturing systems. This remediation
plan was implemented in January 1998. By July 1998, MKS had installed new
systems or upgraded existing systems. Based upon post-implementation testing and
review, management believes that all business and manufacturing systems within
its manufacturing operations are Year 2000 compliant.
One of MKS's international subsidiaries is currently undergoing conversion
of its business systems in order to become Year 2000 compliant. Management
believes that these systems will be operational by June 1999. This phase of the
Year 2000 project is currently on schedule.
MKS's personal computer based systems were assessed in early 1998. MKS
believes that all non-compliant hardware and software was identified by March
1998, at which time it made a list prioritizing databases to be remedied.
Critical databases were identified and were scheduled for remediation prior to
other databases. Remediation plans to convert the databases were initiated in
November 1998. MKS anticipates that it will complete its critical and
non-critical conversions by June 1999. This phase of the Year 2000 project is
currently on schedule.
Product Compliance. Throughout 1998, MKS assessed and addressed the Year
2000 compliance of its products. This assessment resulted in the identification
of MKS's products that were compliant and non-compliant. The substantial
majority of MKS's products were deemed to be compliant.
The date related functions of all non-compliant products, other than
certain residual gas analysis products, are believed by MKS to be non-critical
in that such noncompliance would not affect the independent performance of the
product; would not cause the MKS product to cease operating on any particular
date; and independently would not pose a safety risk. MKS believes that Year
2000 problems associated with non-compliant residual gas analysis products will
also be non-critical. However, these products contain components of other
manufacturers and cannot be tested and therefore it is possible that such
products could cause unanticipated performance problems. The non-compliant
features of our other products primarily relate to non-essential functions such
as date displays. MKS made available to its customers a list which describes
Year 2000 readiness of its products. This phase of the Year 2000 project is
currently on schedule.
Facilities and Manufacturing Equipment. Some aspects of MKS's facilities
and manufacturing equipment may include embedded technology, such as
microcontrollers. The Year 2000 problem could cause a system failure or
miscalculation in such facilities or manufacturing equipment which could disrupt
MKS's operations. Affected areas include security systems, elevator controls,
voice mail and phone systems, clean room environmental controls, numerically
controlled production machinery and computer based production equipment. MKS
organized a team of experienced managers in November 1998 to assess the
potential problems in these areas. An assessment of all facilities and
manufacturing equipment was conducted through December 1998, and a remediation
plan was developed in January 1999. MKS
25
<PAGE> 29
anticipates completion of all corrective actions by June 1999 with testing and
review of corrected items to occur in the summer of 1999. This phase of the Year
2000 project is currently on schedule.
Third-Party Compliance. MKS has relationships with third-parties including
customers and vendors and suppliers of goods, services and computer interfaces.
The failure of such persons to implement and execute Year 2000 compliance
measures in a timely manner, if at all, could, among other things: (i) adversely
affect MKS's ability to obtain components in a timely manner; (ii) cause a
reduction in the quality of components obtained by MKS; (iii) cause a reduction,
delay or cancellation of customer orders received by MKS or a delay in payments
by its customers for products shipped; and/or (iv) result in the loss of
services that would be necessary for MKS to operate in the normal course of
business. MKS assessed which of these third-party goods, services and interfaces
were critical to its operations and developed and mailed a standard survey to
each third-party deemed critical in January 1998. By March 1998, MKS had
reviewed most responses received. To date, the responses received indicate that
the third-parties are either in the process of developing remediation plans, or
are compliant. MKS anticipates further assessment to continue through March 1999
and plans to conduct reviews at that time. A remediation plan is expected to be
in place by June 1999 with all critical third-parties achieving satisfactory
compliance by August 1999. This phase of the Year 2000 project is currently on
schedule.
Costs
MKS's costs to date associated with assessment, remediation and testing
activities concerning the Year 2000 problem have been approximately $1,500,000.
MKS estimates that an additional $1,000,000, the major portion of which will be
capitalized and expensed over the life of the assets, will be required to
complete the replacement or modification of its facilities, manufacturing
equipment, computer software and products and to address the noncompliance of
key third-parties. MKS has funded and will continue to fund these activities
principally through cash provided by operations and existing leasing lines of
credit. It is not possible for MKS to completely estimate the costs incurred in
its remediation effort as many of its employees have focused and will continue
to focus significant efforts in evaluating MKS's Year 2000 state of readiness
and in remediating problems that have arisen, and will continue to arise, from
such evaluation.
Contingency Plan
To date, MKS has not formulated contingency plans related to the failure of
its or a third-party's Year 2000 remediation efforts. Contingency plans for the
failure to implement compliance procedures have not been completed because it is
the intent of MKS to complete all required modifications and to test
modifications thoroughly prior to December 31, 1999. However, as discussed
above, MKS is engaged in ongoing assessment, remediation and testing activities
and the internal results as well as the responses received from third-parties
will be taken into account in determining the nature and extent of any
contingency plans if necessary.
26
<PAGE> 30
BUSINESS
MKS is a leading worldwide developer, manufacturer and supplier of
instruments and components used to measure, control and analyze gases in
semiconductor manufacturing and similar industrial manufacturing processes. MKS
offers a comprehensive line of products which are used to manufacture, among
other things:
- - semiconductors
- - flat panel displays
- - magnetic and optical storage devices and media, including:
-- compact disks
-- hard disk storage devices
-- magnetic devices for reading disk data
-- digital video disks
-- optical storage disks (laser readable disks)
- - solar cells which convert light into electrical current
- - fiber optic cables for telecommunications
- - optical coatings (such as eyeglass coatings)
- - coatings for architectural glass
- - hard coatings to minimize wear on cutting tools
- - diamond thin films
Our products include:
- - instruments used to measure, control and analyze:
-- gas pressure
-- gas flow
-- gas composition
- - vacuum technology products:
-- vacuum gauges
-- vacuum valves and components
For over 25 years, MKS has focused on satisfying the needs of semiconductor
capital equipment manufacturers and semiconductor device manufacturers and has
established long-term relationships with many of its customers. MKS has over
4,000 active customers worldwide (all of which purchased products during 1998)
including:
- semiconductor capital equipment manufacturers
- semiconductor device manufacturers
- industrial manufacturing companies
- university, government and industrial research laboratories
MKS's customers include Applied Materials, Inc., Lam Research Corporation,
Tokyo Electron, Ltd., Air Products and Chemicals, Inc. and Motorola Inc. MKS
sells its products primarily through its sales force which consists of 118
employees in 22 offices in France, Germany, Japan, Korea, The Netherlands,
Singapore, Taiwan, the United Kingdom and the United States.
INDUSTRY BACKGROUND
In the past 40 years, significant advances in materials science and
processing technologies have made possible the manufacture of products ranging
from highly complex microprocessor chips to simple but effective airtight
coatings for food packaging. In many materials processing applications, specific
gas mixtures at precisely controlled pressures are used:
- to create and maintain the required process atmosphere
- as a source of materials to be deposited on a substrate (for example, a
silicon wafer)
- to remove (or etch) materials from a substrate to form a circuit pattern
The largest commercial application employing materials science and
processing technologies is the manufacture of semiconductors. Worldwide
semiconductor sales have increased as the use of semiconduc-
27
<PAGE> 31
tors has expanded beyond personal computers and computer systems to a wide array
of additional applications such as telecommunications and data communications
systems, automotive products, consumer goods, medical products and household
appliances. In large part, this growth has been facilitated by the ability of
semiconductor device manufacturers to produce increasingly fast, more complex,
higher performance semiconductors while steadily reducing cost per function,
power consumption requirements and size of these products to meet end-user and
system designer requirements. These improvements in the ratio of price to
performance have been enabled by advancements in semiconductor processing
technologies, which have facilitated the ability to reduce circuit pattern sizes
and subsequently increase the number of individual semiconductor circuits on a
silicon wafer. These trends have driven the need for increasingly complex and
sophisticated semiconductor device manufacturing processes, process equipment
and process controls.
Semiconductor Manufacturing Process
The beginning of the semiconductor manufacturing process, or front-end
wafer processing, requires hundreds of process steps involving the controlled
application of materials on silicon wafers to form circuit patterns. These
process steps take place within a process chamber, which provides a controlled
environment for the fabrication of semiconductor devices. Most of the key
front-end processes used in the production of semiconductors require precise
automatic control of gas pressure, flow and composition in the process chamber.
To ensure the integrity and performance of the manufacturing process,
semiconductor device manufacturers require sophisticated instruments that can
provide precise automated control of all major process variables within the
process chamber. The process steps required to produce circuit patterns involve
the control of multiple gases flowing into the process chamber at specified
intervals, and at controlled pressure and vacuum levels. In a typical process
step, the process chamber is evacuated to a base pressure established by a
vacuum pumping system and measured with vacuum gauges. Automatic shut-off valves
are sequenced to protect pumps and process instruments from exposure to
atmospheric pressure. Chamber leak integrity may be checked by gas analyzers
scanning for the presence of undesirable atmospheric gases or water vapor. Mass
flow controllers automatically control the flow rates of multiple gases into the
process chamber. Simultaneously, the automatic pressure control system for the
process chamber measures the pressure in the chamber and controls it at the
desired level by electronically adjusting the position of a control valve
located between the process chamber and the vacuum pump. Downstream of the
process chamber, heated lines, particle traps, and vacuum valves and switches
are used to prevent contamination of the process chamber as a result of the
backstream of particles and exhaust gases back into the process chamber. This
improves circuit quality, reduces maintenance and prolongs vacuum pump life.
The front-end process steps which involve gases include deposition, etch,
strip, clean, ion implantation, rapid thermal processing and diffusion.
Deposition involves the formation of several layers of conducting,
semiconducting and insulating thin films on the surface of a wafer or substrate.
The two principal methods of film deposition are physical vapor deposition,
which is used primarily to deposit conductive metal layers, and chemical vapor
deposition, which is used primarily to deposit semiconducting and insulating
thin films. In the physical vapor deposition process, wafers are typically
placed in a process chamber where solid sources of film materials mounted in the
chamber are vaporized onto the wafer surface at precisely controlled pressures
and temperatures. In the chemical vapor deposition process, a specially designed
gas or vaporized liquid material is introduced into a pressure and temperature
controlled process chamber containing the wafers. The gases interact with the
wafer surface to form a semiconducting or insulating layer. The pressure in the
process chamber during the deposition process and the mixture of deposition
gases must be precisely controlled to achieve uniform film thickness and
composition.
The etching process creates the line-widths and other feature sizes which
form the circuit patterns of integrated circuits. To produce specified
line-widths, manufacturers typically employ plasma etching
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techniques, which use gases that chemically react with unprotected portions of
the wafer to create the thinly etched features that form the circuit patterns.
The pressure in the etch chamber and the mixture of etchant gases must be
precisely controlled to achieve the specified side wall angle and ratio of
line-widths to depths. Stripping and cleaning are etching processes used to
prepare the wafer surface for further processing steps.
In the ion implantation process, positively charged atoms (or ions) of
certain materials are formed in minuscule quantities from gases introduced into
a chamber on the implantation tool. The ions are generated in the chamber and
are accelerated into the silicon wafer. The energy of acceleration implants the
ion beneath the surface of the silicon, altering electrical characteristics of
the silicon. The flow rates of the gases into the ion chamber and the pressure
in the ion chamber must be precisely controlled to create and maintain the ion
density required to achieve desired electrical characteristics.
Rapid thermal processing and diffusion typically involve raising the
semiconductor wafer to elevated temperatures in order to modify the properties
of a material or electronic circuit. These processes are often performed in a
precisely controlled process gas or vacuum environment.
The pressures used in semiconductor manufacturing processes range from as
low as one trillionth of atmospheric pressure to as high as two hundred times
atmospheric pressure. The following table shows the wide range of pressures
required for typical semiconductor manufacturing processes:
[PRESSURE RANGES OF TYPICAL SEMICONDUCTOR MANUFACTURING PROCESSES CHART]
[This table graphically depicts, using graybars, the gas pressure ranges, from
one trillionth of atmospheric pressure (10(-9) Torr) to two hundred times
atmospheric pressure (152,000 Torr), used in various typical semiconductor
manufacturing process steps, (Gas Distribution, Atmospheric Chemical Vapor
Deposition, Sub-atmospheric Chemical Vapor Deposition, Low Pressure Chemical
Vapor Deposition, Plasma Etching and Cleaning, Physical Vapor Deposition and Ion
Implantation).]
Etching and deposition steps are repeated many times in the fabrication of
a semiconductor circuit and require varying flow rates, pressures and gases. A
typical process step uses from three to five different gases. The amount of time
that the semiconductor processing tool is available for processing (or uptime),
the ratio of acceptable circuits to total circuits processed (or yield), and the
number of wafers that can be processed per hour (or throughput), depend in major
part upon:
- precise repeatable measurement and control of the specific gas pressure,
flow rates and composition
- the maintenance of the vacuum integrity of the process chamber
- the prevention of wafer contamination from particles entering the chamber
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<PAGE> 33
Pressure variations of as little as one one-hundred-thousandth of
atmospheric pressure can change process yields significantly and errors in gas
flow rates and composition may impair circuit performance. Atmospheric
contamination and particle contamination can produce defects that significantly
reduce wafer yields and the time required to remove contaminates reduces uptime
and throughput. The speed of response and precision of the automatic control
systems directly affects uptime, throughput of wafers and process yields.
Other Similar Industrial Manufacturing Processes
Many of the same processes of deposition, etch, strip, clean, ion
implantation, rapid thermal processing and diffusion used to manufacture
semiconductors are also used to manufacture: flat panel displays; magnetic and
optical storage devices and media; solar cells; fiber optic cables for
telecommunications; optical coatings; coatings for architectural glass; hard
coatings to minimize wear on cutting tools; and diamond thin films.
Trends in Semiconductor Manufacturing
The ability of semiconductor device manufacturers to offer integrated
circuits with smaller geometries and greater functionality at higher speeds
requires continuous improvements in semiconductor process equipment and process
controls. The transition to smaller circuit patterns, such as 0.18 micron and
smaller line-widths, requires more process steps. It is also leading to the
introduction of new materials such as copper for conductors and a whole new
class of organic and inorganic materials for insulators (dielectrics). These in
turn require new technologies for delivery of gases and vapors to the process
chamber. In addition, the introduction of advanced processes such as high
density plasma is leading to a need for lower pressures, which are more
difficult to measure and control than higher pressures. These trends, along with
increased wafer sizes, which result in higher circuit value per wafer, are
leading to the need for increased sophistication of semiconductor processing
equipment, a heightened emphasis on uptime, yield and throughput and the need
for more precise process controls. As a result, the design and performance of
instruments that control pressure or the flow of gases, or analyze the
composition of gases, are becoming even more critical to the semiconductor
manufacturing process.
To address the increasing complexity of semiconductor devices,
semiconductor device manufacturers typically develop processes to create
particular device features using specific manufacturing equipment. The process
for each feature is then documented and may be subsequently replicated for use
in multiple fabrication facilities around the world. The precision,
repeatability and reliability of the measurement and control instrumentation
used for each process is critical to providing uptime, high yield and throughput
on manufacturing equipment at all facilities employing such processes.
Semiconductor device manufacturers are placing increasing importance on uptime,
yield, throughput and process consistency throughout their facilities to
minimize:
- capital equipment expenditures
- facility construction costs
- overall ongoing operating costs
The increasing sophistication of semiconductor devices requires an increase
in the number of components and subsystems used in the design of semiconductor
manufacturing process tools. To reduce manufacturing complexity, improve quality
and reliability and ensure long-term service and support, semiconductor capital
equipment manufacturers and semiconductor device manufacturers are increasingly
seeking to establish relationships with a smaller group of broad-based suppliers
that meet their needs on a worldwide basis and provide:
- advanced technological capabilities to address the increasing
complexities of the semiconductor manufacturing process
- instrument and component designs that ensure repeatable processes around
the world
- value-added, integrated instruments and components
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- a worldwide sales, service and support infrastructure
MKS SOLUTION AND STRATEGY
MKS's objective is to be the leading worldwide supplier of instruments and
components used to measure, control and analyze gases in semiconductor and other
advanced thin-film materials processing applications and to help semiconductor
device manufacturers achieve improvements in their return on invested capital.
The principal elements of MKS's solution and strategy to achieve this objective
are set forth below:
Technology Leadership. MKS's products incorporate leading-edge
technologies to control and monitor increasingly complex gas-related
semiconductor manufacturing processes, thereby enhancing uptime, yield and
throughput which can improve the investment return on capital equipment and
facilities. The instruments and components in MKS's product offering provides
the required capabilities through:
- high precision operation over the extreme and variable pressure ranges
required for semiconductor processes
- precise, consistent and repeatable measurement and control performance
that allows processes to be replicated in manufacturing facilities around
the world
- advanced control technologies which enhance uptime, yield and throughput
- multiple, diverse and alternative technologies for controlling the flow
rate and composition of gases and vapors needed for new classes of
advanced materials for next generation semiconductor devices
- innovative vacuum technology subsystems that reduce atmospheric and
particle contamination, thereby enhancing uptime, yield and throughput
MKS has 47 U.S. patents and 10 pending U.S. patent applications. MKS's
products have continuously advanced as its customers' needs have evolved. MKS
seeks to extend its technological leadership by applying its expertise in
vacuum, pressure, flow and gas composition measurement control and analysis
technologies to develop advanced products that meet the critical gas-related
process requirements of semiconductor and advanced thin-film materials
manufacturers. MKS has introduced technological innovations including
corrosion-resistant pressure and vacuum sensors, automatic pressure and vacuum
control systems, and compact single unit gas composition analyzers to replace
bulky multi-component systems. MKS has developed, and continues to develop, new
products to address emerging industry trends such as the transition from the use
of 200mm wafers to 300mm wafers and the shrinking of integrated circuit
line-widths from 0.25 micron to 0.18 micron and smaller. MKS has supplied pre-
production equipment to be incorporated into semiconductor capital equipment
manufacturers' 300mm pre-production semiconductor wafer process equipment, which
is expected to be included in pilot production lines of device manufacturers.
MKS has also developed equipment that is being used by research laboratories for
semiconductor devices using less than 0.18 micron line-widths. In addition, MKS
has developed, and continues to develop, materials delivery systems for new
classes of materials, such as copper for conductors, titanium nitride for
barriers and a class of organic and inorganic dielectric materials that are
beginning to be used in small geometry manufacturing. MKS also has been a leader
in making its products compatible with emerging digital network standards, such
as DeviceNet, for enabling components used in semiconductor manufacturing
processes to transmit self-diagnostic and other information on a digital host
network while reducing system complexity and space requirements. MKS aligns its
research and development program to the Semiconductor Industry Association
Technology Roadmap (which identifies technological developments, as well as
obstacles, required to produce future generations of semiconductor devices), to
ensure that MKS maintains its leading-edge position and, through its association
with leading universities to anticipate future semiconductor production needs
three to seven years in advance.
Comprehensive Product Offering. MKS currently offers, and intends to
continue to offer, the widest range of pressure and vacuum measurement and
control products serving the semiconductor manufacturing
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and similar industrial manufacturing industries. MKS offers a full line of
products including a wide range of gas pressure, flow and composition analysis
measurement and control instruments and vacuum gauges, valves and components.
Since the development of its original Baratron laboratory-based instrument in
1961, MKS has continuously enhanced and expanded its product offerings in
response to the evolving needs of its customers. For example, MKS recently
introduced the Micro Baratron instrument, a significantly smaller version of its
pressure measurement product, and a new low vapor pressure material delivery
system. MKS plans to introduce new products throughout 1999, including a line of
mass flow calibrators and process monitoring hardware and software for residual
gas analysis. MKS plans to continue to expand its product lines through both
internal development and acquisitions of complementary businesses, products and
technologies. MKS's comprehensive product offering enables MKS to meet a broad
range of customer needs and provide a single source of solutions for
semiconductor device and semiconductor capital equipment manufacturers as they
seek to consolidate their supplier relationships to a smaller select group.
MKS's products are designed to meet the increasingly complex needs of its
customers. With the increasing sophistication of semiconductor capital equipment
leading to an increasing number of components and subsystems in semiconductor
manufacturing process tools, MKS delivers products that reduce equipment size
and improve process performance. MKS's subsystem products combine several
components into single integrated solutions. MKS's integrated solutions deliver
higher performance at a lower cost than similar subsystems built from discrete
components. Additionally, MKS's integrated solutions are easier to install and
configure, further reducing the overall cost to the customer.
Close Working Relationships with Customers. MKS has focused on satisfying
the needs of semiconductor device manufacturers and semiconductor capital
equipment manufacturers for over 25 years and has established long-term
relationships with many of its customers. MKS works with its customers at the
pre-design and design stage to identify and respond to their requests for
current and future generations of products. These close working relationships
allow MKS to understand and address the cost and performance expectations of its
customers. MKS plans to enhance its relationships with its major customers and
identify opportunities to develop similar relationships with additional
semiconductor capital equipment manufacturers and semiconductor device
manufacturers.
Applications in Related Markets. MKS is leveraging its accumulated
expertise in the semiconductor industry by developing products for applications
that employ production processes similar to semiconductor fabrication processes
in their reliance upon gases and vacuum-based production technologies.
Applications served by MKS outside the semiconductor industry include vacuum
freeze-drying of pharmaceuticals and foods, sterilization of medical appliances,
and applications that involve advanced thin-film manufacturing such as flat
panel displays, magnetic and optical storage media, solar cells, fiber optic
cables and optical coatings. MKS plans to continue to identify and develop
products that address advanced materials processing applications where gas
management plays a critical role.
Global Infrastructure and World Class Manufacturing Capabilities. As
semiconductor device manufacturers have become increasingly global, they have
required that suppliers offer comprehensive local repair service and close
customer support. Manufacturers require close support to enable them to
calibrate, repair, modify, upgrade and retrofit their equipment to improve
process consistency, uptime, yield and throughput. To meet these market
requirements, MKS maintains a global sales and support organization with 22
offices worldwide. MKS currently manufactures its products at nine facilities in
the United States and abroad. MKS continues to devote significant resources to
expand and maintain its worldwide production and service capabilities to meet
the global demand for gas measurement, control and analysis instruments and
vacuum technology components. MKS opened a sales and support facility in
Singapore in 1998 and during the year ending December 31, 1999 plans to add
manufacturing capabilities to its Austin, Texas facility and further equip its
cleanroom facilities in Andover and Methuen, Massachusetts.
MKS believes that the ability to manufacture reliable instruments and
components in a cost-effective manner is critical to meet the demanding
just-in-time delivery requirements of semiconductor capital equipment
manufacturers and semiconductor device manufacturers. MKS's worldwide production
and
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manufacturing facilities provide MKS with the ability to manufacture reliable
gas measurement, control and analysis instruments and components in a timely and
cost-effective manner. With a total of approximately 250,000 square feet of
manufacturing capacity in five locations in the United States and four others in
Germany, Japan, the United Kingdom and Korea, MKS has implemented world class
practices in quality and delivery techniques. MKS's manufacturing facilities in
the United States, the United Kingdom and Germany are ISO 9001 certified.
PRODUCTS
MKS offers a full line of instruments and components that are used to
measure, control and analyze gases in semiconductor manufacturing and other
advanced thin-film manufacturing processes. MKS supplies products in two
principal areas:
- measurement and control instrumentation products for gas pressure, flow
and composition analysis
- vacuum gauges, valves and components
These products are covered by 47 U.S. patents and 10 pending U.S. patent
applications.
The following schematic shows where MKS products are used in a typical
semiconductor manufacturing process.
[CHART]
1. Ultraclean Mini-Baratron Pressure Transducer and Local Display Module
2. Automatic Pressure Controller/ Regulator
3. Thermal Mass Flow Controller or Pressure-Based Mass Flow Controller
4. Gas Box Rate-of-Rise In-Situ Calibrator
5. Control and Shut-Off Valves
6. Direct Liquid Injection -- Controller
7. Direct Liquid Injection -- Micropump
8. Direct Liquid Injection -- Vaporizer
9. RGA Mass Spectrometer with Software
10. Baratron Pressure Switch
11. In-Situ Diagnostics Access Valve
12. Baratron Pressure Transducer
13. Automatic Downstream Valve Controller
14. Vacuum Foreline Virtual Wall
15. In-Line Valve
16. Convection Pirani Gauge
17. Throttle Valve
18. Cold Cathode High Vacuum Gauge or Hot Cathode High Vacuum Gauge
19. In-Line Trap
20. Foreline/Exhaust Line Heaters
Measurement and Control Instrumentation Products
MKS designs and manufactures a wide range of gas pressure, flow and
composition analysis measurement and control instrumentation. Each product line
consists of products which are designed for a variety of pressure, flow and
composition ranges and accuracies.
Baratron Pressure Measurement Products. MKS's Baratron pressure
measurement products are high precision, pressure measurement instruments. MKS
has five Baratron product families that range from
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high accuracy digital output instruments to simple electronic switches. These
products are typically used to measure the pressure of the gases being
distributed upstream of the process chambers, to measure process chamber
pressures and to measure pressures between process chambers, vacuum pumps and
exhaust lines. Baratron instruments measure pressures at ranges from two hundred
times atmospheric pressure to one billionth of atmospheric pressure. MKS
believes it offers the widest range of gas pressure measurement instruments in
the semiconductor and advanced thin-film materials processing industries.
A key feature of Baratron instruments is the ability to measure pressure
independent of gas composition, which is critical for precise pressure control
of semiconductor processes that involve gas mixtures. In these processes, there
is a need to control both pressure and gas mixture, but the pressure measurement
instrument must measure only the pressure of the sum of the gases in the
chamber, independent of gas composition. The Baratron instruments enable users
to achieve a highly precise, accurate and repeatable measurement of gas
pressure. Pressure measurement, independent of gas composition, is also useful
in evacuation (removal of atmospheric gases) and backfilling (introduction of
specific amounts of several gases) applications, such as fluorescent bulb
manufacturing and gas laser fabrication.
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The following table shows MKS's principal Baratron pressure measurement
product lines:
BARATRON PRESSURE MEASUREMENT PRODUCTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PRODUCT LINES TYPICAL APPLICATIONS DESCRIPTION RANGES OF LIST PRICES
------------- -------------------- ----------- ---------------------
<S> <C> <C> <C>
High precision, high Chemical Vapor Instruments with $2,900-$6,400
accuracy pressure and Deposition built-in temperature
vacuum measurement stabilization
instruments Physical Vapor features, for high
Deposition precision, high
accuracy and high
Etch, Strip, Clean temperature operation
Pressure Calibration
- ----------------------------------------------------------------------------------------------
General purpose Chemical Vapor Rugged instruments $450-$4,200
pressure and vacuum Deposition with and without
measurement built-in temperature
instruments Physical Vapor stabilization
Deposition features, for
reliable, precise and
Etch, Strip, Clean accurate process
measurement
- ----------------------------------------------------------------------------------------------
Ultra-clean high Gas Distribution Instruments with $550-$1,050
pressure and vacuum ultra- clean surfaces
measurement Chemical Vapor exposed to gas, for
instruments Deposition precise, high purity
applications
Etch
- ----------------------------------------------------------------------------------------------
General purpose "MINI" Chemical Vapor Small footprint $650-$1,400
pressure and vacuum Deposition instruments for
measurement precise, accurate,
instruments Etch, Strip, Clean general purpose
process measurement
- ----------------------------------------------------------------------------------------------
Electronic pressure Physical Vapor Economical, stable $350-$750
and vacuum switches Deposition instrument providing
"go/no-go" output for
Chemical Vapor precise pressure trip-
Deposition points and alarms
Etch
- ----------------------------------------------------------------------------------------------
</TABLE>
MKS's list prices for its Baratron measurement products vary depending upon
precision, accuracy, pressure range, operating temperature range, stability and
gas purity specifications.
Automatic Pressure Control Products. MKS's automatic pressure control
products consist of analog and digital automatic pressure and vacuum control
electronic instruments and valves. These products enable precise control of
process pressure by electronically actuating valves which control the flow of
gases in and out of the process chamber to minimize the difference between
desired and actual pressure in the chamber. The electronic controllers vary from
simple analog units with precise manual tuning capability to state-of-the-art
self-tuning, digital signal processing controllers. The valve products vary from
small gas inlet valves to large exhaust valves.
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In most cases, MKS's Baratron pressure measurement instruments provide the
pressure input to the automatic pressure control device. Together, these
components create an integrated automatic pressure control system. MKS's
pressure control products can also accept inputs from other measurement
instruments, enabling the automatic control of gas input or exhaust based on
parameters other than pressure.
PRESSURE AND VACUUM CONTROL PRODUCTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PRODUCT LINES TYPICAL APPLICATIONS DESCRIPTION RANGES OF LIST PRICES
------------- -------------------- ----------- ---------------------
<S> <C> <C> <C>
Automatic throttle Chemical Vapor Analog controllers, $800-$2,650
control valve Deposition self- tuning digital
controllers controllers and
Etch, Strip, Clean displayless self-
tuning controllers
- ----------------------------------------------------------------------------------------------
Throttle control Chemical Vapor Non-sealing and $1,400-$8,800
valves Deposition sealing valves; high
speed sealing throttle
Etch control valves;
automatic,
microprocessor-based
smart throttle control
valves
- ----------------------------------------------------------------------------------------------
Automatic solenoid Chemical Vapor Stand-alone control $1,850-$2,900
control valve Deposition electronics packages
controllers or integrated sensor,
Etch valve and control
electronics packages
Ion Implantation
Backside Wafer Cooling
- ----------------------------------------------------------------------------------------------
Solenoid control Etch Elastomer and $450-$1,500
valves all-metal-sealed
Ion Implantation solenoid control
valves
Backside Wafer Cooling
- ----------------------------------------------------------------------------------------------
</TABLE>
MKS has recently introduced a line of integrated pressure controllers that
combine the functions of its Baratron pressure measurement instrument, flow
measurement instrument, control electronics and valve into a four-inch long
instrument which can be placed directly on a gas line to control pressure
downstream of the instrument while indicating the gas flow rate. This addresses
the need for smaller components, saving valuable clean room space.
Flow Measurement and Control Products. MKS's flow measurement products
include gas, vapor and liquid flow measurement products based upon thermal
conductivity, pressure and direct liquid injection technologies. The flow
control products combine the flow measuring device with valve control elements
based upon solenoid, piezo-electric and piston pump technologies. The products
measure and automatically control the mass flow rate of gases and vapors into
the process chamber. MKS's broad product lines include products that allow the
precise, automatic flow control of inert or corrosive gases, the automatic
control of low vapor pressure gases and heated liquid source materials, and the
automatic control of delicate, advanced technology liquid sources and vaporized
solid sources for next generation devices.
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MKS's line of thermal-based mass flow controllers, which control gas flow
based on the molecular weight of gases, includes all-metal-sealed designs and
ultra-clean designs for semiconductor applications, and general purpose
controllers for applications where all-metal-sealed construction is not
required. MKS has also developed pressure-based mass flow controllers, based on
Baratron pressure instrument measurement and control technology, which use flow
restrictors in the gas line to transform pressure control into mass flow
control.
FLOW MEASUREMENT AND CONTROL PRODUCTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PRODUCT LINES TYPICAL APPLICATIONS DESCRIPTION RANGES OF LIST PRICES
------------- -------------------- ----------- ---------------------
<S> <C> <C> <C>
Direct liquid Chemical Vapor Pumps and vaporizes $8,500-$24,900
injection system Deposition liquid precursors for
metals and dielectrics
into process chamber
- ----------------------------------------------------------------------------------------------
Gas box rate of rise In-situ Calibration of Measures pressure $8,100-$11,800
calibrator Mass Flow Controllers increase with time in
a known volume
- ----------------------------------------------------------------------------------------------
Pressure-based vapor Chemical Vapor Measures and controls $4,900-$12,400
delivery systems Deposition flow of low pressure
vapors into chamber
- ----------------------------------------------------------------------------------------------
Pressure-based mass Chemical Vapor Gas flow controller $2,700
flow controllers Deposition consisting of Baratron
sensor, control valve,
Ion Implantation orifice and
electronics
- ----------------------------------------------------------------------------------------------
Ultra-clean, Chemical Vapor Gas flow controller $1,400-$9,500
all-metal-sealed Deposition consisting of sensor,
thermal mass flow control valve and
controllers Physical Vapor electronics
Deposition
Etch
- ----------------------------------------------------------------------------------------------
General purpose Chemical Vapor Gas flow controller $1,050-$2,450
elastomer-sealed mass Deposition consisting of sensor,
flow controllers control valve and
Etch, Strip, Clean electronics
- ----------------------------------------------------------------------------------------------
</TABLE>
Certain new materials required for the next generation of semiconductor
devices are difficult to control using traditional thermal mass flow technology.
To control these new materials, MKS has designed a direct liquid injection
subsystem which pumps a precise volume of liquid into a vaporizer, which in turn
supplies a controlled flow of vapor into the process chamber. The direct liquid
injection subsystem pump and vaporizer are presently used principally for
research and development applications for next generation semiconductor device
conductors, diffusion barriers and insulators, such as copper, titanium nitride
and dielectric materials.
MKS's flow measurement products also include an in-situ calibration system
which independently measures mass flow and compares this measurement to that of
the process chamber mass flow controller. The demand for the MKS calibration
system is driven by the increasingly stringent process control needs of the
semiconductor industry and the need to reduce costly downtime resulting from
stopping operations to address mass flow controller problems.
Gas Composition Analysis Instruments. MKS's gas analysis instruments are
sold primarily to the semiconductor industry. The residual gas analysis product
lines include a quadrapole (four rods) mass spectrometer (a device which
separates gases based on molecular weight) sensor with built-in electronics
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to analyze the composition of background and process gases in the process
chamber. MKS's ORION process monitoring system is a sophisticated quadrapole
mass spectrometer process analyzer for statistical process monitoring of
manufacturing processes operating from very low pressures to atmospheric
pressure. These instruments are provided both as portable laboratory systems and
as process gas monitoring systems used in the diagnosis of semiconductor
manufacturing process systems. The gas monitoring systems can indicate
out-of-bounds conditions, such as the presence of undesirable atmospheric gases,
water vapor or out-of-tolerance amounts of specific gases in the process
chamber, enabling operators to diagnose and repair faulty equipment. MKS's gas
sampling systems provide a turn-key solution for withdrawing gases from chambers
at relatively high pressures for introduction into the low pressure gas
analyzers. Next generation semiconductor manufacturing processes, with smaller
circuit patterns and larger wafer sizes, are expected to require sophisticated
gas analysis instruments and/or monitoring equipment to ensure tighter process
control and earlier diagnosis of equipment malfunction.
Vacuum Technology Products
MKS designs and manufactures a wide variety of vacuum technology products,
including vacuum gauges, vacuum valves and components.
Vacuum Gauging Products
MKS offers a wide range of vacuum instruments consisting of vacuum
measurement sensors and associated power supply and readout units. These vacuum
gauges measure phenomena that are related to the level of pressure in the
process chamber and downstream of the process chamber between the chamber and
the pump. Unlike Baratron pressure measurement instruments, vacuum gauges do not
measure pressure directly. These gauges are used to measure vacuum at pressures
lower than those measurable with a Baratron pressure measurement instrument or
to measure vacuum in the Baratron pressure measurement instrument range where
less accuracy is required. MKS's indirect pressure gauges use thermal
conductivity and ionization gauge technologies to measure pressure from
atmospheric pressure to one trillionth of atmospheric pressure. MKS's Baratron
pressure measurement instruments, together with its vacuum gauges, are capable
of measuring the full range of pressures used in semiconductor and other
thin-film manufacturing processes from two hundred times atmospheric pressure to
one trillionth of atmospheric pressure.
MKS also manufactures a wide range of vacuum gauge instruments in which the
associated electronics are packaged with the vacuum sensor, reducing panel space
and installation cost. MKS offers both analog and digital versions of these
vacuum gauge transducers.
Vacuum Valves and Components
MKS's vacuum valves are used on the gas lines between the process chamber
and the pump downstream of the process chamber for chemical vapor deposition,
physical vapor deposition, ion implantation and etch processes. MKS's vacuum
components consist of fittings, flanges, traps and heated lines that are used
downstream from the process chamber to provide leak free connections and to
prevent condensable materials from depositing particles near or back into the
chamber. The manufacture of small circuit patterns cannot tolerate contamination
from atmospheric leaks or particles. MKS's vacuum components are designed to
minimize such contamination and thus increase yields and uptimes.
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<PAGE> 42
VACUUM GAUGES, VALVES AND COMPONENT PRODUCTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PRODUCT LINES TYPICAL APPLICATIONS DESCRIPTION RANGES OF LIST PRICES
------------- -------------------- ----------- ---------------------
<S> <C> <C> <C>
Cold cathode and hot Physical Vapor Electronic gauges to $600-$6,200
filament vacuum gauges Deposition measure pressure down
to one trillionth of
Ion Implantation atmospheric pressure
Etch
- ----------------------------------------------------------------------------------------------
Convection gauges Physical Vapor Electronic gauges to $200-$700
Deposition measure from one
atmosphere down to one
Chemical Vapor millionth of
Deposition atmospheric pressure
Etch, Strip, Clean
- ----------------------------------------------------------------------------------------------
Right-angle and Physical Vapor High vacuum rapid $250-$4,500
in-line shut-off Deposition action poppet valves
valves
Chemical Vapor
Deposition
Etch, Strip, Clean
Ion Implantation
- ----------------------------------------------------------------------------------------------
Vacuum traps Chemical Vapor Contaminant particle $1,800-$4,600
Deposition trap
Etch
- ----------------------------------------------------------------------------------------------
Other vacuum Physical Vapor Flanges, fittings and $50-$3,050
components Deposition heated lines
Chemical Vapor
Deposition
Etch
Ion Implantation
- ----------------------------------------------------------------------------------------------
</TABLE>
MARKETS AND APPLICATIONS
MKS estimates that approximately 60% of its sales in 1998 were made to the
semiconductor industry. MKS's products are also used in other markets and
applications including the manufacture of, among other things:
- flat panel displays
- magnetic and optical storage devices and media, including:
-- compact disks
-- hard disk storage devices
-- magnetic devices for reading disk data
-- digital video disks
-- optical storage disks (laser readable disks)
- solar cells which convert light into electrical current
- fiber optic cables for telecommunications
- optical coatings (such as eyeglass coatings)
- coatings for architectural glass
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<PAGE> 43
- hard coatings to minimize wear on cutting tools
- diamond thin films
MKS sells its products primarily through its direct sales force which
consists of 118 employees in 22 offices in France, Germany, Japan, Korea, The
Netherlands, Singapore, Taiwan, the United Kingdom and the United States. This
direct sales force is supplemented by sales representatives and agents in
Canada, China, India, Israel, and Italy and in selected U.S. cities. The major
markets for MKS's products include:
Semiconductor Manufacturing
MKS's products are sold to semiconductor capital equipment manufacturers
and semiconductor device manufacturers. MKS's products are used in the major
front-end process technologies such as physical vapor deposition, chemical vapor
deposition, etch and ion implantation and for process facility applications such
as gas distribution, clean room (room in which semiconductor manufacturing takes
place) pressure control and vacuum distribution. MKS anticipates that the
semiconductor manufacturing market will continue to account for a substantial
portion of its sales. While the semiconductor device manufacturing market is
global, the major semiconductor capital equipment manufacturers are concentrated
in the United States, Japan and Europe.
Flat Panel Display Manufacturing
MKS's products are used in the manufacture of flat panel displays, which
require the same or similar fabrication processes as semiconductor
manufacturing. The dominant fabrication process is chemical vapor deposition,
which uses the same or similar MKS products as chemical vapor deposition for
semiconductor manufacturing. MKS sells its products both to flat panel original
equipment manufacturers and to end-users in the flat panel display market. The
transition to larger panel size and higher definition is driving the need for
defect reduction which requires tighter process controls. The major
manufacturers for flat panel displays and flat panel display equipment are
concentrated in Japan.
Magnetic and Optical Storage Devices and Media
MKS's products are used in the manufacture of magnetic (data is stored and
read magnetically) and optical (data is read using laser technology) storage
media, compact disks, hard disks, data storage devices, and digital video or
versatile disks, typically in physical vapor deposition applications. The
transition to higher density storage capacity requires manufacturing processes
incorporating tighter process controls. While storage media manufacturing is
global, the major manufacturers are concentrated in Japan and the Asia-Pacific
region and storage media capital equipment manufacturers are concentrated in the
United States, Japan and Europe.
Optical Fiber and Optical Coating
MKS's products are used in optical fiber and optical thin-film coating
processes. MKS's products are sold both to coating equipment manufacturers and
to manufacturers of products made using optical thin-film coating processes.
Optical fibers used for data transmission are manufactured using chemical vapor
deposition processes similar to those used in semiconductor manufacturing. The
requirement for greater data transmission is driving the need for tighter
control of optical fiber coating processes. Optical thin films for eyeglasses,
solar panels and architectural glass are deposited using chemical vapor
deposition or physical vapor deposition in processes similar to those used in
semiconductor manufacturing. Optical fiber manufacturing and optical thin-film
processing are concentrated in the United States, Japan and Europe.
Other Coating Markets
MKS's pressure and flow measurement and control instruments are also used
in chemical vapor deposition and physical vapor deposition processes for the
application of thin films to harden tool bit surfaces, in the production of
diamond thin films, coatings for food container packaging and coatings for
jewelry and ornaments. The major equipment and process providers are
concentrated in the United States, Japan and Europe.
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<PAGE> 44
MKS estimates that the flat panel display, magnetic and optical storage
media, optical fiber, optical coating markets and other coating markets
combined, accounted for approximately 12% and 14% of net sales for 1997 and
1998, respectively.
Other Markets
MKS's pressure measurement and control instruments and vacuum components
are used in plasma processes used to sterilize medical instruments, in vacuum
freeze drying of pharmaceuticals, foods and beverages, and in vacuum processes
involved in light bulb and gas laser manufacturing. MKS's products are also sold
to government, university and industrial laboratories for vacuum applications
involving research and development in materials science, physical chemistry and
electronics materials. The major equipment and process providers and research
laboratories are concentrated in the United States, Japan and Europe.
CUSTOMERS
MKS has more than 4,000 active customers worldwide (all of which purchased
products during 1998), including semiconductor capital equipment manufacturers,
semiconductor device manufacturers, industrial manufacturing companies and
university, government and industrial research laboratories. MKS's largest
customers consist primarily of leading semiconductor capital equipment
manufacturers and semiconductor device manufacturers, including Applied
Materials, Inc., Lam Research Corporation, Tokyo Electron, Ltd., Air Products
and Chemicals, Inc. and Motorola Inc. In 1996, 1997, and 1998, sales to MKS's
top five customers accounted for approximately 26%, 32% and 24%, respectively,
of MKS's net sales. During the same periods, international sales represented
approximately 30.1%, 27.3% and 32.3% of total net sales, respectively. During
1998, Applied Materials, Inc. accounted for approximately 16% of MKS's net
sales. Applied Materials, Inc. purchases products from MKS under the terms of an
agreement, with no minimum purchase requirements, that expires in 2000.
SALES, MARKETING AND SUPPORT
MKS's worldwide sales, marketing and support organization is critical to
its strategy of maintaining close relationships with semiconductor capital
equipment manufacturers and semiconductor device manufacturers. MKS sells its
products primarily through its direct sales force which consists of 118
employees in 22 offices in France, Germany, Japan, Korea, The Netherlands,
Singapore, Taiwan, the United Kingdom and the United States. This direct sales
force is supplemented by sales representatives and agents in Canada, China,
India, Israel, and Italy and in selected U.S. cities. MKS maintains a marketing
staff of 14 employees to identify customer requirements, assist in product
planning and specifications and to focus on future trends in the semiconductor
and other markets.
As semiconductor device manufacturers have become increasingly sensitive to
the significant costs of system downtime, they have required that suppliers
offer comprehensive local repair service and close customer support.
Manufacturers require close support to enable them to repair, modify, upgrade
and retrofit their equipment to improve yields and adapt new materials or
processes. To meet these market requirements, MKS maintains a worldwide sales
and support organization with offices in 22 locations. Technical support is
provided by applications engineers located at offices in Arizona, California,
Colorado, Massachusetts, Oregon and Texas, as well as Canada, France, Germany,
India, Israel, Italy, Japan, Korea, The Netherlands, Singapore, Taiwan and the
United Kingdom. Repair and calibration services are provided at 14 service
depots located worldwide. MKS provides warranties from one to three years,
depending upon the type of product. In addition, MKS offers training programs
for its customers in a wide range of vacuum and gas processing technologies.
MANUFACTURING
MKS believes that the ability to manufacture reliable gas management
instruments and components in a cost-effective manner is critical to meeting the
demanding requirements of semiconductor capital
41
<PAGE> 45
equipment manufacturers and semiconductor device manufacturers. MKS monitors and
analyzes product lead times, warranty data, process yields, supplier
performance, field data on mean time between failures, inventory turns, repair
response time and other indicators so that it may continuously improve its
manufacturing processes. MKS has adopted a total quality management process.
MKS's manufacturing facilities in the United States, the United Kingdom and
Germany are ISO 9001 certified.
MKS is devoting significant financial and management resources to maintain
and expand its worldwide production and service capabilities to meet the global
demand for gas management instruments and components. MKS believes that the
ability to manufacture reliable instruments and components in a cost-effective
manner is critical to meet the demanding just-in-time delivery requirements of
semiconductor capital equipment manufacturers and semiconductor device
manufacturers. Due to the short time between the receipt of orders and
shipments, MKS normally operates with a level of backlog that is not
significant. MKS currently manufactures its products at nine facilities in the
United States and abroad. MKS plans to add manufacturing capabilities in 1999 to
its Austin, Texas facilities and further equip its cleanroom facilities in
Andover and Methuen, Massachusetts.
MKS's principal manufacturing activities consist of precision assembly,
test, calibration, welding and machining activities. MKS subcontracts a portion
of its assembly, machining and printed circuit board assembly and testing. All
other assembly, test and calibration functions are performed by MKS. Critical
assembly activities are performed in cleanroom environments at MKS's facilities.
RESEARCH AND DEVELOPMENT
MKS's research and development efforts are directed toward developing and
improving MKS's gas management instruments and components for semiconductor and
advanced thin-film processing applications and identifying and developing
products for new applications for which gas management plays a critical role.
MKS has undertaken an initiative to involve its marketing, engineering,
manufacturing and sales personnel in the concurrent development of new products
in order to reduce the time to market for new products. MKS's employees also
work closely with its customers' development personnel. These relationships help
MKS identify and define future technical needs on which to focus its research
and development efforts. In addition, MKS participates in SEMI/SEMATECH, a
consortium of semiconductor equipment suppliers, to assist in product
development and standardization of product technology, and it supports research
at academic institutions targeted at advances in materials science and
semiconductor process development.
As of December 31, 1998, MKS employed a research and development staff of
89 employees. In 1996, 1997 and 1998, MKS's research and development
expenditures were approximately $14.2 million, $14.7 million and $12.1 million,
respectively, representing approximately 8.3%, 7.8% and 8.7% of net sales,
respectively.
COMPETITION
The market for MKS's products is highly competitive. Principal competitive
factors include historical customer relationships; product quality, performance
and price; breadth of product line; manufacturing capabilities; and customer
service and support. While MKS believes that it competes favorably with respect
to these factors, there can be no assurance that it will continue to do so.
MKS encounters substantial competition in each of its product lines from a
number of competitors, although no one competitor competes with MKS across all
product lines. Certain of MKS's competitors have greater financial and other
resources than MKS. In some cases, the competitors are smaller than MKS, but
well-established in specific product niches. Millipore Corporation offers
products that compete with MKS's pressure and flow products. Aera Corporation,
STEC (Horiba Ltd.), and Unit Instruments, Inc., each offer products that compete
with MKS's mass flow control products. NOR-CAL Products, Inc. and MDC Vacuum
Products, Inc., each offer products that compete with MKS's vacuum components.
Leybold-Inficon, Inc., offers products that compete with MKS's vacuum measuring
and gas analysis products. Helix Technology Corporation offers products that
compete with MKS's vacuum gauging
42
<PAGE> 46
products. Spectra International LLC offers products that compete with MKS's gas
analysis products. In some cases, particularly with respect to mass flow
controllers, semiconductor device manufacturers may direct semiconductor capital
equipment manufacturers to use a specified supplier's product in their
equipment. Accordingly, MKS's success depends in part on its ability to have
semiconductor device manufacturers specify that its products be used at their
fabrication facilities and MKS may encounter difficulties in changing
established relationships of competitors with a large installed base of products
at such customers' fabrication facilities. In addition, MKS's competitors can be
expected to continue to improve the design and performance of their products.
There can be no assurance that competitors will not develop products that offer
price or performance features superior to those of MKS's products.
PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS
MKS relies on a combination of patent, copyright, trademark and trade
secret laws and license agreements to establish and protect its proprietary
rights. MKS has 47 U.S. patents and 10 pending U.S. patent applications. Foreign
counterparts of certain of these applications have been filed or may be filed at
the appropriate time. While MKS believes that certain patents may be important
for certain aspects of its business, MKS believes that its success depends more
upon close customer contact, innovation, technological expertise, responsiveness
and worldwide distribution.
MKS requires each of its employees, including its executive officers, to
enter into standard agreements pursuant to which the employee agrees to keep
confidential all proprietary information of MKS and to assign to MKS all
inventions made while in the employ of MKS.
EMPLOYEES
As of December 31, 1998, MKS employed 821 persons, including 486 in
manufacturing, 89 in research and development, 246 in marketing, sales, support
and general and administrative activities. Management believes that MKS's
ongoing success depends upon its continued ability to attract and retain highly
skilled employees. None of MKS's employees is represented by a labor union or
party to a collective bargaining agreement. MKS believes that its employee
relations are good.
FACILITIES
MKS sells its products primarily through its direct sales force in 22
offices in France, Germany, Japan, Korea, The Netherlands, Singapore, Taiwan,
the United Kingdom and the United States. The direct sales force is supplemented
by sales representatives and agents in Canada, China, India, Israel, and Italy
and in selected U.S. cities. MKS's corporate headquarters are located in
Andover, Massachusetts. Manufacturing and other operations are conducted in a
number of locations worldwide. MKS's minimum payments for leased real estate for
the year ending December 31, 1999 are expected to be $1,484,000. MKS believes
that the current facilities along with the planned addition for 1999 will be
adequate and suitable to meet its needs for the foreseeable future. The
following table provides information concerning MKS's principal and certain
other owned and leased facilities:
<TABLE>
<CAPTION>
LEASE
LOCATION SQ. FT. ACTIVITY PRODUCTS MANUFACTURED EXPIRES
-------- ------- -------- --------------------- ---------
<S> <C> <C> <C> <C>
Andover, Massachusetts 82,000 Headquarters, Baratron pressure (1)
Manufacturing, Customer measurement products
Support and Research &
Development
Boulder, Colorado 86,000 Manufacturing, Customer Vacuum gauges, valves (2)
Support, Service and and components
Research & Development
Methuen, Massachusetts 85,000 Manufacturing, Customer Pressure control and (1)
Support, Service and flow measurement and
Research & Development control products
</TABLE>
43
<PAGE> 47
<TABLE>
<CAPTION>
LEASE
LOCATION SQ. FT. ACTIVITY PRODUCTS MANUFACTURED EXPIRES
-------- ------- -------- --------------------- ---------
<S> <C> <C> <C> <C>
Lawrence, Massachusetts 40,000 Manufacturing Baratron pressure (1)
measurement products
Tokyo, Japan 20,700 Manufacturing, Sales, Mass flow measurement (3)
Customer Support, and control products
Service and Research &
Development
Santa Clara, California 15,600 Sales, Customer Support Not applicable (4)*
and Service
Richardson, Texas 14,600 Manufacturing, Sales, Subassemblies 8/31/01
Customer Support and
Service
Munich, Germany 14,100 Manufacturing, Sales, Mass flow measurement (1)
Customer Support, and control products
Service and Research &
Development
Le Bourget, France 13,700 Sales, Customer Support Not applicable (1)
and Service
Austin, Texas 8,200 Sales, Customer Support Not applicable 1/30/03
and Service
Seoul, Korea 4,760 Manufacturing, Sales, Mass flow measurement 5/30/00**
Customer Support and and control products
Service
Manchester, U.K. 2,200 Manufacturing, Sales, Mass flow measurement 10/5/09
Customer Support and and control products
Service
Singapore 2,050 Sales, Customer Support Not applicable 3/25/01
and Service
Taiwan 2,050 Sales, Customer Support Not applicable 12/31/01
and Service
</TABLE>
- ---------------
(1) This facility is owned by MKS.
(2) MKS leases one facility which has 39,000 square feet of space and a lease
term which expires 10/31/01 and owns a second and third facility with 28,000
and 19,000 square feet of space, respectively.
(3) MKS leases a facility which has 14,000 square feet of space and a lease term
which expires 4/30/99 and owns another facility with 6,700 square feet of
space.
(4) MKS leases one facility with 4,000 square feet of space on a month-to-month
basis, a second facility of 4,000 square feet with a lease term which
expires on 1/30/00 and a third facility of 2,600 square feet with a lease
term which expires 6/30/99. MKS owns a fourth facility of 5,000 square feet.
* MKS has an option to extend its leases at this location for a period of 18
months.
** MKS has an option to extend this lease for a period of two years.
In addition to manufacturing and other operations conducted at the
foregoing leased or owned facilities, MKS provides worldwide sales, customer
support and services from various other leased facilities throughout the world
not listed in the table above. See "Business -- Sales, Marketing and Support."
LEGAL PROCEEDINGS
MKS is not a party to any material legal proceedings.
44
<PAGE> 48
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of MKS as of December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John R. Bertucci.......................... 57 Chairman, Chief Executive Officer and President
Ronald C. Weigner......................... 53 Vice President and Chief Financial Officer
John J. Sullivan.......................... 63 Executive Vice President of Technology
William D. Stewart........................ 54 Corporate Vice President and General Manager, Vacuum
Products
Joseph A. Maher, Jr....................... 51 Corporate Vice President and General Manager,
Measurement and Control Products
Leo Berlinghieri.......................... 45 Corporate Vice President, Customer Support
Operations
Richard S. Chute(1)....................... 60 Director
Owen W. Robbins(2)........................ 69 Director
Robert J. Therrien........................ 64 Director
Louis P. Valente(1)(2).................... 68 Director
</TABLE>
- ---------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
Mr. Bertucci has served as President and a Director of MKS since 1974 and
has been Chairman of the Board of Directors and Chief Executive Officer since
November 1995. From 1970 to 1974, he was Vice President and General Manager. Mr.
Bertucci has an M.S. in Industrial Administration and a B.S. in Metallurgical
Engineering from Carnegie-Mellon University. Mr. Bertucci is also a director of
Applied Science and Technology Corporation and Intellisense Corporation.
Mr. Weigner has served as Vice President and Chief Financial Officer of MKS
since November 1995. From September 1993 until November 1995, he was Vice
President and Corporate Controller and from 1980 to 1993 he was Corporate
Controller. Mr. Weigner is a certified public accountant and has a B.S. in
Business Administration from Boston University.
Mr. Sullivan has served as Executive Vice President of Technology of MKS
since March 1995. From 1982 to March 1995, he was Vice President of Marketing,
and from 1975 to 1982, he was Vice President of Sales and Marketing. Mr.
Sullivan has an M.S. and a B.S. in Physics from Northeastern University.
Mr. Stewart has served as Corporate Vice President of MKS and General
Manager of Vacuum Products since November 1997. From October 1986 to November
1997, he was President of HPS Vacuum Products group, which MKS acquired in
October 1986. Mr. Stewart co-founded HPS in 1976. Mr. Stewart has an M.B.A. from
Northwestern University and a B.S. in Business Administration from the
University of Colorado. Mr. Stewart also serves on the board of directors of the
Janus Fund.
Mr. Maher has served as Corporate Vice President of MKS and General Manager
of Measurement and Control Products since November 1997. From March 1997 through
November 1997, he served as Vice President of the Process Control
Instrumentation Group. Mr. Maher was a Vice President of Lam Research
Corporation from 1993 through 1996, and from 1980 through 1993, he was Executive
Vice President of Drytek Corporation, which was purchased by Lam Research
Corporation in 1993. Mr. Maher has a B.S. in Electrical Engineering from
Northeastern University.
Mr. Berlinghieri has served as Corporate Vice President, Customer Support
Operations of MKS since November 1995. From 1980 to November 1995, he served in
various management positions at MKS, including Manufacturing Manager, Production
& Inventory Control Manager, and Director of Customer
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<PAGE> 49
Support Operations. Mr. Berlinghieri is also Treasurer of the TQM-BASE Council,
Inc., a non-profit quality management consortium comprised of Boston-area
semiconductor capital equipment manufacturers.
Mr. Chute has served as a director of MKS since 1974. Mr. Chute has been a
member of the law firm of Hill & Barlow, a professional corporation, since
November 1971.
Mr. Robbins has served as a director of MKS since February 1996. Mr.
Robbins was Executive Vice President of Teradyne, Inc., a manufacturer of
electronic test systems and backplane connection systems used in the electronics
and telecommunications industries from March 1992 to May 1997, and its Chief
Financial Officer from February 1980 to May 1997. Mr. Robbins has served on the
board of directors of Teradyne, Inc. since March 1992 and was its Vice Chairman
from January 1996 to May 1997.
Mr. Therrien has served as a director of MKS since February 1996. Mr.
Therrien has been President and Chief Executive Officer of Brooks Automation,
Inc., a manufacturer of semiconductor processing equipment, since 1989.
Mr. Valente has served as a director of MKS since February 1996. Mr.
Valente has been Chairman and Chief Executive Officer of Palomar Medical
Technologies, Inc., a company which designs, manufactures and markets cosmetic
lasers, since September 1997. He has been a director of Palomar Medical
Technologies, Inc. since February 1997 and was its President and Chief Executive
Officer from May 1997 to September 1997. Mr. Valente was a Senior Vice President
of Acquisitions, Mergers and Investments of EG&G, Inc. from 1991 until July
1995. Mr. Valente is also a director of Micrion Corporation.
Executive officers of MKS are elected by the Board of Directors on an
annual basis and serve until their successors are duly elected and qualified.
There are no family relationships among any of the executive officers of MKS.
COMMITTEES OF THE BOARD OF DIRECTORS
The Compensation Committee consists of Messrs. Chute and Valente. The
Compensation Committee reviews and evaluates the salaries, supplemental
compensation and benefits of all officers of MKS, reviews general policy matters
relating to compensation and benefits of employees of MKS and makes
recommendations concerning these matters to the Board of Directors. The
Compensation Committee also administers MKS's stock option and stock purchase
plans. See "-- Stock Plans."
The Audit Committee consists of Messrs. Robbins and Valente. The Audit
Committee reviews with MKS's independent auditor the scope and timing of its
audit services, the auditor's report on MKS's financial statements following
completion of its audit and MKS's policies and procedures with respect to
internal accounting and financial controls. In addition, the Audit Committee
will make annual recommendations to the Board of Directors for the appointment
of independent auditors for the ensuing year.
DIRECTOR COMPENSATION
Directors of MKS are reimbursed for expenses incurred in connection with
their attendance at Board of Directors and committee meetings. Directors who are
not employees of MKS are paid an annual fee of $10,000 and $1,000 for each Board
of Directors meeting they attend and $500 for each committee meeting they attend
which is not held on the same day as a Board of Directors meeting. Messrs.
Chute, Robbins, Therrien and Valente, MKS's four non-employee directors, have
each been granted options, under MKS's 1996 Director Stock Option Plan (under
which no further grants will be made), to purchase 8,592 shares of common stock
at a weighted average exercise price of $4.81 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Messrs. Chute and
Valente. No member of the Compensation Committee was at any time an employee of
MKS. No executive officer of MKS serves
46
<PAGE> 50
as a member of the Board of Directors or Compensation Committee of any other
entity which has one or more executive officers serving as a member of MKS's
Board of Directors or Compensation Committee.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
of MKS's Chief Executive Officer and each of the four other most highly
compensated executive officers for the year ended December 31, 1998 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE FOR 1998
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION(1)
- --------------------------- -------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
John R. Bertucci........... $337,440 -- -- -- $19,500
Chief Executive Officer
and President
Ronald C. Weigner.......... 164,257 -- -- 60,000 9,740
Vice President and Chief
Financial Officer
Joseph A. Maher, Jr........ 161,307 -- -- 60,000 9,577
Corporate Vice President
and General Manager,
Measurement and Control
Products
William D. Stewart......... 173,893 -- -- 60,000 10,059
Corporate Vice President
and General Manager,
Vacuum Products
Leo Berlinghieri........... 152,559 -- -- 60,000 3,121
Corporate Vice President,
Customer Support
Operations
</TABLE>
- ---------------
(1) Includes a premium of $4,264 paid on a life insurance policy and estimated
payments of $15,236 paid into a 401(k) plan for Mr. Bertucci, and estimated
payments paid into a 401(k) plan for Messrs. Weigner, Maher, Stewart and
Berlinghieri.
47
<PAGE> 51
STOCK OPTION GRANTS
The following table contains information concerning the grants of options
to purchase MKS's common stock made to each of the Named Executive Officers for
the year ended December 31, 1998.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION ------------------------
NAME GRANTED(1) IN FISCAL YEAR PER SHARE DATE 5% 10%
---- ----------- ---------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John R. Bertucci........ -- -- -- -- -- --
Ronald C. Weigner....... 60,000 9.47% $6.67 7/9/08 $251,684 $637,816
Joseph A. Maher, Jr. ... 60,000 9.47 6.67 7/9/08 251,684 637,816
William D. Stewart...... 60,000 9.47 6.67 7/9/08 251,684 637,816
Leo Berlinghieri........ 60,000 9.47 6.67 7/9/08 251,684 637,816
</TABLE>
- ---------------
(1) These options become exercisable 20% on the first anniversary of the date of
grant and the remainder become exercisable on a quarterly basis over a four
year period.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect
MKS's estimate of future stock price growth. Actual gains, if any, on stock
option exercises and common stock are dependent on the timing of such
exercise and the future performance of the common stock.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning option exercises and
option holdings for the fiscal year ended December 31, 1998 with respect to each
of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN 1998
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT YEAR-END AT YEAR-END(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John R. Bertucci........................... -- --
Ronald C. Weigner.......................... 75,961 110,639
Joseph A. Maher, Jr. ...................... 44,310 142,290
William D. Stewart......................... 75,961 110,639
Leo Berlinghieri........................... 75,961 110,639
</TABLE>
- ---------------
(1) Values are based on the difference between the fair market value of the
underlying shares at December 31, 1998 ($ per share) and the exercise
price of each option listed (between $4.43 and $6.67 per share).
STOCK PLANS
1995 Stock Incentive Plan
MKS's Amended and Restated 1995 Stock Incentive Plan (the "1995 Stock
Plan") provides for the grant of incentive stock options, nonstatutory stock
options, stock appreciation rights, performance shares
48
<PAGE> 52
and awards of restricted stock and unrestricted stock. An aggregate of 3,750,000
shares of common stock may be issued pursuant to the 1995 Stock Plan (subject to
adjustment for certain changes in MKS's capitalization). No award may be made
under the 1995 Stock Plan after November 30, 2005.
The 1995 Stock Plan is administered by the Board of Directors and the
Compensation Committee. The Board of Directors has the authority to grant awards
under the 1995 Stock Plan and to accelerate, waive or amend certain provisions
of outstanding awards. The Board of Directors has authorized the Compensation
Committee to administer certain aspects of the 1995 Stock Plan and has
authorized the Chief Executive Officer of MKS to grant awards to non-executive
officer employees. The maximum number of shares represented by such awards may
not exceed 450,000 shares in the aggregate or 30,000 shares to any one employee.
Incentive Stock Options and Nonstatutory Options. Optionees receive the
right to purchase a specified number of shares of common stock at some time in
the future at an option price and subject to such terms and conditions as are
specified at the time of the grant. Incentive stock options and options that the
Board of Directors or Compensation Committee intends to qualify as
performance-based compensation under Section 162(m) of the Internal Revenue Code
may not be granted at an exercise price less than the fair market value of the
common stock on the date of grant (or less than 110% of the fair market value in
the case of incentive stock options granted to optionees holding 10% or more of
the voting stock of MKS). All other options may be granted at an exercise price
that may be less than, equal to or greater than the fair market value of the
common stock on the date of grant.
Stock Appreciation Rights and Performance Shares. A stock appreciation
right is based on the value of common stock and entitles the holder to receive
consideration to the extent that the fair market value on the date of exercise
of the shares of common stock underlying the right exceeds the fair market value
of the underlying shares on the date the right was granted. A performance share
award entitles the recipient to acquire shares of common stock upon the
attainment of specified performance goals.
Restricted and Unrestricted Stock. Restricted stock awards entitle
recipients to acquire shares of common stock, subject to the right of MKS to
repurchase all or part of such shares at their purchase price from the recipient
in the event that the conditions specified in the applicable stock award are not
satisfied prior to the end of the applicable restriction period established for
such award. MKS may also grant (or sell at a purchase price not less than 85% of
the fair market value on the date of such sale) to participants shares of common
stock free of any restrictions under the 1995 Stock Plan.
All of the employees, officers, directors, consultants and advisors of MKS
and its subsidiaries who are expected to contribute to MKS's future growth and
success are eligible to participate in the 1995 Stock Plan.
Section 162(m) of the Internal Revenue Code disallows a tax deduction to
public companies for certain compensation in excess of $1.0 million paid to a
company's chief executive officer or to any of the four other most highly
compensated executive officers. Certain compensation, including "performance-
based compensation," is not included in compensation subject to the $1.0 million
limitation. The 1995 Stock Plan limits to 1,350,000 the maximum number of shares
of common stock with respect to which awards may be granted to any employee in
any calendar year. This limitation is intended to preserve the tax deductions to
MKS that might otherwise be unavailable under Section 162(m) with respect to
certain awards.
Prior to the date of this prospectus, MKS plans to grant options (to vest
20% after one year and 5% per quarter thereafter) to purchase approximately
350,000 shares of common stock to certain employees of MKS, at an exercise price
equal to the initial public offering price.
1999 Employee Stock Purchase Plan
MKS's 1999 Employee Stock Purchase Plan (the "Purchase Plan") authorizes
the issuance of up to an aggregate of 450,000 shares of common stock to
participating employees. MKS will make one or more offerings to employees to
purchase common stock under the Purchase Plan. Offerings under the Purchase
49
<PAGE> 53
Plan commence on June 1 and December 1 and terminate, respectively on November
30 and May 31. During each offering, the maximum number of shares which may be
purchased by a participating employee is determined on the first day of this
offering period under a formula whereby 85% of the market value of a share of
common stock on the first day of this offering period is divided into an amount
equal to 10% of the employee's annualized compensation (or such lower percentage
as may be established by the Compensation Committee) for the immediately
preceding six-month period. An employee may elect to have up to 10% deducted
from his or her regular salary (or such lower percentage as may be established
by the Compensation Committee) for this purpose. The price at which an
employee's option is exercised is the lower of (i) 85% of the closing price of
the common stock on the Nasdaq National Market on the day that this offering
commences or (ii) 85% of the closing price on the day that this offering
terminates.
The Purchase Plan is administered by the Board of Directors and the
Compensation Committee. With certain exceptions, all eligible employees,
including directors and officers, regularly employed by MKS for at least six
months on the applicable offering commencement date are eligible to participate
in the Purchase Plan. The Purchase Plan is intended to qualify as an "employee
stock purchase plan" as defined in Section 423 of the Internal Revenue Code.
1997 Director Stock Option Plan
MKS's 1997 Director Stock Option Plan (the "1997 Director Plan") authorizes
the issuance of up to an aggregate of 300,000 shares of common stock. The 1997
Director Plan is administered by MKS's Board of Directors. Options are granted
under the 1997 Director Plan only to directors of MKS who are not employees of
MKS. Under the 1997 Director Plan, prior to the date of this prospectus each
existing eligible director will receive an option to purchase 10,500 shares of
common stock at an exercise price equal to the initial public offering price and
future non-employee directors will receive an option to purchase 11,250 shares
of common stock upon their initial election to the Board of Directors. Each
initial option will vest over a three-year period in 12 equal quarterly
installments following the date of grant. On the date of each annual meeting of
the stockholders, options will be automatically granted to each eligible
director who has been in office for at least six months prior to the date of the
annual meeting of the stockholders. Each annual option will entitle the holder
to purchase 6,000 shares of common stock. Each annual option will become
exercisable on the day prior to the first annual meeting of stockholders
following the date of grant (or if no such meeting is held within 13 months
after the date of grant, on the 13-month anniversary of the date of grant). The
exercise price of all options granted under the 1997 Director Plan is equal to
the fair market value of the common stock on the date of grant. Options granted
under the 1997 Director Plan terminate upon the earlier of three months after
the optionee ceases to be a director of MKS or ten years after the grant date.
In the event of a change in control of MKS, the vesting of all options then
outstanding would be accelerated in full and any restrictions on exercising
outstanding options would terminate.
The Company's 1996 Director Stock Option Plan, under which options have
been granted to, and may still be exercised by, four non-employee directors of
MKS, has been terminated. See "-- Director Compensation."
50
<PAGE> 54
CERTAIN TRANSACTIONS
Mr. Chute, a director of MKS, MKS's clerk, and a co-trustee of certain of
the Bertucci Family Trusts (see "Principal Stockholders") and Mr. Thomas H.
Belknap, a co-trustee of certain of the Bertucci Family trusts, are attorneys at
the law firm of Hill & Barlow, a professional corporation. Hill & Barlow has
provided legal services to MKS during the calendar year ended December 31, 1998
for which it was compensated by MKS in the aggregate amount of $183,000.
Mr. Stewart, Corporate Vice President and General Manager of Vacuum
Products, is the general partner of Aspen Industrial Park Partnership ("Aspen").
On October 12, 1989, MKS entered into a lease with Aspen, which has been
periodically extended, for certain facilities occupied by MKS's Vacuum Products
group in Boulder, Colorado. MKS currently pays Aspen approximately $350,000
annually to lease such facilities.
MKS has been treated as an S corporation for federal income tax purposes
since July 1, 1987. As a result, MKS currently pays no federal, and certain
state, income tax and all of the earnings of MKS are subject to federal, and
certain state, income taxation directly at the stockholder level. MKS's S
corporation status will terminate upon the closing of this offering, at which
time MKS will become subject to corporate income taxation under Subchapter C of
the Internal Revenue Code. In 1997 and 1998, MKS distributed $12.4 million and
$6.2 million, respectively, of undistributed S corporation earnings to its
stockholders. As soon as practicable following the closing of this offering, MKS
intends to make a distribution to the holders of record on the day prior to the
closing of this offering in an amount equivalent to the accumulated adjustments
account. As of December 31, 1998, the outstanding balance of the accumulated
adjustments account was approximately $35.9 million and such balance is expected
to increase in the period from January 1, 1999 through the closing of this
offering. See "S Corporation And Termination of S Corporation Status."
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<PAGE> 55
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of MKS's common stock as of December 31, 1998, and as adjusted to
reflect the sale of shares offered hereby, by (i) each of the directors of MKS,
(ii) each of the Named Executive Officers, (iii) each person or entity known to
MKS to own beneficially more than 5% of MKS's common stock and (iv) all
directors and executive officers as a group. Except as indicated below, none of
these entities has a relationship with MKS or, to the knowledge of MKS, any
underwriters of this offering or their respective affiliates. Unless otherwise
indicated, each person or entity named in the table has sole voting power and
investment power (or shares such power with his or her spouse) with respect to
all shares of capital stock listed as owned by such person or entity.
<TABLE>
<CAPTION>
PERCENTAGE OF
COMMON STOCK
NUMBER SHARES OUTSTANDING(1)(2)
BENEFICIALLY ---------------------------------
NAME OF BENEFICIAL OWNER OWNED(1) BEFORE OFFERING AFTER OFFERING
------------------------ ------------- --------------- --------------
<S> <C> <C> <C>
John R. Bertucci(3)................................. 17,261,915 95.6% %
Ronald C. Weigner(4)................................ 82,291 *
John J. Sullivan(5)................................. 614,010 3.4
Joseph A. Maher, Jr.(4)............................. 44,310 *
William D. Stewart(4)............................... 82,291 *
Leo Berlinghieri(4)................................. 82,291 *
Richard S. Chute(6)................................. 2,766,852 15.3
Owen W. Robbins(4).................................. 8,027 *
Robert J. Therrien(4)............................... 8,027 *
Louis P. Valente(4)................................. 8,027 *
Thomas H. Belknap(7)................................ 2,331,902 12.9
All executive officers and directors as a group..... 18,199,216 99.0% %
</TABLE>
- ---------------
* Less than 1% of outstanding common stock.
(1) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as
to which the individual has sole or shared voting power or investment power
and also any shares which the individual has the right to acquire within 60
days of December 31, 1998 through the exercise of any stock option or other
right. The inclusion herein of such shares, however, does not constitute an
admission that the named stockholder is a direct or indirect beneficial
owner of such shares.
(2) Assumes no exercise of the underwriters' over-allotment option.
(3) Includes 6,046,208 shares held directly by Mr. Bertucci, 6,124,980 shares
held directly by Mr. Bertucci's wife, and 5,090,727 shares held by trusts
(collectively, the "Bertucci Family Trusts") for which either Mr. or Mrs.
Bertucci serves as a co-trustee.
(4) Comprised solely of options exercisable within 60 days of December 31, 1998.
(5) Includes 316,500 shares held in a grantor retained annuity trust.
(6) Includes 2,758,825 shares held by certain of the Bertucci Family Trusts for
which Mr. Chute serves as a co-trustee and 8,027 shares subject to options
held by Mr. Chute exercisable within 60 days of December 31, 1998.
(7) Represents shares held by certain of the Bertucci Family Trusts for which
Mr. Belknap serves as a co-trustee.
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<PAGE> 56
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of MKS consists of 30,000,000 shares of common
stock, no par value per share, and 2,000,000 shares of preferred stock, $.01 par
value per share, after giving effect to the amendment and restatement of MKS's
Restated Articles of Organization which will be filed with the Secretary of
State of The Commonwealth of Massachusetts prior to the closing of this
offering.
COMMON STOCK
As of December 31, 1998, there were 18,053,167 shares of common stock
outstanding and held of record by twenty-three stockholders, after giving effect
to a 3-for-2 stock split to be effected prior to the effective date of this
prospectus, of shares of Class A common stock and Class B common stock and the
conversion of such shares into shares of common stock upon the closing of this
offering.
Upon the closing of this offering, all holders of common stock shall be
entitled to one vote for each share held on all matters submitted to a vote of
stockholders and will not have cumulative voting rights. Accordingly, holders of
a majority of the shares of common stock entitled to vote in any election of
directors may elect all of the directors standing for election. Holders of
common stock are entitled to receive ratably such dividends, if any, as may be
declared by the Board of Directors out of funds legally available therefor,
subject to any preferential dividend rights of any outstanding preferred stock.
Upon the liquidation, dissolution or winding up of MKS, the holders of common
stock are entitled to receive ratably the net assets of MKS available after the
payment of all debts and other liabilities, subject to the prior rights of any
outstanding preferred stock. Holders of the common stock have no preemptive,
subscription, redemption or conversion rights. The outstanding shares of common
stock are, and the shares offered by MKS in this offering made by this
prospectus will be, when issued and paid for, fully paid and nonassessable. The
rights, preferences and privileges of holders of common stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any
series of preferred stock that MKS may designate and issue in the future. There
are no shares of preferred stock outstanding.
PREFERRED STOCK
The Articles of Organization authorize the Board of Directors, subject to
certain limitations prescribed by law, without further stockholder approval,
from time to time to issue up to an aggregate of 2,000,000 shares of preferred
stock in one or more series and to fix or alter the designations, preferences
and rights, and any qualifications, limitations or restrictions thereof, of the
shares of each such series, including the number of shares constituting any such
series and the dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption (including sinking fund provisions), redemption
price or prices and liquidation preferences thereof. The issuance of preferred
stock may have the effect of delaying, deferring or preventing a change in
control of MKS. MKS has no present plans to issue any shares of preferred stock.
MASSACHUSETTS LAW AND CERTAIN PROVISIONS OF MKS'S RESTATED ARTICLES OF
ORGANIZATION AND BY-LAWS
MKS intends to amend and restate its By-Laws prior to the closing of this
offering. The By-Laws will include a provision excluding MKS from the
applicability of Massachusetts General Laws Chapter 110D, entitled "Regulation
of Control Share Acquisitions." In general, this statute provides that any
stockholder of a corporation subject to this statute who acquires 20% or more of
the outstanding voting stock of a corporation may not vote such stock unless the
stockholders of the corporation so authorize. The Board of Directors will be
able to amend the By-Laws at any time to subject MKS to this statute
prospectively.
Massachusetts General Laws Chapter 156B, Section 50A generally requires
that publicly-held Massachusetts corporations have a classified board of
directors consisting of three classes as nearly equal in size as possible,
unless the corporation elects to opt out of the statute's coverage. The By-Laws
will contain provisions which give effect to Section 50A.
53
<PAGE> 57
The By-Laws will require that nominations for the Board of Directors made
by a stockholder of a planned nomination must be given not less than 30 and not
more than 90 days prior to a scheduled meeting, provided that if less than 40
days' notice is given of the date of the meeting, a stockholder will have ten
days within which to give such notice. The stockholder's notice of nomination
must include particular information about the stockholder, the nominee and any
beneficial owner on whose behalf the nomination is made. MKS may require any
proposed nominee to provide such additional information as is reasonably
required to determine the eligibility of the proposed nominee.
The By-Laws will also require that a stockholder seeking to have any
business conducted at a meeting of stockholders give notice to MKS not less than
60 and not more than 90 days prior to the scheduled meeting, provided in certain
circumstances that a ten-day notice rule applies. The notice from the
stockholder will be required to describe the proposed business to be brought
before the meeting and include information about the stockholder making the
proposal, any beneficial owner on whose behalf the proposal is made, and any
other stockholder known to be supporting the proposal. The By-Laws will require
MKS to call a special stockholders meeting at the request of stockholders
holding at least 40% of the voting power of MKS.
The Articles of Organization will provide that the directors and officers
of MKS shall be indemnified by MKS to the fullest extent authorized by
Massachusetts law, as it now exists or may in the future be amended, against all
expenses and liabilities reasonably incurred in connection with service for or
on behalf of MKS. In addition, the Articles of Organization will provide that
the directors of MKS will not be personally liable for monetary damages to MKS
for breaches of their fiduciary duty as directors, unless they violated their
duty of loyalty to MKS or its stockholders, acted in bad faith, knowingly or
intentionally violated the law (which could include securities laws), authorized
illegal dividends or redemptions or derived an improper personal benefit from
their action as directors.
The Articles of Organization will provide that any amendment to the
Articles of Organization, the sale, lease or exchange of all or substantially
all of MKS's property and assets, or the merger or consolidation of MKS into or
with any corporation may be authorized by the approval of the holders of a
majority of the shares of each class of stock entitled to vote thereon, rather
than by two-thirds as otherwise provided by statute, provided that the
transactions have been authorized by a majority of the members of the Board of
Directors and the requirements of any other applicable provisions of the
Articles of Organization have been met.
The Articles of Organization will contain a provision excluding MKS from
the applicability of Massachusetts General Laws Chapter 110F, entitled "Business
Combinations with Interested Shareholders." In general, Chapter 110F places
limitations on a Massachusetts corporation's ability to engage in business
combinations with certain stockholders for a period of three years, unless the
corporation elects to opt out of the statute's coverage by including such a
provision in its Articles of Organization.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the common stock is BankBoston, N.A.
54
<PAGE> 58
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the securities
of MKS. Upon completion of this offering, based upon the number of shares
outstanding at December 31, 1998, there will be shares of common stock of
MKS outstanding (assuming no exercise of the underwriters' over-allotment option
or options outstanding under MKS's stock option plans). Of these shares, the
shares sold in this offering will be freely tradable without
restriction or further registration under the Securities Act, except that any
shares purchased by "affiliates" of MKS, as that term is defined in Rule 144
under the Securities Act, may generally only be sold in compliance with the
limitations of Rule 144 described below.
SALES OF RESTRICTED SHARES
The remaining shares of common stock are deemed "restricted
securities" under Rule 144 under the Securities Act. All of these shares are
subject to 180-day lock-up agreements with the Representatives. Upon expiration
of the lock-up agreements 180 days after the date of this prospectus, all such
shares will be available for sale in the public market, subject to the
provisions of Rule 144.
Stockholders who are parties to the lock-up agreement have agreed that for
a period of 180 days after the date of this prospectus, they will not sell,
offer, contract or grant any option to sell, pledge, transfer, establish an open
put equivalent position or otherwise dispose of any shares of common stock, any
options to purchase shares of common stock or any shares convertible into or
exchangeable for shares of common stock, owned directly by such persons or with
respect to which they have the power of disposition, without the prior written
consent of NationsBanc Montgomery Securities LLC.
In general, Rule 144 as currently in effect, beginning 90 days after the
effective date of the registration statement of which this prospectus is a part,
a stockholder, including an affiliate, who has beneficially owned his or her
restricted securities for at least one year from the later of the date such
securities were acquired from MKS or (if applicable) the date they were acquired
from an affiliate is entitled to sell, within any three-month period, a number
of such shares that does not exceed the greater of 1% of the then outstanding
shares of common stock ( shares immediately after this offering) or the
average weekly trading volume in the common stock during the four calendar weeks
preceding the date on which notice of such sale was filed under Rule 144,
provided certain requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, under Rule 144(k),
if a period of at least two years has elapsed between the later of the date
restricted securities were acquired from MKS or (if applicable) the date they
were acquired from an affiliate of MKS, a stockholder who is not an affiliate of
MKS at the time of sale and has not been an affiliate of MKS for at least three
months prior to the sale is entitled to sell the shares immediately without
compliance with the foregoing requirements under Rule 144.
Securities issued in reliance on Rule 701 (such as shares of common stock
acquired pursuant to the exercise of certain options granted under MKS's stock
plans) are also restricted and, beginning 90 days after the effective date of
the registration statement of which this prospectus is a part, may be sold by
stockholders other than affiliates of MKS subject only to the manner of sale
provisions of Rule 144 and by affiliates under Rule 144 without compliance with
its one-year holding period requirement.
OPTIONS
As of December 31, 1998 there were options outstanding to purchase an
aggregate of 2,132,575 shares of MKS's common stock, of which options to
purchase an aggregate of 804,701 shares were exercisable. Of these, shares
were subject to the lock-up agreements. MKS intends to file registration
statements on Form S-8 under the Securities Act to register all shares of common
stock issuable under each of the 1995 Stock Plan, Purchase Plan, the 1997
Director Plan and the 1996 Director Stock Option Plan promptly following the
consummation of this offering. Shares issued pursuant to such plans shall be,
after the effective date of the Form S-8 registration statements, eligible for
resale in the public market without restriction, subject to Rule 144 limitations
applicable to affiliates and the lock-up agreements noted above, if applicable.
55
<PAGE> 59
UNDERWRITING
The underwriters named below, represented by NationsBanc Montgomery
Securities LLC, Donaldson, Lufkin & Jenrette Securities Corporation and Lehman
Brothers Inc. (the "Representatives"), have severally agreed, subject to the
terms and conditions set forth in the underwriting agreement, to purchase from
MKS the number of shares of common stock indicated below opposite their
respective names at the initial public offering price less the underwriting
discount set forth on the cover page of this prospectus. The underwriting
agreement provides that the obligations of the underwriters are subject to
certain terms and conditions precedent and that the underwriters are committed
to purchase all of such shares, if any are purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
NationsBanc Montgomery Securities LLC.......................
Donaldson, Lufkin & Jenrette Securities Corporation.........
Lehman Brothers Inc. .......................................
---------
Total.............................................
=========
</TABLE>
The Representatives have advised MKS that the underwriters initially
propose to offer the common stock to the public on the terms set forth on the
cover page of this prospectus. The underwriters may allow to selected dealers a
concession of not more than $ per share, and the underwriters may allow, and
any other dealers may reallow, a concession of not more than $ per share to
certain other dealers. After the initial public offering, this offering price
and other selling terms may be changed by the Representatives. The common stock
is offered subject to receipt and acceptance by the underwriters and to certain
other conditions, including the right to reject orders in whole or in part.
MKS has granted an option to the underwriters, exercisable during the
30-day period after the date of this prospectus, to purchase up to a maximum of
additional shares of common stock to cover over-allotments, if any, at
the same price per share as the initial shares to be purchased by the
underwriters. To the extent the underwriters exercise this option, each of the
underwriters will be committed, subject to certain conditions, to purchase such
additional shares in approximately the same proportion as set forth in the above
table. The underwriters may purchase such shares only to cover over-allotments
made in connection with this offering.
All stockholders prior to this offering, as well as certain holders of
options to purchase common stock, have entered into lock-up agreements whereby
they have agreed not to directly or indirectly sell, offer, contract or grant
any option to sell, pledge, transfer, establish an open put equivalent position
or otherwise dispose of any rights with respect to any shares of common stock,
any options or warrants to purchase common stock, or any securities convertible
or exchangeable for common stock, owned directly by such holders or with respect
to which they have the power of disposition for a period of 180 days after the
period of this prospectus without the prior written consent of NationsBanc
Montgomery Securities LLC which may, in its sole discretion and at any time
without notice, release all or any portion of the securities subject to these
lock-up agreements. In addition, MKS has agreed not to sell, offer to sell,
contract to sell or otherwise sell or dispose of any shares of common stock or
any rights to acquire common stock, other than pursuant to its stock plans or
upon the exercise of outstanding options, for a period of 180 days after the
date of this prospectus without the prior consent of NationsBanc Montgomery
Securities LLC.
The underwriting agreement provides that MKS will indemnify the
underwriters against certain liabilities, including civil liabilities, under the
Securities Act, or will contribute to payments the underwriters may be required
to make in respect thereof.
In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock, including over-allotment, stabilization, syndicate covering
transactions and imposition of penalty bids. In an over-allotment, the
underwriters would allot more shares of common stock to their customers in the
aggregate than are available for purchase by the
56
<PAGE> 60
underwriters under the underwriting agreement. Stabilizing means the placing of
any bid, or the effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of a security. In a syndicate covering transaction, the
underwriters would place a bid or effect a purchase to reduce a short position
created in connection with this offering. Pursuant to a penalty bid, NationsBanc
Montgomery Securities LLC on behalf of the underwriters, would be able to
reclaim a selling concession from an underwriter if shares of common stock
originally sold by such underwriter are purchased in syndicate covering
transactions. These transactions may result in the price of the common stock
being higher than the price that might otherwise prevail in the open market.
These transactions may be effected on the Nasdaq National Market, in the
over-the-counter market or otherwise, and, if commenced, may be discontinued at
any time.
The Representatives have informed MKS that they do not expect to make sales
to accounts over which they exercise discretionary authority in excess of 5% of
the number of shares of common stock offered hereby.
Prior to this offering, there has been no public market for the common
stock of MKS. Consequently, the initial public offering price will be determined
through negotiations among MKS and the Representatives. Among the factors to be
considered in such negotiations are the history of, and prospects for, MKS and
the industry in which it competes, an assessment of MKS's management, the
present state of MKS's development, the prospects for future earnings of MKS,
the prevailing market conditions at the time of this offering, market valuations
of publicly traded companies that MKS and the Representatives believe to be
comparable to MKS, and other factors deemed relevant.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for MKS
by Hale and Dorr LLP, Boston, Massachusetts. Certain legal matters in connection
with this offering will be passed upon for the underwriters by Ropes & Gray,
Boston, Massachusetts.
EXPERTS
The consolidated balance sheets of MKS Instruments, Inc. at December 31,
1997 and 1998 and the consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31, 1998
included in this prospectus have been included herein in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given upon the authority
of that firm as experts in accounting and auditing.
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<PAGE> 61
ADDITIONAL INFORMATION
MKS has filed with the Securities and Exchange Commission, a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered hereby. This prospectus, which constitutes part of the registration
statement, does not contain all of the information set forth in the registration
statement, certain parts of which are omitted in accordance with the rules and
regulations of the Securities and Exchange Commission. For further information
with respect to MKS and the common stock offered hereby, reference is made to
the registration statement. Statements contained in this prospectus as to the
contents of any contract or other document filed as an exhibit to the
registration statement are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference. The registration statement (and all amendments, exhibits and
schedules thereto) may be inspected without charge at the principal office of
the Securities and Exchange Commission in Washington, D.C. and copies of all or
any part of which may be inspected and copied at the public reference facilities
maintained by the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the Securities and
Exchange Commission's regional offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can also
be obtained at prescribed rates by mail from the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, the Securities and Exchange Commission maintains a website
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Securities and Exchange Commission.
MKS intends to distribute to its stockholders annual reports containing
audited consolidated financial statements.
58
<PAGE> 62
MKS INSTRUMENTS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets at December 31, 1997 and
1998...................................................... F-3
Consolidated Statements of Income for the Years Ended
December 31, 1996, 1997, and 1998......................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996, 1997, and 1998............. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1997, and 1998......................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 63
This is the form of the report that we expect to issue upon the filing of
an amendment to the Company's Articles of Organization effecting the 3-for-2
stock split of the Company's outstanding common stock, increase in the number of
authorized shares of common stock and the authorization of preferred stock, as
discussed in Note 8 of Notes to Consolidated Financial Statements.
PRICEWATERHOUSECOOPERS LLP
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
MKS Instruments, Inc.:
In our opinion, the accompanying consolidated balance sheets and related
consolidated statements of income, stockholders' equity and cash flows present
fairly, in all material respects, the financial position of MKS Instruments,
Inc. and its subsidiaries at December 31, 1997 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Boston, Massachusetts
January 22, 1999, except for
Note 13 as to which the date
is January 28, 1999
F-2
<PAGE> 64
MKS INSTRUMENTS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
DECEMBER 31, ----------------------
1997 ACTUAL PRO FORMA
------------ ------- -----------
(NOTE 2)
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 2,511 $11,188 $11,188
Marketable equity securities......................... 614 538 538
Trade accounts receivable, net of allowance for
doubtful accounts of $610 and $656 at December 31,
1997 and 1998, respectively........................ 32,439 20,674 20,674
Inventories.......................................... 29,963 24,464 24,464
Deferred tax asset................................... 682 698 698
Other current assets................................. 1,670 971 971
-------- ------- -------
Total current assets............................ 67,879 58,533 58,533
Property, plant and equipment, net................... 33,976 32,725 32,725
Other assets......................................... 4,681 4,974 4,974
-------- ------- -------
Total assets.................................... $106,536 $96,232 $96,232
======== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings................................ $ 10,721 $ 9,687 $ 9,687
Current portion of long-term debt.................... 2,070 2,058 2,058
Current portion of capital lease obligations......... 1,061 1,074 1,074
Accounts payable..................................... 7,433 3,677 3,677
Accrued compensation................................. 7,501 3,985 3,985
Other accrued expenses............................... 6,883 5,280 5,280
Income taxes payable................................. 1,889 1,279 1,279
Distribution payable................................. -- -- 35,926
-------- ------- -------
Total current liabilities....................... 37,558 27,040 62,966
Long-term debt............................................ 13,748 12,042 12,042
Long-term portion of capital lease obligations............ 1,876 1,744 1,744
Deferred tax liability.................................... 133 117 117
Other liabilities......................................... 373 463 463
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred Stock, $0.01 par value; 2,000,000 shares
authorized, no shares issued or outstanding........ -- -- --
Common Stock, Class A, no par value; 11,250,000
shares authorized, 7,766,910 issued and
outstanding........................................ 40 40 40
Common Stock, Class B (non voting) no par value;
18,750,000 shares authorized; 10,286,255 and
10,286,257 shares issued and outstanding at
December 31, 1997 and 1998, respectively........... 73 73 73
Additional paid-in capital........................... 48 48 48
Retained earnings.................................... 51,443 52,479 16,553
Accumulated other comprehensive income............... 1,244 2,186 2,186
-------- ------- -------
Total stockholders' equity...................... 52,848 54,826 18,900
-------- ------- -------
Total liabilities and stockholders' equity...... $106,536 $96,232 $96,232
======== ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 65
MKS INSTRUMENTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Net sales................................................... $170,862 $188,080 $139,763
Cost of sales............................................... 102,008 107,606 83,784
-------- -------- --------
Gross profit................................................ 68,854 80,474 55,979
Research and development.................................... 14,195 14,673 12,137
Selling, general and administrative......................... 37,191 41,838 34,707
Restructuring............................................... 1,400 -- --
-------- -------- --------
Income from operations...................................... 16,068 23,963 9,135
Interest expense............................................ 2,378 2,132 1,483
Interest income............................................. 92 271 296
Other income (expense), net................................. (479) 166 187
-------- -------- --------
Income before income taxes.................................. 13,303 22,268 8,135
Provision for income taxes.................................. 800 1,978 949
-------- -------- --------
Net income.................................................. $ 12,503 $ 20,290 $ 7,186
======== ======== ========
Pro forma data (unaudited):
Historical income before income taxes.................. $ 8,135
Pro forma provision for income taxes................... 3,091
--------
Pro forma net income................................... 5,044
========
Pro forma net income per share:
Basic.................................................. $ 0.25
========
Diluted................................................ $ 0.24
========
Pro forma weighted average common shares outstanding:
Basic.................................................. 20,166
========
Diluted................................................ 20,651
========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 66
MKS INSTRUMENTS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------------
PREFERRED STOCK CLASS A CLASS B ADDITIONAL
------------------ ------------------ ------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
--------- ------ --------- ------ ---------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995....... 7,766,910 $40 10,286,255 $73 $48 $45,550
Distributions to stockholders...... (14,500)
Comprehensive income:
Net income..................... 12,503
Other comprehensive income:
Foreign currency translation
adjustment...................
Unrealized loss on
investments..................
Comprehensive income...........
--------- --- --------- --- ---------- --- --- -------
Balance at December 31, 1996....... 7,766,910 40 10,286,255 73 48 43,553
Distributions to stockholders...... (12,400)
Comprehensive income:
Net income..................... 20,290
Other comprehensive income:
Foreign currency translation
adjustment...................
Unrealized gain on
investments..................
Comprehensive income...........
--------- --- --------- --- ---------- --- --- -------
Balance at December 31, 1997....... 7,766,910 40 10,286,255 73 48 51,443
Distributions to stockholders...... (6,150)
Issuance of common stock........... 2
Comprehensive income:
Net income..................... 7,186
Other comprehensive income:
Foreign currency translation
adjustment...................
