SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1995
or
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-12353
PLASMA-THERM, INC.
(Exact name of registrant as specified in its charter)
Florida 04-2554632
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9509 International Court, St. Petersburg, Florida 33716
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code
(813) 577-4999
Securities registered pursuant to Section 12(b) of the
Act:
None
Securities registered pursuant to Section 12(g) of the
Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and
(2) has been subject to such filing requirements for
the past 90 days.
Yes X No
<PAGE>
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this
Form 10-K.
(X)
As of January 16, 1996, the aggregate market value of
the voting stock held by non-affiliates of the
Registrant was approximately $19,271,348.*
As of January 16, 1996, 10,284,561 shares of Common
Stock, $.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III --The Registrant's definitive Proxy Statement
for its Annual Meeting of Stockholders
presently scheduled to be held on April 30,
1996.
*Calculated by using the applicable average of the
ending bid and ask price and by excluding all shares
that may be deemed to be beneficially owned by
executive officers and directors of the Registrant,
without conceding that all such persons are
"affiliates" of the Registrant for purposes of the
Federal securities laws.
ii<PAGE>
PART I
Item 1. Business
General
Plasma-Therm, Inc., together with its
subsidiary, (the "Company") is engaged in the design
and production of thin film etching and deposition
manufacturing equipment. The Company sells this
equipment directly to manufacturers in the
semiconductor, compound semiconductor, thin film head,
photomask, microeletectromechanical systems (MEMS) and
flat panel display industries. The Company's products
are marketed, together with service and technical
support, by the Company's direct sales force, its
Japanese distributor and independent domestic and
foreign manufacturer's representatives. The Company's
business was founded in 1975.
Recent Developments
In late 1995, the Company began shipping its
newest product the Versalock(TM) 700 thin film etching
and deposition system. The Versalock(TM) 700 is a
natural extension of its Shuttlelock(R) Series of
plasma processing systems. All processes developed on
the Company's Shuttlelock(R) chamber platform can be
transferred directly to the Versalock(TM) 700 system.
The Versalock(TM) 700 is the Company's second cluster
tool style system and its first where multiple product
generations will be developed on the same substrate
handling platform. The Versalock(TM) 700 is perceived
by management to be a potential source of growth in
revenue and income, although such growth cannot be
assured. See "Product Lines".
During 1995, the Company developed a
proprietary Inductively Coupled Plasma (ICP) source.
This ICP source provides high density, high performance
plasma processing. The ICP source increases the
technical performance of the Company's products and
allows the Company to offer the affected products at
favorable margins and competitive prices.
Incorporation of the ICP capability into the 790
Series, the Shuttlelock(R) and the Versalock(TM)
product lines is ongoing. The development of this
source represents innovation in basic technology
brought to market in a compressed time frame.
In August 1995, the Company purchased
approximately six acres for the purposes of building a
new manufacturing facility to meet its future capacity
requirements. Construction on the facility began in
September and is expected to be completed in June 1996.
The Company's entire operations will be based in the
new 60,000 sq. ft. facility. The entire assembly and
test area will be contained in a class 10,000 to class
1,000 clean room. Additionally, the Company's
demonstration and applications laboratories will be
housed in a class 100 clean room. These clean room
manufacturing and demonstration areas are necessary to
address the cleanliness requirements of the Company's
customer base. The design of the new building will
accommodate increased production capacity and is
expected to improve efficiencies due to enhanced
manufacturing flow. The land and the building design
will also accommodate a 30,000 sq. ft. expansion for
future growth.
1<PAGE>
The Company secured financing for the
construction of the facility in August 1995 (see Notes
5 and 8 to the Consolidated Financial Statements for
further detail).
In September, the Company signed an exclusive
distributorship agreement with Hakuto Co., Ltd.
replacing its current Japanese distributor, Nissin Hi-
Tech, Inc./Nissin Electric Co., Ltd. The new
distributorship arrangement is considered favorable by
the Company since it provided similar terms as the
previous agreement and permitted Hakuto Co., Ltd. to
hire many of the former distributor's employees.
The Company's revolving credit facility was
modified in November 1995. The amount available for
borrowing was increased from $2 million to $3 million.
All loan covenants are identical to the previous loan
document.
Plasma-Therm Product Lines
The Company manufactures various product lines
that perform thin film etching and deposition. Several
products utilize batch processing in which wafers or
substrates are placed into the plasma chamber and
processed simultaneously. Also, the Company's products
permit single wafer or substrate processing.
The Company's thin film etching systems provide
a combination of Reactive Ion Etching (RIE), Plasma-
Etching (PE), Electron Cyclotron Resonance (ECR), and
Inductively Coupled Plasma (ICP) capability, which
permits advanced process applications for Gallium
Arsenide, Indium Phosphide, Chrome, Quartz, Silicon
Dioxide, Amorphous Silicon, Silicon, Indium Tin Oxide,
Molybdenum, Aluminum, Aluminum Oxide and various other
materials.
The Company also offers Plasma Enhanced
Chemical Vapor Deposition (PECVD) systems for
depositing Amorphous Silicon, Silicon Nitride, Silicon
Dioxide, diamond-like carbon and other materials.
The Company's plasma systems are divided into
two groups. The core group consists of three products
lines: (1) 790 Series, (2) Shuttlelock(R) Series, and
(3) the 7000 Series. The second or automated group of
products consists of the Versalock(TM) 700 and
Clusterlock(R) 7000 Series. These groups of products
permit our customers to go from research and
development to pilot production and then on to high
volume manufacturing, utilizing the Company as their
primary supplier.
The three core product lines are marketed as
related products to a wide range of industries (see
Item 1, Business, General). They are modular in design
with components that are largely interchangeable. The
automated group of products are targeted specifically
to high volume manufacturers of thin film heads,
compound semiconductors and flat panel displays.
In addition to plasma systems, the Company
produces specialty power subsystems and devices.
2<PAGE>
790 Series
The 790 Series RIE/PECVD plasma system was
introduced in 1992. The 790 Series has been widely
accepted in the marketplace as the successor to the
System VII 70 and 700 Series. The 790's advanced 80486
control system coupled with increased flexibility has
significantly improved its marketability. This past
year the 790 Series was outfitted with the Company's
proprietary Inductively Coupled Plasma (ICP) source,
making it what the Company believes to be the first
commercially available non-loadlocked ICP based plasma
system. The 790 Series is primarily used for advanced
research and development and pilot production of
compound semiconductor devices.
Shuttlelock(R) Series
The Shuttlelock(R) Series RIE, PECVD, and ECR
plasma systems continue to be the Company's most
successful products. The Shuttlelock(R) Series
enhanced 80486 control system and other unique
features, continues to provide excellent marketability.
The Shuttlelock(R) is a loadlocked single or dual
chamber plasma processing system. The loadlock allows
the processing chambers to remain under vacuum, thus
permitting increased process integrity. The
Shuttlelock(R) is used for pilot production and
production of compound semiconductor devices, opto-
electronics, photomasks, microelectromechanical (MEMS)
systems and thin film head manufacturing.
7000 Series
The 7000 Series RIE and PECVD systems were
originally introduced in 1987. This series of manually
loaded plasma systems is unique, featuring 24 inch
diameter electrode areas. This makes the product
attractive for use on either large area substrates or
large load batches of medium or small substrates. In
1995 the 7000 Series was re-engineered and updated to
bring the product up to levels of performance and cost
comparable with the Company's newer products. The
upgrades included improvements to the electrical
design, the computer control system and the gas control
system, as well as updated packaging and aesthetics.
These upgrades were made as a result of increased
interest in the 7000 Series from the market and will
enable this product to be produced with higher
performance and reduced cost.
Versalock(TM) 700 Series
The Versalock(TM) 700 Series RIE, PECVD, and
ICP plasma systems are among the Company's newest
products and are a natural extension of the
Shuttlelock(R) Series. All processes developed using
the Company's Shuttlelock(R) chamber platform can be
transferred directly to the Versalock(TM) 700 system.
The Versalock(TM) 700 is the Company's first plasma
system platform where multiple product generations will
be developed using the same substrate handling
mechanisms. The Versalock(TM) 700 has a central
handler (square loadlock) that permits up to three
processing modules. The Versalock(TM) 700 is available
with manual or cassette-to-cassette capability allowing
it to meet advanced research and development and or
volume production requirements of the compound
semiconductor, thin film head, photomask,
microelectromechanical (MEMS) system, and flat panel
display markets.
3<PAGE>
Clusterlock(R) 7000 Series
The Clusterlock(R) 7000 (CLR-7000) Series flat
panel display plasma processing system was introduced
in late 1993. The CLR-7000 system was designed to
penetrate the flat panel display manufacturing
industry. The CLR-7000 is used by manufacturers of
flat panel displays during the micro-structure
formation process. This formation process is essential
in the production of flat panel displays for notebook
computers, personal computers, work stations, avionics
and marine navigation equipment. The potential exists
for flat panel displays to be used for televisions in
the future.
The CLR-7000 offers a multi-chamber system
configuration that combines cassette-to-cassette vacuum
transfer and "Class One" cleanliness with reduced
contamination, high throughput (yield) and ultimately
lower costs of ownership.
Specialty Power Subsystems and Devices
The Company's wholly-owned subsidiary,
Magnetran, Inc., is in the business of manufacturing
transformers, reactors, power centers and related
components. These products are used by manufacturers
of induction melting furnaces, RF power supplies and
AM/FM broadcast transmitters.
Manufacturing and Supplies
The Company designs and develops a substantial
portion of its systems' components. The Company has
multiple potential commercial sources for all of its
components and sub-assemblies that it acquires from
outside vendors, although it often uses a single vendor
for a given item to achieve consistency, favorable
pricing and dependable close relationships. The
Company maintains a significant inventory due to
lengthy lead times of certain components, aggressive
customer delivery requirements and the need to provide
quality parts and service to its customers.
Patents and Trademarks
The Company believes that its success is
generally less dependent upon patent protection than on
the scientific and engineering skills which are applied
to its products. The Company believes that licenses
for products or processes that are developed in the
future could be valuable components of its business
strategy and intends to grant or seek such licenses and
agreements and seek possible patent protection,
wherever it deems appropriate.
4<PAGE>
Research and Development
The market served by the Company is
characterized by rapid and constant technological
change. There is no assurance that the Company's
current products will be viable for extended time
periods. Accordingly, the Company spends substantial
resources for research and product development directed
toward improving existing products and developing new
products.
During fiscal years ended November 30, 1995,
1994, and 1993, the Company spent approximately
$2,570,000, $2,266,000 and $1,466,000, respectively,
for research and product development.
No assurance can be given that the Company will
be technologically or commercially successful in these
or in any other research and product development
efforts. As of November 30, 1995, 28 employees were
engaged primarily in research and product development
activities.
Marketing, Sales and Service
In the United States, the Company sells its
products through a combination of direct sales (West
Coast, Southwest, Mid-Atlantic, Northeast) and one
manufacturer's representative. Service is provided
directly with locations in Vermont, New Jersey,
Michigan, Minnesota, Texas, Florida, California,
Arizona and Idaho.
A substantial portion of the Company's markets
is outside of the United States. In Japan, the Company
distributes its products exclusively through its
distributor, Hakuto Co., Ltd., located in Tokyo.
Hakuto purchases the Company's products for resale for
its own account and provides sales and service through
several locations in Japan.
Sales of the Company's products in Europe are
handled through a network of manufacturer's
representatives managed by the Company's direct sales
office located in Horsham, England. Service is
provided by locations in England and Ireland.
In the Far East (other than in Japan), sales
are handled exclusively by manufacturer's
representatives. Far Eastern service is supported by
the manufacturer's representatives and the Company
directly.
The Company's marketing efforts include the
operation of a process demonstration laboratory in
Florida. The Company's exclusive Japanese distributor,
Hakuto Co., Ltd. operates a system demonstration
facility. Process and demonstration laboratories are
used to demonstrate system performance on customer
wafers and substrates as part of the sales process, as
well as in research and development.
5<PAGE>
The following table sets forth the estimated
percentages of revenues represented by the Company's
principal areas of activity for the periods indicated:
<TABLE>
<CAPTION>
Year Ended November 30,
1995 1994 1993
<S> <C> <C> <C>
Area Revenues
DomestiC............. 69% 69% 69%
.
Foreign ........... 31% 31% 31%
Total 100% 100% 100%
Product Revenues
Plasma systems <F1>.. 94% 94% 93%
Other <F2>........... 6% 6% 7%
Total 100% 100% 100%
See Note 10 to the Financial Statements under Item 8
for additional foreign and domestic operations and
export sales information.
__________________________
<F1> Includes core products and automated products.
<F2> Includes transformers and other systems.
</TABLE>
A substantial amount of equipment is sold by
the Company with applications support and warranties of
the systems' ability to perform the desired process
within specified limits. In substantiating those
warranties, the Company offers customers the
opportunity to perform tests on the customers' sample
wafers and substrates in the Company's process
laboratories. The warranty period ranges from four
months to one year from date of shipment, depending on
the type of product.
Sales to Nissin Hi-Tech, Inc./Nissin Electric
Co., Ltd. amounted to 7%, 13% and 8% of total revenues
in 1995, 1994 and 1993 respectively. Nissin Hi-Tech
was the Company's Japanese distributor until August
1995.
Backlog
The Company's backlog, as of November 30, 1995
was approximately $12,000,000 as compared to
approximately $4,700,000 as of November 30, 1994,
(revenue recognized on a percentage of completion basis
in 1994 has been excluded from the backlog amounts).
Backlog orders consist solely of those items for which
a delivery schedule has been specified and to which the
customer has assigned a purchase order number. Orders
generally are subject to cancellation by the customer
upon payment of charges which vary depending on the
nature of the order and the timing of the cancellation.
It is expected that substantially all of the November
30, 1995 backlog will be shipped during fiscal year
1996.
6<PAGE>
Competition
Core Products
The Company experiences substantial competition
in marketing all of its core products. Competition
comes mainly from Oxford Plasma Technology and Surface
Technology Systems based in Europe and SamCo
Corporation located in Japan. Due to the Company's
locally available Applications Laboratory and
substantially larger service organization and installed
base, it maintains competitive advantages in selling
its products in the United States. Conversely, the
Company experiences significantly greater competition
in Europe and Japan because of its competitors'
locations.
Automated Products
The Company experiences global competition for
the CLR-7000 flat panel display manufacturing system.
Several competitors include Tokyo Electron LTD (TEL),
ULVAC and Applied Komatsu Technology. In addition, Lam
Research has announced plans to enter the market in
1996. The competition for the Versalock(TM) 700 system
is Surface Technology Systems, Anelva and Ulvac.
Principal competitive factors include system
performance, cost of ownership, size of installed base,
diversity of product line and overall customer support.
The Company's competitors have more experience with
complex high-volume manufacturing, broader name
recognition, substantially larger customer bases and
greater financial, technical, and marketing resources.
Therefore, there can be no assurance that the Company's
competitors will not develop systems and features that
are superior to the Company's.
Employees
As of November 30, 1995, the Company had 148
full-time employees, 117 of whom are employed in
Florida, 20 in New Jersey, with the remaining 11
located in its sales and service offices in the United
States. Of such employees, 21 are executive or
administrative, 22 are sales and service, 77 are
manufacturing and 28 are research and development
personnel. Management believes that in general, its
employee relations are good. The Company currently does
not have any collective bargaining agreements.
7<PAGE>
Executive Officers of the Company and Key Employees
Executive Officers
The executive officers of the Company are as
follows:
Name Age Position
Ronald H. Deferrari 55 Chief Executive Officer,
Treasurer,
Chairman of the Board
Ronald S. Deferrari 32 President, Chief
Operating Officer
Diana M. DeFerrari 33 Vice President of
Administration,
Secretary
Curtis A. Barratt 40 Vice President of
Technology,
Chief Technical Officer
Stacy L. Wagner 32 Vice President of
Finance, Controller
David R. Anderson 34 Operations Manager
_________________________
Ronald H. Deferrari is the founder of the
Company and the father of Ronald S. Deferrari and Diana
M. DeFerrari. Mr. Deferrari served as President of the
Company since its formation in 1975 until Ronald S.
Deferrari became President in 1995.
Ronald S. Deferrari was named President in June
1995 and has been employed with the Company in various
capacities since 1983. Mr. Deferrari was appointed
Chief Operating Officer in 1993. Prior to his current
position, he was Executive Vice President and Director
of Sales and Marketing.
Diana M. DeFerrari was named Vice President of
Administration in February 1995 and has been employed
with the Company for six years. Ms. DeFerrari was
appointed Secretary of the Corporation in May 1994.
Prior to her current position, she was Director of
Administration since 1992 and has worked in related
capacities since 1990. Ms. DeFerrari holds a Masters
Degree in Business Administration.
Curtis A. Barratt was named Vice President of
Technology and Chief Technical Officer in July 1995 and
has been with the Company for over five years. Prior
to his current position, Mr. Barratt was Director of
Technology and Manager of Process Applications. Mr.
Barratt holds a B.S. in Chemistry and has had numerous
publications in the field of microelectronic device
fabrication, many of which directly involve the use of
plasma processing.
8<PAGE>
Stacy L. Wagner, CPA, was named Vice President
of Finance in June 1995 and has been with the Company
as Controller since July 1993. Prior to working at
Plasma-Therm, Ms. Wagner was Audit Supervisor/Manager
for Grant Thornton for over two years.
David R. Anderson has been Operations Manager
for the last five years. Mr. Anderson has worked for
the Company since 1985 in various manufacturing and
customer service positions.
Other Key Employees
Edmond A. Richards, PE, Age 45, Director of
Engineering since 1994, has been employed with the
Company for twenty years. Since 1991 Mr. Richards has
held various engineering management positions and prior
to this, he served as General Manager of the Company
for 11 years. Mr. Richards holds a B.S. in Electrical
Engineering.
Dr. David J. Johnson, Age 55, Process
Scientist, has fifteen years experience in the plasma
processing field and has been employed with Plasma-
Therm since 1979. He is a widely acknowledged expert
in the area of metal etching for the manufacture of
silicon integrated circuits and complements this with
knowledge and publications in virtually every aspect of
plasma processing.
Dr. Christopher Constantine, Age 41,
Applications Manager, has been employed with the
Company since 1984. He has acquired considerable
experience working in the ECR and ICP plasma processes
after an extensive career in traditional parallel plate
plasmas, and is widely acknowledged for his expertise.
Item 2. Properties
The Company's executive offices, manufacturing
and product development facilities are located in
leased premises, aggregating approximately 55,800
square feet in St. Petersburg, Florida. Since October
1995, when the lease term of its facilities expired,
the Company began leasing the facilities on a month-to-
month basis and will continue leasing on a month-to-
month basis until the completion of the construction of
the new facility which is anticipated to be in June
1996 (see below). The monthly rental amount is
approximately $41,000. In March, 1995 the Company
executed a real estate lease for additional space,
included in the total square footage above, for
approximately $2,100 per month which expires in March
1996. Upon expiration, the Company will continue to
lease the space on a month-to-month basis until the
completion of the new facility. The leases require the
Company to pay its share of real estate taxes and
operating expenses.
The Company is in the process of constructing a
60,000 square foot building in St. Petersburg, Florida.
The Company will conduct all its operations in the new
facility. At November 30, 1995, approximately
$2,200,000, including $786,000 for land, has been
incurred. Total anticipated costs upon completion
approximate $4,750,000. In August, 1995 the Company
executed a promissory note for $3,375,000 with its bank
for the construction of the facility. In June, 1996,
the maturity date of the construction phase and the
9<PAGE>
anticipated completion date, the note converts to a
five year term loan, amortized over a fifteen year
period. Equal payment of principal and interest will
be payable monthly at a fixed interest rate based on
the weekly average yield of U.S. Treasury securities
plus 200 basis points. The interest rate will be
determined upon conversion. In addition, the Company
anticipates acquiring approximately $500,000 in
furniture, fixtures, and equipment which is expected to
be financed through a lease.
Magnetran, Inc., the Company's subsidiary,
entered into a 5 year gross lease, with the Company's
Chief Executive Officer, commencing on November 1,
1994, for approximately 17,750 square feet in Voorhees,
New Jersey. The premises are leased at an aggregate
annual base rental of $86,841, which escalates 3%
annually. After the initial term of the lease,
Magnetran has an option to renew for five years with a
3% increase each year. The Company believes that the
terms of the lease are generally as favorable to it as
could be obtained from unaffiliated third parties. The
aggregate rentals paid to the Chief Executive Officer
for all leases for the years ended November 30, 1995,
1994 and 1993 were approximately $87,000, $225,500 and
$240,300, respectively.
Item 3. Legal Proceedings
No material litigation is pending.
Item 4. Submission of Matters to a Vote of Security
Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters
The Company's Common Stock is traded in the
over-the-counter market and is quoted on NASDAQ small
capitalization market under the symbol PTIS. The
following table sets forth the range of high and low
closing bid quotations for the Common Stock for fiscal
1994 and fiscal 1995 as reported by NASDAQ. These
quotes are believed to be representative interdealer
quotations, without retail mark-up, mark-down or
commission, and may not necessarily represent actual
transactions. As of January 16, 1996, the average of
the closing bid and ask price of the Company's Common
Stock was $2.41.