Unrealized loss on
investments..................
Comprehensive income...........
--------- --- --------- --- ---------- --- --- -------
Balance at December 31, 1998....... 7,766,910 $40 10,286,257 $73 $48 $52,479
========= === ========= === ========== === === =======
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE COMPREHENSIVE STOCKHOLDERS'
INCOME INCOME EQUITY
------------- ------------- -------------
<S> <C> <C> <C>
Balance at December 31, 1995....... $2,681 $ 48,392
Distributions to stockholders...... (14,500)
Comprehensive income:
Net income..................... $12,503 12,503
Other comprehensive income:
Foreign currency translation
adjustment................... (766) (766) (766)
Unrealized loss on
investments.................. (131) (131) (131)
-------
Comprehensive income........... $11,606
------ ======= --------
Balance at December 31, 1996....... 1,784 45,498
Distributions to stockholders...... (12,400)
Comprehensive income:
Net income..................... 20,290 20,290
Other comprehensive income:
Foreign currency translation
adjustment................... (786) (786) (786)
Unrealized gain on
investments.................. 246 246 246
-------
Comprehensive income........... $19,750
------ ======= --------
Balance at December 31, 1997....... 1,244 52,848
Distributions to stockholders...... (6,150)
Issuance of common stock...........
Comprehensive income:
Net income..................... 7,186 7,186
Other comprehensive income:
Foreign currency translation
adjustment................... 992 992 992
Unrealized loss on
investments.................. (50) (50) (50)
-------
Comprehensive income........... $ 8,128
------ ======= --------
Balance at December 31, 1998....... $2,186 $ 54,826
====== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 67
MKS INSTRUMENTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 12,503 $ 20,290 $ 7,186
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property, plant, and
equipment......................................... 5,920 5,712 6,242
Loss on disposal of property, plant and equipment.... -- 552 48
Deferred taxes....................................... (277) (145) (32)
Provision for doubtful accounts...................... (20) 258 253
Forward exchange contract loss (gain) realized....... 302 132 (1,211)
Stock option compensation............................ -- 95 --
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts
receivable...................................... 6,119 (12,509) 12,908
(Increase) decrease in inventories................ 4,145 (5,930) 6,479
(Increase) decrease in other current assets....... 3,239 (1,261) 554
Increase (decrease) in accrued compensation....... (220) 2,386 (3,516)
Increase (decrease) in other accrued expenses..... (1,520) 3,312 (1,602)
Increase (decrease) in accounts payable........... (4,221) 2,638 (3,682)
Increase (decrease) in income taxes payable....... 331 1,283 (647)
-------- -------- --------
Net cash provided by operating activities.............. 26,301 16,813 22,980
-------- -------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment........... (9,417) (3,269) (3,137)
Proceeds from sale of property, plant and
equipment......................................... -- 203 60
Increase in other assets............................. (443) (123) (270)
Cash received (used) to settle forward exchange
contracts......................................... (302) (132) 1,211
-------- -------- --------
Net cash used in investing activities.................. (10,162) (3,321) (2,136)
-------- -------- --------
Cash flows from financing activities:
Net (payments) borrowings on demand notes payable.... 224 (1,875) --
Proceeds from short-term borrowings.................. 11,025 24,110 15,242
Payments on short-term borrowings.................... (9,628) (22,938) (17,569)
Proceeds from long-term debt......................... 400 -- --
Principal payments on long-term debt................. (2,093) (2,217) (2,057)
Cash distributions to stockholders................... (14,500) (12,400) (6,150)
Principal payments under capital lease obligations... (982) (870) (1,257)
-------- -------- --------
Net cash used in financing activities.................. (15,554) (16,190) (11,791)
-------- -------- --------
Effect of exchange rate changes on cash and cash
equivalents.......................................... (420) 1,394 (376)
-------- -------- --------
Increase (decrease) in cash and cash equivalents....... 165 (1,304) 8,677
Cash and cash equivalents at beginning of period....... 3,650 3,815 2,511
-------- -------- --------
Cash and cash equivalents at end of period............. $ 3,815 $ 2,511 $ 11,188
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest.......................................... $ 2,363 $ 2,030 $ 1,526
======== ======== ========
Income taxes...................................... $ 770 $ 1,078 $ 1,608
======== ======== ========
Noncash transactions during the period:
Equipment acquired under capital leases........... $ 2,074 $ 145 $ 1,138
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 68
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
1. DESCRIPTION OF BUSINESS:
MKS Instruments, Inc. (the "Company") is a worldwide developer,
manufacturer, and supplier of instruments and components that are used to
measure, control and analyze gases in semiconductor manufacturing and similar
industrial manufacturing processes. The Company's products include pressure and
flow measurement and control instruments; vacuum gauges, valves and components;
and gas analysis instruments. The Company is subject to risks common to
companies in the semiconductor industry including, but not limited to, the
highly cyclical nature of the semiconductor industry leading to recurring
periods of over supply, development by the Company or its competitors of new
technological innovations, dependence on key personnel and the protection of
proprietary technology.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation. The Company has reflected the
approximately 77.5% owned foreign subsidiaries as wholly-owned subsidiaries
pursuant to common control accounting. Upon the closing of this offering for
which these financial statements are being prepared, the shares of the foreign
subsidiaries owned directly by the ultimate stockholders will be contributed to
the Company.
PRO FORMA BALANCE SHEET PRESENTATION (UNAUDITED)
The Company intends to distribute the balance of its accumulated and
undistributed S corporation earnings from the proceeds of this offering for
which this registration statement is being prepared. The unaudited pro forma
balance sheet has been prepared assuming an estimated $35,926,000 distribution
was payable as of December 31, 1998. The remaining balance in retained earnings
represents accumulated earnings prior to the Company converting from a C
corporation to an S corporation in 1987, accumulated income in overseas
subsidiaries and differences between book and tax accumulated income.
PRO FORMA NET INCOME PER SHARE (UNAUDITED)
Pro forma net income per share is based upon the weighted average number of
common and common equivalent shares (using the treasury stock method)
outstanding. Common equivalent shares are included in the per share calculations
where the effect of their inclusion would be dilutive.
Historical net income has been adjusted for the pro forma provision for
income taxes calculated assuming the Company was subject to income taxation as a
C corporation, at a pro forma tax rate of 38.0%. In accordance with a regulation
of the Securities and Exchange Commission, pro forma net income per share has
been presented for the year ended December 31, 1998 to reflect the effect as of
January 1, 1998 of the assumed issuance of that number of shares of common stock
of the Company necessary to be sold at the mid-point of the estimated initial
public offering price in order to fund the intended distribution in the amount
of the accumulated and undistributed S corporation earnings.
F-7
<PAGE> 69
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical net income per share is not presented as it is not meaningful
based upon the Company's planned conversion from an S corporation to a C
corporation upon the closing of this offering for which these financial
statements are being prepared.
The following is a reconciliation of basic to diluted pro forma net income
per share:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1998
------------------
<S> <C>
Pro forma net income........................................ $ 5,044
=======
Shares used in pro forma net income per common share --
basic..................................................... 20,166
Effect of dilutive securities:
Employee and director stock options............... 485
-------
Shares used in pro forma net income per common share --
diluted................................................... 20,651
=======
Pro forma net income per common share -- basic.............. $ 0.25
=======
Pro forma net income per common share -- diluted............ $ 0.24
=======
</TABLE>
FOREIGN EXCHANGE
The functional currency of the Company's foreign subsidiaries is the
applicable local currency. For those subsidiaries, assets and liabilities are
translated to U.S. dollars at year-end exchange rates. Income and expense
accounts are translated at the average exchange rates prevailing for the year.
The resulting translation adjustments are included in accumulated other
comprehensive income in consolidated stockholders' equity.
REVENUE RECOGNITION
The Company recognizes revenue upon shipment. The Company accrues for
anticipated returns and warranty costs upon shipment.
CASH AND CASH EQUIVALENTS
All highly liquid investments with an original maturity of three months or
less at the date of purchase are considered to be cash equivalents. Cash
equivalents consist of money market instruments.
INVESTMENTS
The appropriate classification of investments in debt and equity securities
is determined at the time of purchase. Debt securities that the Company has both
the intent and ability to hold to maturity are carried at amortized cost. Debt
securities that the Company does not have the intent and ability to hold to
maturity or equity securities are classified either as "available-for-sale" or
as "trading" and are carried at fair value. Marketable equity securities are
carried at fair value and classified either as available-for-sale or trading.
Unrealized gains and losses on securities classified as available-for-sale are
included in accumulated other comprehensive income in consolidated stockholders'
equity. Unrealized gains and losses on securities classified as trading are
reported in earnings.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
on the first-in, first-out method.
F-8
<PAGE> 70
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Equipment acquired under
capital leases is recorded at the present value of the minimum lease payments
required during the lease period. Expenditures for major renewals and
betterments that extend the useful lives of property, plant and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense as
incurred. When assets are sold or otherwise disposed of, the cost and related
accumulated depreciation are eliminated from the accounts and any resulting gain
or loss is recognized in earnings.
Depreciation is provided on the straight-line method over the estimated
useful lives of 20 years for buildings and three to five years for machinery and
equipment. Leasehold improvements are amortized over the shorter of the lease
term or the estimated useful life of the lease.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Software
Developed or Obtained for Internal Use" which provides guidance on the
accounting for the costs of software developed or obtained for internal use. SOP
98-1 is effective for fiscal years beginning after December 15, 1998. The
Company does not expect the SOP 98-1 to have a material impact on its financial
position or results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. The statement
is effective for all fiscal quarters of all fiscal years beginning after June
15, 1999. The Company has not yet determined the impact that the adoption SFAS
No. 133 will have on its financial position or results of operations.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
RECLASSIFICATION OF PRIOR YEAR BALANCES
Certain reclassifications have been made to prior years' consolidated
financial statements to conform to the current presentation.
F-9
<PAGE> 71
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT:
FOREIGN EXCHANGE RISK MANAGEMENT
The Company uses forward exchange contracts and local currency purchased
options in an effort to reduce its exposure to currency fluctuations on future
U.S. dollar cash flows derived from foreign currency denominated sales
associated with the intercompany purchases of inventory. The Company has entered
into forward exchange contracts, and to a lesser extent, local currency
purchased options to hedge a portion of its probable anticipated, but not firmly
committed transactions. The Company has also used forward exchange contracts to
hedge firm commitments. Market value gains and losses on forward exchange
contracts are recognized immediately in earnings unless a firm commitment
exists. Market value gains and premiums on local currency purchased options on
probable anticipated transactions and market value gains and losses on forward
exchange contracts hedging firm commitments are recognized when the hedged
transaction occurs. These contracts, which relate primarily to Japanese and
European currencies generally have terms of eighteen months or less. The Company
does not hold or issue derivative financial instruments for trading purposes.
Realized and unrealized gains and losses on forward exchange contracts and
local currency purchased options that qualify for hedge accounting are
recognized in earnings in the same period as the underlying hedged item.
Realized and unrealized gains and losses on forward exchange contracts and local
currency purchased option contracts that do not qualify for hedge accounting are
recognized immediately in earnings. Forward exchange contracts receive hedge
accounting on firmly committed transactions when they are designated as a hedge
of the designated currency exposure and are highly effective in minimizing such
exposure. Options receive hedge accounting on probable anticipated transactions
when they are designated as a hedge of the currency exposure and are highly
effective in minimizing such exposure. The cash flows resulting from forward
exchange contracts and local currency purchased options that qualify for hedge
accounting are classified in the statement of cash flows as part of cash flows
from operating activities. Cash flows resulting from forward exchange contracts
and local currency purchased options that do not qualify for hedge accounting
are classified in the statement of cash flows as investing activities.
Forward exchange contracts with notional amounts totaling none, $9,800,000,
and $8,000,000 to exchange foreign currencies for U.S. dollars, were outstanding
at December 31, 1996, 1997, and 1998, respectively. The forward exchange
contracts with notional amounts outstanding at December 31, 1998 totaling
$8,000,000 do not qualify for hedge accounting and accordingly are marked to
market and recognized immediately in earnings. Local currency purchased options
with notional amounts totaling $3,722,000, $12,738,000, and $10,221,000 to
exchange foreign currencies for U.S. dollars were outstanding at December 31,
1996, 1997, and 1998, respectively.
Foreign exchange losses of $479,000, foreign exchange gains of $1,166,000
and foreign exchange losses of $168,000 on forward exchange contracts that did
not qualify for hedge accounting were recognized in earnings during 1996, 1997
and 1998, respectively, and are classified in Other income (expense), net. Gains
on forward exchange contracts that qualify for hedge accounting of $978,000 were
deferred and classified in other accrued expenses at December 31, 1996. Gains on
local currency purchased options deferred at December 31, 1996 that qualify for
hedge accounting of $200,000 were deferred in other accrued expenses. Gains on
forward exchange contracts and local currency purchased options that qualify for
hedge accounting are classified in cost of goods sold and totaled $2,476,000,
$1,178,000, and $310,000 for the years ended December 31, 1996, 1997, and 1998,
respectively.
The fair value of forward exchange contracts at December 31, 1998,
determined by applying period end currency exchange rates to the notional
contract amounts, amounted to a loss of $349,000. The fair
F-10
<PAGE> 72
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
values of local currency purchased options at December 31, 1997 and 1998 which
were obtained through dealer quotes were immaterial.
The Company recorded a foreign exchange translation loss on intercompany
payables of $1,000,000 and a foreign exchange translation gain on intercompany
payables of $1,000,000 in Other income (expense), net in 1997 and 1998,
respectively. Foreign exchange translation gains and losses from unhedged
intercompany balances were not material in 1996.
The market risk exposure from forward exchange contracts is assessed in
light of the underlying currency exposures and is controlled by the initiation
of additional or offsetting foreign currency contracts. The market risk exposure
from options is limited to the cost of such investments. Credit risk exposure
from forward exchange contracts and local currency purchased options are
minimized as these instruments are contracted with a major financial
institution. The Company monitors the credit worthiness of this financial
institution and full performance is anticipated.
INTEREST RATE RISK MANAGEMENT
The Company utilizes an interest rate swap to fix the interest rate on
certain variable rate term loans in order to minimize the effect of changes in
interest rates on earnings. In 1998, the Company entered into a four-year
interest rate swap agreement with a major financial institution for the notional
amount of $10,528,000 equal to the term loans described in Note 6. Under the
agreement, the Company pays a fixed rate of 5.85% on the notional amount and
receives the London Interbank Offering Rate ("LIBOR"). The interest differential
paid or received on the swap agreement is recognized as an adjustment to
interest expense. At December 31, 1998, the fair value of this interest rate
swap, which represents the amount the Company would receive or pay to terminate
the agreement, is a net payable of $151,000, based on dealer quotes.
The market risk exposure from the interest rate swap is assessed in light
of the underlying interest rate exposures. Credit risk exposure from the swap is
minimized as the agreement is with a major financial institution. The Company
monitors the credit worthiness of this financial institution and full
performance is anticipated.
CONCENTRATIONS OF CREDIT RISK
The Company's significant concentrations of credit risk consist principally
of cash and cash equivalents and trade accounts receivable. The Company
maintains cash and cash equivalents with financial institutions including the
bank it has borrowings with. Concentrations of credit risk with respect to trade
accounts receivable are limited due to the large number of geographically
dispersed customers. Credit is extended for all customers based on financial
condition and collateral is not required.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the term loans, including the current portion,
approximates its carrying value given its variable rate interest provisions. The
fair value of mortgage notes is based on borrowing rates for similar instruments
and approximates its carrying value. For all other balance sheet financial
instruments, the carrying amount approximates fair value because of the short
period to maturity of these instruments.
F-11
<PAGE> 73
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
4. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- -------
<S> <C> <C>
Raw material............................................... $ 9,981 $ 7,544
Work in process............................................ 7,241 5,718
Finished goods............................................. 12,741 11,202
------- -------
$29,963 $24,464
======= =======
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- -------
<S> <C> <C>
Land....................................................... $ 8,350 $ 8,834
Buildings.................................................. 26,241 26,020
Machinery and equipment.................................... 24,861 27,394
Furniture and fixtures..................................... 9,697 10,578
Leasehold improvements..................................... 882 1,814
------- -------
70,031 74,640
Less: accumulated depreciation and amortization............ 36,055 41,915
------- -------
$33,976 $32,725
======= =======
</TABLE>
6. DEBT:
CREDIT AGREEMENTS AND SHORT-TERM BORROWINGS
In February 1996, the Company entered into loan agreements with two banks,
which provide access to a revolving credit facility. These agreements have since
been amended. The revolving credit facility, as amended, provides for
uncollateralized borrowings up to $30,000,000, which expires on December 31,
1999. Interest on borrowings is payable quarterly at either the banks' base rate
or the LIBOR Rate, as defined in the agreement, at the Company's option. At
December 31, 1997 and 1998, the Company had no borrowings under this revolving
credit facility.
Additionally, certain of the Company's foreign subsidiaries have lines of
credit and short-term borrowing arrangements with various financial institutions
which provide for aggregate borrowings as of December 31, 1998 of up to
$15,003,000, which generally expire and are renewed at six month intervals. At
December 31, 1997 and 1998, total borrowings outstanding under these
arrangements were $10,721,000, and $9,687,000, respectively, at interest rates
ranging from 1.3% to 1.6%, and 1.3% to 1.7%, respectively. Foreign short-term
borrowings are generally collateralized by certain trade accounts receivable and
are guaranteed by a domestic bank.
F-12
<PAGE> 74
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Term loans.................................................. $12,194 $10,528
Mortgage notes.............................................. 3,624 3,572
------- -------
Total long-term debt........................................ 15,818 14,100
Less: current portion....................................... 2,070 2,058
------- -------
Long-term debt less current portion......................... $13,748 $12,042
======= =======
</TABLE>
On November 1, 1993, the Company entered into a term loan agreement with a
bank, which provided for borrowings of $10,000,000. Principal payments are
payable in equal monthly installments of $56,000 through October 1, 2000, with
the remaining principal payment due on November 1, 2000. The loan is
collateralized by certain land, buildings, and equipment. Interest is payable
monthly at either the bank's base rate, at a rate based on the long-term funds
rate, or at the LIBOR Rate, as defined in the agreement, at the Company's
option.
On October 31, 1995, the Company also entered into a term loan agreement
with the same bank, which provided additional uncollateralized borrowings of
$7,000,000. Principal payments are payable in equal monthly installments of
$83,000 through June 1, 2002, with the remaining principal payment due on June
30, 2002. Interest is payable monthly at either the bank's base rate or at the
LIBOR Rate, as defined in the agreement, at the Company's option.
At December 31, 1997 and 1998, the interest rates in effect for the term
loan borrowings were 6.975% and 7.131%, respectively.
The terms of the revolving credit facility and term loan agreements, as
amended, contain, among other provisions, requirements for maintaining certain
levels of tangible net worth and other financial ratios. The agreement also
contains restrictions with respect to acquisitions. Under the most restrictive
covenant, the operating cash flow to debt service ratio for a fiscal quarter
shall not be less than 1.25 to 1.0. In the event of default of these covenants
or restrictions, any obligation then outstanding under the loan agreement shall
become payable upon demand by the bank. See Note 13 for subsequent event.
The Company has loans outstanding from various foreign banks in the form of
mortgage notes at interest rates ranging from 2.0% to 6.2%. Principal and
interest are payable in monthly installments through 2010. The loans are
collateralized by mortgages on certain of the Company's foreign properties.
Aggregate maturities of long-term debt over the next five years are as
follows:
<TABLE>
<CAPTION>
AGGREGATE
YEAR ENDING DECEMBER 31, MATURITIES
------------------------ ----------
<S> <C>
1999................................................... $ 2,058
2000................................................... 7,343
2001................................................... 1,405
2002................................................... 1,329
2003................................................... 422
Thereafter............................................. 1,543
-------
$14,100
=======
</TABLE>
F-13
<PAGE> 75
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
7. LEASE COMMITMENTS:
The Company leases certain of its facilities and machinery and equipment
under capital and operating leases expiring in various years through 2002 and
thereafter. Generally, the facility leases require the Company to pay
maintenance, insurance and real estate taxes. Rental expense under operating
leases totaled $2,487,000, $2,478,000, and $2,388,000 for the years ended
December 31, 1996, 1997, and 1998, respectively.
Minimum lease payments under operating and capital leases are as follows:
<TABLE>
<CAPTION>
CAPITAL
OPERATING LEASES LEASES
------------------------ ---------
YEAR ENDING DECEMBER 31, REAL ESTATE EQUIPMENT EQUIPMENT
------------------------ ----------- --------- ---------
<S> <C> <C> <C>
1999................................................... $1,484 $437 $1,202
2000................................................... 882 251 974
2001................................................... 660 130 537
2002................................................... 153 36 333
2003................................................... 84 13 116
Thereafter............................................. 51 42 --
------ ---- ------
Total minimum lease payments................................ $3,314 $909 $3,162
====== ==== ======
Less: amounts representing interest......................... 344
------
Present value of minimum lease payments..................... 2,818
Less: current portion....................................... 1,074
------
Long-term portion........................................... $1,744
======
</TABLE>
8. STOCKHOLDERS' EQUITY:
COMMON STOCK
Prior to the effectiveness of a registration statement relating to the
initial public offering of common stock of the Company, the Company will effect
a 3-for-2 stock split, to be effected in the form of a stock dividend of its
common stock, increase the number of authorized shares of common stock to
30,000,000 and authorize 2,000,000 shares of $0.01 par value preferred stock.
Accordingly, all share data has been restated to reflect the common stock split.
The Company has two classes of common stock. Stockholders of Class A common
stock are entitled to voting rights with one vote for each share of common
stock. Stockholders of Class B common stock are not entitled to voting rights.
Upon the closing of this offering for which this Registration Statement is
being prepared each outstanding share of Class A and Class B common stock of the
Company will be converted into an aggregate of 18,053,167 shares of common
stock.
STOCK OPTION PLANS
On January 9, 1998, the stockholders of the Company approved the following:
(i) an increase in the number of shares that may be granted under the 1995 Stock
Incentive Plan to 3,750,000 shares of common stock; (ii) the adoption of the
1997 Director Stock Option Plan pursuant to which options may be granted to
purchase up to an aggregate of 300,000 shares of common stock; (iii) the
adoption of the 1997 Employee Stock Purchase Plan pursuant to which the Company
may issue up to an aggregate of 450,000 shares of common stock; and (iv) that
3,750,000 shares, 300,000 shares, and 450,000 shares of
F-14
<PAGE> 76
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
common stock be reserved for issuance under the 1995 Stock Incentive Plan, the
1997 Director Stock Option Plan, and the 1997 Employee Stock Purchase Plan,
respectively.
The Company grants options to employees under the 1995 Stock Incentive Plan
(the "Plan") and to directors under the 1996 Director Stock Option Plan (the
"Director Plan").
At December 31, 1998 options to purchase 1,651,793 shares of the Company's
common stock were reserved for issuance under the Plan. At December 31, 1998,
under the Director Plan, options to purchase 28,932 shares of common stock were
reserved for issuance. Stock options are granted at 100% of the fair value of
the Company's common stock as determined by the Board of Directors on the date
of grant. In reaching the determination of fair value at the time of each grant,
the Board of Directors considered a range of factors, including the Company's
current financial position, its recent revenues, results of operations and cash
flows, its assessment of the Company's competitive position in its markets and
prospects for the future, the status of the Company's product development and
marketing efforts, current valuations for comparable companies and the
illiquidity of an investment in the Company's common stock. Generally, stock
options under the Plan vest 20% after one year and 5% per quarter thereafter,
and expire 10 years after the grant date. Under the Director Plan, the options
granted in 1996 vest over three years and options granted in 1997 and later vest
at the earlier of (a) the next annual meeting, (b) 13 months from date of grant
or (c) the effective date of an acquisition as defined in the Director Plan.
The following table presents the activity for options under the Plan.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
------------------- -------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
-------- -------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding -- beginning of period... 608,270 $11.06 810,442 $4.43 1,564,449 $4.50
Granted.............................. 810,442 4.43 785,657 4.57 629,969 6.80
Exercised............................ -- -- -- -- (2) 4.43
Forfeited or Expired................. (608,270) 11.06 (31,650) 4.43 (96,209) 4.43
-------- ------ --------- ----- ---------- -----
Outstanding -- end of period......... 810,442 $ 4.43 1,564,449 $4.50 2,098,207 $5.20
Exercisable at end of period......... 114,782 $ 4.43 476,451 $4.43 778,473 $4.46
</TABLE>
At December 31, 1998, Plan options included 1,436,588, 566,669, and 94,950
shares outstanding at exercise prices of $4.43, $6.67, and $8.00 per share. The
weighted average remaining contractual life of these options was 8.2 years.
During 1996, 27,128 options were granted at an exercise price of $4.43 per
share under the Director Plan and were outstanding at December 31, 1996. Of
these options, 4,524 were exercisable at December 31, 1996. During 1997, options
for 3,620 shares were granted under the Director Plan at an exercise price of
$4.43 per share. Of these options, 30,748 were outstanding with 13,564
exercisable at the $4.43 per share price at December 31, 1997. During 1998,
options for 3,620 shares were granted under the Director Plan at an exercise
price of $8.00 per share. Of these options, 34,368 were outstanding with 26,228
exercisable at the $4.43 per share price at December 31, 1998.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting for
Stock-Based Compensation." The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the
F-15
<PAGE> 77
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
fair value of the Company's stock at the date of grant over the amount an
employee must pay to acquire the stock.
The disclosures required under SFAS No. 123 have been omitted as they are
not meaningful based upon the Company's planned conversion from an S corporation
to a C corporation upon the closing of this offering for which these financial
statements are being prepared. Had the fair value based method prescribed in
SFAS No. 123 been used to account for stock-based compensation cost, there would
have been no change in pro forma net income and pro forma earnings per share
from that reported.
9. INCOME TAXES:
The Company has elected to be taxed as an S corporation for federal and
certain states income tax purposes and, as a result, is not subject to Federal
taxation but is subject to state taxation on income in certain states. The
stockholders are liable for individual Federal and certain state income taxes on
their allocated portions of the Company's taxable income.
The components of income before income taxes and the historical related
provision for income taxes consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1997 1998
------- ------- ------
<S> <C> <C> <C>
Income before income taxes:
United States........................................ $11,953 $21,858 $6,169
Foreign.............................................. 1,350 410 1,966
------- ------- ------
13,303 22,268 8,135
Current taxes:
State................................................ 285 1,331 197
Foreign.............................................. 792 792 784
------- ------- ------
1,077 2,123 981
------- ------- ------
Deferred taxes:
State................................................ (156) (72) (39)
Foreign.............................................. (121) (73) 7
------- ------- ------
(277) (145) (32)
------- ------- ------
Provision for income taxes............................. $ 800 $ 1,978 $ 949
======= ======= ======
</TABLE>
As the Company is not subject to Federal income taxes, a reconciliation of
the effective tax rate to the Federal statutory rate is not meaningful.
At December 31, 1996, 1997, and 1998 the components of the deferred tax
asset and deferred tax liability were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Deferred tax assets (liabilities):
Inventories............................................ $234 $344 $265
Intercompany profits................................... 160 214 152
Compensation........................................... 72 77 127
Investment booked under the equity method.............. (28) (41) (59)
Other.................................................. (34) (45) 96
---- ---- ----
Total.......................................... $404 $549 $581
==== ==== ====
</TABLE>
F-16
<PAGE> 78
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
10. EMPLOYEE BENEFIT PLANS:
The Company has a 401(k) profit-sharing plan for U.S. employees meeting
certain requirements in which eligible employees may contribute from 1% up to
12% of their compensation. The Company, at its discretion, may provide a
matching contribution which will generally match up to the first 2% of each
participant's compensation, plus 25% of the next 4% of compensation. At the
discretion of the Board of Directors, the Company may also make additional
contributions for the benefit of all eligible employees. The Company's
contributions are generally paid annually, and were $2,170,000 and $2,500,000
for the years ended December 31, 1996 and 1997. Approximately $1,400,000 has
been accrued as the estimated Company contribution for the year ended December
31, 1998 and is included in accrued compensation.
The Company maintains a bonus plan which provides cash awards to key
employees, at the discretion of the Compensation Committee of the Board of
Directors, based upon operating results and employee performance. Bonus expense
to key employees was none, $1,425,000, and none for the years ended December 31,
1996, 1997, and 1998, respectively.
11. RESTRUCTURING:
In 1996, the Company recorded a restructuring charge of $1,400,000,
primarily related to reduction of personnel and the closure of facilities in
Phoenix, AZ and San Jose, CA. These charges include $425,000 of severance pay,
$710,000 of lease commitments, and $265,000 for the write-off of leasehold
improvements. The facilities closure concluded during 1997. The remaining
balance of approximately $126,000 for lease commitments is included in Other
accrued expenses in the accompanying balance sheet at December 31, 1998.
12. GEOGRAPHIC FINANCIAL INFORMATION AND SIGNIFICANT CUSTOMER:
See Note 1 for a brief description of the Company's business. The Company
is organized around two similar product lines domestically and by geographic
locations internationally and has three reportable segments: North America, Far
East, and Europe. Net sales to unaffiliated customers are based on the location
in which the sale originated. Transfers between geographic areas are at
negotiated transfer prices and have been eliminated from consolidated net sales.
Income from operations consists of total net sales less operating expenses and
does not include either interest income, interest expense or income taxes. The
Company had one customer comprising 15%, 22% and 16% of net sales for the years
ended December 31, 1996, 1997, and 1998, respectively. This data is presented in
accordance with SFAS 131, "Disclosures About Segments of an Enterprise and
Related Information," which the Company has retroactively adopted for all
periods presented.
F-17
<PAGE> 79
MKS INSTRUMENTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(TABLES IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
------------------------------------------------
NORTH AMERICA FAR EAST EUROPE TOTAL
------------- -------- ------- --------
<S> <C> <C> <C> <C>
Net sales to unaffiliated customers... $ 95,607 $23,902 $20,254 $139,763
Intersegment net sales................ 26,657 290 1,015 27,962
Depreciation and amortization......... 5,627 210 405 6,242
Income from operations................ 6,319 1,298 1,518 9,135
Identifiable assets................... 65,560 20,768 9,904 96,232
Capital expenditures.................. 2,635 179 323 3,137
YEAR ENDED DECEMBER 31, 1997
-----------------------------------------------
Net sales to unaffiliated customers... $138,186 $31,559 $18,335 $188,080
Intersegment net sales................ 35,429 225 749 36,403
Depreciation and amortization......... 5,096 259 357 5,712
Income from operations................ 22,847 886 230 23,963
Identifiable assets................... 77,302 19,906 9,328 106,536
Capital expenditures.................. 2,899 128 242 3,269
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------
Net sales to unaffiliated customers... $121,061 $31,066 $18,735 $170,862
Intersegment net sales................ 34,100 199 1,426 35,725
Depreciation and amortization......... 5,145 388 387 5,920
Income from operations................ 14,534 653 881 16,068
Identifiable assets................... 66,593 18,524 9,883 95,000
Capital expenditures.................. 8,332 208 877 9,417
</TABLE>
13. SUBSEQUENT EVENT:
On January 28, 1999, the Company amended its revolving credit facility and
its term loan agreements described in Note 6. The amendments include revised
quarterly cash flow to debt service ratios. The most restrictive covenant is the
cash flow to debt service ratio of 1.25 to 1.0 in the fourth quarter of 1999 and
thereafter.
F-18
<PAGE> 80
INSIDE BACK COVER (PG.5):
The inside back cover graphically depicts MKS Instruments' message of being a
worldwide provider of process control solutions. It is produced in four-color
process. In the center of the page is a photo of the Earth, with the tag line
"Providing Solutions Around the Process, Around the World" wrapping around the
photo. The background of the page is dark, with the MKS logo appearing at the
top right, knocking out to white. Photos of MKS products surround the photo of
the Earth --above, below, left, and right--and include MKS Baratron Capacitance
Manometers, a Throttling Poppet Valve, a Pressure Controller, Mass Flow
Controllers, an In Situ Flow Verifier, a Direct Liquid Injection Subsystem, and
a Residual Gas Analyzer.
<PAGE> 81
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHARES
LOGO
COMMON STOCK
------------------------
Prospectus
, 1999
------------------------
NationsBanc Montgomery Securities LLC
Donaldson, Lufkin & Jenrette
Lehman Brothers
Until , 1999 (25 days after the date of this prospectus), all
dealers effecting transactions in the common stock, whether or not participating
in this distribution, may be required to deliver a prospectus. This is in
addition to the obligation of dealers to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 82
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses payable in connection with the sale of the common stock
offered hereby are as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $27,800
NASD Filing Fee............................................. $10,500
Printing, Engraving and Mailing Expenses.................... $ *
Nasdaq Listing Fee.......................................... $95,000
Legal Fees and Expenses..................................... $ *
Accounting Fees and Expenses................................ $ *
Blue Sky Fees and Expenses.................................. $ *
Transfer Agent and Registrar Fees........................... $ *
Miscellaneous............................................... $ *
-------
Total............................................. $ *
=======
</TABLE>
- ---------------
The Company will bear all expenses shown above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of Chapter 156B of the Massachusetts General Laws provides that
a corporation may indemnify its directors and officers to the extent specified
in or authorized by (i) the articles of organization; (ii) a by-law adopted by
the stockholders; or (iii) a vote adopted by the holders of a majority of the
shares of stock entitled to vote on the election of directors. In all instances,
the extent to which a corporation provides indemnification to its directors and
officers under Section 67 is optional. In its Amended and Restated Articles of
Organization (the "Articles of Organization"), the Registrant has elected to
commit to provide indemnification to its directors and officers in specified
circumstances. Generally, Article 6 of the Registrant's Articles of Organization
provides that the Registrant shall indemnify directors and officers of the
Registrant against liabilities and expenses arising out of legal proceedings
brought against them by reason of their status as directors or officers or by
reason of their agreeing to serve, at the request of the Registrant, as a
director or officer with another organization. Under this provision, a director
or officer of the Registrant shall be indemnified by the Registrant for all
costs and expenses (including attorneys' fees), judgments, liabilities and
amounts paid in settlement of such proceedings, even if he is not successful on
the merits, if he acted in good faith in the reasonable belief that his action
was in the best interests of the Registrant. The Board of Directors may
authorize advancing litigation expenses to a director or officer at his request
upon receipt of an undertaking by any such director of officer to repay such
expenses if it is ultimately determined that he is not entitled to
indemnification for such expenses.
Article 6 of the Registrant's Articles of Organization eliminates the
personal liability of the Registrant's directors to the Registrant or its
stockholders for monetary damages for breach of a director's fiduciary duty,
except to the extent Chapter 156B of the Massachusetts General Laws prohibits
the elimination or limitation of such liability.
The Underwriting Agreement, a form of which is filed at Exhibit 1.1 to this
Registration Statement on Form S-1 (the "Underwriting Agreement"), provides that
the underwriters are obligated under certain circumstances to indemnify
directors, officers and controlling persons of the Registrant against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Reference is made to the form of Underwriting Agreement.
II-1
<PAGE> 83
The Company has obtained directors and officers liability insurance for the
benefit of its directors and certain of its officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the three years preceding the filing of this Registration Statement, the
Registrant sold 2 shares of its common stock for total proceeds of $6.64. The
registrant awarded options to purchase 837,570 shares of common stock at a
weighted average exercise price of $4.43 per share and 789,277 shares of common
stock at a weighted average exercise price of $4.57 per share, in 1996 and 1997,
respectively.
In 1998, the registrant awarded options to purchase shares of common stock
on the dates in the amounts, and at the exercise price set forth below:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
DATE OPTIONS PER SHARE
- ---- ----------------- --------------
<S> <C> <C>
January 9, 1998........................................ 3,620 $8.00
January 26, 1998....................................... 31,650 $8.00
March 31, 1998......................................... 31,650 $8.00
July 9, 1998........................................... 450,000 $6.67
November 10, 1998...................................... 116,669 $6.67
</TABLE>
The grant of options were exempt from registration under the Securities Act
by virtue of the provisions of Section 4(2) of the Securities Act or Rule 701
thereunder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EX. NO. DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Restated Articles of Organization, as amended
*3.2 Form of Amended and Restated Articles of Organization
3.3 By-Laws, as amended
*3.4 Form of Amended and Restated By-Laws
4.1 Specimen certificate representing the common stock
*5.1 Opinion of Hale and Dorr LLP
10.1 Amended and Restated 1995 Stock Incentive Plan
10.2 1996 Amended and Restated 1996 Director Stock Option Plan
10.3 1997 Director Stock Option Plan
*10.4 1999 Employee Stock Purchase Plan
10.5 Amended and Restated Employment Agreement dated as of
December 15, 1995 between Leo Berlinghieri and the
Registrant
10.6 Amended and Restated Employment Agreement dated as of
December 15, 1995 between John J. Sullivan and the
Registrant
10.7 Amended and Restated Employment Agreement dated as of
December 15, 1995 between Ronald C. Weigner and the
Registrant
10.8 Amended and Restated Employment Agreement dated as of
December 15, 1995 between William D. Stewart and the
Registrant
*10.9 Loan Agreement dated as of October 31, 1995, as last amended
January 28, 1999, by and between the First National Bank of
Boston and the Registrant
10.10 Lease Agreement dated as of October 12, 1989, as extended
November 1, 1998, by and between Aspen Industrial Park
Partnership and the Registrant
*10.11 Loan Agreement dated as of November 1, 1993, as last amended
January 28, 1999 between the First National Bank of Boston
and the Registrant
</TABLE>
II-2
<PAGE> 84
<TABLE>
<CAPTION>
EX. NO. DESCRIPTION
------- -----------
<C> <S>
10.12 Lease dated as of September 21, 1995 by and between General
American Life Insurance Company and the Registrant
*10.13 Loan Agreement dated as of February 23, 1996, as last
amended January 28, 1999 between the BankBoston, N.A.,
Chemical Bank and the Registrant
10.14 Revolving Credit Note ($8,000,000) dated February 23, 1996
between Chemical Bank, The First National Bank of Boston and
the Registrant
10.15 Revolving Credit Note ($12,000,000) dated February 23, 1996
between Chemical Bank, The First National Bank of Boston and
the Registrant
10.16 Promissory Note dated as of August 1990 between Jefferson
National Life Insurance Company and the Registrant
**10.17 Comprehensive Supplier Agreement #982812 dated October 23,
1998 by and between Applied Materials, Inc. and the
Registrant
**10.18 Management Incentive Program
10.19 Lease dated as of December 21, 1989, as last amended
December 1996, between Walpole Park South II Trust and the
Registrant
10.20 Lease dated as of January 1, 1996 between MiFuji Kanzai Co.
Ltd. and the Registrant (covering Floor 5)
10.21 Lease dated as of April 21, 1997 between MiFuji Kanzai Co.
Ltd. and the Registrant (covering Floors 1 and 2)
10.22 Split-Dollar Agreement dated as of September 12, 1991
between the Registrant, John R. Bertucci and Claire R.
Bertucci and Richard S. Chute, Trustees of the John R.
Bertucci Insurance Trust of January 10, 1986
10.23 Split-Dollar Agreement dated as of September 12, 1991
between the Registrant, John R. Bertucci and John R.
Bertucci and Thomas H. Belknap, Trustees of the Claire R.
Bertucci Insurance Trust of January 10, 1986
*10.24 Tax Indemnification and S Corporation Distribution Agreement
10.25 Employment Agreement dated March 7, 1997 between Joseph
Maher and the Registrant
*10.26 Contribution Agreement
21.1 Subsidiaries of the Registrant
*23.1 Consent of Hale and Dorr LLP (contained in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included on Page II-4)
27 Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
** Confidential materials omitted and filed separately with the Securities and
Exchange Commission.
(b) FINANCIAL STATEMENTS SCHEDULES
Report of Independent Accountants on Schedule II -- Valuation and
Qualifying Accounts
Schedule II -- Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS.
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 and 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 questions 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-3
<PAGE> 85
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offer
therein, and this offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby further undertakes to provide to the
underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
II-4
<PAGE> 86
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement (File No. 333- ) to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Andover, Commonwealth of Massachusetts, on this day of January 28, 1999.
MKS INSTRUMENTS, INC.
By: /s/ JOHN R. BERTUCCI
------------------------------------
JOHN R. BERTUCCI
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints each of John R. Bertucci, Ronald C.
Weigner and Mark G. Borden such person's true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for such person and in
such person's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement (or to any other registration statement for the same offering that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act),
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that any said attorney-in-fact
and agent, or any substitute or substitutes of any of them, 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ JOHN R. BERTUCCI Chairman of the Board of January 28, 1999
- --------------------------------------------------- Directors, President and Chief
JOHN R. BERTUCCI Executive Officer (Principal
Executive Officer)
/s/ RONALD C. WEIGNER Vice President and Chief January 28, 1999
- --------------------------------------------------- Financial Officer (Principal
RONALD C. WEIGNER Financial and Accounting
Officer)
/s/ RICHARD S. CHUTE Director January 28, 1999
- ---------------------------------------------------
RICHARD S. CHUTE
Director January , 1999
- ---------------------------------------------------
OWEN W. ROBBINS
/s/ ROBERT J. THERRIEN Director January 28, 1999
- ---------------------------------------------------
ROBERT J. THERRIEN
/s/ LOUIS P. VALENTE Director January 28, 1999
- ---------------------------------------------------
LOUIS P. VALENTE
</TABLE>
II-5
<PAGE> 87
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of MKS Instruments, Inc.:
Our audits of the consolidated financial statements referred to in our report
dated January 22, 1999, except for Note 13 as to which the date is January 28,
1999, of MKS Instruments, Inc. also included an audit of the consolidated
financial statement schedule listed in Item 16(b) herein. In our opinion, this
consolidated financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
January 22, 1999
S-1
<PAGE> 88
SCHEDULE II
MKS INSTRUMENTS, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE
BALANCE AT PROVISION AT END
BEGINNING CHARGED TO ACCOUNTS OF
OF PERIOD EXPENSE WRITTEN OFF PERIOD
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Allowance for Doubtful Accounts..................... $542 (20) 40 $482
YEAR ENDED DECEMBER 31, 1997
Allowance for Doubtful Accounts..................... $482 258 130 $610
YEAR ENDED DECEMBER 31, 1998
Allowance for Doubtful Accounts..................... $610 253 207 $656
</TABLE>
S-2
<PAGE> 89
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EX. NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Restated Articles of Organization, as amended
*3.2 Form of Amended and Restated Articles of Organization
3.3 By-Laws, as amended
*3.4 Form of Amended and Restated By-Laws
4.1 Specimen certificate representing the common stock
*5.1 Opinion of Hale and Dorr LLP
10.1 Amended and Restated 1995 Stock Incentive Plan
10.2 1996 Amended and Restated 1996 Director Stock Option Plan
10.3 1997 Director Stock Option Plan
*10.4 1999 Employee Stock Purchase Plan
10.5 Amended and Restated Employment Agreement dated as of
December 15, 1995 between Leo Berlinghieri and the
Registrant
10.6 Amended and Restated Employment Agreement dated as of
December 15, 1995 between John J. Sullivan and the
Registrant
10.7 Amended and Restated Employment Agreement dated as of
December 15, 1995 between Ronald C. Weigner and the
Registrant
10.8 Amended and Restated Employment Agreement dated as of
December 15, 1995 between William D. Stewart and the
Registrant
*10.9 Loan Agreement dated as of October 31, 1995, as last amended
January 28, 1999, by and between the First National Bank of
Boston and the Registrant
10.10 Lease Agreement dated as of October 12, 1989, as extended
November 1, 1998, by and between Aspen Industrial Park
Partnership and the Registrant
*10.11 Loan Agreement dated as of November 1, 1993, as last amended
January 28, 1999 between the First National Bank of Boston
and the Registrant
10.12 Lease dated as of September 21, 1995 by and between General
American Life Insurance Company and the Registrant
*10.13 Loan Agreement dated as of February 23, 1996, as last
amended January 28, 1999 between the BankBoston, N.A.,
Chemical Bank and the Registrant
10.14 Revolving Credit Note ($8,000,000) dated February 23, 1996
between Chemical Bank, The First National Bank of Boston and
the Registrant
10.15 Revolving Credit Note ($12,000,000) dated February 23, 1996
between Chemical Bank, The First National Bank of Boston and
the Registrant
10.16 Promissory Note dated as of August 1990 between Jefferson
National Life Insurance Company and the Registrant
**10.17 Comprehensive Supplier Agreement #982812 dated October 23,
1998 by and between Applied Materials, Inc. and the
Registrant
**10.18 Management Incentive Program
10.19 Lease dated as of December 21, 1989, as last amended
December 1996, between Walpole Park South II Trust and the
Registrant
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EX. NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
10.20 Lease dated as of January 1, 1996 between MiFuji Kanzai Co.
Ltd. and the Registrant (covering Floor 5)
10.21 Lease dated as of April 21, 1997 between MiFuji Kanzai Co.
Ltd. and the Registrant (covering Floors 1 and 2)
10.22 Split-Dollar Agreement dated as of September 12, 1991
between the Registrant, John R. Bertucci and Claire R.
Bertucci and Richard S. Chute, Trustees of the John R.
Bertucci Insurance Trust of January 10, 1986
10.23 Split-Dollar Agreement dated as of September 12, 1991
between the Registrant, John R. Bertucci and John R.
Bertucci and Thomas H. Belknap, Trustees of the Claire R.
Bertucci Insurance Trust of January 10, 1986
*10.24 Tax Indemnification and S Corporation Distribution Agreement
10.25 Employment Agreement dated March 7, 1997 between Joseph
Maher and the Registrant
*10.26 Contribution Agreement
21.1 Subsidiaries of the Registrant
*23.1 Consent of Hale and Dorr LLP (contained in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included on Page II-4)
27 Financial Data Schedule
</TABLE>
- ---------------
* To be filed by amendment.
** Confidential materials omitted and filed separately with the Securities and
Exchange Commission.
<PAGE> 1
EXHIBIT 1.1
NATIONSBANC MONTGOMERY SECURITIES LLC
FORM UNDERWRITING AGREEMENT
Draft of January 27, 1999
_______________ Shares
MKS Instruments, Inc.
Common Stock
Underwriting Agreement
dated [___]
<PAGE> 2
____________ Shares
MKS INSTRUMENTS, INC.
Common Stock
UNDERWRITING AGREEMENT
___, 1999
NATIONSBANC MONTGOMERY SECURITIES LLC
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
LEHMAN BROTHERS INC.
As Representatives of the several Underwriters
c/o NATIONSBANC MONTGOMERY SECURITIES LLC
600 Montgomery Street
San Francisco, California 94111
Ladies and Gentlemen:
Introductory. MKS Instruments, Inc., a Massachusetts corporation (the
"Company), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of [___] shares (the "Firm Common
Shares") of its Common Stock, no par value per share (the "Common Stock"). In
addition, the Company has granted to the Underwriters an option to purchase up
to an additional [___] shares (the "Optional Common Shares") of Common Stock, as
provided in Section 2. The Firm Common Shares and, if and to the extent such
option is exercised, the Optional Common Shares are collectively called the
"Common Shares". NationsBanc Montgomery Securities LLC ("NMS"), Donaldson,
Lufkin & Jenrette Securities Corporation and Lehman Brothers, Inc. have agreed
to act as representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Common
Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-[___]), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434
under the Securities Act, is called the "Registration Statement". Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "Rule 462(b) Registration Statement", and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Common Shares, is called the "Prospectus"; provided,
however, if the Company has, with the consent of NMS, elected to rely upon Rule
434 under the Securities Act, the term "Prospectus" shall mean the Company's
prospectus subject
1
<PAGE> 3
to completion (each, a "preliminary prospectus") dated [___] (such preliminary
prospectus is called the "Rule 434 preliminary prospectus"), together with the
applicable term sheet (the "Term Sheet") prepared and filed by the Company with
the Commission under Rules 434 and 424(b) under the Securities Act and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus or the Term Sheet, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System ("EDGAR").
The Company hereby confirms its agreements with the Underwriters as
follows:
Section 1. Representations and Warranties of the Company. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has complied
to the Commission's satisfaction with all requests of the Commission for
additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in all
material respects with the Securities Act and, if filed by electronic
transmission pursuant to EDGAR (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common Shares.
Each of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time it became effective and at all
subsequent times up to and including the Closing Date, complied and will comply
in all material respects with the Securities Act and did not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, as amended or supplemented, as of its date and at
all subsequent times up to and including the Closing Date, did not and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use therein. There are
no contracts or other documents required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement which have not been described
or filed as required.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
2
<PAGE> 4
(c) Distribution of Offering Material By the Company. The Company has
not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Common Shares, any offering material in connection with the
offering and sale of the Common Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) Authorization of the Common Shares. The Common Shares to be
purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a "Material Adverse Change"); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or
agreement not in the ordinary course of business; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
(h) Independent Accountants. PricewaterhouseCoopers LLP, who have
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are independent public or certified public accountants as required
by the Securities Act.
(i) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. Such financial
statements [and supporting schedules] have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the
3
<PAGE> 5
related notes thereto. No other financial statements or supporting schedules are
required to be included in the Registration Statement. The financial data set
forth in the Prospectus under the captions "Prospectus Summary--Summary Selected
Financial Data", "Selected Financial Data" and "Capitalization" fairly present
the information set forth therein on a basis consistent with that of the audited
financial statements contained in the Registration Statement.
(j) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and, in the case of the Company, to enter into
and perform its obligations under this Agreement. Each of the Company and each
subsidiary is duly qualified as a foreign corporation to transact business and
is in good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change. All of the issued and outstanding capital
stock of each subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21.1 to the Registration Statement.
(k) Capitalization and Other Capital Stock Matters. After giving effect
to the assumptions set forth in the Prospectus, (i) the authorized, issued and
outstanding capital stock of the Company is as set forth in the Prospectus under
the caption "Capitalization" (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Prospectus or upon exercise
of outstanding options described in the Prospectus), (ii) the Common Stock
(including the Common Shares) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in the
Prospectus. The description of the Company's stock option, stock bonus and other
stock plans or arrangements, and the options or other rights granted thereunder,
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(l) Stock Exchange Listing. The Common Shares have been approved for
listing on the Nasdaq National Market, subject only to official notice of
issuance.
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is
subject (each, an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in
4
<PAGE> 6
a Material Adverse Change. The Company's execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby and by
the Prospectus (i) have been duly authorized by all necessary corporate action
and will not result in any violation of the provisions of the charter or by-laws
of the Company or any subsidiary, (ii) will not conflict with or constitute a
breach of, or Default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, or require the consent of any other part to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary. No consent, approval, authorization or other
order of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company's execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus, except such as have been obtained or
made by the Company and are in full force and effect under the Securities Act,
applicable state securities or blue sky laws and from the National Association
of Securities Dealers, Inc. (the "NASD").
(n) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened (i) against or affecting the Company or any of
its subsidiaries, (ii) which has as the subject thereof any officer or director
of, or property owned or leased by, the Company or any of its subsidiaries or
(iii) relating to environmental or discrimination matters, where in any such
case (A) there is a reasonable possibility that such action, suit or proceeding
might be determined adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No material
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the best of the Company's knowledge, is threatened or imminent.
(o) Intellectual Property Rights. The Company and its subsidiaries own
or possess sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals, trade secrets and other similar rights (collectively,
"Intellectual Property Rights") reasonably necessary to conduct their businesses
as now conducted; and the expected expiration of any of such Intellectual
Property Rights would not result in a Material Adverse Change. Neither the
Company nor any of its subsidiaries has received any notice of infringement or
conflict with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Change.
(p) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses (other than any the absence of which would
not, singly or in the aggregate, result in a Material Adverse Change, and
neither the Company nor any subsidiary has received any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could result in a
Material Adverse Change.
(q) Title to Properties. The Company and each of its subsidiaries has
good and marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section (i) above (or elsewhere in the
Prospectus), in each case, except as disclosed in the Prospectus, free and clear
of any security interests, mortgages, liens, encumbrances, equities, claims and
other defects, except
5
<PAGE> 7
such as do not materially and adversely affect the value of such property and do
not materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions as
are not material and do not materially interfere with the use made or proposed
to be made of such real property, improvements, equipment or personal property
by the Company or such subsidiary.
(r) Tax Law Compliance. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns or have
properly requested extensions thereof and have paid all taxes required to be
paid by any of them and, if due and payable, any related or similar assessment,
fine or penalty levied against any of them except as may be being contested in
good faith and by appropriate proceedings. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 1(i) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company or
any of its subsidiaries has not been finally determined.
(s) Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after receipt of
payment for the Common Shares will not be, an "investment company" within the
meaning of Investment Company Act and will conduct its business in a manner so
that it will not become subject to the Investment Company Act.
(t) Insurance. Each of the Company and its subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as the Company has
reasonably deemed adequate and customary for their businesses including, but not
limited to, policies covering real and personal property owned or leased by the
Company and its subsidiaries against theft, damage, destruction, and acts of
vandalism. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
(u) No Price Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to or that might
be reasonably expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Common
Shares.
(v) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus which have not been described
as required.
(w) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be
disclosed in the Prospectus.
6
<PAGE> 8
Any certificate signed by an officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter as
to the matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Common Shares.
The Firm Common Shares. The Company agrees to issue and sell
to the several Underwriters the Firm Common Shares upon the terms herein set
forth. On the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Underwriters agree, severally and not jointly, to purchase from the Company
the respective number of Firm Common Shares set forth opposite their names on
Schedule A. The purchase price per Firm Common Share to be paid by the several
Underwriters to the Company shall be $[___] per share.
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of NMS, 600
7
<PAGE> 9
Montgomery Street, San Francisco, California (or such other place as may be
agreed to by the Company and the Representatives) at 6:00 a.m. San Francisco
time, on [___], or such other time and date not later than 10:30 a.m. San
Francisco time, on [___] as the Representatives shall designate by notice to the
Company (the time and date of such closing are called the "First Closing Date").
The Company hereby acknowledges that circumstances under which the
Representatives may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company or the Representatives to recirculate to the public copies of an
amended or supplemented Prospectus or a delay as contemplated by the provisions
of Section 10.
The Optional Common Shares; the Second Closing Date. In
addition, on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of [___] Optional Common Shares
from the Company at the purchase price per share to be paid by the Underwriters
for the Firm Common Shares. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with the sale
and distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii) the
time, date and place at which such certificates will be delivered (which time
and date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and date
of delivery of certificates for the Firm Common Shares and the Optional Common
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional Common
Shares are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Optional Common Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Optional Common Shares to be purchased as
the number of Firm Common Shares set forth on Schedule A opposite the name of
such Underwriter bears to the total number of Firm Common Shares. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
Public Offering of the Common Shares. The Representatives
hereby advise the Company that the Underwriters intend to offer for sale to the
public, as described in the Prospectus, their respective portions of the Common
Shares as soon after this Agreement has been executed and the Registration
Statement has been declared effective as the Representatives, in their sole
judgment, have determined is advisable and practicable.
Payment for the Common Shares. Payment for the Common Shares
shall be made at the First Closing Date (and, if applicable, at the Second
Closing Date) by wire transfer of immediately available funds to the order of
the Company.
It is understood that the Representatives have been
authorized, for their own account and the accounts of the several Underwriters,
to accept delivery of and receipt for, and make payment of the purchase price
for, the Firm Common Shares and any Optional Common Shares the Underwriters have
agreed to purchase. NMS, individually and not as the Representatives of the
Underwriters, may (but
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<PAGE> 10
shall not be obligated to) make payment for any Common Shares to be purchased by
any Underwriter whose funds shall not have been received by the Representatives
by the First Closing Date or the Second Closing Date, as the case may be, for
the account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
Delivery of the Common Shares. The Company shall deliver, or
cause to be delivered, to the Representatives for the accounts of the several
Underwriters certificates for the Firm Common Shares at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company shall also
deliver, or cause to be delivered, to the Representatives for the accounts of
the several Underwriters, certificates for the Optional Common Shares the
Underwriters have agreed to purchase at the First Closing Date or the Second
Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Common Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date (or
the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the Second
Closing Date, as the case may be) at a location in New York City as the
Representatives may designate. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
Delivery of Prospectus to the Underwriters. Not later than
12:00 p.m. on the second business day following the date the Common Shares are
released by the Underwriters for sale to the public, the Company shall delivery
or cause to be delivered copies of the Prospectus in such quantities and at such
places as the Representatives shall request.
Section 3. Additional Covenants of the Company. The Company further covenants
and agrees with each Underwriter as follows:
(a) Representatives' Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later of the
First Closing Date or such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), prior to amending or supplementing the Registration Statement
(including any registration statement filed under Rule 462(b) under the
Securities Act) or the Prospectus, the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Representatives reasonably object.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of
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<PAGE> 11
the threatening or initiation of any proceedings for any of such purposes. If
the Commission shall enter any such stop order at any time, the Company will use
its best efforts to obtain the lifting of such order at the earliest possible
moment. Additionally, the Company agrees that it shall comply with the
provisions of Rules 424(b), 430A and 434, as applicable, under the Securities
Act and will use its reasonable efforts to confirm that any filings made by the
Company under such Rule 424(b) were received in a timely manner by the
Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Representatives or counsel for the Underwriters it
is otherwise necessary to amend or supplement the Prospectus to comply with law,
the Company agrees to promptly prepare (subject to Section 3(a) hereof), file
with the Commission and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto as the Representatives may request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of) the
state securities or blue sky laws or Canadian provincial Securities laws of
those jurisdictions designated by the Representatives, shall comply with such
laws and shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Common Shares. The
Company shall not be required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the Representatives
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Common Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending [___] that satisfies the provisions of Section 11(a) of the Securities
Act.
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<PAGE> 12
(i) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
Nasdaq National Market all reports and documents required to be filed under the
Exchange Act.
(j) Agreement Not To Offer or Sell Additional Securities During the
period of 180 days following the date of the Prospectus, the Company will not,
without the prior written consent of NMS (which consent may be withheld at the
sole discretion of NMS), directly or indirectly, sell, offer, contract or grant
any option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of Common
Stock (other than as contemplated by this Agreement with respect to the Common
Shares); provided, however, that the Company may issue shares of its Common
Stock or options to purchase its Common Stock, or Common Stock upon exercise of
options, pursuant to any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, (ii) file one or more Registration
Statements on Form S-8, and (iii) issue shares in connection with any
acquisition if recipients agree in writing not to sell, offer, dispose of or
otherwise transfer any such shares during such 180 day period without the prior
written consent of NMS (which consent may be withheld at the sole discretion of
the NMS).
(k) Future Reports to the Representatives. During the period of five
years hereafter the Company will furnish to the Representatives at [600
Montgomery Street, San Francisco, CA 94111] [9 West 57th Street, New York, NY
10022] [Two International Place, Boston, MA 02110] Attention:[ ]: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual Report of
the Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows for
the year then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other report filed by the
Company with the Commission, the NASD or any securities exchange; and (iii) as
soon as available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
Section 4. Payment of Expenses. The Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the state securities or blue sky laws or the provincial
securities laws of Canada, and, if requested by the Representatives, preparing
and printing a "Blue Sky Survey" or memorandum, and any supplements thereto,
advising the Underwriters of such qualifications, registrations and exemptions,
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<PAGE> 13
(vii) the filing fees incident to, and the reasonable fees and expenses of
counsel for the Underwriters in connection with, the NASD's review and approval
of the Underwriters' participation in the offering and distribution of the
Common Shares, (viii) the fees and expenses associated with [listing] the Common
Shares on the Nasdaq National Market, and (ix) all other fees, costs and
expenses referred to in Item 13 of Part II of the Registration Statement. Except
as provided in this Section 4, Section 6, Section 8 and Section 9 hereof, the
Underwriters shall pay their own expenses, including the fees and disbursements
of their counsel.
Section 5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Common Shares as provided
herein on the First Closing Date and, with respect to the Optional Common
Shares, the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the First Closing Date as though then
made and, with respect to the Optional Common Shares, as of the Second Closing
Date as though then made, to the timely performance by the Company of its
covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Representatives shall have received from PricewaterhouseCoopers LLP, independent
public or certified public accountants for the Company, a letter dated the date
hereof addressed to the Underwriters, in form and substance satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the Prospectus (and the
Representatives shall have received an additional [___] conformed copies of such
accountants' letter for each of the several Underwriters).
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the Optional
Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the Securities
Act) in the manner and within the time period required by Rule 424(b) under the
Securities Act; or the Company shall have filed a post-effective amendment to
the Registration Statement containing the information required by such Rule
430A, and such post-effective amendment shall have become effective; or, if the
Company elected to rely upon Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed a Term Sheet with
the Commission in the manner and within the time period required by such Rule
424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission; and
(iii) the NASD shall have raised no objection to the fairness
and reasonableness of the underwriting terms and arrangements.
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<PAGE> 14
(c) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the First Closing Date
and, with respect to the Optional Common Shares, the Second Closing Date:
(i) in the judgment of the Representatives there shall not
have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or any of
its subsidiaries by any "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received the
favorable opinion of Hale and Dorr, counsel for the Company, dated as of such
Closing Date, reasonably satisfactory to the Representatives with respect to the
matters set forth in Exhibit A-1 attached hereto. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received the
favorable opinion of Hill & Barlow, counsel for the Company, dated as of such
Closing Date, reasonably satisfactory to the Representatives with respect to the
matters set forth in Exhibit A-2 attached hereto. In each case, the
Representatives shall have received an additional [___] conformed copies of such
counsel's legal opinions for each of the several Underwriters.
(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and the Second Closing Date the Representatives shall have received
the favorable opinion of Ropes & Gray, counsel for the Underwriters, dated as of
such Closing Date, with respect to the matters set forth in paragraphs (i),
(viii), (ix) and the next-to-last paragraph of Exhibit A (and the
Representatives shall have received an additional [___] conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(f) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer or
President of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, dated as of such Closing Date, to the effect set forth
in subsections (b)(ii) and (c)(ii) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this Agreement
and prior to such Closing Date, there has not occurred any Material Adverse
Change;
(ii) the representations, warranties and covenants of the
Company set forth in Section 1 of this Agreement are true and correct with the
same force and effect as though expressly made on and as of such Closing Date;
and
(iii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing Date and
the Second Closing Date the Representatives shall have received from
PricewaterhouseCoopers LLP, independent public or certified public accountants
for the Company, a letter dated such date, in form and substance satisfactory to
the
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<PAGE> 15
Representatives, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the First Closing Date or
Second Closing Date, as the case may be (and the Representatives shall have
received an additional [___] conformed copies of such accountants' letter for
each of the several Underwriters).
(h) Lock-Up Agreement from Stockholders and Optionholders of the
Company. On the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of Exhibit B hereto from those
stockholders and optionholders of the Company as agreed among the Company and
the Representatives, and such agreement shall be in full force and effect on
each of the First Closing Date and the Second Closing Date.
(i) Additional Documents. On or before each of the First Closing Date
and the Second Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Common Shares as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Common Shares, at any time prior
to the Second Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
Section 6. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 5, Section 7, or Section
11 (iv) or 11(v), or if the sale to the Underwriters of the Common Shares on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply
with any provision hereof, the Company agrees to reimburse the Representatives
and the other Underwriters (or such Underwriters as have terminated this
Agreement with respect to themselves), severally, upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the
Representatives and the Underwriters in connection with the proposed purchase
and the offering and sale of the Common Shares, including but not limited to
fees and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
Section 7. Effectiveness of this Agreement.
This Agreement shall not become effective until the later of
(i) the execution of this Agreement by the parties hereto and (ii) notification
by the Commission to the Company and the Representatives of the effectiveness of
the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated
by any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) the Company to any
Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representatives and the Underwriters pursuant to Sections 4 and
6 hereof, (b) of any Underwriter to
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<PAGE> 16
the Company, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
Section 8. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A or
Rule 434 under the Securities Act, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in whole
or in part upon any failure of the Company to perform its obligations hereunder
or under law; or (v) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to, the
Common Stock or the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising out of
or based upon any matter covered by clause (i) or (ii) above, provided that the
Company shall not be liable under this clause (v) to the extent that a court of
competent jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by NMSI) as such expenses are reasonably
incurred by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Representatives expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); and provided, further, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Common Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim,
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<PAGE> 17
damage, liability or expense. The indemnity agreement set forth in this Section
8(a) shall be in addition to any liabilities that the Company may otherwise
have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The Company
hereby acknowledges that the only information that the Underwriters have
furnished to the Company expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) are the statements set forth (A) as the last [two] paragraphs on the
inside front cover page of the Prospectus concerning stabilization [and passive
market making] by the Underwriters and (B) in the table in the first paragraph
and as the second paragraph [second and [_] (1) paragraphs] under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct. The indemnity agreement set forth in this Section 8(b)
shall be in addition to any liabilities that each Underwriter may otherwise
have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or
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additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (NMS in the case of Section 8(b) and Section 9), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
Section 9. Contribution.
If the indemnification provided for in Section 8 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the offering of the Common Shares pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other hand, in
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<PAGE> 19
connection with the offering of the Common Shares pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Common Shares pursuant to this Agreement
(before deducting expenses) received by the Company, and the total underwriting
discount received by the Underwriters, in each case as set forth on the front
cover page of the Prospectus (or, if Rule 434 under the Securities Act is used,
the corresponding location on the Term Sheet) bear to the aggregate initial
public offering price of the Common Shares as set forth on such cover. The
relative fault of the Company, on the one hand, and the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company, on the one hand, or the Underwriters, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several, and not joint, in proportion
to their respective underwriting commitments as set forth opposite their names
in Schedule A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
Section 10. Default of One or More of the Several Underwriters. If, on the First
Closing Date or the Second Closing Date, as the case may be, any one or more of
the several Underwriters shall fail or refuse to purchase Common Shares that it
or they have agreed to purchase hereunder on such date, and the aggregate number
of Common Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed 10% of the aggregate number of the
Common Shares to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportions that the number of Firm Common Shares
set forth opposite their respective names on Schedule A bears to the aggregate
number of Firm Common Shares set forth opposite the names of all such
non-defaulting
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<PAGE> 20
Underwriters, or in such other proportions as may be specified by the
Representatives with the consent of the non-defaulting Underwriters, to purchase
the Common Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the First Closing Date or the
Second Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase Common Shares and the aggregate number of
Common Shares with respect to which such default occurs exceeds 10% of the
aggregate number of Common Shares to be purchased on such date, and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Common Shares are not made within 48 hours after such default, this Agreement
shall terminate without liability of any party to any other party except that
the provisions of Section 4, Section 8 and Section 9 shall at all times be
effective and shall survive such termination. In any such case either the
Representatives or the Company shall have the right to postpone the First
Closing Date or the Second Closing Date, as the case may be, but in no event for
longer than seven days in order that the required changes, if any, to the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected.
As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
Section 11. Termination of this Agreement. Prior to the First Closing Date this
Agreement may be terminated by the Representatives by notice given to the
Company if at any time (i) trading or quotation in any of the Company's
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any of federal, New York or
California authorities; (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity,
or any change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change in
United States' or international political, financial or economic conditions, as
in the judgment of the Representatives is material and adverse and makes it
impracticable to market the Common Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities;
(iv) in the judgment of the Representatives there shall have occurred any
Material Adverse Change; or (v) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character as
in the judgment of the Representatives may interfere materially with the conduct
of the business and operations of the Company regardless of whether or not such
loss shall have been insured. Any termination pursuant to this Section 11 shall
be without liability on the part of (a) the Company to any Underwriter, except
that the Company shall be obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Sections 4 and 6 hereof, (b)
any Underwriter to the Company, or (c) of any party hereto to any other party
except that the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
Section 12. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or any
of its or their partners, officers or directors or any controlling person, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
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<PAGE> 21
Section 13. All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Representatives:
NationsBanc Montgomery Securities LLC
600 Montgomery Street
San Francisco, California 94111
Facsimile: 415-249-5558
Attention: Richard A. Smith
with copies to:
NationsBanc Montgomery Securities LLC
600 Montgomery Street
San Francisco, California 94111
Facsimile: (415) 249-5553
Attention: Jack G. Levin, Esq.
and
Ropes & Gray
One International Place
Boston, MA 02110
Facsimile: (617) 951-7050
Attention: David C. Chapin
If to the Company:
MKS Instruments, Inc.
Six Shattuck Road
Andover, MA 01810
Facsimile: (978) 975-2350
Attention: President
with a copy to:
Hale and Dorr
60 State Street
Boston, MA 02109
Facsimile: (617) 526-5000
Attention: Mark G. Borden
Section 14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder.
20
<PAGE> 22
The term "successors" shall not include any purchaser of the Common Shares as
such from any of the Underwriters merely by reason of such purchase.
Section 15. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
Section 16. (a) Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 17. General Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties
hereto, and no condition herein (express or implied) may be waived unless waived
in writing by each party whom the condition is meant to benefit. The Table of
Contents and the Section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
MKS INSTRUMENTS, INC.
By:__________________________
President
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representatives in San Francisco, California as of the date first above
written.
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<PAGE> 23
NATIONSBANC MONTGOMERY SECURITIES LLC
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
LEHMAN BROTHERS INC.
Acting as Representatives of the several Underwriters named in the attached
Schedule A.
By NATIONSBANC MONTGOMERY SECURITIES LLC
By:________________________
Senior Managing Director
22
<PAGE> 24
SCHEDULE A
<TABLE>
<CAPTION>
Underwriters Number of Firm Common Shares to be Purchased
------------ --------------------------------------------
<S> <C>
NationsBanc Montgomery Securities LLC
Donaldson, Lufkin & Jenrette Securities Corporation
Lehman Brothers Inc.
</TABLE>
23
<PAGE> 25
EXHIBIT A-1
The final opinion in draft form should be attached as Exhibit A-1 at the time
this Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section
5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(i) The Company is validly existing as a corporation in good standing
under the laws of The Commonwealth of Massachusetts.
(ii) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conform to the descriptions thereof set
forth [or incorporated by reference] in the Prospectus. All of the outstanding
shares of Common Stock have been duly authorized and validly issued, are fully
paid and nonassessable. The form of certificate used to evidence the Common
Stock is in due and proper form and complies with all applicable requirements of
the charter and by-laws of the Company and The Commonwealth of Massachusetts.
The description of the Company's stock option, stock bonus and other stock plans
or arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
(iii) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(iv) The Common Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when issued and delivered by the Company pursuant to
the Underwriting Agreement against payment of the consideration set forth
therein, will be validly issued, fully paid and nonassessable.
(v) Based upon the advice of the staff of the SEC, each of the
Registration Statement and the Rule 462(b) Registration Statement, if any, has
been declared effective by the Commission under the Securities Act. To the
knowledge of such counsel, no stop order suspending the effectiveness of either
of the Registration Statement or the Rule 462(b) Registration Statement, if any,
has been issued under the Securities Act and no proceedings for such purpose
have been instituted or are pending or are contemplated or threatened by the
Commission. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in the manner and
within the time period required by such Rule 424(b).
(vi) The Registration Statement, including any Rule 462(b) Registration
Statement, the Prospectus, and each amendment or supplement to the Registration
Statement and the Prospectus, as of their respective effective or issue dates
(other than the financial statements and supporting schedules included therein
or in exhibits to or excluded from the Registration Statement, as to which no
opinion need be rendered) comply as to form in all material respects with the
applicable requirements of the Securities Act.
(vii) The Common Shares have been approved for listing on the Nasdaq
National Market.
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<PAGE> 26
(viii) The statements (i) in the Prospectus under the captions "Certain
Transactions" and "Shares Eligible for Future Sale" and (ii) in Item 14 and Item
15 of the Registration Statement, insofar as such statements constitute matters
of law, summaries of legal matters, the Company's charter or by-law provisions,
documents or legal proceedings, or legal proceedings, has been reviewed by such
counsel and accurately summarize, in all material respects, the matters referred
to therein.
(ix) To the knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or overtly threatened which
are required to be disclosed in the Registration Statement, other than those
disclosed therein.
(x) To the best knowledge of such counsel, there are no Existing
Instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto;
and the descriptions thereof and references thereto are correct in all material
respects.
(xi) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution, delivery and performance of the
Underwriting Agreement and consummation of the transactions contemplated thereby
and by the Prospectus, except as required under the Securities Act, applicable
state securities or blue sky laws and from the NASD.
(xii) The execution and delivery of the Underwriting Agreement by the
Company and the performance by the Company of its obligations thereunder (other
than performance by the Company of its obligations under the indemnification
section of the Underwriting Agreement, as to which no opinion need be rendered)
(i) have been duly authorized by all necessary corporate action on the part of
the Company; (ii) will not result in any violation of the provisions of the
charter or by-laws of the Company or any subsidiary; (iii) will not constitute a
breach of, or Default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company pursuant
to any Existing Instrument filed as an exhibit to the Registration Statement; or
(iv) to the knowledge of such counsel, will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company.
(xiii) The Company is not, and after receipt of payment for the Common
Shares will not be, an "investment company" within the meaning of Investment
Company Act.
In addition, such counsel shall state that they have participated in conferences
with officers and other representatives of the Company, representatives of the
independent public or certified public accountants for the Company and with
representatives of the Underwriters at which the contents of the Registration
Statement and the Prospectus, and any supplements or amendments thereto, and
related matters were discussed and, although such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (other than as specified above), and any supplements or amendments
thereto, on the basis of the foregoing, nothing has come to their attention
which would lead them to believe that either the Registration Statement or any
amendments thereto, at the time the Registration Statement or such amendments
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of its date or at
the First Closing Date or the Second Closing Date, as the case may be, contained
an untrue statement
25
<PAGE> 27
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need express no
belief as to the financial statements or schedules or other financial or
statistical data derived therefrom, included in the Registration Statement or
the Prospectus or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, laws of the Commonwealth of
Massachusetts or the federal law of the United States, to the extent they deem
proper and specified in such opinion, upon the opinion (which shall be dated the
First Closing Date or the Second Closing Date, as the case may be, shall be
satisfactory in form and substance to the Underwriters, shall expressly state
that the Underwriters may rely on such opinion as if it were addressed to them
and shall be furnished to the Representatives) of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Underwriters; provided, however, that such counsel shall further state that they
believe that they and the Underwriters are justified in relying upon such
opinion of other counsel, and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials.
1
<PAGE> 28
EXHIBIT A-2
The final opinion in draft form should be attached as Exhibit A-2 at the time
this Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section
5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(xiv) The Company has been duly incorporated.
(xv) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Underwriting
Agreement.
(xvi) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required by reason of the ownership or leasing of property,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change.
(xvii) Each significant subsidiary incorporated in the United States
(as defined in Rule 405 under the Securities Act) has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and, to the best knowledge of such counsel, is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property , except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change.
(xviii) All of the issued and outstanding capital stock of each such
significant subsidiary incorporated in the United States has been duly
authorized and validly issued, is fully paid and non-assessable and is owned by
the Company, directly or through subsidiaries, to such counsel's knowledge, free
and clear of any security interest, mortgage, pledge, lien, encumbrance or any
pending or threatened claim.
(xix) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to subscribe for
or purchase securities of the Company arising (i) by operation of the charter or
by-laws of the Company or (ii) to the best knowledge of such counsel, otherwise.
(xx) Except as disclosed in the Prospectus, to the knowledge of such
counsel, there are no persons with registration or other similar rights to have
any equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by the Underwriting
Agreement, except for such rights as have been duly waived.
(xxi) To the knowledge of such counsel, the Company is not in violation
of its charter or by-laws, except for such violations as would not, individually
or in the aggregate, result in a Material Adverse Change.
2
<PAGE> 29
In addition, such counsel shall state that they have participated in conferences
with officers and other representatives of the Company, representatives of the
independent public or certified public accountants for the Company and with
representatives of the Underwriters at which the contents of the Registration
Statement and the Prospectus, and any supplements or amendments thereto, and
related matters were discussed and, although such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (other than as specified above), and any supplements or amendments
thereto, on the basis of the foregoing, nothing has come to their attention
which would lead them to believe that either the Registration Statement or any
amendments thereto, at the time the Registration Statement or such amendments
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, as of its date or at
the First Closing Date or the Second Closing Date, as the case may be, contained
an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief as to the financial statements or
schedules or other financial or statistical data derived therefrom, included [or
incorporated by reference] in the Registration Statement or the Prospectus or
any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware, laws of the Commonwealth of
Massachusetts or the federal law of the United States, to the extent they deem
proper and specified in such opinion, upon the opinion (which shall be dated the
First Closing Date or the Second Closing Date, as the case may be, shall be
satisfactory in form and substance to the Underwriters, shall expressly state
that the Underwriters may rely on such opinion as if it were addressed to them
and shall be furnished to the Representatives) of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Underwriters; provided, however, that such counsel shall further state that they
believe that they and the Underwriters are justified in relying upon such
opinion of other counsel, and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials.
3
<PAGE> 30
EXHIBIT B
___________, 1999
NationsBanc Montgomery Securities, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Paine Webber
As Representatives of the Several Underwriters
c/o NationsBanc Montgomery Securities, Inc.
600 Montgomery Street
San Francisco, California 94111
RE: MKS Instruments Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company [by,
among other things, raising additional capital for its operations]. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of NMSI (which consent
may be withheld in its sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, or otherwise
dispose of any shares of Common Stock, options or warrants to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into
shares of Common Stock currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under Securities Exchange Act of 1934, as
amended) by the undersigned, or publicly announce the undersigned's intention to
do any of the foregoing, for a period commencing on the date hereof and
continuing through the close of trading on the date 180 days after the date of
the Prospectus. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
B-1
1
<PAGE> 31
Printed Name of Holder
By:
Signature
Printed Name of Person Signing (and indicate
capacity of person signing if signing as
custodian, trustee, or on behalf of an
entity)
1
<PAGE> 1
EXHIBIT A
LM
- ------------ The Commonwealth of Massachusetts EXHIBIT 3.1
Examiner
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION No. 04-2277512
RESTATED ARTICLES OF ORGANIZATION
General Laws, Chapter 156B, Section 74
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
restated articles of organization. The fee for filing this certificate is
prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the
Commonwealth of Massachusetts.
-------------
We, John R. Bertucci, President, and
Richard S. Chute, Clerk of
MKS Instruments, Inc.
- -------------------------------------------------------------------------------
(Name of Corporation)
located at 34 Third Avenue, Burlington, Massachusetts 01803
--------------------------------------------------------------------
do hereby certify that the following restatement of the articles of organization
of the corporation was duly adopted and authorized by unanimous written consent
of all the Directors dated January 15, 1982.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1. The name by which the corporation shall be known is:
MKS Instruments, Inc.
2. The purposes for which the corporation is formed are as follows:
See Continuation Sheets 2A and 2B.
12
- ----------
P.C.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of
paper leaving a left hand margin of at least 1 inch for binding. Additions
to more than one article may be continued on a single sheet so long as each
article requiring each such addition is clearly indicated.
<PAGE> 2
3. The total number of shares and the par value, if any, of each class of
stock which the corporation is authorized to issue is as follows:
<TABLE>
<CAPTION>
WITHOUT PAR VALUE WITH PAR VALUE
----------------- --------------
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- -------------- ---------------- ---------------- ---------
<S> <C> <C> <C>
Preferred None None None
Class A Common 10,000 None None
Class B Common 10,000 None None
</TABLE>
*4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting
powers, qualifications, special or relative rights or privileges as to
each class thereof and any series now established:
See Continuation Sheet 4A.
*5. The restrictions, if any, imposed by the articles of organization upon
the transfer of shares of stock of any class are as follows:
See Continuation Sheets 5A, 5B, 5C and 5D.
*6. Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution,
or for limiting, defining, or regulating the powers of the corporation,
or of its directors or stockholders, or of any class of stockholders:
See Continuation Sheet 6A.
*If there are no such provisions state "None".
<PAGE> 3
Continuation Sheet 2A
2. The purposes for which the corporation is formed are as follows:
To design, manufacture, sell, lease and license instruments of all kinds,
including electromechanical, electronic and mechanical gauges for the
measurement of pressure, temperature, acceleration, flow and level of liquids
and gases; to design, manufacture, sell, lease and license control systems
incorporating measuring devices, and control systems separate from measuring
devices, for the control of production processes and operations of all kinds; to
design, manufacture, sell, lease and license instrumentation for military use;
to design, manufacture, sell, lease and license instrumentation for use in
research laboratories, in industry, in educational institutions, for medical
purposes and for use elsewhere and for other purposes; and in general to design,
manufacture, sell, lease and license electro-mechanical, electronic and
mechanical devices of all kinds.
To buy and sell at wholesale and retail, or otherwise, to manufacture,
produce, adapt, repair, dispose of, export, import and in any other manner to
deal in goods, wares, merchandise, articles and things of manufacture or
otherwise of all materials, supplies and other articles and things necessary or
convenient for use in connection with any of said businesses or any other
business or any part thereof; and to manufacture, repair, purchase, sell, lease,
dispose of and otherwise deal in machinery, tools, and appliances which are or
may be used in connection with the purchase, sale, production, adaption, repair,
disposition of, export, import or other dealings in said goods, wares,
merchandise, articles and things.
To purchase, lease or otherwise acquire as a going concern or otherwise all
or any part of the franchises, rights, property, assets, business, good will or
capital stock of any persons, firm, corporation, trust or association engaged in
whole or in part in any business in which this corporation is empowered to
engage, or in any other business; to pay for the same in whole or in part in
cash, stock, bonds, notes, securities or other evidence of indebtedness of this
corporation or in any other manner; to assume as part of the consideration or
otherwise any and all debts, contracts or liabilities, matured or unmatured,
fixed or contingent, of any such person, firm or corporation, trust or
association; and to operate, manage, develop and generally to carry on the whole
or any part of any such business under any name or names which it may select or
designate.
<PAGE> 4
Continuation Sheet 2B
To construct, lease, hire, purchase or otherwise acquire and hold or
maintain, and to rebuild, enlarge, improve, furnish, equip, alter, operate and
dispose of warehouses, factories, offices and other buildings, real estate,
structures or parts thereof, and appliances for the preparation, manufacture,
purchase, sale and distribution of goods, wares, merchandise, things, and
articles of all kinds.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage, or otherwise dispose of franchises, letters patent of the United
States or of any foreign country, patent rights, licenses and privileges,
inventions, improvements and processes, systems, copyrights, trade-marks and
trade names, relating to, or useful in connection with, any business of this
corporation.
To buy or otherwise acquire, to sell, assign, pledge, or otherwise
dispose of and deal in stocks, bonds, securities, notes and other obligations
of any person, firm or corporation, including this corporation, organized for
or engaged in similar or cognate purposes; also stocks, bonds, securities,
notes, and other obligations of any person, firm, or corporation, including
this corporation, which it may be found or deemed necessary, valuable, or
convenient for this corporation to acquire and deal in, in pursuance or
furtherance of or in connection with the businesses herein specified, or any
other business.
To borrow money and contract indebtedness for all proper corporate
purposes, to issue bonds, notes, and other evidences of indebtedness, to secure
the same by pledge, mortgage, or lien on all or any part of the property of the
corporation, tangible or intangible; and to assume or guarantee or secure in
like manner or otherwise, the leases, contracts, or other obligations, fixed or
contingent, or the payment of any dividends on any stock or shares or of the
principal or interest on any bonds, notes, or other evidences of indebtedness
of any person, firm, corporation, trust, or association in which this
corporation has a financial interest.
To enter into, make, and perform contracts of every name, nature, and
kind with any person, firm, association, or corporation which may be deemed
valuable, expedient, or convenient for this corporation in pursuance of or in
furtherance of or in connection with any of the objects of incorporation of
this corporation or in connection with any of the businesses or purposes herein
specified.
The enumeration of specific powers herein shall not be construed as
limiting or restricting in any way the general powers herein set forth, but
nothing herein contained shall be construed as authorizing the business of
banking.
<PAGE> 5
Continuation Sheet 4A
4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established:
The holders of shares of Class B Common stock of the corporation shall
not be entitled to vote for the election of Officers or Directors or with
respect to any other aspect of the business of the corporation, or any matter
or thing which may come or be brought before any meeting of the Stockholders of
the corporation; and said Class B Common stock shall not be deemed to be a
class of stock entitled to vote for any purpose whatsoever. In all other
respects, however, the Class B Common stock and the Class A Common stock of the
corporation, and the respective rights and preferences thereof shall be equal,
and neither class shall have any priority over the other with respect to the
payment of dividends or to distributions in liquidation.
<PAGE> 6
Continuation Sheet 5A
5. The restrictions, if any, imposed by the articles of organization
upon the transfer of shares of stock of any class are as follows:
Section 5. Restrictions. None of the corporation's stock, of any
class, may be transferred except as hereinafter provided:
(a) Before making any proposed disposition of any of the
corporation's stock, the holder of the stock shall give written notice
to the Board of Directors specifying in detail the nature of the
proposed disposition and its terms, the class and number of the shares
involved, and the consideration for the proposed disposition, if any.
Such notice shall constitute an offer by the holder to sell the shares
involved to the corporation at their Agreed Value, as determined
hereunder, or, if such proposed disposition is one for a pecuniary
consideration less than the Agreed Value of the shares involved, such
notice shall constitute an offer to sell the shares to the corporation
for such proposed pecuniary consideration.
(b) Within thirty days after receipt of such notice, the Board of
Directors shall give written notice to the offering holder stating
whether the corporation accepts or rejects the holder's offer. If the
offer is accepted, such notice by the corporation shall state the price
to be paid for the shares and shall specify whether the corporation
elects to pay a part of the purchase price by means of the
corporation's note, as provided for in subsection (d) hereof. The
offering holder of such shares shall deliver the shares to the
corporation, suitably endorsed, within ten days after receipt of the
corporation's notice of acceptance, and upon receipt of the shares, the
corporation shall make payment therefor in the manner hereinafter
provided.
If such offer is rejected by the corporation, the Directors shall
transmit forthwith such offer to the record owners of the Class A
Common Stock of the corporation who shall, subject to the provisions of
this subsection (b), have the right to purchase the offered shares, in
amounts proportionate to their respective holdings of said Class A
Common stock, upon all of the same terms and conditions upon which the
corporation might have purchased said offered shares, except that
payment for offered shares shall be made in cash unless otherwise
agreed upon between the parties. Each such owner to whom such shares
are offered shall have the right within thirty (30) days of such offer
to purchase the entire number of shares apportioned to him as above or
to purchase none, and such acceptance shall be extended by written
notice to the Board of Directors given within such time. If any owner
of Class A Common stock shall
<PAGE> 7
Continuation Sheet 5B
not accept such offer, the Board of Directors shall forthwith notify the
remaining shareholders of Class A Common stock that they may purchase in
proportion to their respective holdings of such stock the shares which such
owner was entitled to purchase. Each such shareholder to whom such shares are
offered shall have the right within ten (10) days of such offer to purchase the
entire number of shares apportioned to him as above or to purchase none. Within
three days after the expiration of said ten-day period the Board of Directors
shall give written notice to the offering holder advising him in detail of the
elections made with respect to the offered shares by the owners of the Class A
Common stock. If the offer has been accepted with respect to all of the offered
shares, then the offering holder of such shares shall deliver the same to the
corporation, suitably endorsed, for the account of the accepting owners, within
ten days after receipt of said last-mentioned notice from the Board of Directors
and upon receipt of the shares by the corporation the accepting owners of the
Class A Common stock shall make payment therefor in accordance with the terms of
their respective acceptances.
If such offer is rejected by the corporation and if such offer to the
holders of the Class A Common stock is rejected, in whole or in part, the
offering shareholder, at any time within six months after receipt of any such
notice of rejection, may effect the disposition of the shares which was set
forth in such offering shareholder's notice to the Board.
(c) The Agreed Value of the stock of the corporation shall be such as may
from time to time be determined by the unanimous agreement in writing of the
holders of the corporation's Class A Common stock, such determination to be
reviewed and either confirmed or adjusted at reasonable intervals. The Agreed
Value of the Class B Common stock shall be ninety (90) percent of the Agreed
Value of the Class A Common stock, to reflect the fact that the Class B Common
stock is not entitled to vote.
The Agreed Value of the stock of the corporation shall be reviewed as
herein provided at six-month intervals following the adoption of this by-law and
at the expiration of any such six-month period, if no agreement is arrived at,
any owner of stock may demand from the owners of Class A Common stock that an
agreement be reached and in the absence of such agreement within ten days
thereafter, such value shall be determined by an arbitrator appointed by the
President, or by some other appropriate official, of the American Arbitration
Association, upon written request for such appointment made by any owner of
stock of the corporation. The decision of such arbitrator shall be binding upon
the parties, and may be enforced by any court having jurisdiction, but each
owner of stock of the corporation shall
<PAGE> 8
Continuation Sheet 5c
be entitled to appear before such arbitrator, to be represented by counsel, and
to present evidence. The expenses of arbitration, other than expenses for
counsel and witnesses, shall be borne pro rata, according to the number of
shares held, by the owners of the stock of the corporation.
(d) In the event the corporation shall elect to accept the offer of the
holder of its stock, as herein provided, the corporation may pay the full
purchase price for such stock in cash at the time of the delivery of the stock
to the corporation or, at the corporation's sole election, it may pay said
purchase price partly in cash and partly in the form of an unsecured note of
the corporation. If the corporation shall make the latter election, then in
such event the corporation shall pay at least one-third (1/3) of the purchase
price for the stock at the time the stock is delivered to the corporation, and
the corporation shall then deliver to the selling shareholder the note of the
corporation for the unpaid balance of the purchase price for the stock, bearing
interest at the rate of 6% per annum on the unpaid principal balance and
payable in or within two years from its date.
(e) Each share of stock of the corporation is subject to the requirements
and restrictions upon the transfer of such shares set forth in this Section 5,
and the same shall constitute a contract of each shareholder with the
corporation, shall be binding upon each shareholder and his heirs, assigns,
executors, administrators, or other legal representatives and upon all other
persons succeeding to or standing in the place of or holding under the
shareholder, whether by act of the shareholder or by operation of law. These
provisions shall not be discharged by any transfer of shares which may be made
in compliance with the provisions hereof, but shall apply anew to such shares in
the hands of the new holder thereof. These provisions shall not restrict the
making of a bona fide pledge of any shares to secure an indebtedness, but shall
apply fully with respect to any proposed transfer from the name of the
shareholder pursuant to such pledge, whether upon foreclosure or otherwise and
whether to the pledgee or to any other person. These provisions shall not
restrict the transfer of shares, without consideration, to the transferor's
spouse or to the transferor's issue or to the spouses or the transferor's issue,
or any of them (or to a form of joint ownership between the transferor and the
transferees described next above, or any of them, or to a trust for the sole
benefit of the transferor and the transferees described next above or any of
them), but shall apply fully with respect to any proposed disposition by any
such transferee, except as provided in this and the preceding sentence.
<PAGE> 9
Continuation Sheet 5D
(f) The determination of the Board of Directors under the provisions of
this Section 5 shall be made by majority vote except that no waiver of the
provisions of this Section 5 in the case of any proposed disposition of stock
shall be granted by the vote of less than eighty (80) percent of the members
of the Board of Directors. No Director shall be disqualified from voting on any
matter arising under the provisions of this Section 5 by reason of such
Director's ownership of stock of the corporation which might, directly or
indirectly, be affected by such vote.
(g) In the event of any breach of any of the provisions of this Section 5
by any holder of any of the corporation's stock, none of the rights or
privileges attaching to such stock (including, without limitation, voting
rights and rights to dividends) may be exercised or enjoyed with respect to
such stock by such holder or by any purported transferee from such holder while
such breach shall continue, but nothing herein contained shall be deemed to
preclude lawful action by the corporation to enforce the provisions of this
Section 5.
<PAGE> 10
Continuation Sheet 6A
6. Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
Pre-Emptive Rights. No stockholder shall, by reason of ownership of stock
of the corporation, have any pre-emptive right to purchase unissued stock of
the corporation, or to subscribe to stock of the corporation, or to purchase
stock of the corporation previously issued and held in the treasury of the
corporation, and, subject to the provisions of applicable law, the authorized
and unissued stock of the corporation shall be issued to such person, firm,
corporation or other legal entity, in such amounts, at such times, and for such
consideration as a majority of the Board of Directors may from time to time
determine.
<PAGE> 11
*We further certify that the foregoing restated articles of organization
effect no amendments to the articles of organization of the corporation as
heretofore amended,
None
- -----------------------------------------------------------------------------
(*If there are no such amendments, state "None".)
Briefly describe amendments in space below:
None
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed
our names this 15th day of January in the year 1982.
/s/ John R. Bertucci
- --------------------------------------------------- President
John R. Bertucci
/s/ Richard S. Chute
- --------------------------------------------------- Clerk
Richard S. Chute
<PAGE> 12
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within restated articles of
organization and, the filing fee in the amount of
$15.00 having been paid, said articles are deemed to
have been filed with me this 19th day of January, 1982.
/s/ Michael Joseph Connolly
----------------------------
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF RESTATED ARTICLES OF ORGANIZATION TO BE SENT
TO: Richard S. Chute, Esquire
Hill & Barlow
225 Franklin Street
Boston, Massachusetts 02110
Telephone 617/423-6200
[SEAL OF WILLIAM FRANCIS GALVIN
Copy Mailed SECRETARY OF THE COMMONWEALTH
DATED 2/20/96]
<PAGE> 13
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
CG SECRETARY OF STATE
- -------- ONE ASHBURTON PLACE FEDERAL IDENTIFICATION
EXAMINER BOSTON, MASS. 02108 NO. 04-2277512
ARTICLES OF
MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
PURSUANT TO GENERAL LAWS, CHAPTER 156B, SECTION 82
The fee for filing this certificate is
prescribed by General Laws, Chapter 156B, Section 114.
Make check payable to the Commonwealth of Massachusetts.
We, John R. Bertucci and Richard S. Chute, President*/and Clerk*/ of
MKS Instruments, Inc. 042277512
--------------------------------
name of corporation
organized under the laws of the Commonwealth of Massachusetts and herein called
the parent corporation, do hereby certify as follows:
1. That the subsidiary corporation(s) to be merged into the parent
corporations is as follows*:
<TABLE>
<CAPTION>
Name State of Date of
Organization Organization
<S> <C> <C>
MKS Disc, Inc. 046311363 Massachusetts 10/31/72
</TABLE>
2. That the parent corporation owns at least ninety per cent of the outstanding
shares of each class of the stock of each subsidiary corporation to be merged
into the parent corporation.
3.
______________
*Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts these articles are to be
signed by officers having corresponding powers and duties.
<PAGE> 14
4. That at a meeting of the directors of the parent corporation the
following vote, pursuant to subsection (a) of General Laws, Chapter 156B,
Section 82, was duly adopted:
VOTED: That MKS Disc, Inc., a Massachusetts corporation and a
wholly-owned subsidiary corporation of the Corporation,
be merged with and into the Corporation in accordance
with the provisions of Section 82 of the Massachusetts
Business Corporation Law, the effective date of the
merger to be the date of filing of the Articles of
Merger of Parent and Subsidiary Corporations with the
State Secretary of the Commonwealth of Massachusetts;
that the President and Clerk of the Corporation be and
hereby are authorized in the name and on behalf of
the Corporation to execute the Articles of Merger of
Parent and Subsidiary Corporations attached hereto (the
"Articles of Merger") and to file the Articles of
Merger with the State Secretary of the Commonwealth of
Massachusetts; and in furtherance thereof that the
President, any Vice President, Treasurer, Clerk, and
Assistant Clerk of the Corporation or any one or more
of them be and hereby are authorized in the name and on
behalf of the Corporation to execute and deliver any
and all documents and instruments and to take any and
all action as they or any one or more of them may deem
necessary or appropriate to effectuate the merger of
MKS Disc, Inc. with and into the Corporation.
<PAGE> 15
5. The effective date of the merger as specified in the vote set out
under Paragraph 4 is the date of filing of these articles of merger of parent
and subsidiary corporations.
6.
IN WITNESS WHEREOF and under the penalties of perjury we have hereto signed
our names this 15th day of December, 1986.
/s/ John R. Burtucci President*
-----------------------------------------
/s/ Richard S. Chute Clerk*
-----------------------------------------
*Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts these articles are to be
signed by officers having corresponding powers and duties.
<PAGE> 16
COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
(General Laws, Chapter 156B, Section 82)
I hereby approve the within articles of merger of parent and subsidiary
corporations and, the filing fee in the amount of $200.00 having been paid, said
articles are deemed to have been filed with me this 15th day of December, 1986.
/s/ Michael J. Connolly
-----------------------------------
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
Photo Copy of Merger To Be Sent
TO: Richard S. Chute, Esquire
Hill & Barlow
-----------------------------------------------
225 Franklin Street
-----------------------------------------------
Boston, MA 02110
-----------------------------------------------
Telephone 617-423-6200
--------------------------------------
[SEAL OF WILLIAM FRANCIS GALVIN
Copy Mailed SECRETARY OF THE COMMONWEALTH
DATED 2/20/96]
<PAGE> 17
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
FEDERAL IDENTIFICATION
Secretary of State
NO. 04-2277512
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
ARTICLES OF AMENDMENT
GENERAL LAWS, CHAPTER 156B, SECTION 72
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of
stockholders adopting the amendment. The fee for filing this
certificate is prescribed by General Laws, Chapter 156B, Section
114. Make check payable to the Commonwealth of Massachusetts.
-------------
We, John R. Bertucci , President and
Richard S. Chute , Clerk of
MKS Instruments, Inc.
---------------------------------------------------------------------
(Name of Corporation)
located at 34 Third Avenue, Burlington, Massachusetts 01803
- ------ do hereby certify that the following amendment to the restated
Name articles of organization of the corporation was duly adopted by
Approved written consent dated December 15, 1986, by vote of
2454 shares of Class A Common out of 2454 shares outstanding,
(Class of Stock)
CROSS OUT being all of each class outstanding and entitled to vote thereon.(2)
INAPPLICABLE
CLAUSE
C / /
P / /
M / /
(1)For amendments adopted pursuant to Chapter 156B, Section 70.
(2)For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
4 is insufficient, additions shall be set forth on separate 8 1/2 - 11
- ---------- sheets of paper leaving a left hand margin of at least 1 inch for
P.C. binding. Additions to more than one Amendment may be continued on a
single sheet so long as each Amendment requiring each such addition
is clearly indicated.
<PAGE> 18
FOR INCREASE IN CAPITAL FILL IN THE FOLLOWING:
(------shares preferred ) with par value
(------shares common )
The total amount of capital stock :
already authorized is (------shares preferred ) without par value
(------shares common )
(------shares preferred ) with par value
(------shares common )
The amount of additional capital :
stock authorized is (------shares preferred ) without par value
(------shares common )
<PAGE> 19
Voted: That the Restated Articles of Organization of the Corporation be
and hereby are amended by deleting and striking in their entirety
the restrictions upon the transfer of shares of stock contained in
article 5. of the Restated Articles of Organization of the
Corporation so that there are no restrictions imposed by the
articles of organization of the Corporation upon the transfer of
shares of stock of any class of the Corporation; that the President
and Clerk of the Corporation be and hereby are authorized in the
name and on behalf of the Corporation to execute Articles of
Amendment to effectuate such amendment of the Restated Articles of
Organization of the Corporation, a copy of which is attached hereto
(the "Articles of Amendment"), and to file the Articles of
Amendment with the State Secretary of the Commonwealth of
Massachusetts; and in furtherance thereof that the President, any
Vice President, Treasurer, Clerk, and Assistant Clerk of the
Corporation or any one or more of them be and hereby are
authorized in the name and on behalf of the Corporation to execute
and deliver any and all documents and instruments and to take any
and all action as they or any one or more of them may deem
necessary or appropriate to effectuate such amendment of the
Restated Articles of Organization of the Corporation.
The foregoing amendment will become effective when these articles of
amendment are filed in accordance with Chapter 156B, Section 6 of The General
Laws unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 15th day of December, in the year 1986
/s/ John R. Bertucci President
- -----------------------------------------------------
John R. Bertucci
/s/ Richard S. Chute Clerk
- -----------------------------------------------------
Richard S. Chute
<PAGE> 20
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment
and, the filing fee in the amount of $75.00
having been paid, said articles are deemed to have
been filed with me this 16th
day of December, 1986.
/s/ Michael Joseph Connolly
----------------------------
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO: Richard S. Chute
Hill & Sarlow
---------------------------
225 Franklin Street
---------------------------
Boston, MA 02110
---------------------------
Telephone 617-423-6200
---------------------------
Copy Mailed
[STATE SEAL]
<PAGE> 21
THE COMMONWEALTH OF MASSACHUSETTS
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASS. 02180
- ---------- FEDERAL IDENTIFICATION
EXAMINER NO. 04-2277512
------------------
N/A
- ----------
Name
Approved
C [ ]
P [ ]
M [ ]
4
- ----------
P.C.
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
amendment. The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114. Make check payable to the Commonwealth of
Massachusetts.
---------------
We, John R. Bertucci , President and
Richard S. Chute , Clerk of
MKS Instruments, Inc.
- --------------------------------------------------------------------------------
(Name of Corporation)
located at Six Shattuck Road, Andover, Massachusetts 01810
- --------------------------------------------------------------------------------
do hereby certify that the following amendment to the restated articles of
organization of the corporation was duly adopted by written consent dated
January 8, 1987, by vote of
2454 shares of Class A Common out of 2454 shares outstanding,
- -------- ------------------------ --------
(Class of Stock)
3250 shares of Class B Common out of 3250 shares outstanding,
- -------- ------------------------ --------
(Class of Stock)
being all of each class outstanding and entitled to vote thereon and of each
class of series of stock whose rights are adversely affected thereby:
(1) for amendments adopted pursuant in Chapter 156B, Section 70.
(2) for amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of
paper leaving a left hand margin of at least 1 inch for binding. Additions to
more than one Amendment may be continued on a single sheet so long as each
Amendment requiring each such addition is clearly indicated
<PAGE> 22
TO CHANGE the number of shares and the par value, if any, of each class of
stock within the corporation fill in the following:
The total presently authorized is:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
PREFERRED
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
CHANGE the total to:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
NO PAR VALUE WITH PAR VALUE PAR
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
PREFERRED
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>
VOTED: That the Restated Articles of Organization of the Corporation be and
hereby are amended by adding the following provision to article 6 of the
Restated Articles of Organization of the Corporation so that article 6
of the Restated Articles of Organization of the Corporation shall
contain the following provision:
"A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director notwithstanding any provision of law
imposing such liability, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 61 or 62 of the Massachusetts Business Corporation
Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
<PAGE> 23
If the Massachusetts Business Corporation Law is amended, after
approval by the stockholders of the corporation of this provision,
to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of
the corporation shall be eliminated or limited to the fullest extent
permitted by the Massachusetts Business Corporation Law, as so
amended. Any amendment, repeal, or modification of this provision by
the stockholders of the corporation shall not adversely affect any
right or protection of a director of the corporation existing at the
time of such amendment, repeal, or modification."
; that the President and Clerk of the Corporation be and hereby are
authorized in the name and on behalf of the Corporation to execute Articles
of Amendment to effectuate such amendment of the Restated Articles of
Organization of the Corporation, a copy of which is attached hereto (the
"Articles of Amendment"), and to file the Articles of Amendment with the
State Secretary of the Commonwealth of Massachusetts; and in furtherance
thereof that the President, any Vice President, Treasurer, Clerk, and
Assistant Clerk of the Corporation or any one or more of them be and hereby
are authorized in the name and on behalf of the Corporation to execute and
deliver any and all documents and instruments and to take any and all
action as they or any one or more of them may deem necessary or appropriate
to effectuate such amendment of the Restated Articles of Organization of
the Corporation.
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which
event the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed
our names this 9th day of February, in the year 1987.
/s/ John R. Bertucci President
- ----------------------------------------------------------------
John R. Bertucci
/s/ Richard S. Chute Clerk
- ----------------------------------------------------------------
Richard S. Chute
<PAGE> 24
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in
the amount of $75.00 having been paid, said articles are deemed to have been
filed with me this 11th day of February, 1987.
/s/ Michael J. Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO: Richard S. Chute, Esq.
Hill & Barlow
----------------------------------
225 Franklin Street
Boston, MA 02110
----------------------------------
----------------------------------
Telephone (617) 423-6200
-------------------------
Copy Mailed
[SEAL OF WILLIAM FRANCIS GALVIN,
SECRETARY OF THE COMMONWEALTH
DATED 2/20/96]
<PAGE> 25
The Commonwealth of Massachusetts
WILLIAM FRANCIS GALVIN
- ------------ Secretary of the Commonwealth
Examiner ONE ASHBURTON PLACE
BOSTON, MASS. 02108
FEDERAL IDENTIFICATION NO. 004-2277512
ARTICLES OF
MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
PURSUANT TO GENERAL LAWS, CHAPTER 156B, SECTION 82
The fee for filing this certificate is prescribed by
General Laws, Chapter 156B, Section 114.
Make check payable to the Commonwealth of Massachusetts.
* * * *
We, John R. Bertucci and Richard S. Chute, President* and Clerk* of
MKS Instruments, Inc.
- -------------------------------------------------------------------------------
name of corporation
organized under the laws of Massachusetts and herein called the parent
corporation, do hereby certify as follows:
1. That the subsidiary corporation(s) to be merged into the parent
corporations are/is as follows:
State of Date of
Name Organization Organization
UTI Instruments Company CA 09/26/73
2. That the parent corporation owns at least ninety per cent of the
outstanding shares of each class of the stock of each subsidiary corporation to
be merged into the parent corporation.
3. That in the case of each of the above-named corporations the laws of
the state of its organization, if other than Massachusetts, permit the merger
herein provided for and that all action required under the laws of each such
state in connection with this merger has been duly taken. (If all the
corporations are organized under the laws of Massachusetts and if General Laws,
Chapter 156B is applicable to them, then Paragraph 3 may be deleted.)
* Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts these articles are to be
signed by officers having corresponding powers and duties.
<PAGE> 26
4. That at a meeting of the directors of the parent corporation the
following vote, pursuant to subsection (a) of General Laws, Chapter 156B,
Section 82, was duly adopted:
VOTED: That the Corporation merge into itself UTI
----- Instruments Company, a California corporation,
with the Corporation surviving the merger
(the "Merger"), in accordance with the
provisions of Section 82 of Chapter 156B of the
Massachusetts General Laws.
FURTHER
VOTED: That the effective date of the Merger shall be
------- the date of filing of appropriate Articles of
Merger with the Secretary of State of Massachusetts.
FURTHER
VOTED: That any officer of the Corporation, acting singly,
------- be and he hereby is, authorized and directed to
take any further actions, and to execute and deliver
any further documents and certificates, which may
be necessary or appropriate to effectuate the Merger
described herein.
<PAGE> 27
5. The effective date of the merger as specified in the vote set out under
Paragraph 4 is
IN WITNESS WHEREOF and under the penalties of perjury we have hereto signed
our names this 17th day of November, 1995.
/s/ John R. Bertucci
------------------------ President*
John R. Bertucci
/s/ Richard S. Chute
------------------------ Clerk*
Richard S. Chute
* Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts these articles are to be
signed by officers having corresponding powers and duties.
<PAGE> 28
COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
(General Laws, Chapter 156B, Section 82)
I hereby approve the within articles of merger of parent and subsidiary
corporations and, the filing fee in the amount of $250 having been paid, said
articles are deemed to have been filed with me this 17th day of November, 1995.
/s/ William Francis Galvin
William Francis Galvin
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photo Copy of Merger To Be Sent
TO: Terrence W. Mahoney, Esq.
Hill & Barlow
------------------------------
One International Place
------------------------------
Boston, MA 02110
------------------------------
Telephone 617-428-3000
--------------------
<PAGE> 29
FEDERAL IDENTIFICATION
NO. 04-2277512
----------
THE COMMONWEALTH OF MASSACHUSETTS
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
We, John R. Bertucci , *President,
----------------------------------------------------------------
and Richard S. Chute , *Clerk,
--------------------------------------------------------------------
of MKS Instruments, Inc. ,
-----------------------------------------------------------------------------
(Exact name of corporation)
located at Six Shattuck Road, Andover, MA 01810
---------------------------------------------------------------------,
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered: 3
3
- --------------------------------------------------------------------------------
(Number those articles 1, 2, 3, 4, 5 and/or 6 being amended)
of the Articles of Organization were duly adopted at a meeting held on
January 9 , 1998 by vote of:
- ---------- --,
2,454 shares of Class A Common of 2,454 shares outstanding,
- -------- ------------------------------ -------
(type, class & series, if any)
3,250 shares of Class B Common of 3,250 shares outstanding,
- -------- ------------------------------ -------
(type, class & series, if any)
and
shares of of shares outstanding,
- -------- ------------------------------ -------
(type, class & series, if any)
(1)**being all and of each type, class or series of stock whose rights are
adversely affected thereby:
*Delete the inapplicable words. **Delete the inapplicable clause.
(1)For amendments adopted pursuant to Chapter 156B, Section 70.
(2)For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on one side only of separate 8 1/2 x
11 sheets of paper with a left margin of at least 1 inch. Additions to more
than one article may be made on a single sheet so long as each article
requiring each addition is clearly indicated.
<PAGE> 30
To change the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
WITHOUT PAR VALUE STOCKS | WITH PAR VALUE STOCKS
- -----------------------------------|--------------------------------------------
TYPE | NUMBER OF SHARES | TYPE | NUMBER OF SHARES | PAR VALUE
- ------------|----------------------|------------|-------------------|-----------
Common: | Class A 10,000 | Common: | None | None
- ------------|----------------------|------------|-------------------|-----------
| Class B 10,000 | | None | None
- ------------|----------------------|------------|-------------------|-----------
Preferred: | None | Preferred: | None | None
- ------------|----------------------|------------|-------------------|-----------
| | | |
- --------------------------------------------------------------------------------
</TABLE>
Change the total authorized to:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
WITHOUT PAR VALUE STOCKS | WITH PAR VALUE STOCKS
- -----------------------------------|--------------------------------------------
TYPE | NUMBER OF SHARES | TYPE | NUMBER OF SHARES | PAR VALUE
- ------------|----------------------|------------|-------------------|-----------
Common: | Class A 6,000,000 | Common: | None | None
- ------------|----------------------|------------|-------------------|-----------
| Class B 10,000,000 | | None | None
- ------------|----------------------|------------|-------------------|-----------
Preferred: | None | Preferred: | None | None
- ------------|----------------------|------------|-------------------|-----------
| | | |
- --------------------------------------------------------------------------------
</TABLE>
VOTED: To amend the Restated Articles of Organization, as amended,
to increase the authorized Class A Common Stock, no par
value per share, of the Corporation from 10,000 shares to
6,000,000 shares and to increase the authorized Class B
Common Stock, no par value per share of the Corporation from
10,000 shares to 10,000,000 shares, so that after the
effective date of such amendment the total authorized
capital stock of the Corporation shall consist of 6,000,000
shares of Class A Common Stock, no par value per share, and
10,000,000 shares of Class B Common Stock, no par value per
share.
<PAGE> 31
The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B, Section 6
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such later date.
Later effective date: _____________________.
SIGNED UNDER THE PENALTIES OF PERJURY, this 14th day of January , 1998,
-------- -------------
/s/ John R. Bertucci , *President
- --------------------------------------------------------------------
/s/ Richard S. Chute , *Clerk
- ------------------------------------------------------------------------
*Delete the inapplicable words.
<PAGE> 32
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(GENERAL LAWS, CHAPTER 156B, SECTION 72)
=====================================================
I hereby approve the within Articles of Amendment and,
the filing fee in the amount of $15,980 having been
paid, said articles are deemed to have been filed
with me this 14th day of January 1998.
Effective date: January 14, 1998
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF DOCUMENT TO BE SENT TO:
Richard N. Kimball, Esq.
----------------------------------------------
Hale and Dorr LLP
60 State Street
----------------------------------------------
Boston, MA 02109
----------------------------------------------
Tel: (617) 526-6000
<PAGE> 1
EXHIBIT 3.3
As amended through
May 17, 1996
BY-LAWS
OF
MKS INSTRUMENTS, INC.
ARTICLE I
Name, Location, Corporate Seal, and Fiscal Year
Section 1. Name. The name of the corporation is MKS
Instruments, Inc.
Section 2. Location. The principal office of the corporation
in Massachusetts shall be located at the place set forth on the form of
the articles of organization or on a certificate filed with the State
Secretary. The Board of Directors may change the location of the
principal office in Massachusetts and establish such other offices as
it deems appropriate.
Section 3. Corporate Seal. The Board of Directors may adopt
and alter the form of seal of the corporation.
Section 4. Fiscal Year. Except as otherwise determined from
time to time by the Board of Directors, the fiscal year of the
corporation shall in each year end on December 31.
ARTICLE II
Stockholders
Section 1. Annual Meeting. The annual meeting of stockholders
shall be held within six months after the end of
<PAGE> 2
each fiscal year of the corporation on a date to be fixed by the Board
of Directors or the President (which date shall not be a legal holiday
in the place where the meeting is to be held) at the time and place to
be fixed by the Board of Directors or the President and stated in the
notice of the meeting. The purposes for which the annual meeting is to
be held, in addition to those prescribed by law, by the articles of
organization or by these by-laws, may be specified by the Board of
Directors or the President. If no annual meeting is held in accordance
with the foregoing provisions, a special meeting may be held in lieu of
the annual meeting, and any action taken at that special meeting shall
have the same effect as if it had been taken at the annual meeting, and
in such case all references in these by-laws to the annual meeting of
stockholders shall be deemed to refer to such special meeting.
Section 2. Special Meetings. Special meetings of the
stockholders may be called by the President or by the Board of
Directors, who shall state the purposes for which the meeting is to be
held. The Clerk, or, in the case of the death, absence, incapacity or
refusal of the Clerk, any other officer, shall call a special meeting
upon written application of one or more stockholders holding at least
one-tenth part in interest of the capital stock entitled to vote at the
meeting, which application shall state the time, place and purposes of
the proposed meeting. If notice of a special meeting shall have been
duly waived by every stockholder entitled to notice thereof, or by his
attorney
- 2 -
<PAGE> 3
thereunto duly authorized, such meeting shall be deemed to have been
duly called at the request of the stockholders.
Section 3. Time and Place of Meetings. All meetings of
stockholders shall be held at a suitable time at the principal office
of the corporation or at such other suitable place within Massachusetts
or, to the extent permitted by the articles of organization, elsewhere
in the United States, as shall be selected by the President or the
Board of Directors in the case of an annual meeting and, in the case of
a special meeting, by the President, the Board of Directors or the
applying stockholders calling such meeting.
Section 4. Notice of Meetings. A written notice of each
meeting of stockholders containing the place, date and hour, and the
purposes for which it is to be held, shall be given by the Clerk or, in
the case of the death, absence, incapacity, or refusal of the Clerk, by
any other officer, at least seven days before the date of the meeting,
to each stockholder entitled to vote at the meeting and to each
stockholder who is otherwise entitled by law or by the articles of
organization or these by-laws to such notice, by leaving such notice
with him or at his residence or usual place of business or by mailing
it postage prepaid and addressed to each stockholder at his address as
it shall appear in the stock and transfer records of the corporation.
Notice of a meeting need not be given to a stockholder if a written
waiver of notice, executed before or after the meeting by such
stockholder or his attorney thereunto authorized, is filed with the
records of the meeting.
- 3 -
<PAGE> 4
Section 5. Quorum. The holder or holders of a majority in
interest of all stock issued, outstanding, and entitled to vote at a
meeting, present in person or represented by proxy, shall constitute a
quorum, but the majority of a lesser interest so present may, from time
to time, postpone to a new time or place any meeting and the postponed
meeting may be held without further notice.
Section 6. Voting and Proxies. Each stockholder entitled to
vote shall have one vote, to be exercised in person or by proxy, for
each share of stock held by him, and a proportionate vote for a
fractional share. When a quorum is present at any meeting the vote of
the holders of a majority in interest of the stock represented which is
entitled to vote and voting shall decide any matter properly brought
before the meeting, except in the case of elections by stockholders,
which shall be decided by a plurality of the votes cast by stockholders
entitled to vote at the election, and except when a larger vote is
required by law, the articles of organization or these by-laws. No vote
need be taken by ballot unless so requested by any stockholder entitled
to vote thereon. Proxies must be in writing and filed with the clerk of
the meeting before being voted. The person named in a proxy may vote at
any adjournment of the meeting for which the proxy was given, but the
proxy shall terminate after final adjournment of the meeting. No proxy
dated more than six months before the meeting named in it shall be
valid. A proxy purporting to be executed by or on behalf of a
stockholder shall be deemed valid unless challenged at or prior to its
exercise and
- 4 -
<PAGE> 5
the burden of proving invalidity shall rest on the challenger. A proxy
with respect to stock held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to the exercise
of the proxy the corporation receives a specific notice to the contrary
from any one of them. Inspectors of election, if any, shall be
appointed by the Board of Directors or, in the absence of such
appointment, by the officer presiding at any meeting of the
stockholders.
Section 7. Action by Consent. Any action required or permitted
to be taken by stockholders may be taken without a meeting if all
stockholders entitled to vote on the matter consent in writing to the
action and such written consents are filed with the records of the
meetings of stockholders. Such consents shall be treated for all
purposes as a vote at a meeting.
ARTICLE III
The Board of Directors
Section 1. Composition. The number of directors which shall
constitute the whole Board of Directors shall be determined by vote of
the stockholders or the Board of Directors, but shall consist of not
less than three directors (except that whenever there shall be only two
stockholders the number of directors shall be not less than two and
whenever there shall be only one stockholder or prior to the issuance
of any stock, there shall be at least one director). The number of
directors may be decreased at any time and from time to time either by
the stockholders or by a majority of the directors then in office, but
only to
- 5 -
<PAGE> 6
eliminate vacancies existing by reason of the death, resignation,
removal or expiration of the term of one or more directors.
Section 2. Election and Term. The directors, except as
provided in the preceding section and Section 12 of this Article, shall
be elected at the annual meeting of the stockholders. The directors,
except as provided in Section 13 of this Article, shall hold office
until the next annual meeting and until their successors are chosen and
qualified. No director need be a stockholder.
Section 3. Powers. The business of the corporation shall be
managed by the Board of Directors, which shall have and may exercise
all the powers of the corporation except those powers reserved to the
stockholders by these by-laws, by law or by the articles of
organization.
Section 4. Annual Meeting. The annual meeting of the Board of
Directors shall be held immediately after and at the same place as the
annual meeting of stockholders, or any special meeting held in lieu
thereof, without the necessity of notice. If such meeting is not then
held, or if a quorum is not present, the annual meeting of the Board of
Directors shall be called in the manner hereinafter provided for
special meetings.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors may be held at such times and places as shall from time to
time be fixed by vote of the Board of Directors and no notice need be
given of regular meetings held at times and places so fixed, provided,
however, that any vote relating to the holding of regular meetings
shall remain in force only until the
- 6 -
<PAGE> 7
next annual meeting of the Board of Directors, and that if at any
meeting of the Board of Directors, at which a vote is adopted fixing
the times or place or places for any regular meetings any director is
absent no meeting shall be held pursuant to such vote until either each
such absent director has in writing or by telegram approved the vote or
seven days have elapsed after a copy of such vote certified by the
Clerk has been mailed, postage prepaid, addressed to each such absent
director at his last known home or business address.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be called by the chairman of the Board of Directors, or
the President, or by any two directors and shall be held at the time
and place designated by the person or persons calling such meeting.
Section 7. Notices. The Clerk of the corporation or, in the
case of his death, absence, incapacity, or refusal, any other officer,
shall give notice of any special meeting to each director (i) by
written notice delivered in person, or by telegram sent to his business
or home address, at least twenty-four hours before such meeting or (ii)
by written notice mailed to his last known business or home address at
least seventy-two hours before such meeting. Notice of a meeting need
not be given to any director if he executes a written waiver of notice
before or after the meeting or if he attends the meeting without
protesting either prior thereto or at its commencement the lack of
notice to him. A notice or waiver of notice of a
- 7 -
<PAGE> 8
meeting of the Board of Directors need not specify the purposes of the
meeting.
Section 8. Quorum and Voting. A majority of the directors then
in office shall constitute a quorum. If a quorum is not present, a
majority of those present at a meeting may, from time to time, postpone
to a new time or place any meeting and the postponed meeting may be
held without further notice. If a quorum is present, a majority of the
directors present and voting may take any action unless a different
vote is required by law, the articles of organization or these by-laws.
Section 9. Action by Consent. Any action required or permitted
to be taken at any meeting of the Board of Directors may be taken
without a meeting if all of the directors consent to the action in
writing and such consents are filed with the records of the meetings of
the Board of Directors. Such consents shall be treated for all purposes
as a vote at a meeting.
Section 10. Chairman of Board of Directors. The Board of
Directors may elect from its own number a chairman. If a chairman has
been elected, he shall preside at all meetings of the stockholders and
of the Board of Directors at which he is present and shall have such
other duties and powers as the Board of Directors may decide.
Section 11. Executive and Other Committees. The Board of
Directors may elect from its own number an executive committee and any
other committees, and may delegate to the committees any or all of its
powers except the power to (a) change the principal office of the
corporation; (b) amend the by-laws; (c) issue
- 8 -
<PAGE> 9
stock; (d) establish and designate series of stock and fix and
determine the relative rights and preferences of any series of stock;
(e) elect officers required by law to be elected by the stockholders or
directors and fill vacancies in any such offices; (f) change the number
of the Board of Directors; (g) remove officers or directors from
office; (h) authorize the payment of any dividend or distribution to
stockholders; (i) authorize the reacquisition for value of stock of the
corporation; or (j) authorize a merger. The Board of Directors may
decide the manner in which any such committees shall conduct their
business. The Board of Directors shall have power to rescind any action
of any committee, but such rescission shall not be retroactive.
Section 12. Vacancies. Except as may be otherwise provided in
the articles of organization, a vacancy in the Board of Directors may
be filled by the Board of Directors by the election of a successor to
hold office for the unexpired term of the director whose place is
vacant and until his successor is chosen and qualified. Any vacancy in
the Board of Directors may also be filled by the stockholders and the
person so chosen shall displace any successor chosen by the Board of
Directors.
Section 13. Removal. A director may be removed from office
with or without cause by the stockholders, provided that the directors
elected by a particular class of stockholders may be removed with or
without cause only by the stockholders of such class. A director may be
removed at any time for cause by the vote of a majority of the
directors then in office. A director
- 9 -
<PAGE> 10
may be removed for cause only after reasonable notice and opportunity
to be heard before the body proposing to remove him.
Section 14. Resignation. Any director may at any time resign
his office by delivering a written resignation to the Board of
Directors, the President or the Clerk. Such resignation, unless a later
time is specified therein, shall take effect upon receipt by the
addressee or at the principal office of the corporation, and acceptance
thereof shall not be necessary to make it effective.
ARTICLE IV
Officers
Section 1. Designation and Qualification. The officers of the
corporation shall consist of a President, a Treasurer, a Clerk, and
such other officers including one or more Vice Presidents, Assistant
Treasurers and Assistant Clerks as the Board of Directors may elect. No
officer need be a stockholder or a director. The Clerk shall be a
resident of the Commonwealth of Massachusetts unless the corporation
has a resident agent appointed to accept service of process. A person
may hold more than one office at the same time provided that the
President and Clerk may not be the same person except when there is
only one stockholder. Any officer may be required by the Board of
Directors to give bond for the faithful performance of his duties to
the corporation in such amount and with such sureties as the Board of
Directors may determine.
Section 2. Election and Term. The President, Treasurer and
Clerk shall be elected annually by the Board of Directors at the
- 10 -
<PAGE> 11
annual meeting of the Board of Directors and shall hold office until
the next annual meeting of the Board of Directors and until their
respective successors are chosen and qualified. All other officers may
be elected by the Board of Directors at any time and shall hold office
for such term as the Board of Directors determines.
Section 3. President. The President shall be the chief
executive officer of the corporation, except as the Board of Directors
may otherwise provide, and shall have general supervision and control
of the business of the corporation subject to the direction of the
Board of Directors. The President shall also have such other powers and
duties as the Board of Directors may decide. It shall be his duty, and
he shall have the power, to see that all orders and resolutions of the
directors are carried into effect. In the absence of a chairman of the
Board of Directors, the President shall preside at all meetings of the
stockholders and at all meetings of the Board of Directors. Unless
otherwise directed by the Board of Directors, the President may on
behalf of the corporation vote or consent to any action with respect to
or in connection with any interest that the corporation may hold or
have in any other corporation or in any partnership, joint venture,
association, trust, proprietorship, business entity or common
undertaking whatsoever, and may appoint any other person or persons to
act as proxy or attorney-in-fact for the corporation, with or without
power of substitution. The Board of Directors may from time to time
confer like powers upon any other officer.
- 11 -
<PAGE> 12
Section 4. Vice President. The Vice President or Vice
Presidents, if any, shall have such powers and perform such duties as
may be assigned to them by the Board of Directors or the President. In
the absence of the President or in the event of his inability to act,
the Vice President, if any, or, if there is more than one Vice
President, the First Vice President, or, if no First Vice President has
been designated, the Vice President senior in office, shall have and
may exercise all the powers and duties of the President.
Section 5. Treasurer and Assistant Treasurers. The Treasurer
shall have, subject to the direction of the Board of Directors, general
charge of the financial affairs of the corporation and shall keep full
and accurate records thereof, which shall always be open to the
inspection of the President or of any director. He shall render to the
President or to the Board of Directors, whenever either may require it,
a statement of the accounts of his transactions as Treasurer and of the
financial condition of the corporation. The Treasurer shall perform
such duties and have such powers additional to the foregoing as the
directors may designate.
Any Assistant Treasurer shall have such powers and duties as
the Board of Directors may decide.
Section 6. Clerk and Assistant Clerks. The Clerk shall record
in books kept for that purpose all votes, consents, and the proceedings
of all meetings of the stockholders and of the Board of Directors.
Record books of stockholders' meetings shall be open at all reasonable
times to the inspection of any
- 12 -
<PAGE> 13
stockholder. The Clerk shall notify the stockholders and directors of
all meetings in accordance with the by-laws.
In the absence of the Clerk from any meeting of the
stockholders or from any meeting of the directors, the Assistant Clerk,
if one be elected, or, if there be more than one, the one designated
for the purpose by the directors, and otherwise a temporary clerk
designated by the person presiding at the meeting, shall perform the
duties of the Clerk.
Any Assistant Clerks shall have such other powers and duties
as the Board of Directors may decide.
Section 7. Vacancies. A vacancy in any office may be filled by
the Board of Directors by the election of a successor to hold office
for the unexpired term of the officer whose place is vacant and until
his successor is chosen and qualified.
Section 8. Removal. All officers may be removed from their
respective offices with or without cause by vote of a majority of the
directors then in office. An officer may be removed for cause only
after a reasonable notice and opportunity to be heard before the Board
of Directors.
Section 9. Resignation. Any officer may at any time resign his
office by delivering a written resignation to the Board of Directors,
the President or the Clerk. Such resignation, unless a later date is
specified therein, shall take effect upon receipt by the addressee or
at the principal office of the corporation, and acceptance thereof
shall not be necessary to make it effective.
- 13 -
<PAGE> 14
ARTICLE V
Capital Stock
Section 1. Certificates of Stock. Each stockholder shall be
entitled to a certificate in the form approved by the Board of
Directors stating the number, class, and designation of series, if any,
of the shares held by him. Such certificate shall be signed by the
President or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimiles if the certificate is
countersigned by a transfer agent, or by a registrar of transfers,
other than a director, officer or employee of the corporation.
Every certificate for shares of stock subject to any
restriction on transfer pursuant to the articles of organization, these
by-laws, or any agreement to which the corporation is a party shall
have the restriction noted conspicuously on the certificate and shall
also set forth on the face or back either the full text of the
restriction or a statement of the existence of such restriction and a
statement that the corporation will furnish a copy to the holder of
such certificate upon written request and without charge. If the
corporation is authorized to issue more than one class or series of
stock, every certificate issued shall set forth on its face or back
either the full text of the preferences, voting powers, qualifications
and special and relative rights of the shares of each class and series
authorized to be issued or a statement of the existence of such
preferences, powers, qualification and rights, and a statement that the
- 14 -
<PAGE> 15
corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
Section 2. Transfer. Shares of stock shall be transferred of
record on the books of the corporation only upon the surrender to the
corporation or its transfer agent of the certificate therefor properly
endorsed for transfer (or accompanied by a written assignment and power
of attorney properly executed for transfer), and only upon compliance
with provisions, if any, respecting restrictions on transfer contained
in the articles of organization, these by-laws or any agreement to
which the corporation is a party. The corporation may require proof of
the genuineness of the signature and the capacity of the party
presenting the certificate for transfer.
Section 3. Interests Not Recognized. The corporation shall be
entitled to treat the holder of record of any share or shares of stock
as the holder in fact thereof and shall not be bound to recognize any
other claim to or interest in such share or shares on the part of any
other person except as may be otherwise expressly provided by law.
Section 4. Lost, Mutilated, or Destroyed Certificates. Subject
to Section 8-405 of the Massachusetts Uniform Commercial Code, as
amended from time to time, the Board of Directors may determine the
conditions upon which a new certificate of stock may be issued in place
of any certificate alleged to have been lost, mutilated or destroyed.
It may, in its discretion, require the owner of a lost, mutilated or
destroyed certificate, or his legal representative, to give a bond,
with or without surety,
- 15 -
<PAGE> 16
sufficient in its opinion to indemnify the corporation against any
loss, claim or expense which may arise by reason of the issuance of a
new certificate in place of such lost, mutilated or destroyed stock
certificate.
Section 5. Transfer Agent and Registrar. The Board of
Directors may appoint a transfer agent or a registrar, or both, and
require all stock certificates to bear the signature or facsimile
thereof of any such transfer agent or registrar. Unless the Board of
Directors shall appoint a transfer agent, registrar or other officer or
officers for the purpose, the Clerk shall be charged with the duty of
keeping, or causing to be kept, accurate records of all stock
outstanding, stock certificates issued, and stock transfers. Subject to
any other rules which may be adopted from time to time by the Board of
Directors, such records may be kept solely in the stock certificate
books.
Section 6. Setting Record Date and Closing Transfer Records.
The Board of Directors may fix in advance a time not more than sixty
days before (i) the date of any meeting of the stockholders or (ii) the
date for the payment of any dividend or the making of any distribution
to stockholders or (iii) the last day on which the consent or dissent
of stockholders may be effectively expressed for any purpose, as the
record date for determining the stockholders having the right to notice
of, and to vote at such meeting or any adjournment thereof, or the
right to receive such dividend or distribution, or the right to give
such consent or dissent. If a record date is fixed by the Board of
Directors, only stockholders of record on such date shall have
- 16 -
<PAGE> 17
such rights notwithstanding any transfer of stock on the records of the
corporation after such date. Without fixing such record date, the Board
of Directors may close the transfer records of the corporation for all
or any part of such sixty-day period.
If no record date is fixed and the transfer books are not
closed, then the record date for determining stockholders having the
right to notice of or to vote at a meeting of stockholders shall be at
the close of business on the day next preceding the day on which notice
is given, and the record date for determining stockholders for any
other purpose shall be at the close of business on the date on which
the Board of Directors acts with respect thereto.
Section 7. Issue of Stock. The Board of Directors may, from
time to time, issue any of the authorized capital stock of the
corporation for cash, property, services or expenses, or as a stock
dividend, and on any terms permitted by law and the articles of
organization. No stock shall be issued unless the cash, so far as due,
or the property, services or expenses for which it was authorized to be
issued, has been actually received or incurred by, or conveyed or
rendered to, the corporation, or is in its possession as surplus.
ARTICLE VI
Inspection of Records
The original, or attested copies of the articles of
organization, by-laws and records of all meetings of the incorporators
and stockholders, and the stock and transfer records, which shall
contain the names of all stockholders and
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<PAGE> 18
the record address and the amount of stock held by each, shall be kept
in the Commonwealth of Massachusetts at the principal office of the
corporation, or at an office of its transfer agent or of the Clerk or
of its resident agent. Said copies and records need not all be kept in
the same office. They shall be available at all reasonable times to the
inspection of any stockholder for any proper purpose but not to secure
a list of stockholders for the purpose of selling said list or copies
thereof or of using the same for a purpose other than in the interest
of the applicant, as a stockholder, relative to the affairs of the
corporation.
ARTICLE VII
Checks, Notes, Drafts and Other Instruments
Checks, notes, drafts and other instruments for the payment of
money drawn or endorsed in the name of the corporation may be signed by
any officer or officers or person or persons authorized by the
directors to sign the same. No officer or person shall sign any such
instrument as aforesaid unless authorized by the directors to do so.
ARTICLE VIII
Amendments
These by-laws may at any time be amended by the stockholders,
provided that notice of the substance of the proposed amendment is
stated in the notice of any meeting at which action is to be taken on
the amendment.
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<PAGE> 19
ARTICLE IX
Indemnification
Except as provided below, any director or officer of the
corporation, and any person who serves at the request of the
corporation as a director or officer of another organization or who
serves at the request of the corporation in any capacity with respect
to any employee benefit plan, shall be indemnified in full by the
corporation against expenses, including attorneys' fees, and against
the amount of any judgment, money decree, fine, or penalty, or against
the amount of any settlement deemed reasonable by the Board of
Directors, necessarily paid or incurred by such person in connection
with or arising out of any claim made against such person, or any civil
or criminal action, suit, or proceeding of whatever nature brought
against such person or in which such person is made a party or in which
such person is otherwise involved, by reason of being or having been a
director or officer of the corporation or a director or officer of
another organization at the request of the corporation or serving in
any capacity with respect to any employee benefit plan at the request
of the corporation. Such indemnification shall be provided although
such person at the time of such claim, action, suit, or proceeding is
no longer a director or officer of the corporation or of such other
organization or no longer serves with respect to any such employee
benefit plan.
No indemnification shall be provided for any person with
respect to any matter as to which such person shall have been
adjudicated in any proceeding not to have acted in good faith in
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<PAGE> 20
the reasonable belief that such person's action was in the best
interests of the corporation or, to the extent that such matter relates
to service with respect to an employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit
plan. If such person has not been so adjudicated, such person shall be
entitled to indemnification unless the Board of Directors decides that
such person did not act in good faith in the reasonable belief that
such person's action was in the best interests of the corporation or,
to the extent that such matter relates to service with respect to an
employee benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan. Expenses reasonably
incurred in defending any claim, action, suit, or proceeding of the
character described in the preceding paragraph may, if the Board of
Directors so decides, be advanced by the corporation in advance of the
final disposition of such claim, action, suit, or proceeding, upon
receipt of an undertaking by the recipient to repay all such advances
in the event such person is adjudicated in any proceeding not to have
acted, or the Board of Directors decides that such person did not act,
in good faith in the reasonable belief that such person's action was in
the best interests of the corporation or, to the extent that such
matter relates to service with respect to an employee benefit plan, in
the best interests of the participants or beneficiaries of such
employee benefit plan, which undertaking may be accepted without
reference to the financial ability of such person to make repayment.
- 20 -
<PAGE> 21
Any rights of indemnification hereunder shall not be
exclusive, shall be in addition to any other right which a director or
officer of the corporation and any person serving at the request of the
corporation as a director or officer of another organization or in any
capacity with respect to any employee benefit plan may have or obtain,
and shall accrue to such person's estate.
Any agent or employee of or for the corporation may be
indemnified in such manner as the Board of Directors decides.
- 21 -
<PAGE> 1
Exhibit 4.1
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
[LOGO] MKS
INSTRUMENTS, INC.
NUMBER SHARES
----------------------- ---------------------
MKS MKS INSTRUMENTS, INC.
----------------------- ---------------------
COMMON STOCK
THIS CERTIFICATE IS TRANSFERABLE SEE REVERSE FOR CERTAIN DEFINITIONS
IN BOSTON, MA OR NEW YORK, NY
INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS CUSIP 55306N 10 4
-----------------------------------------------------------------------------------------------------------------
THIS CERTIFIES THAT
is the owner of
-----------------------------------------------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, NO PAR VALUE OF
====================================================== MKS INSTRUMENTS, INC. ======================================================
transferable only the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of
this Certificate properly endorsed. This Certificate and the shares represented hereby are issued under and subject to the laws of
The Commonwealth of Massachusetts and to the Articles of Organization and By-laws of the Corporation, all as amended from time to
time. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by the facsimile signatures of its duly authorized
officers and a facsimile of its corporate seal to be hereunto affixed.
Dated:
/s/ William Donlan /s/ John R. Bertucci
TREASURER [SEAL] PRESIDENT
COUNTERSIGNED AND REGISTERED:
BANKBOSTON, N.A.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
AMERICAN BANK NOTE COMPANY DEC 10, 1997 fm
3504 ATLANTIC AVENUE
SUITE 12 053699fc
LONG BEACH, CA 90807
(562) 989-2333
(FAX) (562) 426-7450 270-19x Proof X REV 3
- ------------------------------------------------
<PAGE> 2
MKS INSTRUMENTS, INC.
The Corporation has more than one class of stock authorized to be issued. The
Corporation will furnish without charge to each stockholder upon written
request, a copy of the full text of the preferences, voting powers,
qualifications and special and relative rights of the shares of each class of
stock (and any series thereof) authorized to be issued by the Corporation.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ____ Guardian ____
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act ________________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received ___________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
--------------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------------------------------------------ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ---------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
------------------
(Signature) _________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
Signature Guaranteed: _________________________________________________________
ALL GUARANTEES MUST BE MADE BY A FINANCIAL INSTITUTION
(SUCH AS A BANK OR BROKER) WHICH IS A PARTICIPANT IN THE
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM ("STAMP"),
THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE
PROGRAM ("MSP") OR THE STOCK EXCHANGES MEDALLION PROGRAM
("SEMP") AND MUST NOT BE DATED. GUARANTEES BY A NOTARY
PUBLIC ARE NOT ACCEPTABLE.
- ----------------------------------------------
AMERICAN BANK NOTE COMPANY NOV 12, 1997 fm
3504 ATLANTIC AVENUE
SUITE 12
LONG BEACH, CA 90807 053699bk
(562) 989-2333
(FAX) (562) 426-7450 Proof X NEW
- ----------------------------------------------
<PAGE> 1
Exhibit 10.1
MKS INSTRUMENTS, INC.
AMENDED AND RESTATED 1995 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this Amended and Restated 1995 Stock Incentive Plan (the
"Plan") of MKS Instruments, Inc., a Massachusetts corporation (the "Company"),
is to advance the interests of the Company's stockholders by enhancing the
Company's ability to attract, retain and motivate persons who make (or are
expected to make) important contributions to the Company by providing such
persons with equity ownership opportunities and performance-based incentives and
thereby better aligning the interests of such persons with those of the
Company's stockholders. Except where the context otherwise requires, the term
"Company" shall include any present or future subsidiary corporations of MKS
Instruments, Inc. as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options, restricted stock, or other
stock-based awards (each, an "Award") under the Plan. Any person who has been
granted an Award under the Plan shall be deemed a "Participant."
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered
by the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
<PAGE> 2
(b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers. The Chief Executive Officer
of the Company may grant Awards to non-executive officer employees of the
Company in amounts not to exceed 300,000 shares in the aggregate or 20,000
shares to any one employee.
(c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). If and when the
Common Stock (as defined below in Section 4(d)) is registered under the
Securities Exchange Act of 1934 (the "Exchange Act"), the Board shall appoint
one such Committee of not less than two members, each member of which shall be
an "outside director" within the meaning of Section 162(m) of the Code and a
"non-employee director" as defined in Rule 16b-3 promulgated under the Exchange
Act." All references in the Plan to the "Board" shall mean the Board or a
Committee of the Board or the executive officer referred to in Section 3(b) to
the extent that the Board's powers or authority under the Plan have been
delegated to such Committee or executive officer.
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 4(c), Awards
may be made under the Plan for up to 2,500,000 shares of Common Stock (as
defined below in Section 4(d)). If any Award expires or is terminated,
surrendered or canceled without having been fully exercised or is forfeited in
whole or in part or results in any Common Stock not being issued, the unused
Common Stock (as defined below in Section 4(d)) covered by such Award shall
again be available for the grant of Awards under the Plan, subject, however, in
the case of Incentive Stock Options (as hereinafter defined), to any limitation
required under the Code. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares. All share amounts set
forth in this plan reflect the 2,110-for-1 stock split approved by the Board of
Directors of the Company on December 31, 1997 (the "1997 Stock Split").
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 4(c),
for Awards granted after the Common Stock (as defined below in Section 4(d)) is
registered under the Exchange Act, the maximum number of shares with respect to
which an Award may be granted to any Participant under the Plan shall be 900,000
per calendar year. The per-participant limit described in this Section 4(b)
shall be construed and applied consistently with Section 162(m) of the Code.
-2-
<PAGE> 3
(c) ADJUSTMENT TO COMMON STOCK. In the event, at any time after the
1997 Stock Split, of any stock split, stock, dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
liquidation, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock (as defined below in Section 4(d)) other
than a normal cash dividend, (i) the number and class of securities available
under this Plan, (ii) the number and class of security and exercise price per
share subject to each outstanding Option, (iii) the repurchase price per
security subject to each outstanding Restricted Stock Award and (iv) the terms
of each other outstanding stock-based Award shall be appropriately adjusted by
the Company (or substituted Awards may be made, if applicable) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is necessary and appropriate. If this Section 4(c) applies and Section 8(e)(1)
also applies to any event, Section 8(e)(1) shall be applicable to such event and
this Section 4(c) shall not be applicable.
(d) DEFINITION OF COMMON STOCK. "Common Stock" means (i) prior to the
closing of the Company's initial public offering of common stock pursuant to an
effective registration statement under the Securities Act of 1933 ("IPO"), the
Class B Common Stock, no par value per share, of the Company, and (ii) from and
after the closing of the IPO, the Common Stock, no par value per share, of the
Company.
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option."
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable
-3-
<PAGE> 4
option agreement. No Option will be granted for a term in excess of 10 years.
(e) EXERCISE OF OPTION. Options may be exercised only by delivery
to the Company of a written notice of exercise signed by the proper person
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the
exercise of an Option granted under the Plan shall be paid for as follows:
(i) in cash or by check, payable to the order of the
Company;
(ii) except as the Board may otherwise provide in an
Option Agreement, delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price, delivery by the Participant to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price, or
by delivery of shares of Common Stock owned by the Participant valued at the
fair market value as determined by the Board in good faith ("Fair Market
Value"), which Common Stock was owned by the Participant at least six months
prior to such delivery;
(iii) to the extent permitted by the Board and explicitly
provided in an Option Agreement (i) by delivery of a promissory note of the
Participant to the Company on terms determined by the Board, or (ii) by payment
of such other lawful consideration as the Board may determine; or
(iv) any combination of the above permitted forms of
payment.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award (each,
"Restricted Stock Award").
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together
-4-
<PAGE> 5
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant's estate.
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the
Common Stock, having such terms and conditions as the Board may determine
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.
8. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Award under the Plan shall be evidenced by a
written instrument in such form as the Board shall determine. Each Award may
contain terms and conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each
type of Award may be made alone or in addition or in relation to any other type
of Award. The terms of each type of Award need not be identical, and the Board
need not treat Participants uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
-5-
<PAGE> 6
(e) ACQUISITION EVENTS
(1) CONSEQUENCES OF ACQUISITION EVENTS. Upon the occurrence of
an Acquisition Event (as defined below), or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall take any one or
more of the following actions with respect to then outstanding Awards: (i)
provide that outstanding Options shall be assumed, or equivalent Options shall
be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such Options substituted for Incentive Stock Options
shall satisfy, in the determination of the Board, the requirements of Section
424(a) of the Code; (ii) if the acquisition or succeeding corporation refuses or
is unable to assume outstanding Options or grant Options in substitution
therefor pursuant to clause (i), upon written notice to the Participants,
provide that all then unexercised Options will become exercisable in full as of
a specified time (the "Acceleration Time") prior to the Acquisition Event and
will terminate immediately prior to the consummation of such Acquisition Event,
except to the extent exercised by the Participants between the Acceleration Time
and the consummation of such Acquisition Event; (iii) in the event of an
Acquisition Event under the terms of which holders of Common Stock will receive
upon consummation thereof a cash payment for each share of Common Stock
surrendered pursuant to such Acquisition Event (the "Acquisition Price"),
provide that all outstanding Options shall terminate upon consummation of such
Acquisition Event and each Participant shall receive, in exchange therefor, a
cash payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding
Options (whether or not then exercisable), exceeds (B) the aggregate exercise
price of such Options; (iv) provide that all Restricted Stock Awards then
outstanding shall become free of all restrictions prior to the consummation of
the Acquisition Event; and (v) provide that any other stock-based Awards
outstanding (A) shall become exercisable, realizable or vested in full, or shall
be free of all conditions or restrictions, as applicable to each such Award,
prior to the consummation of the Acquisition Event, or (B), if applicable, shall
be assumed, or equivalent Awards shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof).
An "Acquisition Event" shall mean: (a) any merger or consolidation
which results in the voting securities of the Company outstanding immediately
prior thereto representing immediately thereafter (either by remaining
outstanding or by being converted into voting securities of the surviving or
acquiring entity) less than 50% of the combined voting power of the voting
securities of the Company or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; (b) any sale of all or
substantially all of the assets of the Company; or (c) the complete liquidation
of the Company.
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<PAGE> 7
(2) ASSUMPTION OF OPTIONS UPON CERTAIN EVENTS. The Board may
grant Awards under the Plan in substitution for stock and stock-based awards
held by employees of another corporation who become employees of the Company as
a result of a merger or consolidation of the employing corporation with the
Company or the acquisition by the Company of property or stock of the employing
corporation. The substitute Awards shall be granted on such terms and conditions
as the Board considers appropriate in the circumstances.
(f) WITHHOLDING. Each Participant shall pay to the Company, or
make provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in connection with Awards to such Participant no later than
the date of the event creating the tax liability. The Board may allow
Participants to satisfy such tax obligations in whole or in part in shares of
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value. The Company may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to a Participant.
(g) AMENDMENT OF AWARD. The Board may amend, modify or terminate
any outstanding Award, including but not limited to, substituting therefor
another Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(h) CONDITIONS ON DELIVERY OF STOCK. The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the Plan until (i)
all conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(i) ACCELERATION. The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, that any
Restricted Stock Awards shall be free of all restrictions or that any other
stock-based Awards may become exercisable in full or in part or free of some or
all restrictions or conditions, or otherwise realizable in full or in part, as
the case may be.
-7-
<PAGE> 8
9. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant designated as subject to Section 162(m) by the Board shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's stockholders. No Awards shall be
granted under the Plan after the completion of ten years from the earlier of (i)
the date on which the Plan was adopted by the Board or (ii) the date the Plan
was approved by the Company's stockholders, but Awards previously granted may
extend beyond that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that no Award granted to a
Participant designated as subject to Section 162(m) by the Board after the date
of such amendment shall become exercisable, realizable or vested, as applicable
to such Award (to the extent that such amendment to the Plan was required to
grant such Award to a particular Participant), unless and until such amendment
shall have been approved by the Company's stockholders.
(e) STOCKHOLDER APPROVAL. For purposes of this Plan, stockholder
approval shall mean approval by a vote of the stockholders in accordance with
the requirements of Section 162(m) of the Code.
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<PAGE> 9
(f) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
The Commonwealth of Massachusetts, without regard to any applicable conflicts of
law rules or provisions.
Adopted by the Board of Directors
on November 30, 1995
Adopted by the Stockholders on
May 17, 1996
Approved as Amended and Restated
by the Board of Directors on
December 31, 1997
Approved as Amended and Restated
by the Stockholders on January 9,
1998
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<PAGE> 1
Exhibit 10.2
MKS INSTRUMENTS, INC.
AMENDED AND RESTATED 1996 DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this Amended and Restated 1996 Director Stock Option Plan
(the "Plan") of MKS Instruments, Inc., a Massachusetts corporation (the
"Company"), is to encourage ownership in the Company by outside directors of the
Company whose continued services are considered essential to the Company's
future progress and to provide them with a further incentive to remain as
directors of the Company.
2. ADMINISTRATION
The Board of Directors shall supervise and administer the Plan. Grants of
stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic in accordance with Section 5. However, all questions
of interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan.
3. PARTICIPATION IN THE PLAN
Directors of the Company who are not employees of the Company or any
subsidiary of the Company shall be eligible to participate in the Plan.
4. STOCK SUBJECT TO THE PLAN
(a) The maximum number of shares which may be issued under the Plan
shall be 20 shares of the Company s Class B Common Stock, no par value per share
(the "Common Stock"). From and after the closing of the Company s initial public
offering of Common Stock pursuant to an effective Registration Statement under
the Securities Act of 1933, all references herein to "Common Stock" shall be
deemed to be references to the Company s Common Stock, and all references to
numbers of shares of Common Stock in the Plan and in outstanding options under
the Plan shall be adjusted to reflect the rate at which outstanding shares of
Class B Common Stock are exchanged for shares of Common Stock pursuant to the
recapitalization effected in connection with such public offering.
(b) If any outstanding option under the Plan for any reason expires
or is terminated without having been exercised in full, the shares allocable to
the
<PAGE> 2
unexercised portion of such option shall again become available for grant
pursuant to the Plan.
(c) All options granted under the Plan shall be nonstatutory options
not entitled to special tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended to date and as it may be amended from time to time (the
"Code").
5. TERMS, CONDITIONS AND FORM OF OPTIONS
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) OPTION GRANT DATES.
Options will be granted in accordance with the following:
(i) CURRENT OUTSIDE DIRECTORS. An option for 2.1429 shares
shall automatically be granted to each non-employee director of the Company on
the date of the original adoption of the Plan by the Board of Directors (the
"Adoption Date").
(ii) FUTURE OUTSIDE DIRECTORS. An option for 2.1429 shares
shall automatically be granted to each non-employee director elected to the
Board of Directors after the Adoption Date upon his initial election to the
Board.
(ii) ANNUAL GRANTS. An option for 0.2857 shares shall
automatically be granted on the date of each annual meeting of stockholders of
the Company (commencing with the annual meeting to be held in 1997) to each
non-employee director of the Company, PROVIDED that he was elected to serve as a
director of the Company at least six months prior to the date of such meeting.
(b) OPTION EXERCISE PRICE. The option exercise price per share for
each option granted under the Plan shall equal (i) the last reported sales price
per share of the Company s Common Stock on the Nasdaq National Market (or, if
the Common Stock is traded on a national securities exchange on the date of
grant, the reported closing sales price per share of the Common Stock on such
exchange) on the date of grant (or if no such price is reported on such date
such price as reported on the nearest preceding day) or (ii) if the Common Stock
is not traded on the Nasdaq National Market or a national securities exchange,
the fair market value per share on the date of grant as determined by the Board
of Directors on such date. If at any time, in the good faith judgment of the
Board of Directors, the Board of Directors
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<PAGE> 3
determines that the fair market value of the shares of the Company's Common
Stock is less than the exercise price of any options granted under the Plan, it
may change the exercise price of such options to the fair market value of the
Common Stock on the date of such determination; provided that, similar exercise
price adjustments (or replacement options are issued) with respect to options
issued pursuant to the Company's other option plans.
(c) OPTIONS NON-TRANSFERABLE. Each option granted under the Plan by
its terms shall not be transferable by the optionee otherwise than by will, or
by the laws of descent and distribution, and shall be exercised during the
lifetime of the optionee only by him. No option or interest therein may be
transferred, assigned, pledged or hypothecated by the optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(d) EXERCISE PERIOD. Each option granted pursuant to paragraphs
(a)(i) and (ii) of this Section 5 shall become exercisable in twelve (12) equal
quarterly installments following the date of grant. Each option granted pursuant
to paragraph (a)(iii) of this Section 5 shall become fully exercisable on the
day prior to the first annual meeting of stockholders of the Company following
the date of grant (or if no such meeting is held within thirteen (13) months
after the date of grant, on the thirteen-month anniversary of the date of
grant).
(e) TERMINATION. Upon termination of an optionee s service as a
director of the Company, each option held by him may be exercised during the
three month period following such termination of service, as to the exercisable
portion of such option as of the date of termination, PROVIDED that (i) no
option may be exercised more than ten (10) years after the date of grant, and
(ii) in the event an optionee ceases to serve as a director due to his death or
disability (within the meaning of Section 22(e)(3) of the Code or any successor
provision), each option may be exercised, within the period of 180 days
following the date the optionee ceases to serve as a director, by the optionee
or by the person to whom the option is transferred by will, by the laws of
descent and distribution, or by written notice, as to the portion of the option
that is exercisable on the date of death or disability and as to the additional
portion that would have become exercisable on the next anniversary date of the
date of grant of such option.
(f) EXERCISE PROCEDURE. Options may be exercised only by written
notice to the Company at its principal office accompanied by (i) payment in cash
of the full consideration for the shares as to which they are exercised or (ii)
an irrevocable undertaking, in form and substance satisfactory to the Company,
by a broker to deliver promptly to the Company sufficient funds to pay the
exercise price or delivery of irrevocable instructions, in form and substance
satisfactory to the Company, to a broker to deliver promptly to the Company cash
or a check sufficient to pay the exercise price.
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<PAGE> 4
(g) EXERCISE BY REPRESENTATIVE FOLLOWING DEATH OF DIRECTOR. An
optionee, by written notice to the Company, may designate one or more persons
(and from time to time change such designation), including his or her legal
representative, who, by reason of the director's death, shall acquire the right
to exercise all or a portion of the option. If the person or persons so
designated wish to exercise any portion of the option, they must do so within
the term of the option as provided herein. Any exercise by a representative
shall be subject to the provisions of the Plan.
6. ASSIGNMENTS
The rights and benefits of participants under the Plan may not be
assigned, whether voluntarily or by operation of law, except as provided in
Section 5(g).
7. EFFECTIVE DATE
The Plan shall become effective immediately upon its adoption by the
Board of Directors, but all grants of options shall be conditional upon the
approval of the Plan by the stockholders of the Company within 12 months after
adoption of the Plan by the Board of Directors.
8. LIMITATION OF RIGHTS
(a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain the optionee as a director for any period of time.
(b) NO STOCKHOLDERS' RIGHTS FOR OPTIONS. An optionee shall have no
rights as a stockholder with respect to the shares covered by his options until
the date of the issuance to him of a stock certificate therefor, and no
adjustment will be made for dividends or other rights (except as provided in
Section 9) for which the record date is prior to the date such certificate is
issued.
9. CHANGES IN COMMON STOCK
(a) If the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of shares or other
securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all of
the assets of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other distribution with
respect to such shares of Common Stock, or
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<PAGE> 5
other securities, an appropriate and proportionate adjustment will be made in
(i) the maximum number and kind of shares reserved for issuance under the Plan,
(ii) the number and kind of shares or other securities subject to then
outstanding options under the Plan and (iii) the price for each share subject to
any then outstanding options under the Plan, without changing the aggregate
purchase price as to which such options remain exercisable. No fractional shares
will be issued under the Plan on account of any such adjustments.
(b) In the event of (i) a consolidation, merger or other
reorganization in which all of the outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity or (ii) any sale of all or substantially all of the Company's
assets (in either event, an "Acquisition"), all options outstanding under the
Plan immediately prior to the effective date of such Acquisition shall become
automatically exercisable in full upon the effective date of such Acquisition.
10. AMENDMENT OF THE PLAN
The Board of Directors may suspend or discontinue the Plan or revise
or amend it in any respect whatsoever; provided, however, that without approval
of the stockholders of the Company no revision or amendment shall change the
number of shares subject to the Plan (except as provided in Section 9).
11. NOTICE
Any written notice to the Company required by any of the provisions
of the Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.
12. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of The Commonwealth of Massachusetts.
Adopted by the Board of Directors
and Stockholders on May 17, 1996
Approved as Amended and Restated by the
Board of Directors on December 31, 1997
Approved as Amended and Restated by the
Stockholders on January 9, 1998
- --------------
1. Share amounts set forth herein do not reflect the 2,110-for-1
stock split approved by the Board of Directors of the Company on December
31, 1997 (the "Split"), therefore, amounts reflected herein should be
appropriately adjusted in accordance with Section 9 to reflect the Split.
-5-
<PAGE> 1
Exhibit 10.3
MKS INSTRUMENTS, INC.
1997 DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1997 Director Stock Option Plan (the "Plan") of MKS
Instruments, Inc., a Massachusetts corporation (the "Company"), is to encourage
ownership in the Company by non-employee directors of the Company whose
continued services are considered essential to the Company's future progress and
to provide them with a further incentive to remain as directors of the Company.
2. ADMINISTRATION
The Board of Directors shall supervise and administer the Plan. Grants
of stock options under the Plan and the amount and nature of the awards to be
granted shall be automatic in accordance with Section 5. However, all questions
of interpretation of the Plan or of any options issued under it shall be
determined by the Board of Directors and such determination shall be final and
binding upon all persons having an interest in the Plan.
3. PARTICIPATION IN THE PLAN
Directors of the Company who are not employees of the Company
or any subsidiary of the Company shall be eligible to participate in the Plan.
4. STOCK SUBJECT TO THE PLAN
(a) DEFINITION OF COMMON STOCK. "Common Stock" means (i) prior
to the closing of the Company's initial public offering of common stock pursuant
to an effective registration statement under the Securities Act of 1933 ("IPO"),
the Class B Common Stock, no par value per share, of the Company, and (ii) from
and after the closing of the IPO, the Common Stock, no par value per share, of
the Company.
(b) The maximum number of shares of the Company's Common Stock
which may be issued under the Plan shall be 200,000 shares, subject to
adjustment as provided in Section 7. All share amounts set forth in this Plan
reflect the 2,110-for-1 stock split approved by the Board of Directors of the
Company on December 31, 1997 (the "1997 Stock Split").
<PAGE> 2
(c) If any outstanding option under the Plan for any
reason expires or is terminated without having been exercised in full, the
shares allocable to the unexercised portion of such option shall again become
available for grant pursuant to the Plan.
(d) All options granted under the Plan shall be
nonstatutory options not entitled to special tax treatment under Section 422 of
the Internal Revenue Code of 1986, as amended to date and as it may be amended
from time to time (the "Code").
5. TERMS, CONDITIONS AND FORM OF OPTIONS
Each option granted under the Plan shall be evidenced by a
written agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) OPTION GRANT DATES. Options shall automatically be
granted to all eligible outside directors as follows:
(i) each person who is an eligible outside
director on the date upon which the Company enters into an underwriting
agreement for its first underwritten public offering of Common Stock (the
"Public Offering Price") pursuant to an effective registration statement under
the Securities Act of 1933, as amended, (the "Pricing Date"), shall be granted
an option to purchase 7,000 shares of Common Stock at an exercise price equal to
the Public Offering Price;
(ii) each person who first becomes an eligible
outside director after the Pricing Date shall be granted an option to purchase
7,500 shares of Common Stock on the date of his or her initial election to the
Board of Directors; and
(iii) each eligible outside director then in
office on the date of each annual meeting of stockholders of the Company shall
be granted an additional option to purchase 4,000 shares of Common Stock on the
date of each such annual meeting of stockholders, PROVIDED that he was elected
to serve as a director of the Company at least six months prior to the date of
such meeting.
(b) OPTION EXERCISE PRICE. The option exercise price per
share for each option granted under the Plan shall equal (i) the last reported
sales price per share of the Company's Common Stock on the Nasdaq National
Market (or, if the Common Stock is traded on a national securities exchange on
the date of grant, the reported closing sales price per share of the Common
Stock on such exchange) on the date of grant (or if no such price is reported on
such date such price as reported on the nearest preceding day), (ii) if the
Common Stock is not traded on the Nasdaq
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<PAGE> 3
National Market or a national securities exchange, the fair market value per
share on the date of grant as determined by the Board of Directors or (iii) the
average of the closing bid and asked prices in the over-the-counter market.
(c) TRANSFERABILITY OF OPTIONS. Except as the Board of
Directors of the Company may otherwise determine or provide in a written
agreement entered into in connection with the grant of an option under the Plan,
options shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the Optionee, either voluntarily or by operation of law except by
will or the laws of descent and distribution, and during the life of the
optionee and shall be exercisable only by him. Reference to an optionee, to the
extent relevant in the context, shall include references to authorized
transferees.
(d) EXERCISE PERIOD. Except as the Board may otherwise
determine or provide in a written agreement entered into in connection with the
grant of an option under the Plan, each option granted pursuant to paragraphs
(a)(i) and (ii) of this Section 5 shall become exercisable in twelve (12) equal
quarterly installments following the date of grant. Each option granted pursuant
to paragraph (a)(iii) of this Section 5 shall become fully exercisable on the
day prior to the first annual meeting of stockholders of the Company following
the date of grant (or if no such meeting is held within thirteen (13) months
after the date of grant, on the thirteen-month anniversary of the date of
grant).
(e) TERMINATION. Upon termination of an optionee's service as
a director of the Company, each option held by him may be exercised during the
three month period following such termination of service, as to the exercisable
portion of such option as of the date of termination, PROVIDED that (i) no
option may be exercised more than ten (10) years after the date of grant and
(ii) in the event an optionee ceases to serve as a director due to his death or
disability (within the meaning of Section 22(e)(3) of the Code or any successor
provision), each option may be exercised, within the period of 180 days
following the date the optionee ceases to serve as a director, by the optionee
or by the person to whom the option is transferred by will, by the laws of
descent and distribution, or by written notice, as to the portion of the option
that is exercisable on the date of death or disability and as to the additional
portion that would have become exercisable on the next anniversary date of the
date of grant of such option.
(f) EXERCISE PROCEDURE. Options may be exercised only by
written notice to the Company at its principal office accompanied by (i) payment
in cash of the full consideration for the shares as to which they are exercised
or (ii) an irrevocable undertaking, in form and substance satisfactory to the
Company, by a broker to deliver promptly to the Company sufficient funds to pay
the exercise price or delivery of irrevocable instructions, in form and
substance satisfactory to the
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<PAGE> 4
Company, to a broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price.
(g) EXERCISE BY REPRESENTATIVE FOLLOWING DEATH OF DIRECTOR. An
optionee, by written notice to the Company, may designate one or more persons
(and from time to time change such designation), including his or her legal
representative, who, by reason of the director's death, shall acquire the right
to exercise all or a portion of the option. If the person or persons so
designated wish to exercise any portion of the option, they must do so within
the term of the option as provided herein. Any exercise by a representative
shall be subject to the provisions of the Plan.
6. LIMITATION OF RIGHTS
(a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor
the granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain the optionee as a director for any period of time.
(b) NO STOCKHOLDERS' RIGHTS FOR OPTIONS. An optionee shall
have no rights as a stockholder with respect to the shares covered by his
options until the date of the issuance to him of a stock certificate therefor,
and no adjustment will be made for dividends or other rights (except as provided
in Section 7) for which the record date is prior to the date such certificate is
issued.
7. CHANGES IN COMMON STOCK
(a) If, at any time after the 1997 Stock Split, the
outstanding shares of Common Stock are increased, decreased or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock, or
other securities, an appropriate and proportionate adjustment will be made in
(i) the maximum number and kind of shares reserved for issuance under the Plan,
(ii) the number and kind of shares or other securities subject to then
outstanding options under the Plan and (iii) the price for each share subject to
any then outstanding options under the Plan, without changing the aggregate
purchase price as to which such options remain exercisable. No fractional shares
will be issued under the Plan on account of any such adjustments.
-4-
<PAGE> 5
(b) In the event of (i) a consolidation, merger or other
reorganization in which all of the outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation or
business entity or (ii) any sale of all or substantially all of the Company's
assets (in either event, an "Acquisition"), all options outstanding under the
Plan immediately prior to the effective date of such Acquisition shall become
automatically exercisable in full upon the effective date of such Acquisition.
8. AMENDMENT OF THE PLAN
The Board of Directors may suspend or discontinue the Plan or
revise or amend it in any respect whatsoever; provided, however, that without
approval of the stockholders of the Company no revision or amendment shall
change the number of shares subject to the Plan (except as provided in Section
7).
9. NOTICE
Any written notice to the Company required by any of the
provisions of the Plan shall be addressed to the Chief Financial Officer of the
Company and shall become effective when it is received.
10. GOVERNING LAW
The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of The Commonwealth of
Massachusetts.
Adopted by the Board of Directors
on December 31, 1997
Approved by the Stockholders
on January 9, 1998
-5-
<PAGE> 1
EXHIBIT 10.5
AMENDED & RESTATED EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated December 15, 1995 (the "Employment Agreement") by and
between MKS Instruments, Inc., a Massachusetts Corporation (the "Corporation"),
and Leo Berlinghieri of Billerica, MA (the "Employee").
WHEREAS, the Corporation and the Employee entered into an Employment Agreement
dated August 24, 1981 (the "Original Employment Agreement"); and
WHEREAS, the Corporation has adopted a new Management Incentive Program and the
Employee desires to be eligible to participate in such Management Incentive
Program; and
WHEREAS, the Corporation and the Employee desire to make certain other
amendments to the Original Employment Agreement as more particularly set forth
herein; and
WHEREAS, for convenience of reference, the Corporation and the Employee desire
to amend and restate the Original Employment Agreement in its entirety:
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, and for other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Corporation and the
Employee hereby agree that the Original Employment Agreement is hereby amended
and restated to read in its entirety as follows:
(1) TERM OF EMPLOYMENT: The Corporation hereby employs the Employee,
and the Employee hereby accepts employment with the Corporation, for a period
commencing as of December 15, 1995 and continuing from month to month thereafter
until terminated as provided in this Section (1). Either the Corporation or the
Employee may terminate the employment of the Employee under this Employment
Agreement any time after December 15, 1995 by giving written notice to the other
party stating or his election to terminate the employment of the Employee under
this Employment Agreement. The employment of the Employee under this Employment
Agreement shall terminate thirty (30) days after the date of receipt by the
other party of such notice; provided, however, that the employment of the
Employee under this Employment Agreement is subject to prior termination as
hereinafter provided in Section (5).
(2) CAPACITY: The Employee shall serve in such capacity as may be
assigned to him consistent with his training and experience for the term of
employment under this Employment Agreement and shall have such authority as is
delegated to him by the President of the Corporation, or his designee.
<PAGE> 2
(3) EXTENT OF SERVICES: During the term of employment of the Employee
under this Employment Agreement, the Employee shall devote his full time to, and
use his best efforts in the furtherance of, the business of the Corporation and
shall not engage in any other business activity, whether or not such business
activity is pursued for gain or any other pecuniary advantage, without the prior
written consent of the Corporation.
(4) COMPENSATION: In consideration of the services to be rendered by
the Employee under this Employment Agreement, the Corporation agrees to pay, and
the Employee agrees to accept, the following compensation:
(a) BASE SALARY: A base salary at the rate of $125,000 per year
for the term of employment of the Employee under this Employment Agreement. The
base salary shall be payable in equal weekly, biweekly, or bimonthly
installments subject to usual withholding requirements. Base salary will be
reviewed according to the established practices of the corporation. No overtime
pay will be paid to the Employee by the Corporation.
(b) INCENTIVE: For each calendar year of the Corporation during
the term of employment of the Employee under this Employment Agreement, the
Employee shall be entitled to participate in a Management Incentive Program
pursuant to the terms of which the Employee may receive compensation in addition
to his base salary in an amount equal to a specified percentage of his base
salary if the Corporation attains its consolidated financial goals during such
calendar year of the Corporation. The Management Incentive Program, including
the consolidated financial goals established by the Corporation for the calendar
year and the formula to be used to determine the payment of amounts under the
Management Incentive Program. will be communicated to the Employee in writing
prior to the beginning of each calendar year of the Corporation The first
calendar year of the Corporation for purposes of the Management Incentive
Program will commence on January 1, 1996 and end on December 31, 1996. If the
term of employment of the Employee under this Employment Agreement shall include
a portion of a calendar year of the Corporation commencing after January 1,
1996, the Corporation shall not pay the Employee, and the Employee shall not be
entitled to receive, any amount under the Management Incentive Program.
If there shall be any disagreement between the Corporation and the
Employee as to the calculation of the Management Incentive Bonus in any calendar
year of the Corporation during the term of employment of the Employee under this
Employment Agreement, the decision of the independent Public Accounting firm of
the Corporation as to the amount of the Management Incentive Bonus of the
Corporation shall be conclusive and binding on the Corporation and the Employee.
The Employee shall have no right to inspect any of the books, papers or records
of the
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<PAGE> 3
Corporation, except that the Employee shall be entitled to inspect any
certificate of such independent public accounting firm as to the calculation of
the Management Incentive Bonus of the Corporation in any calendar year of the
Corporation during the term of employment of the Employee under this Employment
Agreement.
Incentive payments shall be payable to the Employee on or before
March 31 after the end of each calendar year of the Corporation during the term
of employment of the Employee under this Employment Agreement.
(c) MKS INSTRUMENTS. INC. PROFIT SHARING AND RETIREMENT SAVINGS
PLAN: The Employee shall be eligible to participate in the MKS Instruments, Inc.
Profit Sharing and Retirement Savings Plan upon satisfaction of the conditions
set forth therein
(d) VACATION: The Employee shall be entitled to an annual
vacation leave of days at full pay during each calendar year during the term of
employment of the Employee under this Employment Agreement, subject to the
Employee arranging such vacation so as not to affect adversely the ability of
the Corporation to transact its necessary business.
(e) LIFE INSURANCE: The Corporation shall provide, and pay all of
the premiums for, term life insurance for the Employee during the term of
employment of the Employee under this Employment Agreement in accordance with
the term life insurance plan of the Corporation.
(f) MEDICAL/DENTAL INSURANCE: The Corporation shall provide group
medical/dental insurance for the Employee under the Plans of the Corporation
applicable to the Employee during the term of employment of the Employee under
this Employment Agreement.
(g) OTHER BENEFITS: The Corporation shall provide other benefits
for the employee under the Plans of the Corporation applicable to the Employee
during the term of employment of the Employee under this Employment Agreement.
(5) TERMINATION: The employment of the Employee under this Employment
Agreement shall terminate:
(a) On the expiration of the period of employment as provided in
Section (1)
(b) Upon the death of the Employee.
(c) At the election of the Corporation (i) if the Employee shall
fail, or refuse, to perform the services required of him under this Employment
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<PAGE> 4
Agreement, or (ii) if the Employee shall fail, or refuse, to perform the other
covenants and agreements required of him under this Employment Agreement, or
(iii) for "cause", which term shall mean acts or actions detrimental to the best
interests of the Corporation.
(6) PAYMENT UPON TERMINATION:
(a) If the employment of the Employee is terminated on the
expiration of the period of employment as provided in Section (1), the Employee
shall not be entitled to any compensation, and the Corporation shall have no
obligation to pay the Employee any compensation, except as is provided in this
Employment Agreement.
(b) If the employment of the Employee is terminated by death, the
Corporation shall pay to the estate of the Employee the compensation which would
otherwise be payable to the Employee at the end of the month in which his death
occurs.
(c) In the event the employment of the Employee is terminated at
the election of the Corporation pursuant to Section (5) (c) hereof, the Employee
shall only be entitled to his base salary through the last day of actual
employment or the date of termination, whichever is earlier.
(7) TRADE SECRETS: The Employee covenants and agrees that he will
communicate to the Corporation, and will not divulge or communicate to any other
person, partnership, corporation or other entity without the prior written
consent of the Corporation, any trade secrets of the Corporation or confidential
information relating to the business of the Corporation or any one connected
with the Corporation, and that such trade secrets and confidential information
shall not be used by the Employee either on his own behalf or for the benefit of
others or disclosed by the Employee to any one, except to the Corporation,
during or after the term of employment of the Employee under this Employment
Agreement. "Trade secrets of the Corporation" shall include, but not be limited
to, Inventions, trade secrets, files, records, drawings, specifications,
processes, lists of material, lists of customers, sales and marketing
strategies, product development plans, financial information, and information on
research and development.
(8) INVENTIONS AND PATENTS:
(a) The Employee shall make prompt full disclosure in writing to
the Corporation of all inventions, improvements and discoveries, whether or not
patentable, which the Employee conceives, devises, makes, discovers, develops,
perfects or first reduces to practice, either alone or jointly with others,
during the term of employment of the Employee under this Employment Agreement,
which
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<PAGE> 5
relate in any way to the fields, products or business of the Corporation,
including development and research, whether during or out of the usual hours of
work or on or off the premises of the Corporation or by use of the facilities of
the Corporation or otherwise and whether at the request or suggestion of the
Corporation or otherwise (all such inventions, improvements and discoveries
being hereinafter called the "Inventions"), including any Inventions, whether or
not patentable, conceived, devised, made, discovered, developed, perfected or
first reduced to practice by the Employee after the employment of the Employee
under this Employment Agreement is terminated if the Inventions were conceived
by the Employee during the term of employment of the Employee under this
Employment Agreement. Any Inventions, whether or not patentable, conceived,
devised, made, discovered, developed, perfected or first reduced to practice by
the Employee within six (6) months of the date of termination of the employment
of the Employee under this Employment Agreement shall be conclusively presumed
to have been conceived during the term of employment of the Employee under this
Employment Agreement.
(b) The Employee agrees that the Inventions shall be the sole and
exclusive property of the Corporation.
(c) The Employee agrees to assist the Corporation and its
nominees in every reasonable way (entirely at its or their expense) to obtain
for the benefit of the Corporation letters patent for the Inventions and
trademarks, trade names and copyrights relating to the Inventions, and any
renewals, extensions or reissues thereof, in any and all countries, and agrees
to make, execute, acknowledge and deliver, at the request of the Corporation,
all written applications for letters patent, trademarks, trade names and
copyrights relating to the Inventions and any renewals, extensions or reissues
thereof, in any and all countries, and all documents with respect thereto, and
all powers of attorney relating thereto and, without further compensation, to
assign to the Corporation or its nominees all the right, title and interest of
the Employee in and to such applications and to any patents, trademarks, trade
names or copyrights which shall thereafter issue on any such applications, and
to execute, acknowledge and deliver all other documents deemed necessary by the
Corporation to transfer to or vest in the Corporation all of the right, title
and interest of the Employee in and to the Inventions, and to such trademarks,
trade names, patents and copyrights together with exclusive rights to make, use,
license and sell them throughout the world.
(d) The Employee agrees that even though his employment is
terminated under this Employment Agreement he will, at any time after such
termination of employment, carry out and perform all of the agreements of
Subsections (8) (a) and (8) (c) above, and will at any time and at all times
cooperate with the Corporation in the prosecution and/or defense of any
litigation which may arise in connection with the Inventions, provided, however,
that should such services be rendered after termination of employment of the
Employee under this
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<PAGE> 6
Employment Agreement, the Employee shall be paid reasonable compensation on a
per diem basis.
(e) The Employee agrees to make and maintain adequate and current
written records of all Inventions in the form of notes, sketches, drawings, or
reports relating thereto, which records shall be and remain the property of, and
available to, the Corporation at all times.
(f) The Employee agrees that he will, upon leaving the employment
of the Corporation, promptly deliver to the Corporation all originals and copies
of disclosures, drawings, prints, letters, notes, and reports either typed,
handwritten or otherwise memorialized, belonging to the Corporation which are in
his possession or under his control and the Employee agrees that he will not
retain or give away or make copies of the originals or copies of any such
disclosures, drawings, prints, letters, notes or reports.
(9) PROPERTY OF CORPORATION: All files, records, reports, documents,
drawings, specifications, equipment, and similar items relating to the business
of the Corporation, whether prepared by the Employee or otherwise coming into
his possession, shall remain the exclusive property of the Corporation and shall
not be removed by the Employee from the premises of the Corporation under any
circumstances whatsoever without the prior written consent of the Corporation.
(10) NON-COMPETITION:
(a) In order to protect the good will of the Corporation and in
order to protect the trade secrets of the Corporation referred to in Section (7)
of this Employment Agreement, the Employee hereby agrees that during the term of
employment of the Employee under this Employment Agreement, and during a period
of one (1) year after termination of employment of the Employee under this
Employment Agreement without regard to the cause of termination of employment
and whether or not such termination of employment was caused by the Employee or
by the Corporation, (i) the Employee shall not engage, either directly or
indirectly, in any manner or capacity, in any business or activity which is
competitive with any business or activity conducted by the Corporation; (ii) the
Employee shall not work for or employ, directly or indirectly, or cause to be
employed by another, any person who was an employee, officer or agent of the
Corporation or of any of its subsidiaries at any time during a period of twelve
(12) months prior to the termination of the employment of the Employee under
this Employment Agreement nor shall the Employee form any partnership with, or
establish any business venture in cooperation with, any such person which is
competitive with any business or activity of the Corporation; (iii) the Employee
shall not give, sell or lease any goods or services competitive with the goods
or services of the Corporation or its subsidiaries to any person, partnership,
corporation or other entity who purchased goods or
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<PAGE> 7
services from the Corporation or its subsidiaries within one (1) year before the
termination of the employment of the Employee under this Employment Agreement;
(iv) the Employee shall not have any financial interest, or participate as a
director, officer, stockholder, partner, employee, consultant or otherwise, in
any corporation, partnership or other entity which is competitive with any
business or activity conducted by the Corporation.
(b) The Corporation and the Employee agree that the services of
the Employee are of a personal, special, unique and extraordinary character, and
cannot be replaced by the Corporation without great difficulty, and that the
violation by the Employee of any of his agreements under this Section (10) would
damage the goodwill of the Corporation and cause the Corporation irreparable
harm which could not reasonably or adequately be compensated in damages in an
action at law, and that the agreements of the Employment under this Section (1)
may be enforced by the Corporation in equity by an injunction or restraining
order in addition to being enforced by the Corporation at law.
(c) In the event that this Section (10) shall be determined by
any court of competent jurisdiction to be unenforceable by reason of its
extending for too long a period of time or over too great a range of activities,
it shall be interpreted to extend only over the maximum period of time or range
of activities as to which it may be enforceable.
(11) NOTICE: Any and all notices under this Employment Agreement shall
be in writing and, if to the Corporation, shall be duly given if sent to the
Corporation by registered or certified mail, postage prepaid, return receipt
requested, at the address of the Corporation set forth under its name below or
at such other address as the Corporation may hereafter designate to the Employee
in writing for the purpose, and if to the Employee, shall be duly given if
delivered to the Employee by hand or if sent to the Employee by registered or
certified mail, postage prepaid, return receipt requested, at the address of the
Employee set forth under his name below or at such other address as the Employee
may hereafter designate to the Corporation in writing for the purpose.
(12) ASSIGNMENT: The rights and obligations of the Corporation under
this Employment Agreement shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Corporation. The rights and obligations
of the Employee under this Employment Agreement shall inure to the benefit of,
and shall be binding upon, the heirs, executors and legal representatives of the
Employee.
(13) ENTIRE AGREEMENT AND SEVERABILITY:
(a) This Employment Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the
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<PAGE> 8
employment of the Employee by the Corporation and contains all of the covenants
and agreements between the parties with respect to such employment. Each party
to this Employment Agreement acknowledges that no representations, inducements,
promises or agreements, oral or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement or promise not contained in this Employment Agreement
shall be valid and binding. Any modification of this Employment Agreement will
be effective only if it is in writing signed by both parties to this Employment
Agreement.
(b) If any provision in this Employment Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way.
(c) All pronouns used herein shall include the masculine,
feminine, and neuter gender as the context requires.
(14) GOVERNING LAW AND JURISDICTIONS: This Employment Agreement shall
be governed by, and construed in accordance with, the laws of The Commonwealth
of Massachusetts applicable to contracts made and to be performed entirely
within The Commonwealth of Massachusetts (without reference to conflict of laws
principles). Any action or proceeding arising from or in connection with this
Employment Agreement may be brought against the Employee in a court of record of
The Commonwealth of Massachusetts, Middlesex County, or in the United States
District Court for the District of Massachusetts, the Employee hereby consenting
to the jurisdiction thereof over its person; and service of process may be made
upon the Employee by mailing a copy of the summons and any complaint to the
Employee by registered or certified mail, postage prepaid, return receipt
requested, at the address to be used for the giving of notice to the Employee as
provided in this Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as a sealed instrument in the Commonwealth of Massachusetts, all as of the day,
month and year first written above.
MKS INSTRUMENTS, INC.
By: /s/ John R. Bertucci, President
-------------------------------
John R. Bertucci, President
Six Shattuck Road
Andover, MA 01810
-8-
<PAGE> 9
/s/ Leo Berlinghieri
------------------------
Employee Signature
Leo Berlinghieri
------------------------
Employee Name
Address:
15 Olney Street
Billerica, MA 01821
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<PAGE> 1
EXHIBIT 10.6
AMENDED & RESTATED EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated December 15, 1995 (the "Employment Agreement") by and
between MKS Instruments Inc., a Massachusetts Corporation (the "Corporation"),
and John J. Sullivan of Milton, MA (the "Employee").
WHEREAS, the Corporation and the Employee entered into an Employment Agreement
dated April 3, 1982 (the "Original Employment Agreement"); and
WHEREAS, the Corporation has adopted a new Management Incentive Program and the
Employee desires to be eligible to participate in such Management Incentive
Program; and
WHEREAS, the Corporation and the Employee desire to make certain other
amendments to the Original Employment Agreement as more particularly set forth
herein; and
WHEREAS, for convenience of reference, the Corporation and the Employee desire
to amend and restate the Original Employment Agreement in its entirety:
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, and for other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Corporation and the
Employee hereby agree that the Original Employment Agreement is hereby amended
and restated to read in its entirety as follows:
(1) TERM OF EMPLOYMENT: The Corporation hereby employs the Employee,
and the Employee hereby accepts employment with the Corporation, for a period
commencing as of December 15, 1995 and continuing from month to month thereafter
until terminated as provided in this Section (1). Either the Corporation or the
Employee may terminate the employment of the Employee under this Employment
Agreement at any time after December 15, 1995 by giving written notice to the
other party stating or his election to terminate the employment of the Employee
under this Employment Agreement. The employment of the Employee under this
Employment Agreement shall terminate thirty (30) days after the date of receipt
by the other party of such notice; provided, however, that the employment of the
Employee under this Employment Agreement is subject to prior termination as
hereinafter provided in Section (5).
(2) CAPACITY: The Employee shall serve in such capacity as may be
assigned to him consistent with his training and experience for the term of
employment under this Employment Agreement and shall have such authority as is
delegated to him by the President of the Corporation, or his designee.
<PAGE> 2
(3) EXTENT OF SERVICES: During the term of employment of the Employee
under this Employment Agreement, the Employee shall devote his full time to, and
use his best efforts in the furtherance of, the business of the Corporation and
shall not engage in any other business activity, whether or not such business
activity is pursued for gain or any other pecuniary advantage, without the prior
written consent of the Corporation.
(4) COMPENSATION: In consideration of the services to be rendered by
the Employee under this Employment Agreement, the Corporation agrees to pay, and
the Employee agrees to accept, the following compensation:
(a) BASE SALARY: A base salary at the rate of $140,000 per year
for the term of employment of the Employee under this Employment Agreement. The
base salary shall be payable in equal weekly, biweekly, or bimonthly
installments subject to usual withholding requirements. Base salary will be
reviewed according to the established practices of the corporation. No overtime
pay will be paid to the Employee by the Corporation.
(b) INCENTIVE: For each calendar year of the Corporation during
the term of employment of the Employee under this Employment Agreement, the
Employee shall be entitled to participate in a Management Incentive Program
pursuant to the terms of which the Employee may receive compensation in addition
to his base salary in an amount equal to a specified percentage of his base
salary if the Corporation attains its consolidated financial goals during such
calendar year of the Corporation. The Management Incentive Program, including
the consolidated financial goals established by the Corporation for the calendar
year and the formula to be used to determine the payment of amounts under the
Management Incentive Program, will be communicated to the Employee in writing
prior to the beginning of each calendar year of the Corporation. The first
calendar year of the Corporation for purposes of the Management Incentive
Program will commence on January 1, 1996 and end on December 31, 1996. If the
term of employment of the Employee under this Employment Agreement shall include
a portion of a calendar year of the Corporation commencing after January 1,
1996, the Corporation shall not pay the Employee, and the Employee shall not be
entitled to receive, any amount under the Management Incentive Program.
If there shall be any disagreement between the Corporation and the
Employee as to the calculation of the Management Incentive Bonus in any calendar
year of the Corporation during the term of employment of the Employee under this
Employment Agreement, the decision of the independent Public Accounting firm of
the Corporation as to the amount of the Management Incentive Bonus of the
Corporation shall be conclusive and binding on the Corporation and the Employee.
The Employee shall have no right to inspect any of the books, papers or records
of the Corporation except that the Employee shall be entitled to inspect any
certificate of
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<PAGE> 3
such independent public accounting firm as to the calculation of the Management
Incentive Bonus of the Corporation in any calendar year of the Corporation
during the term of employment of the Employee under this Employment Agreement.
Incentive payments shall be payable to the Employee on or before
March 31 after the end of each calendar year of the Corporation during the term
of employment of the Employee under this Employment Agreement.
(c) MKS INSTRUMENTS, INC. PROFIT SHARING AND RETIREMENT SAVINGS
PLAN: The Employee shall be eligible to participate in the MKS Instruments, Inc.
Profit Sharing and Retirement Savings Plan upon satisfaction of the conditions
set forth therein.
(d) VACATION: The Employee shall be entitled to an annual
vacation leave of 20 days at full pay during each calendar year during the term
of employment of the Employee under this Employment Agreement, subject to the
Employee arranging such vacation so as not to affect adversely the ability of
the Corporation to transact its necessary business.
(e) LIFE INSURANCE: The Corporation shall provide, and pay all of
the premiums for, term life insurance for the Employee during the term of
employment of the Employee under this Employment Agreement in accordance with
the term life insurance plan of the Corporation.
(f) MEDICAL/DENTAL INSURANCE: The Corporation shall provide group
medical/dental insurance for the Employee under the Plans of the Corporation
applicable to the Employee during the term of employment of the Employee under
this Employment Agreement.
(g) OTHER BENEFITS: The Corporation shall provide other benefits
for the employee under the Plans of the Corporation applicable to the Employee
during the term of employment of the Employee under this Employment Agreement.
(5) TERMINATION: The employment of the Employee under this Employment
Agreement shall terminate:
(a) On the expiration of the period of employment as provided in
Section (1).
(b) Upon the death of the Employee.
(c) At the election of the Corporation (i) if the Employee shall
fail, or refuse, to perform the services required of him under this Employment
Agreement, or (ii) if the Employee shall fail, or refuse, to perform the other
covenants and
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<PAGE> 4
agreements required of him under this Employment Agreement, or (iii) for
"cause," which term shall mean acts or actions detrimental to the best interests
of the Corporation
(6) PAYMENT UPON TERMINATION:
(a) If the employment of the Employee is terminated on the
expiration of the period of employment as provided in Section (1), the Employee
shall not be entitled to any compensation, and the Corporation shall have no
obligation to pay the Employee any compensation, except as is provided in this
Employment Agreement.
(b) If the employment of the Employee is terminated by death, the
Corporation shall pay to the estate of the Employee the compensation which would
otherwise be payable to the employee at the end of the month in which his death
occurs.
(c) In the event the employment of the Employee is terminated at
the election of the Corporation pursuant to Section (5) (c) hereof, the Employee
shall only be entitled to his base salary through the last day of actual
employment or the date of termination, whichever is earlier.
(7) TRADE SECRETS: The Employee covenants and agrees that he will
communicate to the Corporation, and will not divulge or communicate to any other
person, partnership, corporation or other entity without the prior written
consent of the Corporation, any trade secrets of the Corporation or confidential
information relating to the business of the Corporation or any one connected
with the Corporation, and that such trade secrets and confidential information
shall not be used by the Employee either on his own behalf or for the benefit of
others or disclosed by the Employee to any one, except to the Corporation,
during or after the term of employment of the Employee under this Employment
Agreement. "Trade secrets of the Corporation" shall include, but not be limited
to, Inventions, trade secrets, files, records, drawings, specifications,
processes, lists of material, lists of customers, sales and marketing
strategies, product development plans, financial information, and information on
research and development.
(8) INVENTIONS AND PATENTS:
(a) The Employee shall make prompt full disclosure in writing to
the Corporation of all inventions, improvements and discoveries, whether or not
patentable, which the Employee conceives, devises, makes, discovers, develops,
perfects or first reduces to practice, either alone or jointly with others,
during the term of employment of the Employee under this Employment Agreement,
which relate in any way to the fields, products or business of the Corporation,
including
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<PAGE> 5
development and research, whether during or out of the usual hours of work or on
or off the premises of the Corporation or by use of the facilities of the
Corporation or otherwise and whether at the request or suggestion of the
Corporation or otherwise (all such inventions, improvements and discoveries
being hereinafter called the "Inventions"), including any Inventions, whether or
not patentable, conceived, devised, made, discovered, developed, perfected or
first reduced to practice by the Employee after the employment of the Employee
under this Employment Agreement is terminated if the Inventions were conceived
by the Employee during the term of employment of the Employee under this
Employment Agreement. Any Inventions, whether or not patentable, conceived,
devised, made, discovered, developed, perfected or first reduced to practice by
the Employee within six (6) months of the date of termination of the employment
of the Employee under this Employment Agreement shall be conclusively presumed
to have been conceived during the term of employment of the Employee under this
Employment Agreement.