Fiscal 1994 High Bid Low Bid
First quarter $4-7/16 $2-7/16
Second quarter 4-1/4 1-15/16
Third quarter 6-5/8 3-3/16
Fourth quarter 5-7/8 4-1/4
10<PAGE>
Fiscal 1995 High Bid Low Bid
First quarter $9-1/16 $4-1/2
Second quarter 5-5/8 3-1/4
Third quarter 4-15/16 3-1/2
Fourth quarter 5-5/16 2-9/16
As of January 16, 1996, there were 747 record
holders of the shares of Common Stock.
There have been no dividends declared. The
Company entered into a new loan agreement with
NationsBank of Florida, N.A. (NationsBank) in November
1995. That agreement contains covenants which relate
to the Company's operating performance and financial
condition. In addition, the loan agreement requires
prior consent from the lender before declaring any cash
dividends. Under the most restrictive covenant, none
of the Company's retained earnings at November 30, 1995
are free of limitations on payment of cash dividends.
For the foreseeable future, the Company anticipates
that any net earnings will continue to be retained by
the Company as working capital.
<TABLE>
<CAPTION>
Item 6. Selected Financial Data
Years ended November 30,
1995 1994 1993 1992 1991
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations:
Revenues $29,612 $23,318 $16,401 $17,497 $18,733
Net Income (loss) 1,089 1,963 233 55 (1,391)
Net Income (loss) per
per common share .10 .22<F1> .03 .01 (.17)
<F1> Includes .04 increase (from .18 to .22) as a
result of the cumulative effect of adopting
SFAS 109 (see Note 2 to the Consolidated
Financial Statements).
</TABLE>
11<PAGE>
<TABLE>
<CAPTION>
Years ended November 30,
1995 1994 1993 1992 1991
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Balance Sheet at end
of period:
Working Capital $16,875 $10,390 $ 7,647 $ 6,953 $ 6,925
Total assets 26,909 16,583 10,824 11,539 12,824
Total long-term
obligations 1,147 811 66 332 676
Shareholders' Equity 18,972 11,105 8,623 8,266 9,579
</TABLE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Position, Liquidity and Capital Requirements
The Company's cash position increased by
$2,432,868 from November 30, 1994 to November 30, 1995.
Working capital at November 30, 1995 was $16,875,126,
which is an increase of $6,485,010 over November 30,
1994. The increase in working capital was partially
due to the completion of a private placement offering
of 1,500,000 shares of the Company's Common Stock in
December 1994, raising net cash of approximately
$5,759,000. A portion of the proceeds from the private
placement have been used for working capital
requirements, including inventory which increased
$2,613,513. Furthermore, an increase in sales
contributed significantly to the increase in working
capital. As a result of the increase in sales, accounts
receivable has increased $3,156,551. In summary, an
increase in inventory and accounts receivable which is
the result of an increase in sales, and the proceeds
from the private placement account primarily for the
increase in working capital.
Uses of cash during fiscal 1995 included the
repayment of $486,564 of notes payable and capital
lease obligations. In addition, the Company has
incurred $2,656,835 in capital expenditures.
Approximately $232,000 of the capital expenditures
relate to computer hardware to be used in conjunction
with the manufacturing and financial software which the
Company is currently in the process of purchasing.
Total cost of the software and additional hardware
approximates $500,000 which will be financed through a
capital lease. The financing is expected to be
completed in the first quarter of 1996.
Approximately $2,203,000 of capital expenditures relate
to the initial costs associated with the construction
of the new building including $786,017 for land. Total
anticipated costs upon completion approximate
$4,750,000. The construction is being financed through
a promissory note with the Company's bank. During the
construction phase, interest is payable monthly at the
bank's prime rate on the outstanding balance. In June,
12<PAGE>
1996, the maturity date of the construction phase and
anticipated completion date, the note converts to a
five year term loan, amortized over a fifteen year
period. Equal payments of principal and interest will
be payable monthly at a fixed interest rate based on
the weekly average yield on U.S. Treasury securities
plus 200 basis points. The interest rate will be
determined upon conversion. In addition, the Company
anticipates acquiring approximately $500,000 of
furniture, fixtures, and equipment which is expected to
be financed through a lease.
In November 1995, the Company increased its
existing line of credit with its bank to $3,000,000
which is due May 19, 1997. Interest is payable monthly
at the bank's prime rate. The line is collateralized
by accounts receivable and the bank has a security
interest in the proceeds for the collection of accounts
receivable in the Company's depository accounts.
The Company has extensive ongoing capital
requirements for research and development, the
repayment of debt, capital equipment and inventory.
The Company believes that its current cash reserves,
together with the proceeds of the private placement,
working capital expected to be generated by operations
and additional funds available under its line of
credit, should be sufficient to meet its capital
requirements for the immediate future. Should order
input exceed projected 1996 levels, additional working
capital may be required.
The Company believes that inflation has had no
material impact upon its operations.
Results of Operations
Comparison of Fiscal 1995 and Fiscal 1994
For fiscal 1995, the Company reported sales of
$29,611,625, 27% higher than sales of $23,318,465 for
fiscal 1994. The increase in sales was attributable to
higher product demand, increase in Clusterlock(R) 7000
sales and sales of the newly introduced Versalock(TM)
product line.
Cost of products sold of $19,152,542 for fiscal
1995 is 65% of net sales, compared to 62% in the prior
year. The increase relates primarily to lower margins
on Clusterlock(R) 7000 orders. The initial
Clusterlock(R) 7000 sales were taken at lower margins
to enable the Company to gain market share. In
addition, the planned recognition of approximately
$550,000 for field service costs (principally warranty
costs for both the Clusterlock(R) 7000 sales and the
Company's other product lines) and a write-off of slow-
moving inventory of approximately $336,000 contributed
to higher cost of products sold.
Research and development expenses for fiscal
1995 were $2,569,700 compared to $2,266,133 in fiscal
1994, which are 9% and 10% of net sales, respectively.
Although the percentage of research and development
expense to net sales has decreased slightly, total
dollars spent has increased. As new product lines
continue to be introduced, total dollars expended on
research and development are expected to increase.
13<PAGE>
Selling and administrative expense for the year
ended November 30, 1995 was $6,175,072, up from
$4,638,163 for the year ended November 30, 1994 which
is 21% and 20% of net sales, respectively. In 1995
additional expenditures were incurred related to the
evaluation, initial purchase and implementation of new
manufacturing and financial computer software. These
expenditures are expected to continue through the first
half of 1996.
Income before income taxes for fiscal 1995 was
$1,802,258, a slight decrease of $149,630 from
$1,951,888 earned in fiscal 1994. The decrease is due
primarily to a 3% increase in cost of products sold, as
discussed above.
Net income per share was $.10 and $.22 for the
years ended November 30, 1995 and 1994, respectively.
Net income per share, before the cumulative effect of
change in accounting principle in 1994 was $.18.
Furthermore, the $332,475 reduction of the income tax
valuation allowance discussed in the Comparison of
Fiscal 1994 and Fiscal 1993, which reduced income tax
expense for 1994, had the effect of increasing income
before the cumulative effect from $.14 to $.18 per
share. The remaining $.04 decrease from fiscal 1994 to
fiscal 1995 is primarily the result of a slight
decrease in income before income taxes discussed above
and an increase of shares of common stock outstanding
as a result of the private placement offering in
December 1995 discussed previously, for the sale of
1,500,000 shares.
Statement of Financial Accounting Standards
(SFAS) No. 123 "Accounting for Stock-Based
Compensation" has been issued by the Financial
Accounting Standards Board in October 1995. Management
has the option to continue using the accounting method
promulgated by the Accounting Principals Board No. 25
"Accounting for Stock Issued to Employees" to measure
compensation as it relates to stock options granted or
to adopt the method prescribed by SFAS No. 123.
Management has not completely analyzed the provisions
of SFAS No. 123; accordingly, management has not
determined whether or not SFAS No. 123's accounting
recognition provisions will be adopted or APB No. 25's
method will be continued (see Note 1 to the
Consolidated Financial Statements).
Comparison of Fiscal 1994 and Fiscal 1993
The Company's Clusterlock7000 flat panel
display manufacturing system was introduced to the
market in late 1993. The first two production units of
the system were shipped to a customer in October and
November of 1994. The Company had orders for three
additional systems from three other customers which
were shipped in 1995. This product line has
represented and will represent a significant investment
of the Company's resources.
Due to the long duration of the initial
manufacturing cycle, the Company used the percentage of
completion method of revenue recognition on certain
initial Clusterlock 7000 orders, to better match
revenue and expense. For Clusterlock 7000 orders with
shorter manufacturing cycles, the Company recognized
revenue when the product was shipped, as it did with
all its other products.
14<PAGE>
For fiscal 1994, the Company reported sales of
$23,318,465, 42% higher than sales of $16,400,749 for
fiscal 1993. The increase in sales was attributable to
higher product demand and to sales of the newly
introduced Clusterlock7000 product line to
manufacturers of flat panel displays and increased
capital spending by the semiconductor industry.
Cost of products sold of $14,451,365 for fiscal
1994 is 62% of net sales, compared to 67% in the prior
year. The reduction related to the lowering of
manufacturing costs associated with the Company's
products, resulting from a combination of manufacturing
efficiency, improved product design and lower material
costs. At November 30, 1994, the Company recognized an
additional provision of approximately $143,000 for
field service costs (principally warranty costs related
to Clusterlock7000 sales in 1994), which have occurred
subsequent to November 30, 1994. A similar provision
was not considered necessary for the Company's other
products at November 30, 1994 and 1993, because the
amounts were deemed to be insignificant.
Research and development expenses for fiscal
1994 were $2,266,133 compared to $1,465,628 in the
fiscal 1993, which were 10% and 9% of net sales,
respectively. The increase was due primarily to the
Company's new Clusterlock7000 product line, which
accounted for $1,234,190 of such expenses in 1994 and
only $235,194 in 1993.
Selling and administrative expense for the year
ended November 30, 1994 was $4,638,163, up from
$3,733,221 for the year ended November 30, 1993.
Although actual expenses increased, selling and
administrative expense as a percentage of net sales
decreased from 23% to 20% in fiscal 1994 compared to
the same period in 1993.
Income before income taxes for fiscal 1994 was
$1,951,888, a $1,733,140 increase from $218,748 earned
in fiscal 1993. The increase was due primarily to a
42% increase in revenue and a 5% decrease in cost of
products sold, as discussed above.
The Company adopted, effective December 1,
1993, Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes".
The cumulative effect of adopting SFAS No. 109
as of December 1, 1993 was to increase net income by
$350,000. This amount represented the recording of
additional deferred tax assets related to tax credit
carryforwards of approximately $750,000, net of a
valuation allowance for $400,000. The valuation
allowance was subsequently reduced to $67,525 at
November 30, 1994 as the uncertainties related to the
Company's ability to use the tax credits were
substantially eliminated by November 30, 1994 (see Note
7 to the Financial Statements which includes a more
detailed comparison of the 1994 and 1993 income tax
provision).
Net income per share was $.22 and $.03 for the
years ended November 30, 1994 and 1993 respectively.
Net income per share, before the cumulative effect of
change in accounting principle in 1994 and
15<PAGE>
extraordinary item in 1993, was $.18 for fiscal 1994,
up from $.02 for fiscal 1993. The $332,475 reduction
of the income tax valuation allowance discussed above,
which reduced income tax expense for 1994, had the
effect of increasing income before the cumulative
effect from $.14 to $.18 per share.
16<PAGE>
Item 8. Financial Statements and Supplementary Data
Index
Page
Accountants' Report 18
Consolidated Financial Statements
Balance Sheets - November 30, 1995, and 1994 19
Statements of Income - Years Ended
November 30, 1995, 1994, and 1993 21
Statements of Shareholders' Equity - Years Ended
November 30, 1995, 1994, and 1993 22
Statements of Cash Flows - Years Ended
November 30, 1995, 1994, and 1993 23
Notes to the Financial Statements 25
17<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Plasma-Therm, Inc.
We have audited the accompanying consolidated balance
sheets of Plasma-Therm, Inc. and Subsidiary as of
November 30, 1995 and 1994, and the related
consolidated statements of income, shareholders'
equity and cash flows for each of the three years in
the period ended November 30, 1995. 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 in accordance with generally
accepted auditing standards. Those standards 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. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
consolidated financial position of Plasma-Therm, Inc.
and Subsidiary as of November 30, 1995 and 1994, and
the consolidated results of their operations and their
consolidated cash flows for each of the three years in
the period ended November 30, 1995 in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the financial statements,
effective December 1, 1993 the Company changed its
method of accounting for income taxes from the
deferred method to the liability method required by
Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes".
GRANT THORNTON LLP
Tampa, Florida
January 10, 1996
18<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
November 30,
<TABLE>
<CAPTION>
ASSETS 1995 1994
<S> <C> <C>
Current assets
Cash and cash equivalents $5,058,718 $2,625,850
Accounts receivable 7,882,427 4,725,876
Prepaid income taxes 18,048 0
Inventories 9,832,853 7,219,340
Prepaid expenses and other 269,875 278,569
Deferred tax asset 603,000 208,000
Total current assets 23,664,921 15,057,635
Property, plant and equipment
Machinery and equipment 2,301,273 2,118,537
Leasehold improvements 419,263 375,099
2,720,536 2,493,636
Less accumulated depreciation and
amortization 1,954,377 1,633,535
766,159 860,101
Land 786,017 0
Construction in process 1,417,353 0
2,969,529 860,101
Other assets
Deferred tax asset 182,850 498,380
Deferred offering costs 0 86,878
Other 91,720 80,904
274,570 666,162
$26,909,020 $16,583,898
</TABLE>
See accompanying notes to these consolidated financial statements.
19<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
November 30,
LIABILITIES 1995 1994
<S> <C> <C>
Current liabilities
Short-term borrowings $2,000,000 $1,000,000
Current portion of notes payable 343,647 375,000
Current maturities of obligations under
capital leases 73,010 111,565
Accounts payable 2,920,079 1,544,791
Billings in excess of costs and estimated
earnings on uncompleted contracts 0 27,330
Accrued payroll and related 402,649 390,913
Accrued expenses 356,895 184,958
Accrued warranty reserve 693,515 143,000
Income taxes payable 0 151,962
Customer deposits 0 738,000
Total current liabilities 6,789,795 4,667,519
Long-term obligations
Notes payable $908,485 $500,000
Obligations under capital leases 238,475 311,484
1,146,960 811,484
SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock
$.01 par value
Authorized - 25,000,000 shares
Issued and outstanding - 10,279,561
shares - 1995 and 8,428,561 shares -
1994 102,797 84,287
Additional paid-in capital 14,645,775 7,885,857
Retained earnings 4,223,693 3,134,751
18,972,265 11,104,895
$26,909,020 $16,583,898
</TABLE>
See accompanying notes to these consolidated financial statements.
20<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Year Ended November 30,
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net sales $29,611,625 $23,318,465 $16,400,749
Costs and expenses
Cost of products sold 19,152,542 14,451,365 11,009,229
Research and development 2,569,700 2,266,133 1,465,628
Selling and administrative 6,175,072 4,638,163 3,733,221
Interest expense 203,211 101,483 65,086
Interest income (336,435) (94,839) (79,570)
Other (income) expense, net 51,736 4,272 (11,593)
27,815,826 21,366,577 16,182,001
Income before income taxes and extraordinary
item and cumulative effect of change in
accounting principle 1,795,799 1,951,888 218,748
Income taxes (benefit)
Current and deferred 706,857 338,869 (14,400)
Tax effect of loss carryforward 0 0 41,700
706,857 338,869 27,300
Income before extraordinary item and
cumulative effect of change in accounting
principle 1,088,942 1,613,019 191,448
Extraordinary item - tax benefit
of operating loss carryforward 0 0 41,700
Income before cumulative effect
of change in accounting principle 1,088,942 1,613,019 233,148
Cumulative effect of change in
accounting for income taxes 0 350,000 0
Net income $1,088,942 $1,963,019 $233,148
Income per share (primary and fully dilutive)
Income before extraordinary item and
cumulative effect of change in
accounting principle $0.10 $0.18 $0.02
Extraordinary item 0 0 0
Cumulative effect of change
in accounting principle 0 0 0
$0.10 $0.22 $0.03
</TABLE>
See accompanying notes to these consolidated financial statements.
21<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended November 30, 1995
<TABLE>
<CAPTION>
Additional
Paid-in Retained
Common Stock Capital Earnings
Shares
Issued Amount Amount Amount
<S> <C> <C> <C> <C>
Balance at November 30, 1992 $8,086,561 $80,867 $7,246,110 $938,584
Exercise of stock options
(inclusive of income tax benefits) 139,000 1,390 54,904 0
Compensation on unexercised
stock options 0 0 67,665 0
Net income 0 0 0 233,148
Balance at November 30, 1993 8,225,561 82,257 7,368,679 1,171,732
Exercise of stock options
(inclusive of income tax benefits) 203,000 2,030 324,925 0
Compensation on unexercised
stock options 0 0 192,253 0
Net income 0 0 0 1,963,019
Balance at November 30, 1994 8,428,561 84,287 7,885,857 3,134,751
Exercise of stock options
(inclusive of income tax benefits) 101,000 1,010 222,621 0
Exercise of warrants
(inclusive of income tax benefits) 250,000 2,500 524,939 0
Compensation on unexercised
stock options 0 0 183,908 0
Sale of 1,500,000 shares of
common stock, net of
offering costs 1,500,000 15,000 5,744,097 0
Repayment of obligations under
Section 16(b) of the Securities
Exchange Act of 1934 0 0 84,353 0
Net income 0 0 0 1,088,942
Balance at November 30, 1995 $10,279,561 $102,797 $14,645,775 $4,223,693
</TABLE>
See accompanying notes to these consolidated financial statements.
22<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended November 30,
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities
Net income $1,088,942 $1,963,019 $233,148
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 532,084 424,018 578,470
(Gain) loss on disposal of assets 15,323 (16,097) (99,440)
Deferred taxes (79,470) (295,469) (60,911)
Compensation - stock options 183,908 192,253 67,665
Cumulative effect of change in accounting for
income taxes 0 (350,000) 0
Changes in assets and liabilities
Increase in accounts receivable (3,156,551) (1,191,771) (472,821)
(Increase) decrease in prepaid income taxes (18,048) 0 250,000
Increase in inventories (2,613,513) (2,569,346) (702,495)
(Increase) decrease in prepaid expenses and other (6,306) (35,694) 40,875
Increase in accounts payable 1,462,166 75,230 180,268
Increase (decrease) in billings in excess of costs and
estimated earnings on uncompleted contracts (27,330) 27,330 0
Increase (decrease) in accrued payroll and related 11,736 172,164 (168,802)
Increase (decrease) in accrued expenses 722,452 118,453 (70,035)
Increase in income taxes payable (exclusive of
tax benefits derived from exercise of
options/warrants) 282,834 359,001 41,220
Increase (decrease) in customer deposits (738,000) 738,000 (235,116)
Net cash used in
operating activities (2,339,773) (388,909) (417,974)
Cash flows from investing activities
Capital expenditures (2,656,835) (177,310) (78,569)
Proceeds from sales of assets 0 63,300 247,354
Payments received on note receivable 60,000 60,000 35,000
Other (55,816) (24,887) 5,363
Net cash provided by (used in)
investing activities (2,652,651) (78,897) 209,148
</TABLE>
See accompanying notes to these consolidated financial statements.
23<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Year Ended November 30,
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from financing activities
Proceeds from issuance of notes payable 752,132 1,000,000 0
Principal payments on notes payable (375,000) (426,897) (293,543)
Principal payments under capital lease obligations (111,564) (70,550) (60,211)
Net proceeds (issuances) under line of credit agreements 1,000,000 1,000,000 (500,000)
Issuance of common stock and warrants 400,627 94,990 40,000
Issuance of common stock in private placement 5,759,097 0 0
Net cash provided by (used in)
financing activities 7,425,292 1,597,543 (813,754)
Net increase (decrease) in cash
and cash equivalents 2,432,868 1,129,737 (1,022,580)
Cash and cash equivalents, beginning of year 2,625,850 1,496,113 2,518,693
Cash and cash equivalents, end of year $5,058,718 $2,625,850 $1,496,113
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION
The following is supplemental cash flow information for the years ended
November 30:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash paid for:
Interest $197,458 $101,483 $64,202
Income Taxes 525,755 276,388 44,304
</TABLE>
See accompanying notes to these consolidated financial statements.
24<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 1 Summary of Significant Accounting Policies
Plasma-Therm, Inc., a Florida corporation, together
with its subsidiary, (the "Company") is engaged in
the design and production of semiconductor and flat
panel display manufacturing equipment. The Company
sells this equipment directly to manufacturers in
the semiconductor, thin film head, computer, flat
panel display, telecommunications and other
industries. The Company's products are marketed,
together with service and technical support, by the
Company's domestic sales force, its Japanese
distributor and independent domestic and foreign
manufacturer's representatives.
Principles of Consolidation
The consolidated financial statements include the
accounts of Plasma-Therm, Inc. and its wholly-owned
subsidiary, Magnetran, Inc.. All significant
intercompany transactions and balances have been
eliminated.
Use of Estimates in Financial Statements
In preparing financial statements in conformity with
generally accepted accounting principles, management
makes estimates and assumptions that affect the
reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at
the date of the financial statements, as well as the
reported amounts of revenues and expenses during the
reporting period. While actual results could differ
from those estimates, management does not expect the
variances, if any, to have a material effect on the
financial statements.
Cash Equivalents
For purposes of the consolidated statements of cash
flows, the Company considers all highly liquid
investments purchased with maturities of three
months or less to be cash equivalents. The Company
utilizes an overnight automated investment account
for sweeping of funds. The overnight investment
account is held in repurchase agreements backed by
U.S. government securities.