(b) The Employee agrees that the Inventions shall be the sole and
exclusive property of the Corporation.
(c) The Employee agrees to assist the Corporation and its
nominees in every reasonable way (entirely at its or their expense) to obtain
for the benefit of the Corporation letters patent for the Inventions and
trademarks, trade names and copyrights relating to the Inventions, and any
renewals, extensions or reissues thereof, in any and all countries, and agrees
to make, execute, acknowledge and deliver, at the request of the Corporation,
all written applications for letters patent, trademarks, trade names and
copyrights relating to the Inventions and any renewals, extensions or reissues
thereof, in any and all countries, and all documents with respect thereto, and
all powers of attorney relating thereto and, without further compensation, to
assign to the Corporation or its nominees all the right, title and interest of
the Employee in and to such applications and to any patents, trademarks, trade
names or copyrights which shall thereafter issue on any such applications, and
to execute, acknowledge and deliver all other documents deemed necessary by the
Corporation to transfer to or vest in the Corporation all of the right, title
and interest of the Employee in and to the Inventions, and to such trademarks,
trade names, patents and copyrights together with exclusive rights to make, use,
license and sell them throughout the world.
(d) The Employee agrees that even though his employment is
terminated under this Employment Agreement he will, at any time after such
termination of employment, carry out and perform all of the agreements of
Subsections (8) (a) and (8) (c) above, and will at any time and at all times
cooperate with the Corporation in the prosecution and/or defense of any
litigation which may arise in connection with the Inventions, provided however,
that should such services be rendered after termination of employment of the
Employee under this
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<PAGE> 6
Employment Agreement, the Employee shall be paid reasonable compensation on a
per diem basis.
(e) The Employee agrees to make and maintain adequate and current
written records of all Inventions in the form of notes, sketches, drawings, or
reports relating thereto, which records shall be and remain the property of, and
available to, the Corporation at all times.
(f) The Employee agrees that he will, upon leaving the employment
of the Corporation, promptly deliver to the Corporation all originals and copies
of disclosures, drawings, prints, letters, notes, and reports either typed,
handwritten or otherwise memorialized, belonging to the Corporation which are in
his possession or under his control and the Employee agrees that he will not
retain or give away or make copies of the originals or copies of any such
disclosures drawings prints, letters, notes or reports.
(9) PROPERTY OF CORPORATION: All files, records, reports, documents,
drawings, specifications, equipment, and similar items relating to the business
of the Corporation, whether prepared by the Employee or otherwise coming into
his possession, shall remain the exclusive property of the Corporation and shall
not be removed by the Employee from the premises of the Corporation under any
circumstances whatsoever without the prior written consent of the Corporation.
(10) NON-COMPETITION:
(a) In order to protect the good will of the Corporation and in
order to protect the trade secrets of the Corporation referred to in Section (7)
of this Employment Agreement, the Employee hereby agrees that during the term of
employment of the Employee under this Employment Agreement, and during a period
of one (1) year after termination of employment of the Employee under this
Employment Agreement without regard to the cause of termination of employment
and whether or not such termination of employment was caused by the Employee or
by the Corporation, (i) the Employee shall not engage, either directly or
indirectly, in any manner or capacity, in any business or activity which is
competitive with any business or activity conducted by the Corporation; (ii) the
Employee shall not work for or employ, directly or indirectly, or cause to be
employed by another, any person who was an employee officer or agent of the
Corporation or of any of its subsidiaries at any time during a period of twelve
(12) months prior to the termination of the employment of the Employee under
this Employment Agreement nor shall the Employee form any partnership with, or
establish any business venture in cooperation with, any such person which is
competitive with any business or activity of the Corporation; (iii) the Employee
shall not give sell or lease any goods or services competitive with the goods or
services of the Corporation or its subsidiaries to any person, partnership,
corporation or other entity who purchased goods or
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<PAGE> 7
services from the Corporation or its subsidiaries within one (1) year before the
termination of the employment of the Employee under this Employment Agreement;
(iv) the Employee shall not have any financial interest, or participate as a
director, officer, stockholder, partner, employee, consultant or otherwise, in
any corporation partnership or other entity which is competitive with any
business or activity conducted by the Corporation.
(b) The Corporation and the Employee agree that the services of
the Employee are of a personal, special, unique and extraordinary character, and
cannot be replaced by the Corporation without great difficulty, and that the
violation by the Employee of any of his agreements under this Section (10) would
damage the goodwill of the Corporation and cause the Corporation irreparable
harm which could not reasonably or adequately be compensated in damages in an
action at law, and that the agreements of the Employee under this Section (10)
may be enforced by the Corporation in equity by an injunction or restraining
order in addition to being enforced by the Corporation at law.
(c) In the event that this Section (10) shall be determined by
any court of competent jurisdiction to be unenforceable by reason of its
extending for too long a period of time or over too great a range of activities,
it shall be interpreted to extend only over the maximum period of time or range
of activities as to which it may be enforceable.
(11) NOTICE: Any and all notices under this Employment Agreement shall
be in writing and, if to the Corporation, shall be duly given if sent to the
Corporation by registered or certified mail, postage prepaid, return receipt
requested, at the address of the Corporation set forth under its name below or
at such other address as the Corporation may hereafter designate to the Employee
in writing for the purpose, and if to the Employee, shall be duly given if
delivered to the Employee by hand or if sent to the Employee by registered or
certified mail, postage prepaid, return receipt requested, at the address of the
Employee set forth under his name below or at such other address as the Employee
may hereafter designate to the Corporation in writing for the purpose.
(12) ASSIGNMENT: The rights and obligations of the Corporation under
this Employment Agreement shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Corporation. The rights and obligations
of the Employee under this Employment Agreement shall inure to the benefit of,
and shall be binding upon, the heirs, executors and legal representatives of the
Employee.
(13) ENTIRE AGREEMENT AND SEVERABILITY:
(a) This Employment Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the
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<PAGE> 8
employment of the Employee by the Corporation and contains all of the covenants
and agreements between the parties with respect to such employment. Each party
to this Employment Agreement acknowledges that no representations, inducements,
promises or agreements, oral or otherwise, have been made by any party or any
one acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement or promise not contained in this Employment Agreement
shall be valid and binding. Any modification of this Employment Agreement will
be effective only if it is in writing signed by both parties to this Employment
Agreement.
(b) If any provision in this Employment Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way.
(c) All pronouns used herein shall include the masculine,
feminine, and neuter gender as the context requires.
(14) GOVERNING LAW AND JURISDICTIONS: This Employment Agreement shall
be governed by, and construed in accordance with, the laws of the Commonwealth
of Massachusetts applicable to contracts made and to be performed entirely
within the Commonwealth of Massachusetts (without reference to conflict of laws
principles). Any action or proceeding arising from or in connection with this
Employment Agreement may be brought against the Employee in a court of record of
the Commonwealth of Massachusetts, Middlesex County, or in the United States
District Court for the District of Massachusetts, the Employee hereby consenting
to the jurisdiction thereof over its person; and service of process may be made
upon the Employee by mailing a copy of the summons and any complaint to the
Employee by registered or certified mail, postage prepaid, return receipt
requested, at the address to be used for the giving of notice to the Employee as
provided in this Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as a sealed instrument in the Commonwealth of Massachusetts, all as of the day,
month and year first written above.
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<PAGE> 9
MKS INSTRUMENTS, INC.
By: /s/ John R. Bertucci, President
--------------------------------------
John R. Bertucci, President
Six Shattuck Road
Andover, MA 01810
/s/ John J. Sullivan
-----------------------------------------
Employee Signature
John J. Sullivan
-----------------------------------------
Employee Name
Address:
=========================================
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<PAGE> 1
EXHIBIT 10.7
AMENDED & RESTATED EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated December 15, 1995 (the "Employment
Agreement") by and between MKS Instruments, Inc., a Massachusetts
Corporation (the "Corporation"), and Ronald Weigner of Sudbury, MA (the
"Employee").
WHEREAS, the Corporation and the Employee entered into an Employment
Agreement dated October 7, 1981 (the "Original Employment Agreement");
and
WHEREAS, the Corporation has adopted a new Management Incentive Program
and the Employee desires to be eligible to participate in such
Management Incentive Program; and
WHEREAS, the Corporation and the Employee desire to make certain other
amendments to the Original Employment Agreement as more particularly
set forth herein; and
WHEREAS, for convenience of reference, the Corporation and the Employee
desire to amend and restate the Original Employment Agreement in its
entirety:
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, and for other good and valuable
considerations, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and the Employee hereby agree that the
Original Employment Agreement is hereby amended and restated to read in
its entirety as follows:
(1) TERM OF EMPLOYMENT: The Corporation hereby employs the
Employee, and the Employee hereby accepts employment with the
Corporation, for a period commencing as of December 15, 1995 and
continuing from month to month thereafter until terminated as provided
in this Section (1). Either the Corporation or the Employee may
terminate the employment of the Employee under this Employment
Agreement at any time after December 15, 1995 by giving written notice
to the other party stating its or his election to terminate the
employment of the Employee under this Employment Agreement. The
employment of the Employee under this Employment Agreement shall
terminate thirty (30) days after the date of receipt by the other party
of such notice; provided, however, that the employment of the Employee
under this Employment Agreement is subject to prior termination as
hereinafter provided in Section (5).
(2) CAPACITY: The Employee shall serve in such capacity as may be
assigned to him consistent with his training and experience for the
term of employment under this Employment Agreement and shall have such
authority as is delegated to him by the President of the Corporation,
or his designee.
<PAGE> 2
(3) EXTENT OF SERVICES: During the term of employment of the
Employee under this Employment Agreement, the Employee shall devote his
full time to, and use his best efforts in the furtherance of, the
business of the Corporation and shall not engage in any other business
activity, whether or not such business activity is pursued for gain or
any other pecuniary advantage, without the prior written consent of the
Corporation.
(4) COMPENSATION: In consideration of the services to be rendered
by the Employee under this Employment Agreement, the Corporation agrees
to pay, and the Employee agrees to accept, the following compensation:
(a) BASE SALARY: A base salary at the rate of $155,000 per
year for the term of employment of the Employee under this Employment
Agreement. The base salary shall be payable in equal weekly, biweekly,
or bimonthly installments subject to usual withholding requirements.
Base salary will be reviewed according to the established practices of
the corporation. No overtime pay will be paid to the Employee by the
Corporation.
(b) INCENTIVE: For each calendar year of the Corporation
during the term of employment of the Employee under this Employment
Agreement, the Employee shall be entitled to participate in a
Management Incentive Program pursuant to the terms of which the
Employee may receive compensation in addition to his base salary in an
amount equal to a specified percentage of his base salary if the
Corporation attains its consolidated financial goals during such
calendar year of the Corporation. The Management Incentive Program,
including the consolidated financial goals established by the
Corporation for the calendar year and the formula to be used to
determine the payment of amounts under the Management Incentive
Program, will be communicated to the Employee in writing prior to the
beginning of each calendar year of the Corporation. The first calendar
year of the Corporation for purposes of the Management Incentive
Program will commence on January 1, 1996 and end on December 31, 1996.
If the term of employment of the Employee under this Employment
Agreement shall include a portion of a calendar year of the Corporation
commencing after January 1, 1996, the Corporation shall not pay the
Employee, and the Employee shall not be entitled to receive, any amount
under the Management Incentive Program.
If there shall be any disagreement between the Corporation and the
Employee as to the calculation of the Management Incentive Bonus in any
calendar year of the Corporation during the term of employment of the
Employee under this Employment Agreement, the decision of the
independent Public Accounting firm of the Corporation as to the amount
of the Management Incentive Bonus of the Corporation shall be
conclusive and binding on the Corporation and the Employee. The
Employee shall have no right to inspect any of the books, papers or
records of the Corporation, except that the Employee shall be entitled
to inspect any certificate of
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<PAGE> 3
such independent public accounting firm as to the calculation of the
Management Incentive Bonus of the Corporation in any calendar year of
the Corporation during the term of employment of the Employee under
this Employment Agreement.
Incentive payments shall be payable to the Employee on or before
March 31 after the end of each calendar year of the Corporation during
the term of employment of the Employee under this Employment Agreement.
(c) MKS INSTRUMENTS, INC. PROFIT SHARING AND RETIREMENT
SAVINGS PLAN: The Employee shall be eligible to participate in the MKS
Instruments, Inc. Profit Sharing and Retirement Savings Plan upon
satisfaction of the conditions set forth therein.
(d) VACATION: The Employee shall be entitled to an annual
vacation leave of 20 days at full pay during each calendar year during
the term of employment of the Employee under this Employment Agreement,
subject to the Employee arranging such vacation so as not to affect
adversely the ability of the Corporation to transact its necessary
business.
(e) LIFE INSURANCE: The Corporation shall provide, and pay
all of the premiums for, term life insurance for the Employee during
the term of employment of the Employee under this Employment Agreement
in accordance with the term life insurance plan of the Corporation.
(f) MEDICAL/DENTAL INSURANCE: The Corporation shall provide
group medical/dental insurance for the Employee under the Plans of the
Corporation applicable to the Employee during the term of employment of
the Employee under this Employment Agreement.
(g) OTHER BENEFITS: The Corporation shall provide other
benefits for the employee under the Plans of the Corporation applicable
to the Employee during the term of employment of the Employee under
this Employment Agreement.
(5) TERMINATION: The employment of the Employee under this
Employment Agreement shall terminate:
(a) On the expiration of the period of employment as provided
in Section (1).
(b) Upon the death of the Employee.
(c) At the election of the Corporation (i) if the Employee
shall fail, or refuse, to perform the services required of him under
this Employment Agreement, or (ii) if the Employee shall fail, or
refuse, to perform the other covenants and
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<PAGE> 4
agreements required of him under this Employment Agreement, or (iii)
for "cause," which term shall mean acts or actions detrimental to the
best interests of the Corporation.
(6) PAYMENT UPON TERMINATION:
(a) If the employment of the Employee is terminated on the
expiration of the period of employment as provided in Section (1), the
Employee shall not be entitled to any compensation, and the Corporation
shall have no obligation to pay the Employee any compensation, except
as is provided in this Employment Agreement.
(b) If the employment of the Employee is terminated by death,
the Corporation shall pay to the estate of the Employee the
compensation which would otherwise be payable to the Employee at the
end of the month in which his death occurs.
(c) In the event the employment of the Employee is terminated
at the election of the Corporation pursuant to Section (5) (c) hereof,
the Employee shall only be entitled to his base salary through the last
day of actual employment or the date of termination, whichever is
earlier.
(7) TRADE SECRETS: The Employee covenants and agrees that he will
communicate to the Corporation, and will not divulge or communicate to
any other person, partnership, corporation or other entity without the
prior written consent of the Corporation, any trade secrets of the
Corporation or confidential information relating to the business of the
Corporation or any one connected with the Corporation, and that such
trade secrets and confidential information shall not be used by the
Employee either on his own behalf or for the benefit of others or
disclosed by the Employee to any one, except to the Corporation, during
or after the term of employment of the Employee under this Employment
Agreement. "Trade secrets of the Corporation" shall include, but not be
limited to, Inventions, trade secrets, files, records, drawings,
specifications, processes, lists of material, lists of customers, sales
and marketing strategies, product development plans, financial
information, and information on research and development.
(8) INVENTIONS AND PATENTS:
(a) The Employee shall make prompt full disclosure in writing
to the Corporation of all inventions, improvements and discoveries,
whether or not patentable, which the Employee conceives, devises,
makes, discovers, develops, perfects or first reduces to practice,
either alone or jointly with others, during the term of employment of
the Employee under this Employment Agreement, which relate in any way
to the fields, products or business of the Corporation, including
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<PAGE> 5
development and research, whether during or out of the usual hours of
work or on or off the premises of the Corporation or by use of the
facilities of the Corporation or otherwise and whether at the request
or suggestion of the Corporation or otherwise (all such inventions,
improvements and discoveries being hereinafter called the
"Inventions"), including any Inventions, whether or not patentable,
conceived, devised, made, discovered, developed, perfected or first
reduced to practice by the employee after the employment of the
Employee under this Employment Agreement is terminated if the
Inventions were conceived by the Employee during the term of employment
of the Employee under this Employment Agreement. Any Inventions,
whether or not patentable, conceived, devised, made, discovered,
developed, perfected or first reduced to practice by the Employee
within six (6) months of the date of termination of the employment of
the Employee under this Employment Agreement shall be conclusively
presumed to have been conceived during the term of employment of the
Employee under this Employment Agreement.
(b) The Employee agrees that the Inventions shall be the sole
and exclusive property of the Corporation.
(c) The Employee agrees to assist the Corporation and its
nominees in every reasonable way (entirely at its or their expense) to
obtain for the benefit of the Corporation letters patent for the
Inventions and trademarks, trade names and copyrights relating to the
Inventions, and any renewals, extensions or reissues thereof, in any
and all countries, and agrees to make, execute, acknowledge and
deliver, at the request of the Corporation, all written applications
for letters patent, trademarks, trade names and copyrights relating to
the Inventions and any renewals, extensions or reissues thereof, in any
and all countries, and all documents with respect thereto, and all
powers of attorney relating thereto and, without further compensation,
to assign to the Corporation or its nominees all the right, title and
interest of the Employee in and to such applications and to any
patents, trademarks, trade names or copyrights which shall thereafter
issue on any such applications, and to execute, acknowledge and deliver
all other documents deemed necessary by the Corporation to transfer to
or vest in the Corporation all of the right, title and interest of the
Employee in and to the Inventions, and to such trademarks, trade names,
patents and copyrights together with exclusive rights to make, use,
license and sell them throughout the world.
(d) The Employee agrees that even though his employment is
terminated under this Employment Agreement he will, at any time after
such termination of employment, carry out and perform all of the
agreements of Subsections (8) (a) and (8) (c) above, and will at any
time and at all times cooperate with the Corporation in the prosecution
and/or defense of any litigation which may arise in connection with the
Inventions, provided, however, that should such services be rendered
after termination of employment of the Employee under this
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<PAGE> 6
Employment Agreement, the Employee shall be paid reasonable
compensation on a per diem basis.
(e) The Employee agrees to make and maintain adequate and
current written records of all Inventions in the form of notes,
sketches, drawings, or reports relating thereto, which records shall be
and remain the property of, and available to, the Corporation at all
times.
(f) The Employee agrees that he will, upon leaving the
employment of the Corporation, promptly deliver to the Corporation all
originals and copies of disclosures, drawings, prints, letters, notes,
and reports either typed, handwritten or otherwise memorialized,
belonging to the Corporation which are in his possession or under his
control and the Employee agrees that he will not retain or give away or
make copies of the originals or copies of any such disclosures,
drawings, prints, letters, notes or reports.
(9) PROPERTY OF CORPORATION: All files, records, reports,
documents, drawings, specifications, equipment, and similar items
relating to the business of the Corporation, whether prepared by the
Employee or otherwise coming into his possession, shall remain the
exclusive property of the Corporation and shall not be removed by the
Employee from the premises of the Corporation under any circumstances
whatsoever without the prior written consent of the Corporation.
(10) NON-COMPETITION:
(a) In order to protect the good will of the Corporation and
in order to protect the trade secrets of the Corporation referred to in
Section (7) of this Employment Agreement, the Employee hereby agrees
that during the term of employment of the Employee under this
Employment Agreement, and during a period of one (1) year after
termination of employment of the Employee under this Employment
Agreement without regard to the cause of termination of employment and
whether or not such termination of employment was caused by the
Employee or by the Corporation, (i) the Employee shall not engage,
either directly or indirectly, in any manner or capacity, in any
business or activity which is competitive with any business or activity
conducted by the Corporation; (ii) the Employee shall not work for or
employ, directly or indirectly, or cause to be employed by another any
person who was an employee, officer or agent of the Corporation or of
any of its subsidiaries at any time during a period of twelve (12)
months prior to the termination of the employment of the Employee under
this Employment Agreement nor shall the Employee form any partnership
with, or establish any business venture in cooperation with, any such
person which is competitive with any business or activity of the
Corporation; (iii) the Employee shall not give, sell or lease any goods
or services competitive with the goods or services of the Corporation
or its subsidiaries to any person, partnership, corporation or other
entity who purchased goods or
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<PAGE> 7
services from the Corporation or its subsidiaries within one (1) year
before the termination of the employment of the Employee under this
Employment Agreement; (iv) the Employee all not have any financial
interest, or participate as a director, officer, stockholder, partner,
employee, consultant or otherwise, in any corporation, partnership or
other entity which is competitive with any business or activity
conducted by the Corporation.
(b) The Corporation and the Employee agree that the services
of the Employee are of a personal, special unique and extraordinary
character, and cannot be replaced by the Corporation without great
difficulty, and that the violation by the Employee of any of his
agreements under this Section (10) would damage the goodwill of the
Corporation and cause the Corporation irreparable harm which could not
reasonably or adequately be compensated in damages in an action at law,
and that the agreements of the Employee under this Section (10) may be
enforced by the Corporation in equity by an injunction or restraining
order in addition to being enforced by the Corporation at law.
(c) In the event that this Section (10) shall be determined
by any court of competent jurisdiction to be unenforceable by reason of
its extending for too long a period of time or over too great a range
of activities, it shall be interpreted to extend only over the maximum
period of time or range of activities as to which it may be
enforceable.
(11) NOTICE: Any and all notices under this Employment Agreement
shall be in writing and, if to the Corporation, shall be duly given if
sent to the Corporation by registered or certified mail, postage
prepaid, return receipt requested, at the address of the corporation
set forth under its name below or at such other address as the
Corporation may hereafter designate to the Employee in writing for the
purpose, and if to the Employee, shall be duly given if delivered to
the Employee by hand or if sent to the Employee by registered or
certified mail, postage prepaid, return receipt requested, at the
address of the Employee set forth under his name below or at such other
address as the Employee may hereafter designate to the Corporation in
writing for the purpose.
(12) ASSIGNMENT: The rights and obligations of the Corporation
under this Employment Agreement shall insure to the benefit of, and
shall be binding upon, the successors and assigns of the Corporation.
The rights and obligations of the Employee under this Employment
Agreement shall insure to the benefit of, and shall be binding upon,
the heirs, executors and legal representatives of the Employee.
(13) ENTIRE AGREEMENT AND SEVERABILITY:
(a) This Employment Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the
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<PAGE> 8
employment of the Employee by the Corporation and contains all of the
covenants and agreements between the parties with respect to such
employment. Each party to this Employment Agreement acknowledges that
no representations, inducements, promises or agreements, oral or
otherwise, have been made by any party, or any one acting on behalf of
any party, which are not embodied herein, and that no other agreement,
statement or promise not contained in this Employment Agreement shall
be valid and binding. Any modification of this Employment Agreement
will be effective only if it is in writing signed by both parties to
this Employment Agreement.
(b) If any provision in this Employment Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall nevertheless continue in full force and
effect without being impaired or invalidated in any way.
(c) All pronouns used herein shall include the masculine,
feminine, and neuter gender as the context requires.
(14) GOVERNING LAW AND JURISDICTIONS: This Employment Agreement
shall be governed by, and construed in accordance with, the laws of The
Commonwealth of Massachusetts applicable to contracts made and to be
performed entirely within The Commonwealth of Massachusetts (without
reference to conflict of laws principles). Any action or proceeding
arising from or in connection with this Employment Agreement may be
brought against the Employee in a court of record of The Commonwealth
of Massachusetts, Middlesex County, or in the United States District
Court for the District of Massachusetts, the Employee hereby consenting
to the jurisdiction thereof over its person; and service of process may
be made upon the Employee by mailing a copy of the summons and any
complaint to the Employee by registered or certified mall, postage
prepaid, return receipt requested, at the address to be used for the
giving of notice to the Employee as provided in this Employment
Agreement.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as a sealed instrument in the Commonwealth of Massachusetts,
all as of the day, month and year first written above.
MKS INSTRUMENTS, INC.
By: /s/ John R. Bertucci, President
-------------------------------
John R. Bertucci, President
Six Shattuck Road
Andover, MA 01810
/s/ Ronald Weigner
-------------------------------
Employee Signature
-------------------------------
Ronald Weigner
Employee Name
Address:
___________________________
___________________________
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<PAGE> 1
EXHIBIT 10.8
AMENDED & RESTATED EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated December 15, 1995 (the "Employment
Agreement") by and between MKS Instruments, Inc., a Massachusetts
Corporation (the "Corporation"), and William Stewart of Boulder, CO
(the "Employee").
WHEREAS, the Corporation and the Employee entered into an Employment
Agreement dated October 31, 1986 (the "Original Employment Agreement");
and
WHEREAS, the Corporation has adopted a new Management Incentive Program
and the Employee desires to be eligible to participate in such
Management Incentive Program; and
WHEREAS, the Corporation and the Employee desire to make certain other
amendments to the Original Employment Agreement as more particularly
set forth herein; and
WHEREAS, for convenience of reference, the Corporation and the Employee
desire to amend and restate the Original Employment Agreement in its
entirety:
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, and for other good and valuable
considerations, the receipt and sufficiency of which are hereby
acknowledged, the Corporation and the Employee hereby agree that the
Original Employment Agreement is hereby amended and restated to read in
its entirety as follows:
(1) TERM OF EMPLOYMENT: The Corporation hereby employs the
Employee, and the Employee hereby accepts employment with the
Corporation, for a period commencing as of December 15, 1995 and
continuing from month to month thereafter until terminated as provided
in this Section (1). Either the Corporation or the Employee may
terminate the employment of the Employee under this Employment
Agreement at any time after December 15, 1995 by giving written notice
to the other party stating its or his election to terminate the
employment of the Employee under this Employment Agreement. The
employment of the Employee under this Employment Agreement shall
terminate thirty (30) days after the date of receipt by the other party
of such notice; provided, however, that the employment of the Employee
under this Employment Agreement is subject to prior termination as
hereinafter provided in Section (5).
(2) CAPACITY: The Employee shall serve in such capacity as may be
assigned to him consistent with his training and experience for the
term of employment under this Employment Agreement and shall have such
authority as is delegated to him by the President of the Corporation,
or his designee.
<PAGE> 2
(3) EXTENT OF SERVICES: During the term of employment of the
Employee under this Employment Agreement, the Employee shall devote his
full time to, and use his best efforts in the furtherance of, the
business of the Corporation and shall not engage in any other business
activity, whether or not such business activity is pursued for gain or
any other pecuniary advantage, without the prior written consent of the
Corporation.
(4) COMPENSATION: In consideration of the services to be rendered
by the Employee under this Employment Agreement, the Corporation agrees
to pay, and the Employee agrees to accept, the following compensation:
(a) BASE SALARY: A base salary at the rate of $170,000 per
year for the term of employment of the Employee under this Employment
Agreement. The base salary shall be payable in equal weekly, biweekly,
or bimonthly installments subject to usual withholding requirements.
Base salary will be reviewed according to the established practices of
the corporation. No overtime pay will be paid to the Employee by the
Corporation.
(b) INCENTIVE: For each calendar year of the Corporation
during the term of employment of the Employee under this Employment
Agreement, the Employee shall be entitled to participate in a
Management Incentive Program pursuant to the terms of which the
Employee may receive compensation in addition to his base salary in an
amount equal to a specified percentage of his base salary if the
Corporation attains its consolidated financial goals during such
calendar year of the Corporation. The Management Incentive Program,
including the consolidated financial goals established by the
Corporation for the calendar year and the formula to be used to
determine the payment of amounts under the Management Incentive
Program, will be communicated to the Employee in writing prior to the
beginning of each calendar year of the Corporation. The first calendar
year of the Corporation for purposes of the Management Incentive
Program will commence on January 1, 1996 and end on December 31, 1996.
If the term of employment of the Employee under this Employment
Agreement shall include a portion of a calendar year of the Corporation
commencing after January 1, 1996, the Corporation shall not pay the
Employee, and the Employee shall not be entitled to receive, any amount
under the Management Incentive Program.
If there shall be any disagreement between the Corporation
and the Employee as to the calculation of the Management Incentive
Bonus in any calendar year of the Corporation during the term of
employment of the Employee under this Employment Agreement, the
decision of the independent Public Accounting firm of the Corporation
as to the amount of the Management Incentive Bonus of the Corporation
shall be conclusive and binding on the Corporation and the Employee.
The Employee shall have no right to inspect any of the books, papers or
records of the Corporation, except that the Employee shall be entitled
to inspect any certificate
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<PAGE> 3
of such independent public accounting firm as to the calculation of the
Management Incentive Bonus of the Corporation in any calendar year of
the Corporation during the term of employment of the Employee under
this Employment Agreement.
Incentive payments shall be payable to the Employee on or
before March 31 after the end of each calendar year of the Corporation
during the term of employment of the Employee under this Employment
Agreement.
(c) MKS INSTRUMENTS, INC. PROFIT SHARING AND RETIREMENT
SAVINGS PLAN: The Employee shall be eligible to participate in the MKS
Instruments, Inc. Profit Sharing and Retirement Savings Plan upon
satisfaction of the conditions set forth therein.
(d) VACATION: The Employee shall be entitled to an annual
vacation leave of 20 days at pay during each calendar year during the
term of employment of the Employee under this Employment Agreement in
accordance with policy under plans of the Corporation applicable to the
Employee, subject to the Employee arranging such vacation so as not to
affect adversely the ability of the Corporation to transact its
necessary business.
(e) LIFE INSURANCE: The Corporation shall provide, and pay
all of the premiums for, term life insurance for the Employee during
the term of employment of the Employee under this Employment Agreement
in accordance with the term life insurance plan of the Corporation.
(f) MEDICAL/DENTAL INSURANCE: The Corporation shall provide
group medical/dental insurance for the Employee under the Plans of the
Corporation applicable to the Employee during the term of employment of
the Employee under this Employment Agreement.
(g) OTHER BENEFITS: The Corporation shall provide other
benefits for the employee under the Plans of the Corporation applicable
to the Employee during the term of employment of the Employee under
this Employment Agreement.
(5) TERMINATION: The employment of the Employee under this
Employment Agreement shall terminate:
(a) On the expiration of the period of employment as provided
in Section (1).
(b) Upon the death of the Employee.
(c) At the election of the Corporation (i) if the Employee
shall fail, or refuse, to perform the services required of him under
this Employment Agreement,
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<PAGE> 4
or (ii) if the Employee shall fail, or refuse, to perform the other
covenants and agreements required of him under this Employment
Agreement, or (iii) for "cause," which term shall mean acts or actions
detrimental to the best interests of the Corporation.
(6) PAYMENT UPON TERMINATION:
(a) If the employment of the Employee is terminated on the
expiration of the period of employment as provided in Section (1), the
Employee shall not be entitled to any compensation, and the Corporation
shall have no obligation to pay the Employee any compensation, except
as is provided in this Employment Agreement.
(b) If the employment of the Employee is terminated by death,
the Corporation shall pay to the estate of the Employee the
compensation which would otherwise be payable to the Employee at the
end of the month in which his death occurs.
(c) In the event the employment of the Employee is terminated
at the election of the Corporation pursuant to Section (5) (c) hereof,
the Employee shall only be entitled to his base salary through the last
day of actual employment or the date of termination, whichever is
earlier.
(7) TRADE SECRETS: The Employee covenants and agrees that he will
communicate to the Corporation, and will not divulge or communicate to
any other person, partnership, corporation or other entity without the
prior written consent of the Corporation, any trade secrets of the
Corporation or confidential information relating to the business of the
Corporation or any one connected with the Corporation, and that such
trade secrets and confidential information shall not be used by the
Employee either on his own behalf or for the benefit of others or
disclosed by the Employee to any one, except to the Corporation, during
or after the term of employment of the Employee under this Employment
Agreement. "Trade secrets of the Corporation" shall include, but not be
limited to, Inventions, trade secrets, files, records, drawings,
specifications, processes, lists of material, lists of customers, sales
and marketing strategies, product development plans, financial
information, and information on research and development.
(8) INVENTIONS AND PATENTS:
(a) The Employee shall make prompt full disclosure in writing
to the Corporation of all inventions, improvements and discoveries,
whether or not patentable which the Employee conceives, devises, makes,
discovers, develops, perfects or first reduces to practice, either
alone or jointly with others, during the term of employment of the
Employee under this Employment Agreement, which
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<PAGE> 5
relate in any way to the fields, products or business of the
Corporation, including development and research, whether during or out
of the usual hours of work or on or off the premises of the Corporation
or by use of the facilities of the Corporation or otherwise and whether
at the request or suggestion of the Corporation or otherwise (all such
inventions, improvements and discoveries being hereinafter called the
"Inventions"), including any Inventions, whether or not patentable,
conceived, devised, made, discovered, developed, perfected or first
reduced to practice by the Employee after the employment of the
Employee under this Employment Agreement is terminated if the
Inventions were conceived by the Employee during the term of employment
of the Employee under this Employment Agreement. Any Inventions,
whether or not patentable, conceived, devised, made, discovered,
developed, perfected or first reduced to practice by the Employee
within six (6) months of the date of termination of the employment of
the Employee under this Employment Agreement shall be conclusively
presumed to have been conceived during the term of employment of the
Employee under this Employment Agreement.
(b) The Employee agrees that the Inventions shall be the sole
and exclusive property of the Corporation.
(c) The Employee agrees to assist the Corporation and its
nominees in every reasonable way (entirely at its or their expense) to
obtain for the benefit of the Corporation letters patent for the
Inventions and trademarks, trade names and copyrights relating to the
Inventions, and any renewals, extensions or reissues thereof, in any
and all countries, and agrees to make, execute, acknowledge and
deliver, at the request of the Corporation, all written applications
for letters patent, trademarks, trade names and copyrights relating to
the Inventions and any renewals, extensions or reissues thereof, in any
and all countries, and all documents with respect thereto, and all
powers of attorney relating thereto and, without further compensation,
to assign to the Corporation or its nominees all the right, title and
interest of the Employee in and to such applications and to any
patents, trademarks, trade names or copyrights which shall thereafter
issue on any such applications, and to execute, acknowledge and deliver
all other documents deemed necessary by the Corporation to transfer to
or vest in the Corporation all of the right, title and interest of the
Employee in and to the Inventions, and to such trademarks, trade names,
patents and copyrights together with exclusive rights to make, use,
license and sell them throughout the world.
(d) The Employee agrees that even though his employment is
terminated under this Employment Agreement he will, at any time after
such termination of employment, carry out and perform all of the
agreements of Subsections (8)(a) and (8)(c) above, and will at any time
and at all times cooperate with the Corporation in the prosecution
and/or defense of any litigation which may arise in connection with the
Inventions, provided, however, that should such services be rendered
after termination of employment of the Employee under this
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<PAGE> 6
Employment Agreement, the Employee shall be paid reasonable
compensation on a per diem basis.
(e) The Employee agrees to make and maintain adequate and
current written records of all Inventions in the form of notes,
sketches, drawings, or reports relating thereto, which records shall be
and remain the property of, and available to, the Corporation at all
times.
(f) The Employee agrees that he will, upon leaving the
employment of the Corporation, promptly deliver to the Corporation all
originals and copies of disclosures, drawings, prints, letters, notes,
and reports either typed, handwritten or otherwise memorialized,
belonging to the Corporation which are in his possession or under his
control and the Employee agrees that he will not retain or give away or
make copies of the originals or copies of any such disclosures,
drawings, prints, letters, notes or reports.
(9) PROPERTY OF CORPORATION: All files, records, reports,
documents, drawings, specifications, equipment, and similar items
relating to the business of the Corporation, whether prepared by the
Employee or otherwise coming into his possession, shall remain the
exclusive property of the Corporation and shall not be removed by the
Employee from the premises of the Corporation under any circumstances
whatsoever without the prior written consent of the Corporation.
(10) NON-COMPETITION:
(a) In order to protect the good will of the Corporation and
in order to protect the trade secrets of the Corporation referred to in
Section (7) of this Employment Agreement, the Employee hereby agrees
that during the term of employment of the Employee under this
Employment Agreement, and during a period of one (1) year after
termination of employment of the Employee under this Employment
Agreement without regard to the cause of termination of employment and
whether or not such termination of employment was caused by the
Employee or by the Corporation, (i) the Employee shall not engage,
either directly or indirectly, in any manner or capacity, in any
business or activity which is competitive with any business or activity
conducted by the Corporation; (ii) the Employee shall not work for or
employ, directly or indirectly, or cause to be employed by another, any
person who was an employee, officer or agent of the Corporation or of
any of its subsidiaries at any time during a period of twelve (12)
months prior to the termination of the employment of the Employee under
this Employment Agreement nor shall the Employee form any partnership
with or establish any business venture in cooperation with, any such
person which is competitive with any business or activity of the
Corporation; (iii) the Employee shall not give, sell or lease any goods
or services competitive with the goods or services of the Corporation
or its subsidiaries to any person, partnership, corporation or other
entity who purchased goods or services
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<PAGE> 7
from the Corporation or its subsidiaries within one (1) year before the
termination of the employment of the Employee under employment
Agreement; (iv) the Employee shall not have any financial interest, or
participate as a director, officer, stockholder, partner, employee,
consultant or otherwise, in any corporation, partners or other entity
which is competitive with any business or activity conducted by the
Corporation.
(b) The Corporation and the Employee agree that the services
of the Employee are of a personal, special, unique and extraordinary
character, and cannot be replaced by the Corporation without great
difficulty, and that the violation by the Employee of any of his
agreements under this Section (10) would damage the goodwill of the
Corporation and cause the Corporation irreparable harm which could not
reasonably or adequately be compensated in damages in an action at law,
and that the agreements of the Employee under this Section (10) may be
enforced by the Corporation in equity by an injunction or restraining
order in addition to being enforced by the Corporation at law.
(c) In the event that this Section (10) shall be determined
by any court of competent jurisdiction to be unenforceable by reason of
its extending for too long a period of time or over too great a range
of activities, it shall be interpreted to extend only over the maximum
period of time or range of activities as to which it may be
enforceable.
(11) NOTICE: Any and all notices under this Employment Agreement
shall be in writing and, if to the Corporation, shall be duly given if
sent to the Corporation by registered or certified mall, postage
prepaid, return receipt requested, at the address of the Corporation
set forth under its name below or at such other address as the
Corporation may hereafter designate to the Employee in writing for the
purpose, and if to the Employee, shall be duly given if delivered to
the Employee by hand or if sent to the Employee by registered or
certified mail, postage prepaid, return receipt requested, at the
address of the Employee set forth under his name below or at such other
address as the Employee may hereafter designate to the Corporation in
writing for the purpose.
(12) ASSIGNMENT: The rights and obligations of the Corporation
under this Employment Agreement shall inure to the benefit of, and
shall be binding upon, the successors and assigns of the Corporation.
The rights and obligations of the Employee under this Employment
Agreement shall inure to the benefit of, and shall be binding upon, the
heirs, executors and legal representatives of the Employee.
(13) ENTIRE AGREEMENT AND SEVERABILITY:
(a) This Employment Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the
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<PAGE> 8
employment of the Employee by the Corporation and contains all of the
covenants and agreements between the parties with respect to such
employment. Each party to this Employment Agreement acknowledges that
no representations, inducements, promises or agreements, oral or
otherwise, have been made by any party, or any one acting one half of
any party, which are not embodied herein, and that no other agreement,
statement or promise not contained in this Employment Agreement shall
be valid and binding. Any modification of this Employment Agreement
will be effective only if it is in writing signed by both parties to
this Employment Agreement.
(b) If any provision in this Employment Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall nevertheless continue in full force and
effect without being impaired or invalidated in any way.
(c) All pronouns used herein shall include the masculine,
feminine, and neuter gender as the context requires.
(14) GOVERNING LAW AND JURISDICTIONS: This Employment Agreement
shall be governed by, and construed in accordance with, the laws of The
Commonwealth of Massachusetts applicable to contracts made and to be
performed entirely within The Commonwealth of Massachusetts (without
reference to conflict of laws principles). Any action or proceeding
arising from or in connection with this Employment Agreement may be
brought against the Employee in a court of record of The Commonwealth
of Massachusetts, Middlesex County, or in the United States District
Court for the District of Massachusetts, the Employee hereby consenting
to the jurisdiction thereof over its person; and service of process may
be made upon the Employee by mailing a copy of the summons and any
complaint to the Employee by registered or certified mall, postage
prepaid, return receipt requested, at the address to be used for the
giving of notice to the Employee as provided in this Employment
Agreement.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as a sealed instrument in the Commonwealth of Massachusetts,
all as of the day, month and year first written above.
MKS INSTRUMENTS, INC.
By: /s/ John R. Bertucci, President
-------------------------------
John R. Bertucci, President
Six Shattuck Road
Andover, MA 01810
/s/ William Stewart
-------------------------------
Employee Signature
William Stewart
------------------------------
Employee Name
Address:
______________________________
______________________________
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<PAGE> 1
EXHIBIT 10.10
LEASE AGREEMENT
1. PARTIES. This Lease, dated for reference purposes only, October 12, 1989, is
made by and between ASPEN INDUSTRIAL PARK PARTNERSHIP, a Colorado limited
partnership, (herein called "Landlord") and HPS, DIVISION OF MKS INDUSTRIES,
INC. (herein called "Tenant").
2. PREMISES. Landlord does hereby lease unto Tenant the following described
premises containing approximately 39,032 square feet measured to the outside of
the exterior walls, including overhangs, canopies and loading docks, and to
approximately one-half the thickness of common walls; commonly known as 5330
Sterling Drive, in the City of Boulder, County of Boulder, State of Colorado; as
shown on the plans attached hereto as Exhibit "A".
Said Lease is subject to the terms, covenants and conditions herein set forth
and the Tenant covenants as a material part of the consideration for this Lease
to keep and perform each and all of said terms, covenants and conditions by it
to be kept and performed and that this Lease is made upon the conditions of said
performance.
3. TERM. The terms of this Lease shall be for five (5) years, commencing on
November 1, 1989.
4. POSSESSION.
a. If the Landlord, for any reason whatsoever, cannot deliver possession
of the said Premises to the Tenant at the commencement of the term hereof, this
Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for
any loss or damage resulting therefrom, nor shall the expiration date of the
above term be in any way extended, but in that event, all rent shall be abated
during the period between the commencement of said term and the time when
Landlord delivers possession.
b. In the event that Landlord shall permit Tenant to occupy the Premises
prior to the commencement date of the term, such occupancy shall be subject to
all the provisions of this Lease. Said early possession shall not advance the
termination date hereinabove provided.
5. RENT. The Tenant shall pay for the full five (5) year term of this Lease, a
reserve minimum rent of One Million Five Hundred Fifty-Four Thousand One Hundred
Ninety-Seven Dollars ($1,554,197.00). The total minimum reserve rent shall be
payable as follows:
a. The Tenant covenants and agrees to pay minimum rent for the Leased
Premises for the first Lease Year of Two Hundred Ninety-Two Thousand Seven
Hundred Forty Dollars ($292,740.00), which amount shall be payable in equal
monthly installments of Twenty-Four Thousand Three Hundred Ninety-Five Dollars
<PAGE> 2
($24,395.00) per month; for the second Lease Year, the sum of Three Hundred One
Thousand Five Hundred Twenty-Two Dollars ($301,522.00), payable in equal monthly
installments of Twenty- Five Thousand One Hundred Twenty-Six and 83/100ths
Dollars per month ($25,126.83); for the third Lease Year, the sum of Three
Hundred Ten Thousand Five Hundred Sixty-Eight Dollars ($310,568.00) payable in
equal monthly installments of Twenty- Five Thousand Eight Hundred Eighty and
67/100ths Dollars ($25,880.67) per month; for the fourth Lease Year, the sum of
Three Hundred Nineteen Thousand Eight Hundred Eighty-Five Dollars ($319,885.00),
payable in equal monthly installments of Twenty- Six Thousand Six Hundred
Fifty-Seven and 08/100ths Dollars ($26,657.08); and for the fifth Lease Year,
the sum of Three Hundred Twenty-Nine Thousand Four Hundred Eighty Two Dollars
($329,482.00), payable in equal monthly installments of Twenty- Seven Thousand
Four Hundred Fifty Six and 83/100ths Dollars ($27,456.83) per month.
b. All minimum rent payable hereunder shall be paid without setoff or
deduction, in advance, on or before the first day of each month during the term
of this Lease at the address of the Landlord first written above, or such other
address or addresses as Landlord may hereafter determine by notice to the
Tenant.
c. Rent for any period during the term hereof which is for less than one
(1) month shall be a prorated portion of the monthly installment herein, based
on a thirty (30) day month.
6. SECURITY DEPOSIT. Tenant shall deposit with Landlord the sum of None upon
commencement of the term of this Lease. Said sum shall be held by Landlord as
security for the faithful performance by Tenant of all the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the term
hereof. If Tenant defaults with respect to any provision of this Lease,
including, but not limited to the provisions relating to the payment of rent,
Landlord may (but shall not be required to) use, apply or retain rent or any
other sum in default or for the payment of any amount of Tenant's default. If
any portion of said deposit is so used or applied, Tenant shall within five days
after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount and Tenant's
failure to do so shall be a material breach of this Lease. Landlord shall not be
required to keep this security deposit separate from its general funds, and
Tenant shall not be entitled to interest on such deposit. If Tenant shall fully
and faithfully perform every provision of this Lease to be performed by it, the
security deposit or any balance thereof shall be [illegible] to Tenant (or, at
Landlord's option, to the last assignee of Tenant's interest hereunder) at the
expiration of the Lease term. In the event of termination of Landlord's interest
in this Lease, Landlord shall transfer said deposit to Landlord's successor in
interest.
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<PAGE> 3
7. OPERATING EXPENSE ADJUSTMENTS. For the purposes of this Article, the term
Direct Expenses is defined as follows:
All direct costs of operation and maintenance, as determined by standard
practices, and shall include the following costs by way of illustration,
but not be limited to: real property taxes and assessments; rent taxes,
gross receipt taxes, (whether assessed against the Landlord or assessed
against the Tenant and collected by the Landlord, or both); water and
sewer charges; Insurance premiums; utilities; janitorial services; labor;
window cleaning; costs incurred in the management of the Building, if any;
air conditioning and heating; elevator maintenance; supplies; materials,
equipment; and tools; including maintenance, costs, and upkeep of all
common areas, and all building repairs except repair of structural defects
("Direct Expenses" shall not include depreciation on the Building of which
the Premises are a part or equipment therein, loan payments, executive
salaries or real estate brokers' commissions.)
Tenant shall pay one hundred percent (100%) of Direct Expenses paid or
incurred by the Landlord for the operation or maintenance of the Building of
which the Premises are a part.
Even though the term has expired and Tenant has vacated the Premises, when
the final determination is made of Tenant's share of Direct Expenses for the
year in which this Leave terminates, Tenant shall immediately pay any increase
due over the estimated expenses paid and conversely any overpayment made in the
event of said expenses decrease shall be immediately rebated by Landlord to
Tenant.
8. USE. Tenant shall use the Premises for office-warehouse and/or manufacturing
purposes, and shall not use or permit the Premises to be used for any other
purpose without the prior written consent of Landlord.
Tenant shall not do or permit anything to be done in or about the Premises
nor bring or keep anything herein which will in any way increase the existing
rate or affect any fire or other insurance upon the Building or any of its
contents, or cause cancellation of any insurance policy covering said Building
or any part thereof or any of its contents. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the building or
injure or annoy them or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer to be committed any waste in or upon the Premises.
9. COMPLIANCE WITH LAW. Tenant shall not use the Premises or permit anything to
be done in or about the Premises which will in any way conflict with any law,
statute, ordinance or governmental rule or regulation now in force or which may
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<PAGE> 4
hereafter be enacted or promulgated. Tenant shall, at its sole costs and
expense, promptly comply with all laws, statutes, ordinances and governmental
rules, regulations or requirements now in force or which may hereafter be in
force, and with the requirements of any board of fire insurance underwriters or
other similar bodies now or hereafter constituted, relating to, or affecting the
condition, use or occupancy of the Premises, excluding structural changes not
related to or affected by Tenant's improvements or acts. The judgment against
Tenant, whether the Landlord be a party thereto or not, that tenant has violated
any law, statute, ordinance or governmental rule, regulation or requirement,
shall be conclusive of that fact as between the Landlord and Tenant.
10. ALTERATIONS AND ADDITIONS. Tenant shall not make or suffer to be made any
alterations, additions or improvements to or of the Premises or any part thereof
without the consent of Landlord first had and obtained, and any alterations,
additions or improvements to or of said Premises, including, but not limited to,
wall covering, paneling and built-in cabinet work, but excepting movable
furniture and trade fixtures, shall on the expiration of the term become a part
of the realty and belong to the Landlord and shall be surrendered with the
Premises. In the event Landlord consents to the making of any alterations,
additions or improvements to the Premises by Tenant, the same shall be made by
Tenant at Tenant's sole cost and expense, and an contractor or person selected
by Tenant to make the same must first be approved by the Landlord. Upon the
expiration or earlier termination of the term hereof, Tenant shall, prior to the
written demand by the Landlord, given at least thirty (30) days prior to the end
of the term, at Tenant's sole cost and expense, forthwith and with all due
diligence, remove any alterations, additions, or improvements made which have
been designated by the Landlord to be removed, and repair any damage to the
Premises caused by such removal.
11. REPAIRS.
a. By taking possession of the Premises, Tenant shall be deemed to have
accepted the Premises as being in good, sanitary order, condition and repair.
Tenant shall, at Tenant's sole cost and expense, keep the Premises and every
part thereof in good condition and repair, damage thereto from causes beyond the
reasonable control of Tenant and ordinary wear and tear excepted. Tenant shall
upon the expiration or sooner termination of this Lease hereof surrender the
Premises to the Landlord in good condition, ordinary wear and tear and damage
from causes beyond the reasonable control of Tenant excepted. Except as
specifically provided in an addendum, if any, to this Lease, Landlord shall have
no obligation whatsoever to alter, remodel, improve, repair, decorate or paint
the Premises or any part thereof, and the parties hereto affirm that Landlord
has made no representations to Tenant respecting the condition of the Premises
or the Building except as specifically herein set forth.
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<PAGE> 5
12. LIENS. Tenant shall keep the Premises and property in which the Premises are
situated free from any liens out of any work performed, materials furnished or
obligations incurred by Tenant. Landlord may require, at Landlord's sole option,
that Tenant shall provide to Landlord, at Tenant's sole cost and expense, a lien
and completion bond in an amount equal to one and one-half (1 1/2) times any and
all estimated cost of improvements, additions, or alterations in the Premises,
to insure Landlord against any liability for mechanics' and materialmen's liens
and to insure completion of the work.
13. ASSIGNMENT AND SUBLETTING. Tenant shall not either voluntarily or by
operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber
this Lease or any interest therein, and shall not sublet the said Premises or
any part thereof, or any right or privilege appurtenant thereto, or suffer any
other person (the employees, agents, servants and invitees of Tenant excepted)
to occupy or use the said Premises, or any portion thereof, without the written
consent of Landlord first had and obtained, which consent shall not be
unreasonably withheld, and a consent to one assignment, subletting, occupation
or use by any other person shall not be deemed to be a consent to any subsequent
assignment, subletting, occupation or use by another person. Any such assignment
or subletting without such consent shall be void, and shall, at the option of
the Landlord, constitute a default under this Lease.
14. HOLD HARMLESS. Tenant shall identify and hold harmless Landlord against and
from any and all claims arising from Tenant's use of the Premises for the
conduct of its business or from any activity, work, or other thing done,
permitted or suffered by the Tenant in or about the Building, and shall further
indemnify and hold harmless Landlord against and from any and all claims arising
from any breach or default in the performance of any obligations on Tenant's
part to be performed under the terms of this lease, or arising from any act or
negligence of the Tenant, or any officer, agent, employee, guest, or invitee of
Tenant, and from all and against all cost, attorney's fees, expenses and
liabilities incurred in or about any such claim or action or proceeding be
brought against Landlord by reason of any such claim, Tenant, upon notice from
Landlord shall defend the same at Tenant's expense by counsel reasonably
satisfactory to Landlord. Tenant as a material part of the consideration to
Landlord hereby assumes all risk of damage to property or injury to persons, in,
upon or about the Premises, from any cause other than Landlord's negligence, and
Tenant hereby waives all claims in respect thereof against Landlord.
Landlord or its agents shall not be liable for any damage to property
entrusted to employees of the Building, nor for loss or damage to any property
by theft or otherwise, nor for any injury to or damage to persons or property
resulting from fire, explosion, falling plaster, steam, gas, electricity, water
or rain which may leak from any part of the Building or from the pipes,
appliances or plumbing works therein or from the roof, street or subsurface or
from any other place resulting from dampness or any other cause whatsoever,
unless caused by or due to the negligence of
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<PAGE> 6
Landlord, its agents, servants or employees. Landlord or its agents shall not be
liable for interference with the light or incorporeal hereditaments, loss of
business by Tenant, nor shall Landlord be liable for any latent defects in the
Premises or in the Building. Tenant shall give prompt notice to Landlord in
cause of fire or accidents in the Premises or in the Building or of defects
therein or in the fixtures or equipment.
15. SUBROGATION. As long as their respective Insurers so permit, Landlord and
Tenant hereby mutually waive their respective rights of recovery against each
other for any loss insured by fire, extended coverage and other property
insurance policies existing for the benefit of the respective parties. Each
party shall obtain any special endorsements, if required by their insurer to
evidence compliance with the aforementioned waiver.
16. INSURANCE. Tenant shall not install any electrical equipment that overloads
the wiring panels, etc. in the leased premises. Tenant shall make at his own
expense whatever changes are necessary to relieve any overload condition and to
comply with the requirements of the insurance Underwriters or the governmental
authorities having jurisdiction. Tenant agrees to carry general liability
insurance in the minimum total amount or amounts of Five Hundred Thousand
Dollars ($500,000.00), for each occurrence of bodily injury and One Hundred
Thousand Dollars ($100,000.00) property damage. Tenant shall supply to Landlord
certificates of insurance showing the liability insurance coverage, and
throughout the term hereof, certificates of renewals of such policies. Said
certificate shall provide that the insurer shall have given Landlord ten (10)
days written notice prior to cancellation of said policy. In the event Tenant
fails to secure such insurance or to give evidence to Landlord of such insurance
by depositing with Landlord certificates as above provided, Landlord may
purchase such insurance in Tenant's name and charge Tenant the premiums
therefor. Building insurance for damage caused by fire and all other perils is
the responsibility of the Landlord. Premiums for such coverage shall be paid by
the Landlord. Said insurance policy will add MKS Instruments, Inc. as an
additional insured.
17. PROPERTY TAXES. Tenant shall pay, or cause to be paid, before delinquency,
any and all taxes levied or assessed and which become payable during the term
thereof upon all Tenant's leasehold improvements, equipment, furniture, fixtures
and personal property located in the premises; except that which has been paid
for by Landlord, and is the standard of the Building. In the event any or all of
Tenant's leasehold improvements, equipment, furniture, fixtures and personal
property shall be assessed and taxed with the building. Tenant shall pay to
Landlord its share of such taxes within ten (10) days after delivery to Tenant
by Landlord of a statement in writing setting forth the amount of such taxes
applicable to Tenant's property.
18. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the
rules and regulations that Landlord shall from time to time promulgate.
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<PAGE> 7
Landlord reserves the right from time to time to make all reasonable
modifications to said rules. The additions and modifications to those rules
shall be binding upon Tenant upon delivery of a copy of them to Tenant. Landlord
shall not be responsible to Tenant for the nonperformance of any said rules by
any other tenants or occupants.
19. HOLDING OVER. If Tenant remains in possession of the Premises or any part
after the expiration of the term hereof, with the express written consent of
Landlord, such occupancy shall be a tenancy from month-to-month at a rental in
the amount of the last monthly rental, plus all other charges payable hereunder,
and upon all terms hereof applicable to a month-to-month tenancy.
20. ENTRY BY LANDLORD. Landlord reserves and shall at any and all times have the
right to enter the Premises, inspect the same, supply janitorial service and any
other service to be provided by Landlord to Tenant hereunder, to submit said
Premises and responsibility, and to alter, improve or repair the Premises and
any portion of the Building of which the Premises are a part that Landlord may
deem necessary or desirable, without abatement of rent and may for that purpose
erect scaffolding and other necessary structures where reasonably required by
the character of the work to be performed, always providing that the entrance to
the Premises shall not be blocked thereby, and further providing that the
business of the Tenant shall not be interfered with unreasonably. Tenant hereby
waives any claim for damages or for any injury or inconvenience to interference
with Tenant's business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby. For each of the aforesaid
purposes, Landlord shall at all times have and retain a key with which to unlock
all of the doors in, upon and about the Premises, excluding Tenant's vaults,
safes, and files, and Landlord shall have the right to use any and all means
which Landlord may deem proper to open said doors in an emergency, in order to
obtain entry to the Premises without liability to Tenant except for any failure
to exercise due care for Tenant's property. Any entry to the Premises obtained
by Landlord by any of said means, or otherwise shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction of Tenant from the Premises or any portion
thereof.
21. RECONSTRUCTION. In the event the Premises or the Building of which the
Premises are a part are damaged by fire or other perils covered by extended
coverage insurance, Landlord agrees to forthwith repair the same; and this Lease
shall remain in full force and effect, except that the Tenant shall be entitled
to a proportionate reduction of the rent while such repairs are being made, such
proportionate reduction to be based upon the extent to which the making of such
repairs shall materially interfere with the business carried on by the Tenant in
the Premises. If the damage is due to the fault or neglect of Tenant or its
employees, there shall be no abatement of rent.
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<PAGE> 8
In the event the Premises or the Building of which the Premises are a part
are damaged as a result of any cause other than the perils covered by fire and
extended coverage insurance, then Landlord shall forthwith repair the same,
provided the extent of the destruction be less than ten percent (10%) of the
then full replacement cost of the Premises or the Building of which the Premises
are a part. In the event the destruction of the Premises or the Building is to
an extent greater than ten percent (10%) of the then full replacement cost, then
Landlord shall have the option: (1) to repair or restore such damage, this Lease
continuing in full force and effect, but the rest to be proportionately reduced
as hereinabove in this Article provided; or (2) give notice to Tenant at any
time within sixty (60) days after such damage terminating this Lease as of the
date specified in such notice, which date shall be no less than thirty (30) and
no more than sixty (60) days after the giving of such notice. In the event of
such notice, this Lease shall expire and all interest of the Tenant in the
Premises shall terminate on the date so specified in such notice and the Rent,
reduced by a proportionate amount, based upon the extent, if any, to which such
damage materially interfered with the business carried on by the Tenant in the
Premises, shall be paid up to date of said such termination.
Notwithstanding anything to the contrary contained in this Article,
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises when the damage resulting from any casualty covered under
this Article occurs during the last twelve (12) months of the term of this Lease
or any extension thereof.
Landlord shall not be required to repair any injury or damage by fire or
other cause, or to make any repairs or replacements of any panels, decoration,
office fixtures, railings, floor coverings, partitions, or any other property
installed in the Premises by Tenant.
The Tenant shall not be entitled to any compensation or damages from
Landlord for loss of the use of the whole any part of the Premises, Tenant's
personal property or any inconvenience or annoyance occasioned by such damage,
repair, reconstruction or restoration.
22. DEFAULT. The occurrence of any one or more of the following events shall
constitute a default and breach of this Lease by Tenant.
a. The vacating or abandonment of the Premises by Tenant.
b. The failure by Tenant to make any payment of rent or any other payment
required to be made by Tenant hereunder, as and when due, where such failure
shall continue for a period of three (3) days after written notice thereof by
Landlord to Tenant.
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<PAGE> 9
c. The failure by tenant to observe any of the covenants, conditions or
provisions of this Lease to be observed or performed by the Tenant, other than
as described in Article 23.b above, where such failure shall continue for a
period of thirty (30) days after written notice thereof by Landlord to Tenant;
provided, however, that if the nature of Tenant's default is such that more than
thirty (30) days are reasonably required for its cure, then Tenant shall not be
deemed to be in default if Tenant commences such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.
d. The making by Tenant of any general assignment or general arrangements
for the benefit of creditors; or the filing by or against Tenant of a petition
to have Tenant adjudged a bankrupt, or a petition or reorganization or
arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, the same is dismissed within sixty [60] days); or
the appointment of a trustee or a receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where possession is not restored to Tenant within thirty (30) days; or
the attachment, execution or other judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Lease,
where such seizure is not discharged in thirty (30) days.
23. REMEDIES IN DEFAULT. In the event of any such material default or breach by
Tenant, Landlord may at any time thereafter, with or without notice or demand,
and without limiting Landlord in the exercise or a right or remedy which
Landlord may have by reason of such default or breach:
a. Terminate Tenant's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In such event Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default including, but not limited to, the cost of recovering
possession of the Premises; expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorney's fees, any real
estate commission actually paid; the worth at the time of award by the court
having jurisdiction thereof of the amount by which the unpaid rent for the
balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Tenant proves could be reasonably avoided;
that portion of the leasing commission paid by Landlord and applicable to the
unexpired term of this Lease. Unpaid installments of rent or other sums shall
bear interest from the due date at the rate of twenty percent (20%) per annum.
In the event Tenant shall have abandoned the Premises, Landlord shall have the
option of (a) taking possession of the Premises and recovering from Tenant the
amount specified in this paragraph, or (b) proceeding under the provisions of
the following Article 23.b.
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<PAGE> 10
b. Maintain Tenant's right to possession, in which case this Lease shall
continue in effect whether or not Tenant shall have abandoned the Premises. In
such event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due hereunder.
c. Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decision of the State in which the Premises are located.
24. EMINENT DOMAIN. If more than twenty-five percent (25%) of the Premises shall
be taken or appropriated by any public or quasi-public authority under the power
of eminent domain, either party hereto shall have the right, at its option, to
terminate this Lease, and Landlord shall be entitled to any and all income,
rent, award, or any interest therein whatsoever which may be paid or made in
connection with such public or quasi-public use or purpose, and Tenant shall
have no claim against Landlord for the value of any unexpired term of this
Lease. If either less than or more than twenty-five percent (25%) of the
Premises is taken, and neither party elects to terminate as herein provided, the
rental thereafter to be paid shall be equitable reduced. If any part of the
Building other than the Premises may be so taken or apportioned, Landlord shall
have the right, at its option to terminate this Lease and shall be entitled to
the entire award as above provided.
25. ESTOPPEL CERTIFICATE. Tenant shall at any time and from time to time upon
not less than ten (10) days' prior written notice from Landlord, execute,
acknowledge, and deliver to Landlord a statement in writing, (a) certifying that
this Lease is unmodified and full force and effect (or, if modified, stating the
nature of such modification and certifying that this Lease as so modified, is in
full force and effect), and the date to which the rental and other charges are
paid in advance, if any, and (b) acknowledging that there are not, to Tenant's
knowledge, any uncured defaults on the part of the Landlord hereunder, or
specifying such defaults if any are claimed. Any such statement may be relied
upon by any prospective purchaser or encumbrancer of all or any portion of the
real property of which the Premises are a part. The failure of Tenant to timely
deliver such statement, or a statement specifically setting forth any items
which would be exceptions from such certification, shall be conclusive evidence
that Tenant has certified to the matters set forth herein.
26. AUTHORITY OF PARTIES.
a. Corporate Authority. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of the
corporation, in accordance with a duly adopted resolution of the board of
directors of said corporation or in accordance with the by-laws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms.
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<PAGE> 11
b. Limited Partnerships. If the Landlord herein is a limited partnership,
it is understood and agreed that any claims by Tenant on Landlord shall be
limited to the assets of the limited partnership, and furthermore, Tenant
expressly waives any and all rights to proceed against the individual partners
or the officers, directors or shareholders of any corporate partner, except to
the extent of their interest in said limited partnership.
27. GENERAL PROVISIONS.
a. Plats and Riders. Clauses, plats and riders, if any, signed by the
Landlord and the Tenant endorsed on or affixed to this Lease are a part hereof.
b. Waiver. The waiver by Landlord of any term, covenant, or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of the
Tenant to pay the particular rental so accepted, regardless of Landlord's
knowledge of such preceding breach at the time of the acceptance of such rent.
c. Notices. All notices and demands which may or are to be required or
permitted to be given by either party to the other hereunder shall be in
writing. All notices and demands by the Landlord to the Tenant shall be sent by
United States Mail, postage prepaid, addressed to the Tenant at the Premises, or
to such other place as Tenant may from time to time designate in a notice to the
Landlord. All notices and demands by the Tenant to the Landlord shall be sent by
United States Mail, postage prepaid, addressed to the Landlord at the Office of
the Building, or to such other person or place as the Landlord may from time to
time designate in a notice to the Tenant.
d. Joint Obligation. If there be more than one Tenant, the obligations
hereunder imposed upon Tenants shall be joint and several.
e. Marginal Headings. The original headings and Article titles to the
Articles of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof.
f. Time. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.
g. Recordation. Neither the Landlord nor Tenant shall record this Lease or
a short form memorandum hereof without the prior written consent of the other
party.
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<PAGE> 12
h. Quiet Possession. Upon Tenant paying the rent reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Tenant's part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire term hereof, subject to all the
provisions of this Lease.
i. Late Charges. Tenant hereby acknowledges that late payment by Tenant to
Landlord of rent or other sums due hereunder will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, out are not limited to, processing
and accounting charges, and late charges which may be imposed upon Landlord by
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or of a sum due from Tenant shall not be received by
Landlord or Landlord's designee within ten (10) days after written notice that
said amount is past due, then Tenant shall pay to Landlord a late charge equal
to ten percent (10%) of such overdue amount. The parties hereby agree that such
late charges represent a fair and reasonable estimate of the cost that Landlord
will incur by reason of the late payment by Tenant. Acceptance of such late
charges by the Landlord shall, in no event, constitute a waiver of Tenant's
default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder.
j. Prior Agreements. This Lease contains all of the agreements of the
parties hereto with respect to any matter covered or mentioned in this Lease,
and no prior agreements or understanding pertaining to any such matters shall be
effective for any purpose. No provision of this may be amended or added to
except by an agreement in writing signed by the parties hereto or their
respective successors in interest. This Lease shall not be effective or binding
on any party until fully executed by both parties hereto.
k. Attorney's Fees. In the event of any action or proceeding brought by
either party against the other under this Lease, the prevailing party shall be
entitled to recover all costs and expenses including the fees of its attorney in
such action or proceeding in such amount as the court may adjudge reasonable as
attorney's fees.
l. Sales of Premises by Landlord. In the event of any sale of the
building, Landlord shall be and is hereby entirely freed and relieved of, all
liability under any and all of its covenants and obligations contained in or
derived from this Lease arising out of any act, occurrence or omission occurring
after the consummation of such sale; and the purchaser, at such sale or any
subsequent sale of the Premises shall be deemed, without any further agreement
between the parties or their successors in interest or between the parties and
any such purchaser, to have assumed and agreed to carry out any and all of the
covenants and obligations of the Landlord under this Lease.
-12-
<PAGE> 13
m. Subordination Attornment. Upon request of the Landlord, Tenant will, in
writing, subordinate its rights hereunder to the lien of any first mortgage or
first deed of trust to any bank, insurance company or other lending institution,
now or hereafter in force against the land and Building of which the Premises
are a part, and upon any building hereafter placed upon the land of which the
Premises are a part, and to all advances made or hereafter to be made upon the
security thereof.
In the event any proceedings are brought for foreclosure or in the
event of the exercises of the power of sale under any mortgage or deed of trust
made by the Landlord covering the Premises, the Tenant shall attorn to the
purchaser upon any such foreclosure of sale and recognize such purchases as the
Landlord under this Lease.
The provisions of this Article to the contrary notwithstanding, and
so long as Tenant is not in default hereunder, this Lease shall remain in full
force and effect for the full term hereof.
n. Name. Tenant shall not use the name of the Building or of the
development in which the Building is situated for any purpose other than as an
address of the business to be conducted by the Tenant in the Premises.
o. Separability. Any provision of the Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof and such other provision shall remain in full force and effect.
p. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
q. Choice of Law. This Lease shall be governed by the laws of the State in
which the Premises are located.
r. Signs and Auctions. Tenant shall not place any sign upon the Premises
or Building or conduct any auction thereon without Landlord's prior written
consent.
28. BROKERS. Tenant warrants that it has had no dealings with any real estate
brokers or agents in connection with the negotiation of this Lease, and it knows
or no other real estate broker or agent who is entitled to a commission in
connection with this Lease.
29. LIEN OF LANDLORD. Tenant hereby grants to the Landlord a lien upon all the
furniture, fixtures, equipment, or other property belonging to the Tenant
located on or within the leased premises at any time during the Lease term, to
secure the
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<PAGE> 14
performance of the Tenant's obligations under this Lease, said lien to be prior
to any other lien on such property except a lien in favor of the seller of such
property to secure the unpaid purchase price thereof. This Landlord's lien may
be foreclosed in the same manner as a security agreement, and the filing of this
Lease or a memorandum thereof, or a financing statement in the security interest
records of Boulder County, Colorado, shall constitute full lawful notice of this
lien. If the Landlord also has a lien on such property, or any portion thereof,
by virtue of any other instrument, or by operation of law, the lien under this
Lease shall be in addition thereto, and the Landlord shall have alternate
remedies at his option.
The parties hereto have executed this Lease at the place and on the dates
specified immediately adjacent to their respective signatures.
If this Lease has been filled in, it has been prepared for submission to
your attorney for his approval. No representation or recommendation is made by
the real estate broker or its agents or employees as to the legal sufficiency,
legal effect, or tax consequences of this Lease, or the transactions relating
thereto.
LANDLORD: TENANT:
ASPEN INDUSTRIAL PARK MKS INSTRUMENTS, INC.
PARTNERSHIP, a Colorado
limited partnership
By: /s/ William D. Stewart III By: /s/ Robert F. O'Brien
-------------------------- ----------------------
William D. Stewart III, Robert F. O'Brien
General Partner Treasurer
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<PAGE> 15
EXHIBIT "A"
Lots 2 and 3, Aspen Industrial Park, A subdivision in the City and County of
Boulder, State of Colorado.
-15-
<PAGE> 16
LEASE EXTENSION AGREEMENT
THIS LEASE EXTENSION AGREEMENT is between Aspen Industrial Park
Partnership, a Colorado limited partnership ("Landlord") and HPS, DIVISION OF
MKS INDUSTRIES, INC. ("Tenant").
30. Premises
a. Lease Agreement. Landlord and Tenant entered into a lease agreement for
Lots 2 and 3, Aspen Industrial Park, a subdivision in the City and County of
Boulder, State of Colorado, commonly known as 5330 Sterling Drive, Boulder,
Colorado, dated October 12, 1989 for a term of five years commencing on November
1, 1989 (the "Lease Agreement").
b. Term of Lease. Landlord and Tenant desire to extend the Lease Agreement
on the same terms and conditions for a period of four (4) additional years
commencing on November 1, 1994 (the "Extended Term") and to agree on the rent
for the period of the Extended Term.
31. Extended Term and Rent
a. Lease Extension. Landlord and Tenant hereby agree to extend the Lease
Agreement for a period of four years commencing November 1, 1994 under all of
the same terms and conditions as set forth in the Lease Agreement except for the
rent adjustment set forth in paragraph 2.2 below.
b. Minimum Rent. The minimum rent for the full four-year Extended Term of
the Lease Agreement shall be One Million Three Hundred Sixty-Six Thousand One
Hundred Nineteen and 84/100 Dollars ($1,366,119.84) payable in equal monthly
installments of Twenty-Eight Thousand Four Hundred Sixty and 83/100 Dollars
($28,460.83).
32. Confirmation of Lease Agreement
a. Except as specifically modified in Article II above, Landlord and
Tenant hereby ratify and confirm all of the terms and conditions of the Lease
Agreement and agree that all such terms and conditions shall be in full force
and effect in their entirety during the Extended Term.
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<PAGE> 17
Dated this 14th day of October, 1994
LANDLORD: TENANT:
ASPEN INDUSTRIAL PARK PARTNERSHIP, MKS INSTRUMENTS, INC.
a Colorado limited partnership
By:/s/ William D. Stewart III By: /s/ Robert F. O'Brien
------------------------------- ------------------------------
William D. Stewart, III Robert F. O'Brien
General Partner Treasurer
-17-
<PAGE> 18
LEASE EXTENSION AGREEMENT
THIS LEASE EXTENSION AGREEMENT (this "Extension") is between ASPEN
INDUSTRIAL PARK PARTNERSHIP, LLLP, a Colorado limited liability limited
partnership ("Landlord"), and MKS INSTRUMENTS, INC. ("Tenant").
RECITALS
A. Landlord and Tenant entered into a lease agreement for Lots 2 and 3,
Aspen Industrial Park, a subdivision in the City and County of Boulder,
State of Colorado, commonly known as 5330 Sterling Drive, Boulder,
Colorado, dated October 12, 1989, for a term of five years commencing
on November 1, 1989 (the "Lease Agreement"). Landlord and Tenant
entered into a lease extension agreement extending the terms and
conditions of the Lease Agreement for an additional four years
commencing on November 1, 1994 (the "First Extension").
B. Landlord and Tenant desire to again extend the Lease Agreement, as
amended by the First Extension, on the same terms and conditions except
as set forth below, for a period of three additional years commencing
on November 1, 1998 (the "Extended Term"), and to agree on the rent for
the period of the Extended Term as set forth below.
AMENDMENTS
1. Term. Landlord and Tenant hereby agree to extend the term of the Lease
Agreement for a period of three years commencing November 1, 1998 under
the terms and conditions set forth in the Lease Agreement except for
the additional amendments set forth below.
2. Minimum Rent. The minimum rent for the full three-year Extended Term of
the Lease Agreement shall be $1,102,653.96 payable in monthly
installments as set forth below:
<TABLE>
<CAPTION>
Period Annual Rent Monthly Rent Annual Rent
------ Per Sq. Ft. ------------ -----------
-----------
<S> <C> <C> <C>
Nov. 1, 1998 through Oct. 31, 1999 $8.75/ft.2 $28,460.83 $341,529.96
Nov. 1, 1999 through Oct. 31, 2000 $9.50/ft.2 $30,900.33 $370,803.96
Nov. 1, 2000 through Oct. 31, 2001 $10.00/ft.2 $32,526.67 $390,320.04
Total $1,102,653.96
</TABLE>
3. Landlord Conversion of Entity. Tenant hereby acknowledges that Landlord
has converted from a limited partnership to a limited liability limited
partnership.
<PAGE> 19
4. Exhibit A. Exhibit A, which sets forth the legal description of the
real property on which the premises are located, is hereby deleted and
replaced with the following:
Lot 2, Aspen Industrial Park, A subdivision in the City and County of
Boulder, State of Colorado.
5. Estoppel. Tenant hereby agrees at any time and from time to time upon
not less than ten days prior written request by Landlord, to execute,
acknowledge, and deliver to Landlord an estoppel affidavit in form
acceptable to Landlord and the holder of any existing or contemplated
mortgage or deed of trust encumbering the premises. Tenant's failure to
deliver such statement within such time shall be conclusive upon Tenant
that (A) the Lease is in full force and effect, without modification
except as may be represented by Landlord; (B) there are no uncured
defaults in Landlord's performance; and (C) not more than one month's
rent has been paid in advance. Further, upon request, Tenant shall
supply to Landlord a corporate resolution certifying that the party
signing such a statement on behalf of Tenant is properly authorized to
do so. Tenant agrees to provide Landlord within ten business days of
Landlord's request, Tenant's most recently completed financial
statements and such other financial information as reasonably requested
by Landlord in order to verify Tenant's financial condition to satisfy
requirements of Landlord's existing or contemplated lender or
mortgagee.
6. Amendments and Binding Effect. This Extension may be modified only by
an agreement in writing signed by the parties hereto. This Extension
will inure to the benefit and be binding upon the parties hereto and
their respective successors and permitted assigns.
CONFIRMATION OF LEASE AGREEMENT
Except as specifically modified above, Landlord and Tenant hereby
ratify and confirm all of the terms and conditions of the Lease Agreement and
agree that all such terms and conditions shall be in full force and effect in
their entirety during the Extended Term.
Dated this 1st day of Nov, 1998.
LANDLORD:
ASPEN INDUSTRIAL PARK PARTNERSHIP, LLLP,
a Colorado limited liability limited partnership
By: /s/ William D. Stewart, III
William D. Stewart, III
General Partner
<PAGE> 20
TENANT:
MKS INSTRUMENTS, INC.
a Massachusetts corporation
By: /s/ Ron Weigner
Ron Weigner
Title: VP & CFO
<PAGE> 1
EXHIBIT 10.12
STANDARD FORM OF INDUSTRIAL LEASE
(SEMI-GROSS)
TABLE OF CONTENTS
PAGE
----
ARTICLE I. DEFINITIONS...............................................1
1.1 Address of Landlord ....................................... 1
1.2 Address of Tenant ......................................... 1
1.3 Base Rent ................................................. 1
1.4 Base Year ................................................. 1
1.5 Building/s ................................................ 1
1.6 Center .................................................... 1
1.7 Common Area ............................................... 1
1.8 Lease Term ................................................ 1
1.9 Permitted Use of the Premises ............................. 1
1.10 Premises .................................................. 1
1.11 Rent ...................................................... 1
1.12 Additional Rent ........................................... 2
1.13 Security Deposit .......................................... 2
1.14 Tenant's Allocated Share .................................. 2
1.15 Tenant's Proportionate Share............................... 2
1.16 Tenant's Prorata Share .................................... 2
ARTICLE II. THE DEMISED PREMISES ................................... 2
2.1 Lease of the Premises ..................................... 2
2.2 Use of Common Area ........................................ 2
2.3 Quiet Enjoyment ........................................... 2
2.4 Reservations by Landlord .................................. 2
ARTICLE III. TERM OF THE LEASE ..................................... 3
3.1 Term ...................................................... 3
3.2 Tender of Possession ...................................... 3
3.3 Holding Over .............................................. 3
ARTICLE IV. RENT ................................................... 3
4.1 Base Rent ................................................. 3
4.2 Additional Rent ........................................... 4
4.2(a) Utilities and Services ..................... 4
4.2(b) Insurance .................................. 5
4.2(c) Real Estate Taxes .......................... 5
4.2(d) HVAC Maintenance ........................... 5
4.2(e) Common Area Expenses ....................... 6
4.2(f) Rent on Sales Taxes ........................ 6
4.3 Late Payment .............................................. 7
<PAGE> 2
4.4 Security Deposit .......................................... 7
ARTICLE V. LANDLORD'S RIGHTS AND OBLIGATIONS ....................... 7
5.1 Maintenance by Landlord ................................... 7
5.2 Mortgage and Transfer: Estoppel Certificates .............. 7
5.3 Landlord's Inability to Perform ........................... 8
5.4 Rights of Landlord ........................................ 8
5.4(a) Name of Center ............................. 9
5.4(b) Redecorate ................................. 9
5.4(c) Re-Lease ................................... 9
5.4(d) Vehicles ................................... 9
5.4(e) Preservation of Center ..................... 9
ARTICLE VI. TENANT'S RIGHTS AND OBLIGATIONS ........................ 9
6.1 Acceptance of Premises .................................... 9
6.2 Alterations and Additions ................................. 9
6.3 Assignment and Subletting ................................ 10
6.4 Locks .................................................... 10
6.5 Maintenance by Tenant .................................... 10
6.6 Mechanic's Liens ......................................... 11
6.7 Redelivery of Premises ................................... 11
6.8 Signs and Advertisements ................................. 11
6.9 Use of Common Areas ...................................... 11
6.10 Use of Premises .......................................... 11
6.11 Hazardous Substances ..................................... 11
ARTICLE VII. INSURANCE ............................................ 12
7.1 Liability Insurance ...................................... 12
7.2 Fire and Extended Coverage Insurance ..................... 12
7.3 Indemnification of Landlord .............................. 12
ARTICLE VIII. EMINENT DOMAIN AND DAMAGE OR DESTRUCTION ............ 13
8.1 Eminent Domain ........................................... 13
8.2 Damage or Destruction .................................... 13
ARTICLE IX. DEFAULT AND REMEDIES .................................. 14
9.1 Events of Default ........................................ 14
9.1(a) Nonpayment ................................ 14
9.1(b) Noncompliance ............................. 14
9.1(c) Insolvency or Transfer .................... 15
9.1(d) Bankruptcy ................................ 15
9.1(e) Receiver .................................. 15
9.1(f) Abandonment ............................... 15
9.2 Remedies ................................................. 15
9.2(a) Repossession and Sale ..................... 15
9.2(b) Releasing ................................. 15
<PAGE> 3
9.2(c) Cancellation ............................... 15
9.2(d) Anticipatory Breach ........................ 16
9.2(e) Attorney's Fees ............................ 16
9.3 Remedies Cumulative ...................................... 16
9.4 No Waiver ................................................ 16
ARTICLE X. MISCELLANEOUS ........................................... 16
10.1 Bankruptcy or Assignment to Trustee ...................... 16
10.2 Brokers .................................................. 16
10.3 Captions ................................................. 17
10.4 Certificates of Occupancy ................................ 17
10.5 Entire Agreement ......................................... 17
10.6 Joint and Several Liability of Multiple Tenants .......... 17
10.7 Notices .................................................. 17
10.8 Partial Invalidity ....................................... 17
10.9 Recording ................................................ 17
10.10 Successors ............................................... 17
10.11 Use of the Singular; Gender .............................. 18
10.12 Rider .................................................... 18
EXHIBIT A. RULES AND REGULATIONS
EXHIBIT B . THE CENTER AND PREMISES
EXHIBIT C. LANDLORD'S IMPROVEMENTS TO PREMIES (if any)
<PAGE> 4
GA Property No. 17717
IP-524
STANDARD FORM OF INDUSTRIAL LEASE
(SEMI-GROSS)
THIS LEASE, made this 21st day of September, 1995, by and between
GENERAL AMERICAN LIFE INSURANCE COMPANY, a Missouri corporation (hereinafter
"Landlord"), and MKS INSTRUMENTS, INC. (hereinafter "Tenant").
ARTICLE I. DEFINITIONS.
1.1 Address of Landlord: One Lincoln Centre, Suite 567, 5400 LBJ Freeway,
Dallas, Texas 75240.
1.2 Address of Tenant: Six Shattuck Road, Andover, MA 01810.
1.3 Base Rent: See Paragraph No. 1 of Lease Rider Number One.
1.4 Base Year: *See Paragraph 2 of Lease Rider Number One.
1.5 Building/s: The Building/s in which the Premises is located. The specific
Building in which the Premises is located contains 54,301 square feet. The total
square footage of all the Buildings in the Center is 124,187 square feet.
1.6 Center: The land, improvements and appurtenances depicted on Exhibit B
attached hereto and commonly referred to as: ARAPAHO GROVE BUSINESS PARK and
located at 789 Grove Road, Suite 111, Richardson, Texas.
1.7 Common Area: The term "Common Area" means all the areas of the Center
designed for the common use and benefit of the Landlord and all of the tenants,
their employees, agents, customers and invitees. The Common Area includes, but
not by way of limitation, parking lots, truck courts, landscaped and vacant
areas, driveways, rail spurs, walks and curbs and facilities appurtenant to each
as such areas may exist from time to time.
1.8 Lease Term: The lease term shall commence on September 1, 1995 and run for
three (3) years, and 0 months, expiring on August 31, 1998.
1.9 Permitted Use of the Premises: light electronic assembly and associated
activities.
1.10 Premises: 14,627 square feet of space in the Center located as outlined on
Exhibit B attached hereto, and addressed as: 789 Grove Road, Suite 111,
Richardson, Texas.
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1.11 Rent: All sums, monies or payments required to be paid by Tenant to
Landlord pursuant to this Lease, including Base Rent and Additional Rent.
1.12 Additional Rent: All sums, monies or payments required to be paid by Tenant
to landlord pursuant to this Lease other than Base Rent.
1.13 Security Deposit: $3,117.00
1.14 Tenant's Allocated Share: The percentage figure determined by dividing the
number of square feet in the Premises by the number of square feet in the
Building that is then leased to Tenant and to other tenants.
1.15 Tenant's Proportionate Share: The percentage figure determined by dividing
the number of square feet in the Premises by the total number of square feet in
all the buildings (this paragraph is applicable when the Center contains more
than one Building), which percentage figure is: 11.78%.
1.16 Tenant's Prorata Share: The percentage figure determined by dividing the
number of square feet in the Premises by the number of square feet in the
specific Building in which the Premises is located, which percentage figure is:
26.94%.
ARTICLE II. THE DEMISED PREMISES.
2.1 Lease of the Premises. In consideration of the Rents, covenants, agreements
and conditions hereinafter provided to be paid, kept, performed and observed,
the Landlord leases to the Tenant and the Tenant hereby hires from the Landlord
the Premises, upon all the terms and conditions set forth in this Lease.
2.2 Use of Common Area. Landlord grants the Tenant the nonexclusive revocable
use of the Common Area by tenant, Tenant's employees, agents, customers and
invitees, under all the terms and conditions hereof, which use shall be subject
at all times to such reasonable, uniform and non-discriminatory rules and
regulations as may from time to time be established.
2.3 Quiet Enjoyment. Landlord covenants that the Tenant, on paying the Rent
herein provided and keeping, performing and observing the covenants, agreements
and conditions herein required of the Tenant, shall peaceably and quietly hold
and enjoy the Premises for the Lease Term, subject, however, to the terms and
conditions of this Lease.
2.4 Reservations by Landlord. Landlord excepts and reserves from the Premises
the roof and exterior walls of the Building/s, and further reserves the right to
place, install, maintain, carry through, repair and replace such utility lines,
air ducts, pipes, wires, appliances, tunneling and the like in, over, through
and upon the Premises as may be reasonably necessary or advisable for the
servicing of the Premises or any other
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portions of the Center. Landlord further reserves the right, at any time, and
from time to time to: (i) make alterations, changes and additions to the
Building/s and other improvements in the Center; (ii) add additional areas to
the Center and/or to exclude areas therefrom; (iii) construct additional
buildings and other improvements in the Center; (iv) remove or relocate the
whole or any part of any building or other improvement in the Center; and (v)
relocate any other tenant in the Center. It is further understood that the
existing layout of the buildings, walks, roadways, parking areas, entrances,
exits, and other improvements shall not be deemed to be a warranty,
representation or agreement on the part of the Landlord that the Center will
remain exactly as presently built, it being understood and agreed that Landlord
may change the number, dimensions and locations of the walks, buildings and
parking spaces as Landlord shall deem proper.
ARTICLE III. TERM OF THE LEASE.
3.1 Term. Tenant shall have and hold the Premises for and during the Lease Term
subject to the payment of the Rent and the full and timely performance by Tenant
of all the covenants and conditions set forth in this Lease.
3.2 Tender of Possession. Landlord shall use its best efforts to tender
possession of the Premises to Tenant at the commencement of the Lease Term.
Landlord shall not be subject to any liability for any failure to tender
possession of the Premises to Tenant, provided that such failure occurred as a
consequence of any circumstance or cause beyond Landlord's reasonable control,
including but not limited to any Act of God or the failure of a prior tenant to
vacate all or any portion of the Premises.
3.3 Holding Over. In the event of a holding over by Tenant or any of its
successors in interest after expiration or termination of this Lease without the
consent in writing of the Landlord, Tenant shall be deemed a Tenant at
sufferance and shall pay as liquidated damages, double Rent for the entire
holdover period and all attorney's fees and expenses incurred by Landlord in
enforcing its rights hereunder. Any holding over with the consent of Landlord
shall constitute Tenant a month-to-month tenant upon and subject to all the
terms, covenants and conditions of this Lease. *See paragraph 3 of Lease Rider
Number One.
ARTICLE IV. RENT.
4.1 Base Rent. Tenant covenants to pay without notice, deduction, set-off or
abatement to Landlord the Base Rent in lawful money of the United States in
equal consecutive monthly installments in advance on the first day of each month
during the Lease Term. Base Rent for any partial month shall be prorated on a
per diem basis. Base Rent shall be payable to Landlord at Landlord's Address or
such other place as Landlord may designate from time to time in writing. Tenant
shall pay the first full month's Base Rent upon execution of this Lease.
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4.2 Additional Rent. Tenant covenants to pay without notice, deduction, set-off
or abatement to Landlord the Additional Rent in lawful money of the United
States in equal consecutive monthly installments in advance on the first day of
each month during the Lease Term. Additional Rent for any partial month shall be
prorated on a per diem basis. Additional Rent shall be payable to Landlord at
Landlord's Address or such other place as Landlord may designate in writing. In
order to provide for current payments of Additional Rent, Tenant agrees to pay
an amount of Additional Rent reasonably estimated by Landlord from time to time
commencing on the first day of the month following the month in which Landlord
notifies Tenant of the amount of such Additional Rent. If, as finally
determined, the amount of Additional Rent owing by Tenant shall be greater than
or less than the aggregate of all installments so paid to Landlord for each
calendar year, the Tenant shall pay to Landlord the amount of such underpayment,
or Landlord shall credit Tenant for the amount of such overpayment, as the case
may be. It is the intention hereunder to estimate the amount of Additional Rent
for each calendar year and then to adjust such estimate in the following year
based on the actual amount of Additional Rent owing. The obligation of Tenant
with respect to the payment of Additional Rent shall survive the termination of
this Lease. Any payment, refund or credit made pursuant to this paragraph shall
be made without prejudice to any right of Tenant to dispute the amount of
Additional Rent owing, or the right of Landlord to correct any items as billed
pursuant to the provisions hereof. Within 30 days of the date Landlord notifies
Tenant of the amount of Additional Rent owing, Tenant or its authorized agent
shall have the right to inspect the books of Landlord during the business hours
of Landlord at such location that Landlord may specify, for the purpose of
verifying such amount. Unless Tenant asserts specific errors within such 30
days, such notification by Landlord shall be deemed to be correct. No decrease
in Additional Rent shall reduce Tenant's liability hereunder below the amount of
Base Rent payable hereunder.
4.2(a) Utilities and Services. Landlord shall not be liable for any
interruption or failure whatsoever in utility services. Tenant shall
contract in its own name and pay for all charges for electricity, gas,
fuel, telephone, and any other services or utilities used in, servicing or
assessed against the Premises, unless otherwise herein expressly provided.
Additionally, and if the Building is master metered for water, sewer and
exterior lighting, Tenant agrees to pay to Landlord as Additional Rent
Tenant's Prorata Share of the cost of such utilities for the Building.
Additionally, and as containerized rubbish collection bins will be provided
to the Building, Tenant agrees to pay to Landlord as Additional Rent,
Tenant's Allocated Share of the service cost of such bins (unless Landlord,
exercising reasonable discretion, should determine that Tenant's actual use
thereof is greater than such Tenant's Allocated Share therefore, in which
case an equitable adjustment shall be made). Landlord may, however, require
Tenant to contract for his own rubbish collection, in the event Tenant's
needs for such containers
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constitute excessive demand on common containers. In such event, Tenant shall
contract with the same provider as the Center's common bins.
4.2(b) Insurance. Tenant shall pay to Landlord as Additional Rent Tenant's
Prorata Share (or, Tenant's Proportionate Share in the event there is more than
one Building in the Center) of any increase in the cost of the premium for the
fire and extended coverage insurance that Landlord maintains hereunder over the
premium paid by Landlord for the Base Year. Tenant shall pay any increase in the
cost of fire and extended coverage insurance caused by Tenant's use or
activities on or about the Premises.
4.2(c) Real Estate Taxes. Tenant shall pay to Landlord as Additional Rent
Tenant's Prorata Share (or, Tenant's Proportionate Share in the event there is
more than one Building in the Center) of any increases in Landlord's Real Estate
Taxes over Real Estate Taxes for the Base Year levied against the Center. "Real
Estate Taxes" shall mean: (a) all ad valorem Real Estate Taxes on the Center
(adjusted after protest or litigation, if any) for any part of the term of this
Lease, exclusive of penalties; (b) any taxes which shall be levied in lieu of
any such ad valorem Real Estate Taxes; (c) any special assessments for benefits
on or to the Center paid in annual installments by Landlord; (d) occupational
taxes or excise taxes levied on rentals derived from the operation of the
property or the privilege of leasing property; (e) any private subdivision
assessment made against the Center; and (f) the expense of protesting,
negotiating or contesting the amount or validity of any such taxes, charges or
assessments, such expense to be applicable to the period of the item contested,
protested or negotiated.
If the Lease Term shall end during a tax year ("tax year" shall mean the annual
period for which Real Estate Taxes are assessed and levied) of which only part
is included in the Lease Term, the amount of such Additional Rent shall be
prorated on a per diem basis and shall be paid on or before the last day of the
Lease Term. If the Lease Term ends in any tax year before the amount to be
payable by Tenant has been determined under the provisions of this Section, an
amount payable for the portion of the Lease Term during the tax year shall be
reasonably estimated by Landlord and the estimated amount shall be promptly paid
by Tenant. As soon as the amount properly payable by Tenant for the partial
period has finally been determined, the amount shall be adjusted between
Landlord and Tenant. Tenant shall be liable for all taxes levied against
personal property and trade fixtures placed by Tenant in the Premises.
4.2(d) HVAC Maintenance. Tenant shall pay to Landlord as Additional Rent
Tenant's Allocated Share of Landlord's cost and expense of the maintenance
service agreements to the heating, ventilating and air conditioning equipment
and controls servicing the Premises. Tenant shall pay all expenses incurred to
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repair the heating, ventilating and air conditioning equipment servicing the
Premises. *See Paragraph 4 of Lease Rider Number One.
4.2(e) Common Area Expenses. Tenant will pay to Landlord as Additional Rent
Tenant's Prorata Share (or, Tenant's Proportionate Share in the event there is
more than one Building in the Center) of the Common Area Operating Cost. *See
Paragraph 5 of Lease Rider Number One.