Accounts Receivable and Bad Debts
The Company considers accounts receivable to be
fully collectible; accordingly, no allowance for
doubtful accounts is required. If amounts become
uncollectible, they will be charged to operations
when that determination is made. Bad debts have not
been material.
Inventories
Inventories are stated at the lower of cost or
market. Cost was determined using the first-in,
first-out (FIFO) method for substantially all
inventories.
25<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 1 Summary of Significant Accounting Policies -
Continued
Property, Plant and Equipment
Property, plant and equipment are stated at cost.
Depreciation and amortization of property and
equipment is provided by generally using the
straight-line method over the useful lives of the
related assets (machinery and equipment principally
over five years) or, for leasehold improvements, the
lesser of the useful life or the related lease term.
For income tax purposes, leasehold improvements and
certain equipment are amortized and depreciated over
a longer period of time than for book purposes (see
Note 8).
Revenue and Cost Recognition
Sales of the Company's products are generally
recognized upon shipment, except for the first
orders related to the Clusterlock(R)7000 systems in
1994, which initially had a longer manufacturing
cycle than the other products. In order to better
match revenues and expenses, the Company used the
percentage of completion method of revenue
recognition for these initial Clusterlock(R)7000
orders. Sales related to subsequent Clusterlock(R)7000
orders have shorter manufacturing cycles similar to
the Company's other products, and therefore have
been recognized upon shipment.
Revenue recognized on the percentage of completion
is measured by total costs incurred to date to
estimated total cost for each order. Costs include
all direct material and labor costs and those
indirect costs related to performance, such as
indirect labor, supplies, tools, repairs and
depreciation costs. Selling and administrative
costs are charged to expense as incurred.
The liability "billings in excess of costs and
estimated earnings on uncompleted contracts"
represents billings in excess of revenue recognized.
Field Service Costs (Principally Warranty)
Field service costs related principally to warranty
are accrued upon the shipment of the products. With
the introduction of certain significant new products
and increased production, management anticipates
that warranty costs, which historically have been
insignificant, will increase. Accordingly,
management, using historical experience, industry
experience and other factors, has recorded a
warranty provision during 1995 and 1994. Such
amounts provided will possibly be revised in the
future as the Company's historical experience
further develops. Management, at this time, does not
believe that these revisions, if any, will have a
material effect on the financial statements.
Research and Development
Research and development costs are expensed as
incurred.
26<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 1 Summary of Significant Accounting Policies -
Continued
Income Per Share
Earnings per share is computed based on the weighted
average number of shares of common stock adjusted
for the conversion of dilutive common stock
equivalents. The primary and fully dilutive income
per share are the same for all periods presented.
The following is the weighted average outstanding
share information.
<TABLE>
<CAPTION>
November 30,
1995 1994 1993
<S> <C> <C> <C>
Primary 10,542,114 9,057,751 8,363,503
Fully Dilutive 10,571,995 9,092,991 8,839,691
</TABLE>
Deferred Offering Costs
Deferred offering costs of $86,878 at November 30,
1994 consisted of legal and accounting fees and
other costs associated with the Company's private
placement which was subsequently closed in December
1994 (see Note 6). Accordingly, these costs were
offset against the proceeds of the offering and were
charged to additional paid-in capital in fiscal
1995.
Reclassifications
Certain reclassifications have been made to the 1994
financial statements to conform to the 1995
presentation.
Accounting for Stock-Based Compensation
Statement of Financial Accounting Standards (SFAS)
No. 123 "Accounting for Stock-Based Compensation"
has been issued by the Financial Accounting
Standards Board in October, 1995. As it relates
to stock options granted to employees, SFAS No.
123 permits companies to continue using the
accounting method promulgated by the Accounting
Principals Board (APB) No. 25 "Accounting for
Stock Issued to Employees" to measure compensation
or to adopt the fair value based method prescribed
by SFAS No. 123. If APB No. 25's method is
continued, proforma disclosures are required as if
SFAS No. 123 accounting provisions were followed.
SFAS No. 123's accounting recognition method can
be adopted subsequent to the issuance of the
Statement in October 1995, with a mandatory
implementation date of December 1, 1996, and would
pertain to stock option awards granted or modified
or settled for cash after the date of adoption.
If the Company elects to continue using the method
under APB No. 25, SFAS No. 123's proforma
disclosures are required after December 1, 1996.
Management has not completely analyzed the
provisions
27<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 1 Summary of Significant Accounting Policies -
Continued
of SFAS No. 123; accordingly, management has not
determined whether or not SFAS No. 123's accounting
recognition provisions will be adopted or APB No.
25's method will be continued. In addition,
management has not yet determined the potential
effect that SFAS No. 123 accounting provisions, if
adopted, will have on the Company's financial
statements.
Note 2 Change In Accounting Principle for Income Taxes
The Company adopted, effective December 1, 1993,
Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes". Under the
liability method specified by SFAS 109, deferred tax
assets and liabilities are determined based on the
difference between the financial statement and tax
basis of assets and liabilities as measured by the
enacted tax rates which will be in effect when these
differences reverse. Deferred tax expense is the
result of changes in deferred tax assets and
liabilities. The principal types of differences
between assets and liabilities for financial
statement and tax return purposes are accumulated
depreciation, vacation accrual and stock options. A
deferred tax asset is recorded primarily for
cumulative investment tax credits being carried
forward for tax purposes.
The deferred method, used in years prior to 1994,
required the Company to provide for deferred tax
expense based on certain items of income and
expense, which were reported in different years in
the financial statements and the tax returns as
measured by the tax rate in effect for the year the
difference occurred.
The cumulative effect of adopting SFAS No. 109, as
of December 1, 1993, was to increase net income by
$350,000. This amount represents the recording of
additional deferred tax assets related to tax credit
carryforwards of approximately $750,000, net of a
valuation allowance for $400,000. Factors that
management considered in deriving the additional
deferred tax asset and valuation allowance included
the Company's historical taxable income patterns and
expected future taxable income through the period
that the tax credit carryforwards expire (see Note
7). In this determination, greater weight was given
to the two most recent years' (fiscal 1992 and 1993)
average taxable income of approximately $335,000.
Under the previous accounting method of accounting
for income taxes (APB No. 11), the income tax
provision for 1994 would have been approximately
$432,000 which differs from that determined under
SFAS No. 109 of approximately $93,000. The
principal difference in the accounting methods is
that SFAS No. 109 has provided an earlier
recognition of the tax credit carryforwards than
provided by APB No. 11, as can be seen by the
deferred tax asset recorded when SFAS No. 109 was
adopted.
28<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 2 Change In Accounting Principle for Income Taxes -
Continued
The valuation allowance of $400,000 established
December 1, 1993 relating to tax credit
carryforwards, was subsequently reduced to $67,525
at November 30, 1994, reducing income tax expense
for 1994 by the difference of $332,475. Factors that
management considered in deriving the valuation
allowance at November 30, 1994 were the same as
discussed in paragraph three above. The average
taxable income used in the determination discussed
above was updated to reflect the taxable income for
1994 which was not previously known.
The average taxable income for 1994 and 1993 was
approximately $1,000,000 with taxable income for
1994 of approximately $1,700,000. Management's
current business plan and budgets for 1995 provided
further justification for the reduction of the
valuation allowance at November 30, 1994.
Note 3 Inventories
Inventories consist of the following:
November 30,
1995 1994
Raw materials $5,066,621 $3,418,811
Work-in-process 2,825,789 2,874,373
Finished goods 1,940,443 926,156
$9,832,853 $7,219,340
Note 4 Costs and Estimated Earnings on Uncompleted
Contracts
<TABLE>
<CAPTION>
November 30, 1994
<S> <C>
Costs incurred on uncompleted
contracts $142,836
Estimated earnings 36,834
179,670
Less: Billings to date 207,000
Billings in excess of costs
and estimated earnings on
uncompleted contracts $(27,330)
</TABLE>
Note 5 Short-Term and Long-Term Borrowings
Line of Credit
In November 1995, the Company increased its existing
29<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
line of credit with its bank to $3,000,000. The
term of the line of credit agreement is through May
19, 1997, and for a period of sixty (60) consecutive
days during the term of the loan, the Company must
repay the principal below $100. Interest is payable
monthly at the bank's prime rate (8.75% at November
30, 1995). The line is collateralized by accounts
receivable and the bank has a security interest in
the proceeds for the collection of accounts
receivable in the Company's depository accounts. The
unused balance on the line of credit at November 30,
1995 and 1994 was $1,000,000.
Notes Payable
Notes payable consist of the following:
<TABLE>
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Note payable with a bank, payable in monthly
installments of $20,833 plus interest at 7.3%
payable through January 1995. The note is
secured by all of the assets of the Company
and includes financial covenants relating
to the Company's operating performance and
financial condition - $41,667
Note payable with a bank, payable in monthly
installments of $27,778 plus interest at
8.28% payable through May 1997. The note
is secured by accounts receivable and
inventory and includes financial covenants
relating to the Company's operating
performance and financial condition 500,000 833,333
Note payable with a bank, interest payable
monthly at bank's prime rate (8.75% at
November 30, 1995) through the
construction phase (see below) 752,132 -
1,252,132 875,000
Less current portion 343,647 375,000
$ 908,485 $500,000
</TABLE>
30<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 5 Short-Term and Long-Term Borrowings - Continued
In August, 1995 the Company executed a promissory
note for $3,375,000 with its bank for the
construction of its new manufacturing facility.
During the construction phase, interest is payable
monthly at the bank's prime rate (8.75% at November
30, 1995) on the outstanding balance. The
outstanding balance at November 30, 1995 is $752,132
(see Note 8).
On June 14, 1996, the completion of the construction
phase, the note converts to a five year term loan,
amortized over a fifteen year period. Equal
payments of principal and interest will be payable
monthly at a fixed interest rate based on the weekly
average yield of U.S. Treasury securities plus 200
basis points. The interest rate will be determined
upon conversion. The loan is collateralized by the
land, the building and its contents.
Aggregate maturities of notes payable for five years
following November 30, 1995 are as follows:
1996 $ 343,647
1997 193,004
1998 28,736
1999 31,353
2000 34,210
2001 and thereafter 621,182
$1,252,132
The Company is subject to the bank agreement
described above. Under the most restrictive
covenant, none of the Company's consolidated
retained earnings is free of limitation for payment
of cash dividends at November 30, 1995.
Capitalized Leases
The Company conducts a portion of its operations
utilizing leased equipment consisting of primarily
computer equipment. For financial statement
purposes, minimum lease rentals relating to the
equipment have been capitalized.
31<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 5 Short-Term and Long-Term Borrowings - Continued
The related assets and obligations have been
recorded using the Company's incremental borrowing
rate at the inception of the leases. The leases,
which are non-cancelable, expire in 1999. The
following is a schedule of leased property under
capital leases:
<TABLE>
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Machinery and equipment $331,920 $427,408
Less accumulated depreciation 59,865 101,837
$272,055 $325,571
</TABLE>
The following is a schedule by years of future
minimum lease payments under capital leases together
with the present value of the net minimum lease
payments as of November 30, 1995:
<TABLE>
<CAPTION> <S> <C>
Year ended November 30,
1996 $101,757
1997 101,757
1998 101,757
1999 70,489
Total minimum lease payments 375,760
Less amount representing interest 64,275
Present value of net minimum lease payments $311,485
Current portion $ 73,010
Noncurrent portion 238,475
$311,485
</TABLE>
Note 6 Shareholders' Equity
Private Placement
The Company completed a private placement offering
of its Common Stock in December 1994, raising
$6,375,000 from the sale of 1,500,000 shares.
Costs, including commissions, associated with the
offering were approximately $616,000. Part of these
proceeds were used to pay off the Company's line of
credit balance of $1,000,000 at November 30, 1994.
32<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 6 Shareholders' Equity - Continued
Increase in Authorized Shares of Common Stock
In June, 1995, the Company's shareholders approved
an amendment to the Company's Articles of
Incorporation increasing the number of authorized
shares of Common Stock from 12,000,000 to
25,000,000.
Obligations under Section 16(b) of the Securities
Exchange Act of 1934
In 1995, two officers of the Company inadvertently
incurred obligations to the Company of approximately
$16,000 and $69,000, respectively, under Section
16(b) of the Securities Exchange Act of 1934 arising
out of grants of options to them under the Company's
1988 Stock Option Plan and the sale of shares they
acquired on the exercise of options within a six
month period. The obligations were paid back to the
Company in full.
1995 Stock Incentive Plan
In June 1995, the Company's shareholders approved
the 1995 Stock Incentive Plan (the Plan). The Plan
authorizes the granting of both incentive stock
options and non-qualified stock options up to a
total of 1,000,000 shares, increased annually by an
additional number of shares equal to 1% of the
number of shares outstanding on the last day of each
fiscal year, commencing November 30, 1995, provided
that the maximum aggregate number of shares to be
issued shall not exceed 3,000,000. The option price
for non-qualified stock options may be less than,
equal to, or greater than the fair market value on
the date the option is granted, whereas for
incentive stock options, the price will be at least
100% of the fair market value. Compensation expense,
representing the difference between the exercise
price and the fair market value at date of grant, is
recognized over the vesting or service period.
Stock option activity under the 1995 Plan was as
follows:
<TABLE>
<CAPTION>
November 30,
1995
<S> <C>
Outstanding - beginning of year -
Granted
223,000
Exercised
-
Canceled -
Outstanding - end of year 223,000
Options exercisable - end of year 27,000
</TABLE>
33<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 6 Shareholders' Equity - Continued
Option prices per share for options exercisable as
of November 30, 1995 ranged from $2.09 to $4.00.
1988 Stock Option Plan
The 1988 Stock Option Plan authorized the granting
of both incentive stock options and non-qualified
stock options up to a total of 850,000 shares of the
Company's common stock to employees and directors.
Upon adoption of the 1995 Stock Incentive Plan no
additional options were or will be granted under the
1988 Plan. At November 30, 1995, 50,000 shares of
common stock have been reserved under this plan for
the outstanding options remaining at November 30,
1995. Under the 1988 Plan non-qualified stock
options were granted at less than the fair market
value of the Company's common stock. Compensation
expense, representing the difference between the
exercise price and the fair market value at date of
grant, was recognized over the vesting or service
period (e.g. currently six months to one year after
the date of grant). In 1995 and 1994 income taxes
payable was reduced and paid-in-capital was
increased by approximately $151,000 and $232,000,
respectively, related to an incremental tax benefit
associated with the stock options exercised during
the year. Stock option activity was as follows
under the 1988 Plan:
<TABLE>
<CAPTION>
November 30,
1995 1994 1993
<S> <C> <C> <C>
Outstanding - beginning of year 154,000 323,000 96,000
Granted - 34,000 398,000
Exercised 101,000 203,000 139,000
Canceled 3,000 - 32,000
Outstanding - end of year 50,000 154,000 323,000
Options exercisable - end of year 50,000 149,000 69,000
</TABLE>
<TABLE>
<CAPTION>
Option prices per share:
November 30,
1995 1994 1993
<S> <C> <C> <C>
Exercised during
the year $ .26 - 1.90 $ .24 - 1.90 $ .24 - .39
Exercisable
end of year $1.41 - 2.50 $ .26 - 1.90 $ .24 -1.49
</TABLE>
Incentive Stock Option Plan
The Incentive Stock Option Plan authorizes the
granting of options to purchase 200,000 shares of
the Company's common stock. The Plan expired on
September 15, 1991, and therefore no
34<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 6 Shareholders' Equity - Continued
further options may be granted under this Plan. At
November 30, 1995, 13,000 shares of common stock
have been reserved under this plan for the
outstanding options remaining as of November 30,
1995. For the three years ended November 30, 1995,
the activity under the Incentive Stock Plan was as
follows:
<TABLE>
<CAPTION>
November 30,
1995 1994 1993
<S> <C> <C> <C>
Options outstanding - beginning of year 13,000 23,000 23,000
Options exercised - -
Options surrendered, unexercised - 10,000 -
Options outstanding - end of year 13,000 13,000 23,000
</TABLE>
Option prices are $1.50 a share, the equivalent of
the market price on the dates the options were
granted and all options are exercisable for each
year presented.
Common Stock Warrants
In connection with the Company's borrowing from its
former primary bank, the Company's Chief Executive
Officer (CEO) executed a limited guarantee of the
Company's indebtedness which was released in 1989.
The Company agreed to compensate the Company's CEO
for giving such guarantee by issuing to him a
warrant expiring in April 2002, for the purchase of
500,000 shares of the Company's common stock at a
purchase price per share of $.875. In accordance
with the anti-dilution provisions contained in the
above warrants, the exercise price of the warrants
was adjusted as a result of the spin-off of the
Company's subsidiary in 1992. The adjusted
conversion price of the warrants is $.7721 per
share. Warrants totaling 100,000 were exercised in
April 1995 for $77,210.
In conjunction with previous financing agreements,
two warrants expiring in 1995 were issued to an
investment company in November 1988 and June 1989
to purchase 50,000 and 100,000 shares of common
stock, respectively, at a price of $1.25 per share.
In accordance with the anti-dilution provisions
contained in the above warrants, the exercise price
of the warrants was adjusted as a result of the
spin-off of the Company's subsidiary in 1992. The
adjusted conversion price of the warrants is
$1.1029 per share. Both warrants were exercised in
February 1995 for $165,435. As a result of the
exercise of these warrants, in 1995 income taxes
payable was reduced and paid-in capital was
increased by approximately $285,000 related to an
incremental tax benefit associated with the
exercise of the warrants.
35<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 7 Income Taxes
Effective December 1, 1993, the Company changed its
method of accounting for income taxes from the
deferred method to the liability method (see Note
2). As permitted by SFAS No. 109, the financial
statements for 1993 have not been restated.
The provisions for income taxes consist of the
following:
<TABLE>
<CAPTION>
Deferred
Liability Method Method
November 30, November 30,
1995 1994 1993
<S> <C> <C> <C>
Current
Federal $279,380 $342,308 $ 40,600
State 63,455 60,000 5,900
342,835 402,308 46,500
Deferred benefit
Federal (239,739) (187,060) (17,700)
State (30,327) (20,013) (1,500)
(270,066) (207,073) (19,200)
Investment tax credits 200,666 239,616 -
Tax benefit from the
exercise of employee
stock options 150,001 231,965 -
Tax benefit from the
exercise of warrants 284,794 - -
Adjustment to valuation
allowance - (332,475) -
Other (1,373) 4,528 -
$706,857 $338,869 $ 27,300
</TABLE>
36<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 7 Income Taxes - Continued
The income tax provision reconciled to the tax
computed at the statutory Federal rate of 34% is as
follows:
<TABLE>
<CAPTION>
Deferred
Liability Method Method
November 30, November 30,
1995 1994 1993
<S> <C> <C> <C>
Tax expense at statutory rate $612,768 $663,642 $ 74,374
State income taxes, net of federal
income tax benefit 60,379 49,358 3,900
Non-deductible charges 35,084 36,641 6,500
Utilization of tax credit
carryforwards - - (27,300)
Utilization of loss carryforward - - (41,700)
Prior year over accrual - - (25,000)
Adjustment to deferred tax credit item
(recorded in fourth quarter) - (81,592) -
Reduction of valuation allowance
(recorded in fourth quarter) - (332,475) -
Other (1,374) 3,295 (5,174)
$706,857 $338,869 $(14,400)
</TABLE>
The components of deferred income tax expense for
1993 are as follows:
November 30,
1993
Accrued expenses $ 19,800
Depreciation (30,800)
Compensation (8,200)
$ (19,200)
37<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 7 Income Taxes - Continued
The deferred tax asset consists of the following:
<TABLE>
<CAPTION>
November 30,
1995 1994
<S> <C> <C>
Vacation accrual $100,929 $ 93,046
Depreciation 113,400 84,666
Stock options 86,326 57,967
Warranty reserve 265,623 53,463
Tax credit carryforwards 219,572 417,238
Capital loss carryforward 66,402 67,525
$852,252 $773,905
Less: valuation (66,402) (67,525)
allowance
$785,850 $706,380
</TABLE>
Factors that management considered in deriving the
valuation allowance at November 30, 1994 are
discussed in Note 2 to the financial statements and
are similar to those used for 1995, with taxable
income factor for 1995 being approximately
$1,400,000.
For income tax purposes at November 30, 1995, there
were no net operating loss carryforwards and
approximately $332,000 of capital loss
carryforwards. These capital loss carryforwards
expire between 1996 and 1997. At November 30, 1995,
there are investment tax and research and
development tax credit carryforwards of
approximately $220,000 for tax purposes and such
credits expire as follows: $28,000 in 1999 and
$192,000 in 2000.
The extraordinary item reported for 1993 resulted
from the tax effect of the net operating loss
carryforward for book purposes generated in 1991.
Note 8 Commitments
Operating Leases
The Company conducts a majority of its operations
from leased facilities. Since October 1995, when
the lease term of its Florida corporate and
manufacturing facilities expired, the Company began
leasing the facilities on a month-to-month basis and
will do so until the completion of the construction
of the new facility which is anticipated to be in
June 1996 (see below). The monthly rental amount is
approximately $41,000. In March, 1995 the Company
executed a real estate lease for additional space
for $2,141 per month which expires in March 1996.
Upon expiration, the Company will continue to lease
the space on a month-to-month basis until the
38<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 8 Commitments - Continued
completion of the new facility. The leases
require the Company to pay its share of real estate
taxes and operating expenses. Also, the Company
uses machinery and equipment under non-cancelable
operating leases expiring through 1998.