"Common Area Operating Cost" means the Landlord's total cost and expense
incurred in owning, operating, maintaining and repairing the Common Area,
including but without limitation by enumeration, costs for all electricity, gas,
water, sewer or fuel used in connection with the operation, maintenance and
repair of the Common Area; the amount paid for all electricity furnished to the
Common Area to light the parking lots or for any other purpose; the amount paid
for all labor and/or wages and other payments including costs to Landlord of
workmen's compensation and disability insurance, payroll taxes, welfare and
fringe benefits made to janitors, employees, contractors and subcontractors of
the Landlord involved in the operation and maintenance or the Common Area;
managerial, administrative and telephone expenses related to operation and
maintenance of the Common Area; the total charges of any independent contractors
employed in the care, operation, repair, maintenance, cleaning, snow removal,
salting and landscaping of the Common Area; the amount paid for all supplies,
tools, replacement parts of components, equipment and necessities which are
occasioned by everyday wear and tear of the Common Area; the amount paid for
premiums for all insurance required from time to time by Landlord or Landlord's
mortgagees; the costs of machinery and equipment purchased or leased by Landlord
to perform its Common Area maintenance obligations; and property management fees
not to exceed five percent (5%) of the gross income of the Center. To the extent
that Landlord elects to provide services which are not separately metered or
directly billed to the tenant, such as water, sewer and trash hauling, the costs
of such services shall be included in Common Area Operating Cost. Common Area
Operating Cost shall not, however, include interest on debt, capital retirement
of debt, depreciation, costs properly chargeable to the capital account, except
for capital expenditures which reduce other operating expenses or such capital
expenditures that are required by changes in any governmental law or regulation
in which case such expenditures, plus interest on the unamortized principal
investment at ten (10%) percent per annum, shall be amortized over the life of
the improvements, and such costs shall be directly chargeable by the Landlord to
Tenant in the Tenant's Prorata Share (or, Tenant's Proportionate Share in the
event there is more than one Building in the Center).
4.2(f) Rent on Sales Taxes. Tenant shall pay to Landlord as Additional Rent any
Sales or Rent Taxes, however named or designated, levied on any form of Rent or
Additional Rent.
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4.3 Late Payment. Tenant's failure to make any rental payment or other payment
required of Tenant hereunder within three (3) days of the due date therefor
shall automatically result in the imposition of a service charge for such late
payment in the amount of ten (10%) percent of such payment, without notice. *See
Paragraph 6 of Lease Rider Number One.
4.4 Security Deposit. Tenant herewith deposits with Landlord the Security
Deposit as security for the performance by Tenant of every covenant and
condition of this Lease. Said Security Deposit may be mingled with other funds
of Landlord and shall bear no interest. If Tenant shall default with respect to
any covenant or condition of this Lease, Landlord may apply the whole or any
part of such Security Deposit to the payment of any sum in default, including
Rent and Additional Rent, or any sum which Landlord may be required to spend by
reason of Tenant's default. This includes, but is not limited to, applying the
Security Deposit first to any restoration, relamping, repairs and/or cleanup
costs necessary over and above normal wear and tear of the vacated space. Should
Landlord so apply the Security Deposit or any portion thereof during the Lease
Term, Tenant shall promptly reimburse Landlord for same. It is understood that
the Security Deposit is not to be considered as the last month's rent. Should
Tenant comply with all of the covenants and conditions of this Lease, the
Security Deposit or any balance thereof shall be returned to Tenant within 30
days of the expiration of the Lease Term.
ARTICLE V. LANDLORD'S RIGHTS AND OBLIGATIONS.
5.1 Maintenance by Landlord. During the Lease Term, Landlord shall operate and
maintain the Common Area and shall keep and maintain the roof, exterior walls
(excluding doors, glass or plate glass), gutters and downspouts of the
Building/s in good condition and repair. Landlord shall be under no obligation
and shall not be liable for any failure to make repairs that are Landlord's
responsibility herein until and unless Tenant notifies Landlord in writing of
the necessity therefor, in which event Landlord shall have a reasonable time
thereafter to make such repairs. Landlord reserves the right to the exclusive
use of the roof and exterior walls of the Building/s which Landlord is so
obligated to maintain and repair. Landlord shall enter into a service contract
on the Building for the heating, ventilation and air conditioning equipment for
periodic inspection and service of such equipment, and Tenant shall reimburse
Landlord pursuant to the provisions hereof. If any portion of the Center which
Landlord is obligated to maintain or repair is damaged by the negligence of
Tenant, its agents, employees or invitees, then repairs necessitated by such
damage shall be paid for by Tenant. *See Paragraph 7 of Lease Rider Number One.
5.2 Mortgage and Transfer: Estoppel Certificates. Landlord shall have the right
to transfer, mortgage, pledge or otherwise encumber, assign and convey, in whole
or in part, the Center, the Building/s, this Lease, and all or any part of the
rights now or
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thereafter existing therein and all Rents and amounts payable to Landlord under
the provisions hereof. In the event of any such transfer or transfers, Landlord
herein named (and in case of any subsequent transfer, the then transferor) shall
be automatically freed and relieved from and after the date of such transfer of
all personal liability as respects the performance of any covenants or
agreements on the part of Landlord contained in this Lease thereafter to be
performed. Nothing herein contained shall limit or restrict any such rights, and
the rights of the Tenant under this Lease shall be subject and subordinate to
all instruments executed and to be executed in connection with the exercise of
any such rights, including, but not limited to, the lien of any mortgage, deed
of trust, or security agreement now or hereafter placed upon Landlord's interest
in the Premises. This paragraph shall be self-operative. However, Tenant
covenants and agrees to execute and deliver upon demand such further instruments
subordinating this Lease to the lien, of any such mortgage, deed of trust or
security agreement as shall be requested by Landlord and/or mortgagee or
proposed mortgagee or holder of any security agreement and hereby irrevocably
appoints Landlord as its agent and attorney-in-fact to execute and deliver any
such instrument for and in the name of Tenant. Tenant shall, within ten (10)
days after written request of Landlord, execute, acknowledge, and deliver to
Landlord or to Landlord's mortgagee, proposed mortgagee, Land Lessor or proposed
purchaser of the Center or any part thereof, any estoppel certificates requested
by Landlord from time to time, which estoppel certificates shall show whether
the lease is in full force and effect and whether any changes may have been made
to the original lease; whether the term of the lease has commenced and full
rental is accruing; whether there are any defaults by Landlord and, if so, the
nature of such defaults; whether possession has been assumed and all
improvements to be provided by Landlord have been completed; and whether rent
has been paid more than thirty (30) days in advance and that there are no liens,
charges, or offsets against rental due or to become due and that the address
shown on such estoppel is accurate.
5.3 Landlord's Inability to Perform. If, by reason of: inability to obtain and
utilize labor, materials or supplies; circumstances directly or indirectly the
results of a state of war or national or local emergency; any laws, rules,
orders, regulations or requirements of any governmental authority now or
hereafter in force; strikes or riots; accident in, damage to or the making of
repairs, replacements, or improvements to, the Premises or any of the equipment
thereof; or by reason of any other cause beyond the reasonable control of the
Landlord including "Acts of God," Landlord shall be unable to perform or shall
be delayed in the performance of any covenant to supply any service, such
nonperformance or delay in performance shall not render Landlord liable in any
respect for damages to either person or property, constitute a total or partial
eviction, constructive or otherwise, work an abatement of rent or relieve Tenant
from the fulfillment of any covenant or agreement contained in this Lease.
5.4 Rights of Landlord. Landlord may enter upon the Premises for the purpose of
exercising any or all of the rights hereby reserved without being deemed guilty
of an
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eviction or disturbance of Tenant's use or possession and without being liable
in any manner to Tenant. The reservation of these rights by Landlord shall not
render Landlord liable for not performing any of the matters specified herein.
5.4(a) Name of Center. To change the name of the Building/s or the Center
without notice or liability of the Landlord to Tenant;
5.4(b) Redecorate. During the last ninety (90) days of the Lease Term or any
renewal or extension thereof, if during or prior to that time the Tenant has
vacated the Premises, to decorate, remodel, repair, alter or otherwise prepare
the Premises for reoccupancy; *See Paragraph 8 of Lease Rider Number One.
5.4(c) Re-Lease. To exhibit the Premises to others and to display "For Lease"
signs on the Premises during the last one hundred eighty (180) days of the Lease
Term or any renewal or extension thereof;
5.4(d) Vehicles. To remove abandoned or unlicensed vehicles and vehicles that
are unreasonably interfering with the use of the parking lot by others, and to
charge the responsible tenant for the expense of removing said vehicles;
5.4(e) Preservation of Center. To take any and all measures, including making
inspection, repairs, alterations, additions and improvements to the Premises or
to the Center as may be necessary or desirable for the safety, protection or
preservation of the Premises or the Center or the Landlord's interests, or as
may be necessary or desirable in the operation of the Premises or the Center.
ARTICLE VI. TENANT'S RIGHTS AND OBLIGATIONS.
6.1 Acceptance of Premises. Landlord will complete the Premises in accordance
with Exhibit C, if attached hereto. Tenant acknowledges that it will examine the
Premises before taking possession hereunder. Unless Tenant furnishes Landlord
with a notice in writing specifying any defect in the construction or condition
of the Premises within ten (10) days after taking possession, such taking of
possession shall be conclusive evidence as against Tenant that at the time
thereof the Premises were in good order and satisfactory condition.
6.2 Alterations and Additions. Tenant shall not make any alterations,
improvements, or additions to the Premises without the prior written consent and
approval of plans therefor by Landlord. Alterations, improvements or additions
made by either of the parties upon the Premises, except moveable furniture and
equipment placed in the Premises at the expense of Tenant, shall be the property
of Landlord and shall remain upon and be surrendered with the Premises as a part
thereof at the termination of this Lease, without disturbance, molestation,
injury or damage unless Landlord elects to require Tenant to remove such
alterations or improvements from the Premises at the
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expiration of this Lease. In the event damage shall be caused by moving said
furniture and equipment in or out of the Premises, said damage shall be repaired
at the cost of Tenant. *See Paragraph 9 of Lease Rider Number One.
6.3 Assignment and Subletting. Tenant shall not assign or hypothecate this Lease
or sublet all or any part of the Premises without the prior written consent of
Landlord. If Tenant wishes to assign or sublet the Premises, it shall give
notice in writing (by certified mail or by personal delivery) of such intention
to Landlord and, thereupon, Landlord shall, within thirty (30) days of receipt
of such notice, have the right to unilaterally terminate this Lease or to
approve said subletting by written notice to Tenant. If no notice is given by
Landlord, Landlord will be deemed to have elected to approve the assignment or
subletting. If the assignment or subletting is approved and rents under the
sublease are greater than the rents provided for herein, then Landlord shall
have the further option either (a) to convert the sublease into a prime Lease
and receive all of the rents, in which case Tenant will be relieved of further
liability hereunder and under the proposed sublease, or (b) to require Tenant to
remain liable under this Lease, in which event Tenant shall be entitled to
retain such excess rents. If the assignment or subletting is approved and rents
under the sublease are less than the rents provided for herein, Tenant shall
remain liable under all the covenants and conditions of this Lease. Landlord may
withhold its consent to any proposed assignee or subtenant which in Landlord's
judgment (a) would conflict with the tenancy, use or business of any other
tenant or the tenant mix of the Center, (b) has a net worth and/or credit
history inferior to that of Tenant, or (c) is currently a tenant or negotiating
for space in the Center.
6.4 Locks. No additional locks or similar devices shall be attached to any door
or window without Landlord's prior written consent. No keys for any door other
than those provided by the Landlord shall be made. If more than two keys for one
lock are desired, the Landlord will provide the same upon payment by the Tenant.
All keys must be returned to the Landlord at the expiration or termination of
the lease. *See Paragraph 10 of Lease Rider Number One.
6.5 Maintenance by Tenant. Tenant shall be responsible for all maintenance and
repair to the Premises of whatsoever kind or nature that is not herein set forth
specifically as the obligation of Landlord. Tenant shall take good care of the
Premises and fixtures, and keep them in good repair free from filth,
overloading, danger of fire or any pest or nuisance, repair any damage or
breakage done by Tenant or Tenant's agents, employees or invitees, including
damage done to the Building/s by Tenant's equipment or installations. Tenant
shall be responsible for the repair and replacement of all glass and plate glass
on the Premises. In the event Tenant fails to maintain the Premises as provided
for herein Landlord shall have the right, but not the obligation, to perform
such maintenance as is required of Tenant in which event Tenant shall reimburse
Landlord for its costs in providing such maintenance or repairs together with a
ten (10%) percent charge for Landlord's overhead and Tenant shall promptly
reimburse Landlord for the amount so billed to Tenant by Landlord.
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6.6 Mechanic's Liens. Tenant will not permit any mechanic's liens, or other
liens, to be placed upon the Premises, the Building/s or the Center during the
Lease Term or any extension or renewal thereof, and in case of the filing of any
such lien, Tenant will promptly pay same. Tenant agrees to pay all legal fees
that might be incurred by Landlord because of any mechanic's liens being placed
upon the Premises, as a result of Tenant's actions.
6.7 Redelivery of Premises. No later than the last day of the Lease Term, Tenant
will remove all Tenant's personal property and repair all injury done by or in
connection with installation or removal of such property and surrender the
Premises broom clean (together with all keys to the Premises) in as good a
condition as they were in at the beginning of the Lease Term, reasonable wear
and tear excepted.
6.8 Signs and Advertisements. Tenant shall not put upon nor permit to be put
upon any part or the Premises, the Building/s or the Center, any signs,
billboards or advertisements whatever in any location or any form without the
prior written consent of Landlord. A charge of $50.00 per day per sign,
billboard or advertisement will be assessed against Tenant if Tenant fails to
obtain the written consent of Landlord prior to placing any such signs.
6.9 Use of Common Areas. Tenant shall not use any part of the Center exterior to
the Premises for outside storage. No trash, crates, pallets, or refuse shall be
permitted anywhere on the Center outside of the Building/s by Tenant except in
enclosed metal containers to be located as directed by Landlord. Tenant shall
not park any trucks or trailers, loaded or empty, except in front of the loading
areas.
6.10 Use of Premises. The Premises hereby leased shall be used by the Tenant
only for the Permitted Use of the Premises and for no other purposes. Tenant
shall, at Tenant's expense, comply promptly with all applicable statutes,
ordinances, rules, regulations, orders and requirements in effect during the
term or any part of the term hereof regulating the use by Tenant of the
Premises. Tenant shall not use or permit the use of the Premises in any manner
that will tend to create waste or a nuisance, or will tend to unreasonably
disturb such other tenants in the Center. Tenant, its employees and all persons
visiting or doing business with the Tenant in the Premises shall be bound by and
shall observe the Rules and Regulations attached to this Lease, as Exhibit A,
and such further and other reasonable rules and regulations made hereafter by
the Landlord relating to the Center or the Premises of which notice in writing
shall be given to the Tenant and all such rules and regulations shall be deemed
to be incorporated into and form a part of this Lease.
6.11 Hazardous Substances. Tenant shall not cause or permit to be released
(whether by way of uncapping, pouring, spilling, spraying, spreading, attaching,
or otherwise) into or onto the Premises, or the Building/s, or the Center, or
the Common Areas (including
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the ground and ground water thereunder and the sewer and drainage systems
therein) any hazardous substances (as defined or established from time to time
by applicable local, state or federal law). Tenant shall immediately notify
Landlord if any such release occurs, and, as to any such release that has been
caused or permitted by Tenant: (I) Tenant shall immediately and entirely remove
such released hazardous substance, and in a manner fully in compliance with all
laws pertaining to the removal and storage or deposit thereof; and (11) Tenant
hereby agrees to hold Landlord harmless of and from any liability, public or
private, resulting to Landlord as a result of such release. Further, Tenant
shall, upon Landlord's demand and at Tenant's sole expense, demonstrate to
Landlord (through such tests, professional inspections, sampling or otherwise as
is, in Landlord's sole judgment, sufficient for the purpose) that Tenant has not
caused or permitted any such release of hazardous substances.
ARTICLE VII. INSURANCE.
7.1 Liability Insurance. Tenant covenants and agrees to maintain on the Premises
at all times during the Lease Term, or any extension or renewal thereof, a
policy or policies of comprehensive public liability and property damage
insurance with not less than $1,000,000.00 combined single limit for both bodily
injury and property damage.
7.2 Fire and Extended Coverage Insurance. Landlord shall, throughout the Lease
Term, or any extension or renewal thereof, maintain fire and extended coverage
(FEC) insurance on the property owned by Landlord located on the Center in such
amounts and with such deductibles as Landlord shall determine. Landlord shall
not in any way or manner insure any property of Tenant or any property that may
be in the Premises not owned by Landlord. Tenant shall comply with all insurance
regulations so that the lowest fire, lightning, explosion, extended coverage and
liability insurance rates may be obtained; and nothing shall be done or kept in
or on the Premises by Tenant which will cause an increase in the premium for any
such insurance on the Premises or on any Building/s of which the Premises are a
part or on any contents located therein, over the rate usually obtained for the
proper use of the Premises permitted by this Lease or which will cause
cancellation of any such insurance.
7.3 Indemnification of Landlord. Tenant shall indemnify Landlord and save
Landlord harmless from and against any and all loss (including loss of rentals
payable by Tenant or other tenants) and against all claims, actions, damages,
liability and expenses in connection with loss of life, bodily and, personal
injury or damage to property arising from any occurrence in, upon or at the
Premises or any part thereof, or occasioned wholly or in part by any act or
omission of Tenant, or by anyone permitted to be on the Premises by Tenant.
Tenant assumes all risk of and Landlord shall not be liable for injury to person
or damage to property resulting from the conditions of the Premises or from the
bursting or leaking of any and all pipes, utility lines, connections, or air
conditioning or heating equipment in, on or about the Premises, or from water,
rain or snow which may leak into, issue or flow from any part of the Building/s.
Tenant
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agrees, at all times, to indemnify and hold Landlord harmless against all
actions, claims, demands, costs, damages or expenses of any kind which may be
brought or made against Landlord or which Landlord may pay or incur by reason of
Tenant's occupancy of the Premises or its negligent performance of or failure to
perform any of its obligations under this Lease. In case Landlord shall, without
fault on its part, be made a party to any litigation commenced by or against
Tenant, then Tenant shall protect and hold Landlord harmless and shall pay all
costs, expenses and reasonable attorney's fees incurred or paid by Landlord in
connection with such litigation. *See Paragraph 11 of Lease Rider Number One.
ARTICLE VIII. EMINENT DOMAIN AND DAMAGE OR DESTRUCTION.
8.1 Eminent Domain. In the event that title to the whole or a substantial part
of the Premises shall be lawfully condemned or taken in any manner for any
public or quasi-public use, this lease and the term and estate hereby granted
shall forthwith cease and terminate as of the date of vesting of title and
Landlord shall be entitled to receive the entire award, Tenant hereby assigning
to Landlord the Tenant's interest therein, if any. However, nothing herein shall
be deemed to give Landlord any interest in or to require Tenant to assign to
Landlord any award made to Tenant for the taking of personal property or
fixtures belonging to Tenant or for the interruption of or damage to Tenant's
business or for Tenant's moving expenses. A sale to a public or quasi-public
authority under threat of condemnation shall constitute a taking by eminent
domain.
In the event that title to a part of the building/s other than the Premises
shall be so condemned or taken, Landlord may terminate this lease and the term
and estate hereby granted by notifying Tenant of such termination within sixty
(60) days following the date of vesting of title, and this lease and the term
and estate hereby granted shall expire on the date specified in the notice of
termination, not less than sixty (60) days after the giving of such notice, as
fully and completely as if such date were the date herein set for the expiration
of the Lease Term, and the Rent hereunder shall be apportioned as of such date.
In the event of any condemnation or taking of any portion of the parking area of
the Center, which does not result in a reduction of the parking area by more
than twenty percent (20%) the terms of this lease shall continue in full force
and effect. If more than twenty percent (20%) of the parking area is taken,
either party shall have the right to terminate this lease upon giving written
notice to the other party within thirty (30) days of such taking.
8.2 Damage or Destruction. If the Premises, the Building/s or the Center or any
part thereof is damaged by fire or other casualty, cause or condition whatsoever
and Landlord shall determine not to restore said Premises, Building/s or Center,
Landlord may, by written notice to Tenant given within sixty (60) days after
such damage, terminate this Lease. Such termination shall become effective as of
the date of the damage. If this Lease is not terminated as above provided and if
the Premises are made partially or wholly untenantable, Landlord, at its
expense, shall restore the same with
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reasonable promptness to the condition in which Landlord furnished the Premises
to Tenant at the commencement of the Lease Term as to those items that were
provided to the Premises at Landlord's expense without any reimbursement by
Tenant. Landlord shall be under no obligation to restore any alteration,
improvements or additions to the Premises made by Tenant or paid for by Tenant,
including, but not limited to, any of the initial tenant finish done or paid for
by Tenant or any subsequent changes, alterations or additions made by Tenant or
reimbursed by Tenant. *See Paragraph 12 of Lease Rider Number One.
If, as a result of fire or other casualty, cause or condition whatsoever the
Premises are made partially or wholly untenantable and, if Landlord has not
given the sixty (60) day notice above provided for and fails within one hundred
twenty (120) days after such damage occurs to eliminate substantial interference
with Tenant's use of said Premises or substantially to restore said Premises,
Tenant may terminate this Lease after the end of said one hundred twenty (120)
days, effective as of the date such damage occurs, by notice to Landlord given
not later than ten (10) days after expiration of said one hundred twenty (120)
day period. If the Premises are rendered totally untenantable but this Lease is
not terminated, all rent shall abate from the date of the fire or other relevant
cause or condition until the Premises are ready for occupancy and reasonably
accessible to Tenant. If a portion of the Premises is untenantable, rent shall
be prorated on a per diem basis and apportioned in accordance with the portion
of the Premises which is usable by the Tenant until the damaged part is ready
for the Tenant's occupancy. In all cases, due allowance shall be made for
reasonable delay caused by adjustment of insurance loss, strikes, labor
difficulties or any cause beyond Landlord's reasonable control. For the purposes
of this Lease, said Premises shall be considered tenantable so long as and to
the extent that the Premises are occupied. In any event, Tenant shall be
responsible for the removal, or restoration, when applicable, of all its damaged
property and debris from the Premises, upon request by Landlord or else Tenant
must reimburse Landlord for the cost of removal.
ARTICLE IX. DEFAULT AND REMEDIES.
9.1 Events of Default. The occurrence of any one or more of the following events
shall constitute a Default and a material breach of this Lease by Tenant:
9.1(a) Nonpayment. Failure of Tenant to pay any installment of Rent or other
sum payable to Landlord hereunder on the date that same is due and such
failure shall continue for a period of five (5) days; or *See Paragraph 13
of Lease Rider Number One.
9.1(b) Noncompliance. Failure of Tenant to comply with any term, condition
or covenant of this Lease, other than the payment of Rent or other sum of
money, and such failure shall not be cured within ten (10) days after
written notice thereof has been delivered by Landlord to Tenant; or
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<PAGE> 18
9.1(c) Insolvency or Transfer. Insolvency, the making of a transfer in fraud
of creditors or the making of an assignment for the benefit of creditors by
Tenant or any guarantor of Tenant's obligation; or
9.1(d) Bankruptcy. The filing by or against Tenant or any guarantor of
Tenant's obligations hereunder of a petition in bankruptcy or for
liquidation, or adjudication as a bankrupt or insolvent in proceedings filed
by or against Tenant or such guarantor; or
9.1(e) Receiver. Appointment of receiver or trustee for all or substantially
all of the assets of Tenant or any guarantor of Tenant's obligations
hereunder; or
9.1(f) Abandonment. Abandonment by Tenant of any substantial portion of the
Premises or cessation of use of the Premises for the purpose leased. *See
Paragraph 14 of Lease Rider Number One.
9.2 Remedies. In the event of the occurrence of any Default, Landlord shall have
the right, without further notice to or demand upon Tenant and without being
liable to Tenant for any damages or to any prosecution therefor, to do any and
all of the following:
9.2(a) Repossession and Sale. Re-enter and take exclusive possession of the
Premises with or without force or legal process, refuse to allow Tenant to
enter the same or have possession thereof, change the locks on the doors to
the Premises, take possession of any furniture or fixtures or other property
in or upon the Premises (Tenant hereby waiving the benefit of all exemptions
by law), sell the same at public or private sale without notice and apply
the proceeds thereof to the costs of sale, payment of damages and payment of
all sums owing under this Lease; and/or
9.2(b) Releasing. Relet the Premises as agent of Tenant for the balance of
the term of this Lease or for a shorter or longer term and receive the rents
therefor, applying them first to the payment of the expense of such
reletting and, second, to the payment of damages suffered to the Premises,
and third to all sums due and to become due under this Lease, Tenant
remaining liable for and hereby agreeing to pay Landlord any deficiency;
and/or
9.2(c) Cancellation. Cancel and terminate the remaining term of this Lease,
and re-enter and take possession of the Premises free of this Lease.
Thereafter this Lease shall be null and void and the Rent in such case shall
be apportioned and paid on and up to the date of such entry. Thereafter both
parties shall be released and relieved from and of any and all obligations
thereafter to accrue hereunder.
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Tenant shall be liable for all loss and damage resulting from such breach or
default; and/or
9.2(d) Anticipatory Breach. Treat such default as an anticipatory breach of this
Lease and, as liquidated damages for such default, be entitled to the
difference, if any, between the sum which, at the time of such termination for
anticipatory breach represents the then present worth (computed at ten percent
(10%) per year) of the excess aggregate rents and additional rents payable
hereunder that would have accrued over the balance of the Lease Term (including
renewals) had such term not been prematurely terminated, over the aggregate
market rental value of the Premises over the term (including renewals) that the
Lease would have run had it not been prematurely terminated; and/or
9.2(e) Attorney's Fees. Recover from Tenant, Landlord's attorney's fees incurred
in enforcing its rights hereunder.
9.3 Remedies Cumulative. All rights and remedies expressly provided in this
Lease for Landlord's protection shall be cumulative as to each other and of any
other rights and remedies provided hereunder or by law.
9.4 No Waiver. A waiver by Landlord of a breach or default by Tenant under the
terms and conditions of this Lease shall not be construed to be a waiver of any
subsequent breach or default or of any other or the same term or condition of
this Lease,: and the failure of Landlord to assert any breach or to declare a
default by Tenant shall not be construed to constitute a waiver thereof so long
as such breach or default continues unremedied.
ARTICLE X. MISCELLANEOUS.
10.1 Bankruptcy or Assignment to Trustee. Neither this Lease nor any interest
therein nor any estate hereby created shall pass to any trustee or receiver in
bankruptcy or to any other receiver or assignee for the benefit of creditors or
otherwise by operation of law during the term of this Lease or any renewal
thereof.
10.2 Brokers. Except as may be expressly set forth to the contrary in the Rider,
each party represents to the other that no person, firm, corporation, or other
entity is entitled to any brokerage commission or finder's fee on account of the
execution, delivery, and consummation of this Lease. Tenant hereby agrees to
indemnify Landlord and to hold Landlord free and harmless of and from any and
all claims, losses, damages, costs and expenses of whatsoever nature, including
attorneys' fees and costs of litigation arising from or relating to any
brokerage commissions or finder's fees incurred by Tenant in connection with
this Lease. *See Paragraph 15 of Lease Rider Number One.
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10.3 Captions. The captions used throughout this Lease are for convenience and
reference only and shall in no way be held to explain, modify, amplify, or aid
in the interpretation, construction or meaning of any provisions in this Lease.
10.4 Certificates of Occupancy. Tenant may, prior to the commencement of the
Lease Term, apply for a certificate of occupancy to be issued by the
municipality in which the Premises are located, but this Lease shall not be
contingent on issuance thereof.
10.5 Entire Agreement. This Lease including its Exhibits and Rider, if any,
contains the entire agreement between the parties and no modification of this
Lease shall be binding upon the parties unless evidenced by an agreement in
writing signed by Landlord and Tenant after the date hereof.
10.6 Joint and Several Liability of Multiple Tenants. If there be more than one
Tenant named herein, the provisions of this Lease shall be applicable to and
binding upon such Tenants jointly and severally.
10.7 Notices. Except as otherwise herein provided, whenever by the terms of this
Lease notice shall or may be given either to Landlord or, to Tenant, such notice
shall be in writing and shall be deemed to have been properly delivered if sent
by certified mail, return receipt requested, postage prepaid, to Landlord at
Landlord's Address and to Tenant at the Premises, or to such other place as
Landlord or Tenant may designate in writing. The date of mailing shall be deemed
the date of delivery.
10.8 Partial Invalidity. If any term, covenant, condition or provision of this
Lease or the application thereof to any person or circumstances shall, to any
extent be invalid, unenforceable or violate a party's legal rights, then such
term, covenant, condition or provision shall be deemed to be null and void and
unenforceable. however, all other provisions of this Lease, or the application
of such term or provision to persons or circumstances other than those which are
held invalid, unenforceable or violative of legal rights, shall not be affected
thereby. and each and every other term, condition, covenant and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
10.9 Recording. This Lease shall not be recorded by either party without the
written consent of the other.
10.10 Successors. The agreements' covenants and conditions of this Lease shall
be binding upon and inure to the benefit of the heirs, legal representatives,
successors and assigns of each of the parties hereto, except that no assignment,
encumbrance or subletting by Tenant unless permitted by the provisions of this
Lease, without the written consent of Landlord shall vest any right in the
assignee, encumbrance or sublessee of Tenant.
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10.11 Use of the Singular; Gender. The terms "Landlord" and "Tenant," and
pronouns representing the same, wherever used herein shall include the plural as
well as the singular, the feminine as well as the masculine.
10.12 Rider. A Rider consisting of 3 pages, with paragraphs numbered 1 through
20 consecutively, is attached hereto and made a part hereof.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
hereinabove stated.
LANDLORD:
GENERAL AMERICAN LIFE INSURANCE
COMPANY, a Missouri Corporation
By: /s/ Robert B. St. Ayr
--------------------------------------
TENANT:
MKS INSTRUMENTS, INC.
By: /s/ Robert F. O'Brien
--------------------------------------
Robert T. O'Brien, Treasurer
By:_______________________________________
By:_______________________________________
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EXHIBIT A
RULES AND REGULATIONS
1. Signs. Tenant shall not inscribe any inscription or post, place, or in any
manner display any sign, notice, picture, placard or advertising matter
whatsoever anywhere in or about Premises at places visible (either directly
or indirectly as an outline or shadow on a glass pane) from anywhere
outside of the Premises or from public and common areas within Premises
without first obtaining Landlord's written consent thereto and Landlord
shall specify the color, size, style and material to be used. *See
Paragraph 19 of Lease Rider Number One.
2. Showcases. No showcase shall be placed in front of or in the lobbies or
corridors of the Premises and Landlord reserves the right to remove all
showcases so placed and all signs other than those above provided for,
without notice and at the expense of the tenant responsible. See Paragraph
19 of Lease Rider Number One.
3. Installation of Signs. All exterior and interior signs must be installed by
Landlord or someone designated by Landlord and the actual cost thereof
shall be paid by Tenant and all such signs are so placed at the risk of
Tenant.
4. Telephone Connections. If Tenant desires telegraphic, cable television, or
telephone connections, Landlord will direct electricians where the wires
are to be introduced and without such direction no boring or cutting for
wires shall be permitted.
5. Submission of Plans. Tenant shall submit to Landlord for Landlord's
approval, a copy of its construction and equipment layout plan prior to
commencement of construction. In the event that Tenant is unable to obtain
Landlord's approval for said plans and layout, this Lease shall at Tenant's
sole option be deemed null and void and any amounts paid by Tenant to
Landlord pursuant to this lease shall be reimbursed to Tenant without
offset. *See Paragraph 19 of Lease Rider Number One.
6. No Nuisances. Tenant shall not do or permit anything to be done in the
Premises which will be dangerous to life, or limb, or which will tend to
create a nuisance or injure the reputation of the Building/s. Tenant shall
not use burning fluid, camphine, alcohol, kerosene, or anything else in
order to light or heat the Premises except steam, gas or electricity.
Tenant shall not bring into the Premises or keep therein any heating or
lighting apparatus other than that provided by Landlord; or install any air
conditioning or air cooling apparatus without the written consent of
Landlord; or in any way injure, modify, or tamper with any of such
apparatus in any manner or in any manner in violation of the regulations of
the
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Fire Department, or with any insurance policy upon said Buildings or any
part thereof. Tenant shall not do or permit to be done in the Premises any
activity in conflict with any of the laws, rules or regulations of any
governmental agency or municipality having jurisdiction, or use the
Premises for an illegal or immoral purpose. No beer, wine or intoxicating
liquor shall be sold on or about the Premises without the written consent
of Landlord in each instance.
7. Passageways. The sidewalk, passages, lobbies, corridors, elevators and
stairways shall not be obstructed by Tenant; or used except for ingress and
egress from and to the Premises. The doors, skylights, windows and transoms
that reflect or admit light into passageways or into any place in said
Buildings, shall not be covered or obstructed by Tenant.
8. Water Closets. The water closets and other apparatus shall not be used for
any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. Any
damage resulting to them from misuse shall be borne by the tenant who shall
cause it.
9. No Defacing or Offensive Business. Tenant and its employees and guests are
not to injure or deface the Buildings nor the woodwork, nor the walls of
the Premises, nor to carry on upon the premises any noisome, noxious, noisy
or offensive business nor conduct an auction therein, nor interfere in any
way with other tenants or those having business with them.
10. No Lodging. No room or rooms on or about the Premises shall be occupied or
used as sleeping or lodging apartments.
11. Lock all Doors. Tenant shall, when leaving Premises at close of business,
or unoccupied at any time, lock all doors and windows and for any default
or carelessness in this respect shall make good all injury sustained by
other tenants and by Landlord or by either of them, for damages resulting
from such default or carelessness.
12. No Animals. No animal or bird shall be allowed in any part of the Premises
or Buildings without the consent of Landlord.
13. No Accumulation of Rubbish. Tenant shall not accumulate or store on or
about the Premises any waste paper, discarded records, paper files,
sweepings, rags, rubbish or other combustible matter other than the normal
accumulation needed to conduct the Permitted Use of the Premises. Nothing
shall be thrown by Tenant, its employees or guests, out of the windows or
doors or down the passages or skylights or over balcony rails of the
Buildings or in the parking areas.
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14. Exclusion of Peace Disturbers. Landlord reserves the right to exclude from
the Premises or Buildings all drunken persons, idlers, diseased persons,
peddlers, solicitors, persons of a general character or conduct so as to
create a disturbance, and persons entering in crowds or in such unusual
numbers as to cause inconvenience to tenants of the Buildings.
15. Changes to Rules. Landlord reserves the right to change these rules and to
make such other and further reasonable rules and regulations either as it
affects one or all tenants as in its judgment may from time to time be
needed for the safety, care and cleanliness of the Center, for the
preservation of good order therein or for any other cause. When such
changes are made such modified or new rules shall be deemed a part hereof
with the same effect as if written herein, when a copy shall have been
delivered to Tenant or left with some person in charge of the Premises.
16. No Live Christmas Trees. No live or fresh cut Christmas Trees are permitted
on or about the Premises.
17. No Picnics. No outside picnics or barbecue's are permitted without the
prior written consent of Landlord.
18. No Outside Storage. No outside storage of any material is permitted.
19. Smoking Policy. Though Landlord encourages no smoking at the property
within the leased premises, beginning July 1, 1995 forward, Tenant,
Tenant's employees and agents's outdoor smoking shall be limited to behind
the building in which Tenant occupies space. Tenant shall be responsible
for maintaining the area and Landlord shall bill Tenant directly for any
needed clean-up costs resulting from any smoking debris which litters the
property. Violations of the smoking area rules will be handled by Landlord
and/or the City of Richardson. *See Paragraph 19 of Lease Rider Number One.
Tenant, Tenant's employees and Tenant's customers shall not congregate in
front of buildings except areas in front of Tenant's leased premises.
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LEASE RIDER
NUMBER ONE
BY AND BETWEEN
GENERAL AMERICAN LIFE INSURANCE COMPANY
AND
MKS INSTRUMENTS, INC.
1. 1.3 Base Rent.
Years 1 - 3 $5,485.13 per month
2. 1.4 Base Year. - Delete the sentence and replace with "The base year for
this lease agreement is 1994".
3. 3.3 Holding Over. - On line 4 change "double Rent" to "monthly rent
equivalent to one hundred twenty-five percent (125%) of the Base
Rent".
4. 4.2(d) HVAC Maintenance. - Delete this paragraph and replace with the
following: "Tenant shall be responsible for maintaining the
heating/ventilation/air-conditioning systems throughout the term of
the Lease. Upon termination of the Lease Agreement, Tenant shall
deliver the equipment back to Landlord in the same condition as it
was received, reasonable wear and tear accepted."
5. 4.2(e) Common Area Expenses. - At the end of the first paragraph add the
following: "Additional rent due from this paragraph is estimated to
be $597.27 per month. Tenant shall deposit an additional $597.27 per
month during the term of the lease. At the end of each calendar
year, if Tenant has deposited an excess amount, Landlord will credit
any overage. If at the end of any calendar year Tenant has not
deposited their pro rata portion in full, Tenant will be billed for
any deficit."
6. 4.3 Late Payment. - On line 2 change "three (3)" to "ten (10)".
7. 5.1 Maintenance by Landlord. - On line one, top of page six, after the
word "roof", insert "except as herein provided".
On line two, top of page six, after the word "repair.", delete the
following: "Landlord shall enter into a service contract on the
Building for the Heating, ventilation and air conditioning equipment
for periodic inspection
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and service of such equipment and Tenant shall reimburse Landlord
pursuant to the provisions hereof."
8. 5.4(b) Redecorate. - Strike entire paragraph.
9. 6.2 Alterations and Additions. - On line 2 after "Premises" add "except
as herein provided".
10. 6.4 Locks. - Strike entire paragraph.
11. 7.3 Indemnification of Landlord. - On line 2, after "loss", delete
"(including loss of rentals payable by Tenant or other tenants)".
On line 7, before "Premises" add "demised".
On line 9, before "property" add "personal" and before "Premises"
add "demised".
On line 13, after "Building/s" add ", unless such damage or injury
is a direct result of Landlord's gross negligence, willful act or
failure to act".
On line 16, delete "its" and replace with "Tenant's".
At the end of the paragraph, add the following: "Notwithstanding
anything contained in this Paragraph 7.3 to the contrary, Tenant
shall not indemnify and hold Landlord harmless from any losses,
claims, actions, damages, liabilities or expenses that are caused by
or arise out of Landlord's gross negligence, willful acts or failure
to act, or that is caused by conditions in the Demised Premises or
the Building that has not been caused by Tenant and that Landlord
has the obligation and duty to maintain, repair or replace."
12. 8.2 Damage or Destruction. - On line five of the first paragraph delete
"sixty (60)" add "thirty (30)".
Make the following changes in the second paragraph: On line 3,
delete "sixty (60)" add "thirty (30)"; on line 4, delete "one
hundred twenty (120)" add "ninety (90)"; on line 7, delete "one
hundred twenty (120)" add "ninety (90)"; and on line 9, delete "one
hundred twenty (120)" add "ninety (90)".
13. 9.1(a) Nonpayment. - On line 4, delete "five (5) days' add "ten (10) days
after written notice from Landlord".
14. 9.1(f) Abandonment. - Delete this paragraph.
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15. 10.2 Brokers. - Delete this paragraph and add "Each party represents
that Firman Cook of Firman Cook, REALTORS(R) and Bill Bexley of
Fults Companies/ONCOR International, are entitled to a
brokerage commission on account of the execution, delivery and
consummation of this Lease."
16. Tenant shall be responsible for causing the demised premises to
at all times be in compliance with the terms of the Americans
with Disabilities Act of 1990 (the "ADA"), including, without
limitation of any improvements, additions or alterations to the
demised premises. Furthermore, Tenant shall at all times
operate the demised premises and its business thereon in a
manner which causes the demised premises to comply with ADA.
Landlord hereby reserves the right to hereafter modify, from
time to time, policies, practices, rules and procedures
applicable to the demised premises, to the extent necessary to
comply with the ADA.
17. Waiver of Subrogation. - Each party hereto waives any and every
claim which arises or may arise in its favor and against the
other party hereto during the term of this Lease or any renewal
or extension thereof for any and all loss of, or damage to, any
of its property located within or upon, or constituting a part
of, the Premises leased to Tenant hereunder, which loss or
damage is covered by valid and collectible fire and extended
coverage recoverable under said insurance policies. Such mutual
waivers shall be in addition to, and not in limitation or
derogation of, any other waiver or release contained in this
Lease with respect to any loss of, or damage to, property of
the parties hereto. Inasmuch as the above mutual waivers will
preclude the assignment of any aforesaid claim by way of
subrogation (or otherwise) to an insurance company (or to any
other person), each party hereby agrees immediately to give to
each insurance company which has issued to it policies of fire
and extended coverage insurance, written notice of the terms of
said mutual waivers, and to have said insurance policies
properly endorsed, if necessary, to prevent the invalidation of
said insurance coverages by reasons of said waivers.
18. Parking. - Parking for Tenant's customers, employees, and
agents shall be limited to directly in front of the Premises.
Overflow parking shall be limited to the open parking area
between the 777 Grove Road and 783 Grove Road buildings and the
north end of the 783 Grove Road building (See Exhibit "B"). Any
violation of this parking limitation shall allow Landlord to
have such vehicle towed with no recourse to Landlord.
EXHIBIT A:
19. 1. Signs. - On line 1 between "not" and "inscribe", insert
"except as herein permitted".
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2. Showcases. - On Line 1, delete "in front of or in the lobbies
or corridors of the Premises" add "outside of the confines of
the demised Premises".
5. Submission of Plans. - At the end of this paragraph add the
following: "If the plans are not approved by Landlord within
three (3) business days after submission by Tenant to Landlord,
said plans shall automatically be deemed to be approved by
Landlord."
19. Smoking Policy. - Outdoor smoking breaks shall be in accordance
with Rules and Regulations Item No. 19.
20. Tenant's security deposit in the amount of $3,117 for lease
dated August 10, 1989 for 789 Grove Rd #111, Richardson, Texas
shall be transferred to this new lease.
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EXHIBIT 10.14
REVOLVING CREDIT NOTE
$8,000,000 Boston, Massachusetts
February 23, 1996
FOR VALUE RECEIVED, MKS INSTRUMENTS, INC., a Massachusetts corporation
having its principal place of business located in Andover, Massachusetts (the
"Borrower"), hereby promises to pay to the order of CHEMICAL BANK (the
"Lender"), in its individual capacity, at the office of THE FIRST NATIONAL BANK
OF BOSTON, as agent for the Lender (the "Agent"), located at 100 Federal Street,
Boston, Massachusetts (or at such other place or places as the Agent may
designate in writing) at the times set forth in the Loan Agreement dated as of
February 23, 1996 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized
terms not otherwise defined herein shall have the respective meanings set forth
in the Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of EIGHT MILLION DOLLARS
($8,000,000) or, if less than such principal amount, the aggregate unpaid
principal amount of all Advances made by the Lender to the Borrower pursuant to
the Agreement, on the Revolver Termination Date or such earlier date as may be
required pursuant to the terms of the Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates provided in the Agreement. All or any
portion of the principal amount of Advances may be prepaid as provided in the
Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest shall bear interest, which shall be payable on demand, at
the rate per annum set forth in Section 2.4.2 of the Agreement. Further, in the
event of such acceleration, this Revolving Credit Note shall become immediately
due and payable, without presentation, demand, protest or notice of any kind,
all of which are hereby waived by the Borrower.
In the event this Revolving Credit Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable attorneys'
fees, and interest thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
This Revolving Credit Note is one of the Revolving Credit Notes in the
aggregate principal amount of $20,000,000 referred to in the Agreement and is
issued
<PAGE> 2
pursuant to and entitled to the benefits of the Agreement to which reference is
hereby made for a more complete statement of the terms and conditions upon which
the Advances evidenced hereby were or are made and are to be repaid. This
Revolving Credit Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.
No delay or omission on the part of the Lender in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Lender, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. Every
maker, endorser and guarantor of this Revolving Credit Note or the obligations
represented hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Revolving Credit Note, assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note
to be made, executed and delivered by its duly authorized representative under
seal as of the date and year first above written.
MKS INSTRUMENTS, INC.
WITNESS:
/s/ Richard S. Chute By: /s/ Robert F. O'Brien
- -------------------------- -------------------------------
- -------------------------- Name: Robert F. O'Brien
-----------------------------
Title: Treasurer
----------------------------
-2-
<PAGE> 1
EXHIBIT 10.15
REVOLVING CREDIT NOTE
$12,000,000 Boston, Massachusetts
February 23, 1996
FOR VALUE RECEIVED, MKS INSTRUMENTS, INC., a Massachusetts corporation
having its principal place of business located in Andover, Massachusetts (the
"Borrower"), hereby promises to pay to the order of THE FIRST NATIONAL BANK OF
BOSTON (the "Lender"), in its individual capacity, at the office of THE FIRST
NATIONAL BANK OF BOSTON, as agent for the Lender (the "Agent"), located at 100
Federal Street, Boston, Massachusetts (or at such other place or places as the
Agent may designate in writing) at the times set forth in the Loan Agreement
dated as of February 23, 1996 among the Borrower, the financial institutions
party thereto (collectively, the "Lenders") and the Agent (the "Agreement" --
all capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Agreement), in lawful money of the United States of
America, in immediately available funds, the principal amount of TWELVE MILLION
DOLLARS ($12,000,000) or, if less than such principal amount, the aggregate
unpaid principal amount of all Advances made by the Lender to the Borrower
pursuant to the Agreement, on the Revolver Termination Date or such earlier date
as may be required pursuant to the terms of the Agreement, and to pay interest
from the date hereof on the unpaid principal amount hereof, in like money, at
said office, on the dates and at the rates provided in the Agreement. All or any
portion of the principal amount of Advances may be prepaid as provided in the
Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest shall bear interest, which shall be payable on demand, at
the rate per annum set forth in Section 2.4.2 of the Agreement. Further, in the
event of such acceleration, this Revolving Credit Note shall become immediately
due and payable, without presentation, demand, protest or notice of any kind,
all of which are hereby waived by the Borrower.
In the event this Revolving Credit Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable attorneys'
fees, and interest thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
This Revolving Credit Note is one of the Revolving Credit Notes in the
aggregate principal amount of $20,000,000 referred to in the Agreement and is
issued pursuant to and entitled to the benefits of the Agreement to which
reference is
<PAGE> 2
hereby made for a more complete statement of the terms and conditions upon which
the Advances evidenced hereby were or are made and are to be repaid. This
Revolving Credit Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.
No delay or omission on the part of the Lender in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Lender, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. Every
maker, endorser and guarantor of this Revolving Credit Note or the obligations
represented hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Revolving Credit Note, assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note
to be made, executed and delivered by its duly authorized representative under
seal as of the date and year first above written.
MKS INSTRUMENTS, INC.
WITNESS:
/s/ Richard S. Chute By: /s/ Robert F. O'Brien
- -------------------------- -------------------------------
- -------------------------- Name: Robert F. O'Brien
-----------------------------
Title: Treasurer
----------------------------
-2-
<PAGE> 1
EXHIBIT 10.16
PROMISSORY NOTE
$475,000.00 August ___, 1990
Denver, Colorado
FOR VALUE RECEIVED, the undersigned, M.K.S. Instruments, Inc., a
Massachusetts Corporation, hereinafter collectively referred to as "Maker,"
whose address is 6 Shattuck Road, Andover, Massachusetts 01810, promises to pay
to the order of Jefferson National Life Insurance Company, an Indiana
corporation and/or Its Assigns (hereinafter referred to as "Holder," which term
shall include any subsequent holder of this Note), at its office at One Virginia
Ave., Indianapolis, Indiana 46204-3655 (or at such other place as Holder shall
designate in writing) in lawful money of the United States of America, the
principal sum of FOUR HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS
($475,000.00), with interest thereon from the date hereof as hereinafter set
forth.
1. General Definitions. As used herein the following terms shall have
the indicated meanings (definitions appear in alphabetical order and defined
terms used within definitions are defined in the appropriate alphabetical place
in this Paragraph 1):
(a) Deed Of Trust: The Deed of Trust dated of even date
herewith, from M.K.S. Instruments Inc., a Massachusetts corporation, as Grantor,
to the Public Trustee of the County of Boulder, Colorado, as Trustee, for the
use and benefit of Holder, as Beneficiary, encumbering the Property and securing
this Note.
(b) Default Rate: The interest rate equal to eighteen percent
(18%) per annum.
(c) Maturity Date: September 1, 2000, unless such maturity
date is sooner accelerated upon the occurrence of an event of default hereunder
or under any of the other Loan Documents.
(d) Interest Rate: The interest rate shall be fixed at the
rate of ten and three quarters percent (10.75%) per annum during the entire ten
(10) year term of the loan.
(e) Loan Documents: Collectively, this Note, the Deed of Trust
and all other documents and instruments executed by or on behalf of Maker, or
either of them, evidencing, securing or relating to the loan evidenced by this
Note, as the same may be amended from time to time.
(f) Loan Term: The period of time commencing on the date
hereof and terminating on the Maturity Date.
<PAGE> 2
(g) Outstanding Principal Balance: The principal amounts from
time to time outstanding under this Note during the Loan Term.
(h)Property: The Real Estate together with all fixtures,
equipment and machinery now or hereafter owned by Grantor and actually or
constructively attached to the subject property, all present and future leases
and rents in respect thereof, and as otherwise included in the definition of
"Property" in the Deed of Trust, but not including any business assets of any
tenant or of the Maker.
(i) Real Estate: The real property located in the County of
Boulder, State of Colorado, encumbered by the Deed of Trust and more
particularly described therein.
2. Terms of Loan.
(a) Interest Rate: Commencing on the date hereof and
continuing until the Maturity Date, interest shall accrue on the Outstanding
Principal Balance at a rate per annum equal to the Interest Rate.
(b) Installments of Principal and Interest: Commencing on
October 1, 1990, and continuing thereafter on the first day of each calendar
month thereafter through August 1, 2000, Maker shall make equal monthly
installments of principal and interest (based on a 20 year amortization) on the
amount of Four Thousand Eight Hundred Twenty-Three and no/100 dollars
($4,823.00). On the Maturity Date of September 1, 2000, Maker shall pay Holder
all remaining sums of principal and interest and other sums due under the
Promissory Note and Deed of Trust. If not otherwise accelerated, the Note shall
be due and payable in full on September 1, 2000.
(c) Payment -- Maturity: If not sooner paid in accordance with
the terms of this Note, the entire Outstanding Principal Balance, plus any
accrued but unpaid interest thereon and all the sums due hereunder, shall be due
and payable, in full, on the Maturity Date.
(d) Prepayment: Upon thirty (30) days' notice, the loan may be
prepaid in full during the first five (5) years of the loan term at a prepayment
charge equalling ten and three-quarters percent (10.75%) of the principal
balance. Commencing with the sixth (6th) year of the loan term, the entire loan
can be prepaid at a charge of fifty percent (50%) of the then interest rate
being charged on the Note. (For example, if the loan balance is $400,000.00, and
the Borrower wishes to prepay in full during the sixth year of the loan term, a
prepayment of the $400,000.00 would result in a prepayment penalty of 50% of
10.75% multiplied by $400,000.00 or $21,500.00). Thereafter , the prepayment
penalty rate will be forty percent (40%) of the interest rate during the seventh
(7th) year of the loan term; thirty percent (30%) of
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<PAGE> 3
the interest rate during the eighth (8th) year of the loan term; twenty percent
(20%) of the interest rate during the ninth (9th) year of the loan term; and,
ten percent (10%) of the interest rate during the tenth year of the loan term.
Any prepayment penalty charge shall also apply if the Holder accelerates payment
following a default or any involuntary prepayment with the exception of a full
or partial condemnation.
(e) Application of Payments: All payments on this Note shall
be made in immediately available funds received in Holder's office on the date
due. During the Loan Term, all payments on this Note shall be applied first to
the repayment of any sums advanced by Holder for the payment of taxes,
assessments, insurance premiums, late charges or other charges against the
Property (together with interest thereon from the date of advance until paid at
the Default Rate), then to the payment of accrued and unpaid interest on the
Outstanding Principal Balance and then to the reduction of the Outstanding
Principal Balance.
3. Other Terms and Conditions.
(a) Default Rate: Upon the declaration of default by Holder
and written notice to Make, then and in such event the entire Outstanding
Principal Balance shall bear interest at the Default Rate from the date of
default until the default is cured, or, if the default is not cured, then until
the outstanding Principal Balance, accrued interest, attorney's fees and costs
are paid in full. In the event of Maker's failure to pay the Outstanding
Principal Balance, together with any accrued but unpaid interest thereon and all
other sums due hereunder upon the maturity hereof (by acceleration or
otherwise), same shall bear interest at the Default Rate from the date due until
the default is cured and if the default is not cured, then until the outstanding
Principal Balance, accrued interest, attorney's fees and costs are paid in full.
(b) Late Charge: In the event that Maker fails to pay any
installment due hereunder or any portion thereof within ten (10) days after the
due date thereof, Maker agrees to pay a late charge equal to five percent (5%)
of the overdue amount. Maker acknowledges that it would be extremely difficult
or impracticable to determine Holder's actual damages resulting from any late
payment and this late charge is a reasonable estimate of those damages.
(c) Default: Time is of the essence hereof. Upon the
occurrence of any of the following events of default, the payment of all
principal, interest and any other sums due in accordance with the terms of this
Note shall, at the option of Holder, be accelerated and such principal, interest
and other sums shall be immediately due and payable upon demand of Holder by
written notice to Maker, wherein Maker shall have a ten (10) day period from
receipt of written notice of default to cure any monetary default, and Holder
shall have the option to foreclose or to require foreclosure of any or all liens
securing the payment hereof:
-3-
<PAGE> 4
(1) Default in the payment within ten (10) days after
receipt of written notice of default of any monthly installment due hereunder,
or any part thereof, or failure to pay the entire Outstanding Principal Balance,
together with any accrued but unpaid interest thereon and all other sums due
hereunder upon the maturity hereof (whether by acceleration or otherwise);
(2) Breach or violation by Maker of any other
agreement or covenant contained herein unless cured within twenty (20) days
after receipt of written notice thereof from Holder to Maker;
(3) Default by Maker under the Deed of Trust or under
any of the other Loan Documents (unless cured within any applicable grace
period).
(d) Character of the Loan: Maker certifies that the loan
evidenced by this Note is obtained for business or commercial purposes and that
the proceeds thereof will not be used primarily for personal, family, household
or agricultural purposes. It is expressly understood that this Note is
non-revolving and, therefore, that the total disbursements made to or for the
benefit of Maker in accordance with the provisions of this Note shall not, in
the aggregate, exceed $475,000.00.
(e) Security: The payment and performance of this Note is
secured in part by the Deed of Trust.
(f) Corporate Liability: Holder shall have full recourse
against Maker, and Maker shall be liable for payment of any and all sums
evidenced hereby and/or secured by the Deed of Trust and/or the other Loan
Documents, and for the performance of all of the covenants, duties and
obligations arising under this Note, the Deed of Trust and the other Loan
Documents.
(g) Governing Law: As an additional consideration for the
extension of credit, each maker, endorser, cosigner and guarantor of this Note
understands and agrees that the loan evidenced by this Note is made in the State
of Colorado and the provisions hereof will be construed in accordance with the
laws of the State of Colorado; and such parties further agree that in the event
of default, this Note may be enforced in any court of competent jurisdiction in
the State of Colorado, and they do hereby submit to the jurisdiction of such
court regardless of their residence or where this Note or any endorsement hereof
may be executed.
(h) Remedies Cumulative; Waiver: The remedies of Holder, as
provided herein or in any of the other Loan Documents, shall be cumulative and
concurrent, and may be pursued singularly, successively or together, at the sole
discretion of Holder, and may be exercised as often as occasion therefor shall
arise. No act of omission or commission of Holder, including specifically any
failure to exercise any right, remedy or recourse shall be deemed to be a waiver
or release of
-4-
<PAGE> 5
the same; such waiver or release to be affected only through a written document
executed by Holder and then only to the extent specifically recited therein. A
waiver or release with reference to any one event shall not be construed as
continuing, as a bar to, or as a waiver or release of, any subsequent right,
remedy or recourse as to a subsequent event.
(i) Notice: Any notice, request, demand or other communication
required or permitted hereunder or required by law shall be in writing and shall
be effective upon delivery of the same in person to the intended addressee, or 1
day after deposit of the same with a responsible overnight courier service (such
as Federal Express) for delivery to the intended addressee or 3 days after
deposit of the same in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, sent to the intended addressee at the
address shown on the first page of this Note, or to such different address as
the intended addressee shall have designated by written notice sent in
accordance herewith and actually received by the other party at least ten (10)
days in advance of the date upon which such change of address shall be
effective.
(j) Miscellaneous Provisions:
(1) Every maker, endorser, cosigner and guarantor of
this Note expressly grants to Holder the right to release or to agree not to sue
any other person, or to suspend the right to enforce this Note against such
other person or to otherwise discharge such person; and each such maker,
endorser, cosigner and guarantor agrees that the exercise of such rights by
Holder will have no effect on the liability of any other person, primarily or
secondarily liable hereunder. Each maker, endorser, cosigner and guarantor of
this Note waives demand for payment, presentment for payment, protest, notice of
protest, notice of dishonor, notice of nonpayment, notice of acceleration of
maturity, diligence in taking any action to collect sums owing hereunder and all
duty or obligation of Holder to effect, protect, perfect, retain or enforce any
security for the payment of this Note or to proceed against any collateral
before otherwise enforcing this Note.
(2) This Note and each payment of principal and
interest hereunder shall be paid when due without deduction or setoff of any
kind or nature or for any costs whatsoever.
(3) Maker agrees to reimburse Holder for all costs,
including, without limitation, attorneys' fees, incurred to collect this Note if
this Note is not paid when due. Maker agrees that Holder may from time to time
extend the maturity of this Note or the time any payment is due under this Note
and may accept further security or release security for the payment of this
Note, without in any way affecting any obligations of Maker to Holder.
-5-
<PAGE> 6
(4) Maker hereby expressly warrants and represents
that there is not as of the date hereof any contract, agreement or
understanding, written or oral, between Maker and any person or entity
whatsoever which in any manner limits or affects the liability of Maker
hereunder, nor shall Maker enter into any such contract, agreement or
understanding prior to the payment in full of the principal indebtedness
evidenced by this Note.
(5) If any provision hereof or of any of the other
Loan Documents is, for any reason and to any extent, invalid or unenforceable,
then neither the remainder of the document in which such provision is contained,
nor the application of the provision to other persons, entities or
circumstances, nor any other document referred to herein, shall be affected
thereby, but instead shall be enforceable to the maximum extent permitted by
law.
(6) This Note shall be a joint and several obligation
of each Maker and of all endorsers, cosigners and guarantors hereof and shall be
binding upon them and, subject to the restriction with respect to assumption of
this Note referenced herein, their heirs, representatives, successors and
assigns.
(7) All fees, charges or other sums paid by Maker to
Holder, whether pursuant to the terms of this Note or otherwise, with respect to
the loan evidenced by this Note or with respect to the Deed of Trust or any of
the other Loan Documents which, under the laws of the State of Colorado, may be
deemed to be in the nature of interest, shall, for the purpose of any law of the
State of Colorado which may limit the maximum rate of interest to be charged
with respect to the loan evidenced by this Note, be payable by Maker as and
shall be deemed to be additional interest and, for such purposes only, the
agreed upon and contracted rate of interest as calculated above shall be deemed
to be increased to reflect the payment of such fees, charges and other sums as
interest, which rate of interest Maker hereby agrees to pay.
(8) This Note may not be terminated or amended
orally, but only by a termination or amendment in writing signed by Holder and
Maker.
(9) When the context and construction so require, all
words used in the singular herein shall be deemed to have been used in the
plural and the masculine shall include the feminine and neuter and vice versa.
The word "person" as used herein shall include any individual, company, firm,
association, partnership, corporation, trust or other legal entity of any kind
whatsoever.
(10) The headings of the paragraphs and sections of
this Note are for convenience of reference only, are not to be considered a part
hereof and shall not limit or otherwise affect any of the terms hereof.
-6-
<PAGE> 7
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the
day and year first above written.
MAKER: M.K.S. Instruments Inc.,
a Massachusetts Corp.
By: /s/ Robert F. O'Brien
------------------------------
Robert F. O'Brien, Treasurer
STATE OF )
) SS.
COUNTY OF )
The foregoing instrument was acknowledged before me, in the County of
________________, State of ___________________, this ____________ day of
________________, 1990, by Robert F. O'Brien, Treasurer, of M.K.S. Instruments
Inc., a Massachusetts Corp.
WITNESS my hand and official seal.
My commission expires:
___________________________________
Notary Public
-7-
<PAGE> 1
EXHIBIT 10.17
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
COMPREHENSIVE SUPPLIER AGREEMENT #982812
This Agreement dated October 23,1998 is by and between Applied Materials, Inc.,
("Applied"), a Delaware corporation, having its place of business in Santa
Clara, California and Austin, Texas and MKS Instruments, (MKS), a Massachusetts
corporation, having its place of business in Andover, Massachusetts.
The parties agree as follows:
Definitions
The following capitalized terms will have the following meanings:
A. "Applied" means Applied Materials, Inc., including all of its domestic
and international divisions and subsidiaries.
B. MKS means MKS Instruments, including all of its divisions and
subsidiaries (except HPS).
C "Item" or "items" means the good(s) or service(s) that MKS is to
provide to Applied wider this Agreement, including all Applied Materials
purchase orders and related agreements that are governed by this CSA, as
specified from time to time by Applied and set forth in Attachment 1 and any
amendments to Attachment 1.
D. "Applied's Standard Terms and Conditions of Purchase" means the terms
and conditions contained in Exhibit 1 to this Agreement.
E. "Additional Provisions" means all requirements contained in this
Comprehensive Supplier Agreement.
F. "Agreement" means this Comprehensive Supplier Agreement and/or the
Applied's Purchase Order, and other Exhibits or Attachments to the Comprehensive
Supplier Agreement and/or Purchase Order together with any Nondisclosure
Agreement defined below as "NDA".
G. "Comprehensive Supplier Agreement" means the Comprehensive Supplier
Agreement No.982812, including Exhibit 1, the Applied Terms and Conditions of
Purchase.
H. "NDA" means any and all Nondisclosure Agreement(s) between Applied and
MKS and any specific Nondisclosure Agreement that may be attached to this
Agreement.
I. "Will" or "shall" have the same meaning and are used to convey an
affirmative duty or obligation (i.e., a requirement).
J. "Release," or "release" means individual purchase orders, spot buys,
pick cards or other orders for items issued by Applied to MKS under this
Agreement
K. "Proprietary Information" means the Proprietary Information, as that
term is defined by the NDA, of Applied.
L. "Confidential Information" means the Confidential Information, as that
term is defined by the NDA, of Applied.
<PAGE> 2
1. SCOPE
1.1 INTENTION/DESCRIPTION OF COMPREHENSIVE SUPPLIER AGREEMENT PRINCIPLES
This Comprehensive Supplier Agreement ("CSA") serves as a tool to
manage the items Applied purchases from MKS as well as sub-assemblies
MKS processes for Applied. Attachment 1 lists the items covered by this
Agreement. Any modifications to this document will include a current
list of the items covered by this CSA.
This Agreement defines the relationship and requirements between
Applied and MKS to ensure a consistent supply of material that meets
Applied's specifications. Decisions regarding future purchases from MKS
will be based upon MKS' performance under this CSA as stated in Section
6, and their achievement toward Applied's business objectives, e.g.
Hoshin goals.
1.2 MKS DETAILS
MKS Instruments Account Manager: John Kranik
Six Shattuck Road Sales Manager: Jeff Peters:
Andover. MA 01810 Customer Service Representative: Barbara Guthrie
Phone: (978)975-2350 Engineering Manager: Joe Maher
Fax: (978)975-0093
1.3 ENTIRE AGREEMENT
This CSA, including the Applied Standard Terms and Conditions of
Purchase (Exhibit 1) and any other Exhibits or Attachments which are
incorporated by reference into this CSA, together with any NDA sets
forth the entire understanding and agreement of the parties as to the
subject matter of this CSA and supersedes all prior agreements,
understandings, negotiations and discussions between the parties as to
the subject matter. No amendment to or modification of this CSA will be
binding unless in writing and signed by a duly authorized
representative of both parties. In the event of any conflict between
the terms of the CSA and the terms of the Exhibits and Attachments, the
order of precedence shall be given first to the CSA, followed by the
Applied Standard Terms and Conditions of Purchase, drawings,
specifications or other technical documents.
The following lists all of the Exhibits and Attachments referenced in
this agreement:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Exhibit/Attachment Revision Release Date
- --------------------------------------------------------------------------------
<S> <C> <C>
Exhibit 1 no revision 10/23/98
- --------------------------------------------------------------------------------
Attachment 1 A 10/23/98
- --------------------------------------------------------------------------------
Attachment 2 no revision 10/15/97
- --------------------------------------------------------------------------------
Attachment 3 no revision
- --------------------------------------------------------------------------------
Attachment 4 no revision any example -
will be in contract
- --------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE> 3
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Exhibit/Attachment Revision Release Date
- --------------------------------------------------------------------------------
<S> <C> <C>
Attachment 5 A 4/27/98
- --------------------------------------------------------------------------------
Attachment 6 K 6/15/98
- --------------------------------------------------------------------------------
Attachment 7 no revision
- --------------------------------------------------------------------------------
Attachment 8 n/a
- --------------------------------------------------------------------------------
Attachment 9 n/a
- --------------------------------------------------------------------------------
Attachment 10 no revision
- --------------------------------------------------------------------------------
Attachment 11 no revision
- --------------------------------------------------------------------------------
Attachment 12 no revision
- --------------------------------------------------------------------------------
Attachment 13 no revision
- --------------------------------------------------------------------------------
Attachment 14 n/a
- --------------------------------------------------------------------------------
Attachment 15 n/a
- --------------------------------------------------------------------------------
Attachment 16 no revision
- --------------------------------------------------------------------------------
Attachment 17 no revision 8/27/98
- --------------------------------------------------------------------------------
</TABLE>
1.4 ITEMS COVERED
In general, all Items supplied to Applied by MKS will be covered by
this agreement. The list of Items covered by this CSA is shown in
Attachment 1. New Items may be added to Attachment 1 upon mutual
agreement between Applied and MKS. Items may be removed by Applied from
Attachment 1 from time to time in accordance with this Agreement. MKS
may recommend or Applied may implement removal for the following
reasons without limitations:
a. Specification changes that MKS is unable to comply with
b. Quality or delivery default
c. Obsolete Items
d. Outsourcing of the parent assembly
1.5 DURATION OF AGREEMENT
This Agreement commences on and as of the date of the latter of the two
signatures shown in Section 9, Effective Date, when each party has
executed and delivered one or more counterparts of this CSA to the
other (the "Effective Date") and will remain in effect through October
23, 2000 (the "Initial Term"). Provided that MKS has complied with all
contract requirements and
-3-
<PAGE> 4
specifically those requirements identified in section 6.0 (Performance
Management), both parties may mutually agree to expand the term of the
agreement up to 24 months from the conclusion of the initial term. Any
extension of this agreement will be subject to all terms and conditions
of this agreement.
1.6 RESPONSIBILITIES
1.6.1 Applied Responsibilities
Applied agrees to:
- Provide demand signals to MKS as defined in section 2.5.1;
- Provide updated twenty-six week rolling forecasts to MKS;
- Measure inventory levels and scoring compliance to
days-of-supply metric as stated in Section 6;
- Receive and inspect Items from MKS and measuring quality for
quality metric as stated in Section 6;
- Notify MKS of any discrepancies;
- Provide suggestions on how MKS can improve its operation of
this agreement;
- Make recommendations as to how MKS might reduce costs and
improve the quality of Items purchased from MKS;
- Respond to any of MKS' inquiries;
- Identity, in conjunction with MKS, possible solutions to
resolve any exceptions that might arise;
- Write and record action plans to resolve exceptions;
- Provide MKS with MKS performance reports;
- Meet with MKS quarterly to review its performance;
1.6.2 MKS Responsibilities
MKS agrees to fully perform all requirements of this Agreement MKS
obligations include but are not limited to:
- Produce high quality and high reliability Items;
- Deliver Items on time to Applied;
- Respond in a timely manner to any of Applied's inquiries and
requests;
- Continuously improve MKS' operations to better serve Applied's
needs and support Applied's business objectives, e.g. Hoshin
goals;
- Work with Applied to improve operation of this agreement;
- Work with Applied to reduce costs and improve the quality for
all Items MKS produces for Applied;
- Review regularly the updated forecasts to adjust MKS operation
for changes in Applied's plans;
- Work with Applied to resolve any exceptions that may arise;
- Complete any tasks assigned to resolve exceptions on time;
- Meet with Applied quarterly to review performance;
- Monitor and report to Applied the finished goods inventory
levels of the Items listed in Attachment 1 of this Agreement.
2. LOGISTICS FRAMEWORK
2.1 OPERATION OF CSA
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2.1.1 Operating calendar & holidays
This CSA operates by Applied fiscal year calendar, shown in Attachment
2. Recognized holidays are those holidays shown on Applied fiscal year
calendar. Should any discrepancies between the operating calendars of
Applied and MKS arise, MKS must make provisions so that Applied's
operations are unaffected.
2.1.2 Flowchart of day to day operations (Reserved)
2.1.3 Forecasts
MKS' production of Items will be guided by Applied's most current 26
week rolling forecast, as provided by Applied to MKS on a weekly basis
("Applied's Forecast"). MKS will plan, manufacture, and stock inventory
to meet Applied's forecast. MKS will keep each of Applied's forecasts
for audit purposes for a minimum of six (6) months and may be asked to
present this document for verification of authorized inventory levels.
Applied's forecast is Proprietary Information to be used only by MKS to
meet its obligations to Applied under this Agreement.
2.1.4 Releases
Applied may require a part or Items on an accelerated basis, either in
addition to or in place of Items forecast for release or scheduled for
delivery at a later date. If feasible, as determined by Applied and
MKS, such Items will be provided by MKS to meet Applied's requirements.
Unless otherwise agreed to by Applied, such accelerated deliveries will
not affect the delivery schedule of any Items currently allocated for
forecast requirements. Lead times for each accelerated release will be
agreed upon by both parties. If MKS and Applied are unable to agree on
delivery schedule or other terms affecting Items for accelerated
delivery, Applied shall have the right to purchase or procure affected
Items from other persons, without obligation to MKS.
2.1.5 Delivery Guidelines
2.1.5.1 General Delivery
MKS will exercise all efforts to meet Applied's delivery
requirements on time. Shipments to Applied by MKS will be
delivered in the right quantities ordered by Applied.
For part orders issued via a separate purchase order form
("Spot Buy"), deliveries will be accepted on the requested
date or up to 2 days before the requested date. For Spot Buy
purchases for spares, deliveries will be accepted on the
requested date or up to two days before the requested date.
2.1.6 Replenishment Approach
MKS will be expected to supply Items using one or more of the following
replenishment approaches:
- Bus Route
- Spot Buy
The replenishment methodology to be used for a particular Items are
defined on Attachment 1. Specific delivery mechanics are outlined on
Attachment 3.
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<PAGE> 6
2.1.7 Electronic Commerce
MKS is required to communicate with Applied using EDI ANSI X.l2
standards and encouraged to use either GElS or EDICT software.
2.1.8 Changes to Logistics
Applied may on occasion change any aspect of any logistics requirement.
Applied will expect MKS to accommodate these changes to the best of its
ability. MKS will be given at least three weeks notification prior to
the change being implemented. Applied will then consider all claims for
pricing adjustment due to the change in the logistics framework if made
within the three week notification period.
2.2 SERVICE LEVELS
2.2.1 Inventory Levels
MKS, if involved in supporting lean manufacturing, is expected to have
Finished Goods Inventory ("FGI") of the Items on Attachment 1 in order
to manage demand fluctuations. MKS will maintain a minimum FGI of 4
weeks and a maximum of 6 weeks of each Item, for each Item identified
in Attachment 1 as requiring FGI, to meet Applied's needs based on the
most recent rolling forecast (see Attachment 4 for example of
forecast). After MKS exhibits ability to decrease cycle times, both
parties will agree to lower FGI requirements.
MKS may present a claim for "non-purchase" for payment of inventory
manufactured in response to a valid Applied purchase order, or an
authorized demand signal, as explained in Section 2.5.1, if Applied has
not taken delivery of the FGI within 6 months from date of manufacture.
This claim must be made within thirty (30) days from the end of the 6
months time frame. Applied is not responsible for payment to MKS for
FGI built without a valid Applied purchase order, an authorized demand
signal (as explained in Section 2.5.1), or Applied's Forecast (as
explained in Section 2.1.3).
Applied will not hold any financial responsibility for FGI consisting
of "off-the-shelf" Items that MKS is able to sell to other customers.
2.2.1.1 WIP Tracking
MKS is expected to monitor, track, and report their Work-In-Process
("WIP") inventory (dollars). In the future, Applied will implement
regular reporting mechanisms which MKS will be expected to participate
in.
2.2.1.2 Excess and Obsolete Items
Applied will not be responsible for excess and obsolete parts other
than to the amounts specified above in Section 2.2.1, and in any event
MKS must make all efforts to mitigate claims for "non- purchase".
In the event that MKS desires to submit a claim for reimbursement of
costs associated with obsolete Applied unique build-to-print parts, MKS
shall submit its claim to Applied's authorized purchasing
representative within 90 days from the date Applied designated the part
as obsolete. MKS' claim proposal shall be submitted in accordance with
Section 26, Termination for Convenience, of Applied's Standard Terms
and Conditions of Purchase.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
MKS agrees to physically dispose of the excess and obsolete parts as
directed by Applied's authorized purchasing representative. Parts that
are to be delivered to Applied's facilities must be delivered in
accordance with the requirements of this Agreement and/or any
supplemental instructions provided by Applied's authorized purchasing
representative. With regard to Applied unique build-to-print parts, in
lieu of delivery to Applied, Applied may elect to request MKS to
destroy or otherwise scrap these parts such that these parts are
non-functional MKS agrees to destroy or otherwise scrap these parts in
a manner that is satisfactory to Applied and to provide Applied with a
certification of destruction and/or evidence that the parts have been
properly disposed of.
2.2.2 Response Requirements
Responses to the following types of inquiries are expected within the
time periods in the tables below.
2.2.2.1 MKS Response Time
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Inquiry Type MKS Response Time MKS Contact
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Lead-time 1 business day Master Planner
- ----------------------------------------------------------------------------------------------
Technical 1 business day Manufacturing Engineer
- ----------------------------------------------------------------------------------------------
Quotations 1 business day Customer Service Representative
- ----------------------------------------------------------------------------------------------
Quality 1 business day Quality Engineer
- ----------------------------------------------------------------------------------------------
Price/invoice 1 business day Customer Service Representative
- ----------------------------------------------------------------------------------------------
Component failure & field safety 3 hours Quality Engineer
- ----------------------------------------------------------------------------------------------
Product Problems 1 business day Account Manager
- ----------------------------------------------------------------------------------------------
2.2.2.2 Applied Response Time
<CAPTION>
- ----------------------------------------------------------------------------------------------
Inquiry Type MKS Response Time MKS Contact
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Lead-time 1 business day MKS Account Team Lead/Member
- ----------------------------------------------------------------------------------------------
Technical 1 business day MKS Account Team Lead/Member
- ----------------------------------------------------------------------------------------------
Quality 1 business day MKS Account Team Lead/Member
- ----------------------------------------------------------------------------------------------
Price/invoice 1 business day MKS Account Team Lead/Member
- ----------------------------------------------------------------------------------------------
</TABLE>
2.2.3 Flexibility Requirements
MKS is expected to perform regular capacity planning and to demonstrate
reasonable upside/downside manufacturing flexibility in case of demand
volume changes at Applied. For Bus Route Items, MKS shall be capable of
manufacturing to unplanned sustained increases/decreases in demand
above/below Applied's forecast as defined below. For Spot Buy Items,
MKS allows the following increases/decreases to Purchase Order
Quantities above/below the quantities originally requested:
Weeks until Delivery Date [**] [**] [**] [**] [**]
Flexibility +/- [**] [**] [**] [**] [**]
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2.2.4 On-site support requirements
As determined by Applied, MKS may be asked to provide logistics,
quality engineering, and new product development support on-site at
Applied's facilities. At the appropriate juncture, Applied will require
MKS to execute the On-site Representative Agreement prior to issuing a
building badge to MKS' representatives.
2.2.5 Global Support
For the Items listed in Attachment 1, and all other Items that MKS
provides to Applied, MKS will provide support globally for Applied and
Applied's customers.
Technical assistance and product support services shall be provided at
no additional charge during normal business hours. MKS must have an
established and deployed global service capability. The required
support services must be available globally, however, MKS may utilize a
MKS distributor, or other -fled entity designated by MKS to meet this
requirement MKS is expected to use best efforts to provide a resolution
to requests for assistance.
2.2.6 Turn-around time for Repairs
MKS will supply Applied with repair Items under warranty within [**]
business days from receipt of product. The [**] day cycle is not
guaranteed if Applied ships repair Items in unreasonable batch sizes.
MKS will supply Applied with repair Items not under warranty within
[**] business days from receipt of product.
2.3 INFORMATION
2.3.1 Applied Planning Systems
MKS may be given electronic access to Applied's planning data. This
access, if granted, should only be used to facilitate production and
delivery of Items to support Applied's requirements. MKS' access to,
and utilization of, Applied's planning data is subject to the
confidentiality terms of this Agreement and any NDA.
2.3.3 Applied New Product Plans
MKS will on occasion and at Applied's discretion, be invited to forums
in which Applied's new product plans are shared. Any Applied new
product plans provided to MKS is subject to the confidentiality
provisions of this Agreement and any NDA.
2.4 PACKAGING AND TRANSPORTATION
2.4.1 Packaging and Shipment
MKS will have all Items packaged "ready for use" in accordance with
Applied's packaging specification (Attachment 6). MKS will mark and
identify every item in compliance with Applied's part identification
specifications and requirements (reference Attachment 6).
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<PAGE> 9
2.4.2 Bar Coding
All shipments should be bar coded to Applied's specifications
(Attachment 5).
2.4.3 Transportation Mode
Items will be transported, FOB Origin, Freight Collect in accordance
with Attachment A of Applied's Corporate Transportation Routing Guide
which is provided in Attachment 7.
2.5 PAYMENT
2.5.1 Demand Signal
BUS ROUTE
Each day by 10:00 a.m., Applied sends via EDI transmission an order
sheet to MS containing Applied's material requirements information.
This information is organized at the part-number level and represents
Applied's daily purchase from MKS. This EDI transmission constitutes an
authorized demand signal.
SPOT BUY
As needed, Applied sends via fax an order sheet to MKS containing
Applied's material requirements information. This information is
organized at the part number level and represents an Applied purchase
from MKS. This fax constitutes an authorized demand signal.
2.5.2 Invoices
Invoices shall contain the following information: purchase order
number, item number, description of goods, sizes, quantities, unit
prices, and extended totals in addition to any other information
requested. Applied's payment of invoice does not represent
unconditional acceptance of items and will be subject to adjustment for
errors, shortages, or defects. Applied may at any time set off any
amount owed by Applied to MKS against any amount owed by MKS or any of
its affiliated companies to Applied.
All invoices must be sent directly to Accounts Payable in Austin:
Accounts Payable
Applied Materials
9700 US Highway 290 East M/S 4500
Austin, TX 78724-1199
2.5.3 Cash Discounts
Payment will be made net thirty (30) days from receipt of:
a. invoice, in form and substance acceptable to Applied, or
b. delivery and acceptance of the invoiced Item(s), whichever is
later.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
If payment is made within ten (10) days of the later of either (a) or (b) above,
Applied may [**] from the invoice total as a prompt payment discount.
2.6 DISASTER RECOVERY PLAN
MKS is expected to develop and provide to Applied, upon request,
reasonable information describing (provide evidence of a disaster
recovery plan that includes emergency back up capacity and appropriate
record protection and recovery. Furthermore, MKS represents that its
information systems are year 2000 compatible and hereby grants Applied
the right to verity MKS' internal processes for ensuring compliance
with this provision. MKS agrees to include this same requirement in its
purchase orders to its supply base and to provide reasonable efforts to
verity its supply base is compliant with the requirements herein.
2.7 MANAGING EXCEPTIONS
2.7.1 Identifying constraints
MKS is responsible for anticipating inability to perform its
obligations and limitations on manufacturing, delivery and other
performance to meeting CSA objectives, informing Applied when those
constraints occur, and initiating action plans to resolve the
Constraints might typically include, but not be limited to:
a. Consumption over forecast
b. Consumption under forecast
c. Quality problems
d. Capacity/production problems
e. Secondary supplier supply-chain management problems
f. Other business issues
2.7.2 Process for Exceptions
Applied will work with MKS to determine the impact of an exception and
approve and execute or disapprove the action plans in accordance with
Section 24, Changes, of Applied's Standard Terms and Conditions of
Purchase. MKS will notify the MKS Account Team Lead as soon as
exceptions are identified.
3. QUALITY FRAMEWORK
3.1 SUPPLIER NON-CONFORMANCES AND CORRECTIVE ACTION
MKS' quality must meet all applicable Applied specifications as stated
elsewhere in the Agreement (including all technical specifications and
detailed drawings). MKS is required to replace or repair defective
Items at MKS' expense in a timely manner. MKS are required to use the
most expeditious manner possible to affect the corrections including
the use of overnight delivery
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<PAGE> 11
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
services for shipment of Items; at Applied's request, in certain
circumstances, MKS may be asked to provide new Items in lieu of
repairing a part to ensure immediate corrective action.
MKS will be notified of defects with a corrective action form,
Attachment 10, to which they are expected to respond appropriately. A
corrective action process to resolve non-conformances will be
documented and used. In addition, MKS will participate in continuous
improvement plans and programs as defined by Applied and MKS.
Should MKS fail to conform to the specifications established in this
Agreement, Applied may purchase comparable items in the open market as
necessary to meet its requirements. Applied may at its option charge
MKS with any reasonable cost differential between the contract price
and the price paid in the open market. This cost may include premium
costs for expedited delivery, administrative costs incurred to process
replacement purchase orders.
3.2 APPLIED NON-CONFORMANCES AND CORRECTIVE ACTION
Applied will return Items at Applied's expense that do not conform to
Applied's requirements due to Applied errors. These Items will be
returned for potential rework. Applied and MKS will agree in advance on
"standard" repair costs (labor, Items and freight) on items not covered
under warranty; the standard repair costs will be identified in the
Items list (Attachment 1B).
To the extent that a "standard" repair cost has not been established,
MKS will assess rework costs and timing and inform Applied before work
is performed. The parties agree that MKS will inform Applied if the
total price charged for repairing a part will exceed 40% of the current
purchase price stated in Attachment 1.
MKS agrees to repair and return all Items within [**] business days
from receipt of damaged Item. Applied shall have the right to designate
certain Items for "Same Day" or "24 Hour" repair turnaround. Any
premium charges for "Same Day" or "24 Hour" repair turnaround will not
exceed [**] per Item.
Prior to return of repaired items to Applied, MKS will mark Items with
Applied's part number, serial number, RMA number, purchase order
number, range and gas (ff applicable). Applied shall bear the risk of
loss or damage during transit of Items whether or not the Items meets
warranty requirements.
In addition, as stated below in the quality assurance section, a
corrective action process to resolve non-conformance(s) will be
documented and used.
3.3 QUALITY ASSURANCE
All Items purchased under this CSA will be subject to inspection and
test by Applied at appropriate time and place, including the period of
manufacture and anytime prior to final acceptance. If inspection or
test is made by Applied on MKS' premises, MKS will provide all
reasonable facilities and assistance for the safety and convenience of
Applied's inspectors at no charge to Applied. No preliminary inspection
or test shall constitute acceptance. Records of all inspection work
shall be kept complete and available to Applied during the performance
of this order and for such further period as Applied may determine.
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<PAGE> 12
Certificate of Conformance (COC): MKS agrees to certify that Items have
passed all production acceptance tests and configuration requirements
and provide a "Certificate of Conformance" (see Attachment 16) and a
Calibration Data Report that will be included with each product during
shipment.
With regard to repair services, MKS shall maintain documentation
evidencing that all test inspections have been performed. The
documentation shall indicate the nature and number of observations
made, the quantities approved and rejected as well as the nature of the
corrective action take MKS' service centers shall be responsible for
submitting this data for Applied's review of the delivery summaries.
The data shall be submitted monthly not later than five days after the
close of each of Applied's fiscal months to Applied's Contract
Specialist and Applied's IBSS Repairs Purchasing Group.
At Applied's request, MKS will provide a certificate and/or a copy of
the final inspection records showing compliance to applicable
specifications, contract requirements and any other required documents
stipulated in Applied's repair authorization. MKS also agrees to
provide Applied with copies of its current procedures relative to
repairs, range change and warranty repairs.
Through MKS' internal Quality Service organization, MKS will track and
maintain its internal manufacturing reject rate by percentage of
assemblies, and/or part per million ("TPM"). Trend reporting and
corrective actions shall be furnished to Applied as requested by
Applied Purchasing or Quality representatives. MKS will provide quality
data in the format, as shown in Attachment 11, and as received by
Applied MKS may also be required to provide reasonable additional data
to support qualification and certification programs.
3.4 WARRANTY
MKS warrants that all Items delivered to Applied will be free from
defects in workmanship, material, and manufacture; will comply with the
requirements of this Agreement, and, where design is MKS'
responsibility, will be free from defects in design. All services will
be performed in a competent, professional and workmanlike manner, free
from defects and in accordance with best professional practices or the
like. MKS FURTHER WARRANTS ALL ITEMS PURCHASED OR REPAIRED WILL BE OF
MERCHANTABLE QUALITY AND WILL BE FIT AND SUITABLE FOR THE PURPOSE
INTENDED BY APPLIED. THESE WARRANTIES ARE IN ADDITION TO ALL OTHER
WARRANTIES, WHETHER EXPRESSED OR IMPLIED, AND WILL SURVIVE ANY
DELIVERY, INSPECTION, ACCEPTANCE, OR PAYMENT BY APPLIED. If any Items
delivered by MKS do not meet the warranties specified herein or
otherwise applicable, Applied may, at its option:
(i) require MKS to correct at no cost to Applied any defective or
non-conforming Items by repair or replacement, or
(ii) return such defective or non-conforming Item at MKS' expense
to MKS and recover from MKS the order price thereof, or
(iii) correct the defective or non-conforming Item itself or through
a mutually approved third party and charge MKS with the cost
of such correction
(iv) cancel the balance of the undelivered non-conforming Item
and/or this CSA in accordance with Section 25, Termination for
Default, of Applied's standard Terms and Conditions of
Purchase.
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<PAGE> 13
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
All warranties will run to Applied and to its customers. Applied's
approval of MKS' material or design will not relieve MKS of the
warranties established in this agreement. In addition, if Applied
waives any drawing or specification requirement for one or more of thE
goods, it will not constitute a waiver of all requirements for the
remaining goods to be delivered unless stated by Applied in writing.
3.5 OTHER QUALITY PROGRAMS
3.5.1 MKS' Quality System
MKS' quality system must be in compliance with ISO 9000. If MKS is not
currently ISO 9000 certified, MKS must provide their documented plans
to achieve certification with a tune that is mutually agreeable to both
parties. MKS also agrees to participate in the SSQA development and
implementation plan.
3.5.2 MKS' Process Quality
Applied Materials requirements and workmanship standards shall be
integrated into MKS' processes and identified accordingly. MKS shall
identify the critical processes effecting the product quality and
develop a validated list of the critical processes by discussing with
Applied Materials. All data generated as a result of the critical
manufacturing processes shall be collected, processed and used for
process control and continuous improvement Evidence of process control
of critical processes is a requirement and the presence of control
charts and statistical process control is required. Processes not
exhibiting a Cpk of 1.33 will require a formal corrective action plan
to achieve the required process control. The critical manufacturing
processes on pressure transducers, flow products and electronic
products are:
[**]
[**]
[**]
[**]
[**]
3.5.3 Part quality containment and corrective action
When Applied Materials identifies a product non-conformance on a piece
part and requests MKS to implement containment action on the part
failure, MKS shall respond within [**] with a documented containment
plan and shall have implemented the plan. MKS shall provide follow up
to this containment plan with a closed loop corrective action
identifying the root cause, a permanent fix and tune line to implement
the corrective action. Applied Materials may perform a follow up audit
to verify the effective implementation of the corrective action and
approve the closure of the corrective action.
Applied Materials may develop or request MKS to develop Inspection
Standard Sheets on identified part numbers for deployment in MKS'
operation. ISS's will be deployed in final
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<PAGE> 14
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
inspection, completed and records maintained as part of MKS' quality
system. Template will be provided by Applied Materials supplier quality
organization.
3.5.4 MKS Audits
Applied Materials will conduct the following audits, as required, to
ensure a high level of quality of parts and assemblies purchased from
MKS.
3.5.4.1 Source Inspection
Applied Materials may conduct source inspection at MKS' site at any
time. Performance of source inspection does not waive MKS
responsibility for any defects that might subsequently be identified by
Applied Materials or its customers.
3.5.4.2 Piece part audits
Piece part audits may be performed at MKS' site or at Applied
Materials. MKS shall identify the failure and respond commitment to
contain the part failure with in [**] from notification. MKS shall also
perform the root cause analysis of the failure for containment and
corrective action. MKS shall agree to inform Applied Materials about
the root cause, corrective action, its implementation plan and schedule
with in the time period agreed upon.
3.5.4.3 Process audits
When a systemic failure trend is observed in the piece part or assembly
supplied, Applied Materials or MKS shall identify the process which are
causing the failure and audit the processes at MKS' site. Any
deficiencies or opportunities for improvements identified from the
audit will be discussed with MKS and a closed loop corrective action
will be established, specifying the correction action required with a
specified timeline for implementation. MKS shall agree to work on the
corrective action and provide closure to all deficiencies within the
time period agreed upon.
3.5.4.4 System assessment
Applied Materials, at any time may decide to perform a quality system
audit at MKS' site. Any deficiencies or opportunities for improvements
identified from the audit will be discussed with MKS and a closed loop
corrective action will be established, specifying the corrective action
required with a specified timeline for implementation. MKS shall agree
to work on the corrective action and provide closure to all
deficiencies within the time period agreed upon.
3.5.5 MKS' control over their subcontractors
MKS shall demonstrate control over the selection of subtier suppliers
and maintain a controlled Approved Suppliers List that is supported by
on site audits and completed corrective actions prior to selection and
periodically to ensure the highest quality of procured parts and
assemblies. MKS is required to provide Applied Materials with a quality
plan for
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<PAGE> 15
the selection, control and maintenance of subtier suppliers and will
include periodic testing performed by MKS to ensure compliance to
Applied Materials specifications. Quality records of MKS' subtier
suppliers shall be made available, upon request, to Applied Materials
for review.
3.5.6 MKS communication
MKS agrees to send a report on their quality performance on either a
weekly or monthly basis the frequency and content of which is to be
mutually agreed to between the quality engineering representatives from
each party. Applied's quality engineer may schedule a periodic meeting
with the MKS representative managing the quality to discuss the
contents of MKS' quality report, parts containment, closed loop
corrective action, audit findings or any other issues related to
quality. MKS agrees to develop, with the help and approval of Applied
Materials, a pro-active quality road map to improve their part quality
to meet the Applied Materials quality goals. And the status of the
effectiveness of the implementation plan will be monitored by MKS and
reviewed with Applied Materials on a periodic basis.
3.5.7 Formal Quality Plan
A formal quality plan will be developed jointly by MKS and Applied
Materials and will contain part and process specific requirements
identified to ensure the manufacture of high quality parts. MKS will
conform to all requirements of the plan. Periodic assessments of the
quality plan will be performed by the Applied supplier quality engineer
to ensure conformance to all requirements. The completed plan will be
an attachment to this contract.
3.5.8 Pro-active Action Plans
MKS is advised to work with Applied Materials in a pro-active way on
the following.
1. Work with the Quality Engineers on the manufacturing
floor to receive the DMR parts as soon as possible.
2. Work with the WMO/PBG buyers in reversing the PPMs
from MKS fault to Applied Materials' fault in
applicable cases.
4. PRICING FRAMEWORK
4.1 PRICING BY PART NUMBER
The pricing for the Items are shown in Attachments 1A (part numbers)
and 1B (service and repair). Any modifications to these must be made in
accordance with Section 7 of this Agreement. MKS commits to on-going
cost improvement during the period of this Agreement in accordance with
Section 6.
At the time of the Agreement Effective Date, the remaining balance of
undelivered items on all open purchase orders will be revised to the
agreement price.
Specific circumstances may result in a review of the agreement terms,
including prices. These include, but are not limited to:
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<PAGE> 16
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
a. Volume increases resulting in an increase in agreement value
of over [**] (subsequent to completion of negotiations on the
existing prices);
b. Addition of Items to the agreement increasing the value of the
Agreement over [**]
c. Cost reductions(savings over and above those committed in the
MKS performance plan.;
d. Price reductions in accordance with Section 6,[**], of
Applied's standard Terms and Conditions of Purchase.
4.2 COOPERATIVE PRICING MODELS/FORMULAS
SEE ATTACHMENT 1
4.3 VOLUME
MKS will be provided a range of potential volume that may be purchased.
Applied does not commit to buy a specific volume of a part number from
a MKS. Applied does not limit its ability to buy the same part number
from multiple sources.
4.4 EXPORT PRICING
MKS should quote Applied in unit prices based upon delivery FCA Free
carrier. MKS is expected to prepare the export paperwork and be the
exporter of record. MKS must utilize Applied's preferred carriers to
arrange the export of the goods. Applied will pay the freight charges
based on Applied's rates with its preferred carriers. Applied will be
responsible for importing the goods into the destination country.
4.5 CURRENCY
All prices are quoted in US dollars; prices for foreign manufactured
Items will not be adjusted to reflect changes in the exchange rate. MKS
is encouraged to obtain any necessary currency exchange protection it
deems appropriate.