In addition, the Company leased approximately 48,360
square feet in New Jersey where the Company's
subsidiary, Magnetran, Inc. resides. The leases
expired October 31, 1994. The premises were leased
from the CEO of the Company at an aggregate base
rental of $135,207 for 1994. In addition to the
minimum base rent, the Company paid taxes, insurance
and maintenance relating to the leased properties.
Magnetran, Inc. entered into a 5 year gross lease,
with the Company's CEO, commencing November 1, 1994
for approximately 17,750 square feet in New Jersey.
The premises are leased at an aggregate annual base
rental of $86,841, which escalates 3% annually.
After the initial term of the lease, Magnetran has
an option to renew for five years with a 3% increase
each year. The aggregate rentals paid to the CEO
for all leases for the years ended November 30,
1995, 1994, and 1993 were approximately $87,000,
$225,500 and $240,300, respectively.
The future minimum rental payments required under
operating leases that have an initial or remaining
non-cancelable lease term in excess of one year are
as follows:
Year ended November 30,
1996 $165,030
1997 117,624
1998 106,046
1999 89,595
Total minimum lease payments $478,295
The total rental expense for all operating leases
was $398,529, $605,197 and $563,589 for the years
ended November 30, 1995, 1994 and 1993,
respectively.
New Facility - Construction Costs to Complete
At November 30, 1995, the Company has incurred
approximately $2,200,000, including $786,000 for
land for the construction of the new manufacturing
facility. Total anticipated costs upon completion
approximate $4,750,000. In addition, the Company
anticipates acquiring approximately $500,000 of
furniture, fixtures, and equipment which is expected
to be financed through a lease.
39<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 8 Commitments -Continued
Purchase Commitment
The Company is currently in the process of acquiring
manufacturing software and related hardware for
approximately $500,000 which is expected to be
financed through a capital lease.
Note 9 Affiliate Transactions
During 1992 the Company loaned RF Power Products
(RFPP, a former subsidiary which was spun off in
1992) $200,000 in a secured, subordinated loan to be
repaid in equal monthly installments of $5,000
commencing May 1993 through August 1996. Interest
at the prime rate plus 1% is to be paid monthly.
The remaining balance at November 30, 1995 is
$45,000 and included in prepaid expenses and other.
During 1995, 1994 and 1993, the Company had sales
to and purchases from RFPP, respectively, as
follows: $844,000 and $942,000 in 1995; $551,000
and $708,000 in 1994; and $598,000 and $378,000 in
1993, respectively. At November 30, 1995, 1994 and
1993, the Company's accounts receivables and
payables included the following amounts related to
RFPP, respectively, as follows: $197,000 and
$247,000 at 1995; $86,000 and $129,000 at 1994 and
$155,000 and $64,000 at 1993.
The Company's CEO currently owns approximately 12%
of RFPP shares which he received via the spin-off.
Note 10 Segment Information
<TABLE>
<CAPTION>
Geographic Sales
November 30,
1995 1994 1993
<S> <C> <C> <C>
Export revenues from the
United States to unaffiliated
foreign customers $9,190,317 $7,233,203 $5,004,610
</TABLE>
Customer Sales
In 1994 approximately 18% of consolidated net sales
were to one customer. Additionally, in 1995, 1994
and 1993, 7%, 13% and 8%, respectively, of
consolidated net revenues were from the Company's
former distributor in Japan. In 1995 total
revenues from the Company's new Japanese
distributor were approximately $238,000.
40<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended November 30, 1995
Note 11 Defined Contribution Plan
The Company has a defined contribution plan which is
qualified under Section 401(k) of the Internal
Revenue Code. This plan covers substantially all
employees over the age of twenty-one. The plan
consists of an employee elective contribution and a
company matching contribution for each eligible
participant. The Company's matching contribution is
specified by the Company's Board of Directors, is
discretionary and can change from year to year.
Forfeitures resulting from a terminated
participant's failure to be fully vested in the
Company's matching contribution will be used to
reduce future contributions of the Company. The
Company's contribution for this plan for 1995, 1994
and 1993 was $18,459, $11,596 and $8,217,
respectively.
41<PAGE>
Item 9. Disagreements on Accounting and Financial
Disclosure
Not Applicable
PART III
Except for the information regarding executive
officers called for by Item 401 of Regulation S-K,
which is included in Item 1, "Executive Officers of the
Company," Items 10, 11, 12 and 13 are hereby
incorporated by reference to the Company's definitive
proxy statement for its Annual Meeting of Stockholders
presently scheduled for April 30, 1996, which proxy
statement will be filed pursuant to Regulation 14A not
later than 120 days after the end of the Company's
fiscal year, in accordance with General Instruction
G(3) to Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K
A. The following documents are filed as part
of this Form 10-K:
(1) Consolidated Financial Statements
The index to the Consolidated Financial
Statements of the Company is included on
page 17 in Part II, Item 8.
(2) Financial Statement Schedules
(a) Schedule I - Condensed Financial
Information - Plasma-Therm, Inc.
(Parent Only)
(b) Schedule II - Valuation and
Qualifying Accounts
All other schedules are omitted either
because the schedule is inapplicable or
the required information is included
elsewhere in the Financial Statements.
(3) Reports on Form 8-K
No reports on Form 8-K were filed by the
Company during the quarter ended November
30, 1995.
(4) Exhibits
42<PAGE>
Exhibit No. Description of Exhibits
3.1* Articles of Incorporation of the Registrant, as amended
May 6, 1994 (Exhibit 3.1 to the 1994 Form 10-K).
3.2* By-laws of the Registrant (Exhibit 3.2 to the 1994 Form
10-K).
3.3* Amendment to the Company's Articles of Incorporation
(Exhibit 3.1 to the May 31, 1995 Form 10-Q/A).
4.1* Notes and Warrant Agreements dated July 1, 1980 and
February 17, 1981, and amendments thereto, between the
Registrant and Atalanta Investment Company, Inc. and
related consents (Exhibits 3.3, 3.4 and 3.5 to the
1981 Registration Statement, Exhibit 3.5.1 to
Amendment No. 1 to the Registration Statement
No. 2-73281-NY filed on July 20, 1981 {the "1981
Registration Statement"} and Exhibit 4.3 to the
Registration Statement No. 2-82980 filed on
April 11, 1983 {the "1983 Registration Statement"}).
4.2* Amendment, dated November 1, 1988, to the Note and
Warrant Agreements between the Registrant and
Atalanta Investment Company (Exhibit 4.2 to the
Registrant's Annual Report Form 10-K for the year
ended November 30, 1988 {the "1988 Form 10-K"}).
4.3* Amendment, dated July 21, 1989 to the Note and
Warrant Agreements between the Registrant and
Atalanta Investment Company (Exhibit 4.3 to
Registrant's Annual Report on Form 10-K for the
year ended November 30, 1989 {the "1989 Form 10-K"}).
4.4* Warrant dated as of July 24, 1987 between the
Registrant and Ronald Deferrari (Exhibit 4.6
to the Registrant's Annual Report on Form 10-K
for the year ended November 30, 1987 {the
"1987 Form 10-K"}).
4.5* Stock Option Plan of the Registrant, dated
December 1,1988. (Exhibit 4.4 to the 1988
Form 10-K).
4.6* 1995 Stock Incentive Plan of the Registrant,
dated June 14, 1995 (Exhibit 4 to the 1995
Form S-8).
4.7* Form of stock certificate (Exhibit 4.6 to
the 1994 Form 10-K).
10.1* Employment Agreement dated May 3, 1994 between
the Registrant and Ronald H. Deferrari (Exhibit
10.1 to the 1994 Form 10-K).
10.2* Amendment to Employment Agreement between the
Company and Ronald H. Deferrari, dated 6/26/95
(Exhibit 10.30 to the August 31, 1995 Form 10-Q).
43<PAGE>
10.3* Employment Agreement dated May 3, 1994 between the
Registrant and Diana M. DeFerrari (Exhibit 10.2 to
the 1994 Form 10-K).
10.4* Employment Agreement between the Company and Diana
M. DeFerrari, dated February 9, 1995 (Exhibit 10.1
to the May 31,1995 Form 10-Q/A).
10.5* Employment Agreement dated May 18, 1994 between the
Registrant and Ronald S. Deferrari (Exhibit 10.3 to
the 1994 Form 10-K).
10.6* Amendment to Employment Agreement between the
Company and Ronald S. Deferrari, dated 6/26/95 95
(Exhibit 10.31 to the August 31, 1995 Form 10-Q).
10.7* Lease dated as of November 1, 1994 between Magnetran,
Inc., and Ronald H. Deferrari for property located
at 136 Route 73, Voorhees, New Jersey.
10.8* Lease dated as of April 23, 1990 and Supplement
Agreement #1 thereto dated as of June 6, 1990 between
the Registrant and Rouse & Associates - 9500
International Court Limited Partnership for
property located at 9509 International Court,
St. Petersburg, Florida (Exhibit 10.13 to the 1990
Form 10-K).
10.9* Lease dated as of June 6, 1990 between the
Registrant and Rouse & Associates - 9500 International
Court Limited Partnership for property located at
9501 International Court, St. Petersburg, Florida
(Exhibit 10.14 to the 1990 Form 10-K).
10.10* Lease dated as of October 30, 1990 between the
Registrant and Rouse & Associates - 9500 International
Court Limited Partnership for property located at 9721
International Court, St.Petersburg, Florida
(Exhibit 10.14 to the 1991 Form 10-K).
10.11* Lease dated as of July 17, 1991 between the
Registrant and Rouse & Associates - 9500 International
Court Limited Partnership for property located at
9537 International Court North, St. Petersburg,
Florida (Exhibit 10.15 to the 1991 Form 10-K).
10.12* Supplemental Agreement #4 dated June 7, 1994
between Teachers Insurance and Annuity Association
Inc. and the Registrant for property located at
9509 International Court, St. Petersburg, Florida.
10.13* Supplemental Agreement #3 dated June 7, 1994 between
Teachers Insurance and Annuity Association Inc.
and the Registrant for property located at 9501
International Court, St. Petersburg, Florida.
44<PAGE>
10.14* Supplemental Agreement #3 dated June 7, 1994 between
Teachers Insurance and Annuity Association Inc.
and the Registrant for property located at 9721
International Court, St. Petersburg, Florida.
10.15* Supplemental Lease Agreement #2 dated July 17, 1991
between the Registrant and Rouse and Associates -
9500 International Court Limited Partnership for
property located at 9509 International Court, St.
Petersburg, Florida (Exhibit 10.12 to the 1993
Form 10-K).
10.16* Supplemental Lease Agreement #1 dated July 17, 1991
between the Registrant and Rouse and Associates -
9500 International Court Limited Partnership for
property located at 9501 International Court, St.
Petersburg, Florida (Exhibit 10.13 to the 1993
Form 10-K).
10.17* Supplemental Lease Agreement #1 dated July 17, 1991
between the Registrant and Rouse and Associates -
9500 International Court Limited Partnership for
property located at 9721 International Court, St.
Petersburg, Florida (Exhibit 10.14 to the 1993
Form 10-K).
10.18* Supplemental Agreement #2 dated June 7, 1994 between
Teachers Insurance and Annuity Association Inc.
and the Registrant for property located at 9537
International Court, St. Petersburg, Florida.
10.19* Loan Agreement dated January 19, 1995 between the
Registrant and NationsBank of Florida, N.A.
(including Revolving Credit Agreement, Security
Agreement, Term Promissory Note and Line of Credit
Note), (Exhibit 10.16 to the 1994 Form 10-K).
10.20* Promissory Note dated August 14, 1995 between the
Registrant and NationsBank of Florida, N.A.
(Exhibit 10.23 to the August 31, 1995 Form 10-Q).
10.21* Mortgage, Assignment of Rents and Security
Agreement dated August 14, 1995 between the
Registrant and NationsBank of Florida, N.A.
(Exhibit 10.24 to the August 31, 1995 Form 10-Q).
10.22* Environmental Indemnity Agreement dated August 14,
1995 between the Registrant and NationsBank of
Florida, N.A. (Exhibit 10.25 to the August 31, 1995
Form 10-Q).
10.23* Amendment (to Amended and Restated Revolving Credit
Agreement between Plasma-Therm, Inc. and NationsBank
of Florida, N.A., dated January 19, 1995) dated
August 14, 1995 between the Registrant and
NationsBank of Florida, N.A. (Exhibit 10.26 to the
August 31, 1995 Form 10-Q).
45<PAGE>
10.24* Construction Loan Agreement dated August 14, 1995
between the Registrant and NationsBank of Florida,
N.A. (Exhibit 10.27 to the August 31, 1995 Form 10-Q).
10.25* Collateral Assignment of General Construction
Contract, Subcontracts, Plans and Specifications
and Permits dated August 14, 1995 between the
Registrant and NationsBank of Florida, N.A.
(Exhibit 10.28 to the August 31, 1995 Form 10-Q).
10.26* Collateral Assignment of Professional Agreements
and Plans and Specifications dated August 14, 1995
between the Registrant and NationsBank of Florida,
N.A. (Exhibit 10.29 to the August 31, 1995 Form 10-Q).
10.27 Third Future Advance Promissory Note dated
November 17, 1995 between the Registrant and
NationsBank of Florida, N.A.
10.28 Third Consolidation Line of Credit Promissory Note
dated November 17, 1995 between the Registrant and
and NationsBank of Florida, N.A.
10.29 Future Advance Consolidation and Modification
Agreement dated November 17, 1995 between the
Registrant and NationsBank of Florida, N.A.
10.30 Second Amendment (to Amended and Restated Revolving
Credit Agreement) dated November 17, 1995 between
the Registrant and NationsBank of Florida, N.A.
10.31 Amendment to Amended and Restated Security Agreement
dated November 17, 1995 between the Registrant and
NationsBank of Florida, N.A.
10.32* Distributorship Agreement between the Registrant,
Nissin Hi-Tech and Itoman & Co., dated August 1,
1989 (Exhibit 10.16 to the 1989 Form 10-K).
10.33* December 11, 1990 Amendment to the Distributorship
Agreement between the Registrant, Nissin Hi-Tech
and Itoman & Co. (Exhibit 10.20 to the 1990
Form 10-K).
10.34* License Agreement dated August 9, 1990 by and among
the Registrant, Nissin Hi-Tech, Inc. and Plasma-Therm
International, Inc. (Exhibit 10.21 to the 1990
Form 10-K).
10.35* Loan Documents from RF Power Products, Inc. to
Registrant: Loan Agreement dated April 24, 1992;
Promissory Note dated April 24, 1992; Security
Agreement dated April 24, 1992; Subordination
Agreement dated January 25, 1993 (Exhibit 10.24 to
the 1992 Form 10-K).
46<PAGE>
10.36* Registrant's 401(k) Savings Plan Summary Plan
Description dated July 1, 1992 (Exhibit 10.25 to
the 1992 Form 10-K).
10.37* January 27, 1993 Amendment to the Distributorship
Agreement between Nissin Hi-Tech, Inc., Nissin
Electric Co., Ltd. and the Registrant and January
27, 1993 Amendment to the License Agreement between
Nissin Hi-Tech, Inc., Nissin Electric Co., Ltd.
and the Registrant. (This Exhibit amends Exhibits
10.17, 10.18, 10.19.)
10.38 Distributorship Agreement between the Registrant and
Hakuto Co., Ltd., dated August 1, 1995.
11. Statement RE: Computation of per share earnings.
22. Subsidiary of the Registrant.
24. Consent of Grant Thornton LLP.
27. Financial Data Schedule (for SEC use only).
* Incorporated by reference.
47<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
PLASMA-THERM, INC.
/s/ RONALD H.DEFERRARI
Ronald H.Deferrari,
Chairman of the Board
and Treasurer
Date: January 29, 1996
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant in
the capacities on the dates indicated.
By: /s/ RONALD H. DEFERRARI
Ronald H. Deferrari, Chairman of the Board
and Treasurer
(Principal Executive Officer and
Principal Financial Officer)
Date: January 29, 1996
By: /s/ A.S. GIANOPLUS
A.S. Gianoplus, Director
Date: January 29, 1996
By: /s/ STACY WAGNER
Stacy Wagner, Vice President of Finance
and Controller
Date: January 29, 1996
48<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
THE SCHEDULES
Board of Directors
Plasma-Therm, Inc.
In connection with our audit of the consolidated
financial statements of Plasma-Therm, Inc. and
Subsidiary referred to in our report dated January 10,
1996, which is included in the Annual Report on Form 10-
K for the years ended November 30, 1995, we have also
audited Schedule I for the year ended November 30,
1993, and Schedule II for each of the three years in
the period ended November 30, 1995. In our opinion,
the schedules present fairly, in all material respects,
the information required to be set forth therein.
GRANT THORNTON LLP
Tampa, Florida
January 10, 1996
49<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
Schedule I - Condensed Financial Information
Plasma-Therm, Inc. (Parent Only)
Year Ended November 30, 1993
CONDENSED STATEMENT OF INCOME
Costs and expenses
Selling and administrative $118,607
Interest expense 0
Other income, net (3,620)
114,987
Income (loss) before equity in net
of subsidiaries (114,987)
Equity in net income of subsidiaries 348,135
Net income $233,148
CONDENSED STATEMENT OF CASH FLOWS
Cash from operating activities ($53,780)
Cash flows from investing activities 10,691
Cash flows from financing activities 40,000
Decrease in cash ($3,089)
Note:
Schedule I is not applicable as of or for the years
ended November 30, 1995 and 1994. In prior years
Plasma-Therm, Inc. had a signicantly wholly owned
subsidiary (Plasma-Therm I.P., Inc.) which had a bank
agreement which restricted its dividends and advances
to its parent. As a result of the latter, Schedule I
was required for 1993 and 1992. In 1994 the parent and
subsidary merged together and the debt agreement in
essence reverted directly to the parent, Plasma-Therm,
Inc.
-50- <PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
Schedule I - Condensed Financial Information - Continued --
Plasma-Therm, Inc. (Parent Only)
Notes to Condensed Financial Statements
The notes to the consolidated financial statements
should be read in conjunction with these condensed
financial statements.
Income taxes: Substantially all of the consolidated
income tax expense or benefit is related to the
operating Company's subsidiaries in 1993. See the
notes to consolidated financial statements.
51<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Accounts Deductions - End of
Description Period Expenses - Describe Describe Period
<S> <C> <C> <C> <C>
Year ended November 30, 1995:
Warranty Liability $143,000 $1,211,289 $ - $660,774 <FN1> $693,515
Deferred Tax Asset
Valuation Allowance 67,525 0 0 1,123 <FN4> 66,402
Year ended November 30, 1994:
Warranty Liability 0 366,664 0 223,664 <FN1> 143,000
Deferred Tax Asset
Valuation Allowance 0 400,000 <FN2> 332,475 <FN3> 67,525
Year ended November 30, 1993:
Warranty Liability 0 167,651 0 167,651 <FN1> 0
<PAGE>52
<FN1> Costs incurred for warranty repair during the year.
<FN2> Consists of an addition to the valuation allowance which is a contra account to
<FN3> Reduction of the valuation allowance based on expected future years'
<FN4> Reduction of the valuation allowance for capital loss carryforwards which expired in 1995.
</TABLE>
-52-<PAGE>
Exhibit 22
SUBSIDIARY OF THE REGISTRANT
State or Other
Name Jurisdiction
of Incorporation
Magnetran, Inc. New Jersey
<PAGE>
Exhibit 24
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated January 10, 1996,
accompanying the consolidated financial statements
and schedules of Plasma-Therm, Inc. and Subsidiary
included in the Annual Report on Form 10-K of
Plasma-Therm, Inc. and Subsidiary for the year ended
November 30, 1995. We hereby consent to the
incorporation by reference of said reports in the
Registration Statements of Plasma-Therm, Inc. and
Subsidiary on Form S-3 (File No. 33-88836, effective
February 1, 1995) and Forms S-8 (File No. 2-97920,
effective June 11, 1985, File No. 33-29104, effective
June 22, 1989 and File 33-60375, effective
June 14, 1995).
GRANT THORNTON LLP
Tampa, Florida
January 10, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AS OF NOVEMBER 30, 1995, AND CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED NOVEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<CIK> 0000354452
<NAME> PLASMA-THERM, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1994
<PERIOD-END> NOV-30-1995
<CASH> 5,058,718
<SECURITIES> 0
<RECEIVABLES> 7,927,427
<ALLOWANCES> 0
<INVENTORY> 9,832,853
<CURRENT-ASSETS> 23,664,921
<PP&E> 4,923,906
<DEPRECIATION> 1,954,377
<TOTAL-ASSETS> 26,909,020
<CURRENT-LIABILITIES> 6,789,795
<BONDS> 0
0
0
<COMMON> 102,797
<OTHER-SE> 18,869,468
<TOTAL-LIABILITY-AND-EQUITY> 26,909,020
<SALES> 29,581,625
<TOTAL-REVENUES> 29,611,625
<CGS> 19,152,542
<TOTAL-COSTS> 27,897,314
<OTHER-EXPENSES> (284,699)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 203,211
<INCOME-PRETAX> 1,795,799
<INCOME-TAX> 706,857
<INCOME-CONTINUING> 1,088,942
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,088,942
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
THIRD
FUTURE ADVANCE PROMISSORY NOTE
$1,000,000.00 St. Petersburg, Florida
Executed November 17, 1995
Effective November 17, 1995
FOR VALUE RECEIVED, the undersigned PLASMA-THERM, INC.,
a Florida corporation (hereinafter called "Borrower") promises
to pay to the order of NATIONSBANK OF FLORIDA, N.A., a
national banking association (hereinafter sometimes referred
to as "Lender" and together with any holder hereof called
"Holder"), at 400 N. Ashley Drive, 2nd Floor, Tampa, Florida
33602, or at such other place as Holder may from time to time
designate in writing, without grace, UPON DEMAND the principal
sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00), or so
much thereof as has been advanced hereunder, together with
interest on the unpaid balance of the principal (the "loan")
from time to time outstanding from the date of each advance of
principal at the rate for each day equal to the Prime Rate per
annum. In no event, however, shall the interest rate be
greater than the maximum rate of interest allowed to be
contracted for by applicable law.