Notwithstanding the agreement to quote product in U.S. Dollars, the
parties agree that any Applied entity operating in the same country as
MKS's manufacturing plant or sales and service depots may issue orders
for MKS's products using the local currency for the purposes of
effecting payment. The prices will be converted to local currency as
follows:
PARTS MANUFACTURED EXCLUSIVELY OUTSIDE OF THE UNITED STATES:
The U.S. Dollar prices in Attachment 1 will be converted to local
currency, on a quarterly basis, using the official exchange rate listed
in Bloomberg(TM) or Olsen(TM) publications. The exchange rate shall be
the mid point between the bid and ask price listed at the close of the
following days: January 2nd, April 1st, July 1st, October 1st.
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<PAGE> 17
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
PARTS MANUFACTURED EXCLUSIVELY WITHIN THE UNITED STATES:
The various packaging, shipping, export and import costs associated
with parts manufactured exclusively within the United States and
offered for sale outside the United States will be paid by MKS as part
of its normal operating expenses. In consideration for said costs,
Applied agrees that MKS may increase the U.S. Dollar prices in
Attachment 1 by not more than [**] prior to converting the U.S. price
to the local currency price using the official exchange rate listed in
Bloomberg(TM) or OIsen(TM) publications. The exchange rate shall be the
mid point between the bid and ask price listed at the close of the
following days: January 2nd, April 1st, July 1st, October 1st.
4.6 PROTOTYPES
MKS is committed to price all Items consistent with contract prices.
MKS agrees to provide prototype Items priced considering the total
value of Applied's business with MKS. This may be accomplished in
several ways, including:
a. a specific number of prototype Items may be provided free of
charge
b. Items may be priced at production levels
4.7 ADVANCES FOR RAW MATERIALS
Applied does not provide advance payments for the purchase of raw
materials.
5. TECHNICAL FRAMEWORK
5.1 ENGINEERING CHANGE ORDERS
Applied may change its drawings, design, and specifications at any time
in accordance with Section 25, Changes, of Applied's Standard Terms and
Conditions of Purchase. Applied Supplier Engineer will review with MKS
all proposed Engineering Change Orders (ECO's) that impact the form,
fit, or function of Items. Applied will, in writing, provide approved
ECO's (refer to Attachment 12) and state the effective dates of all
changes. Unless otherwise notified, Applied Receiving Inspection will
inspect to the latest revision in effect at the time of receipt
MKS may request engineering changes via a MKS Problem Sheet (refer to
Attachment 13). This form should be submitted to Applied Supplier
Engineer. Changes shall not be implemented by MKS until written
permission to proceed is given by Applied's authorized purchasing
representative and the agreement is modified accordingly. Applied will
consider claims for adjustment in the terms of this Agreement if made
before the implementation of the changes.
5.2 TOOLING
Unless otherwise agreed to in writing, special dies, tools, patterns
and drawings used in the manufacture of Items shall be furnished by and
at the expense of, MKS.
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<PAGE> 18
5.3 DESIGN CHANGES AND RESOLUTION
For the term of this Agreement, MKS will not make changes to the design
of any part that may alter form, fit, function or a significant
manufacturing process without a documented engineering change request
and prior written approval from Applied's authorized purchasing
representative and the agreement is modified accordingly.
If Applied's design changes impact the pricing, delivery, lead-time, or
other terms and conditions of this Agreement, and agreement upon
alternate terms cannot be reached with MKS, then Applied may remove the
subject Items from this Agreement without affecting the remaining
Items.
5.4 PROCESS CHANGES AND RESOLUTION
MKS is expected to inform Applied of process and MKS changes to include
changes in specifications, manufacturing locations, even when
specifications are met. MKS must receive written approval in writing
from Applied before implementing changes. MKS must use the specified
Applied "approved" list of secondary process suppliers, where
designated. The use of Applied approved secondary process suppliers
does not relieve MKS of the responsibility for management of the
subtier supplier and for ensuring the quality of parts received.
5.5 SUBCONTRACTING
MKS shall not subcontract for completed or substantially completed
components and processes supplied to Applied without prior written
approval of Applied. MKS will ensure that all subcontractors to MKS
that have access (directly or indirectly) to Applied specifications
must be covered by a NDA that is similar in form and substance to
Applied's NDA.
5.6 FIRST ARTICLES
A new Item, Item with revised drawings, or other changes as delineated
above, must have a first article evaluated and accepted by Applied (a
"First Article"). An Item will not be authorized for deliveries until
acceptance of the First Article by Applied. MKS will maintain First
Article qualifications/evidence data file with content as defined by
Applied for the specific part. First Article data is to be made
available to Applied upon request and shall be retained by MKS during
the performance of this Agreement or subsequent agreements.
5.7 OUTSOURCING
Applied may at its discretion elect to outsource an assembly or module
to a third party ("Subassembler") and if the selected assembly or
module includes any Item under this CSA (an "affected Item"), Applied
will advise MKS of the Subassembler, unless precluded from doing so by
confidentiality or other requirements. MKS understands that the
selection and responsibility for sourcing any affected Items will
generally be the responsibility of the Subassembler. If MKS is not
selected as the source for an affected Item, any affected items or
applicable quantities of affected Items may, at Applied's discretion,
be removed from this Agreement.
5.8 PRODUCT SUPPORT
MKS agrees to provide Items, and technical and service support to
Applied for all of the Items for a minimum of ten years from the date
of final shipment of a part to Applied.
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<PAGE> 19
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Alternatively, the parties may agree to establish a product support
period less than ten years provided that MKS agrees to grant to Applied
a non-exclusive license to make, have made, use, sell, and support the
Items in a form and on terms acceptable to Applied.
5.9 COMMODITY SPECIFIC ISSUES
Reserved
5.10 TECHNOLOGY ROADMAP
Reserved
6. PERFORMANCE MANAGEMENT
6.1 SUPPLIER PERFORMANCE PLAN
As part of this Comprehensive Supplier Agreement, Applied and MKS agree
to jointly develop a Supplier Performance Plan. Attachment 15 outlines
the performance plan.
6.2 SUPPLIER PERFORMANCE MANAGEMENT
6.2.1 Metrics and Targets
MKS agrees to target the operational performance targets defined below.
Performance targets for FY2000 are listed. Intermediate performance
targets are established in the Supplier Performance Management Plan.
The following defines how Applied and MKS will measure performance
metrics:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FY 1999 End FY 2000 End
Measure Definition Calculation Target Target
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Quality ppm Number of quality Quantity of parts with
discrepancies recorded DMR [**] [**]
detected prior to occurrences provided
shipping a completed by the supplier over
system to an end the prior 13-week
customer, expressed period, divided by the
as parts per million total quantity of parts
received from that
supplier over the same
period, multiplied by
1 million
- ------------------------------------------------------------------------------------------------------------
Supplier Fault DMRs Number of DMR Number of DMR [**] [**]
transactions for part occurrences recorded
quality discrepancies against the supplier
detected in-house accumulated over the
prior to system prior 13-week period
installation in the
field
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 20
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FY 1999 End FY 2000 End
Measure Definition Calculation Target Target
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Late Delivery ppm Number of parts Quantity of parts
delivered later than received one day or [**] [**]
the agreed upon more after the commit
commit date date, accumulated for
each supplier over a rolling
13-week period, divided by
the total quantity of parts
received over the same
period, multiplied by 1
million
- ------------------------------------------------------------------------------------------------------------
Early Delivery ppm Number of parts Quantity of parts
received three or received three or more [**] [**]
more days before the days before the
commit date commit date,
accumulated over a rolling
13-week period, divided by
the total quantity of parts
received over the same
period, multiplied by 1
- ------------------------------------------------------------------------------------------------------------
Average Lead Time
of Production Parts
(Order Fulfillment
Cycle Time)
- ------------------------------------------------------------------------------------------------------------
Source Cycle Time Average of the total The average of the
(supplier reported) times, from number of days [**] [**]
placement of an between order date
order through receipt and receipt date for all
at Applied Materials, production parts
of parts supplied to recorded for the
volume production supplier, based on
(including Austin volume
transportation time) production activity.
- ------------------------------------------------------------------------------------------------------------
Make Cycle Time Total cycle time to Elapsed time, as
(supplier reported) source all materials determined through [**] [**]
required to produce process audits and
an order, based on supplier
contracted parts self-assessments
supplied to volume
production
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 21
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
FY 1999 End FY 2000 End
Measure Definition Calculation Target Target
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cost Reduction Total production time Elapsed time, as
required to fulfill an determined through [**] [**]
order, including process audits and
manufacturing order supplier
release and build self-assessments
time, based on
contracted parts
supplied to volume
production
- ------------------------------------------------------------------------------------------------------------
Percentage difference Calculated for each
between the average contract by the SAT, [**] [**]
unit price paid for using the method
materials in the prior accepted by the SMO
year and price paid commodity group
in the current year (see Attachment 17)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
7. AMENDMENTS AND MODIFICATIONS
This CSA may be revised by the mutual consent of Applied and MKS.
Revisions to this CSA must be in writing, signed by both Applied and
MKS duly authorized representatives, traced by revision numbers and
attached to this original agreement. A change to one attachment of this
agreement will constitute a revision level change. The master copy of
this CSA and any revisions are to be maintained by Applied.
Updates to Section 2.2, Service levels, and changes may be communicated
via memos sent by mail, fax or e-mail.
8. GLOSSARY
TBD
9. ACCEPTANCE
Accepted:
/s/ Michael Berkaw /s/ Leo Berlinghieri
- --------------------------------- ---------------------------------
Applied Materials, Inc. MKS
Michael Berkaw Leo Berlinghieri
Contract Specialist VP of Customer Service
Chemical Delivery SMO MKS Instruments
Date: 10/22/98 10/22/98
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<PAGE> 22
EXHIBIT 1
APPLIED MATERIALS TERMS AND CONDITIONS OF PURCHASE
1 Acceptance
The terms and conditions stated in these Applied Materials Standard
Terms and Conditions of Purchase become the agreement between the
parties covering the purchase of the goods or services (collectively
referred to as "Items") ordered in the Purchase Agreement/Comprehensive
Supplier Agreement/Basic Supplier Agreement of which these Terms and
Conditions are a part when this Agreement is accepted by acknowledgment
or commencement of performance. This Agreement can be accepted only in
these terms and conditions. Additional or different terms proposed by
Supplier will not be applicable unless accepted in writing by the
Buyer. No change, modification, or revision of this Agreement will be
effective unless in writing and signed by duly authorized
representative of Buyer.
2. Confidential and Proprietary Information
Supplier will observe and is bound by the terms and conditions of any
and all Non- Disclosure Agreements (NDAs) executed by Supplier with or
for the benefit of Buyer, whether now or hereafter in effect. In
addition, all schematics, drawings, specifications and manuals, and all
other technical and business information provided to Supplier by Buyer
during the term of, or in connection with the negotiation, performance
or enforcement of this Agreement shall be deemed included in the
definition (subject to any applicable exclusions therefrom) of
"Proprietary Information" for purposes of this Agreement.
Supplier may use Buyer's Proprietary Information only for the purpose
of providing Items, parts or components of Items or services to Buyer.
Supplier will not discuss and further will not use any of Buyer's
Proprietary Information, directly or indirectly, for any other purpose
including, without limitation, (a) developing, designing,
manufacturing, refurbishing, selling or offering for sale parts or
components of Items or parts, or providing services, for or to any
party other than Buyer, and (b) assisting any third party, in any
manner, to perform any of the activities described herein. All
Proprietary Information shall (a) be clearly marked by Supplier as
Buyer's property and segregated when not in use, and (b) be returned to
Buyer promptly upon request.
Supplier acknowledges and agrees that Buyer would suffer irreparable
harm for which monetary damages would be an inadequate remedy if
Supplier were to breach its obligations under this provision. Supplier
further acknowledges and agrees that equitable relief, including
injunctive relief, would be appropriate to protect Buyer's rights and
interests if such a breach were to arise, or threatened, or were
asserted.
Supplier will use reasonable efforts to notify Buyer of any third party
requests to engage in any of the activities prohibited by this Article.
3. Intellectual Property
Nothing in this Agreement shall be deemed to grant to Supplier any
license or other right under any of Buyer's intellectual property
(including, without limitation, Buyer's patents, copyrights, trade and
service marks, trade secrets, and Proprietary Information) for
Supplier's own benefit or to provide or offer Items to any party other
than Buyer.
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<PAGE> 23
All Items supplied by Supplier and the sale of Items by Supplier and,
as applicable, use thereof by Buyer or its subsequent purchasers or
transferees will be free from liability for or claim by any persons of
royalties, patent rights, copyright, trademark, mechanics' liens or
other encumbrances, and trade secrets or confidential or proprietary
intellectual property rights (collectively "rights" and
"encumbrances"), and Supplier shall defend, indemnify and hold harmless
Buyer against all claims, demands, costs and actions for actual or
alleged infringements of patent, copyright, trademark or trade secret
rights or other rights and encumbrances in the use, sale or re-sale of
any Item which are valid at the time of or after the effective date of
this Agreement; except to the extent that the infringement was
unavoidably caused by Supplier's compliance with a detailed design
furnished and required by Buyer or by Buyer's non-compliance with
Supplier's prior written advice or warning of a possible and likely
infringement
At the request of Buyer, Supplier will provide to Buyer the most
current and complete specifications and drawings (the "Drawings") for
each Item manufactured or produced for Buyer that is based on Buyer's
design or Drawings showing the complete specifications and design for
the Item as manufactured or produced by Supplier. All Drawings are the
sole property of Buyer.
Upon termination of this Agreement, Supplier will return all Applied
Proprietary Information and documentation to Buyer. Notwithstanding
this requirement, Supplier may request Buyer approval to destroy any
Proprietary Information of Buyer that has become obsolete or outdated
(e.g., financial projections, forecasts, et cetera); provided that
Supplier certifies to Buyer the destruction of such Proprietary
Information.
4. Patent License
Supplier, as part consideration for this Agreement and without further
cost to Buyer, hereby grants to Buyer an irrevocable, non-exclusive,
paid-up world-wide right and license to make, have made, use, and sell
any inventions derivative works, improvements, enhancements, or
intellectual property (the "Inventions"') made by or for Supplier in
the performance of this Agreement. Supplier shall cause any employee,
consultant, contractor or other persons who provides work for hire to
Supplier to assign to Supplier for licensing as above of any such
inventions. In addition, Buyer shall be entitled to license Buyer's
customers to use such inventions during the operation of Buyer's
products.
5. Press Releases/Public Disclosure Not Authorized
Supplier will not, without the prior written approval of Buyer, issue
any press releases, advertising, publicity, public statements or in any
way engage in any other form of public disclosure that indicates the
terms of this Agreement, Buyer's relationship with Supplier or implies
any endorsement by Buyer of Supplier or Supplier's products or
services. Supplier further agrees not to use, without the prior written
consent of Buyer, the name or trademarks (including, but not limited to
Buyer's corporate symbol). Any requests under this Section must be made
in writing and submitted to the parties designated by Buyer for the
review and authorization of such matters.
-2-
<PAGE> 24
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
6. [**]
Supplier does not presently sell or offer any Item that is similar in
form, fit or function to any Item to any third party for prices and
terms and conditions of sale (including, without limitation,
warranties, services or other benefits) (collectively, "Benefits") [**]
to Buyer in this Agreement. If during the term of this Agreement,[**]
for any Item than those available to Buyer under this Agreement (a
"Third Party Arrangement"), Supplier will notify Buyer [**], Supplier
will notify Buyer [**] and this Agreement will be deemed [**]. However,
Buyer, at its option, may [**]. If any [**], Supplier will [**] that
Buyer [**] from the effective date [**] shall be [**] of the effective
date [**]. In no event shall Supplier quote prices to Buyer that would
be unlawfully discriminatory under any applicable law.
7. Duty Drawback
Supplier will provide Buyer with U.S. Customs entry data, including
information and receipts for duties paid directly or indirectly on all
Items that are either imported or contain imported parts or components,
that Buyer determines is necessary for Buyer to qualify for duty
drawback ("Duty Drawback Information"). This data will be provided to
Buyer within fifteen (15) days after each calendar quarter (or fiscal
year quarter of Buyer, and be accompanied by a completed Certificate of
Delivery of Imported Merchandise or Certificate of Manufacture and
Delivery of Imported Merchandise (Customs Form 331) as promulgated
pursuant to 19 CFR 191.
8. ODC Elimination
In the event Supplier's goods are manufactured with or contain Class I
ODCs as defined under Section 602 of the Federal Clean Air Act (42 USE
Section 7671 a) and implementing regulations, or if Supplier suspects
that such a condition exists, Supplier shall notify Buyer prior to
performing any work against this Agreement. Buyer reserves the right
to: (a) terminate all Agreements for such goods without penalties, (b)
to return any and all goods delivered which are found to contain or
have been manufactured with Class I ODCs, or (c) to terminate any
outstanding Agreements for such goods without penalties. Supplier shall
reimburse Buyer all monies paid to Supplier and all additional costs
incurred by Buyer in purchasing and returning such goods.
9. Compliance With Laws
Supplier warrants that no law, rule, or ordinance of the United States,
a state, any other governmental agency, or that of any country has been
violated in supplying the goods or services ordered herein.
10. Equal Employment Opportunity
Supplier represents and warrants that it is in compliance with
Executive Agreement 11246, any amending or supplementing Executive
Agreements, and implementing regulations unless exempted.
-3-
<PAGE> 25
11. Applicable Law, Consent to Jurisdiction, Venue
This Agreement shall be governed by, be subject to, and be construed in
accordance with the internal laws of the State of California, excluding
conflicts of law rules. The parties agree that any suit arising out of
this Agreement, for any claim or cause of action, whether in contract,
in tort, statutory, at law or in equity, shall exclusively be brought
in the United States District Court for the Northern District of
California or in the Superior or Municipal Courts of Santa Clara
County, California, or in the United States District Court for the
Western District of Texas, Austin Division, or the Texas State District
Courts of Travis County, Texas, provided that such court has
jurisdiction over the subject matter of the action. Each party agrees
that each of the named courts shall have personal jurisdiction over it
and consents to such jurisdiction. Supplier further agrees that venue
of any suit arising out of this Agreement is proper and appropriate in
any of the courts identified above; Supplier consents to such venue
therein as Buyer selects and to any transfer of venue that Buyer may
seek to any of such courts, without respect to the initial forum.
With respect to transactions to which the 1980 United Nations
Convention of Contracts for the International Sale of Goods would
otherwise apply, the rights and obligations of the parties under the
Agreement, including these terms and conditions, shall not be governed
by the provisions of the 1980 United Nations Convention of Contracts
for the International Sale of Goods; instead' applicable laws of the
State of California, including the Uniform Commercial Code as adopted
therein (but exclusive of such 1980 United Nations Convention) shall
govern.
12. Notice of Labor Disputes
Whenever an actual or potential labor dispute, or any government
embargoes, regulatory or tribunal proceedings relating thereto is
delaying or threatens to delay the timely performance of this
Agreement, Supplier will immediately notify Buyer of such dispute and
furnish all relevant details regardless of whether said dispute arose
directly, or indirectly, as a result of an actual or potential dispute
within the Supplier's subtier supply base or its own operations.
13. Taxes
Unless otherwise specified, the agreed prices include all applicable
federal, state, and local taxes. All such taxes shall be stated
separately on Supplier's invoice.
14. Responsibility for Goods; Risk of Loss
Notwithstanding any prior inspections, Supplier shall bear all risks of
loss, damage, or destruction to the Items called for hereunder until
final acceptance by Buyer at Buyer's facility(s) delivery destination
specified in the Agreement, which risk of loss shall not be altered by
statement of any at F.O.B. point here. These Supplier responsibilities
remain with respect to any Items rejected by Buyer provided, however,
that in either case, Buyer shall be responsible for any loss occasioned
by the gross negligence of its employees acting within the scope of
their employment. Items are not accepted by reason of any preliminary
inspection or test, at any location.
15. Insurance
A. Supplier shall maintain (i) comprehensive general liability
insurance covering bodily injury, property damage, contractual
liability, products liability and completed operations, (ii)
Workers Compensation and employer's liability insurance, and
(iii) auto
-4-
<PAGE> 26
insurance, in such amounts as are necessary to insure against
the risks to Supplier's operations.
B. Minimally, Supplier will obtain and keep in force, insurance
of the types and in the amounts set forth below:
<TABLE>
<CAPTION>
Insurance Minimum Limits of Liability
--------- ---------------------------
<S> <C>
Worker's Compensation Statutory
Employer's Liability $1,000,000
Automobile Liability $1,000,000 per occurrence
Comprehensive General Liability $1,000,000 per occurrence
(including Products Liability)
Umbrella/Excess Liability $1,000,000 per occurrence
</TABLE>
All policies must be primary and non-contributing, and shall include
Buyer as an additional insured. Supplier also waives all rights of
subrogation. Supplier will also require and verify that each of its
subcontractors carry at least the same insurance coverage and minimum
limits or insurance as Supplier carries under this Agreement. Supplier
shall notify Buyer at least thirty (30) days prior to the cancellation
of or implementation of any material change in the foregoing policy
coverage that would affect the Buyer's interests. Upon request,
Supplier shall furnish to Buyer as evidence of insurance a certificate
of insurance stating that the coverage would not be canceled or
materially altered without thirty (30) days prior notice to the Buyer.
16. Change of Control
Supplier will notify Buyer immediately of any change of control or
change (including any change in person or persons with power to direct
or cause the direction of management or policies of Seller) or any
change (35% or more) in the ownership of Supplier, or of any materially
adverse change in Supplier's financial condition or in the operation of
Supplier's business, including, but not limited to, Supplier's net
worth, assets, production capacity, properties, obligations or
liabilities (fixed or contingent) (collectively, a "change of
control").
17. Assignments
A. No right or obligation under this Agreement shall be assigned
by Supplier without the prior written consent of Buyer, and
any purported assignment without such consent shall be void.
B. Buyer may assign this Agreement in whole or part at any time
if such assignment is considered necessary by Buyer in
connection with a sale of Buyer's assets, or a transfer of any
of its contracts or obligations under such contracts, or a
transfer to a third party of manufacturing activities
previously conducted by Buyer.
18. Gratuities
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<PAGE> 27
Supplier warrants that it has not offered or given and will not offer
or give any gratuity to induce this or any other agreement. Upon
Buyer's written request, an officer of Supplier shall certify in
writing that Supplier has complied with and continues to comply with
this Section. Any breach of this warranty shall be a material breach of
each and every agreement and contract between Buyer and Supplier.
19. Insolvency
The insolvency of Supplier, the filing of a voluntary or involuntary
petition for relief by or against Supplier under any bankruptcy,
insolvency or like law, or the making of an assignment for the benefit
of creditors, by Supplier, shall be a material breach hereof and
default.
20. Waiver
In the event Buyer fails to insist on performance of any of the terms
and conditions, or fails to exercise any of its rights or privileges
hereunder, such failure shall not constitute a waiver of such terms,
conditions, rights or privileges.
21. Disclaimer and Limitation of Liability
In no event shall Buyer be liable for any special, indirect,
incidental, consequential, or contingent damages (the foregoing being
collectively called "Damages"), whether or not Buyer has been advised
of the possibility of such damages, for any reason. Buyer excludes and
Supplier waives any liability of Buyer for any "Damages", as so
defined.
22. Indemnity by Supplier
Supplier shall defend, indemnify and hold harmless Buyer from and
against, and shall solely and exclusively bear and pay, any and all
claims, suits, losses, penalties, damages (whether actual, punitive,
consequential or otherwise) and all liabilities and the associated
costs and expenses (including attorney's fees, expert's fees, and costs
of investigation (all of the foregoing being collectively called
"Indemnified Liabilities"), caused in whole or in part by Supplier's
breach of any term or provision of this Agreement, or in whole or in
any part by any negligent, grossly negligent or intentional acts,
errors or omissions by Supplier, its employees, officers, agents or
representatives in the performance of this Agreement or that are for,
that are in the nature of, or that arise under, strict liability or
products liability with respect to or in connection with the Items. The
indemnity by Supplier in favor of Buyer shall extend to Buyer, its
officers, directors, agents, and representatives and shall include and
is intended to include Indemnified Liabilities which arise from or are
caused by, in whole or in part, the concurrent negligence, including
negligence or gross negligence of Supplier but shall not extend to
Indemnified Liabilities to the extent such are caused by the negligence
or willful misconduct of Buyer. Supplier assumes no liability under
this warranty for system failures, personal injury or property damage
resulting from improper operation, improper maintenance, abuse or
modifications from the original product specifications or configuration
on the part of Buyer, it's customers, agents and other third parties.
23. Force Majeure
A failure by either party to perform due to causes beyond the control
and without the fault or negligence of the party is deemed excusable
during the period in which the cause of the failure persists. Such
causes may include, but not be limited to, acts of God or the public
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<PAGE> 28
enemy, acts of the Government in either sovereign or contractual
capacity, fires, floods, epidemics, strikes, freight embargoes and
unusually severe weather. If the failure to perform is caused by the
default of a subcontractor, and such default arises out of causes
beyond the control of both the Supplier and subcontractor, and without
the fault or negligence of either of them, the Supplier will not be
liable for any excess cost for failure to perform, unless the supplies
or services to be furnished by the subcontractor were obtainable from
other sources in sufficient time to permit the Supplier to meet the
required delivery releases. When Supplier becomes aware of any
potential force majeure condition as described in this Agreement,
Supplier shall immediately notify Buyer of the condition and provide
relevant details.
24. Changes
Buyer may at anytime, by a written order and without notice to sureties
or assignees, suspend performance hereunder, increase or decrease the
Agreement quantities, or make changes within the general scope of this
Agreement in any one or more of the following:
(a) applicable drawings, designs, or specification;
(b) method of shipment or packing, and/or;
(c) place and date of delivery;
(d) place and date of inspection or acceptance.
If any such change causes an increase or decrease in the cost of or
time required for performance of the Agreement, an equitable adjustment
shall be made in the Agreement price or delivery schedule, or both, and
the Agreement shall be modified in writing accordingly. No claim by
Supplier for adjustment hereunder shall be valid unless asserted within
thirty (30) days from the date of receipt by Supplier of the
notification of change, provided, however, that such period may be
extended upon the written approval of Buyer. However, nothing in this
clause shall excuse Supplier from proceeding with the Agreement as
changed or amended.
25. Termination for Default
(a) Buyer may, by notice, terminate this Agreement in whole or in
part (i) if Supplier fails to deliver goods or services on
agreed delivery schedules or any installments thereof strictly
within the time specified; (ii) if Supplier fails to replace
or correct defective goods or services; (iii) if Supplier
fails to comply strictly with any provision of, or repudiates
this agreement, or (iv) Supplier defaults under, or any event
or condition stated to be a default occurs under, any
provision of the Agreement, including these Applied Materials
Standard Terms and Conditions of Purchase.
(b) In the event of termination pursuant to this Section:
(i) Supplier shall continue to supply any portion of the
Items contracted for under this Agreement that are
not terminated;
(ii) Supplier shall be liable for additional costs, if
any, for the purchase of such similar goods and
services to cover such default;
(iii) At Buyer's request Supplier will transfer title and
deliver to Buyer (1) any completed goods, (2) any
partially completed goods and (3) all unique
-7-
<PAGE> 29
materials. Prices for partially completed goods and
unique materials so accepted shall be negotiated.
However, such prices shall not exceed the Agreement
price per item.
(c) Buyer's rights and remedies herein or otherwise stated in this
Agreement, any Purchase Order, Comprehensive Supplier
Agreement or Basic Supplier Agreement are in addition to and
shall not limit or preclude resort to any other rights and
remedies provided by law or in equity. Termination under this
Agreement shall constitute "cancellation" under the Uniform
Commercial Code.
26. Termination for convenience
(a) Buyer may terminate, for convenience, work under this
Agreement in whole or in part, at any time by written or
electronic notice. Upon any such termination Supplier shall,
to the extent and at the time specified by Buyer, stop all
work on this Agreement, place no further orders hereunder,
terminate work outstanding hereunder, assign to Buyer all
Supplier's interests under terminated subcontracts and
Agreements, settle all claims thereunder after obtaining
Buyer's approval, protect all property in which Buyer has or
may acquire an interest, and transfer title and make delivery
to Buyer of all Items, materials, work in process, or other
things held or acquired by Supplier in connection with the
terminated portion of this Agreement. Supplier shall proceed
promptly to comply with Buyer's directions respecting each of
the foregoing without awaiting settlement or payment of its
termination claim.
(b) Within six (6) months from such termination, Supplier may
submit to Buyer its written claim for termination charges, in
the form and with supporting data and detail prescribed by
Buyer. Failure to submit such claim within the prescribed time
frame and with such items shall constitute a waiver of all
claims and a release of all Buyer's liability arising out of
such termination.
(c) The parties may agree upon the amount to be paid Supplier for
such termination. If they fail to agree, Buyer shall pay
Supplier the amount due for Items delivered prior to
termination and in addition thereto but without duplication,
shall pay the following amounts:
(i) The contract price for all Items completed in
accordance with this Agreement and not previously
paid for;
(ii) The actual costs for work in process incurred by
Supplier which are properly allocable or
apportionable under Generally Accepted Accounting
Principles (GAAP) to the terminated portion of this
Agreement and a sum constituting a fair and
reasonable profit on such costs. The Supplier agrees
to keep true, complete, and accurate records in
compliance with GAAP for the purpose of determining
allocability of Suppliers costs under this agreement.
Such records shall contain sufficient detail to
permit a determination of the accuracy of the costs;
Independent nationally recognized accountants (the
"Auditor") designated by Buyer and reasonably
acceptable to Supplier shall have the right, at
Buyer's expense and upon reasonable notice, to
conduct audits of all of the relevant books and
records of Supplier in order to determine the
accuracy and allocability of costs submitted by
Supplier to Buyer under this provision.
-8-
<PAGE> 30
(iii) The reasonable costs of Supplier in making settlement
hereunder and in protecting Items to which Buyer has
or may acquire an interest.
(d) Payments made under subparagraphs (c)(i) and (c)(ii) shall not
exceed the aggregate price specified in this Agreement, less
payment otherwise made or to be made. Buyer shall have no
obligation to pay for Items lost, damaged, stolen or destroyed
prior to delivery to Buyer.
(e) The foregoing paragraphs (a) to (d) inclusive, shall be
applicable only to a termination for Buyer's convenience and
shall not affect or impair any right of Buyer to terminate
this Agreement for Supplier's default in the performance
hereof.
-9-
<PAGE> 31
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
FIXED PRICING
<TABLE>
<CAPTION>
PART NO PART DESCRIPTION UNIT PRICE
------- ---------------- ----------
<S> <C> <C>
0010-00744 HE PRESSURE CONTROL (20SCCM) ASSY $ [**]
0010-13150 ASSY, IHC CAMBER D $ SHC (20SCCM) $ [**]
0010-13152 ASSY, IHC CHAMBERD D & SHC (50 SCCM) $ [**]
0010-35404 IHC ASSY, 5200 MCVD CENTURA $ [**]
0010-35650 ASSY, INDEPENDENT HELIUM CONTROL $ [**]
0010-40240 IHC ASSY,5300 W/RSTR $ [**]
0010-76952 ASSY, IHC CHAMBER A, B, AND C, (50 SCCM) $ [**]
0190-18037 ASSEMBLY, DUAL IHC $ [**]
0224-01921 XDCR, MKS, 0-100 PSI 1/4FVCR 12-32VDC 15P-D 5RA $ [**]
0224-42759 XDUCER, PRESSUER -MKS 850 5RA G223 $ [**]
0225-10104 1 TORR VCR MONOMETER $ [**]
0225-10105 100 TR VCR MONOMETER $ [**]
0225-33295 XDCR, PRESS 0-10TORR, 1/2 VCR $ [**]
0226-09052 45D BARATRON W/VCR FTG, 10 TORR 10948-1 $ [**]
0226-10754 EXDCR PRESSURE 0-10TORR, 1/2 VCR 0222- $ [**]
0226-40111 TRANSDUCER,THRU TUBE,MKS TYPE 852,F-F,BENDIX $ [**]
0226-41024 CABLE METER XDCR 0-100PSI 15PIN-D 27IN.L $ [**]
0226-41187 XDCR PRESS 0-100 PSIG 1/4 VCR F/F 13-32VDC 10RA $ [**]
0226-41188 METER XDCR 3-1/2 LCD 0-100 PSIG 13-32VDC 15 PIN-D $ [**]
05-88029-00 CABLE SHLD W/RT ANG CON $ [**]
----------
</TABLE>
1CSA 982812 10/23/98
-1-
<PAGE> 32
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
FIXED PRICING
<TABLE>
<CAPTION>
PART NO PART DESCRIPTION UNIT PRICE
------- ---------------- ----------
<S> <C> <C>
0620-01022 CABLE ASSY 12 COND 22AWG SHIELDED MUTLI-COLOR $ [**]
0620-02563 CABLE ASSY SENSOR HEAD - BARATRON $ [**]
0690-01954 BRKT SENSOR HEAD MTG $ [**]
1040-01092 METER XDCR 3-1/2LCD 0-60PSI 12-32VCD 15PIN-D $ [**]
1350-01005 XDCR PRESS 1TORR 8VCO-F +/-15VDC @ 250MA 45C $ [**]
1350-01011 XDCR PRESS 0-10 TORR VCO D CONNECTOR $ [**]
1350-01016 XDCR PRESS 10TORR 8VCO-F +/-15VDC @ 250 MA 45C $ [**]
1350-01019 XDCR PRESS 0-10TORR 8 VCR WIRE STRIP CONN SP $ [**]
1350-01021 XDCR PRESS 100MTORR 8VCR-F +/-15VDC @ 250MA 45C $ [**]
1350-01025 XDCR PRESS 100TORR 8VCR-F +/-14VDC @ 250MA 45C $ [**]
1350-01035 XDCR PRESS 0-100 TORR VCR D CONN $ [**]
1350-01036 XDCR PRESS 0-1 TORR VCR D CONNECTOR $ [**]
1350-01045 XDCR PRESS 10TORR 8VCR-F +/-15VDC @ 250MA 45C $ [**]
1350-01051 XDCR PRESS BARATRON, HEATED 10 TORR $ [**]
1350-01052 XDCR PRESS BARATRON, HEATED 100 TORR $ [**]
1350-01055 XDCR PRESS 10 TORR CAJON 8 VCR FEMALE FTG .12% $ [**]
1350-01072 XDCR PRESS 1000TORR 8VCR-F +/-15VDC @ 250MA 45C $ [**]
----------
</TABLE>
2CSA 982812 10/23/98
-2-
<PAGE> 33
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
FIXED PRICING
<TABLE>
<CAPTION>
PART NO PART DESCRIPTION UNIT PRICE
------- ---------------- ----------
<S> <C> <C>
1350-01075 XDCR PRESS 0-100TORR SHRT 8FVCR TERM-STRIP +/-15V $ [**]
1350-01078 XDCR PRESS 0-250PSIA 1/4VCR-M/M 0-10VDC 6'PIGTAIL $ [**]
1350-01079 XDCR PRESS 2TORR 8VCR-F +/-15VDC @ 250MA 45DED-C $ [**]
1350-01083 XDCRPRESS 0-60PSIA 1/4VCR-M 12-32VDC 50DEGC 10RA $ [**]
1350-01086 XDCR PRESS 0-1000TORR 1/4VCR-M 12-32VDC 50C 10RA $ [**]
1350-01089 XDCR PRESS 100MTORR 1/8FVCR .25%ACC 100C 15-PDSUB $ [**]
1350-01092 XDCR PRESS 1TORR 1/2FVCR .12%ACC 45DEG-C 15P-DSUB $ [**]
1350-01098 XDCR PRESS 1TOR 1/2FVCR .25%ACC 100C 150-DSUB $ [**]
1350-01101 XDCR PRESS 2-100TORR 1/2VCR-F .5%ACC +/-15VDC $ [**]
1350-01102 XDCR PRESS 10TORR 8FVCR DCONN +/-15VDC@35MA .93"L $ [**]
1350-01121 XDCR PRESS 0-20TORR 45C 15VDC 15P D-CONN 1/2"VCO $ [**]
1350-01143 XDCR PRESS 1TORR RF FLTR 8FVCR +/-15VDC@250MA 45C $ [**]
1400-01217 SNSR HEAD 1 TORR 1/4VCR W/ THERMAL BLANKER $ [**]
3030-01050 MFC 1159 50SCCM HE 1/4VCR VITON N/C 15P-DSUB SST $ [**]
----------
</TABLE>
3CSA 982812 10/23/98
-3-
<PAGE> 34
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
FIXED PRICING
<TABLE>
<CAPTION>
PART NO PART DESCRIPTION UNIT PRICE
------- ---------------- ----------
<S> <C> <C>
3030-01172 MFC 1159 20SCCM HE 1/4VCR VITON N/C 9P-DSUB SST $ [**]
3870-01463 VALVE EXHAUST THROTTLE 1 3/8IDXKF40 W/KEMREZ ORING $ [**]
3870-02311 VALVE BUTTERFLY THROTTLE W/KF 40 FLANGE $ [**]
----------
</TABLE>
4CSA 982812 10/23/98
-4-
<PAGE> 35
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
AUSTIN BUSROUTE
<TABLE>
<CAPTION>
PARTNO PARTDESC UNITPRICE
------ -------- ---------
<S> <C> <C>
0010-00744 HE PRESSURE CONTROL (20SCCM) ASSY $ [**]
0010-13150 ASSY, IHC CHAMBER D $ SHC (20SCCM) $ [**]
0010-13152 ASSY, IHC CHAMBER D & SHC (50SCCM) $ [**]
0010-35404 IHC ASSY,5200 MCVD CENTURA $ [**]
0010-35650 ASSY,INDEPENDENT HELIUM CONTROL $ [**]
0010-37643 ASSY,INDEPENDENT HELIUM CONTROL,DPS WOUT/FILTER $ [**]
0010-40240 ICH ASSY,5300 W/RSTR $ [**]
0010-76952 ASSY, IHC CHAMBER A,B, AND C, (50 SCCM) $ [**]
0190-18037 ASSEMBLY, DUAL IHC $ [**]
0620-02211 CABLE ASSY TRANSDUCER 27"LG 15P-D CONN $ [**]
1040-01093 METER XDCR 3.1/2 LCD 0-100 PSI 13032VDC 15PIN-D $ [**]
1350-01012 XDCR PRESS 0-100 TORR VCO D CONNECTION $ [**]
1350-01025 XDCR PRESS 100TORR 8VCR-F +/-15VDC @ 250MA 45C $ [**]
1350-01026 XDCR PRESS 1TORR 8VCR-F +/-15VDC @ 250MA 45C $ [**]
1350-01027 XDCR PRESS 0-1000 TORR W/FEM #8 VCO D CONN $ [**]
1350-01028 XDCR PRESS 2-1000 TORR CAJON 8 VCR FEM FTG $ [**]
1350-01039 XDCR 0-10 TORR CAP MANO 1/2 VCR D-CONN $ [**]
1350-01045 XDCR PRESS 10TORR 8VCR-F +/-15VDC @ 250MA 45C $ [**]
1350-01067 XDCR PRESS 100MTORR 45C 15VDC 8VCR FEM FTG VERTCL $ [**]
---------
</TABLE>
5CSA 982812 10/23/98
-5-
<PAGE> 36
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
AUSTIN BUSROUTE
<TABLE>
<CAPTION>
PARTNO PARTDESC UNITPRICE
------ -------- ---------
<S> <C> <C>
1350-01091 XDCR PRESS 100TORR 1/2FVCR .12%ACC 45C 15P-DSUB $ [**]
1350-01110 XDCR PRESSURE 100TORR 1/2FVCR 15P-DSUB W/OVERPRES $ [**]
1350-01121 XDCR PRESS 0-20TORR 45C 15VDC 15P D-CONN 1/2" VCO $ [**]
1350-01124 XDCR PRESS SPEC CALIBRTN 10/100MTORR 1/8FVCR 1%AC $ [**]
1350-01133 XDCR PRESS 0-100PSI 1/4VCR F/F 15P D 13-32VDC 10RA $ [**]
1350-01138 XDCR PRESS 0-10TORR 1/2VCR FEMALE 2SET POINTS $ [**]
1350-01141 XDCR PRESS 0-100TORR 0-10VDC OUT 1/4VCR 1% 9PD $ [**]
1350-01143 XDCR PRESS 1TORR RF FLTR 8FVCR +/-15VDC@250MA 45C $ [**]
1350-01212 XDCR PRESS 1TORR 1/2FVCR .12%ACC 45C HORIZ 15P-D $ [**]
3030-01113 MFC1159 50SCCM HE 1/4VCR VITON N/C 15P-DSUB SST $ [**]
3030-02284 MFC 1159 2SLM AR 1/4VCR VITON N/C 15P-DSUB SST $ [**]
3870-02373 VALVE EXH THROT 1-3/9ID X KF40 W/CHMRZ ORING 15P-D $ [**]
3920-01278 CNTRL PRESS 640 SER 10T 1/4VCR VITON CAJON MALE $ [**]
---------
</TABLE>
6CSA 982812 10/23/98
-6-
<PAGE> 37
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
SANTA CLARA BUSROUTE
<TABLE>
<CAPTION>
PARTNO PARTDESC UNITPRICE
------ -------- ---------
<S> <C> <C>
0010-37643 ASSY,INDEPENDENT HELIUM CONTROL,DPS WOUT/FILTER $ [**]
0620-02211 CABLE ASSY TRANSDUCER 27"LG 15P-D CONN $ [**]
0720-03620 CONN ADPTR 15P-D TO 9P-HEX 1FT CABLE $ [**]
1040-01012 METER SENSOR 0-10VDC 50/60HZMULTI-RANGE $ [**]
1040-01092 METER XDCR 3-1/2LCD 0-60PSI 12-32VDC 15PIN-D $ [**]
1040-01093 METER XDCR 3.1/2 LCD 0-100 PSI 13-32VDC 15PIN-D $ [**]
1270-01803 SW PRESS FLOWTHRU -25TORR GUAGE SP 1/4MVCR 9P-D $ [**]
1350-01012 XDCR PRESS 0-100 TORR VCO D CONNECTOR $ [**]
1350-01026 XDCR PRESS 1TORR 8VCR-F +/-15VDC @ 250MA 45C $ [**]
1350-01027 SDCR PRESS 0-1000 TORR W/FEM #8VCO D CONN $ [**]
1350-01028 XDCR PRESS 2-1000 TORR CAJON 8 VCR FEM FTG $ [**]
1350-01035 XDCR PRESS 0-100 TORR VCR D CONN $ [**]
1350-01039 XDCR 0-10 TORR CAP MANO 1/2 VCR D-CONNN $ [**]
1350-01054 XDCR PRESS 1000MMHG 1/8FVCR .12%ACC 45C W/SET-PT $ [**]
1350-01055 XDCR PRESS 10 TORR CAJON 8 VCR FEMALE FTG .12% $ [**]
1350-01067 XDCR PRESS 100MTORR 45C 15VDC 8VCR FEM FTG VERTCL $ [**]
1350-01068 XDCR PRESS 1--,TPRR 45C 15VDC 9VCR FE, FTG HORIZT $ [**]
---------
</TABLE>
7CSA 982812 10/23/98
-7-
<PAGE> 38
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
SANTA CLARA BUSROUTE
<TABLE>
<CAPTION>
PARTNO PARTDESC UNITPRICE
------ -------- ---------
<S> <C> <C>
1350-01090 XDCR PRESS 10TORR 1/8FVCR .25%ACC 100C 15P-DSUB $ [**]
1350-01093 XDCR PRESS 1000TORR 1/4FVCR +/-12-32V 0-10VDC 9PD $ [**]
1350-01096 XDCR PRESS 10TORR 1/4VCR-F +/-14VDC 15P-D SET-PT $ [**]
1350-01097 XDCR PRESS 10-100TORR 1/4VCR-F +/-15VDC 15P-D $ [**]
1350-01103 XDCR PRESS 0-60PSIA 1/4VCR-F/F 15D 12-32VDC 10RA $ [**]
1350-01124 XDCR PRESS SPEC CALIBRTN 10/100MTORR 1/8FVCR 1%AC $ [**]
1350-01131 XDCRPRESS 1000 TORR 1/4VCR 1% 9PIN DSUB $ [**]
1350-01133 XDCR PRESS 0-100PSI 1/4VCR F/F 15P D 13032VDC 10RA $ [**]
1350-0113893 XDCR PRESS 0-10TORR 1/2VCR FEMALE 2SET POINTS $ [**]
1350-01140 XDCR PRESS 10TORR 8VCR-F +/-15VDC @ 35MA 50C $ [**]
1350-01163 XDCR PRESS 10-100 TORR 1/4VCR-F +/-15VDC $ [**]
3030-01113 MFC1159 50SCCM HE 1/4VCR VITON N/C 15P-DSUB SST $ [**]
3030-01172 MFC 1159 20SCCM HE 1/4VCR VITON N/C 9P-DSUB SST $ [**]
3870-01470 VALVE THROTTLE TVC 100MM SMART NW50 W/CNTRL HITEMP $ [**]
3870-01512 VALVE THROTTLE TVC 50MM SMART NW50 W/CNTRL HI-TEMP $ [**]
---------
</TABLE>
8CSA 982812 10/23/98
-8-
<PAGE> 39
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1A
SANTA CLARA BUSROUTE
<TABLE>
<CAPTION>
PARTNO PARTDESC UNITPRICE
------ -------- ---------
<S> <C> <C>
3870-01817 VALVE EXH THRTL NW160 8.9PDX5.879ID 2CTR-BORE-HOL $ [**]
3920-01278 CNTRL PRESS 640 SER 107 1/4VCR VITON CAJON MALE $ [**]
---------
</TABLE>
9CSA 982812 10/23/98
-9-
<PAGE> 40
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ATTACHMENT 1B
SERVICE AND REPAIR
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
AMAT CAL REBUILD
PARTNO ITEM DESCRIPTION MKS PARTNO PRICE PRICE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
010-00744 HE PRESSURE CONTROL (20SCCM) ASSY 121002-G1 [**] [**]
010-13150 ASSY, IHC CHAMBER D $ SHC (20SCCM) 121002-G2 [**] [**]
011l0-13152 ASSY, IHC CHAMBER D & SHC (50 SCCM) 1210-02-G4 [**] [**]
010-35404 IHC ASSY, 5200 MCVD CENTURA 202407 [**] [**]
010-35650 ASSY, INDEPENDENT HELIUM CONTROL 202258 [**] [**]
010-37643 ASSY, INDEPENDENT HELIUM CONTROL, DPS WOUT/FILTER 120657-G2 [**] [**]
010-40240 IHC ASSY, 5300 W/RSTR 190094-G1 [**] [**]
010-76952 ASSY, IHC CHAMBER A, B, AND C 50 SCCM) 121002-G3 [**] [**]
190-18037 ASSEMBLY, DUAL IHC 202406 [**] [**]
224-01921 XDCR, MKS, 0-100 PSI 1/4FVCR 12-32VDC 15P-5RA 852B-13384 [**] [**]
224-42759 XDUCER, PRESSURE -MKS 850 5RA G223 850A-12951 [**] [**]
225-10104 1 TORR VCR MONOMETER 127A-00001B [**] [**]
225-10105 100 TR VCR MONOMETER 127A-00100B [**] [**]
225-33295 XDCR, PRESS 0-10TO44,1/2VCR 122BA-00010BB [**] [**]
226-09052 45D BARATRON W/VCR FTG, 10 TORR 10948-1 127BA-00010BB [**] [**]
226-10754 EXDCR PRESSURE 0-10TORR, 1/2VC 0222- 127A-11356 [**] [**]
226-40111 TRANSDUCER, THRU TUBE, MKS TYPE 852, F-F, BENDIX 852B61PCJ4GH [**] [**]
226-41024 CABLE METER XDCR O-100PSI 15PIN-D27IN.L CB852-5-2.5 [**] [**]
</TABLE>
1CSA 982812 10/23/98
-1-
<PAGE> 41
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
<TABLE>
<S> <C> <C> <C> <C>
226-41187 XDCR PRESS 0-100 PSIG 1/4 VCR F/F 13-32VDC 10RA 842B12PCJ2GC [**] [**]
226-41188 METER XDCR 3-1/2 LCD 0-100 PSIG 13-32VDC 15 PIN-D LDM-A12PB2CC1 [**] [**]
6-88029-00 CABLE SHLD W/RT ANG CON CB036-11075 [**] [**]
620-01022 CABLE ASSY 12 COND 22AWG SHIELDED MULTI-COLOR CB036-11016 [**] [**]
620-02211 CABLE ASSY TRANSDUCER 27"LG 15P-D CONN CB852-5-2.5 [**] [**]
620-02563 CABLE ASSY SENSOR HEAD - BARATRON CB036-11016 [**] [**]
690-01954 BRKT SENSOR HEAD MTG [**] [**]
720-03620 CONN ADPTR 15P-D TO 9P-HEX 1FT CABLE CB6551-31-1 [**] [**]
040-01012 METER SENSOR 0-10VDC 50/60HZMULTI-RANGE 170M-6C [**] [**]
040-01092 METER XDCR 3-1/2CD 0-60PSI 12-32VDC 15PIN-D LDM-A61PA2CC1 [**] [**]
040-01093 METER XDCR 3.1/2 LCD 0-100 PSI 13-32VDC 15PIN-D LDM-A12PA2CC1 [**] [**]
270-01803 SW PRESS FLOWTHRU -25 TORR GAUGE SP 1/4MVCR 9P-D 42A13DCH2AA025 [**] [**]
350-01005 XDCR PRESS 1TORR 8VCO-F +/-15VDC @ 250MA 45C 127A-00001E [**] [**]
350-01011 XDCR PRESS 0-10 TORR VCO D CONNECTOR 122BA-00010EB [**] [**]
350-01012 XDCR PRESS 0-100 TORR VCO D CONNECTOR 122BA-0010EB [**] [**]
350-01016 XDCR PRESS 10TORR 8VCO-F +/-15VDC @ 250MA 45C 127AA-00010E [**] [**]
350-01019 XDCR PRESS 0-10 TORR 8 VCR WIRE STRIP CONN SP 122A-116063 [**] [**]
350-01021 XDCR PRESS 100MTORR 8VCR-F +/-15VDC @ 250MA 45C 127AA-000.1B [**] [**]
350-01025 XDCR PRESS 100TORR 8VCR-F +/-15VDC @ 250MA 45C 127A-00100B [**] [**]
</TABLE>
2CSA 982812 10/23/98
-2-
<PAGE> 42
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
<TABLE>
<S> <C> <C> <C> <C>
350-01026 XDCR PRESS 1TORR 8VCR-F +/- 15VDC @ 250MA 45C 127A-00001B [**] [**]
350-01027 XDCR PRESS 0-1000 TORR W/FEM #8 VCO D CONN 122BA-0100EB [**] [**]
350-01028 XDCR PRESS 2-1000 TORR CAJON 8 VCR FEM FTG 124AA010000BB [**] [**]
350-01035 XDCR PRESS 0-100 TORR VCR D CONN 122BA-00100BB [**] [**]
350-01036 XDCR PRESS 0-1 TORR VCR D CONNECTOR 122BA-00001BB [**] [**]
350-01039 XDCR 0-10 TORR CAP MANO1/2VCR D-CONN 122B-11411 [**] [**]
350-01045 XDCR PRESS 10TORR 8VCR-F +/-15 VDC @ 250MA 45C 127A-00010B [**] [**]
350-01051 XDCR PRESS BARATRON, HEATED 10 TORR 621C11TBFHC [**] [**]
350-01052 XDCR PRESS BARATRON, HEATED 1000 TORR 621C13TBFH [**] [**]
350-01054 XDCR PRESS 1000MMHG 1/8FVCR.12%ACC 45C W/SET-PT 624A13TBC [**] [**]
350-01055 XDCR 10 TORR CAJON 8 VCR FEMALE FTC.12% 627A11TBC [**] [**]
350-01067 XDCR PRESS 100MTORR 45C 15VDC 8VCR FEM FTG VERTCL 627A.1TBD [**] [**]
350-01068 XDCR PRESS 100MTORR 45C 15VDC 8VCR FEM FTG HORIZT 627A-11985 [**] [**]
350-01072 XDCR PRESS 100OTORR 8VCR-F +/-15VDC @ 250MA 45C 127AA-0100B [**] [**]
350-01075 XDCR PRESS 0-100TORR SHRT 8FVCR TERM-STRIP +/-15V 122A-11064 [**] [**]
350-01078 XDCR PRESS 0-250PSIA 1/4VCR-M/M 0-10VDC 6"PIGTAIL [**] [**]
350-01079 XDCR PRESS 2TORR 8VCR-F +/-15VDC @ 250MA 45DED-C 127AA-00002B [**] [**]
350-01083 XDCR PRESS 0-60PSIA 1/4VCR-M 12-32VDC 50DECG 10RA 852B61PCA2NC [**] [**]
350-01086 XDCR PRESS 0-1000TORR 1/4 VCR-M12-32VDC 50C 10RA 852BA13TCA2NC [**] [**]
</TABLE>
3CSA 982812 10/23/98
-3-
<PAGE> 43
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
<TABLE>
<S> <C> <C> <C> <C>
350-01089 XDCR PRESS 100MTORR 1/8FVCR .25%ACC 100C 15P-DSUB 628A.1TBE [**] [**]
350-01090 XDCR PRESS 10TORR 1/8FVCR .25%ACC 100C 15P-DSUB 628A12TBC [**] [**]
350-01091 XDCR PRESS 100TORR 1/2FVCR .12%ACC 45C 15P-DSUB 627A12TBC [**] [**]
350-01092 XDCR PRESS 1TORR 1/2FVCR .12%ACC 45DEG-C 15P-DSUB 627A01TBC [**] [**]
350-01093 XDCR PRESS 1000TORR 1/4FVCR +/-12-32V 0-10VDC 9PD 751A-12772 [**] [**]
350-01096 XDCR PRESS 10TORR 1/4VCR-F +/-15VDC 15P-D SET-PT R750B11TCD2GC [**] [**]
350-01097 XDCR PRESS 10-100TORR 1/RVCR-F +/-15VDC 15P-D CV7527A-01 [**] [**]
350-01098 XDCR PRESS 1TOR 1/2FVCR .25%ACC 100C 15P-DSUB 628A01TBE [**] [**]
350-01101 XDCR PRESS 2-100TORR 1/2VCR-F .5%ACC +/-15VDC 124AA-00100BB [**] [**]
350-01102 XDCR PRESS 10TORR 8FVCR DCONN +/-15VDC@35MA .93"L 122B-12773 [**] [**]
350-01103 XDCR PRESS 0-60PSIA 1/4VCR-F/F 15D 12-32VDC 15RA 852B61PCJ2GC [**] [**]
350-01110 XDCR PRESSURE 100TORR 1/2FVCR 15P-DSUB W/OVERPRE 624A-13092 [**] [**]
350-01121 XDCR PRESS 0-20TORR 45C 15VDC 15P D-CONN 1/2"VCO 627A-13267 [**] [**]
350-01124 XDCR PRESS SPEC CALIBRTN 10/100MTORR 1/8FVCR 1%AC 628A-13114 [**] [**]
350-01131 XDCRPRESS 1000 TORR 1/4VCR 1% SPIN DSUB 750B13TCD2GA [**] [**]
350-01133 XDCR PRESS 0-100PSI 1/4VCR F/F 15P D 13-32VDC 10RA 852B12TCJ2GC [**] [**]
350-01138 XDCR PRESS 0-10TORR 1/2VCR FEMALE 2SET POINTS 625A-13127 [**] [**]
350-01140 XDCR PRESS 10TORR 8VCR-F +/-15VDC @ 35MA 50C 626A11TBE [**] [**]
</TABLE>
4CSA 982812 10/23/98
-4-
<PAGE> 44
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
<TABLE>
<S> <C> <C> <C> <C>
350-01141 XDCR PRESS 0-100TORR 0-10VDC OUT 1/4VCR 1% 9PD 750B12TCD2GA [**] [**]
350-01143 XDCR PRESS 1TORR RF FLTR 8FVCR +/-15VDC@250MA 45C 127A-13608 [**] [**]
350-01163 XDCR PRESS 10-100 TORR 1/4VCR-F +/-15VDC CV7627A-05 [**] [**]
350-01212 XDCR PRESS 1TORR 1/2FVCR .125ACC 45C HORIZ 15P-D 627A-14974 [**] [**]
400-01217 SNSR HEAD 1 TORR 1/4VCR W/THERMAL BLANKER [**] [**]
3030-01050 MFC 1159 50SCMM HE 1/4VCR VITON N/C 15P-DSUB SST 1159B-00059SV-S [**] [**]
3030-01113 MFC1159 50SCCM HE 1/4VCR VITON N/C 15[-DSUB SST 1159B-00050RV-sp [**] [**]
3030-01172 MFC 1159 20SCCM HE 1/4VCR VITON N/C 9[-DSUB SST 1159B-00020RV-S [**] [**]
3030-02284 MFC 1159 2SLM AR 1/4VCR VITON N/C 15P-DSUB SST 1159B-02000RV-S [**] [**]
3870-01463 VALVE EXHAUST THROTTLE 1 3/8DXKF40 W/KEMREZ ORING 253B-11203 [**] [**]
3870-01470 VALVE THROTTLE TVC 100MM SMART NW50 W/CINTRL HITEM 153C-1-100-2 [**] [**]
3870-01512 VALVE THROTTLE TVC 50MM SMART NW50 W/CNTRL HI-TEM 153C-2-50--2 [**] [**]
3870-01817 VALVE EXH THRTL NW160 8.9ODX5.87691D 2CTR-BORE-HOL 653B-13071 [**] [**]
3870-02311 VALVE BUTTERFLY THROTTLE W/KF 40 FLANGE 253B-02311 [**] [**]
3870-02373 VALVE EXH THROT 1-3/81D X KF40 W/CHMRZ ORIGN 15P-D 253B-11203 [**] [**]
3920-01278 CNTRL PRESS 640 SER 10T 1/4VCR VITON CAJON MALE 640A12TW1V12-S [**] [**]
</TABLE>
5CSA 982812 10/23/98
-5-
<PAGE> 45
ATTACHMENT 2
APPLIED MATERIALS, Inc.
CORPORATE FISCAL CALENDAR 1998
<TABLE>
<S> <C>
M T W T F S S M T W T F S S
-------------------------------------- --------------------------------------
WK 1ST QUARTER 3RD QUARTER WK
NOVEMBER MAY
1 27 28 29 30 31 1 2 27 28 29 30 1 2 3 27
2 3 4 5 6 7 8 9 4 5 6 7 8 9 10 28
3 10 11 12 13 14 15 16 11 12 13 14 15 16 17 29
4 17 18 19 20 21 22 23 18 19 20 21 22 23 24 30
5 24 25 26 [27] [28] 29 30
DECEMBER JUNE
6 1 2 3 4 5 6 7 [25] 26 27 28 29 30 31 31
7 8 9 10 11 12 13 14 1 2 3 4 5 6 7 32
8 15 16 17 18 19 20 21 8 9 10 11 12 13 14 33
9 22 23 24 [25] /26/ 27 28 15 16 17 18 19 20 21 34
JANUARY JULY
10 /29/ /30/ /31/ [1] /2/ 3 4 22 23 24 25 26 27 28 35
11 5 6 7 8 9 10 11 29 30 1 2 [3] 4 5 36
12 12 13 14 15 16 17 18 6 7 8 9 10 11 12 37
13 19 20 21 22 23 24 25 13 14 15 16 17 18 19 38
20 21 22 23 24 25 26 39
-------------------------------------- --------------------------------------
2ND QUARTER 4TH QUARTER
FEBRUARY AUGUST
14 26 27 28 29 30 31 1 27 28 29 30 31 1 2 40
15 2 3 4 5 6 7 8 3 4 5 6 7 8 9 41
16 9 10 11 12 13 14 15 10 11 12 13 14 15 16 42
17 [16] 17 18 19 20 21 22 17 18 19 20 21 22 23 43
MARCH SEPTEMBER
18 23 24 25 26 27 28 1 24 25 26 27 28 29 30 44
19 2 3 4 5 6 7 8 31 1 2 3 4 5 6 45
20 9 10 11 12 13 14 15 [7] 8 9 10 11 12 13 46
21 16 17 18 19 20 21 22 14 15 16 17 18 19 20 47
APRIL OCTOBER
22 23 24 25 26 27 28 29 21 22 23 24 25 26 27 48
23 30 31 1 2 3 4 5 28 29 30 1 2 3 4 49
24 6 7 8 9 10 11 12 5 6 7 8 9 10 11 50
25 13 14 15 16 17 18 19 12 13 14 15 16 17 18 51
26 20 21 22 23 24 25 26 19 20 21 22 23 24 25 52
-------------------------------------- --------------------------------------
[ ] = HOLIDAYS / / = SHUTDOWN | | = HOLIDAYS
(US ONLY) (US ONLY) (AMJ ONLY)
APPLIED MATERIALS CONFIDENTIAL
</TABLE>
<PAGE> 46
ATTACHMENT 3
DELIVERY MECHANICS
TYPE 1 PURCHASE ORDER (P.O) RELEASE
Releases against this Agreement will be made by issuing purchase
orders. Delivery dates shall refer to dates of receipt at Buyer's
facility. Seller will not deliver items more than five (5) calendar
days in advance of Buyer's required delivery dates without prior
approval.
TYPE 5 JUST-IN-TIME/BUS ROUTE MECHANICS
A. This Agreement authorizes Seller to create and maintain inventory,
subject to the terms of this Agreement, for the Bus Route Program in
accordance to and subject to Article 5 of the Master Purchase Order and
Sales Agreement. Items to be included in the Bus Route Program are
found in Attachment 1 of the Master Purchase Order and Sales Agreement.
B. Buyer will notify Seller of requirements via facsimile or EDI
transmission. (Requirements may be released twice a day, seven days
week, no later than 6:00 a.m. and 3:00 p.m.).
C. Seller will attach all "pick cards" to the requested material prior to
shipment for easy identification by Buyer.
D. Seller shall have all items ready for pick up by Buyer's truck within
three hours of receipt of requirements. Or. Seller can deliver parts to
Buyer by 9:00 a.m. for morning requirements and 6:00 p.m. for afternoon
requirements.
E. If the "pick card" requirement cannot be filled, Seller shall return to
Buyer the pick card indicating a back order.
F. For back ordered items Seller will receive a new "pick card" the
following day which will have "Back Order" written on it. The Seller
should attach the material to this "pick card" with a red dot which
identifies the item as a filled back order to the Buyer.
G. Seller will be paid based on Buyer's CMR Transaction Summary, and in
accordance with the following, depending on Buyer's Bus Route location:
For Austin, Texas Bus Route:
THE END DATE OF EACH TRANSACTION WEEK WILL BE USED AS THE
INVOICE NUMBER FOR PAYMENT OF AUSTIN BUS ROUTE INVOICES, I.E.
FRIDAY, APRIL 1, 1995 WOULD BE INVOICE #040195A.
For Santa Clara, California Bus Route:
THE PRINT DATE OF THE CMR TRANSACTION SUMMARY DOCUMENT WILL BE
USED AS THE INVOICE NUMBER FOR PAYMENT OF SANTA CLARA BUS
ROUTE INVOICES, I.E. FRIDAY, APRIL 1, 1995 WOULD BE INVOICE
#040195A.
H. Seller will maintain records of all Items shipped to Buyer to verify
against Buyer's weekly accumulated usage report which will be faxed to
Seller each Monday morning.
I. Buyer will make changes (quantity/price) to the transaction summary of
discrepancies that occur and are validated. These changes/adjustments
will be reflected on the transaction summary the following week for
payment.
1. If discrepancies in pricing or quantity are found,
SELLER will modify the report accordingly, and fax
the corrected copy to BUYER/PLANNER.
2. If no discrepancies are found, no further action is
required by SELLER, and payment will be made
accordingly.
J. Buyer shall make payment to Seller in accordance with the terms
established in this agreement.
<PAGE> 47
Attachment 4
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE> 48
Attachment 5
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE> 49
Attachment 6
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE> 50
Attachment 7
APPLIED MATERIALS CORPORATE ROUTING GUIDE ATTACHMENT A
TRANSPORTATION AND SHIPPING REQUIREMENTS
Applied Materials Corporate Traffic Department has established excellent pricing
and service programs with various transportation carriers. Using these approved
carrier programs, when Applied Materials is responsible for the freight charges,
will contribute to our freight cost reduction goals while continuing to provide
a high level of customer satisfaction. Everyone has a responsibility to control
and reduce unnecessary expenses.
Requirements for transportation and shipping are as follows:
- - All freight collect shipments to Applied Materials must be routed via
the appropriate Applied Materials approved carrier, see general routing
instructions within the United States.
- - An Applied Materials department of division number must be referenced
on the carrier documentation.
- - All shipments consigned to a third party at the direction of Applied
Materials and Applied Materials is paying the freight charges must be
routed by an approved Applied Materials carrier. All shipping
documentation must indicate billing to third party (Applied Materials).
- - For freight routed prepaid by third party, FOB origin, the third party
will assume all risk in transit when approved Applied Materials carrier
is used.
- - Materials must be suitable packaged to withstand normal freight
handling and movement while in transit.
- - Multiple order shipping by the same carrier and service level, on the
same day, must be consolidated into one shipment on one carrier
document.
- - Material for each purchase order must be packaged separately with it's
own packing list.
- - Packing lists must be attached to the outside surface of the package
and visible from any position (do not hide from view if multiple
packages are pelletized).
- - When consolidating multiple purchase orders in one overpack carton, all
inside orders must be attached to the overpack carton. Overpack carton
must be clearly label to indicate multiple orders are packed inside.
Each carton within the overpack must be clearly labeled.
<PAGE> 51
Attachment 7
- - DO NOT DECLARE VALUE or request insurance on any freight collect
shipment or third party shipments where Applied Materials is paying the
freight charges unless specifically authorized.
- - Materials must be shipped in time to meet the due date shown on the
purchase order. Materials will not be accepted/received earlier than
three (3) days of the due date, unless specifically authorized.
Materials shipped earlier will be refused and possibly returned at your
expense.
- - Only use air freight at the requested level of service when
specifically instructed and authorized in writing by Applied Materials.
- - Suppliers must specifically state or indicate Emergency/Overnight
service on the airbill or truck bill of lading to ensure expedited
delivery, and only when instructed and authorized in writing by Applied
Materials.
- - All shipping documents and package address labels must reference the
complete purchase order number(s) for the material included in the
package(s) and shipment. When freight codes are provided they must also
show on all documents.
- - Any question concerning third party billing or carrier recommendations
anywhere within the United States should be addressed to Corporate
Traffic Operations:
Santa Clara, California (408) 235-6053
Outside Santa Clara, California Toll Free 1-888-TOO-SHIP
(1-888-866-7447)
<PAGE> 52
ATTACHMENT 7
APPLIED MATERIALS - ROUTING GUIDE
GENERAL ROUTING INSTRUCTIONS WITHIN THE US
COMMON CARRIER (LTL) TRANSPORTATION UP TO 7,500 LBS.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
WEIGHT AMAT LOCATION OR SERVICE AREA CARRIER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1-100 lbs. All points. Federal Expres - Express Saver
- --------------------------------------------------------------------------------------------------------
Over 100 lbs. All interstate shipments. CF Motor Freight
- --------------------------------------------------------------------------------------------------------
Over 100 lbs. Intrastate AZ, CA, & OR Viking Freight System
- --------------------------------------------------------------------------------------------------------
Over 100 lbs. Intrastate Tx, except Augtin & Dallas area Federal Express - Express Saver Freight
- --------------------------------------------------------------------------------------------------------
1-50 lbs. Austin & Dallas area Sonic Air
Over 50 lbs. Federal Express - Express Saver
- --------------------------------------------------------------------------------------------------------
Over 100 lbs. Intrastate MA, NY, & PA Federal Express - Express Saver Freight
- --------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Please provide 48 hour advance notice when your shipment is over 7,500 lbs., or
on shipments that require special equipment. This will enable sufficient tiem to
schedule the carrier that will provide the most economical and timely service.
Contact Corporate Traffic 1-888-TOO-SHIP (866-7447).
- --------------------------------------------------------------------------------
<TABLE>
HIGH VALUE PRODUCTS, AIR RIDE OR PADDED VAN SERVICE
- --------------------------------------------------------------------------------
<S> <C>
TWI Mayflower Call traffic (408) 235-6053, for scheduling and transit
time details.
- --------------------------------------------------------------------------------
<CAPTION>
NEXT FLIGHT OUT, MESSENGER, AND/OR COURIER SERVICE WITHIN THE US
- --------------------------------------------------------------------------------
<S> <C>
All weights Sonic Air call the local office, if no local office call
1-800-528-6070
- --------------------------------------------------------------------------------
<CAPTION>
AIR FREIGHT WITHIN THE US
- --------------------------------------------------------------------------------
WEIGHT SERVICE CARRIER
- --------------------------------------------------------------------------------
<S> <C> <C>
1 - 70 lbs. Priority Overnight - 10:30 AM Next Day
Priority Overnight - 3:00 PM Next Day Federal Express
Economy Service - 4:30 PM Second Day
- --------------------------------------------------------------------------------
Over 70 lbs. Priority Overnight - 10:30 AM Next Day
Standard Overnight - 4:00 PM Next Day
Two Day - 4:00 PM Second Day Eagle USA Air Freight
Deferred Air - 3-5 day delivery
- --------------------------------------------------------------------------------
<CAPTION>
GENERAL ROUTING INSTRUCTIONS FOR ALL INTERNATIONAL LOCATIONS
- --------------------------------------------------------------------------------
WEIGHT SERVICE CARRIER
- --------------------------------------------------------------------------------
<S> <C> <C>
1 - 50 Kgs. Regular Air Federal Express
- --------------------------------------------------------------------------------
All Weights Next Flight Out or Courier Service Schencker International*
- --------------------------------------------------------------------------------
Over 50 Kgs. Regular Air or Consolidation
- --------------------------------------------------------------------------------
</TABLE>
* Shipments over 50 Kgs. to or from Japan must be routed via Nippon Express.
<PAGE> 53
ATTACHMENT 7
TRANSIT TIMES FOR U.S. CARRIERS
SELECT CARRIER BY REFERING TO GUIDANCE PROVIDED ON PAGE ONE. USE TABLE BELOW TO
ENSURE TRANSIT TIME OF SERVICE MEETS DELIVERY REQUIREMENTS.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
US TIMETABLE SHIPMENT SAME-DAY 1 DAY 2 DAYS 3 DAYS 4 DAYS 5 DAYS 6 DAYS
SIZE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sonicair Courier All - see f. Nationwide Nationwide
Next Flight Out
- ----------------------------------------------------------------------------------------------------------------------------------
Sonicair Ground All - see e. 50 miles of
Courier Local AMAT
Sites
- ----------------------------------------------------------------------------------------------------------------------------------
Federal Express 1-100 lbs, Up to 350 350 to Over 1,000
Express Saver see d. miles of 1,000 miles miles of
origin of origin origin
- ------------------------------------------------------------------------------------------
Federal Express Over 151 Up to 350 350 to Over 1,000
Express Saver lbs., see d. miles of 1,000 miles miles of Federal Express
Freight origin of origin origin Express Saver Service commitment
- ------------------------------------------------------------------------------------------ by 4:30 PM
Viking Freight Over 100 All points in CA to metro Colorado or by close of business.
Sys. lbs. CA ex areas in Springs, CO
Between CA, AZ, Calexico. AZ, NV,
OR. Reno, NV OR,
Denver, CO
- ----------------------------------------------------------------------------------------------------------------------------------
CF Motor Freight Over 100 AZ, ID, CO, MT, IL, IN, KS, DC, DE,
Between Santa lbs. NV, OR, NM, UT KY, LA, FL, GA,
Clara and States WA MI, MN, LA, MA,
MO, ND, MD, ME,
NE, OH, MS, NC,
OK, SD, NH, NJ,
TN, WI, NY, PA,
WY RI, SC,
TX, VA,
VT, WV
- ----------------------------------------------------------------------------------------------------------------------------------
CF Motor Freight Over 100 AR, LA, AL, CO, AZ, CT,
between Austin lbs. NM, OK FL, GA, DC, DE,
and States IA, IL, ID, MA,
IN, KS, MD, ME,
KY, MI, MN, MO,
MS, NC, MT, ND,
SC, UT, NE, NH,
WI, WY NJ, NV,
NY, OH,
OR, PA,
RI, SD,
TN, VA,
VT, WA,
MV
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
a. General guidelines call 1-888-TOSHIP for additional information.
b. Viking Freight Systems use for all intrastate California LTL. Can be
used for Western States Listed.
c. Express Saver Freight Program should be used for all appropriate
non-local intra Texas shipments.
d. Express Saver program should be used for appropriate packages under 100
lbs.
e. Sonic Ground Courier Service can be used for sameday shipments in local
area of AMAT sites in Santa Clara, Milpitas, Austin, Dallas, Phoenix,
and Boston.
f. Next Flight Out service is used for extremely urgent shipments. Check
with carrier for delivery commitment. Consider Federal Express or Eagle
if commitment is after 10:30 AM next day.
<PAGE> 54
Attachment 8
Intentionally Omitted
<PAGE> 55
Attachment 9
Intentionally Omitted
<PAGE> 56
ATTACHMENT 10
Applied Materials Incorporated
PRELIMINARY QNRR FORM
SUPPLIER NAME: _________________________________ DATE: ________________________
P/N: ___________________________________________ SQE: _________________________
================================================================================
QNRR Number:
_________________________________
================================================================================
Levels: Please check one 1. Critical [ ]
2. Major [ ]
See Page 3 of 3 for level descriptions 3. Minor [ ]
================================================================================
Brief Description:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
================================================================================
* This QNR requires corrective action 1. CA Approved: [ ];
(CA). Please return this form with Applied Materials must sign
signature to within ________ working page 2 of 3 to confirm
days. approval.
2. CA Disapproved: [ ];
Explain below
Applied Materials Explain
Briefly:
* Applied Materials to review CA and ________________________________
Approve or Disapprove based on fact. ________________________________
Applied Materials must inform supplier ________________________________
by returning this form with status ________________________________
checked and explained within fourteen ________________________________
working days. ________________________________
================================================================================
<PAGE> 57
================================================================================
CA to correct Discrepancy: Explain
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
================================================================================
Preventative Measures Described:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
================================================================================
Scheduled Completion Date: _____________________________________
Supplier Signature: _____________________________________
Applied Materials Approval Signature: _____________________________________
================================================================================
<PAGE> 58
ATTACHMENT 10
Applied Materials Incorporated
LEVELS OF CORRECTIVE ACTION
LEVEL NATURE
- ----- ------
1. CRITICAL HAZARDOUS TO HUMAN SAFETY; OR VITAL TO
FUNCTIONALITY OF END PRODUCT THUS NON-
CONFORMANCE IN MEETING THE REQUIRED
SPECIFICATIONS AND CONTRACTUAL
AGREEMENTS. EXAMPLES: IMPROPER HEAT
TREATEMENT OF CERAMIC MECHNICAL MOTOR
MECHANISM, INOPERATIVE BRAKING SYSTEM,
EXPLOSIVE COMPONENTS, ETC.
2. MAJOR A NON-CONFORMANCE RELATED TO THE
REQUIRED FUNCTIONALITY SPECIFICATIONS
AND/OR NON-CONFORMANCE TO CONTRACTUAL
AGREEMENTS. EXAMPLES: CHEMICAL
REACTION (RUST), INOPERATIVE MECHANISM,
PCBAS.
3. MINOR A NON-CONFORMANCE TO THE FUNCTIONALITY
OF PARTS/MECHANISMS WHICH ARE NOT
SHOW STOPPERS. EXAMPLES: CHEMICAL
REACTION (RUST), DENTS, SCRATCHES, LOOSE
HINGE.
<PAGE> 59
ATTACHMENT 12
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Applied Materials ENGINEERING CHANGE NOTICE ECN No.
COMMODITY:
- -----------------------------------------------------------------------------------------------------------------------------------
MODEL No. CHARGE No. CONTRACT No. PROGRAM NAME Sheet 1 of
------------------------------------------------------------------------------------------------------
ECN CLASS
- -------------------------------------------------------------------------------------- ---------------------------------
DATA ENTRY REQUIRED REASON FOR CHANGE ECP No. Requester TYPE I [ ] II [ ] RCD [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
Doc [ ] Bom [ ] Part [ ] Routine Incorporate
- ----------------------------- -----------------------------------------
DATA ENTRY REQUIRED Customer Approval Date Urgent Changes by
- ----------------------------- ----------------------------------------- ---------------------------------
Doc [ ] Bom [ ] Part [ ] Emergency
- -----------------------------------------------------------------------------------------------------------------------------------
Parts Disposition Codes
--------------------------------------------------------
DOCUMENT(S) AFFECTED PART(S) AFFECTED 1. Use part as is (no action)
2. Rework part/build to change
3. Scrap part (do not use)
4. See special instruction
- -----------------------------------------------------------------------------------------------------------------------------------
Change
Effectivity
Document Current New L/U Part (S/N, Qty,
Number Rev Rev Rev TITLE Number Dates) FP/RR OPEN (OP) Comp (CP) Cloased (CL)
- -----------------------------------------------------------------------------------------------------------------------------------
Not Started In Kitting 10 Mfg. In Stock Shipped
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
DESCRIPTION OF CHANGE
- -----------------------------------------------------------------------------------------------------------------------------------
Project Engineer Date Mfg. Engineer Date Production Control Date ECN Checked by Date
---------------------------------------------------------------------------------------------------------------
REQUIRED ------------------------------
Incorporated by Date
---------------------------------------------------------------------------------------------------------------
APPROVALS Quality Engineer Date Configuration Date Program Manager Date
Incorporation ck'd by Date
------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 60
ATTACHMENT 13
APPLIED MATERIALS SUPPLIER PROBLEM SHEET 95-0957
- --------------------------------------------------------------------------------
Date Vendor Originator Telephone No.
- --------------------------------------------------------------------------------
Part Number Part Description
- --------------------------------------------------------------------------------
Contract/Spot Buy (circle one) Purchase Order No.
- --------------------------------------------------------------------------------
PROBLEM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPLIED ACTION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROBLEM NAME DATE RETURN
WILL BE RESPONSE TO
RESOLVED ORIGINATOR
BY: WITHIN 24
HOURS
- --------------------------------------------------------------------------------
<PAGE> 61
Attachment 14
Intentionally Omitted
<PAGE> 62
Attachment 15
Intentionally Omitted
<PAGE> 63
Attachment 16
CERTIFICATE OF CONFORMANCE
"I certify that on _________________________ the ____________________ furnished
the supplies or services called for under the Applied Materials' Purchase
Contract Number ________________________________ via _______________________ on
________________________________________________________ in accordance with all
applicable requirements. I further certify that the supplies or services are of
the quality specified and conform in all respects with the contract
requirements, including specifications, drawings, preservation, packaging,
packing, marking requirements and physical item identification (part number),
and are in the quantity shown on this or on the attached acceptance document."
Date of Execution:
Signature:
Name & Title:
********************************************
Instructions:
The _____ signed certificate shall be attached to or included on the top copy of
the inspection or receiving report provided to Applied Materials ar the time of
delivery. In addition, a copy of the signed completed certificate shall also be
maintained at the ______ facility and will be made available to Applied
Materials' representatives upon request.
<PAGE> 64
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Attachment 17
[**] CALCULATION
[**]
<PAGE> 65
NONDISCLOSURE AGREEMENT
Applied Materials, Inc.
APPLIED MATERIALS, INC., a Delaware corporation (including its subsidiaries,
"Applied"), having its principal offices in Santa Clara, California and MKS
Instruments, Inc., a Massachusetts corporation,("Recipient") having its
principal offices in Andover, Massachusetts, hereby agree as follows:
I. IDENTIFICATION OF CONFIDENTIAL INFORMATION
A. Applied may disclose to Recipient the following types of
information: SEE ATTACHMENT 1.
B. The information described in A. above shall be deemed
"Confidential Information" if:
(1) in the case of a written disclosure, Applied affixes to
the document an appropriate legend, such as "Proprietary" or "Confidential", and
(2) in the case of an oral or visual disclosure, Applied makes
a contemporaneous oral statement or delivers to Recipient a written statement
within thirty (30) days to the effect that such disclosure is confidential or
the like.
C. "Confidential Information" does not include information that:
(1) becomes a matter of public knowledge through no fault of Recipient, (2) is
rightfully received by Recipient from a third party without restriction on
disclosure, (3) is independently developed by Recipient without the use of
Applied's Confidential Information or (4) is in the possession of Recipient
prior to its disclosure by Applied.
D. Each party's Nondisclosure Agreement ("NDA") Coordinator serve
as the principal contact for the disclosure or receipt of Confidential
Information. Applied's NDA Coordinator will be MICHAEL BERKLAW and Recipient's
NDA Coordinator will be LEO BERLINGHIERI.
II. USE OF CONFIDENTIAL INFORMATION
Recipient shall use the Confidential Information only for the purpose
of (1) determining whether to enter into a transaction with Applied, (2)
purchasing or using products or services supplied by Applied or (3) providing
products or services to Applied. Absent a written agreement to the contrary, all
information generated or derived by Recipient in connection with any such
transaction or provisions of goods or services shall be deemed Confidential
Information for purposes of this Agreement.
III. RESPONSIBILITIES OF RECIPIENT
A. Recipient agrees (1) to disclose Confidential Information only
to those of its employees who have a need to know such information, are informed
of its confidential nature and agree to comply with this Agreement, (2) not to
disclose Confidential Information to any third party, except pursuant to a
lawful judicial, administrative or governmental order after providing Applied an
opportunity to avoid or limit such disclosure, (3) to protect the Confidential
Information with at least the degree of care with which it protects its own
confidential information, but in no case with less than a reasonable degree of
care and (4) to notify Applied promptly of any breach of this Agreement.
B. Within thirty (30) days of a written request by Applied,
Recipient shall (1) destroy or return to Applied all documents received from
Applied that contain Confidential Information, all documents it may have created
that reveal or are based on any Confidential Information, and all copies of the
foregoing (except for one copy which may be kept by Recipient's legal department
or outside attorneys for archival purposes only), and (2) deliver to Applied a
certificate stating that Recipient has complied with such requests.
IV. DISCLOSURE PERIOD AND CONFIDENTIALITY PERIOD
A. The period during which Applied may disclose Confidential
Information under this Agreement shall begin on the date of the first disclosure
of Confidential Information (which may be prior to the date of this Agreement)
and shall end on _______ (if no date is specified, the period shall end three
(3) years from the date this Agreement was signed). Either party may terminate
the Agreement by giving the other party ten (10) days' written notice.
B. The obligations set forth in Articles II and III shall (1)
termination five (5) years from the date of this Agreement and (2) survive the
termination or expiration of this Agreement.
<PAGE> 66
V. MISCELLANEOUS
A. Recipient shall not acquire intellectual property rights from
Applied other than by a separate written agreement. Nothing in this Agreement
shall be deemed to create any obligation to disclose Confidential Information.
The Confidential Information is accepted "as is" by Recipient without any
warranty of noninfringement or of any other sort by Applied or any of Applied's
agents, advisers, consultants or contractors.
B. This Agreement does not create any partnership, joint venture
or agency between the parties.
C. Before exporting or reexporting any Confidential Information,
Recipient must comply with all applicable regulations of the U.S. Department of
Commerce Office of Export Administration and/or other applicable agencies.
D. This Agreement is the complete and exclusive statement of the
understanding between the parties regarding the subject matter hereof and
supersedes all prior or contemporaneous communications. It may be amended only
by a writing signed by both parties.
E. This Agreement shall be interpreted and enforced according to
the laws of the State of California (exclusive conflict of law rules).
APPLIED MATERIALS, INC. MKS INSTRUMENTS, INC.
(Print Name of Recipient)
By: /s/ Joe Cestari By: /s/ Leo Berlinghieri
------------------------------------- -----------------------------
Name (print) Joe Cestari Name (print) Leo Berlinghieri
Title: Sr. Director-Chemical Delivery Title: Corporate VP, Customer
SMO Operations Support
Date: 10/23/98 Date: 12-22-98
Please circle one: Customer
Supplier Consultant
<PAGE> 1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT 10.18
PERSONAL & CONFIDENTIAL
MEMORANDUM
- --------------------------------------------------------------------------------
TO:
FROM: George Manning
DATE:
SUBJECT: 1999 Management Incentive Program
- --------------------------------------------------------------------------------
The amount of bonus you may be eligible to earn under the Management Incentive
Program in 1999 will be dependent on the consolidated net income achieved by the
Corporation for calendar year 1999. Consolidated net income means the
consolidated net profits of the Corporation and its subsidiaries after payment
by the Corporation of bonuses to all employees of the Corporation, contributions
by the Corporation to the Retirement Plan on behalf of all employees of the
corporation (in the United States who are eligible to participate in the
Retirement Plan), and before payment by the Corporation of all income taxes.
If our consolidated net income for 1999 ends up less than ***********, you will
not earn a bonus. If the consolidated net income is ************ or greater, you
will earn a bonus in the amount shown on the attached table. However, in no
event can your bonus exceed 200% of your targeted bonus for 1999.
In order to receive a payout under this Plan, we must be successful in keeping
****************************************** and maintaining tight controls over
our spending. In addition, our 1999 net sales must meet or exceed ********** net
sales. For example, if our annual net sales for 1999 were approximately equal to
our annual net sales for 1998, you could receive approximately 10% of your
targeted bonus amount. If we were able to grow our net 1999 sales to
approximately *** more than our net 1998 sales, you could receive approximately
50% of your targeted bonus amount. And at *** growth over last year, with good
cost control measures in place, you could expect to receive your full targeted
bonus amount. The consolidated net income objectives are based on current
financial conditions. Significant changes in those conditions could cause our
net income objectives to be appropriately revised based on new circumstances.
In order to participate in this management Incentive Program, you must be
actively employed by MKS Instruments, Inc. as of December 31, 1999.
THIS INFORMATION IS EXTREMELY CONFIDENTIAL AND SHOULD BE TREATED AS
SUCH. YOU SHOULD NOT DIVULGE THIS INFORMATION
INSIDE OR OUTSIDE OF MKS INSTRUMENTS, INC.
GM: 99-4200:jg
Attachments
Six Shattuck Road, Andover, MA 01810
logo Telephone (978) 975-2350 Fax (978) 975-3756
<PAGE> 2
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
PERSONAL & CONFIDENTIAL
1999 MANAGEMENT INCENTIVE PROGRAM
CALENDAR YEAR 1999 CONSOLIDATED NET PROFIT TABLE
(JANUARY 1 - DECEMBER 31, 1999)
YOUR TARGET BONUS IS 40% OF YOUR 1999 BASE COMPENSATION, WHICH
WILL BE FULLY ACHIEVED IF CONSOLIDATED NET INCOME BEFORE
TAXES REACHES ****M. AT ****M CONSOLIDATED NET
INCOME BEFORE TAXES, YOU WOULD RECEIVE 200%
OF YOUR TARGET BONUS, WHICH WOULD BE
80% OF YOUR 1999 BASE COMPENSATION.
<TABLE>
<CAPTION>
Consolidated Net Income %* Percent of Target Bonus Earned
-------------------------- ------------------------------
<S> <C>
< $******** 0%
$********** 10%
$********** 25%
$********** 35%
$********** 50%
$********** 65%
$********** 75%
$********** 90%
$********** 100%
$********** 125%
$********** 150%
$********** 175%
>$********* 200%
</TABLE>
*Consolidated net income worldwide, before taxes.
THIS INFORMATION IS EXTREMELY CONFIDENTIAL AND SHOULD BE TREATED
AS SUCH. YOU SHOULD NOT DIVULGE THIS INFORMATION
INSIDE OR OUTSIDE OF MKS INSTRUMENTS, INC.
<PAGE> 1
EXHIBIT 10.19
THIS INDENTURE OF LEASE, made and entered into this 21st day of December,
1989 by and between DONNELL W. MURPHY as he is Trustee of WALPOLE PARK SOUTH
(II) Trust under a Declaration of Trust dated August 10, 1988 filed with the
Norfolk Registry District of the Land Court as Document No. 554329 (hereinafter
referred to as "LESSOR"); and, NGS ASSOCIATES, INC., a Massachusetts corporation
having its principal office in Canton, Massachusetts, (hereinafter referred to
as "LESSEE").
WITNESSETH
That LESSOR, for and in consideration of the rent and all other charges
and payments hereinafter reserved and payable by LESSEE, and in consideration of
the covenants, agreements, terms provisions and conditions to be kept and
performed hereunder by LESSEE, does hereby demise and lease to LESSEE, and
LESSEE does hereby hire and take from LESSOR the premises hereinafter mentioned
and described, subject to the covenants, agreements, terms, provisions and
conditions of this Lease for the term hereinafter stated:
1. DESCRIPTION OF DEMISED PREMISES
The space, consisting of 5,021 square feet, substantially as outlined in
yellow on the plan annexed hereto as Exhibit 1 (hereinafter "PREMISES"), located
in the building known in the numbering as 24 WALPOLE PARK SOUTH, Walpole,
Massachusetts (hereinafter "BUILDING"). The Lease includes the LESSEE'S right to
use, the parking facilities of the Building for the parking of automobiles of
employees, customers, invitees, or licensees of LESSEE in common with other
tenants in the Building.
2. TERM OF LEASE
2.1 DEFINITIONS: As used in this Lease, the words "TERM COMMENCEMENT DATE"
is the date on which the Premises are ready for
<PAGE> 2
LESSEE'S occupancy (as defined in Section 3.2 hereof) and as set forth in
Exhibit 2 hereof.
2.2 HABENDUM: TO HAVE AND TO HOLD the Premises for a term of years
commencing on Term Commencement Date and ending on the Termination Date as
stated in Exhibit 2 or on such earlier date upon which said term may expire or
be terminated pursuant to any of the conditions or other provisions of this
Lease, or pursuant to law (which date for the termination of the term hereof is
hereinafter referred to as TERMINATION DATE"), or any later date to which the
term of this Lease may become extended pursuant to the provisions of Section 28
of the Addenda hereto annexed (if the term of this Lease becomes extended, the
expression "term" as used in this Lease shall be deemed to include such extended
term).
2.3 DECLARATION FIXING TERM COMMENCEMENT DATE: As expeditiously as
possible after the Term Commencement Date, the LESSEE agrees upon request of the
LESSOR, to join in the execution, in recordable form, of a written declaration
in which shall be stated such Term Commencement Date and (if need be) the
Termination Date. If this Lease is terminated before the term expires, then upon
LESSOR'S request the parties shall execute, acknowledge, and deliver an
instrument acknowledging such fact and the date of termination of this Lease.
3. CONSTRUCTION - READINESS FOR OCCUPANCY
3.1 COMPLETION DATE: Subject to delays due to causes beyond the reasonable
control of the LESSOR, or by action or inaction of LESSEE, LESSOR shall use
reasonable speed and diligence in the construction of the Premises and shall use
his best efforts to have the Premises ready for LESSEE'S occupancy on or before
the Term Commencement Date, but nothing herein contained shall be construed to
create any liability on the part of the LESSOR for his failure, due to any cause
whatsoever, to have the Premises ready for occupancy on said date. If the Term
Commencement Date shall not have occurred on or before March 1, 1990, for any
reason, except failure on the part of the LESSEE to perform any of its
obligations hereunder, LESSEE may give LESSOR a thirty (30) day written notice
of termination (sent by registered or certified mail, return receipt requested),
and unless the Term Commencement Date shall have occurred within thirty (30)
days from the date of receipt of such notice, the obligations to the parties
hereto shall cease and terminate as of the thirtieth (30th) day next following
receipt of such notice.
3.2 WHEN PREMISES DEEMED READY: The Premises shall be conclusively deemed
ready for LESSEE'S occupancy as soon as the initial installations to be done by
LESSOR referred to in Exhibit 3 ("Building Standard Work") annexed hereto and
made a part hereof (hereinafter referred to as "BUILDING STANDARD WORK") in the
Premises have been substantially completed by LESSOR insofar as is practicable
in view of delays or defaults, if any, of LESSOR or his contractors, and the
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facilities specified in Exhibit 3 are substantially available to LESSEE, in
accordance with the obligations assumed by LESSOR hereunder. The Premises shall
be not deemed to be unready for LESSEE'S occupancy or incomplete if only minor
insubstantial details of construction or mechanical adjustments remain to be
done in the Premises, or any part thereof (provided that LESSOR shall diligently
continue to complete all work required of him hereunder), or if the delay in the
availability of the Premises for occupancy is (i) due to special work, changes,
alterations, or additions required or made by LESSEE in the layout or finish or
the Premises or any part thereof other than as specified under Building Standard
Work (provided that LESSOR shall diligently continue to complete all work
required of him hereunder); or, (ii) caused in whole or in part by delay and/or
default on the part of LESSEE or its contractors.
3.3 PREPARATION OF PREMISES: Except as is otherwise herein provided or as
may be otherwise approved by the LESSOR, all work necessary to prepare the
Premises for LESSEE'S occupancy, including work to be performed at LESSEE'S
expense, shall be performed by contractors employed by LESSOR and all materials
and workmanship shall be in accordance with Building Standard Work. The term
"preparation of the Premises for LESSEE'S occupancy" shall include not only work
done within the Premises, but also related work out-side the Premises such as,
but not limited to, the installation of additional air conditioning equipment
and facilities to serve the Premises and additional risers, feeders, and wiring
or other electrical equipment to serve the Premises. If any work, including, but
not by way of limitation, installation of built-in equipment by the manufacturer
or distributor thereof, shall be performed by contractors not employed by
LESSOR, LESSEE shall take all reasonable measures to the end that such
contractors shall cooperate in all ways with LESSOR'S contractors and shall not
conflict in any other way with the performance of such work.
3.4 CONCLUSIVENESS OF LESSOR'S PERFORMANCE: LESSEE shall be conclusively
deemed to have agreed that LESSOR has performed all of his obligations
hereunder, unless not later than the end of the second calendar month next
beginning after the Term Commencement Date, LESSEE shall give LESSOR written
notice specifying the respects in which LESSOR has not performed any such
obligation. There shall be excluded from the scope of this section those
omissions or defects which could not reasonably have become apparent to LESSEE
within the time specified and those will be deemed to have been corrected unless
LESSEE shall have notified LESSOR thereof not later than the end of the sixth
calendar month next beginning after the Term Commencement Date.
4. USE OF PREMISES
4.1 IN GENERAL: LESSEE shall use and occupy the Premises only for the
purpose of conducting the use set forth in Exhibit 2 hereof and for no other
purpose.
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<PAGE> 4
LESSEE shall not use, or suffer or permit the use of, or suffer or permit
anything to be done in or anything to be brought into or kept in the Premises or
any part thereof (i) which would violate any of the covenants, agreements,
terms, provisions, and conditions of this Lease; (ii) for any unlawful purpose
or in any unlawful manner; or, impair or interfere with or tend to impair or
interfere with any of the Building services or the proper and economic heating,
air conditioning, or other servicing of the Building or Premises, or with the
use of any of the other areas of the Building by, or occasion discomfort,
inconvenience, or annoyance to, any of the other tenants or occupants of the
Building. LESSEE shall not install any electrical or other equipment of any kind
which, in the reasonable judgement of LESSOR, might cause any such impairment,
interference, discomfort, inconvenience, or annoyance. The installation and/or
use of business office machines normally incident to the type and size of
LESSEE'S business operations in the Premises shall not be deemed forbidden by
this Article 4.
4.2 SPECIFIC RESTRICTIONS:
(a) No part of the Premises shall be used for any of the following
purposes:-
(1) As a facility for the use, generation, treatment, storage or
disposal of hazardous materials, (as any one or more of such
terms are defined by General Laws, Chapter 21C; General Laws
Chapter 21E; Comprehensive Environmental Response Act;
Compensation and Recovery Act, 42 USC section 9601 et seq; the
Resource Conservation and Recovery Act of 1976, 42 USC section
6901, et seq; or, any of the rules and regulations promulgated
under the aforesaid), except for the use, generation,
treatment, or storage of those hazardous materials as to which
LESSOR has given his prior approval, and then only to the
extent that such materials are licensed and approved in
accordance with all applicable laws and regulations of all
governmental authorities having jurisdiction thereof.
(2) Any industrial use which discharges processed waste water on
site.
(3) Subsurface disposal of liquid or likable waste.
(4) Storage of petroleum or other refined petroleum products
except within those portions of the premises which will be
heated, or in vaulted tanks equipped with monitoring systems.
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<PAGE> 5
(5) Manufacture and/or the tanning of leather, but this
prohibition shall not exclude the manufacture of products made
from leather.
(6) Dry cleaning establishment.
(7) Manufacture or processing of paper from pulp.
(8) Manufacture of plastic from raw materials, but this
prohibition shall not exclude the manufacture of any type of
product made from plastic material.
(9) Steel mill or foundry.
(10) Manufacture of abrasives.
(11) Dyeing of textiles.
(b) No part of the Premises shall involve as a principal use any of
the following:-
(1) Processing, manufacture, or storage of chemicals.
(2) Printing of textiles.
(3) A laboratory which tests or analyzes biological or chemical
materials which are provided by others.
(4) Electroplating of products.
(5) Use of any volatile organic compound in any industry devoted
to the manufacture of electronic components unless the
following conditions are observed:
(i) In order to minimize spillage or leakage during the
process of loading or unloading, all loading/unloading
areas of any building in which the same shall be used,
shall be roofed, and the ground area immediately below
the same pitched to and provided with an in-ground
holding tank, constructed of material sufficient to
contain any spill or leak of any volatile organic
compound.
(ii) No volatile organic compound shall be stored in any room
or area of any building where any sink or open drain is
located.
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<PAGE> 6
4.3 SEWER USE DISCHARGE PERMIT: LESSEE understands that sanitary sewerage
from the Building will discharge into the Town of Walpole, MA sewer system which
is a tributary to that owned and/or controlled by the Massachusetts Water
Resources Authority ("MWRA"). The LESSEE further understands that discharge of
such sewerage is generally regulated under 360 CMR 10.000 and that the LESSEE
may be considered to be "user" thereunder. If, because of the LESSEE'S use of
the premises, it discharges or will discharge "industrial wastes" (as defined in
360 CMR 10.004) into the said sewer system, the LESSEE shall make prompt
application to the MWRA for a Sewer Use Discharge Permit so as to permit such
discharge and agrees to hold and save the LESSOR harmless and indemnified for
any claim, demand, or penalty asserted by the MWRA or others with respect to
such sewer discharge.
5. RENT
The LESSEE shall pay to the LESSOR, during the term of this Lease, the
yearly rent as stated in Exhibit 2 (hereinafter referred to as "YEARLY RENT"),
payable in equal monthly installments, as stated in said Exhibit 2, in advance,
on the first day of each month for and in respect of such month and at such rate
for such further time as LESSEE shall hold the Premises or any part thereof. The
rent reserved and covenanted to be paid under this Lease shall commence on the
Term Commencement Date. If, by reason of any provisions of this Lease, the rent
reserved hereunder shall commence on any day other than the first day of a
calendar month, the rent for such calendar month shall be prorated. The rent
shall be payable at the office of LESSOR or such place as LESSOR may designate,
without any setoff or deduction whatsoever.
6. UTILITIES
6.1 FACILITIES: LESSOR will supply or cause to be supplied to the
Premises, at no cost to LESSEE, at or prior to the Term Commencement Date, all
facilities for water (hot and cold); heating, ventilation, and air conditioning;
sprinkler; electricity; and sewer services required for LESSEE'S intended use of
the Premises (all as set forth and described in Building Standard Work annexed
hereto as Exhibit 3), and where feasible such utilities and services shall be
separately metered.
6.2 ADDITIONS TO ELECTRICAL SYSTEM: If LESSEE shall require electric
current or facilities for use in the premises in excess of what is provided in
Exhibit 3 hereof, LESSOR, upon written request and at the sole cost and expense
of LESSEE, will furnish and install such additional wire, conduits, feeders,
switchboards, and appurtenances as reasonably may be required to supply such
additional requirements of LESSEE if current therefore be available to LESSOR,
provided that the same shall be permitted by applicable laws and insurance
regulations, and shall not cause permanent damage or injury to the Building or
the Premises, or cause or create a dangerous or hazardous condition, or entail
excessive or unreasonable
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<PAGE> 7
alterations or repairs, or interfere with or disturb other tenants or occupants
of the Building. LESSEE agrees that it will not make any material alteration or
material addition to the electrical equipment and/or appliances in the Premises
without the prior written consent of LESSOR in each instance first obtained.
6.3 PAYMENT OF CHARGES: LESSEE shall pay when due all charges for water,
gas, sewer, electricity, heating fuels, power, and any other services supplied
to it at the Premises directly to the utility company, supplier, or provider
providing the same.
7. COMMON AREAS
7.1 RIGHT TO USE: LESSOR grants to LESSEE in common with other tenants
within the Building, and their agents, employees, licensees, customers, and
persons doing work for or business with them, the right to use the common areas
(hereinafter referred to as "COMMON AREAS") consisting of the parking areas,
roadways, pathways, sidewalks, entrances, and exits designated by LESSOR for
common use of the Building, subject to the terms and conditions of this Lease.
7.2 MAINTENANCE OF COMMON AREAS: The LESSOR or his managing agent shall
maintain the Common Areas and, in connection therewith, shall have the right to
incur, in his sole discretion, such reasonable expenses as may be required (i)
to maintain and keep in good repair (including the making of any necessary
replacements) all portions of the Common Areas; (ii) to keep the Common Areas
reasonably free from accumulated snow, ice, and refuse, and open for use and
fully lighted during all business hours.
7.3 CONTROL OF COMMON AREAS: The Common Areas shall be subject to the
exclusive control and management of LESSOR and LESSOR shall have the right to
establish, modify, change, and enforce reasonable rules and regulations with
respect to the Common Areas and LESSEE agrees to abide by and conform with such
rules and regulations. LESSEE agrees that it and its employees will park their
trucks, delivery vehicles and automobiles only in such of the parking areas as
LESSOR may from time to time designate for that purpose. LESSOR shall have the
right to close any part of the Common Areas for such time as may be necessary to
clean and repair the same, and to close any part of the parking area for such
time as LESSOR deems necessary in order to discourage noncustomer parking and to
do other things in the parking areas as LESSOR in her discretion deems
reasonable and necessary for the benefit of the Building.
8. ADDITIONAL RENT
8.1 DEFINITIONS: As used in this Article 8, the words and terms which
follow mean and include the following:
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(a) "LESSEE'S PROPORTIONATE SHARE" shall mean a fraction having as
numerator the Rentable Area and having as denominator the Building Rentable Area
as stated in Exhibit 2.
(b) "TAXES" shall mean the real estate taxes and assessments imposed
upon the Building and any and all other taxes, levies, betterments, assessments,
and charges arising from the ownership and/or the operation of said Building
which are or shall be imposed by national, state, municipal or other
authorities, and which are or may become a lien upon the Building. If, due to a
future change in the method of taxation, any franchise, income, or profit tax
shall be levied against LESSOR in substitution for or in lieu of any tax which
would otherwise constitute a real estate tax, such franchise, income, or profit
tax shall be deemed to constitute "taxes" for the purpose hereof. The word
"Taxes" shall exclude any special assessments which are imposed for benefits
rendered to the Building such as a sidewalk assessment, regardless of how
labeled or identified.
(c) "TAX YEAR" shall mean the twelve (12) month period commencing on
July 1 immediately preceeding the Term Commencement Date, and each twelve (12)
month period commencing on an anniversary of said date during the term of this
Lease.
(d) "OPERATING COSTS" shall mean all reasonable costs incurred and
expenditures of whatever nature made by the LESSOR in the operation and
management, repair, and maintenance of the Building; related equipment,
facilities, and appurtenances; as well as maintenance of all exterior portions
of the Building, and including, not limited to, the following:
Taxes:
Federal Social Security, Unemployment and Old Age Taxes and contributions,
and Massachusetts Unemployment taxes and contributions accruing to and
paid by the LESSOR on account of all employees of the LESSOR who are
employed in, about, or on account of the Building, except that taxes
levied upon the net income of the LESSOR, and taxes withheld from
employees, and Taxes shall not be included herein.
Water:
All charges and rates connected with water supplied to the Building and
related sewer use charges, to the extent such charges and rates are paid
for by LESSOR.
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Supplies and Materials:
All supplies and materials used in the operation and maintenance of the
Building, Common Areas, and surrounding areaways.
Wages:
Wage and cost of all employee benefits of all employees of the LESSOR who
are employed in, about or on account of the Building.
Maintenance:
The cost of all outside contractors and all, maintenance and service
agreements with respect to the Building, Common Areas, and surrounding
areaways; maintenance, repairs, and replacement of equipment used for
servicing.
Electricity:
The cost of all electric current for the operation of any machine,
appliance, or device used in connection with the operation of the
Building, including the cost of electric current for exterior public
lights.
Insurance, etc.:
Fire and extended coverage, casualty, liability, and such other insurance
as may be required by any lending institution in connection with the
Building and the Common Areas, and all other expenses customarily incurred
in connection with the operation and maintenance of first-class buildings
in the Metropolitan Boston area.
Management:
All fees and costs incurred in respect of the management of the Building.
"Operating Costs" shall include only reasonable and bona fide expenses actually
incurred by LESSOR and shall not include any of the following: executive
salaries; charges, which under this Lease, would be chargeable to a specific
tenant of the Building; leasing commissions; interest; depreciation; or other
expenses relating to ownership as distinguished from the operation and/or
management of the Building.
(e) "COMPUTATION YEAR" shall mean the twelve (12) month period
beginning on the date of January 1 immediately prior to the Term Commencement
Date and each twelve (12) month period commencing on an anniversary of said date
during the term of this Lease. If the Term Commencement
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<PAGE> 10
Date or the Termination Date occurs during a Computation Year, the LESSEE shall
be liable for only a portion of the Operating Costs in respect to such
Computation Year, represented by a fraction, the numerator of which shall be the
number of days of the herein term which falls within the Computation Year, and
the denominator of which shall be three hundred and sixty-five (365).
(f) "TAX STATEMENT" and "OPERATING COST STATEMENT" shall mean a
statement in writing signed by LESSOR, setting forth the amounts payable by
LESSEE for a specified Tax or Computation Year, respectively, pursuant to this
Section 8.
8.2 PAYMENT OF TAXES BY LESSEE:
(a) In each Tax Year, the LESSEE shall pay to LESSOR, LESSEE'S
Proportional Share of Taxes in the manner as hereinafter set forth.
(b) Estimated payments on account of LESSEE'S Proportionate Share of
Taxes, (as reasonably estimated by the LESSOR) shall be made monthly by the
LESSEE and at the time and in the fashion provided in this Lease for the payment
of Yearly Rent. Such monthly payment shall be sufficient to provide LESSOR by
the end of each Tax Year with a sum equal to LESSEE'S Proportionate Share of
Taxes for such Tax Year. Promptly after the receipt of the Tax bill, LESSOR
shall provide LESSEE with a Tax Statement. If the total of the estimated
payments theretofore made by LESSEE for the Tax Year exceed the required
payments on account thereof for such year, LESSOR shall credit the amount of
overpayment against subsequent obligations of LESSEE on account of Taxes (or
refund such overpayment if the Term of this Lease has ended and LESSEE has no
further obligations to LESSOR); but, if the aggregate of the monthly payments
made by the LESSEE for such Tax Year are less than the LESSEE'S Proportionate
Share of Taxes, LESSEE shall pay the balance of said amount to LESSOR within
thirty (30) days after being so advised by LESSOR. LESSOR shall have the same
rights and remedies for non-payment by LESSEE of any payments due on account of
such Taxes as LESSOR has under this Lease for failure of LESSEE to pay Rent.
(c) If the Term Commencement Date or the Termination Date occurs
during a Tax Year, the LESSEE shall be liable for only that portion of Taxes in
respect of such Tax Year represented by a fraction, the numerator of which shall
be the number of days of the herein term which falls within the Tax Year, and
the denominator of which shall be three hundred sixty-five (365). In the event
the first day of the Tax Year should be changed after the Term Commencement Date
to a day other than July 1 so as to change the twelve (12) month period
comprising the Tax year, in determining Taxes due from the LESSEE hereunder with
respect to Taxes payable for the period between July 1 and such changed first
day of the Tax Year, such amount of Taxes shall be multiplied by a fraction, the
numerator of which shall
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<PAGE> 11
be the number of days elapsing during such period, and the denominator of which
shall be three hundred sixty-five (365).
8.3 PAYMENT OF OPERATING COSTS BY LESSEE:
(a) In each Computation Year, the LESSEE shall pay to LESSOR,
LESSEE'S Proportionate Share of Operating Costs in the manner as hereinafter set
forth.
(b) Estimated payments by LESSEE on account of LESSEE'S
Proportionate Share of Operating Costs shall be made monthly by the LESSEE and
at the time and in the fashion provided in this Lease for the payment of Yearly
Rent. Such monthly payment (to be reasonably estimated by the LESSOR) shall be
sufficient to provide LESSOR by the end of each Computation Year with a sum
equal to LESSEE'S Proportionate Share of Operating Costs pursuant to
subparagraph (a) hereof for such Computation Year. Promptly after the end of
each Computation Year, LESSOR shall submit to LESSEE a reasonably detailed
Operating Cost Statement for such year. If the estimated payments theretofore
made for such Computation Year by LESSEE exceed LESSEE'S required payment on
account thereof for such year, according to such statement, LESSOR shall credit
the amount of overpayment against subsequent obligations of LESSEE with respect
to Operating Costs (or refund such overpayment if the Term of this Lease has
ended and LESSEE has no further obligation to LESSOR); but, if the aggregate of
the monthly payments made for such Computation Year are less than the LESSEE'S
Proportionate Share of Operating Costs, LESSEE shall pay the balance of said
amount to LESSOR within thirty (30) days after being so advised by LESSOR.
LESSOR shall have the same rights and remedies for the nonpayment by LESSEE of
any payments due on account of Operating Costs as LESSOR has hereunder for the
failure of LESSEE to pay Rent.
9. CHANGES OR ALTERATIONS BY LESSOR
LESSOR reserves the right at any time and from time to time, without the
same constituting an actual or constructive eviction, and without incurring any
liability to LESSEE therefor, or otherwise affecting LESSEE'S obligations under
this Lease, to make such changes, alterations, additions, improvements, repairs,
or replacements in or to the Building (including the Premises) and the fixtures
and equipment thereof, as well as in or to the outside areas, and entrances,
thereof, as he may deem necessary or desirable, provided, however, that there be
no unreasonable obstruction of the right of, access to, or unreasonable
interference with, the use and enjoyment of the Premises by LESSEE. Nothing
contained in this Section 9 shall be deemed to relieve LESSEE of any duty,
obligation, or liability of LESSEE with respect to making any repair,
replacement, or improvement, or complying with any law, order, or requirement of
any government or other authority.
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<PAGE> 12
10. FIXTURES, EQUIPMENT, AND IMPROVEMENTS -- REMOVAL BY LESSEE
All fixtures, equipment, improvements, and appurtenances attached to or
built into the Premises prior to or during the term, whether by LESSOR at his
expense or at the expense of LESSEE (either or both), or by LESSEE, shall be and
remain part of the premises and shall not be removed by LESSEE at the end of the
term unless otherwise expressly provided in this Lease. Where not built into the
Premises, and if furnished and installed by and at the sole expense of LESSEE,
all removable electric fixtures, carpets, drinking or tap water facilities,
furniture, or trade fixtures, or business equipment shall not be deemed to be
included if such fixtures, equipment, improvements, and appurtenances, and may
be, and upon the request of LESSOR will be, removed by LESSEE upon the condition
that such removal shall not materially damage the premises or the Building, and
that the cost of repairing any damage to the premises or the Building arising
from such removal shall be paid by LESSEE; provided however, that any such items
as toward which LESSOR shall have granted any allowance or credit to LESSEE
shall be deemed not to have been furnished and installed in the Premises by or
at the sole expense of LESSEE.
11. ALTERATIONS AND IMPROVEMENTS BY LESSEE AFTER TERM COMMENCEMENT DATE
LESSEE shall make no structural alterations, decorations, installations,
removals, additions, or improvements in or to the Premises after the Term
Commencement Date without LESSOR'S prior written consent and then only by
contractors or mechanics engaged on LESSEE'S behalf, by LESSOR. No such
installations or work shall be undertaken or begun by LESSEE until LESSOR has
approved written plans and specifications therefor, and no amendments or
additions to such plans and specifications shall be made without the prior
written consent of LESSOR. Any such work, alterations, decorations,
installations, removals, additions, and improvements shall be done at LESSEE'S
sole expense and at such times and in such manner as LESSOR may from time to
time designate. If LESSEE shall make any alterations, decorations,
installations, removals, additions, or improvements, then LESSOR may require the
LESSEE at the expiration of this Lease to restore the Premises to substantially
the same condition as existed on the Term Commencement Date. LESSOR'S consents
and approvals called for in this Section 11 shall in no instance be unreasonably
withheld or delayed.
12. REPAIRS TO PREMISES
12.1 REPAIRS BY LESSEE: LESSEE shall keep all and singular the Premises in
such repair, order, and condition as the same are in on the Term Commencement
Date or may be put in during the term hereof, reasonable use and wearing thereof
and damage by fire or by casualty insured against only excepted. LESSEE shall
make, as and when needed as a result of misuse by, or neglect or improper
conduct
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of, LESSEE or LESSEE'S servants, employees, agents, or licensees, or otherwise,
all repairs in and about the Premises necessary to preserve them in such repair,
order, and condition, which repairs shall be in quality and class equal to the
original work. LESSOR may elect, at the expense of LESSEE, to make any such
repairs or repair any damage or injury to the Building or the Premises caused by
moving property of LESSEE in and out of the Building, or by installation or
removal of furniture or other property, or by misuse by, or neglect, or improper
conduct of LESSEE or LESSEE'S servants, employees, agents, or licensees outside
the Premises but affecting LESSEE'S use and enjoyment of the Premises, excluding
any repairs required to be made in or damage in the Premises by the LESSOR, as
set forth in section 12.2 hereof.
12.2 REPAIRS BY LESSOR: All repairs required in the Premises occasioned by
action of the elements or by matters ordinarily covered by LESSOR'S fire and
extended coverage insurance, but excluding repairs becoming necessary as the
result of misuse or negligence on the part of LESSEE or LESSEE'S employees,
agents, or licensees, shall be made by and at the expense of LESSOR. LESSOR
agrees to keep in good order, condition, and repair, including replacements
thereof as and when necessary (i) the structural elements of the Premises which
includes all footings, foundations, floor slabs, columns, girders, mullions,
loadbearing exterior walls; and, (ii) the roofing system of the Premises which
includes support members, membrane assembly, flashings, roof insulation
assembly, hatches, sleeves, vents, and brackets.
13. INSURANCE, INDEMNIFICATION, EXONERATION AND EXCULPATION
13.1 PUBLIC LIABILITY INSURANCE: LESSEE shall procure, keep in force, and
pay for comprehensive public liability insurance (hereinafter referred to as
"LIABILITY INSURANCE") indemnifying LESSOR and LESSEE against all claims and
demands for injury to or death of persons or damage to property which may be
claimed to have occurred upon the Premises, or in or about the common areas of
the Building which arise out of the LESSEE'S use and occupancy of the Premises,
in amounts which shall be in a combined single limit for bodily injury or death
and for property damage ("Broad Form" endorsement, so-called), in a sum of not
less than ONE MILLION DOLLARS ($1,000,000) DOLLARS.
13.2 HAZARD INSURANCE: During the term of this lease, LESSOR shall keep
the Building including any improvements which may be made by LESSOR in the
Premises including, but not limited to, painting, light fixtures, floor
covering, and partitions, if installed by LESSOR, to the extent that the same
are customarily insurable as part of the realty and may be covered by LESSOR'S
insurance, insured against loss or damage by fire and any of the casualties
included in the broadest standard form obtainable of extended coverage or
supplementary contract endorsements.
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13.3 CERTIFICATE OF INSURANCE: All such insurance shall be effected with
insurers authorized to do business in Massachusetts under valid and enforceable
policies. The Liability Insurance shall name LESSOR and LESSEE as the insureds,
as their respective interests appear, and shall provide that it shall not be
cancelled without at least thirty (30) days prior written notice to each insured
named therein. Not less than fifteen (15) days prior to the expiration date of
each expiring policy of Liability Insurance, original copies of such policies
issued by the respective insurers, or certificates of such policies setting
forth in full the provisions thereof and issued by such insurers, together with
evidence satisfactory to LESSOR of payment of all premiums for such policies,
shall be delivered by LESSEE to LESSOR and certificates as aforesaid of such
policies shall upon request of LESSOR be delivered by LESSEE to the holder of
any mortgage affecting the Building. LESSEE may provide Liability Insurance as
an endorsement to any of its blanket policies.
13.4 GENERAL: LESSEE will save LESSOR harmless, and will exonerate and
indemnify LESSOR from and against any and all claims, liabilities, or penalties
asserted by or on behalf of any person, firm, corporation, or public authority;
(a) On account of, or based upon any injury to person, or loss of or
damage to property, sustained or occurring on the Premises on account of, or
based upon, the act, omission, fault, negligence, or misconduct of the LESSEE,
its employees, agents, and invitees.
(b) On account of, or based upon any injury to person, or loss of or
damage to property, sustained or occurring elsewhere (other than on the
Premises), in or about the Building, and, in particular and without limiting the
generality of the foregoing, in or about the Common Areas, surrounding areaways,
roof, or other appurtenances and facilities used in connection with the Building
or Premises, arising out of the use or occupancy of the Premises by the LESSEE
or by any person claiming by, through, or under LESSEE, on account of or based
upon the act, omission, fault, negligence, or misconduct of all such persons
other than LESSOR and those for whose conduct the LESSOR is legally responsible.
(c) On account of or based upon (including monies due on account of)
any work or thing whatsoever done by the LESSEE, its employees, agents, and
invitees (other than by LESSOR or his contractors, or agents or employees of
either) on the Premises during the term of this Lease and during the period of
time, if any, prior to the Term Commencement Date that LESSEE may have been
given access to and used the Premises; and, in respect to any of the matters set
forth in subsections (a) and (b) hereof, from and against all cost expenses
(including reasonable attorney's fees) and liabilities incurred in or in
connection with any such claim, or any action, or proceeding brought thereon;
and in case any action or proceeding by brought against LESSOR by reason of such
claim, LESSEE, upon notice from LESSOR shall, at LESSEE'S expense, resist or
defend such action or proceeding and employ such
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<PAGE> 15
counsel therefore reasonably satisfactory to LESSOR, it. being agreed that such
counsel as may act for insurance underwriters of LESSEE engaged in such defense,
shall be deemed satisfactory. Nothing in this Lease shall be construed to
require LESSEE to indemnify LESSOR against the consequences of any act,
omission, fault, negligence, or misconduct of LESSOR or those for whose conduct
LESSOR is legally responsible, and the LESSOR shall indemnify the LESSEE for or
in respect of such conduct.
13.5 PROPERTY OF LESSEE: In addition to and not in limitation of the
foregoing, LESSEE covenants and agrees that all merchandise, furniture,
fixtures, and property of every kind, nature, and description which may be in or
upon the Premises or Building, or on the Common Areas, surrounding areaways, or
approaches adjacent thereto, during the term hereof, shall be at the sole risk
and hazard of LESSEE, and that if the whole or any part thereof shall be
damaged, destroyed, stolen, or removed due to any cause or reason whatsoever, no
part of said damage or loss shall be charged to or borne by LESSOR.
13.6 BURSTING OF PIPES, ETC.: LESSOR shall not be liable for any injury or
damage to persons or property resulting from fire, explosion, falling plaster,
steam, gas, electricity, electrical disturbance, water, rain, or snow leaks from
any part of the Premises or the Building or from the pipes, appliances, or
plumbing works or from the roof, street, or sub-surface, or from any other place
by dampness or by any other cause of whatever nature; nor shall LESSOR or his
agents be liable for any such damage caused by other tenants or persons in the
Building or caused by operations in construction of any private, public, or
quasi-public work; nor shall LESSOR be liable for any latent defect in the
Premises or in the Building.
13.7 REPAIRS AND ALTERATIONS: There shall be no allowance to LESSEE for
diminution of rental value of the Premises and no liability on the part of
LESSOR by reason of inconvenience, annoyance, or injury to LESSEE arising from
any repairs, alterations, additions, replacements, or improvements made by
LESSOR, LESSEE, or others in any portion of the Building or Premises, or in or
to the fixtures, appurtenances, or equipment thereof, or for failure of LESSOR
or others to make any repairs, alterations, additions, or improvements in or to
any portion of the Building or to the Premises, or in or to the fixtures,
appurtenances, or equipment thereof.
14. ASSIGNMENT AND SUBLETTING
14.1 PROHIBITION: LESSEE covenants and agrees that neither this Lease nor
the term and estate hereby granted, nor any interest herein or therein, will be
assigned, mortgaged, pledged, encumbered, or otherwise transferred (including
without limitation, transfers by operation of law) and that neither the Premises
nor any part thereof will be encumbered in any manner by reason of any act or
omission on the part of LESSEE, or used or occupied or permitted to be used or
occupied by
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anyone other than LESSEE, or be sublet (which term without limitation, shall
include granting of concessions, licenses, and the like) in whole or in part,
without, in each instance, having first received the express written consent of
LESSOR which shall not be unreasonably withheld or delayed, except that no such
consent shall be required for an assignment or sublease to LESSEE'S affiliates.
It shall be a condition of the validity of any assignment (whether the LESSOR'S
written consent is required or not, as aforesaid) that the assignee agrees
directly with LESSOR, by written instrument in form satisfactory to LESSOR, to
be bound by all the obligations of LESSEE hereunder including, without
limitation, the covenant against further assignment and subletting. No
assignment or subletting shall relieve LESSEE from its obligations hereunder and
LESSEE shall remain fully and primarily liable therefor.
14.2 NO WAIVER: If this Lease be assigned, or if the Premises or any part
thereof be sublet or occupied by anyone other than LESSEE, LESSOR may, at any
time and from time to time, collect rent and other charges from the assignee,
subtenant, or occupant, and apply the net amount collected to the rent and other
charges herein reserved, but no such assignment, subletting, occupancy, or
collection shall be deemed a waiver of this covenant, or the acceptance of the
assignee, subtenant, or occupant as a tenant or the release of LESSEE from the
further performance by LESSEE of its obligations hereunder. The consent by
LESSOR to an assignment or subletting shall in no way be construed to relieve
LESSEE or any successor from obtaining the express consent in writing of LESSOR
to any further assignment of this Lease or subletting of all or a portion of the
Premises.
15. MISCELLANEOUS COVENANTS
LESSEE covenants and agrees as follows:
15.1 ACCESS TO PREMISES: LESSEE shall (i) permit LESSOR to erect, use, and
maintain pipes, ducts, and conduits in and through the Premises, provided the
same do not materially reduce the floor area or materially or adversely affect
the LESSEE'S use of the same; (ii) permit the LESSOR, any mortgagee of the
Building and its representatives, and any authorized representative of the
Walpole Board of Health to have free and unrestricted access to and to enter
upon the Premises at all reasonable hours for the purpose of inspection, or for
making repairs, replacements, or improvements in or to the Building, or the
equipment thereof (including without limitation, sanitary, electrical, or other
systems), or to determine compliance with all laws, orders, and requirements of
governmental or other authority, or exercising any right reserved to LESSOR
under this Lease (including the right during the progress of any such repairs,
replacements, or improvements, or while performing work and furnishing materials
in connection with compliance with any such laws, orders, or requirements, to
take upon or through or to keep and store within the Premises all necessary
materials, tools, and equipment); and, (iii) permit LESSOR, at reasonable times,
to show the Premises during ordinary business hours to any mortgagee,
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<PAGE> 17
prospective lessee, prospective purchaser, prospective mortgagee, or prospective
assignee of any mortgage of the Building, and during the period of twelve (12)
months next preceding the Termination Date to any person contemplating the
leasing of the Premises or any part thereof. If LESSEE shall not be personally
present to open and permit entry into the Premises at any time when for any
reason an entry therein shall be necessary or permissible, LESSOR or LESSOR'S
agents may, in an emergency situation, enter the same by a master key, or may
forcibly enter the same, without rendering LESSOR or such agents liable therefor
(if during such entry LESSOR or LESSOR'S agents shall accord reasonable care to
LESSEE'S property), and without in any manner affecting the obligations and
covenants of this Lease. The rights provided for in subsections (i), (ii) and
(iii) hereof shall be exercised upon reasonable notice (telephonic or otherwise)
if the same is practicable, and with minimum practicable interference with the
conduct of the LESSEE'S business in the Premises.
15.2 ACCIDENTS TO SANITARY AND OTHER SYSTEMS: LESSEE shall give to LESSOR
prompt notice of any fire or accident occurring in the Premises, and of any
damage to, or defective condition in, any part of the Premises' sanitary,
electrical, heating, or other systems located in or passing through the
Premises, but if the damage or defective condition was caused by LESSEE or by
the employees, licensees, or invitees of LESSEE, the cost to remedy the same
shall be paid by LESSEE. LESSEE shall not be entitled to claim any eviction from
the Premises or any damages arising from any such damage or defect unless the
same shall have been occasioned by the negligence of LESSOR, his agents,
servants, or employees, and in case of a claim of eviction, unless such damage
or defective condition shall have rendered the Premises untenantable and the
Premises shall not have been made tenantable by LESSOR within a commercially
reasonable period of time.
15.3 SIGNS: No signs may be installed on or in any window of the Premises
by LESSEE. No other signs shall be permitted in or about the Premises or
Building Without the written approval of the LESSOR which approval shall not be
unreasonably withheld or delayed. Said exterior sign shall in all events conform
to the requirements of Exhibit 4 hereof.
15.4 INFLAMMABLE - ODORS: LESSEE shall not bring or permit to be brought
or kept in or on the Premises or elsewhere in the Building, any flammable,
combustible, or explosive fluids, material, chemical substances, or cause or
permit and odors of cooking or other processes, or any unusual or other
objectionable odors to emanate from or permeate the Premises.
15.5 REQUIREMENTS OF LAW - FINES AND PENALTIES: LESSEE at its sole expense
shall comply with all laws, rules, orders and regulations of federal, state,
county, and municipal authorities and with any direction of any public officer
or officers, pursuant to law, which shall impose any duty upon LESSOR or LESSEE
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arising out of LESSEE'S use or occupancy of the Premises. LESSEE shall reimburse
and compensate LESSOR for all expenditures made by, or damages or fines
sustained or incurred by LESSOR, due to nonperformance or noncompliance with, or
breach or failure to observe any term, covenant, or condition of this Lease upon
LESSEE'S part to be kept, observed, performed, or complied with.
15.6 LESSEE'S ACTS - EFFECT ON INSURANCE: LESSEE shall not do or permit to
be done any act or thing upon the Premises nor elsewhere in the Building which
will invalidate or be in conflict with any insurance policies covering the
Building and the fixtures and property therein; and shall not do, or permit to
be done, any act or thing upon the Premises or Building which shall or might
subject LESSOR to any liability or responsibility for injury to any person or
persons or to property by reason of any business or operation being carried on
upon said Premises, or for any other reason. LESSEE at its own expense shall
comply with all rules, orders, regulations, or requirements of the Board of Fire
Underwriters, or any other similar body having jurisdiction, and shall not (i)
do, or permit anything to be done, in or upon the Premises, or bring or keep
anything therein, except as now or hereafter permitted by the Fire Department,
Board of Fire Underwriters, any fire insurance rating organization, or other
authority having jurisdiction, and then only in such quantity and manner of
storage as will not increase the rate for any insurance applicable to the
Building; or, (ii) use the Premises in a manner which shall increase such
insurance rates on the Building or on property located therein, over that
applicable at the commencement of this Lease. If by reason of failure of LESSEE
to comply with the provisions hereof, the insurance rate applicable to any
policy of insurance shall at any time thereafter be higher than it otherwise
would be, then LESSEE shall reimburse LESSOR for that part of any insurance
premiums thereafter paid by LESSOR, which shall have been charged because of
such failure by LESSEE.
Under Sections 15.5 and 15.6 hereof, there shall be no duty on LESSEE to
make any structural change or to make any other change in the Premises unless
required because of the manner in which LESSEE shall be using the Premises.
16. DAMAGE BY FIRE OR OTHER CASUALTY
If the Premises or any part thereof shall be damaged by fire or other
casualty, LESSOR shall proceed with reasonable diligence, and at the expense of
LESSOR (but only to the extent of insurance proceeds made available to LESSOR by
any mortgagee of the Building), to repair or cause to be repaired such damage;
provided, however, in respect of such alterations, decorations, additions, and
improvements originally made or installed by LESSEE at LESSEE'S expense as shall
have been damaged by such fire or other casualty, and which (in the judgment of
LESSOR) can more effectively be repaired as an integral part of the repair work
in the Premises, that the repairs to such LESSEE'S alterations, decorations,
additions, and improvements shall be performed by LESSOR but at LESSEE'S
expense. All repairs to and replacements
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of property which LESSEE is entitled to remove as in Article 10 provided, shall
be made by at the expense of LESSEE. If the Premises or any part thereof shall
have been rendered unfit for use and occupation hereunder by reason of such
damage, the Yearly Rent or a just and proportionate part thereof according to
the nature and extent to which the Premises shall have been so rendered unfit,
shall be suspended or abated from the date of the occurrence of such casualty
until the Premises (except as to the property which is to be repaired by or at
the expense of LESSEE) shall have been restored as nearly as practicably may be
to the condition in which they were immediately prior to such fire or other
casualty; provided, however, that if LESSOR or any mortgagee of the Building
shall be unable to collect the insurance proceeds (including any rent insurance
proceeds) applicable to such damage because of some action or inaction on the
part of LESSEE, or the employees, licensees, or invitees of LESSEE, the cost of
repairing such damage shall be paid by LESSEE and there shall be no abatement of
rent. LESSOR shall not be liable for delays in the making of any such repairs
which are due to government regulations, casualties, strikes, unavailability of
labor and materials, and other causes beyond the reasonable control of LESSOR,
nor shall LESSOR be liable for any inconvenience or annoyance to LESSEE or
injury to the business of LESSEE resulting from delays in repairing such damage.
If (i) the Premises are so damaged by such fire or other casualty at any time
during the last twelve (12) months of the term hereof that the cost to repair
such damage (as reasonably estimated by the LESSOR) is likely to exceed
one-third of the total Yearly Rent for the period from the estimated date of
restoration until the Termination Date; or (ii) the Building (whether or not
including any portion of the Premises) is so damaged by such fire or other
casualty that substantial alteration or reconstruction of the Building shall in
LESSORS judgement be required, then and in either of such events, this Lease and
the term hereof may be terminated at the election of LESSOR by a notice in
writing of his election so to terminate which shall be given by LESSOR to LESSEE
within sixty (60) days following such fire or other casualty, the effective
termination date of which shall be not less than thirty (30) days after the date
on which such termination notice is received by LESSEE. If the Premises are
damaged by fire or other casualty, and are not substantially restored to its
original condition within a period of sixty (60) days therefrom, the LESSEE may,
by notice in writing to LESSOR cancel and terminate this Lease on account
thereof. In the event of any such termination, this Lease and the term hereof
shall expire as of such effective termination date as though that were the
Termination Date as stated in Exhibit 2, and the Yearly Rent shall be
apportioned as of such date; and, if the Premises or any part thereof shall have
been rendered unfit for use and occupation by reason of such damage, the Yearly
Rent for the period from the date of occurrence of such fire or other casualty
to the effective termination date, or a just and proportionate part thereof,
according to the nature and extent to which the Premises shall have been so
rendered unfit, shall be abated. Any abatement of rent pursuant to this section,
whether total or partial, shall extend to all rent items called for by this
Lease whether "yearly" or otherwise.
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17. WAIVER OF SUBROGATION RIGHTS
The LESSOR discharges and releases the LESSEE, his agents or employees, to
the extent of the LESSOR'S insurance coverage, for and on account of any and all
claims and liabilities arising out of any loss or damage during the term hereof,
or any extension thereof, to any property of the LESSOR caused by fire and such
risks as are customarily comprehended by the term "extended coverage" in
endorsements to fire insurance policies; and (ii) such other risks as are
covered by insurance which the LESSOR may desire to procure.
The LESSEE discharges and releases the LESSOR, his agents or employees, to
the extent of LESSEE'S insurance coverage for and on account of any and all
claims and liabilities arising out of any loss or damage during the term hereof,
or any extension hereof, to any property of the LESSEE caused by (i) fire and
such risks as are comprehended by the term "extended coverage" in endorsements
to fire insurance policies; and (ii) such other risks as are covered by
insurance which the LESSEE may desire to procure.
In consideration of the foregoing, each of the parties hereto agrees with
the other party (i) that such insurance as may be in effect during the term of
this Lease, or any extensions thereof, shall include a clause or endorsement
which provides in substance that the insurance company waives any right or
subrogation which it might otherwise have against the LESSOR or the LESSEE, as
the case may be; and, (ii) upon demand of the other party for any extra premium
costs, if any, incurred in obtaining such clause or endorsement.
Upon demand in writing made by either party hereto, the other party agrees
to furnish to it a statement of the amount and type of such insurance coverage
and the names of the insurance companies and to request its insurance companies
to give notice to such other party of any cancellation or discontinuance of any
part of such coverage.
18. CONDEMNATION -- EMINENT DOMAIN
In the event that the Premises or any part thereof, or the whole or any
part of the Building (including within such term the Common Areas thereof shall
be taken or appropriated by eminent domain or shall be condemned for any public
or quasi-public use, or (by virtue of any such taking, appropriation, or
condemnation) shall suffer any damage (direct, indirect, or consequential) for
which LESSOR or LESSEE shall be entitled to compensation, then (and in any such
event ) this Lease and the term hereof may be terminated at the election of
LESSOR or LESSEE by a notice in writing of his or its election so to terminate
which shall be given to the other party within sixty (60) days following the
date on which LESSOR shall have received notice of such taking, appropriation,
or condemnation.
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Upon the giving of any such notice of termination (either by LESSOR or
LESSEE) this Lease and the term hereof shall terminate on or retroactively as of
the date on which LESSEE shall be required to vacate any part of the Premises,
or shall be deprived of a substantial part of the means of access thereto;
provided, however, that LESSOR may in LESSOR'S notice elect to terminate this
Lease and the term hereof retroactively as of the date on which such taking,
appropriation, or condemnation became legally effective. In the event of any
such termination, this Lease and the term hereof shall expire as of such
effective termination date and the Yearly Rent shall be apportioned as of such
date: If neither party (having the right so to do) elects to so terminate,
LESSOR will, with reasonable diligence and at LESSOR'S expense, restore the
remainder of the Premises, or the remainder of the means of access thereto, as
nearly as practicably may be to the same condition as obtained prior to such
taking, appropriation, or condemnation, in which event (i) the Rentable Area and
Yearly Rent, according to the nature and extent of the taking, appropriation, or
condemnation, and the resulting permanent injury to the Premises, or the means
of access thereto, shall be permanently abated; and, (ii) a just proportion of
the remainder of the Yearly Rent, according to the nature and extent of the
taking, appropriation, or condemnation and the resultant injury sustained by the
Premises or the means of access thereto, shall be abated until what remains of
the Premises or the means of access thereto, shall have been restored as full as
may be for permanent use and occupation by LESSEE hereunder. There is expressly
reserved to LESSOR all rights to compensation and damages created, accrued, or
accruing by reason of any such taking, appropriation or condemnation, in
implementation and confirmation of which LESSEE does hereby acknowledge that
LESSOR shall be entitled to receive all such compensation and damages, grants to
LESSOR all and whatever rights (if any) LESSEE may have to such compensation and
damages, and agrees to execute and deliver all and whatever further instruments
of assignment as LESSOR may from time to time request.
If part of the Building but not any part of the Premises, or if any part
of the Common Areas of the Building shall be taken or appropriated by eminent
domain or condemned for any public or quasi-public use, LESSOR'S right to
terminate this Lease pursuant to this Section may be exercised only if LESSOR
shall reasonably determine that the continued operation of the Building or what
may remain thereof would not be economically feasible.
Upon the giving of any notice of termination under this Section 18,
whether by LESSOR or LESSEE, the term of this Lease shall end upon LESSEE'S
vacating the Premises pursuant to the notice, unless the term be sooner ended as
a matter of law as a consequence of the taking, appropriation, or condemnation.
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19. LESSEE'S DEFAULT
19.1 EVENTS OF DEFAULT: If at any time subsequent to the date of this
Lease any one or more of the following events (hereinafter referred to as a
"DEFAULT OF LESSEE") shall occur:
(a) LESSEE shall fail to pay the rent or other charges hereunder
when due, and such failure shall continue for a period of seven (7) days after
receipt of notice from LESSOR (receipt shall be presumed within a three day
period after the same is posted in the U.S. Mail postage prepaid); provided
however, that if such failure shall occur more than once during each Computation
Year, no written notice from the LESSOR shall be required, and the LESSEE shall
be in default hereunder, if its failure shall continue for a period of seven (7)
days after the payment of rent or other charges hereunder shall become due.
(b) LESSEE shall neglect or fail to perform or observe any other
covenant herein contained on LESSEE'S part to be performed or observed, and
LESSEE shall fail to remedy the same within thirty (30) days after written
notice from LESSOR, specifying such neglect or failure, or if such failure is of
such a nature that LESSEE cannot reasonably remedy the same within such thirty
(30) day period, LESSEE shall fail to promptly commence to remedy the same and
shall prosecute such remedy to completion with due diligence and continuity; or,
(c) LESSEE'S leasehold in the Premises shall be taken on execution
or by other process of law directed against LESSEE; or,
(d) LESSEE shall make an assignment for the benefit of creditors; or
shall file a voluntary petition in bankruptcy; or shall be adjudicated bankrupt
or insolvent; or shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief for itself under any present or future Federal, State, or other statute,
law, or regulation for the relief of debtors; or shall seek or consent to, or
acquiesce in, the appointment of any trustee, receiver, or liquidator of LESSEE
or of all or any substantial part of its properties; or shall admit in writing
its inability to pay its debts generally as they become due; or,
(e) A petition shall be filed against LESSEE in bankruptcy or under
any other law seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future Federal, State or other statute, law or regulation and shall remain
undismissed or unstayed for an aggregate period of sixty (60) days (whether or
not consecutive); or, if any debtor in possession (whether or not LESSEE),
trustee, receiver, or liquidator of LESSEE of all or any substantial part of its
properties shall be appointed without the consent of acquiescence of LESSOR and
such appointment shall remain unvacated or unstayed
-22-
<PAGE> 23
for an aggregate period of sixty (60) days (whether or not consecutive), then in
any such case (i) if such Default of LESSEE shall occur prior to the Term
Commencement Date, this Lease shall ipso facto, and without further act on the
part of LESSOR, terminate; and,(ii) if such Default of LESSEE shall occur after
the Term Commencement Date, LESSOR may terminate this tease by notice to LESSEE
specifying a date not less than ten (10) days after the giving of such notice,
on which this Lease shall terminate and this Lease shall come to an end on the
date specified therein as fully and completely as if such date were the date
herein originally fixed for the expiration of the term of this Lease (LESSEE
hereby waiving any rights of redemption under present or future laws), and
LESSEE will then quit and surrender the Premises to LESSOR, but LESSEE shall
remain liable as hereinafter provided.
19.2 RE-ENTRY BY LESSOR: If this Lease shall have been terminated as
provided in this Section, or if any execution shall be issued against LESSEE or
any of LESSEE'S property whereupon the Premises shall be taken or occupied by
someone other than LESSEE, then LESSOR may, without notice, re-enter the
Premises, either by force, summary proceedings, ejectment, or otherwise, and
remove and disposes LESSEE and all other persons and any and all property from
the same as if this Lease had not been made.
19.3 DAMAGES DUE: In case of any such termination, the rent reserved
hereunder shall thereupon become due and be paid up to the time of such
termination together with any expenses LESSOR may incur for attorney's fees,
brokerage commissions, or expenses with respect to putting the Premises in good
order and for preparing the same for reletting. In addition, if such termination
occurs during the initial term of this Lease, there shall become due from the
LESSEE to the LESSOR an amount which shall be equal to the unamortized portion
of the total cost to the LESSOR of furnishing and providing the Building
Standard Work in and to the Premises, measured from the date of such termination
to the date originally fixed in this Lease as the Termination Date, as if such
cost was fully amortized over the initial term of this Lease.
19.4 LIQUIDATED DAMAGES: In case of any such termination, LESSEE shall
also pay LESSOR as liquidated damages for the failure of LESSEE to observe and
perform the covenants herein contained to be performed by LESSEE, any deficiency
between the rent reserved hereunder and/or covenanted to be paid and the net
amount, if any, of the damages collected under Section 19.3 and the rents
collected on account of the lease or leases of the Premises for each month of
the period which would otherwise have constituted the balance of the term of
this Lease. In computing such liquidated damages there shall be added to such
deficiency such expenses as LESSOR may incur in connection with reletting such
as legal expenses, brokerage, advertising, and for keeping the Premises in good
order and for preparing the same for reletting. Any such liquidated damages
shall be paid in monthly installments by LESSEE on the first day of each month,
and any suit brought to
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<PAGE> 24
collect the amount of the deficiency for any month shall not prejudice in any
way the rights of LESSOR to collect the deficiency for any subsequent month by
similar proceedings. In no event shall LESSEE be entitled to receive the excess,
if any, of such net rents collected over the sums payable by any LESSEE of the
Premises to LESSOR hereunder. LESSOR, upon termination or at any time hereafter,
shall have the right, in lieu of collecting liquidated damages in installments
as above provided, to recover from LESSEE liquidated damages payable on demand
equal to the excess of the rent which would have been payable from the date of
such demand to the end of the period which would otherwise have constituted the
balance of the term of this Lease, over the then fair market rental value of the
Premises for the same period. For this purpose, in computing the amount of rent,
the amounts to be included for Operating Costs and other amounts required by
this Lease to be paid by LESSEE shall be deemed, for each month, to be equal to
the of the amount of the item for the twelve (12) months preceeding the date of
demand.
19.5 LESSOR'S RIGHTS: In case of any default by LESSEE, reentry,
expiration, or dispossession by summary proceedings, or otherwise, LESSOR may
(i) re-let the Premises or any part or parts thereof, either in the name of
LESSOR or otherwise, for a term or terms which may at LESSOR'S option be equal
to or less than or exceed the period which would otherwise have constituted the
balance of the term of this Lease and may grant concessions or free rent to the
extent that LESSOR in his discretion deems advisable and necessary to re-let the
same; and, (ii) may make such reasonable alterations, repairs, and decorations
in the Premises as LESSOR in his sole judgement considers advisable and
necessary for the purpose of reletting the Premises, and the making of such
alterations, repairs, and decorations shall not operate or be construed to
release LESSEE from liability hereunder as aforesaid. LESSOR shall in no event
be liable in any way whatsoever for failure to re-let the Premises, or, in the
event that the Premises are re-let, for failure to collect the rent under such
reletting. LESSEE hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of LESSEE being
evicted or dispossessed, or in the event of LESSOR obtaining possession of the
Premises, by reason of the violation of the LESSEE of any of the covenants and
conditions of this Lease.
19.6 REMEDIES NON-EXCLUSIVE: The specified remedies to which LESSOR may
resort hereunder are not intended to be exclusive of any remedies or means of
redress to which LESSOR may at any time be lawfully entitled and LESSOR may
invoke any remedy (including the remedy of specific performance) allowed at law
or in equity as if specific remedies were not herein provided for.
20. LESSOR'S DEFAULT
LESSOR shall in no event be in default in the performance of any of
LESSOR'S obligations hereunder unless and until LESSOR shall have failed to
perform such
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<PAGE> 25
obligations within thirty (30) days, or such additional time as is reasonably
required to correct any such default, after written notice by LESSEE to LESSOR
specifying wherein LESSOR has failed to perform any such obligation.
21. ENTIRE AGREEMENT; WAIVER; SURRENDER
21.1 ENTIRE AGREEMENT: This Lease, the Exhibits hereto annexed, and the
Addenda hereto annexed (if any) are made a part hereof, and contain the entire
and only agreement between the parties and any and all statements and
representations, written and oral, including previous correspondence and
agreements between the parties hereto, are merged herein. LESSEE acknowledges
that all representations and statements upon which it relied in executing this
Lease are contained herein, and that the LESSEE in no way relied upon any other
statements or representations, written or oral. Any executory agreement
hereafter made shall be ineffective to change, modify, discharge, or effect an
abandonment of this Lease in whole or in part unless such executory agreement is
in writing and signed by the party against whom the enforcement of the change,
modification, discharge, or abandonment is sought.
21.2 WAIVER BY LESSOR: The failure of LESSOR to seek redress for
violation, or insist upon the strict performance of any covenant or condition of
this Lease, or any of the rules and regulations promulgated by the LESSOR shall
not prevent a subsequent act, which would have originally constituted a
violation, from having all the force and effect of an original violation. The
receipt by LESSOR of rent with knowledge of the breach of any covenant of this
Lease shall not be deemed a waiver of such breach. The failure of LESSOR to
enforce any of his rules and regulations against LESSEE and/or any other tenant
in the Building shall not be deemed a waiver of any such rules and regulations.
No provisions of this Lease shall be deemed to have been waived by LESSOR unless
such waiver be in writing signed by LESSOR. No payment by LESSEE or receipt by
LESSOR of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and LESSOR may accept such
check or payment without prejudice to LESSOR'S right to recover the balance of
such rent or pursue any other remedy in this provided.
21.3 SURRENDER: No act or thing done by LESSOR during the term hereby
demised shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept such surrender shall be valid, unless in writing signed by
the LESSOR. No employee or agent of LESSOR shall have any power to accept the
keys to the Premises prior to the termination of this Lease.
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<PAGE> 26
22. INABILITY TO PERFORM
Except as provided in Sections 3.1 and 3.2 hereof, this Lease and the
obligations of LESSEE to pay rent hereunder and perform all of the other
covenants, agreements, terms, provisions, and conditions hereunder on the part
of LESSEE to be performed, shall in no way be affected, impaired, or excused
because LESSOR is unable to fulfill any of his obligations under this Lease; or
is unable to supply or is delayed in supplying any service expressly or
impliedly to be supplied; or is unable to make, or is delayed in making, any
repairs, replacements, additions, alterations, improvements, or decorations; or
is unable to supply or is delayed in supplying any equipment or fixtures if
LESSOR is prevented or is delayed from so doing by reason of strikes or labor
troubles, or any other similar or dissimilar cause whatsoever beyond LESSOR'S
reasonable control, including but not limited to governmental preemption in
connection with a national emergency; or by reason by any rule, order, or
regulation of governmental agency; or by reason of the conditions of supply and
demand which have been or are affected by war, hostilities, or other similar or
dissimilar emergency. In each such instance of inability of LESSOR to perform,
LESSOR shall exercise reasonable diligence to eliminate the cause of such
inability to perform.
23. BILLS AND NOTICES
Any notice, consent, request, bill, demand, or statement hereunder by
either party to the other party shall be in writing and shall be deemed to have
been duly given when either delivered personally or mailed addressed to LESSOR
at his address as set forth in Exhibit 2 hereof and to LESSEE at the Premises,
or if any address for notices shall have been duly changed as hereinafter
provided, to the party at such changed address. Either party may at any time
change the address for such notices, consents, request, bills, demands, or
statements by delivering or mailing, as aforesaid, to the party entitled
thereto, a notice stating the change and setting forth the changed address.
24. PARTIES BOUND - SEISEN OF TITLE
The covenants, agreements, terms, provisions, and conditions of this Lease
shall bind and benefit the successors and assigns of the parties hereto with the
same effect as if mentioned in each instance where a party hereto is named or
referred to, except that no violation of the provisions of Article 14 hereof
shall operate to vest any rights in any successor or assignee of LESSEE, and
that the provisions of this Article 24 shall not be construed as modifying
Article 19 hereof. The words "LESSOR" and "LESSEE" as used herein shall be
construed in each and every covenant and clause in this Lease, unless repugnant
to the context thereof, to refer to the person or persons first named above and
their respective representatives, successors, and assigns, and those claiming
by, through, or under any of them.
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<PAGE> 27
If in connection with or as a consequence of the sale, transfer, or other
disposition of the Building, LESSOR ceases to be the owner of the reversionary
interest in the same, LESSOR shall be entirely freed and relieved from the
performance and observance thereafter of all covenants and obligations hereunder
on the part of LESSOR to be performed and observed, it being understood and
agreed in such event (and it shall be deemed and construed as a covenant running
with the land) that the person succeeding to LESSOR'S ownership of said
revisionary interest shall thereupon and thereafter assume, perform, and
observe, any and all such covenants and obligations of LESSOR.
25. SUBORDINATION AND LESSEE'S ESTOPPEL CERTIFICATE
25.1 SUBORDINATION OF LEASE: LESSEE agrees that, at the election of the
LESSOR, this Lease shall be subject and subordinate to the lien of any one or
more mortgages which may be now or hereafter be placed on, encumber, or affect
the Building and to all renewals, modifications, consolidations, and
replacements thereof. When requested to do so by LESSOR, LESSEE agrees to
execute, acknowledge, and deliver to the LESSOR an instrument (hereinafter
referred to as "SUBORDINATION AGREEMENT") in form and substance reasonably
satisfactory to the LESSOR, and in proper form for recording, wherein LESSEE
agrees to and does subordinate this Lease to the lien of any one or more
mortgages above mentioned, and to all renewals, modifications, consolidations,
replacements, and extensions of the same, and to attorn to and recognized such
mortgage(s) thereunder, and to any person claiming by, through, or under such
mortgage(s).
25.2 LESSEE'S ESTOPPEL CERTIFICATE: LESSEE shall at any time, and from
time to time, on not less than seven (7) days' prior written notice from LESSOR,
execute, acknowledge, and deliver to LESSOR a statement in writing addressed to
LESSOR (or to any mortgagee or prospective mortgagee of the Building) certifying
that this Lease is unmodified and is in full force and effect, or if there have
been modifications, the dates that this Lease is in full force and effect as
modified, setting forth the modifications; stating the dates to which the rent
and other charges under this Lease have been paid; and, whether or not to the
best of its knowledge, there exists any default in the performance of any
covenant, agreement, term, provision, or condition of this Lease, and if so,
specifying each such default of which it has knowledge. It is intended that any
such statement delivered pursuant hereto may be relied on by LESSOR and by any
such mortgagee or prospective mortgagee affecting the Building.
25.3 NEGLECT OR FAILURE OF LESSEE: In the event that LESSEE shall neglect
or shall refuse to comply with its obligations as set forth in Sections 25.1 and
25.2, or shall neglect or refuse to execute a Subordination Agreement and/or
Estoppel Certificate within a ten (10) day period after LESSOR's written request
therefor, LESSEE hereby irrevocably appoints LESSOR as its attorney-in-fact with
full power
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<PAGE> 28
and authority to execute and deliver such instrument or instruments or and in
the name of LESSEE, or LESSOR may treat such neglect or failure on the part of
the LESSEE as Default of LESSEE within the meaning of Section 19.1 of this
Lease.
26. QUIET ENJOYMENT
LESSEE, subject to the terms and provisions of this Lease, on payment of
the rent and other charges and upon observing, keeping, and performing all of
the other terms and provisions of this Lease on LESSEE'S part to be observed,
kept, and performed, shall lawfully, peaceably, and quietly have, hold, and
occupy and enjoy the Premises during the term hereof, without hindrance or
ejection by any persons lawfully claiming under LESSOR to have title to the
Premises superior to LESSEE. The foregoing covenant of quiet enjoyment is in
lieu of any other covenant, express or implied.
27. MISCELLANEOUS
27.1 SEPARABILITY: If any provision of this Lease or portion of such
provision or the application thereof to any person or circumstance is for any
reason held invalid or unenforceable, the remainder of the Lease (or the
remainder of such provision) and the application thereof to other persons or
circumstances shall not be affected thereby.
27.2 CAPTIONS AND VARIATIONS IN PRONOUNS: The captions in each article,
section, and subsection in this Lease are inserted only as a matter of
convenience and for reference, and in no way define, limit, or describe, the
scope of this Lease or the intent of any provision thereof. All pronouns and any
variation thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identity of the party or parties, or their
representatives, heirs, successors and assigns, may require.
27.3 INCORPORATION OF EXHIBITS AND ADDENDA: Exhibits 1, 2, 3, and 4 and
the Addenda hereto annexed (if any) and initialled by the parties hereto are
expressly made a part of this Lease.
27.4 GOVERNING LAW: This Lease is made pursuant to, and shall be governed
by and construed in accordance with, the laws of the Commonwealth of
Massachusetts.
27.5 NONRECOURSE: Neither the trustee of the LESSOR Trust nor any of the
beneficiaries thereof, or their respective heirs, successors, or assigns shall
be personally liable for the performance or observance of any covenant or
condition herein contained, or for the payment of any claim or judgement under
this Lease, and no recourse shall be had against any such person for such
performance, observance,
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<PAGE> 29
or payment. LESSEE agrees to look solely to the equity of the LESSOR in the
Building for the satisfaction of any LESSEE'S claims under this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Indenture of
Lease in duplicate original as a sealed instrument on the day and year first
above set forth.
ATTEST LESSOR:
WALPOLE PARK SOUTH (II) TRUST
By:
[illegible] /s/ Donnell W. Murphy
- ------------------------------ ------------------------------
DONNELL W. MURPHY
Witness Trustee as aforesaid
LESSEE:
NGS ASSOCIATES, INC.
By:
[illegible] /s/ Nicholas G. Sanuote
- ------------------------------ ------------------------------
Secretary Its President
Hereunto Duly Authorized
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<PAGE> 30
EXHIBIT 1
PLAN OF PREMISES
-30-
<PAGE> 31
EXHIBIT 2
REFERENCE DATA
DATE OF EXECUTION OF LEASE: December 21, 1989
LESSEE NGS ASSOCIATES, INC.
ARTICLE 1
PREMISES: Tenant space 2B in the Premises numbered as 24 Walpole Park South,
Walpole, MA, substantially as shown upon plan hereto annexed as Exhibit 1.
ARTICLE 2
(a) TERM COMMENCEMENT DATE: March 1, 1990
(b) TERMINATION DATE: February 28, 1995
ARTICLE 4
USE OF PREMISES: For warehousing and sale of LESSEE'S products, and any other
lawful use, and offices incidental thereto. No retail sales shall be permitted
to be conducted from the Premises.
ARTICLE 5
RENT: Rent shall be paid at the times and in the amounts as set forth in
Schedule A to this Exhibit 2. As set forth in Exhibit 2, payment of rent shall
commence on the first day of the fourth month next following the Term
Commencement Date. Notwithstanding the foregoing, the LESSEE shall, as of the
Term Commencement Date, be liable for its periodic payment of LESSEE'S
Proportionate Share of Taxes and LESSEE'S Proportionate Share of Operating
Costs, as provided in this Lease.
ARTICLE 7
PARKING SPACES ALLOCATED TO LESSEE: Nine (9) Spaces
ARTICLE 8
(a) RENTABLE AREA: 5,021 (+)/(-) square feet
(b) BUILDING RENTABLE AREA: 95,567 (+)/(-) square feet
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<PAGE> 32
(c) LESSEE'S PROPORTIONATE SHARE: 5.3%
ARTICLE 23
ADDRESSES OF PARTIES:
to LESSOR:
Walpole Park South (II) Trust
147 Morgan Drive
Norwood, MA 02062
to LESSEE (prior to occupancy of Premises)
110 Shawmut Road
Canton, MA 02021
(after occupancy of Premises)
24 Walpole Park South
Walpole, MA 02081
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<PAGE> 33
EXHIBIT 2
SCHEDULE A
RENT SCHEDULE
<TABLE>
<CAPTION>
DUE DATE RENTABLE SF RENTAL RATE PAYMENT
<S> <C> <C> <C>
March 1, 1990 5,021 sf $ /sf $
April 1, 1990 5,021 sf $ /sf $
May 1, 1990 5,021 sf $ /sf $
June 1, 1990 5,021 sf $6.50/sf $2,720
July 1, 1990 5,021 sf $6.50/sf $2,720
August 1, 1990 5,021 sf $6.50/sf $2,720
September 1, 1990 5,021 sf $6.50/sf $2,720
October 1, 1990 5,021 sf $6.50/sf $2,720
November 1, 1990 5,021 sf $6.50/sf $2,720
December 1, 1990 5,021 sf $6.50/sf $2,720
January 1, 1991 5,021 sf $6.50/sf $2,720
February 1, 1991 5,021 $6.50/sf $2,720
Effective Rent Yr 1 $4.88/sf $2,720
March 1, 1991 5,021 sf $6.50/sf $2,720
April 1, 1991 5,021 sf $6.50/sf $2,720
May 1, 1991 5,021 sf $6.50/sf $2,720
June 1, 1991 5,021 sf $6.50/sf $2,720
July 1, 1991 5,021 sf $6.50/sf $2,720
August 1, 1991 5,021 sf $6.50/sf $2,720
September 1, 1991 5,021 sf $6.50/sf $2,720
October 1, 1991 5,021 sf $6.50/sf $2,720
November 1, 1991 5,021 sf $6.50/sf $2,720
December 1, 1991 5,021 sf $6.50/sf $2,720
January 1, 1992 5,021 sf $6.50/sf $2,720
February 1, 1992 5,021 sf $6.50/sf $2,720
Effective Rent Yr 2 $6.50/sf $2,720
</TABLE>
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<PAGE> 34
<TABLE>
<CAPTION>
DUE DATE RENTABLE SF RENTAL RATE PAYMENT
<S> <C> <C> <C>
March 1, 1992 5,021 sf $6.50/sf $2,720
April 1, 1992 5,021 sf $6.50/sf $2,720
May 1, 1992 5,021 sf $6.50/sf $2,720
June 1, 1992 5,021 sf $6.50/sf $2,720
July 1, 1992 5,021 sf $6.50/sf $2,720
August 1, 1992 5,021 sf $6.50/sf $2,720
September 1, 1992 5,021 sf $6.50/sf $2,720
October 1, 1992 5,021 sf $6.50/sf $2,720
November 1, 1992 5,021 sf $6.50/sf $2,720
December 1, 1992 5,021 sf $6.50/sf $2,720
January 1, 1993 5,021 sf $6.50/sf $2,720
February 1, 1993 5,021 sf $6.50/sf $2,720
Effective Rent Yr 3 $6.50/sf $2,720
March 1, 1993 5,021 sf $6.50/sf $2,720
April 1, 1993 5,021 sf $6.50/sf $2,720
May 1, 1993 5,021 sf $6.50/sf $2,720
June 1, 1993 5,021 sf $6.50/sf $2,720
July 1, 1993 5,021 sf $6.50/sf $2,720
August 1, 1993 5,021 sf $6.50/sf $2,720
September 1, 1993 5,021 sf $6.50/sf $2,720
October 1, 1993 5,021 sf $6.50/sf $2,720
November 1, 1993 5,021 sf $6.50/sf $2,720
December 1, 1993 5,021 sf $6.50/sf $2,720
January 1, 1994 5,021 sf $6.50/sf $2,720
February 1, 1994 5,021 sf $6.50/sf $2,720
Effective Rent Yr 4 $6.50/sf $2,720
March 1, 1994 5,021 sf $6.50/sf $2,720
April 1, 1994 5,021 sf $6.50/sf $2,720
May 1, 1994 5,021 sf $6.50/sf $2,720
</TABLE>
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<PAGE> 35
<TABLE>
<CAPTION>
DUE DATE RENTABLE SF RENTAL RATE PAYMENT
<S> <C> <C> <C>
June 1, 1994 5,021 sf $6.50/sf $2,720
July 1, 1994 5,021 sf $6.50/sf $2,720
August 1, 1994 5,021 sf $6.50/sf $2,720
September 1, 1994 5,021 sf $6.50/sf $2,720
October 1, 1994 5,021 sf $6.50/sf $2,720
November 1, 1994 5,021 sf $6.50/sf $2,720
December 1, 1994 5,021 sf $6.50/sf $2,720
January 1, 1995 5,021 sf $6.50/sf $2,720
February 1, 1995 5,021 sf $6.50/sf $2,720
Effective Rent Yr 5 $6.50/sf $2,720
EFFECTIVE RENT: 5.00 YEAR LEASE $6.18/sf $2,584
A)
</TABLE>
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<PAGE> 36
EXHIBIT 3
BUILDING STANDARD WORK
NOTES 1. This "Scope of Work" is intended to outline the improvements
to accommodate the Lessee's tenancy within the "Tenant Space".
2. Unless otherwise noted the following items are not included:
A) The floor, walls, superstructure, roof and mechanical
systems do not include any provisions for Lessee's
machinery, equipment or the installation of same.
B) Security, Public Address, or Telephone Systems.
C) Computer Power or Data Wiring.
3. Note the attached "Schedule (A)" for "Lessee's Quantities"
included within the "Scope of Work".
4. The Lessor or his nominee agree to perform the items noted
within the "Scope of Work" substantially in accordance with
the following information and for the "Rent" noted in Section
(I).
<TABLE>
<S> <C> <C>
HEIGHT Overall:21' - 4" Maximum: top of concrete
floor to top of Steel.
Office Clear: 9' - 0" Minimum: top of concrete
floor to underside of Acoustical
Ceiling.
Warehouse Clear: 18' - 0" Minimum: top of concrete
floor to underside of Steel
TENANT Office Office Toilet (Mens Office Toilet)
SPACE Office Toilet (Womens Office Toilet)
Lunch
Private Offices
Conference Room
Lab
Reception
The balance of the area is open office
</TABLE>
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<PAGE> 37
<TABLE>
<S> <C> <C>
Warehouse The balance of the area is open warehouse.
Standard Tenant Improvements
CONCRETE etc. 111. 4" non structural concrete floor
on grade.
111.a. 3000 psi concrete.
111.b. 6"x6"/#10/#10 welded wire mesh
reinforcing.
111.c Control joints designed to reduce
cracking.
Rear Entrance 120. Precast concrete stairs and rail.
GLASS etc. Front 306. Exterior front windows, door and
Entrance sidelight.
METAL STUD
WALLS Office 355.a. Face Wall (Interior)
One layer of 1/2" gypsum board
applied to the inside face of
the front exterior wall, taped
and sanded to the ceiling plus
6".
Warehouse 355.b. Face Wall (Interior)
One layer of 1/2" gypsum board
applied to the inside face of
the front exterior wall, taped
and sanded to the underside of
steel.
Office 360.a. Demising (Office/Warehouse) ( Rated)
Wall
Warehouse 360.b. Demising (Tenant) ( Rated)
Wall
Framing 16" o.c., sound
dampening insulation, two layers
per face of 5/8" firecode gypsum
board, taped and sanded to the
underside of the metal deck.
Office 364.a. Standard (Bathrooms)(Non Rated)
Wall
Framing 16" o.c. to the
underside of the metal deck or
barjoint, one layer per face of
1/2" gypsum board, taped and
sanded to the underside of the
ceiling plus 6".
</TABLE>
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<PAGE> 38
<TABLE>
<S> <C> <C>
DOORS and
FRAMES etc. Rear Entrance 373.a. Metal Door (Non Rated)
Pressed metal frame, hollow
metal door, 1 1/2 pair of butts,
lock set, closer, threshold and
weather-stripping.
373.c Metal Door (Rated)
Pressed metal frame, hollow
metal door, 1 1/2 pair of butts,
lock set, and closer.
373.e. Hardboard (Rated)
Door
Pressed metal frame, hardboard
door, 1 1/2 pair of butts, pass
set, & bumper.
FINISHES Office 401. Ceiling: White painted aluminum
grid, 2' x 4'
acoustical tiles.
404. Doors: Painted.
Office Toilet 406. Floors: Vinyl Composite Tile.
Kitchen &
Lab
Office 408. Floors: Carpet
( ) Glued directly
to the floor.
( ) Allow $12.00
per s.y. installed
with tax for selection
made from options
provided by Lessor.
Warehouse 409. Floors: Concrete Sealer.
Office 410. Walls: Two coats of flat
latex wall paint.
Office 413. Base: 4" vinyl cove base.
Toilets 415. Toilet paper holder, paper towel
& soap dispensers, and mirrors.
Office Toilet 416. Vanity cabinets and counters.
Office 418. Louvre drapes for each
exterior window.
PLUMBING Office Toilet 500.a. Men: Water closet, vanity
sink & faucet.
Office Toilet 500.b. Women: Water closet, vanity
sink & faucet.
ELECTRIC 552. Service: 200 amp 120/208 volt
panel board, located
at column line C,
with circuit breakers
and electric meter.
</TABLE>
-38-
<PAGE> 39
<TABLE>
<S> <C> <C>
Office 557.a. Lights: Lighting level of 75
fc using 2 x 4, 4 tube
recessed fluorescent
fixture.
Warehouse 557.c. Lights: Lighting level of 35 fc
using 8', 2 tube strip
fluorescent fixture.
557.g. Lights: Emergency lights and
battery pack.
557.h. Lights: Exit signs.
Office 559.a. Switches: Single pole wall
switch & plate. Direct
from panel board.
Warehouse Direct from panel board.
Office 559.d. Outlets: 110 volt duplex wall outlet.
560.a. Fire alarm horns and lights.
560.b. Fire alarm pull stations.
FIRE SPRINKLER 600.a. Group 2 standard hazard calculated
wet system having one head per 120
s.f. of floor area.
Office 603. Drops with Heads
Warehouse 604. Heads
HEATING and
COOLING Office 650.a. Heating and Cooling System
1. Gas heat and electric cooled roof top unit.
2. One thermostat per roof top unit.
3. Air distributed via a ducted system
from the roof top unit and returned
via the ceiling space plenum.
4. The system will maintain a:
Heating temperature of 68 degrees when the
outside temperature is 0 degrees.
Cooling temperature is 90 degrees or a 15 degree
differential between the inside & outside
temperature.
Warehouse 650.b. Heating System
1. Gas fired suspended unit heaters.
2. One thermostat per each heater
3. Air distributed directly from unit heaters.
4. The system will maintain a:
Heating temperature of 55 degrees when the
outside temperature is 0 degrees.
MISCELLANEOUS 702.a. Overhead door, 8'- 0" X 8' - 0".
702.b. Dock seal and rubber dock bumpers.
GENERAL 1158. Exterior sign with Lessee's name
CONDITIONS installed over the front and rear
entrances.
</TABLE>
-39-
<PAGE> 40
1428. Architectural service; one design & revision.
================================
Non Standard Tenant Improvements
================================
ROOF 250.a. Cut & patch for roof top units
GLASS & GLAZ Reception 300. Slider with louver drapes.
PLUMBING Kitchen 500. Kitchen sink, faucer and disposal.
500. Water connected for coffee maker.
ELECTRIC 555. Power wire roof top unit.
MISCELLANEOUS
700. Labor & material for adds to "Scope
of Work".
711. Kitchen cabinets and counters.
ENCLOSURES Title Page
Section (I) Summation
Section (II) Scope of Work
Schedule (A) Lessee's Quantities
Schedule (B) Rent Schedule
Key Plan Of Premises
Lessee's Floor Plan
-40-
<PAGE> 41
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PROPOSAL TO LEASE
SCOPE OF WORK LESSEE
SCHEDULE (A) PAGE (1) QUANTITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Walpole Park South II Trust OFFICE: Rentable Area 2,500 sf
N.G.S. Associates, Inc. ------------------------ 50%
Tenant Space Number: WPS2-2B STANDARD ------------------------ --------
Proposal Number: WPS2-03NGSASS.(2) IMPROVEMENTS WAREHOUSE: Rentable Area 2,521 sf
Tenant Number: WPS2-(N/A) ------------------------ 50%
November 21, 1989 ------------------------ --------
TOTAL: Rentable Area 5,021 sf
- ------------------------------------------------------------------------------------------------------------------------------------
111 CONCRETE etc Floors On Grade 5,021 sf
120 a) Stairs Pre Case Stair & Rail Rear Entrance 1 ea
- ------------------------------------------------------------------------------------------------------------------------------------
306 GLASS etc Door & Windows Front Entrance 1 ea
- ------------------------------------------------------------------------------------------------------------------------------------
355 a) METAL STUD WALLS Face Wall Interior 40 lf
355 b) Face Wall Interior 0 lf
360 a) Demising Wall Office/Ware Rated 40 if
360 b) Demising Wall Tenant Rated 250 lf
364 a) Standard Wall Non Rated 192 lf
- ------------------------------------------------------------------------------------------------------------------------------------
373 a) DOORS & FRAMES etc Metal Door Non Rated Rear Entrance 1 ea
373 c) Metal Door Rated Interior 1 ea
373 e) Hardboard Door Non Rated Interior 8 ea
- ------------------------------------------------------------------------------------------------------------------------------------
401 FINISHES Ceilings Acoustical 2 x 6 Tile 2,500 sf
404 Doors Paint 10 ea
406 Floor Vinyl Composite Tile 1,160 sf
408 Floor Carpet 164 sy
410 Walls Paint Office Walls 6,159 sf
413 Base Vinyl Cove Office Walls 628 lf
515 Accessories 2 ea
416 Vanities Lavanette 2 ea
418 Windows Louvre Drapes 3 ea
- ------------------------------------------------------------------------------------------------------------------------------------
500 PLUMBING Toilet Rooms Plumbing Fixtures 4 ea
- ------------------------------------------------------------------------------------------------------------------------------------
552 ELECTRIC Service & Meters 1 ea
557 a) Light Fixtures 2' x 4' Recessed 35 ea
557 b) Light Fixtures 8' Strips 6 ea
557 c) Light Fixtures Emergency Lights 3 ea
557 d) Light Fixtures Battery Packs 1 ea
557 e) Light Fixtures Exit Signs 3 ea
559 a) Switches Single Pole Wall Mounted Switch 16 ea
559 b) Outlets 110 Volt Wall Mounted Duplex Outlet 38 ea
560 a) Fire Alarm Horn & Lights 1 ea
560 b) Fire Alarm Full Stations 2 ea
- ------------------------------------------------------------------------------------------------------------------------------------
603 FIRE SPRINKLER Drops With Heads Dropped Ceiling Area 25 ea
604 Heads Exposed Ceiling Area 38 ea
- ------------------------------------------------------------------------------------------------------------------------------------
650 a) HEATING & COOLING Heating & Cooling Roof Top Units 2,500 sf
650 b) Heating Unit Heaters 4,521 sf
- ------------------------------------------------------------------------------------------------------------------------------------
702 MISCELLANEOUS Overhead Doors Seals Rubber Bumpers 1 ea
- ------------------------------------------------------------------------------------------------------------------------------------
1158 GENERAL Signs Tenant Neat Exterior Front & Rear 1 pr
CONDITIONS
- ------------------------------------------------------------------------------------------------------------------------------------
250 ROOF Cut & Patch Roof Top Units 1 ea
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-41-
<PAGE> 42
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
300 GLASS & GLAZING Reception Slider W/ Louver Blinds 12 sf
- ------------------------------------------------------------------------------------------------------------------------------------
500 a) PLUMBING Kitchen Kitchen Sink, Disposal & Faucet 1 ea
500 b) Kitchen Water Connection for Coffee Maker 1 ea
- ------------------------------------------------------------------------------------------------------------------------------------
555 ELECTRIC Power Wire Roof Top Unit 1 ea
- ------------------------------------------------------------------------------------------------------------------------------------
700 a) MISCELLANEOUS Labor & Material For Additional Tenant Improvements 5,021 sf
711 Kitchen Cabinets & Counters 6 lf
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-42-
<PAGE> 43
EXHIBIT 4
SIGN SPECIFICATIONS
This sign specification is written to create and maintain standards of
uniformity for all businesses in Walpole Park South (II). Tenants must conform
with these specifications, and any variations must be approved of by the
Landlord.
A. BUILDING SIGNS - One (1) non-illuminated 4'0" X 5'0" will be
allowed for each tenant for identification purposes. The sign
shall be manufactured with a 1 1/2" X 2 1/2" extruded aluminum
retainer forming frame around changeable .063 aluminum face.
Face and frame will be rust to match trim on building. All
lettering must be Rockwell Bold. The sign shall be mounted and
centered over entrance door.
One (1) non-illuminated 1' 6" X 4' 0" will be allowed for tenant
identification above the loading dock doors in the rear of the
Building. The sign will be manufactured of 0.40 aluminum with a 1"
aluminum tube frame. Face will be rust background with white copy.
All lettering must be Rockwell Bold.
B. WINDOW SIGNS - Nothing is to appear in/or on the windows
without the LESSOR's approval before installation.
OTHER SIGNS - No other signs, temporary or permanent, are allowed
without written approval of the LESSOR.
-43-
<PAGE> 44
ADDENDA
28. LESSEE'S OPTION TO EXTEND LEASE TERM
28.1 OPTION GRANTED: At the expiration of the initial term of this
Lease, and if this Lease shall then be in full force and effect, and
the LESSEE shall have fully performed or observed all of the terms,
covenants, and conditions on its part to be performed or observed
hereunder, the LESSEE shall have the option to extend the term of the
Lease, upon the same terms, covenants and conditions, (except for rent
as hereinbelow referred to as "EXTENDED TERM"). The option herein
granted shall be exercised by the LESSEE by giving written notice to
the LESSOR, not less than three (3) months and no more than six (6)
months prior to the expiration of the initial Lease Term.
28.2 RENT DURING EXTENDED TERM: The Yearly Rent payable by the
LESSEE during the Extended Term shall be the greater of the following:
(1) the rate per annum payable at the end of the initial Lease term;
or, (2) a sum equal to what would be considered as the fair market
rental for the Premises, based upon the use of the same as first class
office and warehouse space located in the rental community between
Route 1 and Route 128 as of the date of commencement of the Extended
Term, under similar terms and conditions as contained in this Lease,
but requiring no investment by LESSOR for improvements, renovations,
repairs, etc. (hereinafter referred to as "MARKET RENT"). If the
parties cannot agree as to the Market Rent, the Market Rent shall be
determined by two (2) appraisers who are members of the American
Institute of Real Estate Appraisers to be appointed and paid for by
each of the parties. If such appraisers cannot agree on the Market
Rent, they shall together promptly select a third appraiser who shall
also be a member of the American Institute of Real Estate Appraisers
and whose fee shall be shared by each of the parties hereto. A written
determination as to the Market Rent signed by any two (2) of the
appraisers so chosen shall be final and binding on the parties hereto.
The Yearly Rent payable by the LESSEE during the Extended Term shall be
paid in addition thereto, the LESSEE shall pay all other charges, such
as, but not limited to, Taxes and Operating Costs as set forth in this
Lease.
-44-
<PAGE> 45
EXHIBIT 2
REFERENCE DATA
DATE OF EXECUTION OF LEASE: December 21, 1989
DATE OF EXECUTION OF THIS FIRST AMENDMENT: March , 1994
LESSEE: NGS DIVISION/MKS INSTRUMENTS, INC.,
ARTICLE 1 DESCRIPTION OF DEMISED PREMISES
(a) Initial Premises: 5,021+ square feet of space ("INITIAL
SPACE") consisting of 2,500+/- of office space and 2,521+/-
of warehouse space located in the building numbered 24
Walpole Park South, Walpole, Massachusetts, as shown on the
space plan hereto annexed as Exhibit 1, outlined in yellow,
and being identified thereon as "Initial Space A".
(b) Additional Space: "B" Commencing on May 1, 1992 the LESSEE
shall take and lease from the LESSOR an additional 5,021+/-
square feet of space ("ADDITIONAL SPACE") consisting of
500+/- square feet of office space and 4,521+/- of warehouse
space located contiguous to the Initial Space, as shown on
the space plan hereto annexed as Exhibit 1, outlined in
yellow, and being identified thereon as "Additional Space B".
(b) Additional Space: "C" Commencing on March 1, 1994 the LESSEE
shall take and lease from the LESSOR an additional 10,042+/-
square feet of space ("ADDITIONAL SPACE") consisting of
1,250+/- square feet of office space and 8,792+/- of
warehouse space located contiguous to the Initial Space, as
shown on the space plan hereto annexed as Exhibit 1, outlined
in yellow, and being identified thereon as "Additional Space
C".
ARTICLE 2
2.1 TERM COMMENCEMENT DATE: as to the Initial Space "A"
March 1, 1990
TERM COMMENCEMENT DATE: as to the Additional Space "B"
May 1, 1992
TERM COMMENCEMENT DATE: as to the Additional Space "C"
March 1, 1994
-45-
<PAGE> 46
2.2 TERMINATION DATE: March 31, 1997
to the same Exhibit 3A as annexed hereto, such Exhibit 3A being applicable to
the Additional Space (as defined in said Exhibit 2).
Except as above provided, The Lease shall be otherwise deemed to be
unamended and unmodified.
IN WITNESS WHEREOF, the parties have hereto executed this FIRST AMENDED
in duplicate original as a sealed instrument on this 15th day of March 1994.
LESSOR:
/s/ Janie A. Young /s/ Donnell W. Murphy
- -------------------------------- ------------------------------
WITNESS DONNELL W. MURPHY
Trustee as aforesaid
ATTEST: LESSEE:
NGS DIVISION/MKS INSTRUMENTS, INC.
BY:
/s/ Janet Giddings /s/ Robert F. O'Brien
- -------------------------------- ------------------------------
SECRETARY/CLERK ITS TREASURER
hereunto duly authorized
-46-
<PAGE> 47
EXHIBIT:2 SCHEDULE:A WALPOLE PARK SOUTH II TRUST
- --------------------------------------------------------------------------------
DATE: 03/15/94 TENANT : NGS DIVISION/MKS INSTRUMENTS, INC.
================================================================================
<TABLE>
<CAPTION>
RENT PAYMENT SCHEDULE
-------------------------------
RENTABLE RENTABLE RENTAL RENTAL
DUE DATE SQ. FT. SQ. FT. RATE PAYMENT
- -------------------- ------------------------------- -------------------------------------------------------------
Space A Space B Space C Space A Space B Space C
- ------------------- ------- ------- ------- ------ -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 1, 1994 5,021 5,021 10,042 20,084 $ 0.00 $ 0.00 $ 0.00 $ 0.00
February 1, 1994 5,021 5,021 10,042 20,084 $ 0.00 $ 0.00 $ 0.00 $ 0.00
March 1, 1994 5,021 5,021 10,042 20,084 $ 0.00 $ 0.00 $ 0.00 $ 0.00
April 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
May 1 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
June 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
July 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
August 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
September 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
October 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
November 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
December 1, 1994 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
- --------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR 1
- --------------------------------------------------------------------------------------------------------------------------
January 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
February 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
March 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
April 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
May 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
June 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
July 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
August 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
September 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
October 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
November 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
December 1, 1995 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
- --------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR 2
- --------------------------------------------------------------------------------------------------------------------------
January 1, 1996 5,021 5,021 10,042 20,084 $ 8.00 $ 8.00 $ 8.00 $ 8,368.33
February 1, 1996 5,021 5,021 10,042 20,084 $ 8.00 $ 8.00 $ 8.00 $ 8,368.33
March 1, 1996 5,021 5,021 10,042 20,084 $ 8.00 $ 8.00 $ 8.00 $ 8,368.33
</TABLE>
-47-
<PAGE> 48
<TABLE>
<CAPTION>
RENT PAYMENT SCHEDULE
-------------------------------
RENTABLE RENTABLE RENTAL RENTAL
DUE DATE SQ. FT. SQ. FT. RATE PAYMENT
- -------------------- ------------------------------- -------------------------------------------------------------
Space A Space B Space C Space A Space B Space C
- ------------------- ------- ------- ------- ------ -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
April 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
May 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
June 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
July 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
August 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
September 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
October 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
November 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
December 1, 1996 5,021 5,021 10,042 20,084 $ 5.00 $ 5.00 $ 5.00 $ 8,368.33
- --------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR 3
- --------------------------------------------------------------------------------------------------------------------------
January 1, 1997 5,021 5,021 10,042 20,084 $ 8.00 $ 5.00 $ 5.00 $ 8,368.33
February 1, 1997 5,021 5,021 10,042 20,084 $ 8.00 $ 5.00 $ 5.00 $ 8,368.33
March 1, 1997 5,021 5,021 10,042 20,084 $ 8.00 $ 5.00 $ 5.00 $ 8,368.33
April 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
May 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
June 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
July 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
August 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
September 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
October 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
November 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
December 1, 1997 0 0 0 0 $ 0.00 $ 0.00 $ 0.00 $ 0.00
- --------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR 4
</TABLE>
-48-
<PAGE> 49
FIRST AMENDMENT
This is the FIRST AMENDMENT made to a certain Indenture of Lease ("THE
LEASE") made by and between Donnell W. Murphy, Trustee of Walpole Park South
(II) Trust ("LESSOR"), as landlord; and NGS Division/MKS Instruments, Inc., a
Massachusetts corporation ("THE LESSEE"), as tenant dated December 21, 1989. The
Lease concerns certain premises leased by the LESSEE from the LESSOR at 24
Walpole Park South Drive, Walpole, MA.
In consideration hereof, the LESSOR and the LESSEE do hereby modify The
Lease as follows:
29. EXHIBIT 1 ("Plan of Premises") as annexed to The Lease is
stricken and there is substituted in place thereof Exhibit 1 as
annexed hereto.
30. EXHIBIT 2 ("Reference Data") as annexed to The Lease is
stricken and there is substituted in place thereof Exhibit 2 as
annexed hereto.
31. EXHIBIT 3 ("Building Standard Work") as annexed to The Lease
is amended by identifying the same as being applicable to the
Initial Space (as defined in Exhibit 2 hereto annexed); and
further by adding to the same Exhibit 3A as annexed hereto, such
Exhibit 3A being applicable to the Additional Space (as defined
in said Exhibit 2).
Except as above provided, The Lease shall be otherwise deemed
to be unamended and unmodified.
-49-
<PAGE> 50
IN WITNESS WHEREOF, the parties have hereto executed this FIRST
AMENDMENT in duplicate original as a sealed instrument on this 19th day of
November, 1993.
LESSOR:
/s/ Gary Kybell /s/ Donnell W. Murphy
- ----------------------------------- ---------------------------------
WITNESS DONNELL W. MURPHY
Trustee as aforesaid
ATTEST: LESSEE:
NGS DIVISION/MKS INSTRUMENTS, INC.
BY:
/s/ Janet C. Giddings /s/ Robert F. O'Brien
- ----------------------------------- ---------------------------------
WITNESS Its Treasurer
hereunto duly authorized
-50-
<PAGE> 51
EXHIBIT:2A SCHEDULE:B
- --------------------------------------------------------------------------------
DATE: 10/15/93 TENANT : NGS DIVISION/MKS INSTRUMENTS, INC.
================================================================================
<TABLE>
<CAPTION>
RENT PAYMENT SCHEDULE RENTAL
RENTABLE RENTABLE RENTAL PAY-
DUE DATE SQ. FT. SQ. FT. RATE MENT
- ---------------------- --------------------------------------- ------------------------------------------------------------
Space A Space B Space C Space A Space B Space C
- ---------------------- -------- -------- --------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
February 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
March 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
April 1, 1993 5,021,00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
May 1 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
June 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
July 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
August 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
September 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
October 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
November 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
December 1, 1993 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR 1
- ----------------------------------------------------------------------------------------------------------------------------------
January 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
February 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
March 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
April 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
May 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
June 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
July 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
August 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
September 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
October 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
November 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
December 1, 1994 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
- ----------------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR 2
- ----------------------------------------------------------------------------------------------------------------------------------
January 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
February 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 6.50 5.58 5.00 9,238.64
</TABLE>
-51-
<PAGE> 52
<TABLE>
<CAPTION>
RENT PAYMENT SCHEDULE RENTAL
RENTABLE RENTABLE RENTAL PAY-
DUE DATE SQ. FT. SQ. FT. RATE MENT
- ---------------------- --------------------------------------- ------------------------------------------------------------
Space A Space B Space C Space A Space B Space C
- ---------------------- -------- -------- --------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 5.00 0.00
April 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
May 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
June 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
July 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
August 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
September 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
October 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
November 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
December 1, 1995 5,021.00 5,021.00 10,042.00 20,084.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR 3
</TABLE>
-52-
<PAGE> 53
EXHIBIT 2
REFERENCE DATA
DATE OF EXECUTION OF LEASE: December 21, 1989
DATE OF EXECUTION OF THIS FIRST AMENDMENT: October , 1993
LESSEE: NGS DIVISION/MKS INSTRUMENTS, INC.,
ARTICLE 1 DESCRIPTION OF DEMISED PREMISES
(a) Initial Premises: 5,021 (+/-) square feet of space ("INITIAL
SPACE") consisting of 2,500 (+/-) of office space and 2,521
(+/-) of warehouse space located in the building numbered 24
Walpole Park South, Walpole, Massachusetts, as shown on the
space plan hereto annexed as Exhibit 1, outlined in yellow,
and being identified thereon as "Initial Space A".
(b) Additional Space: "B" Commencing on May 1, 1992 the LESSEE
shall take and lease from the LESSOR an additional 5,021 (+/-)
square feet of space ("ADDITIONAL SPACE") consisting of 500
(+/-) square feet of office space and 4,521 (+/-) of warehouse
space located contiguous to the Initial Space, as shown on the
space plan hereto annexed as Exhibit 1, outlined in yellow,
and being identified thereon as "Additional Space B".
(b) Additional Space: "C" Commencing on March 1, 1994 the LESSEE
shall take and lease from the LESSOR an additional 10,042
(+/-) square feet of space ("ADDITIONAL SPACE") consisting of
1,250 (+/-) square feet of office space and 8,792 (+/-) of
warehouse space located contiguous to the Initial Space, as
shown on the space plan hereto annexed as Exhibit 1, outlined
in yellow, and being identified thereon as "Additional Space
C".
ARTICLE 2
2.1 TERM COMMENCEMENT DATE: as to the Initial Space "A" March 1,
1990
TERM COMMENCEMENT DATE: as to the Additional Space "B" May 1,
1992
TERM COMMENCEMENT DATE: as to the Additional Space "C" March
1, 1994
2.2 TERMINATION DATE: February 28, 1995
-53-
<PAGE> 54
ARTICLE 4
USE OF PREMISES: For office and warehousing space of LESSEE'S products,
and any other lawful use. No retail sales shall be permitted to be
conducted from the premises.
ARTICLE 5 - RENT
Rent for the Initial Space and the Additional Space shall be paid to
LESSOR in accordance with the attached Exhibit 2A-Schedule B
ARTICLE 7 - PARKING SPACES ALLOCATED TO LESSEE:
Twenty Six (30) spaces
ARTICLE 8.1(a) - RENTABLE AREA
<TABLE>
<S> <C>
INITIAL SPACE: "A" 5,021 + square feet
-
ADDITIONAL SPACE: "B" 5,021 + square feet
-
ADDITIONAL SPACE: "C" 10,042 + square feet
-------
TOTAL 20,084 + square feet
-
</TABLE>
BUILDING RENTABLE AREA: 95,567+ square feet
LESSEE'S PROPORTIONATE SHARE:
<TABLE>
<S> <C>
For Initial Space 5.25%
For Initial Space & Additional Spaces 21.00%
</TABLE>
ARTICLE 23 - ADDRESSES OF PARTIES:
LESSOR: P.O. Box 123
7 West Street
Walpole, Massachusetts 02081
LESSEE: 25 Walpole Park South
Walpole, Massachusetts 02081
-54-
<PAGE> 55
EXHIBIT 3A
BUILDING STANDARD WORK
APPLICABLE TO ADDITIONAL SPACE
The interior development to the Additional Space shall be substantially
in accordance with the plan/sketch hereto annexed which indicates an approximate
12%/88% office-warehouse use.
-55-
<PAGE> 56
EXHIBIT 3A
Walpole Park South II Trust October 15, 199?
MGS/MKS Instruments, Inc. Page 3
SECTION (II) SCOPE OF WORK
NOTES 1. This "Scope of Work" is intended to outline the
improvements to accommodate the Lessee's tenancy within
the "Tenant Space".
2. Unless otherwise noted the following items are not
included:
A) The floor, walls, superstructure, roof and
mechanical systems do not include any provisions
for Lessee's machinery, equipment or the
installation of same.
B) Security, Public Address, or Telephone Systems.
C) Computer Power or Data Wiring.
3. Note the attached "Schedule (A)" for "Lessee's
Quantities" included within the "Scope of Work".
4. The Lessor or his nominee agree to perform the items
noted within the "Scope of Work" substantially in
accordance with the following information and for the
"Rent" noted in Section (I).
HEIGHT Overall: 21' - 4" Maximum: top of
concrete floor to top of Steel.
Office Clear: 9' - 0" Minimum: top of
concrete floor to underside of
Acoustical Ceiling.
Warehouse Clear: 18' - 0" Minimum: top of
concrete floor to underside of
Steel.