Principal and interest shall be due and payable UPON
DEMAND.
Interest owing under this Note shall be computed on the
basis of a 360-day year for actual days lapsed.
As used herein, "Prime Rate" shall refer to the
fluctuating rate of interest which is established by
NATIONSBANK OF FLORIDA, N.A., a national banking association,
from time to time as being its Prime Rate whether or not such
rate shall be otherwise published. Such Prime Rate is
established by NATIONSBANK OF FLORIDA, N.A., a national
banking association, as an index or base rate and may or may
not at any time be the best or lowest rate charged by
NATIONSBANK OF FLORIDA, N.A., a national banking association
on any loan. Changes in the Prime Rate shall be effective on
the effective date announced by NATIONSBANK OF FLORIDA, N.A.,
a national banking association.
$3,500.00 in
documentary stamp tax
has been paid and
recorded in the
required log of
Lender.
c:\wp50\NBPTLOC.002\95.5442\111395\NBMISC#17\MJC\MS
Third Future Advance Promissory Note R.S.D.(Initials)<PAGE>
Borrower may prepay all or part of the principal
balance at any time without penalty. Such prepayment shall be
accompanied by payment of any unpaid interest accrued to the
time of such prepayment. If this Note provides for
installment payments of principal, prepayment of principal
payments shall apply in the inverse order such installment
payments are due, applying first to the last principal
installment due hereunder. All payments made hereunder shall
at Holder's option first be applied to late charges, then to
accrued interest, then to principal.
Permitted partial prepayments shall not affect or vary
the duty of Borrower to pay all obligations when due, and they
shall not affect or impair the right of Holder to pursue all
remedies available to it hereunder, under the security
instruments securing this indebtedness, or under any other
loan documents or guaranty executed in connection herewith.
This Note is secured by certain Security Instruments
described in the Future Advance, Consolidation and
Modification Agreement dated of even date herewith, which
together with the Amended and Restated Revolving Credit
Agreement dated as of January 19, 1995, as amended by
Amendment thereto dated August 14, 1995 and Second Amendment
dated of even date herewith, the Commitment Letters of
November 8, 1995, December 8, 1994, March 28, 1994 (as amended
May 9, 1994), November 21, 1991, May 28, 1993 and all other
agreements, instruments and documents delivered in connection
herewith, are hereinafter sometimes referred to as the "Loan
Documents."
This Note and the Loan Documents have been executed and
delivered in the State of Florida, and their terms and
provisions are to be governed by and construed under the laws
of the State of Florida and of the United States of America,
and the rules and regulations promulgated under the authority
thereof. It is the intent of this Note that such laws shall
be interpreted in such a manner that the maximum rate of
interest allowed to be contracted for by applicable law as
changed from time to time which is applicable to this Note
(hereinafter called the "Maximum Rate") be as great as
possible. The interest due hereunder is being charged
pursuant to the provisions of The Florida Banking Code (as
defined by statute), and Chapter 687 Florida Statutes. In the
event that any law, rule or regulation of the United States of
America or the State of Florida, as changed from time to time,
allows interest to be contracted for at a rate that is greater
than the rate permitted by The Florida Banking Code (as
defined by statute), and Chapter 687, Florida Statutes, then
such law, rule or regulation shall apply. References to laws,
c:\wp50\NBPTLOC.002\95.5442\111395\NBMISC#17\MJC\MS
Third Future Advance Promissory Note 2 R.S.D.(Initials)<PAGE>
statutes, rules and regulations in this Note refer to such as
amended from time to time.
In no event shall Holder have the right to charge or
collect, nor shall Borrower be required or obligated to pay,
interest or payments in the nature of interest, which would
result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment
which is interest or in the nature of interest is made by
Borrower or received by Holder which would result in the rate
of interest being charged or collected by Holder being in
excess of the Maximum Rate, then the portion of any such
payment which causes the rate of interest being charged or
collected by Holder to exceed the Maximum Rate (hereinafter
called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Holder in writing that
Borrower elects to have such excess sum returned to Borrower,
such excess sum shall be returned to Borrower. In the event
that any such overcharge is discovered after this Note has
been paid in full, then the amount of such excess sum shall be
returned to Borrower together with interest thereon from the
date such excess sum was paid or collected at the same rate as
was due Holder during such period under the terms of this
Note. All excess sums credited to principal shall be credited
as of the date paid to Holder. It is recognized by Borrower
that the Maximum Rate may vary from time to time, and that
from time to time the Maximum Rate may be uncertain.
Therefore, Holder may seek judicial determination of the
applicable rate of interest. In such event, the withholding
of credit to principal or the withholding of payment to
Borrower of any proposed excess sum during the period of
judicial determination (including all appeals) shall not be
deemed a breach of the obligations of Holder hereunder or of
applicable law. It is the intent of Holder to conform
strictly to the limitations of applicable laws governing the
charging and collection of interest as changed from time to
time.
The "Default Interest Rate" shall be a rate equal to
three percent (3%) above the rate of interest required to be
paid by the terms of this Note. In the event no specific
Maximum Rate is applicable, the Maximum Rate hereunder shall
be twenty-five percent (25%) per annum.
Upon a failure by Borrower to repay principal upon
demand by Holder, the entire unpaid principal balance shall
bear interest at the "Default Interest Rate." In addition to
the rights described in this paragraph, Holder shall have the
right to exercise all other rights or remedies provided by law
or at equity or as provided in any of the Loan Documents and
shall specifically have the right to recover all damages
c:\wp50\NBPTLOC.002\95.5442\111395\NBMISC#17\MJC\MS
Third Future Advance Promissory Note 3 R.S.D.(Initials)<PAGE>
resulting from such default including, without limitation, the
right to recover the payment of all amounts owing to Holder.
Exercise of any of these options shall be without notice to
Borrower, notice of such exercise being hereby expressly
waived.
Time is of the essence hereunder. In the event that
this Note is collected by law or through attorneys at law, or
under advice therefrom, Borrower and any other person liable
for payment hereof hereby, severally and jointly, agree to pay
all costs of collection, including reasonable attorneys' fees
and costs (including charges for paralegals and others working
under the direction or supervision of Holder's attorneys) and
all sales or use taxes thereon, whether or not suit is
brought, and whether incurred in connection with collection,
trial, appeal, bankruptcy or other creditors' proceedings or
otherwise, and, if Holder's attorneys shall include employees
of Holder or of any person controlling, controlled by or under
common control with Holder, such reasonable attorney's fees
shall include costs allocated by Holder's or such person's
internal legal department.
Borrower authorizes Holder, from time to time, to debit
any account that Borrower may have with Holder, for any
payment of principal or interest due or past due hereunder for
the amount of such payment of principal or interest. Exercise
of this right shall be optional with Holder and the provisions
of this paragraph shall not be construed as releasing Borrower
from the obligation to make payments of principal or interest
according to the terms hereof.
The remedies of Holder as provided herein and in the
Loan Documents shall be cumulative and concurrent, and may be
pursued singularly, successively, or together, at the sole
discretion of Holder. 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 the same, such waiver or release to be effected
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.
All persons (including corporations) now or at any time
liable, whether primarily or secondarily, for the payment of
the indebtedness hereby evidenced, for themselves, their
heirs, legal representatives, successors and assigns,
respectively, hereby (a) expressly waive any presentment,
demand for payment, notice of dishonor, protest, notice of
nonpayment or protest, all other forms of notice whatsoever,
c:\wp50\NBPTLOC.002\95.5442\111395\NBMISC#17\MJC\MS
Third Future Advance Promissory Note 4 R.S.D.(Initials)<PAGE>
and diligence in collection; (b) consent that Holder may, from
time to time and without notice to them or demand, (i) extend,
rearrange, renew or postpone any or all payments and/or (ii)
release, exchange, add to or substitute all or any part of the
collateral for this Note, without in any way modifying,
altering, releasing, affecting or limiting their respective
liability or the lien of any security instrument; (c) agree
that Holder, in order to enforce payment of this Note against
them shall not be required first to institute any suit or to
exhaust any of its remedies against Borrower or any other
person or party or to attempt to realize on the collateral for
this Note.
BORROWER AND ANY OTHER PERSON LIABLE FOR PAYMENT
HEREOF, BY EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING
SUCH LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY
ACTION WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR
OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR HOLDER'S EXTENDING CREDIT TO
BORROWER AND NO WAIVER OR LIMITATION OF HOLDER'S RIGHTS
HEREUNDER SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY
SIGNED ON HOLDER'S BEHALF.
Borrower acknowledges that the above paragraph has been
expressly bargained for by Holder as part of the loan
evidenced hereby and that, but for Borrower's agreement and
the agreement of any other person liable for payment hereof
thereto, Holder would not have extended the loan for the term
and with the interest rate provided herein.
If more than one party shall execute this Note, the
term "Borrower", as used herein, shall mean all parties
signing this Note and each of them, who shall be jointly and
severally obligated hereunder. In this Note, whenever the
context so requires, the neuter gender includes the feminine
and/or masculine, as the case may be, and the singular number
includes the plural.
IN WITNESS WHEREOF, Borrower has caused this Note to be
executed in its name on the day and year first above written.
PLASMA-THERM, INC., a Florida
corporation ("Borrower")
/s/Ronald S. Deferrari
Ronald S. Deferrari, President
(CORPORATE SEAL)
c:\wp50\NBPTLOC.002\95.5442\111395\NBMISC#17\MJC\MS
Third Future Advance Promissory Note 5 R.S.D.(Initials)<PAGE>
THIRD
CONSOLIDATION LINE OF CREDIT PROMISSORY NOTE
$3,000,000.00 St. Petersburg, Florida
Executed November 17, 1995
Effective November 17, 1995
FOR VALUE RECEIVED, the undersigned PLASMA-THERM, INC., a
Florida corporation (hereinafter called "Borrower") promises
to pay to the order of NATIONSBANK OF FLORIDA, N.A., a
national banking association (hereinafter sometimes referred
to as "Lender" and together with any holder hereof called
"Holder"), at 400 N. Ashley Drive, 2nd Floor, Tampa, Florida
33602, or at such other place as Holder may from time to time
designate in writing, the principal sum of THREE MILLION AND
NO/100 DOLLARS ($3,000,000.00), or so much thereof as has been
advanced hereunder, together with interest on the unpaid
balance of the principal (the "loan") from time to time
outstanding from the date of each advance of principal at the
rate for each day equal to the Prime Rate per annum. In no
event, however, shall the interest rate be greater than the
maximum rate of interest allowed to be contracted for by
applicable law.
Principal and interest shall be due and payable as
follows:
a. Accrued interest only, as stated above, shall
be payable monthly commencing on December 19, 1995, and
continuing on the same day of each month until May 19, 1997,
at which time all outstanding indebtedness, whether principal,
accrued interest or otherwise, shall be due and payable in
full.
b. The principal amount evidenced hereby may be
borrowed (and to the extent any principal amount advanced
hereunder is repaid by Borrower, such sum may be borrowed
again) prior to May 19, 1997, but only in accordance with the
terms of that certain Amended and Restated Revolving Credit
Agreement dated January 19, 1995, as amended by Amendment
thereto dated August 14, 1995 and Second Amendment dated of
This Note consolidates that
certain Consolidation Line
of Credit Promissory Note
dated January 19, 1995, in
the original principal sum
of $2,000,000.00 and that
certain Third Future Advance
Promissory Note dated of
even date herewith in the
original principal sum of
$1,000,000.00. Documentary
stamp tax was paid with
respect to the original
indebtedness.
c:\wp50\NBPTLOC.003\95.5442\111395\NBMISC#17\MJC\MS
Third Consolidation Line of Credit Note R.S.D.(Initials)<PAGE>
even date herewith, and only if this Note is not in default as
hereinafter defined. At no time, however, shall the principal
balance outstanding hereunder exceed THREE MILLION AND NO/100
DOLLARS ($3,000,000.00).
c. For a period of sixty (60) consecutive days
during the term of the loan, Borrower shall repay the
principal below a sum of $100.00.
Interest owing under this Note shall be computed on the
basis of a 360-day year.
As used herein, "Prime Rate" shall refer to the
fluctuating rate of interest which is established by
NATIONSBANK OF FLORIDA, N.A., a national banking association,
from time to time as being its Prime Rate whether or not such
rate shall be otherwise published. Such Prime Rate is
established by NATIONSBANK OF FLORIDA, N.A., a national
banking association, as an index or base rate and may or may
not at any time be the best or lowest rate charged by
NATIONSBANK OF FLORIDA, N.A., a national banking association
on any loan. Changes in the Prime Rate shall be effective on
the effective date announced by NATIONSBANK OF FLORIDA, N.A.,
a national banking association.
Borrower may prepay all or part of the principal balance
at any time without penalty. Such prepayment shall be
accompanied by payment of any unpaid interest accrued to the
time of such prepayment. All payments made hereunder shall at
Holder's option first be applied to late charges, then to
accrued interest, then to principal.
Permitted partial prepayments shall not affect or vary
the duty of Borrower to pay all obligations when due, and they
shall not affect or impair the right of Holder to pursue all
remedies available to it hereunder, under the security
instruments securing this indebtedness, or under any other
loan documents or guaranty executed in connection herewith.
If any event of default set forth in this Note or in any
of the Loan Documents (as defined herein) shall occur, or in
the event Lender has, in accordance with the term of the Note
or the Loan Documents, made a demand for repayment of the
indebtedness evidenced by this Note and the Loan Documents,
Lender, at its option, may notify Borrower that its commitment
to lend under this line of credit is terminated and Lender
shall be relieved of all obligations to lend any further sums
thereafter to Borrower.
This Note is secured by certain Security Instruments
described in the Future Advance, Consolidation and
Modification Agreement dated of even date herewith, which
together with the Amended and Restated Revolving Credit
Agreement dated January 19, 1995, as amended by Amendment
thereto dated August 14, 1995 and Second Amendment dated of
even date herewith, the Commitment Letters of November 8,
1995, December 8, 1994, March 28, 1994 (as amended May 9,
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Third Consolidation Line of Credit Note 2 R.S.D. (Initials)
<PAGE>
1994), November 21, 1991, May 28, 1993 and all other
agreements, instruments and documents delivered in connection
herewith,are herein after sometimes referred to as the
"LoanDocuments."
This Note and the Loan Documents have been executed and
delivered in the State of Florida, and their terms and
provisions are to be governed by and construed under the laws
of the State of Florida and of the United States of America,
and the rules and regulations promulgated under the authority
thereof. It is the intent of this Note that such laws shall
be interpreted in such a manner that the maximum rate of
interest allowed to be contracted for by applicable law as
changed from time to time which is applicable to this Note
(hereinafter called the "Maximum Rate") be as great as
possible. The interest due hereunder is being charged
pursuant to the provisions of The Florida Banking Code (as
defined by statute), and Chapter 687 Florida Statutes. In the
event that any law, rule or regulation of the United States of
America or the State of Florida, as changed from time to time,
allows interest to be contracted for at a rate that is greater
than the rate permitted by The Florida Banking Code (as
defined by statute), and Chapter 687, Florida Statutes, then
such law, rule or regulation shall apply. References to laws,
statutes, rules and regulations in this Note refer to such as
amended from time to time.
In the event that any payment of principal or interest is
not made within ten (10) days after the same become due
hereunder, it is hereby agreed that Holder shall have the
option of collecting a late charge equal to four percent (4%)
of the amount of each such delinquent payment. Said late
charge and/or interest shall be immediately due and payable in
full on demand by Holder.
In no event shall Holder have the right to charge or
collect, nor shall Borrower be required or obligated to pay,
interest or payments in the nature of interest, which would
result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment
which is interest or in the nature of interest is made by
Borrower or received by Holder which would result in the rate
of interest being charged or collected by Holder being in
excess of the Maximum Rate, then the portion of any such
payment which causes the rate of interest being charged or
collected by Holder to exceed the Maximum Rate (hereinafter
called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Holder in writing that
Borrower elects to have such excess sum returned to Borrower,
such excess sum shall be returned to Borrower. In the event
that any such overcharge is discovered after this Note has
been paid in full, then the amount of such excess sum shall be
returned to Borrower together with interest thereon from the
date such excess sum was paid or collected at the same rate as
was due Holder during such period under the terms of this
Note. All excess sums credited to principal shall be credited
as of the date paid to Holder. It is recognized by Borrower
that the Maximum Rate may vary from time to time, and that
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Third Consolidation Line of Credit Note 3 R.S.D.(Initials)
<PAGE>
from time to time the Maximum Rate may be uncertain.
Therefore, Holder may seek judicial determination of the
applicable rate of interest. In such event, the withholding
of credit to principal or the withholding of payment to
Borrower of any proposed excess sum during the period of
judicial determination (including all appeals) shall not be
deemed a breach of the obligations of Holder hereunder or of
applicable law. It is the intent of Holder to conform
strictly to the limitations of applicable laws governing the
charging and collection of interest as changed from time to
time.
The "Default Interest Rate" shall be a rate equal to
three percent (3%) above the rate of interest required to be
paid by the terms of this Note. In the event no specific
Maximum Rate is applicable, the Maximum Rate hereunder shall
be twenty-five percent (25%) per annum.
Holder shall have the optional right to declare the
amount of the total unpaid balance hereof to be due and
forthwith payable in advance of the maturity date of any sum
due or installment, as fixed herein, upon a default. This
Note shall be deemed to be in default upon the failure of
Borrower to pay, within seven (7) days after the same become
due, any of the installments of interest or principal, or upon
the occurrence of any default under or failure to perform by
any party (other than Holder) in accordance with any of the
terms and conditions of this Note or of any of the Loan
Documents after the expiration of any applicable grace period,
or upon the default under or the failure of Borrower to
perform in accordance with any and all obligations,
instruments or documents between Borrower and Lender after any
applicable grace period. Upon exercise of any of these
options by Holder, the entire unpaid principal balance shall
bear interest at the "Default Interest Rate." In addition to
the rights described in this paragraph, Holder shall have the
right to exercise all other rights or remedies provided by law
or at equity or as provided in any of the Loan Documents and
shall specifically have the right to recover all damages
resulting from such default including, without limitation, the
right to recover the payment of all amounts owing to Holder.
Exercise of any of these options shall be without notice to
Borrower, notice of such exercise being hereby expressly
waived.
Time is of the essence hereunder. In the event that this
Note is collected by law or through attorneys at law, or under
advice therefrom, Borrower and any other person liable for
payment hereof hereby, severally and jointly, agree to pay all
costs of collection, including reasonable attorneys' fees and
costs (including charges for paralegals and others working
under the direction or supervision of Holder's attorneys) and
all sales or use taxes thereon, whether or not suit is
brought, and whether incurred in connection with collection,
trial, appeal, bankruptcy or other creditors' proceedings or
otherwise, and, if Holder's attorneys shall include employees
of Holder or of any person controlling, controlled by or under
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Third Consolidation Line of Credit Note 4 R.S.D.(Initials)
<PAGE>
common control with Holder, such reasonable attorney's fees
shall include costs allocated by Holder's or such person's
internal legal department.
Borrower authorizes Holder, when payment is due, to set
off for any payment of principal or interest due or past due
hereunder for the amount of such payment of principal or
interest. Exercise of this right shall be optional with
Holder and the provisions of this paragraph shall not be
construed as releasing Borrower from the obligation to make
payments of principal or interest according to the terms
hereof.
The remedies of Holder as provided herein and in the Loan
Documents shall be cumulative and concurrent, and may be
pursued singularly, successively, or together, at the sole
discretion of Holder. 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 the same, such waiver or release to be effected
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.
All persons (including corporations) now or at any time
liable whether primarily or secondarily, for the payment of
the indebtedness hereby evidenced, for themselves, their
heirs, legal representatives, successors and assigns,
respectively, hereby (a) expressly waive any presentment,
demand for payment, notice of dishonor, protest, notice of
nonpayment or protest, all other forms of notice whatsoever,
and diligence in collection; (b) consent that Holder may, from
time to time and without notice to them or demand, (i) extend,
rearrange, renew or postpone any or all payments and/or (ii)
release, exchange, add to or substitute all or any part of the
collateral for this Note, without in any way modifying,
altering, releasing, affecting or limiting their respective
liability or the lien of any security instrument; (c) agree
that Holder, in order to enforce payment of this Note against
them shall not be required first to institute any suit or to
exhaust any of its remedies against Borrower or any other
person or party or to attempt to realize on the collateral for
this Note.
BORROWER AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF,
BY EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING SUCH
LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY ACTION
WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR OTHERWISE,
IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR HOLDER'S EXTENDING CREDIT TO BORROWER AND NO
WAIVER OR LIMITATION OF HOLDER'S RIGHTS HEREUNDER SHALL BE
EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON HOLDER'S
BEHALF.