TENANT SPACE Office 1- 10x10 Private Office
- -------------------------------------------------------------------------------
* 7 WEST STREET * WALPOLE, MA * 02081 * (508) 668-1200 * FAX (508) 668-1201 *
- -------------------------------------------------------------------------------
<PAGE> 57
Walpole Park South II Trust October 15, 199?
MGS/MKS Instruments, Inc. Page 4
1- 12x13 Private Office
1- 10x12 Kitchen Area
1- Mens Rooms
1- Ladies Room
Warehouse The balance of the area is open warehouse.
Standard Tenant Improvements
CONCRETE etc. 111. 4" non structural concrete floor on
grade.
111.a 3000 psi concrete.
111.b. 6"x6"/#10/#10 welded wire mesh
reinforcing.
111.c Control joints designed to reduce
cracking.
Rear Entrance 120. Precast concrete stairs and rail.
GLASS etc. Front Entrance 306. Exterior front windows, door and
sidelight.
METAL STUD
WALLS Office 355.a. Face Wall (Interior)
One layer of 1/2" gypsum board
applied to the inside face of the front
exterior wall, taped and sanded to the
ceiling plus 6".
Warehouse 355.b Face Wall (Interior) One layer
of 1/2" gypsum board applied to the
inside face of the front exterior
wall, taped and sanded to the
underside of steel.
Warehouse 360.a Demising Wall (Ware) ( Rated)
- -------------------------------------------------------------------------------
* 7 WEST STREET * WALPOLE, MA * 02081 * (508) 668-1200 * FAX (508) 668-1201 *
- -------------------------------------------------------------------------------
<PAGE> 58
Walpole Park South II Trust October 15, 199?
MGS/MKS Instruments, Inc. Page 5
Warehouse 360.b. Demising Wall (Tenant) (Rated)
Framing 16" o.c., sound dampening
insulation, two layers per face
of 5/8" firecode gypsum board,
taped and sanded to the underside
of the metal deck.
Office 364.a. Standard Wall (Bathrooms) (Non
Rated) Framing 16" o.c. to the
underside of the metal deck or
barjoint, one layer per face of 1/2"
gypsum board, taped and sanded to
the underside of the ceiling plus
6".
DOORS and Rear Entrance 373.a. Metal Door (Non Rated)
Pressed metal frame, hollow metal
door, 1 1/2 pair of butts, lock set,
closer, threshold and weather-
stripping.
373.c Metal Door ( Rated) Pressed metal
frame, hollow metal door, 1 1/2 pair
of butts, lock set, and closer.
373.e. Hardboard Door ( Rated) Pressed
metal frame, hardboard door, 1 1/2
pair of butts, pass set, & bumper.
FINISHES Office 401. Ceiling: White painted aluminum
grid, 2' x 4' acoustical
tiles.
404. Doors: Painted.
Toilets 406. Floors: Vinyl Composite Tile.
Office 408. Floors: Carpet
( ) Glued directly to
the floor.
*7 WEST STREET * WALPOLE, MA * 02081 * (508) 668-1200 * FAX (508) 668-1201*
<PAGE> 59
Walpole Park South II Trust October 15, 199?
MGS/MKS Instruments, Inc. Page 6
( ) Allow $11.50 per
s.y. installed with
tax for selection
made from options
provided by
Lessor.
Warehouse 409. Floors: Concrete Sealer.
410. Walls: Two coats of flat latex
wall paint.
413. Base: 4" vinyl cove base.
Toilets 415. Toilet paper holder, paper
towel & soap dispensers, and
mirrors.
Toilets 416. Vanity cabinets and counters.
Office 418. Louvre drapes for each exterior
window.
PLUMBING Office Toilet 500.a. Men: Water closet, vanity sink
& faucet.
Office Toilet 500.b. Women: Water closet (1), vanity
sink (1) & faucet (1), with
floor drain and hose bib.
ELECTRIC 552. Service: 125 amp 120/208 volt
panel board, located at
column line C, with
circuit breakers and
electric meter.
Office 557.a. Lights: Lighting level of 75 fc using
2 x 4, 4 tube recessed
fluorescent fixture.
Warehouse 557.c. Lights: Lighting level of 35 fc using
8', 2 tube strip fluorescent
fixture.
557.g. Lights: Emergency lights and
battery pack.
*7 WEST STREET * WALPOLE, MA * 02081 * (508) 668-1200 * FAX (508) 668-1201*
<PAGE> 60
Walpole Park South II Trust October 15, 199?
MGS/MKS Instruments, Inc. Page 7
557.h. Lights: Exit signs.
Office 559.a. Switches: Single pole wall switch &
plate.
Warehouse Direct from panel board.
Office 559.d. Outlets: 110 volt duplex wall
outlet.
560.a. Fire alarm horns and lights.
560.b. Fire alarm pull stations.
560.c. Fire alarm smoke detectors.
FIRE
SPRINKLER 600.a. Group 2 standard hazard calculated
wet system having one head per 120
s.f. of floor area.
Office 603. Drops with Heads
Warehouse 604. Heads
HEATING and Office 650.a. Heating and Cooling System
1. Gas heat and electric cooled roof
top unit.
2. One thermostat per roof top unit.
3. Air distributed via a ducted
system from the roof top unit
and returned via the ceiling
space plenum.
4. The system will maintain a:
Heating temperature of 68 degrees
when the outside temperature is
0 degrees. Cooling temperature of
75 degrees when the outside
temperature is 90 degrees or a
15 degree differential between
the inside & outside
temperature.
*7 WEST STREET * WALPOLE, MA * 02081 * (508) 668-1200 * FAX (508) 668-1201*
<PAGE> 61
Walpole Park South II Trust October 15, 199?
MGS/MKS Instruments, Inc. Page 8
Warehouse 650.b. Heating System
1. Gas fired suspended unit
heaters.
2. One thermostat per each heater
3. Air distributed directly from
unit heaters.
4. The system will maintain a:
Heating temperature of 55
degrees when the outside
temperature is 0 degrees.
MISCELLANEOUS Warehouse 702.a. 2- Overhead door,
8' - 0" X 8' - 0".
Warehouse 702.b. 2- Dock seal and rubber
dock bumpers.
GENERAL
CONDITIONS 1158. Exterior sign with Lessee's
name installed over the front
and rear entrances.
1428. Architectural service; one
design & revision.
Non Standard Tenant Improvements
SPRINKLER 600. Relocate existing office area
heads, back to exposed ceiling
area.
MISCELLANEOUS 700. Labor & material for adds to
"Scope of Work"
*7 WEST STREET * WALPOLE, MA * 02081 * (508) 668-1200 * FAX (508) 668-1201*
<PAGE> 62
Walpole Park South II Trust October 15, 199?
MGS/MKS Instruments, Inc. Page 9
ENCLOSERS Title Page
Section (I) Summation
Section (II) Scope of Work
Key Plan of Premises
Lessee's Floor Plan
<PAGE> 63
SECOND AMENDMENT
This is the SECOND AMENDMENT made to a certain Indenture of Lease ("THE
LEASE") made by and between Donnell W. Murphy, Trustee of Walpole Park South
(II) Trust ("LESSOR"), as landlord; and NGS Division/MKS Instruments, Inc. a
Massachusetts corporation ("THE LESSEE"), as tenant dated December 21, 1989. The
Lease concerns certain premises leased by the LESSEE from the LESSOR at 24
Walpole Park South Drive, Walpole, MA 02081.
In consideration hereof, the LESSOR and the LESSEE do hereby modify The
Lease as follows:
1. EXHIBIT 2 ("Reference Data") Article 2.2 as annexed to The Lease, the
data shall be stricken and is substituted in place thereof the following Date:
March 31, 1998.
2. EXHIBIT 2A ("Rental Payment Schedule") as annexed to The Lease is
stricken and there is substituted in place thereof Exhibit 2A as annexed hereto.
Except as above provided, The Lease shall be otherwise deemed to be unamended
and unmodified.
IN WITNESS WHEREOF, the parties have hereto executed this SECOND AMENDMENT
in duplicate original as a sealed instrument on this day of December 1996.
LESSOR
/s/ John D. Murphy /s/ Donnell W. Murphy (Trustee)
- ------------------------------- --------------------------------------
WITNESS DONNELL W. MURPHY
Trustee as aforesaid
<PAGE> 64
ATTEST: LESSEE:
NGS DIVISION/MKS INSTRUMENTS, INC.
BY:
/s/ Brian J. Murray /s/ Robert F. O'Brien
- ------------------------------- -------------------------------------
WITNESS Its Treasurer
hereunto duly authorized
<PAGE> 65
This "LEASE AGREEMENT" is written on behalf of NGS Division/MKS Instruments
Inc., (TENANT), to lease ADDITIONAL office and warehouse space at the
aforementioned location. TENANT agrees to rent the premises, (unit 2A), AS IS,
known as Walpole Park South II Trust (LESSOR), and as per the following terms
and conditions. Please note the following information is in accordance with the
ADDITIONAL lease space ONLY and DOES NOT INCLUDE any terms and conditions of
EXISTING Lease Agreement.
TERMS AND CONDITIONS
1) USEABLE OFFICE square feet: +/- 500 sf
USEABLE WAREHOUSE square feet: +/- 4,521 sf
RENTABLE square feet: +/- 5,021 sf
2) TWO Years and TEN Months (2.83) years COMMENCEMENT: May 1, 1992
TERMINATION: February 28, 1995
3) MAY 1, 1992 - FEBRUARY 28, 1993 is $ 5.58/rsf, Net, Net, Net
MARCH 1, 1993 - FEBRUARY 28, 1994 is $ 5.58/rsf, Net, Net, Net
MARCH 1, 1994 - FEBRUARY 28, 1995 is $ 5.58/rsf, Net, Net, Net
4) The RENTAL PAYMENTS as mentioned above, DO NOT INCLUDE TENANT'S
proportionate share, which is 5.30%, of all real estate taxes and
operating expenses, ie: exterior maintenance and landscaping, common
area lights and water charges, and building liability insurance. The
LESSEE is responsible for same as of May 1, 1992.
5) All rental payments are DUE and PAYABLE ON or BEFORE the FIRST of the
MONTH.
6) LESSEE'S OPTION to EXTEND lease an additional THREE (3) years will
be in accordance with the following. Notice of same will be given to
LESSOR NOT LATER THAN September 1, 1994.
MARCH 1, 1995 - FEBRUARY 28, 1996 is $5.00/rsf, Net, Net, Net
MARCH 1, 1996 - FEBRUARY 28, 1997 is $5.00/rsf, Net, Net, Net
MARCH 1, 1997 - FEBRUARY 28, 1998 is $5.00/rsf, Net, Net, Net
(*)The Option to Extend lease, term rate is for the EXISTING as well as
future rental spaces, both Units 2A-2B.
<PAGE> 66
7) TENANT will have NINE (9) PARKING SPACES located on site.
<PAGE> 67
Accepted by the LESSOR:
WALPOLE PARK SOUTH II TRUST
DONNELL MURPHY
/s/ Donnell W. Murphy
---------------------------------
(Signature)
PROPERTY MANAGER/TRUSTEE
April 2, 1992
Accepted by the TENANT:
NGS DIVISION/MKS
INSTRUMENTS INC.
---------------------------------
(Name)
/s/ N. G. Sanuote
---------------------------------
(Signature)
President
---------------------------------
(Title)
April 2, 1992
<PAGE> 68
<TABLE>
<CAPTION>
BUILDING RENOVATIONS ETC. Lessee Lessor Adjustment FNC
Quantity Allows To
SCOPE OF WORK Lessee
SCHEDULE (A) PAGE (1)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Norwood Corporation OFFICE: Rentable Area 3,750 sf 500 sf 3,250 sf
NGS Division/MKS Instruments, Inc. STANDARD ______________
Tenant Space Number: WPS2-2A IMPROVEMENTS ______________ 75% 10% 65%
Proposal Number: WPS2-D3NGSASS. (6)
Tenant Number: WPS2-(N/A)
April 6, 1992 WAREHOUSE:
Rentable Area 1,271 sf 4,521 sf -3,250 sf
25% 90% -65%
______________
______________
TOTAL: Rentable Area
5,021 sf 5,021 sf 0 sf
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
111 CONCRETE etc Floors on Grade Interior 5,021 sf 5,021 sf 0 sf 0
120 Pre Cast Stair Exterior Rear Entrance 1 ea 1 ea 0 ea
- ------------------------------------------------------------------------------------------------------------------------------------
306 GLASS etc Doors & Windows Exterior Front Entrance 1 ea 1 ea 0 ea 0
- ------------------------------------------------------------------------------------------------------------------------------------
355 a) METAL STUD WALLS Face Wall Interior Offices 40 lf 20 lf 20 lf 11,041
355 b) Face Wall Interior Warehouse 0 lf 0 lf 0 lf
360 a) Demising Wall Interior Rated Offices/Ware 40 lf 0 lf 40 lf
360 b) Demising Wall Interior Rated Tenant 250 lf 250 lf 0 lf
364 Standard Wall Interior Non Rated Offices/Lab 210 lf 44 lf 166 lf
- ------------------------------------------------------------------------------------------------------------------------------------
373 a) DOORS & FRAMES etc Metal Door Exterior Non Rated Rear Entrance 1 ea 1 ea 0 ea 2,717
373 b) Metal Door Interior Rated Off/Ware/ 3 ea 1 ea 2 ea
373 c) Hardboard Door Interior Non Rated Tenant 8 ea 2 ea 6 ea
Offices/Lab
- ------------------------------------------------------------------------------------------------------------------------------------
401 FINISHES Ceiling Accoustical 2 x 4 Tile Offices/Lab 3,750 sf 0 sf 3,750 sf 16,257
404 Doors Paint Offices/Lab 12 ea 0 ea 12 ea
406 Floor Vinyl Composite Tile Lab 2,232 sf 72 sf 2,160 sf
408 Floor Carpet Offices 186 sy 0 sy 186 sy
410 Walls Paint Offices/Lab 7,059 sf 0 sf 7,059 sf
413 Base Vinyl Core Offices/Lab 728 if 0 if 728 if
415 Accessories Baths 2 ea 2 ea 0 ea
416 Vanities Layanette Baths 2 ea 2 ea 0 ea
418 Windows Louvre Drapes Offices 3 ea 3 ea 0 ea
- ------------------------------------------------------------------------------------------------------------------------------------
500 PLUMBING Toilet Rooms Plumbing Fixtures Baths 4 ea 4 ea 0 ea 0
- ------------------------------------------------------------------------------------------------------------------------------------
550 ELECTRIC Service & Meters 1 ea 1 ea 0 ea 5,400
557 a) Light Fixtures 2' x 4' Recessed Offices/Lab 47 ea 3 ea 44 ea
557 b) Light Fixtures 8' Strips Warehouse 3 ea 3 ea 0 ea
557 c) Light Fixtures Emergency Lights Offs/Lab/Ware 3 ea 3 ea 0 ea
557 d) Light Fixtures Bat Packs Offs/Lab/Ware 1 ea 1 ea 0 ea
557 e) Light Fixtures Exit Signs Offs/Lab/Ware 4 ea 2 ea 2 es
559 a) Switches Single Pole Switch Offs/Lab/Ware 17 ea 4 ea 13 ea
559 b) Outlets 110 Volt Duplex Offs/Lab/Ware 27 ea 5 ea 22 ea
560 a) Fire Alarm Horn & Lights Offs/Lab/Ware 1 ea 1 ea 0 ea
560 b) Fire Alarm Pull Stations Offs/Lab/Ware 2 ea 2 ea 0 ea
- ------------------------------------------------------------------------------------------------------------------------------------
603 FIRE SPRINKLER Drops With Heads Dropped Ceiling Area Offices/Lab 31 ea 4 ea 27 ea 2,024
604 Heads Exposed Ceiling Area Warehouse 38 ea 38 ea 0 ea
- ------------------------------------------------------------------------------------------------------------------------------------
650 a) HEATING & COOLING Heating & Cooling Roof Top Units Offices/Lab 3,750 sf 1,000 sf 2,750 sf 14,375
650 b) Heating Unit Headers Warehouse 4,521 sf 4,521 sf 0 sf
- ------------------------------------------------------------------------------------------------------------------------------------
702 MISCELLANEOUS Overhead Doors Seal & Exterior Warehouse 1 ea 1 ea 0 ea 0
Bumper
- ------------------------------------------------------------------------------------------------------------------------------------
1158 GENERAL CONDITIONS Signs Tenant Exterior Front & Rear 0 pr 0 pr 0 pr
1428 Architect Name 0 ea 0 ea 0 ea
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
PROPOSAL TO LEASE NON Proposal Number: WPS2-03NGSASS. (6) Lessee Lessor Adjust- FNC to
SCHEDULE (A) PAGE (2) STANDARD Tenant Number: WPS2 (N/A) Quantity Allows ment Lessee
IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
250 a) ROOF Cut & Patch RTU Lab 1 ea (None) ea 1 ea 1,122
250 b) Cut & Patch RTU Gas & Elec P. Pocket Lab 2 ea (None) ea 2 ea
250 c) Cut & Patch Unit Heater Ware 1 ea (None) ea 1 ea
250 d) Cut & Patch Unit Heater Exist Pent Lab 1 ea (None) ea 1 ea
- -----------------------------------------------------------------------------------------------------------------------------------
500 a) PLUMBING Unit Heater Relocate Ware 1 ls (None) ls 1 ls 2,531
500 b) Unit Heater Gas Piping Ware 35 lf (None) lf 35 lf
500 c) Roof Top Unit Gas Piping Lab 35 lf (None) lf 35 lf
500 d) Water Heater Relocate Offices 1 1s (None) 1s 1 1s
- -----------------------------------------------------------------------------------------------------------------------------------
555 a) ELECTRIC Power Wire Roof Top Unit Lab 1 ea (None) ea 1 ea 2,404
555 b) Power Wire Unit Heater Ware 1 ea (None) ea 1 ea
555 c) Power Wire Water Heater Office 1 ea (None) ea 1 ea
555 d) Re-Work/Relocate Existing Etc. Offs/Lab/Ware 1 1s (None) 1s 1 1s
555 e) Misc. Offs/Lab/Ware 1 1s (None) 1s 1 1s
559 Outlets 20 And, 2/Circuit Lab 20 ea (None) ea 20 ea
- -----------------------------------------------------------------------------------------------------------------------------------
700 MISCELLANEOUS Demolition Existing Office/Ware Wall Offices/Ware 42 lf (None) lf 42 lf 966
- -----------------------------------------------------------------------------------------------------------------------------------
1100 GENERAL CONDITIONS Labor & Material Tenant Improvements 5,021 sf (None) sf 5,021 sf 2,768
1100 Labor & Material 5,021 sf (None) sf 5,021 sf
1150 Building Permit 1 1s (None) sf 1 1s
1155 Dumpster 1 ea (None) ea 1 ea
Cleaning Construction & Finel 5,021 sf (None) sf 5,021 sf
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL COST OF CONSTRUCTION (DUE UPON COMPLETION)--------------------------------------------------------------$61,602 $61,602
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.20
[1]
Lease Agreement
MKS Japan Co., Ltd.
Harmonize Building
Fifth Floor
MIFUJI
[2]
Lease Agreement (Offices in Building)
Lessor: Mifuji Kanzai K.K.
Lessee: MKS Japan Co., Inc.
The aforementioned Lessor and Lessee conclude this lease agreement according to
the terms and conditions set forth below.
Paragraph 1 (Leased Property)
Lessor leases to Lessee, and Lessee leases from Lessor the property indicated
below.
Address of Property: 5-17-13, Narita-higashi, Suginami-ku, Tokyo
Structure and Scale the Building: Steel-framed reinforced concrete structure
with roof, with one underground floor and eight above ground floors.
Name: Harmonize Building
Leased area:
<PAGE> 2
Fifth floor: 324.5 square meters (98.3 tsubo)
Paragraph 2 (Purpose of Use)
Lessee shall use the leased property as an office, and shall not use it for any
other purpose.
Paragraph 3 (Term of Lease)
The term of the lease is established as set forth below.
A two (2) year period from January 1, 1996 to December 31, 1997 shall be
established as the term of the lease.
However, if within at least 6 months but no more than1 year from the date the
term of the lease expires, either party indicates to the other party in writing
a desire to renew the lease, this lease can be renewed upon the mutual consent
of both parties. At the time of the renewal, Lessee shall pay Lessor one month's
rent as a renewal few.
Paragraph 4 (Rent)
1. Total Monthly Rent: 4,729,997 yen (including 5% consumption tax of 225,237
yen)
(1) Rent:
Fifth floor: 1,336,490 yen (including 5% consumption tax of 38,930 yen)
(2) Fee for Shared Services
Fifth floor: 324,000 yen (including 5% consumer tax of 23,380 yen)
Second floor: 531,877 yen (including 5% consumer tax of 9,440 yen)
[3]
<PAGE> 3
2. By the end of every month Lessee shall pay the following month's rent by
transferring funds to a bank account designated by Lessor, and Lessee shall be
responsible for paying the fees for transferring funds.
3. If the term of the lease ends before the end of a month or if the rent is
increased or decreased for any other reason, the rent shall be calculated on a
per diem basis based on the number of days in that month.
Paragraph 5 (Adjustments to Rent)
The rent in this contract shall be reviewed every two (2) years from the
commencement of the lease, and adjustments thereto carried out upon the mutual
consent of both parties.
However, if as a result of changes in prices, increases in taxes or other public
charges, or changes in other economic conditions, etc., the rent has become
unreasonable, Lessor can adjust the rent even before the term of the lease has
expired upon the consent of Lessee.
Paragraph 6 (Security Deposit)
1. As security to ensure that Lessee fulfills its obligations as set forth in
the terms of this contract, Lessee shall provide 9,830,000 yen, an amount
equivalent to ten (10) months rent, to Lessor at the time this contract is
signed.
2. When Lessee has failed to pay the rent on time, has caused damages or has
failed to fulfill any other of its obligations as set forth in the terms of this
contract, upon notification thereof, Lessor is entitled to appropriate all or
some of the deposit to pay for such.
3. Lessee shall not be entitled to claim that the possession of the security
deposit as established in this contract offsets any monetary obligation Lessee
is responsible for paying to Lessor.
<PAGE> 4
4. In the case of Paragraph 6, Section 2 above, within a week after receiving
the notification of appropriation, Lessee must supply the amount necessary to
restore the security deposit to the amount prior to the appropriation.
5. Lessee shall not transfer claim to the security deposit to a third party, nor
offer such for use as collateral.
Paragraph 7 (Return of the Security Deposit)
When the contract has terminated due to the expiration of the term thereof,
Lessor shall return the deposit to Lessee within one month after Lessor has
confirmed that Lessee has returned the leased property to its original
condition, has completely vacated the premises, and has completed dismantling
and removal operations.
Paragraph 8 (Termination of Lease Before Expiration)
If this contract is terminated before it expires due to circumstances of Lessee,
or if it is terminated for reasons that are the fault of Lessee, an amount
equivalent to 10% of the total in Paragraph 6, Section 1 above shall be paid as
compensation.
Paragraph 9 (Category of Project)
None
Paragraph 10 (Responsibility for Expenses)
Lessee shall be responsible for expenses produced as a result of the daily work
carried out within the area contracted for use by Lessee, such as the fees for
use of utilities such as electricity, water, gas.
[4]
Paragraph 11 (Late Payment Penalty)
<PAGE> 5
When Lessee is late in paying obligations set forth in this contract,
upon notification thereof by Lessor, Lessee shall pay a late payment penalty
based on a per annum rate of 14.6%.
Paragraph 12 (Matters to be Reported)
When matters pertaining to any of the following occurs, Lessee must promptly
submit a written report of the gist thereof to Lessor.
1. When there has been a significant change with regard to the representative of
the company or any other item pertaining to the commercial registration of the
company.
2. When a merger, etc., has occurred.
3. When there has been a change in the type of business.
Paragraph 13 (Items Requiring Approval)
If Lessee is to perform any of the following, Lessee must submit a written
report of the intentions thereof to Lessor and receive Lessor's approval before
carrying out such actions.
1. When Lessee desires to modify or establish new fixtures, furniture, designs
or room dividers, etc., of the leased property.
2. When Lessee desires to modify or expand existing equipment which was
previously installed by Lessor on the leased property.
3. When Lessee desires to install new auxiliary equipment.
4. When Lessee desires to establish a display such as a signboard, bulletin
board, sign, billboard or the like.
However, this restriction shall not apply to cases in which the leased property
is not modified or to acts approved by Lessor prior to the contract.
Paragraph 14 (Prohibited Items)
<PAGE> 6
Lessee is prohibited from carrying out any of the following.
1. Regardless of pretext, any act to transfer the rights in this contract, such
as the rights to use, lease, or conduct business on the leased property, etc.,
to a third party, or to use such as collateral.
2. Any act to sub-lease to a third party or let others use or manage part or all
of the leased property.
3. Any change to the purpose of use of the leased property.
4. Any act to display the company name, or post a sign, etc., in a location or
using a method other than that which has been designated by Lessor, or any other
act to display the name of a third party.
5. Any act that is detrimental to the maintenance and upkeep of the building or
any act which cause damage to the building.
6. Any act that disturbs the neighbors.
Paragraph 15 (Responsibility for Repair Expenses)
1. Lessor shall carry out repairs necessary for the maintenance and upkeep of
the building itself and its attachments.
2. Lessee shall be responsible for carrying out repairs and replacements on the
leased property including those relating to the walls, ceilings, floors,
windows, light fixtures and other electrical equipment, gas equipment, water
equipment and all such equipment and facilities used daily by Lessee, as well as
to all equipment and facilities directly used by clients and visitors of Lessee.
3. If Lessee discovers In the building owned by Lessor that a repair is needed
in the area leased by Lessee, Lessee has the obligation to notify Lessor
immediately, and even if Lessee is responsible for the repair expenses, repairs
shall always be carried out upon consent of Lessor.
<PAGE> 7
[5]
Paragraph 16 (Obligation to Notify)
Lessee must notify Lessor promptly when measures required for maintaining the
building must be carried out.
Paragraph 17 (Obligation to Take Necessary Precautions)
Lessee must take the precautions necessary of a good manager when using the
leased property.
Paragraph 18 (Entering the Premises for Inspections)
1. Lessor or a party designated by Lessor shall be allowed to enter and inspect
the leased property after notifying Lessee, in order to check on the maintenance
and upkeep of the building, as well as its sanitation, security and fire
prevention status, or for any other reason required for managing the building;
Lessor may request that Lessee take appropriate actions or Lessor itself can
take any action necessary.
2. In the above case, before entering and inspecting the premises, Lessor shall
provide Lessee with notification to that effect, however, this restriction shall
not apply in the case of an emergency.
Paragraph 19 (Exemptions)
1. When damages have occurred as a result of a disaster such as an earthquake,
fire, or flood, etc., if the Lessee suffers damages originating from or relating
to the building equipment and facilities such as those for electricity, gas,
water, or the cooling and heating system, etc., despite the Lessor, as landlord
and owner of the building, having taken proper care with regard to the
maintenance and management thereof, Lessor shall in no way be held responsible
for such damage.
<PAGE> 8
2. Lessor shall not be held responsible when services are interrupted, partially
suspended, or the use of the leased property is partially restricted due to
inspection, maintenance, repair, or renovation work on the building carried out
by Lessor.
Paragraph 20 (Compensation for Damages)
When Lessee, an agent, employee, independent contractor, or any other party
related to Lessee, has either intentionally or accidentally damaged or harmed
Lessor or a third party, Lessee shall be responsible for providing compensation
for the entire amount suffered as a result of such damage.
Paragraph 21 (Taxes and Other Public Charges)
1. Lessor shall be responsible for paying taxes and other public charges on the
building stipulated in this contract.
2. When Lessee has installed a sign, billboard or other equipment etc., or has
carried out an installation categorized as being a project that is the
responsibility of the Lessee, Lessee shall be responsible for paying taxes or
other public charges imposed as a result thereof including real estate
acquisition taxes and taxes on fixed assets, etc.
Paragraph 22 (Destruction and Damage of Building)
1. If as a result of a natural disaster, earthquake, or other reason for which
neither Lessor nor Lessee is responsible, all or a part of the leased property
is destroyed or damaged, Lessor and Lessee shall consult with each other with
regard to how to handle the situation after this contract.
2. When all or part of the leased property has been lost or damaged, and it is
acknowledged that it would be impossible or extremely difficult to continue this
contract, this contract shall be terminated as of that point in time at which
the loss or damage occurred.
<PAGE> 9
In this case, the security deposit shall be refunded in accordance with
Paragraph 7, Section 1.
[6]
Paragraph 23 (Petition to Terminate Contract Prior to Expiration of Lease)
If Lessee desires to terminate this contract before the lease has expired, six
(6) months prior to the expiration of the lease, Lessee must submit in writing
to the other party the reasons for terminating the contract.
Paragraph 24 (Termination of the Contract)
When any of the following has occurred, Lessor can terminate this contract
without providing prior notification to Lessee, and if Lessor has suffered
damages, Lessor can demand compensation for those damages from Lessee.
1. When Lessee has failed to pay rent or other obligations for two (2) months or
more.
2. When Lessee has violated this contract or any of the attachments hereto.
3. When Lessee has violated a provision under Paragraph 12.
4. When a foreclosure, compulsory execution, bankruptcy, composition
proceedings, or consolidation, reorganization or dissolution of the corporation
has occurred.
Paragraph 25 (Obligation to Dismantle, Remove from and Vacate the Premises)
1. If this contract is terminated before it expires due to circumstances of
Lessee, or is terminated because the term of the lease agreement has expired,
Lessee shall, at the expense of the Lessee, promptly return the leased property
to its original condition, and shall completely vacate the premises by the date
designated by Lessor.
2. In the preceding case, when vacating the premises Lessee shall not leave any
fixtures, equipment, devices, furnishings or any other object in the leased
property.
<PAGE> 10
However, upon the consent of the Lessor, objects may remain on the premises
without remuneration.
3. In the case of Section 1 above, if Lessee does not vacate the leased property
promptly before the date designated by Lessor, from the day after the expiration
date of this contract up until the date by which the premises have been
completely vacated, Lessee shall pay compensation to Lessor which is double the
amount of the regular rent and shall also pay an appropriate amount to cover
expenses; and if Lessor sustains damages as a result of the delay in Lessee's
vacating of the premises, Lessee shall also pay compensation to Lessor for such
damages.
4. In the preceding case, if Lessee does not promptly complete dismantling and
removal, Lessor shall take measures for dismantling and removal at the expense
of Lessee, and Lessee shall not object to this action.
5. In the preceding case, Lessee shall pay compensation to Lessor which is
double the amount of the regular rent and shall also pay an appropriate amount
to cover expenses; and if Lessor sustains damages as a result of the delay in
Lessee's dismantling and removing property from the premises, Lessee shall also
pay compensation to Lessor for such damages.
Paragraph 26 (Demands for Purchasing Installations, etc.)
Lessee can for no reason demand any reimbursement to cover expenses incurred
when vacating the leased property or dismantling and removing property
therefrom, nor can the Lessee demand a refund to cover the necessary costs
associated with expenditures on fixtures and equipment and expenditures
benefiting Lessor, nor demand moving expenses, dispossession expenses, or
concession money, etc. Also, Lessee can not demand that Lessor purchase any
installations, fixtures, decorations, or equipment ,etc., that have been
established in the leased property at the Lessee's own expense.
<PAGE> 11
[7]
Paragraph 27 (Drafting of Notarized Document)
For the purpose of making the content of this contract explicit, when requested
by either Lessor or Lessee, this contract can at any time be handed over to a
Notary Public and a notarized document drafted.
Paragraph 28 (Court of Jurisdiction)
Should a dispute arise with regard to the rights and responsibilities relating
to this contract, the Tokyo District Court shall be the court of jurisdiction.
Paragraph 29 (Special Clauses)
1. This contract shall be notarized.
2. Only rent between January 1, 1996 and March 31, 1996 shall be excused.
3. Fees for shared services shall be paid from January 1, 1996 on.
Paragraph 30 (Other items)
Lessor and Lessee shall carry out the terms of this contract honestly.
If questions should arise concerning items not laid out in this contract, or if
doubt should arise with regard to the interpretation of an item in this
contract, both parties shall deliberate on the matter with sincerity and honesty
and endeavor to resolve any differences in accordance with civil and other laws
and regulations, and commercial customs.
As proof of this lease agreement, two copies thereof shall be made and signed
and sealed by both Lessor and Lessee, with one copy to remain in the possession
of each signatory.
<PAGE> 12
January 1, 1996
Lessor
Address: 5-17-13, Narita-higashi, Suginami-ku, Tokyo
Name: Mifuji Kanzai K.K.
C.E.O.: Yuichiro Sato [Seal]
Lessee
1-20-32, Miyamae, Suginami-ku, Tokyo
Name: MKS Japan Inc.
C.E.O.: Kiyoshi Hoshino [Seal]
[8]
Mifuji Group K.K.
1-9-2, Asagaya-kita,
Mifuji Building
Suginami-ku, Tokyo
Tel: 03-3336-3141 (Main)
Fax: 03-3336-3418
<PAGE> 13
[The Legal Translating Service Letterhead]
Certification of Translation
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF MIDDLESEX
On this day of November 13, 1997
Gregory J. Krauth
of the Legal Translating Service, a division of Linguistic Systems, Inc., 130
Bishop Richard Allen Drive, Cambridge, Massachusetts 02139, being duly sworn,
declared the attached translation to have been made faithfully of his own
knowledge by himself and that the attached translation is a true and correct
English version of the original document, to the best of his knowledge and
belief.
His qualifications as translator include familiarity with English as a
native language and with Japanese as an acquired language, and with said
languages as languages of instruction and use for more than 10 years, and that
he received a Master's degree from Indiana University and that he is employed
as a freelance translator by Linguistic Systems, Inc.
My commission expires March 16, 2001
/s/ Hugh McAden Oechler
Hugh McAden Oechler
Notary Public
<PAGE> 1
Exhibit 10.21
[1]
Lease Agreement
MKS Japan Co., Ltd.
Harmonize Building
First and Second Floors
MIFUJI
[2]
Lease Agreement (Offices in Building)
Lessor: Mifuji Kanzai K.K.
Lessee: MKS Japan Co., Inc.
The aforementioned Lessor and Lessee conclude this lease agreement according to
the terms and conditions set forth below.
Paragraph 1 (Leased Property)
Lessor leases to Lessee, and Lessee leases from Lessor the property indicated
below.
Address of Property: 5-17-13, Narita-higashi, Suginami-ku, Tokyo
Structure and Scale the Building: Steel-framed reinforced concrete structure
with roof, with one underground floor and eight above ground floors.
Name: Harmonize Building
Leased area:
<PAGE> 2
First floor: 467.6 square meters (141.7 tsubo)
Second floor: 506.5 square meters (153.5 tsubo)
Paragraph 2 (Purpose of Use)
Lessee shall use the leased property as an office, and shall not use it for any
other purpose.
Paragraph 3 (Term of Lease)
The term of the lease is established as set forth below.
A two (2) year period from May 1, 1997 to April 30, 1999 shall be established as
the term of the lease.
However, if within at least 6 months but no more than1 year from the date the
term of the lease expires, either party indicates to the other party in writing
a desire to renew the lease, this lease can be renewed upon the mutual consent
of both parties. At the time of the renewal, Lessee shall pay Lessor one month's
rent as a renewal few.
Paragraph 4 (Rent)
1. Total Monthly Rent: 4,729,997 yen (including 5% consumption tax of 225,237
yen)
(1) Rent:
First floor: 1,934,205 yen (including 5% consumption tax of 92,105 yen)
Second floor: 1,772,925 yen (including 5% consumption tax of 84,425 yen)
(2) Fee for Shared Services
First floor: 490,990 yen (including 5% consumer tax of 23,380 yen)
Second floor: 531,877 yen (including 5% consumer tax of 25,327 yen)
[3]
<PAGE> 3
2. By the end of every month Lessee shall pay the following month's rent by
transferring funds to a bank account designated by Lessor, and Lessee shall be
responsible for paying the fees for transferring funds.
3. If the term of the lease ends before the end of a month or if the rent is
increased or decreased for any other reason, the rent shall be calculated on a
per diem basis based on the number of days in that month.
Paragraph 5 (Adjustments to Rent)
The rent in this contract shall be reviewed every two (2) years from the
commencement of the lease, and adjustments thereto carried out upon the mutual
consent of both parties.
However, if as a result of changes in prices, increases in taxes or other public
charges, or changes in other economic conditions, etc., the rent has become
unreasonable, Lessor can adjust the rent even before the term of the lease has
expired upon the consent of Lessee.
Paragraph 6 (Security Deposit)
1. As security to ensure that Lessee fulfills its obligations as set forth in
the terms of this contract, Lessee shall provide 35,306,000 yen, an amount
equivalent to ten (10) months rent, to Lessor at the time this contract is
signed.
2. When Lessee has failed to pay the rent on time, has caused damages or has
failed to fulfill any other of its obligations as set forth in the terms of this
contract, upon notification thereof, Lessor is entitled to appropriate all or
some of the deposit to pay for such.
3. Lessee shall not be entitled to claim that the possession of the security
deposit as established in this contract offsets any monetary obligation Lessee
is responsible for paying to Lessor.
<PAGE> 4
4. In the case of Paragraph 6, Section 2 above, within a week after receiving
the notification of appropriation, Lessee must supply the amount necessary to
restore the security deposit to the amount prior to the appropriation.
5. Lessee shall not transfer claim to the security deposit to a third party, nor
offer such for use as collateral.
Paragraph 7 (Return of the Security Deposit)
When the contract has terminated due to the expiration of the term thereof,
Lessor shall return the deposit to Lessee within one month after Lessor has
confirmed that Lessee has returned the leased property to its original
condition, has completely vacated the premises, and has completed dismantling
and removal operations.
Paragraph 8 (Termination of Lease Before Expiration)
If this contract is terminated before it expires due to circumstances of Lessee,
or if it is terminated for reasons that are the fault of Lessee, an amount
equivalent to 10% of the total in Paragraph 6, Section 1 above shall be paid as
compensation.
Paragraph 9 (Category of Project)
None
Paragraph 10 (Responsibility for Expenses)
Lessee shall be responsible for expenses produced as a result of the daily work
carried out within the area contracted for use by Lessee, such as the fees for
use of utilities such as electricity, water, gas.
[4]
Paragraph 11 (Late Payment Penalty)
<PAGE> 5
When Lessee is late in paying obligations set forth in this contract, upon
notification thereof by Lessor, Lessee shall pay a late payment penalty based on
a per annum rate of 14.6%.
Paragraph 12 (Matters to be Reported)
When matters pertaining to any of the following occurs, Lessee must promptly
submit a written report of the gist thereof to Lessor.
1. When there has been a significant change with regard to the representative of
the company or any other item pertaining to the commercial registration of the
company.
2. When a merger, etc., has occurred.
3. When there has been a change in the type of business.
Paragraph 13 (Items Requiring Approval)
If Lessee is to perform any of the following, Lessee must submit a written
report of the intentions thereof to Lessor and receive Lessor's approval before
carrying out such actions.
1. When Lessee desires to modify or establish new fixtures, furniture, designs
or room dividers, etc., of the leased property.
2. When Lessee desires to modify or expand existing equipment which was
previously installed by Lessor on the leased property.
3. When Lessee desires to install new auxiliary equipment.
4. When Lessee desires to establish a display such as a signboard, bulletin
board, sign, billboard or the like.
However, this restriction shall not apply to cases in which the leased property
is not modified or to acts approved by Lessor prior to the contract.
Paragraph 14 (Prohibited Items)
<PAGE> 6
Lessee is prohibited from carrying out any of the following.
1. Regardless of pretext, any act to transfer the rights in this contract, such
as the rights to use, lease, or conduct business on the leased property, etc.,
to a third party, or to use such as collateral.
2. Any act to sub-lease to a third party or let others use or manage part or all
of the leased property.
3. Any change to the purpose of use of the leased property.
4. Any act to display the company name, or post a sign, etc., in a location or
using a method other than that which has been designated by Lessor, or any other
act to display the name of a third party.
5. Any act that is detrimental to the maintenance and upkeep of the building or
any act which cause damage to the building.
6. Any act that disturbs the neighbors.
Paragraph 15 (Responsibility for Repair Expenses)
1. Lessor shall carry out repairs necessary for the maintenance and upkeep of
the building itself and its attachments.
2. Lessee shall be responsible for carrying out repairs and replacements on the
leased property including those relating to the walls, ceilings, floors,
windows, light fixtures and other electrical equipment, gas equipment, water
equipment and all such equipment and facilities used daily by Lessee, as well as
to all equipment and facilities directly used by clients and visitors of Lessee.
3. If Lessee discovers In the building owned by Lessor that a repair is needed
in the area leased by Lessee, Lessee has the obligation to notify Lessor
immediately, and even if Lessee is responsible for the repair expenses, repairs
shall always be carried out upon consent of Lessor.
<PAGE> 7
[5]
Paragraph 16 (Obligation to Notify)
Lessee must notify Lessor promptly when measures required for maintaining the
building must be carried out.
Paragraph 17 (Obligation to Take Necessary Precautions)
Lessee must take the precautions necessary of a good manager when using the
leased property.
Paragraph 18 (Entering the Premises for Inspections)
1. Lessor or a party designated by Lessor shall be allowed to enter and inspect
the leased property after notifying Lessee, in order to check on the maintenance
and upkeep of the building, as well as its sanitation, security and fire
prevention status, or for any other reason required for managing the building;
Lessor may request that Lessee take appropriate actions or Lessor itself can
take any action necessary.
2. In the above case, before entering and inspecting the premises, Lessor shall
provide Lessee with notification to that effect, however, this restriction shall
not apply in the case of an emergency.
Paragraph 19 (Exemptions)
1. When damages have occurred as a result of a disaster such as an earthquake,
fire, or flood, etc., if the Lessee suffers damages originating from or relating
to the building equipment and facilities such as those for electricity, gas,
water, or the cooling and heating system, etc., despite the Lessor, as landlord
and owner of the building, having taken proper care with regard to the
maintenance and management thereof, Lessor shall in no way be held responsible
for such damage.
<PAGE> 8
2. Lessor shall not be held responsible when services are interrupted, partially
suspended, or the use of the leased property is partially restricted due to
inspection, maintenance, repair, or renovation work on the building carried out
by Lessor.
Paragraph 20 (Compensation for Damages)
When Lessee, an agent, employee, independent contractor, or any other party
related to Lessee, has either intentionally or accidentally damaged or harmed
Lessor or a third party, Lessee shall be responsible for providing compensation
for the entire amount suffered as a result of such damage.
Paragraph 21 (Taxes and Other Public Charges)
1. Lessor shall be responsible for paying taxes and other public charges on the
building stipulated in this contract.
2. When Lessee has installed a sign, billboard or other equipment etc., or has
carried out an installation categorized as being a project that is the
responsibility of the Lessee, Lessee shall be responsible for paying taxes or
other public charges imposed as a result thereof including real estate
acquisition taxes and taxes on fixed assets, etc.
Paragraph 22 (Destruction and Damage of Building)
1. If as a result of a natural disaster, earthquake, or other reason for which
neither Lessor nor Lessee is responsible, all or a part of the leased property
is destroyed or damaged, Lessor and Lessee shall consult with each other with
regard to how to handle the situation after this contract.
2. When all or part of the leased property has been lost or damaged, and it is
acknowledged that it would be impossible or extremely difficult to continue this
contract, this contract shall be terminated as of that point in time at which
the loss or damage occurred.
<PAGE> 9
In this case, the security deposit shall be refunded in accordance with
Paragraph 7, Section 1.
[6]
Paragraph 23 (Petition to Terminate Contract Prior to Expiration of Lease)
If Lessee desires to terminate this contract before the lease has expired, six
(6) months prior to the expiration of the lease, Lessee must submit in writing
to the other party the reasons for terminating the contract.
Paragraph 24 (Termination of the Contract)
When any of the following has occurred, Lessor can terminate this contract
without providing prior notification to Lessee, and if Lessor has suffered
damages, Lessor can demand compensation for those damages from Lessee.
1. When Lessee has failed to pay rent or other obligations for two (2) months or
more.
2. When Lessee has violated this contract or any of the attachments hereto.
3. When Lessee has violated a provision under Paragraph 12.
4. When a foreclosure, compulsory execution, bankruptcy, composition
proceedings, or consolidation, reorganization or dissolution of the corporation
has occurred.
Paragraph 25 (Obligation to Dismantle, Remove from and Vacate the Premises)
1. If this contract is terminated before it expires due to circumstances of
Lessee, or is terminated because the term of the lease agreement has expired,
Lessee shall, at the expense of the Lessee, promptly return the leased property
to its original condition, and shall completely vacate the premises by the date
designated by Lessor.
2. In the preceding case, when vacating the premises Lessee shall not leave any
fixtures, equipment, devices, furnishings or any other object in the leased
property.
<PAGE> 10
However, upon the consent of the Lessor, objects may remain on the premises
without remuneration.
3. In the case of Section 1 above, if Lessee does not vacate the leased property
promptly before the date designated by Lessor, from the day after the expiration
date of this contract up until the date by which the premises have been
completely vacated, Lessee shall pay compensation to Lessor which is double the
amount of the regular rent and shall also pay an appropriate amount to cover
expenses; and if Lessor sustains damages as a result of the delay in Lessee's
vacating of the premises, Lessee shall also pay compensation to Lessor for such
damages.
4. In the preceding case, if Lessee does not promptly complete dismantling and
removal, Lessor shall take measures for dismantling and removal at the expense
of Lessee, and Lessee shall not object to this action.
5. In the preceding case, Lessee shall pay compensation to Lessor which is
double the amount of the regular rent and shall also pay an appropriate amount
to cover expenses; and if Lessor sustains damages as a result of the delay in
Lessee's dismantling and removing property from the premises, Lessee shall also
pay compensation to Lessor for such damages.
Paragraph 26 (Demands for Purchasing Installations, etc.)
Lessee can for no reason demand any reimbursement to cover expenses incurred
when vacating the leased property or dismantling and removing property
therefrom, nor can the Lessee demand a refund to cover the necessary costs
associated with expenditures on fixtures and equipment and expenditures
benefiting Lessor, nor demand moving expenses, dispossession expenses, or
concession money, etc. Also, Lessee can not demand that Lessor purchase any
installations, fixtures, decorations, or equipment ,etc., that have been
established in the leased property at the Lessee's own expense.
<PAGE> 11
[7]
Paragraph 27 (Drafting of Notarized Document)
For the purpose of making the content of this contract explicit, when requested
by either Lessor or Lessee, this contract can at any time be handed over to a
Notary Public and a notarized document drafted.
Paragraph 28 (Court of Jurisdiction)
Should a dispute arise with regard to the rights and responsibilities relating
to this contract, the Tokyo District Court shall be the court of jurisdiction.
Paragraph 29 (Special Clauses)
1. Lessor gives permission to Lessee to exhibit merchandise and equipment of the
work site in the leased rooms.
2. Use of storage room(s) and closet(s) not included in the leased rooms shall
be allowed during the term of the lease.
Paragraph 30 (Other items)
Lessor and Lessee shall carry out the terms of this contract honestly. If
questions should arise concerning items not laid out in this contract, or if
doubt should arise with regard to the interpretation of an item in this
contract, both parties shall deliberate on the matter with sincerity and honesty
and endeavor to resolve any differences in accordance with civil laws, other
laws and regulations, and commercial customs.
<PAGE> 12
As proof of this lease agreement, two copies thereof shall be made, signed and
sealed by both Lessor and Lessee, with one copy to remain in the possession of
each signatory.
April 21, 1997
Lessor
Address: 5-17-13, Narita-higashi, Suginami-ku, Tokyo
Name: Mifuji Kanzai K.K.
C.E.O.: Yuichiro Sato [Seal]
Lessee
1-20-32, Miyamae, Suginami-ku, Tokyo
Name: MKS Japan Inc.
C.E.O.: Kiyoshi Hoshino [Seal]
1-20-32 Miyamae, Suginami-ku, Tokyo
Name: MKS Japan Inc.
C.E.O.: John R. Bertucci [Seal]
[8]
Agreement
As proof of the agreement relating to the lease of the1st and 2nd floors
(offices in the building) of the Harmonize Building, two copies shall be made
thereof, and each shall be signed and sealed by both Lessor and Lessee, with one
copy to remain in the possession of each signatory.
<PAGE> 13
Items of the Agreement:
1. At that point in time when the rent has been adjusted when the lease
agreement is renewed, we agree that the amount of the security deposit shall be
increased or decreased based on the difference with the previous rent.
2. Six (6) months before the term of the lease agreement has expired, both the
Lessor and the Lessee shall indicate their intentions to the other party in
writing. Also, if the indication of the intentions of either party is
accidentally delayed, both Lessor and Lessee shall handle this matter with
sincerity and honesty.
April 21, 1997
Lessor
Address: 5-17-13 Narita-higashi, Suginami-ku, Tokyo
Name: Mifuji Kanzai K.K.
C.E.O.: Yuichiro Sato [Seal]
Lessee
1-20-32 Miyamae, Suginami-ku, Tokyo
Name: MKS Japan Inc.
C.E.O.: Kiyoshi Hoshino [Seal]
[9]
Security Deposit Receipt
[Revenue stamp]
<PAGE> 14
To: MKS Japan Inc.
We hereby accept payment and shall retain throughout the term of the lease
35,306,000 yen as a security deposit as set forth in the lease agreement for
leasing the1st and 2nd floors of the Harmonize Building.
April 21, 1997
Lessor
Mifuji Kanzai K.K.
C.E.O.: Yuichiro Sato
[10]
Mifuji Group K.K.
Mifuji Kanzai K.K.
5-17-13 Narita-higashi,
Suginami-ku, Tokyo, 116
Harmonize Building 8F
Tel: 03-3393-6661 (Main)
Fax: 03-3393-6660
Governor of Tokyo (7): #30401: Corporation/Member of Tokyo Association of Real
Estate Agents, Suginami Branch
<PAGE> 15
[THE LEGAL TRANSLATING SERVICE LETTERHEAD]
CERTIFICATION OF TRANSLATION
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF MIDDLESEX
On this day of November 13, 1997
Gregory J. Krauth
of the Legal Translating Service, a division of Linguistic Systems, Inc., 130
Bishop Richard Allen Drive, Cambridge, Massachusetts 02139, being duly sworn,
declared the attached translation to have been made faithfully of his own
knowledge by himself and that the attached translation is a true and correct
English version of the original document, to the best of his knowledge and
belief.
His qualifications as translator include familiarity with English as a
native language and with Japanese as an acquired language, and with said
languages as languages of instruction and use for more than 10 years, and that
he received a Master's degree from Indiana University and that he is employed
as a freelance translator by Linguistic Systems, Inc.
My commission expires March 16, 2001
/s/ Hugh McAden Oechler
Hugh McAden Oechler
Notary Public
<PAGE> 1
EXHIBIT 10.22
SPLIT-DOLLAR AGREEMENT
AGREEMENT dated as of September 12, 1991 (the Agreement") by and among
MKS Instruments, Inc., a Massachusetts corporation (the "Corporation"), John R.
Bertucci of Lexington, Massachusetts (the "Employee"), and Claire R. Bertucci of
Lexington, Massachusetts and Richard S. Chute of Cambridge, Massachusetts, as
Trustees of the John R. Bertucci Insurance Trust of January 10, 1986 (the
"Owner").
WHEREAS, the Employee is employed by the Corporation; and
WHEREAS, the Employee wishes to provide life insurance protection for
his family in the event of his death under a policy of life insurance insuring
his life and the life of Claire R. Bertucci (the "Policy") which is described in
Exhibit A hereto (and by this reference is hereby made subject to this
Agreement) issued by Pacific Mutual Life Insurance Company (the "Insurer"); and
WHEREAS, the Corporation is willing to pay the premiums due on the
Policy as an additional employment benefit for the Employee on the terms and
conditions hereinafter set forth; and
WHEREAS, the Owner is the owner of the Policy and, as such, possesses
all incidents of ownership in and to the Policy; and
WHEREAS, the Corporation wishes to have the Policy collaterally
assigned to it by the Owner in order to secure the repayment of the amounts
which the Corporation will pay toward the premiums on the Policy; and
WHEREAS, the parties hereto intend that by such collateral assignment
the Corporation shall receive only the right to such repayment with the Owner
retaining all other ownership rights in and to the Policy:
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein and for other valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
(1). Purchase of Policy: The Owner will, contemporaneously with the
execution hereof, purchase the Policy from the Insurer in the total face amount
of $5,000,000. The parties hereto agree that they will take all necessary action
to cause the Insurer to issue the Policy and shall take any further action which
may be necessary to cause the Policy to conform to the provisions of this
Agreement. The parties hereto agree that the Policy shall be subject to the
terms and conditions of this Agreement and of the collateral assignment filed
with the Insurer relating to the Policy.
(2). Ownership of Policy:
(a). The Owner shall be the sole and absolute owner of the
Policy and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as may otherwise be provided
herein.
(b). It is the intention of the parties to this Agreement and
to the collateral assignment referred to herein that the Owner shall
retain all rights which the Policy grants to the owner thereof and that
the sole right of the Corporation hereunder shall be to be repaid the
amounts which it has paid toward the premiums of the Policy.
Specifically, but without limitation, the Corporation shall neither
have nor exercise any right as collateral assignee of the Policy which
could in any way
-2-
<PAGE> 3
defeat or impair the right of the Owner to receive the cash surrender value or
the death proceeds of the Policy in excess of the amount due the Corporation
hereunder.
(3). Payment of Premiums: Except as otherwise provided herein, on or
before the due date of each Policy premium, or within the grace period provided
therein, the Corporation shall pay the full amount of the premium to the
Insurer, and shall, upon request, promptly furnish the Employee evidence of
timely payment of such premium. The Corporation shall annually furnish the
Employee a statement of the amount of income reportable by the Employee for
federal and state income tax purposes as a result of the insurance protection
provided the Owner as the beneficiary of the Policy.
(4). Collateral Assignment: To secure the repayment to the Corporation
of the amount of the premiums on the Policy paid by the Corporation under the
terms of this Agreement, the Owner has, contemporaneously with the execution
hereof, assigned the Policy to the Corporation as collateral under the form used
by the Insurer for such assignments, which collateral assignment specifically
provides that the sole right of the Corporation thereunder is to be repaid the
amounts it has paid toward the premiums on the Policy. Such repayment shall be
made from the cash surrender value of the Policy (as defined therein) if this
Agreement is terminated or if the Owner surrenders or cancels the Policy or from
the death proceeds of the Policy, if any, if the Employee or any other insured
should die while the Policy and this Agreement remain in force. In no event
shall the Corporation have any right to borrow against or make withdrawals from
the Policy or to surrender or cancel the
-3-
<PAGE> 4
Policy or to take any other action which would impair or defeat the rights of
the Owner in and to the Policy. The collateral assignment of the Policy to the
Corporation hereunder shall not be terminated, altered, or amended by the Owner
while this Agreement is in effect. The parties hereto agree to take all action
necessary to cause such collateral assignment to conform to the provisions of
this Agreement.
(5). Limitations on Rights of Owner in and to Policy:
(a). The Owner shall take no action with respect to the Policy
which would in any way compromise or jeopardize the right of the
Corporation to be repaid the amounts it has paid toward the premiums on
the Policy while this Agreement is in effect.
(b). The Owner may pledge or assign the Policy, subject to the
terms and conditions of this Agreement, in order to secure a loan from
the Insurer or from a third party, in an amount which shall not exceed
the cash surrender value of the Policy (as defined therein) as of the
date to which premiums have been paid, less the amount paid toward the
premiums on the Policy by the Corporation. Interest charges on such
loan shall be the responsibility of and be paid by the Owner. For any
Policy year in which the Owner borrows hereunder, the Corporation shall
be correspondingly relieved of its obligation to pay any amounts toward
premiums for such Policy year to the extent of such borrowing.
(c). The Owner shall have the sole right to surrender or
cancel the Policy and to receive the full cash surrender value of the
Policy directly from the Insurer. Upon the surrender or cancellation of
the Policy, the Corporation shall have
-4-
<PAGE> 5
the unqualified right to receive a portion of the cash surrender value equal to
the total amount of the premiums paid by the Corporation under the terms of this
Agreement. Immediately upon receipt of the cash value of the Policy from the
Insurer, the Owner shall pay to the Corporation the portion of such cash value
to which the Corporation is entitled under the terms of this Agreement and shall
retain the balance, if any. Upon such receipt and payment this Agreement shall
thereupon terminate.
(6). Collection of Death Proceeds:
(a). Upon the death of the second to die of the Employee and
Claire R. Bertucci, the Corporation and the Owner shall cooperate to
take whatever action is necessary to collect the death benefit, if any,
provided under the Policy, and when such death benefit, if any, has
been collected and paid as provided herein, this Agreement shall
thereupon terminate.
(b). Upon the death of the second to die of the Employee and
Claire R. Bertucci, the Corporation shall have the unqualified right to
receive a portion of such death benefit, if any, equal to the total
amount of the premiums paid by the Corporation under the terms of this
Agreement; provided, however, that, if the Owner shall deem it to be in
the best interests of the Owner as evidenced by the written consent of
the Owner, the Owner may, upon the death of the first to die of the
Employee and Claire R. Bertucci, repay the Corporation the total amount
of the premiums paid by the Corporation under the terms of this
Agreement. The balance of the death benefit provided under the Policy,
if any, shall be paid directly to the
-5-
<PAGE> 6
Owner in the manner and in the amount or amounts provided in the beneficiary
designation provision of the Policy. In no event shall the amount payable to the
Corporation hereunder exceed the proceeds of the Policy payable at the death of
the second to die of the Employee and Claire R. Bertucci. No amount shall be
paid from such death benefit to the Owner until the full amount due the
Corporation hereunder has been paid. The parties hereto agree that the
beneficiary designation provision of the Policy shall conform to the provisions
hereof.
(c). Notwithstanding any provision hereof to the contrary, in the event
that, for any reason whatsoever, no death benefit is payable under the Policy
upon the death of the second to die of the Employee and Claire R. Bertucci and
in lieu thereof the Insurer refunds all or any part of the premiums paid for the
Policy, the Corporation and the Owner shall have the unqualified right to share
such premiums based on their respective cumulative contributions thereto.
(7). Termination of Agreement During Lifetime of Employee:
(a). This Agreement shall terminate during the lifetime of the
Employee without notice upon the occurrence of any of the following
events: (a) total cessation of the business of the Corporation; or (b)
the bankruptcy, receivership, or dissolution of the Corporation.
(b). In addition, the Owner may terminate this Agreement,
while no premium under the Policy is overdue, by written notice to the
other parties hereto. Such termination shall be effective as of the
date of such written notice.
-6-
<PAGE> 7
(8). Disposition of Policy on Termination of Agreement During Lifetime
of Employee:
(a). For sixty (60) days after the date of the termination of this
Agreement during the lifetime of the Employee, the Owner shall have the option
of obtaining the release of the collateral assignment of the Policy to the
Corporation. To obtain such release, the Owner shall repay to the Corporation
the total amount of the premium payments made by the Corporation under the terms
of this Agreement. Upon receipt of such amount, the Corporation shall release
the collateral assignment of the Policy by the execution and delivery of an
appropriate instrument of release.
(b). If the Owner fails to exercise such option described in Section
(8)(a) above within such sixty (60) day period, then, at the request of the
Corporation, the Owner shall execute any document or documents required by the
Insurer to transfer the interest of the Owner in the Policy to the Corporation.
Alternatively, the Corporation may enforce its right to be repaid the amount of
the premiums on the Policy paid by it from the cash surrender value of the
Policy under the collateral assignment of the Policy; provided, however, that,
in the event the cash surrender value of the Policy exceeds the amount due the
Corporation, such excess shall be paid to the Owner. Thereafter, neither the
Owner nor its successors or assigns shall have any further interest in and to
the Policy either under the terms thereof or under this Agreement.
(9). Insurer Not a Party: The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy death benefit to the
beneficiary
-7-
<PAGE> 8
or beneficiaries named in the Policy, subject to the terms and conditions of the
Policy. In no event shall the Insurer be considered a party to this Agreement or
any modification or amendment hereof. No provision of this Agreement, nor of any
modification or amendment hereof, shall in any way be construed as enlarging,
changing, varying, or in any other way affecting the obligations of the Insurer
as expressly provided in the Policy, except insofar as the provisions hereof are
made a part of the Policy by the collateral assignment executed by the Owner and
filed with the Insurer in connection herewith.
(10). Named Fiduciary; Determination of Benefits; Claims Procedure and
Administration:
(a). The Corporation is hereby designated as the named
fiduciary under this Agreement. The Corporation, as the named fiduciary
under this Agreement, shall have authority to control and manage the
operation and administration of this Agreement, and the Corporation
shall be responsible for establishing and carrying out a funding policy
and method consistent with the objectives of this Agreement.
(b). (1) Claim. A person who believes that he or she is being
denied a benefit to which he or she is entitled under this Agreement (a
"Claimant") may file a written request for such benefit with the
Corporation setting forth his or her claim. The request must be
addressed to the President of the Corporation at its principal place of
business.
-8-
<PAGE> 9
(2) Claim Decision. Upon receipt of a claim, the Corporation
shall advise the Claimant in writing that a reply will be forthcoming
within ninety (90) days and shall deliver such reply within such ninety
(90) day period. The Corporation may, however, extend the reply period
for an additional ninety (90) days for reasonable cause. If the claim
is denied in whole or in part, the Corporation shall adopt a written
opinion, using language calculated to be understood by the Claimant,
setting forth: (a) the specific reason or reasons for such denial; (b)
the specific reference to pertinent provisions of this Agreement on
which such denial is based; (c) a description of any additional
material or information necessary for the Claimant to perfect his or
her claim and an explanation why such material or such information is
necessary; (d) appropriate information as to the steps to be taken if
the Claimant wishes to submit the claim for review; and (e) the time
limits for requesting a review under Subsection (3) of this Section and
for review under Subsection (4) of this Section.
(3) Request for Review. Within sixty (60) days after the
receipt by the Claimant of the written opinion described above, the
Claimant may request in writing that the Clerk of the Corporation
review the determination of the Corporation. Such request shall be
addressed to the Clerk of the Corporation at its principal place of
business. The Claimant or his or her duly authorized representative
may, but need not, review the pertinent documents and submit issues and
comments in writing for consideration by the Clerk of the Corporation.
If the Claimant does not request a review by the Clerk of the
Corporation of the
-9-
<PAGE> 10
determination by the Corporation within such sixty (60) day period, the
Claimant shall be barred and estopped from challenging the
determination of the Corporation.
(4) Review of Decision. Within sixty (60) days after the
Clerk's receipt of a request for review, he or she will review the
determination of the Corporation. After considering all materials
presented by the Claimant, the Clerk will render a written opinion,
written in a manner calculated to be understood by the Claimant,
setting forth the specific reasons for the decision and containing
specific references to the pertinent provisions of this Agreement on
which the decision is based. If special circumstances require that the
sixty (60) day time period be extended, the Clerk will so notify the
Claimant and will render the decision as soon as possible, but no later
than one hundred twenty (120) days after receipt of the request for
review.
(11). Amendment: This Agreement may not be amended, altered, or
modified, except by a written instrument signed by all of the parties hereto, or
their respective successors or assigns, and may not be otherwise terminated,
except as provided herein.
(12). Binding Effect: This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors, assigns,
heirs, executors, administrators, and beneficiaries.
(13). Notice: Any notice, consent, or demand required or permitted to
be given under the provisions of this Agreement shall be in writing, and shall
be signed by the party giving or making the same. If such notice, consent, or
demand is mailed
-10-
<PAGE> 11
to a party hereto, it shall be sent by United States certified mail, postage
prepaid, return receipt requested, addressed to such party's last known address
as shown on the records of the Corporation. The date of such mailing shall be
deemed the date of the notice, consent, or demand.
(14). Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of The Commonwealth of Massachusetts applicable to
a contract made and to be performed solely within The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
an instrument under seal, all as of the day, month, and year first written
above.
MKS INSTRUMENTS, INC.
By: /s/ Ronald C. Weigner
-----------------------------------
Ronald C. Weigner, Controller
/s/ John R. Bertucci
-----------------------------------
John R. Bertucci
JOHN R. BERTUCCI INSURANCE
TRUST OF JANUARY 10, 1986
By: /s/ Claire R. Bertucci
-----------------------------------
Claire R. Bertucci, as Trustee
and not individually
By: /s/ Richard S. Chute
-----------------------------------
Richard S. Chute, as Trustee
and not individually
-11-
<PAGE> 12
EXHIBIT A
The following described life insurance policy is subject to the
Split-Dollar Agreement to which this Exhibit A is attached:
Insurer: Pacific Mutual Life Insurance Company
Insured: John R. Bertucci and Claire R. Bertucci
Owner: Claire R. Bertucci and Richard S. Chute as Trustees of the John R.
Bertucci Insurance Trust of January 10, 1986
Policy Number: 1A2246049
Face Amount: $5,000,000
Date of Issue: September 1, 1991
-12-
<PAGE> 1
EXHIBIT 10.23
SPLIT-DOLLAR AGREEMENT
AGREEMENT dated as of September 12, 1991 (the "Agreement") by and among
MKS Instruments, Inc., a Massachusetts corporation (the "Corporation"), John R.
Bertucci of Lexington, Massachusetts (the "Employee"), and John R. Bertucci of
Lexington, Massachusetts and Thomas H. Belknap of Hamilton, Massachusetts, as
Trustees of the Claire R. Bertucci Insurance Trust of January 10, 1986 (the
"Owner").
WHEREAS, the Employee is employed by the Corporation; and
WHEREAS, the Employee wishes to provide life insurance protection for
his family in the event of his death under a policy of life insurance insuring
his life and the life of Claire R. Bertucci (the "Policy") which is described in
Exhibit A hereto (and by this reference is hereby made subject to this
Agreement) issued by Pacific Mutual Life Insurance Company (the "Insurer"); and
WHEREAS, the Corporation is willing to pay the premiums due on the
Policy as an additional employment benefit for the Employee on the terms and
conditions hereinafter set forth; and
WHEREAS, the Owner is the owner of the Policy and, as such, possesses
all incidents of ownership in and to the Policy; and
WHEREAS, the Corporation wishes to have the Policy collaterally
assigned to it by the Owner in order to secure the repayment of the amounts
which the Corporation will pay toward the premiums on the Policy; and
WHEREAS, the parties hereto intend that by such collateral assignment
the Corporation shall receive only the right to such repayment with the Owner
retaining all other ownership rights in and to the Policy:
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein and for other valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
(1). Purchase of Policy: The Owner will, contemporaneously with the
execution hereof, purchase the Policy from the Insurer in the total face amount
of $5,000,000. The parties hereto agree that they will take all necessary action
to cause the Insurer to issue the Policy and shall take any further action which
may be necessary to cause the Policy to conform to the provisions of this
Agreement. The parties hereto agree that the Policy shall be subject to the
terms and conditions of this Agreement and of the collateral assignment filed
with the Insurer relating to the Policy.
(2). Ownership of Policy:
(a). The Owner shall be the sole and absolute owner of the
Policy and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as may otherwise be provided
herein.
(b). It is the intention of the parties to this Agreement and
to the collateral assignment referred to herein that the Owner shall
retain all rights which the Policy grants to the owner thereof and that
the sole right of the Corporation hereunder shall be to be repaid the
amounts which it has paid toward the premiums of the Policy.
Specifically, but without limitation, the Corporation shall neither
have nor exercise any right as collateral assignee of the Policy which
could in any way
-2-
<PAGE> 3
defeat or impair the right of the Owner to receive the cash surrender value or
the death proceeds of the Policy in excess of the amount due the Corporation
hereunder.
(3). Payment of Premiums: Except as otherwise provided herein, on or
before the due date of each Policy premium, or within the grace period provided
therein, the Corporation shall pay the full amount of the premium to the
Insurer, and shall, upon request, promptly furnish the Employee evidence of
timely payment of such premium. The Corporation shall annually furnish the
Employee a statement of the amount of income reportable by the Employee for
federal and state income tax purposes as a result of the insurance protection
provided the Owner as the beneficiary of the Policy.
(4). Collateral Assignment: To secure the repayment to the Corporation
of the amount of the premiums on the Policy paid by the Corporation under the
terms of this Agreement, the Owner has, contemporaneously with the execution
hereof, assigned the Policy to the Corporation as collateral, which collateral
assignment specifically provides that the sole right of the Corporation
thereunder is to be repaid the amounts it has paid toward the premiums on the
Policy. Such repayment shall be made from the cash surrender value of the Policy
(as defined therein) if this Agreement is terminated or if the Owner surrenders
or cancels the Policy or from the death proceeds of the Policy, if any, if the
Employee or any other insured should die while the Policy and this Agreement
remain in force. In no event shall the Corporation have any right to borrow
against or make withdrawals from the Policy or to surrender or cancel the Policy
or to take any other action which would impair
-3-
<PAGE> 4
or defeat the rights of the Owner in and to the Policy. The collateral
assignment of the Policy to the Corporation hereunder shall not be terminated,
altered, or amended by the Owner while this Agreement is in effect. The parties
hereto agree to take all action necessary to cause such collateral assignment to
conform to the provisions of this Agreement.
(5). Limitations on Rights of Owner in and to Policy:
(a). The Owner shall take no action with respect to the Policy
which would in any way compromise or jeopardize the right of the
Corporation to be repaid the amounts it has paid toward the premiums on
the Policy while this Agreement is in effect.
(b). The Owner may pledge or assign the Policy, subject to the
terms and conditions of this Agreement, in order to secure a loan from
the Insurer or from a third party, in an amount which shall not exceed
the cash surrender value of the Policy (as defined therein) as of the
date to which premiums have been paid, less the amount paid toward the
premiums on the Policy by the Corporation. Interest charges on such
loan shall be the responsibility of and be paid by the Owner. For any
Policy year in which the Owner borrows hereunder, the Corporation shall
be correspondingly relieved of its obligation to pay any amounts toward
premiums for such Policy year to the extent of such borrowing.
(c). The Owner shall have the sole right to surrender or
cancel the Policy and to receive the full cash surrender value of the
Policy directly from the Insurer. Upon the surrender or cancellation of
the Policy, the Corporation shall have
-4-
<PAGE> 5
the unqualified right to receive a portion of the cash surrender value
equal to the total amount of the premiums paid by the Corporation under
the terms of this Agreement. Immediately upon receipt of the cash value
of the Policy from the Insurer, the Owner shall pay to the Corporation
the portion of such cash value to which the Corporation is entitled
under the terms of this Agreement and shall retain the balance, if any.
Upon such receipt and payment this Agreement shall thereupon terminate.
(6). Collection of Death Proceeds:
(a). Upon the death of the second to die of the Employee and
Claire R. Bertucci, the Corporation and the Owner shall cooperate to
take whatever action is necessary to collect the death benefit, if any,
provided under the Policy, and when such death benefit, if any, has
been collected and paid as provided herein, this Agreement shall
thereupon terminate.
(b). Upon the death of the second to die of the Employee and
Claire R. Bertucci, the Corporation shall have the unqualified right to
receive a portion of such death benefit, if any, equal to the total
amount of the premiums paid by the Corporation under the terms of this
Agreement; provided, however, that, if the Owner shall deem it to be in
the best interests of the Owner as evidenced by the written consent of
the Owner, the Owner may, upon the death of the first to die of the
Employee and Claire R. Bertucci, repay the Corporation the total amount
of the premiums paid by the Corporation under the terms of this
Agreement. The balance of the death benefit provided under the Policy,
if any, shall be paid directly to the
-5-
<PAGE> 6
Owner in the manner and in the amount or amounts provided in the
beneficiary designation provision of the Policy. In no event shall the
amount payable to the Corporation hereunder exceed the proceeds of the
Policy payable at the death of the second to die of the Employee and
Claire R. Bertucci. No amount shall be paid from such death benefit to
the Owner until the full amount due the Corporation hereunder has been
paid. The parties hereto agree that the beneficiary designation
provision of the Policy shall conform to the provisions hereof.
(c). Notwithstanding any provision hereof to the contrary, in
the event that, for any reason whatsoever, no death benefit is payable
under the Policy upon the death of the second to die of the Employee
and Claire R. Bertucci and in lieu thereof the Insurer refunds all or
any part of the premiums paid for the Policy, the Corporation and the
Owner shall have the unqualified right to share such premiums based on
their respective cumulative contributions thereto.
(7). Termination of Agreement During Lifetime of Employee:
(a). This Agreement shall terminate during the lifetime of the
Employee without notice upon the occurrence of any of the following
events: (a) total cessation of the business of the Corporation; or (b)
the bankruptcy, receivership, or dissolution of the Corporation.
(b). In addition, the Owner may terminate this Agreement,
while no premium under the Policy is overdue, by written notice to the
other parties hereto. Such termination shall be effective as of the
date of such written notice.
-6-
<PAGE> 7
(8). Disposition of Policy on Termination of Agreement During Lifetime
of Employee:
(a). For sixty (60) days after the date of the termination of
this Agreement during the lifetime of the Employee, the Owner shall
have the option of obtaining the release of the collateral assignment
of the Policy to the Corporation. To obtain such release, the Owner
shall repay to the Corporation the total amount of the premium payments
made by the Corporation under the terms of this Agreement. Upon receipt
of such amount, the Corporation shall release the collateral assignment
of the Policy by the execution and delivery of an appropriate
instrument of release.
(b). If the Owner fails to exercise such option described in
Section (8)(a) above within such sixty (60) day period, then, at the
request of the Corporation, the Owner shall execute any document or
documents required by the Insurer to transfer the interest of the Owner
in the Policy to the Corporation. Alternatively, the Corporation may
enforce its right to be repaid the amount of the premiums on the Policy
paid by it from the cash surrender value of the Policy under the
collateral assignment of the Policy; provided, however, that, in the
event the cash surrender value of the Policy exceeds the amount due the
Corporation, such excess shall be paid to the Owner. Thereafter,
neither the Owner nor its successors or assigns shall have any further
interest in and to the Policy either under the terms thereof or under
this Agreement.
(9). Insurer Not a Party: The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy death benefit to the
beneficiary
-7-
<PAGE> 8
or beneficiaries named in the Policy, subject to the terms and conditions of the
Policy. In no event shall the Insurer be considered a party to this Agreement or
any modification or amendment hereof. No provision of this Agreement, nor of any
modification or amendment hereof, shall in any way be construed as enlarging,
changing, varying, or in any other way affecting the obligations of the Insurer
as expressly provided in the Policy, except insofar as the provisions hereof are
made a part of the Policy by the collateral assignment executed by the Owner and
filed with the Insurer in connection herewith.
(10). Named Fiduciary; Determination of Benefits; Claims Procedure and
Administration:
(a). The Corporation is hereby designated as the named
fiduciary under this Agreement. The Corporation, as the named fiduciary
under this Agreement, shall have authority to control and manage the
operation and administration of this Agreement, and the Corporation
shall be responsible for establishing and carrying out a funding policy
and method consistent with the objectives of this Agreement.
(b). (1) Claim. A person who believes that he or she is being
denied a benefit to which he or she is entitled under this Agreement (a
"Claimant") may file a written request for such benefit with the
Corporation setting forth his or her claim. The request must be
addressed to the President of the Corporation at its principal place of
business.
-8-
<PAGE> 9
(2) Claim Decision. Upon receipt of a claim, the Corporation
shall advise the Claimant in writing that a reply will be forthcoming
within ninety (90) days and shall deliver such reply within such ninety
(90) day period. The Corporation may, however, extend the reply period
for an additional ninety (90) days for reasonable cause. If the claim
is denied in whole or in part, the Corporation shall adopt a written
opinion, using language calculated to be understood by the Claimant,
setting forth: (a) the specific reason or reasons for such denial; (b)
the specific reference to pertinent provisions of this Agreement on
which such denial is based; (c) a description of any additional
material or information necessary for the Claimant to perfect his or
her claim and an explanation why such material or such information is
necessary; (d) appropriate information as to the steps to be taken if
the Claimant wishes to submit the claim for review; and (e) the time
limits for requesting a review under Subsection (3) of this Section and
for review under Subsection (4) of this Section.
(3) Request for Review. Within sixty (60) days after the
receipt by the Claimant of the written opinion described above, the
Claimant may request in writing that the Clerk of the Corporation
review the determination of the Corporation. Such request shall be
addressed to the Clerk of the Corporation at its principal place of
business. The Claimant or his or her duly authorized representative
may, but need not, review the pertinent documents and submit issues and
comments in writing for consideration by the Clerk of the Corporation.
If the Claimant does not request a review by the Clerk of the
Corporation of the
-9-
<PAGE> 10
determination by the Corporation within such sixty (60) day period, the
Claimant shall be barred and estopped from challenging the
determination of the Corporation.
(4) Review of Decision. Within sixty (60) days after the
Clerk's receipt of a request for review, he or she will review the
determination of the Corporation. After considering all materials
presented by the Claimant, the Clerk will render a written opinion,
written in a manner calculated to be understood by the Claimant,
setting forth the specific reasons for the decision and containing
specific references to the pertinent provisions of this Agreement on
which the decision is based. If special circumstances require that the
sixty (60) day time period be extended, the Clerk will so notify the
Claimant and will render the decision as soon as possible, but no later
than one hundred twenty (120) days after receipt of the request for
review.
(11). Amendment: This Agreement may not be amended, altered, or
modified, except by a written instrument signed by all of the parties hereto, or
their respective successors or assigns, and may not be otherwise terminated,
except as provided herein.
(12). Binding Effect: This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors, assigns,
heirs, executors, administrators, and beneficiaries.
(13). Notice: Any notice, consent, or demand required or permitted to
be given under the provisions of this Agreement shall be in writing, and shall
be signed by the party giving or making the same. If such notice, consent, or
demand is mailed
-10-
<PAGE> 11
to a party hereto, it shall be sent by United States certified mail, postage
prepaid, return receipt requested, addressed to such party's last known address
as shown on the records of the Corporation. The date of such mailing shall be
deemed the date of the notice, consent, or demand.
(14). Governing Law: This Agreement shall be governed by, and construed
in accordance with, the laws of The Commonwealth of Massachusetts applicable to
a contract made and to be performed solely within The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
an instrument under seal, all as of the day, month, and year first written
above.
MKS INSTRUMENTS, INC.
By: /s/ Ronald C. Weigner
---------------------------------
Ronald C. Weigner, Controller
/s/ John R. Bertucci
-------------------------------
John R. Bertucci
CLAIRE R. BERTUCCI INSURANCE
TRUST OF JANUARY 10, 1986
By: /s/ John R. Bertucci
---------------------------------
John R. Bertucci, as Trustee
and not individually
By: /s/ Thomas H. Belknap
---------------------------------
Thomas H. Belknap, as Trustee
and not individually
-11-
<PAGE> 12
EXHIBIT A
The following described life insurance policy is subject to the
Split-Dollar Agreement to which this Exhibit A is attached:
Insurer: Pacific Mutual Life Insurance Company
Insured: John R. Bertucci and Claire R. Bertucci
Owner: John R. Bertucci and Thomas H. Belknap as Trustees of the Claire R.
Bertucci Insurance Trust of January 10, 1986
Policy Number: 1A22406290
Face Amount: $5,000,000
Date of Issue: September 1, 1991
-12-
<PAGE> 1
EXHIBIT 10.25
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated March 7, 1997 ("Employment Agreement") by and
between MKS Instruments, Inc., a Massachusetts Corporation (the "Corporation"),
and Joseph Maher of Wenham, MA (the "Employee").
WHEREAS, the Corporation and the Employee desire to provide for the employment
of the Employee by the Corporation:
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, the Corporation and the Employee hereby agree as follows:
(1) Term of Employment: The Corporation hereby employs the Employee, and
the Employee hereby accepts employment with the Corporation, for a period
commencing as of March 3, 1997 and continuing from month to month thereafter
until terminated as provided in this Section (1). Either the Corporation or the
Employee may terminate the employment of the Employee under this Employment
Agreement at any time after March 3, 1997 by giving written notice to the other
party stating its or his election to terminate the employment of the Employee
under this Employment Agreement. The employment of the Employee under this
Employee Agreement shall terminate thirty (30) days after the date of receipt
by the other party of such notice; provided, however, that the employment of
the Employee under this Employment Agreement is subject to prior termination as
hereinafter provided in Section (5).
(2) Capacity: The Employee shall serve in such capacity as may be assigned
to him consistent with his training and experience for the term of employment
under this Employment Agreement and shall have such authority as is delegated
to him by the President of the Corporation, or his designee.
<PAGE> 2
(3) Extent of Services: During the term of employment of the Employee
under this Employment Agreement, the Employee shall devote his full time to,
and use his best efforts in the furtherance of, the business of the Corporation
and shall not engage in any other business activity, which interferes in any
way with the Employee performance of his duties to the Corporation, whether or
not such business activity is pursued for gain or any other pecuniary
advantage, without the prior written consent of the Corporation.
(4) Compensation: In consideration of the services to be rendered by the
Employee under this Employment Agreement, the Corporation agrees to pay, and
the Employee agrees to accept, the following compensation:
(a) Base Salary: A base salary at the rate of one hundred fifty-five
thousand dollars ($155,000) per year for the term of employment of the Employee
under this Employment Agreement. The base salary shall be payable in equal
biweekly installments subject to usual withholding requirements. This salary
will be reviewed regularly according to the established practices of the
company. No overtime pay will be paid to the Employee by the Corporation.
(b) Incentive: For each calendar year of the corporation during the
term of employment of the Employee under this Employment Agreement, the
Employee shall be entitled to participate in a Management Incentive Program
pursuant to the terms of which the Employee may receive compensation in
addition to his base salary if the Corporation attains its consolidated
financial goals during such calendar year of the Corporation. The Management
Incentive Program, including the consolidated financial goals established by
the Corporation for the calendar year and the formula to be used to determine
the payment of amounts under the Management Incentive Program, will be
communicated to the Employee in writing prior to the beginning of each calendar
year of the Corporation.
If there shall be any disagreement between the Corporation and the
Employee as to the calculation of the Management Incentive Bonus in any
calendar year of the Corporation during the term of employment of the Employee
under this Employment Agreement, the decision of the independent Public
Accounting firm of the corporation as to the amount of the Management Incentive
Bonus of the Corporation shall be conclusive
<PAGE> 3
and binding on the corporation and the Employee. The Employee shall have no
right to inspect any of the books, papers or records of the Corporation, except
that the Employee shall be entitled to inspect any certificate of such
independent public accounting firm as to the calculation of the Management
Incentive Bonus of the Corporation in any calendar year of the Corporation
during the term of employment of the Employee under this Employment Agreement.
Incentive payments shall be payable to the Employee on or before
March 31 after the end of each calendar year of the Corporation during the term
of employment of the Employee under this Employment Agreement.
The Employee will not receive any payment under the Management
Incentive Program for any calendar year in which the Employee is not actively
employed on the last day of that calendar year.
(c) MKS Instruments Profit Sharing and Retirement
Savings Plan: The Employee shall be eligible to become a participant
under the profit sharing plan of the Corporation on fulfilling the conditions
set forth in the MKS Instruments Profit Sharing and Retirement Savings Plan of
the Corporation.
(d) Vacation: The Employee shall be entitled to an annual vacation
leave of 20 days at full pay during each year of this Employment Agreement,
subject to the Employee arranging such vacation so as not to affect adversely
the ability of the Corporation to transact its necessary business.
(e) Life Insurance: The Corporation shall provide, and pay all of
the premiums for, term life insurance for the Employee during the term of
employment of the Employee under this Employment Agreement in accordance with
the term life insurance plan of the Corporation.
(f) Medical/Dental Insurance: The Corporation shall provide group
medical/dental insurance for the Employee under the Plans of the Corporation
applicable to the Employee during the term of employment of the Employee under
this Employment Agreement.
<PAGE> 4
(g) Other Benefits: The Corporation shall provide other benefits for
the employee under the Plans of the Corporation applicable to the Employee
during the term of employment of the Employee under this Employment Agreement.
(5) Termination: The employment of the Employee under this Employment
Agreement shall terminate:
(a) On the expiration of the period of employment as provided in
Section (1).
(b) Upon the death of the Employee.
(c) At the election of the Corporation (i) if the Employee shall
fail, or refuse, to perform the services required of him under this Employment
Agreement, or (ii) if the Employee shall fail, or refuse, to perform the other
covenants and agreements required of him under this Employment Agreement, or
(iii) for "cause", which term shall mean acts or actions detrimental to the
best interests of the Corporation.
(6) Payment Upon Termination:
(a) If the employment of the Employee is terminated on the expiration
of the period of employment as provided in Section (1), the Employee shall not
be entitled to any compensation, and the Corporation shall have no obligation
to pay the Employee any compensation, except as is provided in this Employment
Agreement.
(b) If the employment of the Employee is terminated by death, the
Corporation shall pay to the estate of the Employee the compensation which
would otherwise be payable to the Employee at the end of the month in which his
death occurs.
(c) In the event the employment of the Employee is terminated at the
election of the Corporation pursuant to Section (5)(c) hereof, the Employee
shall only be
<PAGE> 5
entitled to his base salary through the last day of actual employment or the
date of termination, whichever is earlier.
(7) Trade Secrets: The Employee covenants and agrees that he will
communicate to the Corporation, and will not divulge or communicate to any
other person, partnership, corporation or other entity without the prior
written consent of the Corporation, any trade secrets of the Corporation or
confidential information relating to the business of the Corporation or any one
connected with the Corporation, and that such trade secrets and confidential
information shall not be used by the Employee either on his own behalf or for
the benefit of others or disclosed by the Employee to any one, except to the
Corporation, during or after the term of employment of the Employee under this
Employment Agreement.
(8) Inventions and Patents:
(a) The Employee shall make prompt full disclosure in writing
to the Corporation of all inventions, improvements and discoveries, whether or
not patentable, which the Employee conceives, devises, makes, discovers,
develops, perfects or first reduces to practice, either alone or jointly with
others, during the term of employment of the Employee under this Employment
Agreement, which relate in any way to the fields, products or business of the
Corporation, including development and research, whether during or out of the
usual hours of work or on or off premises of the Corporation or by use of the
facilities of the Corporation or otherwise and whether at the request or
suggestion of the Corporation or otherwise (all such inventions, improvements
and discoveries being hereinafter called the "Inventions"), including any
Inventions, whether or not patentable, conceived, devised, made, discovered,
developed, perfected or first reduced to practice by the Employee after the
employment of the Employee under this Employment Agreement is terminated if the
Inventions were conceived by the Employee during the term of employment of the
Employee under this Employment Agreement. Any Inventions, whether or not
patentable, conceived, devised, made, discovered, developed, perfected or first
reduced to practice by the Employee within six (6) months of the date of
termination
<PAGE> 6
of the employment of the Employee under this Employment Agreement shall be
conclusively presumed to have been conceived during the term of employment of
the Employee under this Employment Agreement.
(b) The Employee agrees that the Inventions shall be the sole and
exclusive property of the Corporation.
(c) The Employee agrees to assist the Corporation and its nominees in
every reasonable way (entirely at its or their expense) to obtain for the
benefit of the Corporation letters patent for the Inventions and trademarks,
trade names and copyrights relating to the Inventions, and any renewals,
extensions or reissues thereof, in any and all countries, and agrees to make,
execute, acknowledge and deliver, at the request of the Corporation, all
written applications for letters patent, trademarks, trade names and copyrights
relating to the Inventions and any renewals, extensions or reissues thereof, in
any and all countries, and all documents with respect thereto, and all powers
of attorney relating thereto and, without further compensation, to assign to
the Corporation or its nominee all the right, title and interest of the
Employee in and to such applications and to any patents, trademarks, trade
names or copyrights which shall thereafter issue on any such applications, and
to execute, acknowledge and deliver all other documents deemed necessary by the
Corporation to transfer to or vest in the Corporation all of the right, title
and interest of the Employee in and to the Inventions, and to such trademarks,
trade names, patents and copyrights together with the exclusive rights to make,
use, license and sell them throughout the world.
(d) The Employee agrees that even though his employment is terminated
under this Employment Agreement he will, at any time such termination of
employment, carry out and perform all of the agreements of Subsections (8)(a)
and (8)(c) above, and will at any time and at all times cooperate with the
Corporation in the prosecution and/or defense of any litigation which may arise
in connection with the Inventions, provided, however, that should such services
be rendered after termination of employment of the Employee under this
Employment Agreement, the Employee shall be paid reasonable compensation on a
per diem basis.
<PAGE> 7
(e) The Employee agrees to make and maintain adequate and current
written records of all Inventions in the form of notes, sketches, drawings, or
reports relating thereto, which records shall be and remain the property of,
and available to, the Corporation at all times.
(f) The Employee agrees that he will, upon leaving the employment of
the Corporation, promptly deliver to the Corporation all originals and copies
of disclosures, drawings, prints, letters, notes, and reports either typed,
handwritten or otherwise memorialized, belonging to the Corporation which are
in his possession or under his control and the Employee agrees that he will not
retain or give away or make copies of the originals or copies of any such
disclosures, drawings, prints, letters, notes or reports.
(9) Property of Corporation: All files, records, reports, documents,
drawings, specifications, equipment, and similar items relating to the business
of the Corporation, whether prepared by the Employee or otherwise coming into
his possession, shall remain the exclusive property of the Corporation and shall
not be removed by the Employee from the premises of the Corporation under any
circumstances whatsoever without the prior written consent of the Corporation.
(10) Non-Competition:
(a) During the term of employment of the Employee under this
Employment Agreement, and during a period of one (1) year after termination of
employment of the Employee under this Employment Agreement without regard to
the cause of termination of employment and whether or not such termination of
employment was caused by the Employee or by the Corporation, (i) the Employee
shall not engage, either directly or indirectly, in any manner or capacity, in
any business or activity which is competitive with any business or activity
conducted by the Corporation in the Residual Gas Analysis market; (ii) the
Employee shall not work for or employ, directly or indirectly, or cause to be
employed by another, any person who was an employee, officer or agent of the
Corporation or of any of its subsidiaries at any time during a period of twelve
(12) months
<PAGE> 8
prior to the termination of the employment of the Employee under this
Employment Agreement nor shall the Employee form any partnership with, or
establish any business venture in cooperation with, any such person which is
competitive with any business or activity of the Corporation; (iii) the Employee
shall not give, sell or lease any goods or services competitive with the goods
or services of the Corporation or its subsidiaries to any person, partnership,
corporation or other entity who purchased goods or services from the
Corporation or its subsidiaries within one (1) year before the termination of
the employment of the Employee under this Employment Agreement; (iv) the
Employee shall not have any financial interest, or participate as a director,
officer, stockholder, partner, employee, consultant or otherwise, in any
corporation, partnership or other entity which is competitive with any business
or activity conducted by the Corporation.
(b) The Corporation and the Employee agree that the services of the
Employee are of a personal, special, unique and extraordinary character, and
cannot be replaced by the Corporation without great difficulty, and that the
violation by the Employee of any of his agreements under this Section (10)
would damage the goodwill of the Corporation and cause the Corporation
irreparable harm which could not reasonably or adequately be compensated in
damages in an action at law, and that the agreements of the Employee under this
Section (10) may be enforced by the Corporation in equity by an injunction or
restraining order in addition to being enforced by the Corporation at law.
(c) In the event that this Section (10) shall be determined by any
court of competent jurisdiction to be unenforceable by reason of its extending
for too long a period of time or over too great a range of activities, it
shall be interpreted to extend only over the maximum period of time or range of
activities as to which it may be enforceable.
(11) Notice: Any and all notices under this Employment Agreement shall be
in writing and, if to the Corporation, shall be duly given if sent to the
Corporation by registered or certified mail, postage prepaid, return receipt
requested, at the address of the Corporation set forth under its name below or
at such other address as the Corporation may hereafter designate to the
Employee in writing for the purpose, and if to the Employee, shall be duly
given if delivered to the Employee by hand or if sent to the
<PAGE> 9
Employee by registered or certified mail, postage prepaid, return receipt
requested, at the address of the Employee set forth under his name below or at
such other address as the Employee may hereafter designate to the Corporation
in writing for the purpose.
(12) Assignment: The rights and obligations of the Corporation under this
Employment Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Corporation. The rights and obligations of the
Employee under this Employment Agreement shall inure to the benefit of, and
shall be binding upon, the heirs, executors and legal representatives of the
Employee.
(13) Entire Agreement and Severability:
(a) This Employment Agreement and the MKS offer of employment letter
dated 1/28/97 (Attachment A) supersedes any and all other agreements, either
oral or in writing, between the parties hereto with respect to the employment
of the Employee by the Corporation and contains all of the covenants and
agreements between the parties with respect to such employment. Each party to
this Employment Agreement acknowledges that no representations, inducements,
promises or agreements, oral or otherwise, have been made by any party, or any
one acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement or promise not contained in this Employment
Agreement shall be valid and binding. Any modification of the Employment
Agreement will be effective only if it is in writing signed by both parties to
this Employment Agreement.
(b) If any provision in this Employment Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
(c) All pronouns used herein shall include the masculine, feminine,
and neuter gender as the context requires.
<PAGE> 10
(14) Governing Law: This Employment Agreement shall be governed by, and
construed in accordance with, the laws of The Commonwealth of Massachusetts
applicable to contracts made and to be performed entirely within The
Commonwealth of Massachusetts.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed, in the Commonwealth of
Massachusetts, this Employment Agreement as a sealed instrument, all as of the
day, month and year first written above.
MKS INSTRUMENTS, INC.
By: /s/ John R. Bertin
------------------
President
6 Shattuck Road
Andover, MA 01810
/s/ Joseph Maher Legal Signature
----------------
John Maher
Address:
3 Virginia Pl.
Wenham, MA 01984
<PAGE> 1
Exhibit 21.1
MKS International, Inc.
MKS Instruments Deutschland GmbH
MKS Instruments France S.A.
MKS Instruments Canada Ltd.
MKS Instruments, U.K. Limited
MKS East, Inc.
MKS Japan, Inc.
MKS Korea Co., Ltd.
MKS FSC, Inc.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1
(File No. 333- ) of our report dated January 22, 1999, except for Note 13,
as to which the date of January 28, 1999, on our audit of the consolidated
financial statements and our report dated January 22, 1999 on our audit of the
financial statement schedule of MKS Instruments, Inc. We also consent to the
reference to our firm under the caption "Experts" and "Selected Consolidated
Financial Data."
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
January 28, 1999
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