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Third Consolidation Line of Credit Note 5 R.S.D.(Initials)
<PAGE>
Borrower acknowledges that the above paragraph has been
expressly bargained for by Holder as part of the loan
evidenced hereby and that, but for Borrower's agreement and
the agreement of any other person liable for payment hereof
thereto, Holder would not have extended the loan for the term
and with the interest rate provided herein.
If more than one party shall execute this Note, the term
"Borrower", as used herein, shall mean all parties signing
this Note and each of them, who shall be jointly and severally
obligated hereunder. In this Note, whenever the context so
requires, the neuter gender includes the feminine and/or
masculine, as the case may be and the singular number includes
the plural.
Balance of this page intentionally
blank
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Third Consolidation Line of Credit Note 6 R.S.D.(Initials)
<PAGE>
IN WITNESS WHEREOF Borrower has caused this Note to be
executed in its name on the day and year first above written.
PLASMA-THERM, INC., a Florida
corporation ("Borrower")
By: /s/Ronald S. Deferrari
Ronald S. Deferrari,
President
(CORPORATE SEAL)
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Third Consolidation Line of Credit Note 7 (Initials)<PAGE>
FUTURE ADVANCE, CONSOLIDATION AND MODIFICATION AGREEMENT
THIS AGREEMENT, executed the 17th day of November, 1995,
and effective the 17th day of November, 1995, by and between
PLASMA-THERM, INC., a Florida-corporation (hereinafter
referred to as "Borrower") and NATIONSBANK OF FLORIDA, N.A., a
national banking association (hereinafter referred to as
"Lender").
R E C I T A L S:
A. Borrower is successor by merger to Plasma-Therm I.P.
Inc., a Delaware corporation ("Plasma-Therm I.P.").
B. Plasma-Therm, I.P. and Lender entered into a
Revolving Credit Agreement dated January 21, 1992 (the "Credit
Agreement"), as amended and restated in its entirety pursuant
to those certain Amended and Restated Revolving Credit
Agreements dated May 19, 1994 and January 19, 1995, as amended
by Amendment thereto dated August 14, 1995, and Second
Amendment dated of even date herewith by and between Borrower
and Lender (together the "Restated Credit Agreement").
C. Pursuant to the Credit Agreement, Plasma-Therm I.P.
executed a certain Revolving Line of Credit Promissory Note in
the original principal sum of SEVEN HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($750,000.00), dated January 21, 1992 and
renewed pursuant to certain letter extension dated December 7,
1992, and that certain Renewal Line of Credit Promissory Note
in the original principal sum of $750,000.00 dated as of April
21, 1993 and subsequently renewed and increased to
$1,000,000.00 pursuant to that certain $250,000.00 Future
Advance Note dated May 19, 1994 and the total indebtedness
consolidated as evidenced by that certain $1,000,000.00
Renewal and Consolidation Line of Credit Promissory Note dated
May 19, 1994, and subsequently renewed and increased to
$2,000,000.00 pursuant to that certain $1,000,000.00 Future
Advance Promissory Note dated January 19, 1995, and the total
indebtedness consolidated as evidenced by that certain
$2,000,000.00 Consolidation Line of Credit Promissory Note
dated January 19, 1995 (together the "Line of Credit Note"),
which Line of Credit Note is secured by a Security Agreement
dated January 21, 1992, as amended and restated in its
entirety pursuant to that certain Amended and Restated
Security Agreement dated January 19, 1995 which, together with
the Restated Credit Agreement, the Future Advance,
Consolidation and Modification Agreement dated as of January
19, 1995, the UCC-1 financing statements filed in the offices
of the Secretary of State of Florida and New Jersey, the
Commitment Letters of November 21, 1991, May 28, 1993, March
28, 1994 (as amended May 9, 1994), December 8, 1994 and
November 8, 1995, and any other documents or instruments
executed in connection therewith are hereinafter collectively
referred to as the "Security Instruments."
D. Borrower desires to obtain an additional advance in
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Future Advance, Consolidation & Modification<PAGE>
the amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00)
from Lender and Lender is willing to advance such sum provided
that repayment of such sum is secured as a future advance (the
"Third Future Advance") under the terms of the Security
Instruments and as set forth herein.
E. Borrower desires to consolidate the outstanding
principal balance of the Line of Credit Note and the Third
Future Advance, and Lender is willing to consolidate such sums
pursuant to the terms set forth herein.
F. The outstanding principal balance of the Line of
Credit Note as of the date of execution hereof is TWO MILLION
AND NO/100 DOLLARS ($2,000,000.00).
NOW, THEREFORE, in consideration of the Third Future
Advance and other good and valuable consideration, receipt of
which is hereby acknowledged, and in consideration of the
premises and of the mutual covenants contained herein, the
parties agree as follows:
1. Recitals. The above recitals are true and correct
and are incorporated herein.
2. Interest. Accrued interest on the Line of Credit
Note shall be paid in full at the time of execution and
delivery of the Third Consolidation Line of Credit Promissory
Note described herein.
3. Future Advance. This Agreement evidences an
additional advance made by Lender pursuant to the future
advance provision of the Security Instruments. It is agreed
that this additional advance, as evidenced by the Third Future
Advance Promissory Note in the principal amount of ONE MILLION
AND NO/100 DOLLARS ($1,000,000.00) (the "Third Future Advance
Note"), a copy of which is attached hereto as Exhibit "A" and
made a part hereof, shall be equally secured with and have the
same priority as the original indebtedness and is subject to
all the terms and provisions of the Security Instruments. The
undersigned Borrower promises to pay the indebtedness
evidenced by the Third Future Advance Note in accordance with
the terms and conditions, including the rate of interest and
other terms of repayment, as set forth in the Third Future
Advance Note.
4. Modification and Consolidation. The Line of Credit
Note shall be modified and consolidated with the Third Future
Advance Note in accordance with the terms and provisions of
the Third Consolidation Revolving Line of Credit Promissory
Note in the principal amount of THREE MILLION AND NO/100
DOLLARS ($3,000,000.00) (the "Third Consolidation Note"), a
copy of which is attached hereto as Exhibit "B" and made a
part hereof, and is subject to all the terms and provisions of
the Security Instruments. The undersigned Borrower promises
to pay the indebtedness evidenced by the Third Consolidation
Note (hereinafter sometimes referred to as the "Indebtedness")
in accordance with the terms and conditions, including the
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Future Advance, Consolidation & Modification 2<PAGE>
rate of interest and other terms of repayment, as set forth in
the Third Consolidation Note. In the event of any conflict
between the terms and conditions of the Line of Credit Note,
the Third Future Advance Note or the Third Consolidation Note,
the terms and provisions of the Third Consolidation Note shall
control and prevail and the Third Consolidation Note shall be
deemed to supersede the Line of Credit Note and the Third
Future Advance Note.
5. Modification of Security Instruments. The terms of
the Security Instruments are hereby modified so as to provide
that the repayment terms of the indebtedness secured thereby
shall also include the Third Future Advance.
6. Cross Default. Any default by Borrower under the
terms of any promissory note, any Security Instrument, or any
agreement, document or instrument executed with respect to any
thereof, shall be a default hereof, and any default by
Borrower under the terms hereof shall be a default of said
other promissory notes, agreements, documents and instruments.
7. Security. The parties hereto acknowledge and agree
that the payment of the Indebtedness shall be secured by the
Security Instruments and shall be subject to all of the terms
and conditions of the Security Instruments.
8. Ratification. Except as herein modified and
amended, the terms and conditions of the Security Instruments,
and all of the agreements, documents and instruments executed
with respect to the foregoing are hereby ratified and affirmed
and shall remain in full force and effect. THIS FUTURE
ADVANCE SHALL NOT BE DEEMED TO ESTABLISH ANY COURSE OF DEALING
OR TO BIND LENDER TO MAKE ANY FURTHER FUTURE ADVANCES. THE
THIRD CONSOLIDATION NOTE IS PAYABLE IN FULL ON MAY 19,1997.
AT THAT TIME YOU MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF
THE THIRD CONSOLIDATION NOTE AND UNPAID INTEREST THEN DUE.
LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LINE OF CREDIT
NOTE THAT TIME.
9. Novation. It is the intent of the parties that this
instrument shall not constitute a novation and shall in no way
adversely affect the lien priority of the Security Instruments
referred to above.
10. Costs. Borrower shall pay all costs of the Third
Future Advance, except legal fees, to include without
limitation documentary stamp tax. Such costs shall be due at
closing hereunder and the payment thereof shall be a condition
precedent to Lender's duties hereunder. In the event it is
determined that additional costs relating to this transaction
are due, Borrower agrees to pay such costs immediately upon
demand.
11. Restated Credit Agreement. All disbursements made
hereunder shall be conditioned, upon compliance by the
Borrower, with the terms and conditions of the Restated Credit
Agreement, and such disbursements shall be made in accordance
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Future Advance, Consolidation & Modification 3<PAGE>
with the terms thereof.
12. Warranties and Representations. Borrower hereby
affirms, warrants and represents that:
a. all of the warranties and representations made
by Borrower in the Restated Credit Agreement, Line of Credit
Note, Third Consolidation Note, all Security Instruments, and
in any agreements, documents and instruments executed with
respect to any thereof, are true and correct as of the date
hereof;
b. the Restated Credit Agreement, Line of Credit
Note, Third Consolidation Note, all Security Instruments and
all agreements, documents and instruments executed with
respect to any thereof are in full force and effect as of the
date hereof, are enforceable according to their terms, and
there are no defenses to the collection by Lender of sums due
thereunder;
c. there is no default under the Restated Credit
Agreement, Line of Credit Note, any Security Instrument, or
any agreement, document or instrument executed with respect to
any thereof and no event has occurred which, with notice
and/or passage of time, would become an event of default under
the Restated Credit Agreement, Line of Credit Note, Third
Consolidation Note, any Security Instrument, or any agreement,
document or instrument executed with respect to any thereof;
and
d. there is no claim, cause of action or set-off
against Lender arising from any of the Security Instruments
and Borrower hereby waives and releases Lender from any and
all claims which may have arisen pursuant to the Security
Instruments.
13. Miscellaneous.
a. Paragraph headings used herein are for
convenience only and shall not be construed as controlling the
scope of any provision hereof.
b. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
c. Time is of the essence of this Agreement.
d. As used herein, the neuter gender shall include
the masculine and feminine genders, and vice versa, and the
singular the plural, and vice versa, as the context demands.
e. In the event that Lender resorts to litigation
to enforce this Agreement, all costs of such litigation, to
include reasonable attorneys' fees through all trials, appeals
and proceedings, to include, without limitation, any
proceedings pursuant to the bankruptcy laws of the United
States, shall be paid by Borrower.
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Future Advance, Consolidation & Modification 4<PAGE>
f. This Agreement shall inure to the benefit of
and be binding upon the parties hereto as well as their
successors and assigns.
g. LENDER AND BORROWER AND ANY OTHER PERSON LIABLE
FOR PAYMENT HEREOF, BY EXECUTING THIS AGREEMENT OR ANY OTHER
DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR RIGHTS TO A
TRIAL BY JURY IN ANY ACTION WHETHER ARISING IN CONTRACT OR
TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATING TO THE
AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDER'S EXTENDING CREDIT TO BORROWER AND NO WAIVER OR
LIMITATION OF LENDER'S RIGHTS HEREUNDER SHALL BE EFFECTIVE
UNLESS IN
WRITING AND MANUALLY SIGNED ON LENDER'S BEHALF.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement under seal as of the day and year first above
written.
Signed, sealed and delivered
in the presence of:
/s/Diana DeFerrari
(Signature of Witness)
Diana DeFerrari
(Print Name of Witness)
/s/Jill R. Street
(Signature of Witness)
Jill R. Street
(Print Name of Witness)
BORROWER:
PLASMA-THERM, INC., a Florida corporation
By: /s/Ronald S. Deferrari
Ronald S. Deferrari, President
(CORPORATE SEAL)
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Future Advance, Consolidation & Modification 5<PAGE>
/s/Sadahri W. Berry
(Signature of Witness)
Sadahri W. Berry
(Print Name of Witness)
/s/Jill R. Street
(Signature of Witness)
Jill R. Street
(Print Name of Witness)
LENDER:
NATIONSBANK OF FLORIDA, N.A., a
national banking association
By: /s/Penny H. White
Penny H. White
Its Vice President
(CORPORATE SEAL)
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this
17 day of November, 1995, by RONALD S. DEFERRARI, as the
President of PLASMA-THERM, INC., a Florida corporation, on
behalf of the corporation. He XX is personally known to me or
has produced
as identification.
(SEAL)
/s/Jill R. Street
Jill R. Street
(Print Name of Notary Public)
Notary Public
My Commission Expires:
NOTARY PUBLIC
STATE OF FLORIDA
"OFFICIAL SEAL"
Jill R. Street
My Commission Expires 4/26/96
Commission #CC 196605
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Future Advance, Consolidation & Modification 6<PAGE>
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Future Advance, Consolidation & Modification 7<PAGE>
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me this
17 day of November, 1995, by PENNY H. WHITE, as Vice President
of NATIONSBANK OF FLORIDA, N.A., a national banking
association, on behalf of the association. She XX is
personally known to me or has produced
as identification.
(SEAL)
/s/Jill R. Street
Jill R. Street
(Print Name of Notary Public)
Notary Public
My Commission Expires:
NOTARY PUBLIC
STATE OF FLORIDA
"OFFICIAL SEAL"
Jill R. Street
My Commission Expires 4/26/96
Commission #CC 196605
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Future Advance, Consolidation & Modification 8<PAGE>
THIRD
FUTURE ADVANCE PROMISSORY NOTE
$1,000,000.00 St. Petersburg, Florida
Executed November 17, 1995
Effective November 17, 1995
FOR VALUE RECEIVED, the undersigned PLASMA-THERM, INC.,
a Florida corporation (hereinafter called "Borrower") promises
to pay to the order of NATIONSBANK OF FLORIDA, N.A., a
national banking association (hereinafter sometimes referred
to as "Lender" and together with any holder hereof called
"Holder"), at 400 N. Ashley Drive, 2nd Floor, Tampa, Florida
33602, or at such other place as Holder may from time to time
designate in writing, without grace, UPON DEMAND the principal
sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00), or so
much thereof as has been advanced hereunder, together with
interest on the unpaid balance of the principal (the "loan")
from time to time outstanding from the date of each advance of
principal at the rate for each day equal to the Prime Rate per
annum. In no event, however, shall the interest rate be
greater than the maximum rate of interest allowed to be
contracted for by applicable law.
Principal and interest shall be due and payable UPON
DEMAND.
Interest owing under this Note shall be computed on the
basis of a 360-day year for actual days lapsed.
As used herein, "Prime Rate" shall refer to the
fluctuating rate of interest which is established by
NATIONSBANK OF FLORIDA, N.A., a national banking association,
from time to time as being its Prime Rate whether or not such
rate shall be otherwise published. Such Prime Rate is
established by NATIONSBANK OF FLORIDA, N.A., a national
banking association, as an index or base rate and may or may
not at any time be the best or lowest rate charged by
NATIONSBANK OF FLORIDA, N.A., a national banking association
on any loan. Changes in the Prime Rate shall be effective on
the effective date announced by NATIONSBANK OF FLORIDA, N.A.,
a national banking association.
Borrower may prepay all or part of the principal
balance at any time without penalty. Such prepayment shall be
accompanied by payment of any unpaid interest accrued to the
time of such prepayment. If this Note provides for
installment payments of principal, prepayment of principal
payments shall apply in the inverse order such installment
payments are due, applying first to the last principal
installment due hereunder. All payments made hereunder shall
at Holder's option first be applied to late charges, then to
accrued interest, then to principal.
Permitted partial prepayments shall not affect or vary
the duty of Borrower to pay all obligations when due, and they
shall not affect or impair the right of Holder to pursue all
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EXHIBIT "A"
Future Advance, Consolidation & Modification Page 1 of 4<PAGE>
remedies available to it hereunder, under the security
instruments securing this indebtedness, or under any other
loan documents or guaranty executed in connection herewith.
This Note is secured by certain Security Instruments
described in the Future Advance, Consolidation and
Modification Agreement dated of even date herewith, which
together with the Amended and Restated Revolving Credit
Agreement dated as of January 19, 1995, as amended by
Amendment thereto dated August 14, 1995 and Second Amendment
dated of even date herewith, the Commitment Letters of
November 8, 1995, December 8, 1994, March 28, 1994 (as amended
May 9, 1994), November 21, 1991, May 28, 1993 and all other
agreements, instruments and documents delivered in connection
herewith, are hereinafter sometimes referred to as the "Loan
Documents."
This Note and the Loan Documents have been executed and
delivered in the State of Florida, and their terms and
provisions are to be governed by and construed under the laws
of the State of Florida and of the United States of America,
and the rules and regulations promulgated under the authority
thereof. It is the intent of this Note that such laws shall
be interpreted in such a manner that the maximum rate of
interest allowed to be contracted for by applicable law as
changed from time to time which is applicable to this Note
(hereinafter called the "Maximum Rate") be as great as
possible. The interest due hereunder is being charged
pursuant to the provisions of The Florida Banking Code (as
defined by statute), and Chapter 687 Florida Statutes. In the
event that any law, rule or regulation of the United States of
America or the State of Florida, as changed from time to time,
allows interest to be contracted for at a rate that is greater
than the rate permitted by The Florida Banking Code (as
defined by statute), and Chapter 687, Florida Statutes, then
such law, rule or regulation shall apply. References to laws,
statutes, rules and regulations in this Note refer to such as
amended from time to time.
In no event shall Holder have the right to charge or
collect, nor shall Borrower be required or obligated to pay,
interest or payments in the nature of interest, which would
result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment
which is interest or in the nature of interest is made by
Borrower or received by Holder which would result in the rate
of interest being charged or collected by Holder being in
excess of the Maximum Rate, then the portion of any such
payment which causes the rate of interest being charged or
collected by Holder to exceed the Maximum Rate (hereinafter
called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Holder in writing that
Borrower elects to have such excess sum returned to Borrower,
such excess sum shall be returned to Borrower. In the event
that any such overcharge is discovered after this Note has
been paid in full, then the amount of such excess sum shall be
returned to Borrower together with interest thereon from the
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EXHIBIT "A"
Future Advance, Consolidation & Modification Page 2 of 4<PAGE>
date such excess sum was paid or collected at the same rate as
was due Holder during such period under the terms of this
Note. All excess sums credited to principal shall be credited
as of the date paid to Holder. It is recognized by Borrower
that the Maximum Rate may vary from time to time, and that
from time to time the Maximum Rate may be uncertain.
Therefore, Holder may seek judicial determination of the
applicable rate of interest. In such event, the withholding
of credit to principal or the withholding of payment to
Borrower of any proposed excess sum during the period of
judicial determination (including all appeals) shall not be
deemed a breach of the obligations of Holder hereunder or of
applicable law. It is the intent of Holder to conform
strictly to the limitations of applicable laws governing the
charging and collection of interest as changed from time to
time.
The "Default Interest Rate" shall be a rate equal to
three percent (3%) above the rate of interest required to be
paid by the terms of this Note. In the event no specific
Maximum Rate is applicable, the Maximum Rate hereunder shall
be twenty-five percent (25%) per annum.
Upon a failure by Borrower to repay principal upon
demand by Holder, the entire unpaid principal balance shall
bear interest at the "Default Interest Rate." In addition to
the rights described in this paragraph, Holder shall have the
right to exercise all other rights or remedies provided by law
or at equity or as provided in any of the Loan Documents and
shall specifically have the right to recover all damages
resulting from such default including, without limitation, the
right to recover the payment of all amounts owing to Holder.
Exercise of any of these options shall be without notice to
Borrower, notice of such exercise being hereby expressly
waived.
Time is of the essence hereunder. In the event that
this Note is collected by law or through attorneys at law, or
under advice therefrom, Borrower and any other person liable
for payment hereof hereby, severally and jointly, agree to pay
all costs of collection, including reasonable attorneys' fees
and costs (including charges for paralegals and others working
under the direction or supervision of Holder's attorneys) and
all sales or use taxes thereon, whether or not suit is
brought, and whether incurred in connection with collection,
trial, appeal, bankruptcy or other creditors' proceedings or
otherwise, and, if Holder's attorneys shall include employees
of Holder or of any person controlling, controlled by or under
common control with Holder, such reasonable attorney's fees
shall include costs allocated by Holder's or such person's
internal legal department.
Borrower authorizes Holder, from time to time, to debit
any account that Borrower may have with Holder, for any
payment of principal or interest due or past due hereunder for
the amount of such payment of principal or interest. Exercise
of this right shall be optional with Holder and the provisions
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EXHIBIT "A"
Future Advance, Consolidation & Modification Page 3 of 4<PAGE>
of this paragraph shall not be construed as releasing Borrower
from the obligation to make payments of principal or interest
according to the terms hereof.
The remedies of Holder as provided herein and in the
Loan Documents shall be cumulative and concurrent, and may be
pursued singularly, successively, or together, at the sole
discretion of Holder. 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 the same, such waiver or release to be effected
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.
All persons (including corporations) now or at any time
liable, whether primarily or secondarily, for the payment of
the indebtedness hereby evidenced, for themselves, their
heirs, legal representatives, successors and assigns,
respectively, hereby (a) expressly waive any presentment,
demand for payment, notice of dishonor, protest, notice of
nonpayment or protest, all other forms of notice whatsoever,
and diligence in collection; (b) consent that Holder may, from
time to time and without notice to them or demand, (i) extend,
rearrange, renew or postpone any or all payments and/or (ii)
release, exchange, add to or substitute all or any part of the
collateral for this Note, without in any way modifying,
altering, releasing, affecting or limiting their respective
liability or the lien of any security instrument; (c) agree
that Holder, in order to enforce payment of this Note against
them shall not be required first to institute any suit or to
exhaust any of its remedies against Borrower or any other
person or party or to attempt to realize on the collateral for
this Note.
BORROWER AND ANY OTHER PERSON LIABLE FOR PAYMENT
HEREOF, BY EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING
SUCH LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY
ACTION WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR
OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR HOLDER'S EXTENDING CREDIT TO
BORROWER AND NO WAIVER OR LIMITATION OF HOLDER'S RIGHTS
HEREUNDER SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY
SIGNED ON HOLDER'S BEHALF.
Borrower acknowledges that the above paragraph has been
expressly bargained for by Holder as part of the loan
evidenced hereby and that, but for Borrower's agreement and
the agreement of any other person liable for payment hereof
thereto, Holder would not have extended the loan for the term
and with the interest rate provided herein.
If more than one party shall execute this Note, the
term "Borrower", as used herein, shall mean all parties
signing this Note and each of them, who shall be jointly and
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EXHIBIT "A"
Future Advance, Consolidation & Modification Page 4 of 4<PAGE>
severally obligated hereunder. In this Note, whenever the
context so requires, the neuter gender includes the feminine
and/or masculine, as the case may be, and the singular number
includes the plural.
IN WITNESS WHEREOF, Borrower has caused this Note to be
executed in its name on the day and year first above written.
PLASMA-THERM, INC., a Florida
corporation ("Borrower")
Ronald S. Deferrari,
President
(CORPORATE SEAL)
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EXHIBIT "A"
Future Advance, Consolidation & Modification Page 5 of 4<PAGE>
THIRD
CONSOLIDATION LINE OF CREDIT PROMISSORY NOTE
$3,000,000.00 St. Petersburg, Florida
Executed November 17, 1995
Effective November 17, 1995
FOR VALUE RECEIVED, the undersigned PLASMA-THERM, INC.,
a Florida corporation (hereinafter called "Borrower") promises
to pay to the order of NATIONSBANK OF FLORIDA, N.A., a
national banking association (hereinafter sometimes referred
to as "Lender" and together with any holder hereof called
"Holder"), at 400 N. Ashley Drive, 2nd Floor, Tampa, Florida
33602, or at such other place as Holder may from time to time
designate in writing, the principal sum of THREE MILLION AND
NO/100 DOLLARS ($3,000,000.00), or so much thereof as has been
advanced hereunder, together with interest on the unpaid
balance of the principal (the "loan") from time to time
outstanding from the date of each advance of principal at the
rate for each day equal to the Prime Rate per annum. In no
event, however, shall the interest rate be greater than the
maximum rate of interest allowed to be contracted for by
applicable law.
Principal and interest shall be due and payable as
follows:
a.Accrued interest only, as stated above, shall be
payable monthly commencing on December 19, 1995, and
continuing on the same day of each month until May 19, 1997,
at which time all outstanding indebtedness, whether principal,
accrued interest or otherwise, shall be due and payable in
full.
b.The principal amount evidenced hereby may be
borrowed (and to the extent any principal amount advanced
hereunder is repaid by Borrower, such sum may be borrowed
again) prior to May 19, 1997, but only in accordance with the
terms of that certain Amended and Restated Revolving Credit
Agreement dated January 19, 1995, as amended by Amendment
thereto dated August 14, 1995 and Second Amendment dated of
even date herewith, and only if this Note is not in default as
hereinafter defined. At no time, however, shall the principal
balance outstanding hereunder exceed THREE MILLION AND NO/100
DOLLARS ($3,000,000.00).
c.For a period of sixty (60) consecutive days
during the term of the loan, Borrower shall repay the
principal below a sum of $100.00.
Interest owing under this Note shall be computed on the
basis of a 360-day year.
As used herein, "Prime Rate" shall refer to the
fluctuating rate of interest which is established by
NATIONSBANK OF FLORIDA, N.A., a national banking association,
from time to time as being its Prime Rate whether or not such
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EXHIBIT "B"
Future Advance, Consolidation & Modification Page 1 of 5<PAGE>
rate shall be otherwise published. Such Prime Rate is
established by NATIONSBANK OF FLORIDA, N.A., a national
banking association, as an index or base rate and may or may
not at any time be the best or lowest rate charged by
NATIONSBANK OF FLORIDA, N.A., a national banking association
on any loan. Changes in the Prime Rate shall be effective on
the effective date announced by NATIONSBANK OF FLORIDA, N.A.,
a national banking association.
Borrower may prepay all or part of the principal
balance at any time without penalty. Such prepayment shall be
accompanied by payment of any unpaid interest accrued to the
time of such prepayment. All payments made hereunder shall at
Holder's option first be applied to late charges, then to
accrued interest, then to principal.
Permitted partial prepayments shall not affect or vary
the duty of Borrower to pay all obligations when due, and they
shall not affect or impair the right of Holder to pursue all
remedies available to it hereunder, under the security
instruments securing this indebtedness, or under any other
loan documents or guaranty executed in connection herewith.
If any event of default set forth in this Note or in
any of the Loan Documents (as defined herein) shall occur, or
in the event Lender has, in accordance with the term of the
Note or the Loan Documents, made a demand for repayment of the
indebtedness evidenced by this Note and the Loan Documents,
Lender, at its option, may notify Borrower that its commitment
to lend under this line of credit is terminated and Lender
shall be relieved of all obligations to lend any further sums
thereafter to Borrower.
This Note is secured by certain Security Instruments
described in the Future Advance, Consolidation and
Modification Agreement dated of even date herewith, which
together with the Amended and Restated Revolving Credit
Agreement dated January 19, 1995, as amended by Amendment
thereto dated August 14, 1995 and Second Amendment dated of
even date herewith, the Commitment Letters of November 8,
1995, December 8, 1994, March 28, 1994 (as amended May 9,
1994), November 21, 1991, May 28, 1993 and all other
agreements, instruments and documents delivered in connection
herewith, are hereinafter sometimes referred to as the "Loan
Documents."
This Note and the Loan Documents have been executed and
delivered in the State of Florida, and their terms and
provisions are to be governed by and construed under the laws
of the State of Florida and of the United States of America,
and the rules and regulations promulgated under the authority
thereof. It is the intent of this Note that such laws shall
be interpreted in such a manner that the maximum rate of
interest allowed to be contracted for by applicable law as
changed from time to time which is applicable to this Note
(hereinafter called the "Maximum Rate") be as great as
possible. The interest due hereunder is being charged
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EXHIBIT "B"
Future Advance, Consolidation & Modification Page 2 of 5<PAGE>
pursuant to the provisions of The Florida Banking Code (as
defined by statute), and Chapter 687 Florida Statutes. In the
event that any law, rule or regulation of the United States of
America or the State of Florida, as changed from time to time,
allows interest to be contracted for at a rate that is greater
than the rate permitted by The Florida Banking Code (as
defined by statute), and Chapter 687, Florida Statutes, then
such law, rule or regulation shall apply. References to laws,
statutes, rules and regulations in this Note refer to such as
amended from time to time.
In the event that any payment of principal or interest
is not made within ten (10) days after the same become due
hereunder, it is hereby agreed that Holder shall have the
option of collecting a late charge equal to four percent (4%)
of the amount of each such delinquent payment. Said late
charge and/or interest shall be immediately due and payable in
full on demand by Holder.
In no event shall Holder have the right to charge or
collect, nor shall Borrower be required or obligated to pay,
interest or payments in the nature of interest, which would
result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment
which is interest or in the nature of interest is made by
Borrower or received by Holder which would result in the rate
of interest being charged or collected by Holder being in
excess of the Maximum Rate, then the portion of any such
payment which causes the rate of interest being charged or
collected by Holder to exceed the Maximum Rate (hereinafter
called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Holder in writing that
Borrower elects to have such excess sum returned to Borrower,
such excess sum shall be returned to Borrower. In the event
that any such overcharge is discovered after this Note has
been paid in full, then the amount of such excess sum shall be
returned to Borrower together with interest thereon from the
date such excess sum was paid or collected at the same rate as
was due Holder during such period under the terms of this
Note. All excess sums credited to principal shall be credited
as of the date paid to Holder. It is recognized by Borrower
that the Maximum Rate may vary from time to time, and that
from time to time the Maximum Rate may be uncertain.
Therefore, Holder may seek judicial determination of the
applicable rate of interest. In such event, the withholding
of credit to principal or the withholding of payment to
Borrower of any proposed excess sum during the period of
judicial determination (including all appeals) shall not be
deemed a breach of the obligations of Holder hereunder or of
applicable law. It is the intent of Holder to conform
strictly to the limitations of applicable laws governing the
charging and collection of interest as changed from time to
time.
The "Default Interest Rate" shall be a rate equal to
three percent (3%) above the rate of interest required to be
paid by the terms of this Note. In the event no specific
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EXHIBIT "B"
Future Advance, Consolidation & Modification Page 3 of 5<PAGE>
Maximum Rate is applicable, the Maximum Rate hereunder shall
be twenty-five percent (25%) per annum.
Holder shall have the optional right to declare the
amount of the total unpaid balance hereof to be due and
forthwith payable in advance of the maturity date of any sum
due or installment, as fixed herein, upon a default. This
Note shall be deemed to be in default upon the failure of
Borrower to pay, within seven (7) days after the same become
due, any of the installments of interest or principal, or upon
the occurrence of any default under or failure to perform by
any party (other than Holder) in accordance with any of the
terms and conditions of this Note or of any of the Loan
Documents after the expiration of any applicable grace period,
or upon the default under or the failure of Borrower to
perform in accordance with any and all obligations,
instruments or documents between Borrower and Lender after any
applicable grace period. Upon exercise of any of these
options by Holder, the entire unpaid principal balance shall
bear interest at the "Default Interest Rate." In addition to
the rights described in this paragraph, Holder shall have the
right to exercise all other rights or remedies provided by law
or at equity or as provided in any of the Loan Documents and
shall specifically have the right to recover all damages
resulting from such default including, without limitation, the
right to recover the payment of all amounts owing to Holder.
Exercise of any of these options shall be without notice to
Borrower, notice of such exercise being hereby expressly
waived.
Time is of the essence hereunder. In the event that
this Note is collected by law or through attorneys at law, or
under advice therefrom, Borrower and any other person liable
for payment hereof hereby, severally and jointly, agree to pay
all costs of collection, including reasonable attorneys' fees
and costs (including charges for paralegals and others working
under the direction or supervision of Holder's attorneys) and
all sales or use taxes thereon, whether or not suit is
brought, and whether incurred in connection with collection,
trial, appeal, bankruptcy or other creditors' proceedings or
otherwise, and, if Holder's attorneys shall include employees
of Holder or of any person controlling, controlled by or under
common control with Holder, such reasonable attorney's fees
shall include costs allocated by Holder's or such person's
internal legal department.
Borrower authorizes Holder, when payment is due, to set
off for any payment of principal or interest due or past due
hereunder for the amount of such payment of principal or
interest. Exercise of this right shall be optional with
Holder and the provisions of this paragraph shall not be
construed as releasing Borrower from the obligation to make
payments of principal or interest according to the terms
hereof.
The remedies of Holder as provided herein and in the
Loan Documents shall be cumulative and concurrent, and may be
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EXHIBIT "B"
Future Advance, Consolidation & Modification Page 4 of 5<PAGE>
pursued singularly, successively, or together, at the sole
discretion of Holder. 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 the same, such waiver or release to be effected
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.
All persons (including corporations) now or at any time
liable whether primarily or secondarily, for the payment of
the indebtedness hereby evidenced, for themselves, their
heirs, legal representatives, successors and assigns,
respectively, hereby (a) expressly waive any presentment,
demand for payment, notice of dishonor, protest, notice of
nonpayment or protest, all other forms of notice whatsoever,
and diligence in collection; (b) consent that Holder may, from
time to time and without notice to them or demand, (i) extend,
rearrange, renew or postpone any or all payments and/or (ii)
release, exchange, add to or substitute all or any part of the
collateral for this Note, without in any way modifying,
altering, releasing, affecting or limiting their respective
liability or the lien of any security instrument; (c) agree
that Holder, in order to enforce payment of this Note against
them shall not be required first to institute any suit or to
exhaust any of its remedies against Borrower or any other
person or party or to attempt to realize on the collateral for
this Note.
BORROWER AND ANY OTHER PERSON LIABLE FOR PAYMENT
HEREOF, BY EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING
SUCH LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY
ACTION WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR
OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR HOLDER'S EXTENDING CREDIT TO
BORROWER AND NO WAIVER OR LIMITATION OF HOLDER'S RIGHTS
HEREUNDER SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY
SIGNED ON HOLDER'S BEHALF.
Borrower acknowledges that the above paragraph has been
expressly bargained for by Holder as part of the loan
evidenced hereby and that, but for Borrower's agreement and
the agreement of any other person liable for payment hereof
thereto, Holder would not have extended the loan for the term
and with the interest rate provided herein.
If more than one party shall execute this Note, the
term "Borrower", as used herein, shall mean all parties
signing this Note and each of them, who shall be jointly and
severally obligated hereunder. In this Note, whenever the
context so requires, the neuter gender includes the feminine
and/or masculine, as the case may be and the singular number
includes the plural.
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EXHIBIT "B"
Future Advance, Consolidation & Modification Page 5 of 5<PAGE>
IN WITNESS WHEREOF Borrower has caused this Note to be
executed in its name on the day and year first above written.
PLASMA-THERM, INC., a Florida
corporation ("Borrower")
By:
Ronald S. Deferrari,
President
(CORPORATE SEAL)
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EXHIBIT "B"
Future Advance, Consolidation & Modification Page 6 of 5<PAGE>
SECOND AMENDMENT
(TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT)
SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT BETWEEN PLASMA-THERM, INC., A FLORIDA CORPORATION
("BORROWER"), AND NATIONSBANK OF FLORIDA, N.A., A NATIONAL
BANKING ASSOCIATION ("LENDER"), DATED JANUARY 19, 1995
("CREDIT AGREEMENT").
WHEREAS, Borrower and Lender entered into the Credit
Agreement on January 19, 1995.
WHEREAS, Borrower and Lender entered into an Amendment to
the Credit Agreement on August 14, 1995 ("First Amendment").
WHEREAS, on the date hereof, Lender has extended to
Borrower an additional advance under the Line Loan (as said
term is defined in the Credit Agreement) in the amount of ONE
MILLION AND NO/100 DOLLARS ($1,000,000.00) (the "Third Future
Advance"), which Third Future Advance has been consolidated
with the Line Note (as said term is defined in the Credit
Agreement) pursuant to the terms of that certain Future
Advance, Consolidation and Modification Agreement dated of
even date herewith.
WHEREAS, on the date hereof, Lender has also agreed to
allow Borrower to renew its $500,000.00 revolving line of
credit for the issuance of standby letters of credit ("Letter
of Credit Line").
WHEREAS, Borrower and Lender desire to modify some of the
terms and conditions set forth in the Credit Agreement, affirm
that the terms of the Credit Agreement apply with full force
and effect to the Third Future Advance and the renewal of the
Letter of Credit Line, and otherwise ratify and reaffirm the
terms and conditions of the Credit Agreement.
NOW, THEREFORE, it is agreed as follows:
1. Section 1.v. of the Credit Agreement is hereby
amended to read as follows:
v. "Line Commitment" shall mean the
maximum amount of the Letter of Credit
Line and the Line Loan.
2. Section 1.x. of the Credit Agreement is hereby
amended to substitute as Exhibit "A-1" the Third Consolidation
Line of Credit Promissory Note which is attached hereto and
made a part hereof, which note of Borrower payable to the
order of Lender shall from this date forward be the "Line
Note" referred to in the Credit Agreement.
3. The first sentence of Section 2, I.a. of the Credit
Agreement is hereby amended to read as follows:
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Second Amendment<PAGE>
Subject to the terms and conditions stated
herein, Lender may in its discretion lend
to Borrower the lesser of i) the principal
sum of THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) or ii) the Borrowing Base
as determined by Lender in accordance with
Subsection 2, I.b. below.
4. Section 2, II.d. of the Credit Agreement is hereby
amended to change the expiration date of the Letter of Credit
Line to May 19, 1997.
5. Section 12.o. of the Credit Agreement is hereby
amended to change the address of Lender to the following
address:
400 N. Ashley Drive, 2nd Floor
Tampa, FL 33602
Attn: James E. Harden, Jr., Vice President
Telephone: 813-224-5147
Telecopy: 813-224-5770
6. Exhibit "C" of the Credit Agreement is hereby
amended to change the dollar amount shown in line item (K)
from $2,500,000.00 to $3,500,000.00.
7. Lender and Borrower hereby agree that all terms and
conditions set forth in the Credit Agreement, as amended by
the First Amendment and this Second Amendment, shall apply
with full force and effect to the Third Future Advance as if
the Third Future Advance had been extended on the date of the
Credit Agreement and specifically referred to in the Credit
Agreement.
8. Except as otherwise set forth herein, all terms,
conditions and covenants of the Credit Agreement and First
Amendment shall remain the same and shall be fully binding
upon and enforceable by the Lender and Borrower pursuant to
their terms.
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Second Amendment 2<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have executed
this Second Amendment the day and year first above written.
Signed, sealed and delivered
in the presence of:
PLASMA-THERM, INC., a Florida
corporation
/s/Diana DeFerrari By: /s/Ronald S. Deferrari
(Signature of Witness) Ronald S. Deferrari
Diana DeFerrari President
(Print Name of Witness)
/s/Jill R. Street (CORPORATE SEAL)
(Signature of Witness)
Jill R. Street
(Print Name of Witness)
NATIONSBANK OF FLORIDA, N.A., a
national banking association
/s/Diana DeFerrari By: /s/Penny White
(Signature of Witness) Penny H. White
Diana DeFerrari Its Vice President
(Print Name of Witness)
(CORPORATE SEAL)
/s/Jill R. Street
(Signature of Witness)
Jill R. Street
(Print Name of Witness)
c:\wp50\NBPTLOC.005\95.5442\111495\NBMISC#17\MJC\MS
Second Amendment 3<PAGE>
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me
this 17 day of November, 1995, by RONALD S. DEFERRARI, as
the President of PLASMA-THERM, INC., a Florida corporation, on
behalf of the corporation. He XX is personally known to me or
has produced as
identification.
/s/Jill R. Street
Jill R. Street
(SEAL) (Print Name of Notary Public)
Notary Public
My Commission Expires:
NOTARY PUBLIC
STATE OF FLORIDA
"OFFICIAL SEAL"
Jill R. Street
My Commission Expires 4/26/96
Commission #CC 196605
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me
this 17 day of November, 1995, by PENNY H. WHITE, as the
Vice President of NATIONSBANK OF FLORIDA, N.A., a national
banking association, on behalf of the association. She
is personally known to me or has produced drivers
license as identification.
/s/Jill R. Street
Jill R. Street
(SEAL) (Print Name of Notary Public)
Notary Public
My Commission Expires:
NOTARY PUBLIC
STATE OF FLORIDA
"OFFICIAL SEAL"
Jill R. Street
My Commission Expires 4/26/96
Commission #CC 196605
c:\wp50\NBPTLOC.005\95.5442\111495\NBMISC#17\MJC\MS
Second Amendment 4<PAGE>
AMENDMENT TO AMENDED AND RESTATED SECURITY AGREEMENT
AMENDMENT TO AMENDED AND RESTATED SECURITY AGREEMENT
BETWEEN PLASMA-THERM, INC., A FLORIDA CORPORATION (THE
"DEBTOR"), AND NATIONSBANK OF FLORIDA, N.A., A NATIONAL
BANKING ASSOCIATION ("SECURED PARTY"), DATED JANUARY 19, 1995
("SECURITY AGREEMENT").
WHEREAS, Debtor and Secured Party entered into the
Security Agreement on January 19, 1995.
WHEREAS, on the date hereof, Secured Party has increased
the Line of Credit Note (as said term is defined in the
Security Agreement) by the amount of ONE MILLION AND NO/100
DOLLARS ($1,000,000.00) (the "Third Future Advance"), which
Third Future Advance has been consolidated with the Line of
Credit Note pursuant to the terms of that certain Future
Advance, Consolidation and Modification Agreement dated of
even date herewith.
WHEREAS, on the date hereof, Secured Party has also
agreed to allow Debtor to renew the Letter of Credit Line (as
said term is defined in the Security Agreement).
WHEREAS, Debtor and Secured Party desire to modify some
of the terms and conditions set forth in the Security
Agreement, affirm that the terms of the Security Agreement
apply with full force and effect to the Third Future Advance
and the renewal of the Letter of Credit Line, and otherwise
ratify and reaffirm the terms and conditions of the Security
Agreement.
NOW, THEREFORE, it is agreed as follows:
1. The address of the Secured Party contained in the
first paragraph of the Security Agreement is hereby changed
to:
400 N. Ashley Drive, 2nd Floor
Tampa, Florida 33602
2. The address of the Secured Party contained in
Section 9 of the Security Agreement is also changed as
follows:
400 N. Ashley Drive, 2nd Floor
Tampa, Florida 33602
Attn: James E. Harden, Jr., Vice President
Telephone: 813-224-5147
Telecopy: 813-224-5770
3. Section 2(b) of the Security Agreement is hereby
deleted in its entirety and the following is inserted in lieu
thereof:
c:\wp50\NBPTLOC.006\95.5442\111495\NBMISC#17\MJC\MS
Amendment to Restated Security Agreement<PAGE>
(b) Third Consolidation Line of Credit
Promissory Note dated November 17, 1995 in
the original principal amount of
$3,000,000.00 (the "Line of Credit Note");
4. Secured Party and Debtor hereby agree that all terms
and conditions set forth in the Security Agreement, as amended
by this Amendment, shall apply with full force and effect to
the Third Future Advance as if the Third Future Advance has
been extended on the date of the Security Agreement and
specifically referred to in the Security Agreement.
5. Except as otherwise set forth herein, all terms,
conditions and covenants of the Security Agreement shall
remain the same and shall be fully binding upon and
enforceable by the Secured Party and Debtor pursuant to their
terms.
IN WITNESS WHEREOF, Debtor and Secured Party have
executed this Amendment the day and year first above written.
Signed, sealed and delivered
in the presence of:
PLASMA-THERM, INC., a Florida
corporation
/s/Diana DeFerrari By: /s/Ronald S. Deferrari
(Signature of Witness) Ronald S. Deferrari
Diana DeFerrari President
(Print Name of Witness)
/s/Jill R. Street (CORPORATE SEAL)
(Signature of Witness)
Jill R. Street
(Print Name of Witness)
c:\wp50\NBPTLOC.006\95.5442\111495\NBMISC#17\MJC\MS
Amendment to Restated Security Agreement 2<PAGE>
NATIONSBANK OF FLORIDA, N.A., a
national banking association
/s/Sadahri W. Berry By: /s/Penny White
(Signature of Witness) Penny H. White
Sadahri W. Berry Its Vice President
(Print Name of Witness)
(CORPORATE SEAL)
/s/Jill R. Street
(Signature of Witness)
Jill R. Street
(Print Name of Witness)
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me
this 17 day of November, 1995, by RONALD S. DEFERRARI, as the
President of PLASMA-THERM, INC., a Florida corporation, on
behalf of the corporation. He XX is personally known to me or
has produced as identification.
/s/Jill R. Street
Jill R. Street
(SEAL) (Print Name of Notary Public)
Notary Public
My Commission Expires:
NOTARY PUBLIC
STATE OF FLORIDA
"OFFICIAL SEAL"
Jill R. Street
My Commission Expires 4/26/96
Commission #CC 196605
c:\wp50\NBPTLOC.006\95.5442\111495\NBMISC#17\MJC\MS
Amendment to Restated Security Agreement 3<PAGE>
STATE OF FLORIDA )
COUNTY OF PINELLAS )
The foregoing instrument was acknowledged before me
this 17 day of November, 1995, by PENNY H. WHITE, as the Vice
President of NATIONSBANK OF FLORIDA, N.A., a national banking
association, on behalf of the association. She is
personally known to me or XX has produced drivers license
as identification.
/s/Jill R. Street
Jill R. Street
(SEAL) (Print Name of Notary Public)
Notary Public
My Commission Expires:
NOTARY PUBLIC
STATE OF FLORIDA
"OFFICIAL SEAL"
Jill R. Street
My Commission Expires 4/26/96
Commission #CC 196605
c:\wp50\NBPTLOC.006\95.5442\111495\NBMISC#17\MJC\MS
Amendment to Restated Security Agreement 4<PAGE>
DISTRIBUTORSHIP AGREEMENT
Agreement made this 1st day of August, 1995 by and between
Plasma-Therm, Inc., a Florida corporation ("Plasma-Therm") USA;
and Hakuto Co., Ltd., a corporation organized under the laws of
Japan ("Distributor").
In consideration of the agreements contained herein and
intending to be legally bound hereby, Plasma-Therm and
Distributor do hereby agree as follows:
1. Product and Territory. Distributor is hereby appointed
by Plasma-Therm, as the exclusive distributor of Plasma-Therm's
standard, special versions and updated versions of its Complete
2800 ("2800") Inline Wafer Etch Systems, 790, Shuttelockr 700,
7000, and Versalocktm 700 series of plasma processing equipment
(collectively, the "Products") for the country of Japan.
a. Technology. Plasma-Therm's products employ
Reactive Ion Etching (RIE), Plasma Etching (PE), Plasma Enhanced
Chemical Vapor Deposition (PECVD), Electron Cyclotron Resonance
(ECR) and Inductively Coupled Plasma (ICP) technologies.
2. Best Efforts; No Competition. Distributor shall use
its best efforts to sell and promote the sale of the Products
within the Territory. Plasma-Therm will make its best efforts to
fulfill Distributor's purchase orders. It is further understood
that the Distributor will not market, distribute or manufacture
on a world wide basis, any product or technology that competes
with the Products during the life of this agreement (excluding
existing principles).
3. Pricing. Plasma-Therm shall sell and Distributor shall
purchase the Products at a price that equals 85% of Plasma-
Therm's U.S. list price and spare parts at a price that equals
70% of Plasma-Therm's U.S. list price. Special pricing on large
blanket orders will be considered. Therefore, the Distributor
may set its price according to what the market will bare;
however, the Distributor's pricing should not become excessive.
If the Distributor requests additional discounts from Plasma-
Therm, greater than 85% of Plasma-Therm's U.S. list price for the
Products and greater than 70% of Plasma-Therm's U.S. list price
for spare parts, the Distributor will provide selling and cost
price information to Plasma-Therm so that both parties may
cooperate to meet the customer's budget. Any changes in the list
price for such Products shall be determined solely by, and are
subject to the exclusive discretion of, Plasma-Therm.
Distributor shall be promptly notified in writing ninety (90)
days prior to any price changes. The cost of any discounts on
the Products that distributor provides to its customers shall be
borne solely by Distributor. Plasma-Therm, acting in its sole
discretion, shall have the right to reject any non-standard order
from Distributor. Plasma-Therm will consider special changes on
systems, provided they are submitted for approval at the
quotation stage. The terms of all sales by Plasma-Therm to
Distributor shall be ex-works. Plasma-Therm's factory charges
for all crating, handling, shipping costs, insurance, demurrage,
import duties and other taxes or the like to be paid by
Distributor. Risk of loss or damage of Products shall shift to
Distributor upon Plasma-Therm's delivery of Products to the
carrier. The terms of payment shall be net thirty (30) days from
shipment date with all payments to be made by wire transfer;
Title of equipment will pass to Distributor at ex-works
point.
If Distributor fails to comply with the terms of this
paragraph 3 within thirty (30) days following written notice from
Plasma-Therm of Distributor's failure to comply, this Agreement
shall terminate immediately upon written notice from Plasma-Therm
of such termination and all obligations due Plasma-Therm shall
become immediately due.
4. No Sales Outside Territory. Distributor agrees that it
will make no sales of the Products to customers located outside
of the Territory without the prior written consent of Plasma-
Therm, and shall refer all inquiries from prospective purchasers
located outside of the Territory to Plasma-Therm.
5. Term.
a) Initial Term. This Agreement shall be for an
initial term of two contract years commencing August 1, 1995 and
ending July 31, 1997, and for successive contract years
commencing August 1st thereafter until terminated.
(b) Termination. Unless terminated earlier by reason
of breach of contract, this Agreement shall terminate at the end
of the initial term or at the end of a subsequent contract year
upon 180 days or longer written notice prior to the expiration of
the initial term or expiration of any subsequent contract year.
This Agreement shall terminate after thirty (30) days written
notice in the event either Distributor or Plasma-Therm shall
become insolvent, or shall file a voluntary petition in
bankruptcy, or shall be adjudicated as a bankrupt pursuant to any
involuntary petition, or shall suffer appointment of a temporary
or permanent receiver, trustee, or custodian for all or a
substantial part of its assets which shall not be discharged
within thirty (30) days.
(c) Third Party Purchase. If either Plasma-Therm or
Distributor is purchased by a third party, this party must honor
this entire agreement.
6. Sales Requirement. Distributor is required to make a
$3,000,000 minimum purchase of Products for the first contract
year of this Agreement. Thereafter, no later than sixty (60)
days prior to the commencement of the subsequent contract year
and of each contract year thereafter, Plasma-Therm and
Distributor will mutually agree upon the minimum sales
requirement for such contract year. [If the parties cannot
agree, then the minimum sales requirement will be 100% of the
minimum sales requirement for the previous contract year.] The
Distributor may average any two successive years to reach the
minimum sales volume.
In addition to any other remedies herein contained, Plasma-
Therm shall be entitled to terminate this Agreement with ninety
(90) days written notice upon the failure of Distributor to
purchase the foregoing required minimum volume of Products.
7. Additional Obligations of Distributor
(a) The Distributor must purchase a Shuttlelockr 700,
RIE/PE plasma processing system for immediate installation into
its Applications/Demonstration laboratory. Additionally, the
Distributor must purchase and take delivery of a Versalocktm 700
RIE or PECVD system (single chamber) by August 1, 1996. Both
systems will be priced at 75% of U.S. list price and paid in full
by Distributor within thirty (30) days from date of shipment.
The Distributor is also required to sell and replace the
demonstration systems every thirty-six (36) months. When the
Distributor replaces the existing demonstration systems with new
systems, the Distributor will pay 75% of U.S. list price and pay
within thirty (30) days from date of shipment.
(b) Clean Room. Distributor shall be required, at all
times during the term of this Agreement, commencing, August 1,
1995, to maintain clean room facilities adequate for system
demonstrations and eventually the appropriate analytical
equipment, including but not limited to, a scanning electron
microscope to perform customer samples as business permits.
(c) Personnel. Commencing immediately, the
Distributor on a best effort basis shall at all times during the
term of this Agreement, employ an appropriate staff of process,
sales and service personnel, all of whom shall devote their full
time efforts to the servicing and sale of the Products. If
additional service and technical support is required, Plasma-
Therm will provide it on a case-by-case basis, and Distributor
shall pay the standard per diem rate, currently $1,000 a day plus
travel and expenses.
(d) Inventory. Distributor will purchase and maintain
sufficient spare parts inventory for the Products.
(e) No Modification. Unless it has obtained the prior
written consent of Plasma-Therm, Distributor may not sell any non-
standard version of any Product.
(f) No Publicity. No publicity, including any news
release regarding the execution of this Agreement or the
distributorship created by it, shall be authorized or released by
Distributor without the prior written consent of Plasma-Therm.
(g) Product Acceptance. Plasma-Therm will use its
existing test procedure as a standard form for product acceptance
if the Products are not custom made according to customer
specifications. If the Products are custom made to customer
specifications, then the Distributor shall conduct the final
acceptance test after installation of the Products at the
customer's location. Distributor will inform Plasma-Therm of the
customer's date of acceptance for warranty credit purposes.
8. Provision for Product Warranties and Field Service.
Plasma-Therm warrants to Distributor and to end user customers of
the Products that the Products shall be free from defects in
material and workmanship. Plasma-Therm warrants that the
Products shall conform to the published specifications of Plasma-
Therm or the specifications provided by the end user customer.
Distributor will provide all service warranty work, associated
spares and technical support, including process, on all equipment
previously shipped into the field directly by previous
distributor. Distributor will be responsible for warranty work
on all systems sold by Distributor and may be entitled to a
warranty credit therefor. Distributor will be responsible for
all field service and technical support (including process) of
Products shipped into the Territory. Distributor will supply all
materials and will also bear all other out-of-pocket expenses for
warranty work. Where possible, Distributor will be asked to have
component warranty replacements obtained in Japan, assuming the
component manufacturer is agreeable to Plasma-Therm. Warranty
Replacements are normally at no charge from the supplier.
Warranty credit will be given to Distributor in connection with
Products which do not conform to the specifications of Plasma-
Therm or the end user customer, or which have defects in material
or workmanship. If there is a situation where a warranty credit
is involved, Distributor has the right to bill Plasma-Therm with
prior notification. The warranty credit term will be 12 months
from the date of customer's acceptance or 455 days after the date
of shipment from Plasma-Therm, whichever is earlier. Distributor
will make a concerted effort to determine that in fact the
warranty credit is justifiable before submitting to Plasma-Therm.
9. Additional Obligations of Plasma-Therm.
(a) Promotional Materials. Plasma-Therm shall supply
all product literature, documentation and advertising copy which
has been reasonably requested by Distributor. All catalogs and
materials in Japanese version shall be made by Distributor at its
own expense. Technical content of such material must be approved
by Plasma-Therm. Unless otherwise stated, the Japanese version
will contain the same information as the U.S. catalog version.
No publicity, including any news release regarding the execution
of this Agreement and the distributorship created by it, shall be
authorized or released by Plasma-Therm without prior consent of
Distributor.
(b) Technical Support. Plasma-Therm will provide
service engineers and process support to Distributor to assist
Distributor with installation and start-up of the Demonstration
systems. Plasma-Therm will also provide two five (5) day
maintenance training classes for Distributor's personnel. These
classes will be held in St. Petersburg, Florida, USA.
Additionally, Plasma-Therm will support the Distributor for the
first two (2) of each product type installations with its process
and maintenance personnel. All expenses (airfare, hotel, meals,
transportation) associated with supporting initial customer and
demonstration system installations in Japan will be borne by the
Distributor. After the initial installations, Plasma-Therm, at
its discretion, will provide assistance in maintenance and
process support to resolve outstanding customer acceptance
issues.
(c) Sales Support. Plasma-Therm will supply a five
(5) day training class on hardware, software and process at
Plasma-Therm's facility. Additionally, Plasma-Therm will provide
the Distributor technical sales support (during the sales
process) at Plasma-Therm's expense.
(d) Warranty.
i) Equipment Warranty. Plasma-Therm warrants
its equipment against defects in material and workmanship. Under
normal use and service, parts are covered for a period of 455
days from the date of shipment. The obligation of Plasma-Therm
under this warranty is limited to the supply of parts (excluding
consumables). A purchase order is required prior to the
execution of any warranty service repairs. These obligations
will be met provided that (A) Plasma-Therm be promptly notified,
by the purchaser, upon the discovery of alleged defects, (B)
defective equipment is returned to Plasma-Therm after receipt of
purchase order for repair and return transportation charges
(repair charges may be incurred due to defect/damage due to
improper use or operation by purchaser) and issuance of return
authorization with the transportation charges prepaid by the
customer. Any unauthorized returns, or returns or non-defective
parts or equipment shall be subject to re-conditioning and
restocking charges.
ii) Warranty Exclusions. This warranty becomes
null and void upon the use of any improper chemicals or in the
event any modifications or improper service is performed to the
equipment by persons other than Plasma-Therm authorized
personnel. The warranty does not apply to consumable material
such as, but not limited to: indicator lamps, fuses, insulators,
all fluids, filters, "O" rings, sight glasses, platen/electrode
covers or coatings, belts, etc. except as specifically stated in
writing, nor to goods or parts thereof provided by the
Distributor/ customer.
All freight and insurance charges due to warranty shipments are
at the expense of the Distributor. This warranty is applicable
to the original Distributor's customer only, and constitutes the
sole and exclusive warranty of Plasma-Therm. No other warranty
is made, express or implied.
iii) Warranty Limitation. Plasma-Therm's
liability under, or for breach of, this agreement shall be
limited to the costs of the goods and services to be provided by
Plasma-Therm under this agreement. In no event will Plasma-Therm
be liable for any expenses incurred by the Distributor or its
customer, including, but not limited to, procurement of
substitute goods. Nor will Plasma-Therm be liable for any
incidental or consequential damages, however caused, whether
Plasma-Therm's negligence or otherwise.
(e) Demonstration Equipment. If Plasma-Therm
terminates this Distributorship Agreement for reasons other than
breach of contract, Plasma-Therm will repurchase the
Demonstration systems and spare parts inventory according to the
following chart/formula:
Equipment Length of Ownership Repurchase Price
Demonstration 0-365 days from date Original Invoice
System of shipment from less 20%
Spare Parts Plasma-Therm
Demonstration 366-730 days from date Original Invoice
System of shipment from less 40%
Spare Parts Plasma-Therm
Demonstration 731-1,095 days from Original Invoice
System date of shipment from less 60%
Spare Parts Plasma Therm
Demonstration 1,096-1,460 days from Original Invoice
System date of shipment from less 80%
Spare Parts Plasma-Therm
Demonstration Over 1,460 days from No repurchase
System date of shipment from required
Spare Parts Plasma-Therm
The Distributor will be responsible for crating,
handling, shipping costs, insurance, demurrage, import duties and
other taxes, if applicable, upon shipment back to Plasma-Therm.
10. Compliance with Law.
(a) Licensing. Both parties agree to take all
necessary steps to ensure compliance with United States
Department of Commerce ("Commerce") and COCOM regulations.
Distributor will not export the technical data or direct product
of Plasma-Therm without first obtaining written authorization
from the United States Department of Commerce. Distributor will
make sales only to end users authorized by Commerce and will
provide Plasma-Therm with the identities of all end users.
11. Restrictive Covenant.
(a) The Distributor or its Parent Company will not
(other than as set forth in this Agreement): (i) engage directly
or indirectly during the term of this Agreement, whether as a
sole proprietor or as a director, officer, employee or
stockholder of, or consultant or a general partner, investor or
owner of any interest in, any entity or person so engaged, or in
any other capacity, in the selling, marketing and manufacturing
of competitive products anywhere in the Territory, (ii) divulge
or use to its advantage any confidential information, including
pricing, costing, revenue or information concerning methods of
production acquired as a result of its relationship with Plasma-
Therm including, but not limited to methods of marketing and
methods of production, or (iii) reverse engineer Plasma-Therm
equipment in order to imitate the manufacture of the equipment or
any component thereof.
(b) If subparagraph (a or b) is held to be in any
respect an unreasonable restriction upon the activities of
Distributor, then the court so holding may reduce the territory
to which the provision pertains, and/or the period of time which
it operates, or effect any other change, to the extent necessary
to render the provision enforceable by said court.
12. Company Property. All materials or data of any kind
furnished to Distributor by Plasma-Therm or developed by
Distributor on behalf of Plasma-Therm or at Plasma-Therm's
discretion in connection with this Agreement or otherwise, are
and shall remain the sole and confidential property of Plasma-
Therm. If Plasma-Therm requests the return of such materials at
any time during, or at or after the termination of this
Agreement, Distributor shall immediately deliver them to Plasma-
Therm.
13. Independent Contractor; Indemnification. The
relationship between Plasma-Therm and Distributor during the term
of this Agreement shall be that of vendor and vendee.
Distributor is an independent contractor and is not an agent to
make any representation or agreement or to incur any liability on
behalf of Plasma-Therm without the prior written approval of an
authorized officer of Plasma-Therm. Distributor will hold Plasma-
Therm harmless from any liability, damage, cost or other loss
arising from any actions taken by Distributor either in violation
of this Agreement or otherwise, without the specific written
authorization of Plasma-Therm.
14. Warranty. There are no warranties, express or
implied, made by Plasma-Therm to Distributor or to Distributor's
customers or other end-users except as indicated in item 8 and
9(d).
15. Packaging of Products and Spare Parts. Plasma-Therm
shall be responsible for packaging of Products and Spare Parts.
Such packaging shall be of sufficient quality and quantity to
reasonably protect the Products and Spare Parts against damage
during air freight, padded van or other standard mode of
transport used by the Distributor to deliver Products and Spare
Parts to its customers.
16. Liability Insurance. Plasma-Therm shall keep and
maintain a policy or policies of comprehensive general liability
insurance including product liability with the limit of not less
than One Million and no/100 ($1,000,000.00) U.S. Dollars with
respect to Products and Spare Parts sold to the Distributor by
insurance carriers which are financially sound, reputable and in
good standing in the State of Florida, naming Plasma-Therm and
Distributor as insured as their interest may appear and providing
for at least thirty (30) days notice of cancellation to be given
to the Distributor, and will provide Distributor with copies of
insurance policies required hereunder.
17. Infringement. Plasma-Therm shall defend vigorously or
settle within a reasonable time any suit or proceeding brought
against the Distributor based upon a claim that any Product or
Spare Part sold hereunder, without modification by Distributor or
any third party (or with modification, if expressly agreed to by
Plasma-Therm, in writing), constitute an infringement of any
existing patent, copyright, or trade secret, provided that Plasma-
Therm is notified promptly in writing and is given complete
authority and information required for the defense. (Plasma-
Therm shall pay promptly all damages and costs and perform or
comply with other court-ordered remedies awarded against the
Distributor, but shall not be responsible for any cost, expense,
compromise, or other such court-ordered remedies incurred or made
by the Distributor without Plasma-Therm's prior written consent.)
If any Product or Spare Part is, in the opinion of Plasma-Therm
likely to or does become the subject of a claim for patent or
trade secret infringement, Plasma-Therm may, at its sole option,
to be exercised within reasonable time, procure for the
Distributor the right to continue using the Product and Spare
Part, modify it to become non-infringing, or cease all sales
thereof, as it deems necessary, provided, however, the
Distributor shall always have the right to comply with any
judicial order.
18. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any
delay on the part of either party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise
of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege
with respect to any occurrence be construed as a waiver of such
right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing
and is signed by party asserted to have granted such waiver.
(b) Controlling Law. This Agreement and all
questions relating to it validity, interpretation, performance
and enforcement (including, without limitation, provisions
concerning limitation of actions), shall be governed by and
construed in accordance with the laws of the State of Florida,
USA and without the aid of any canon, custom or rule of law
requiring construction against the draftsman.
(c) Notices. All notices, requests, demands and
other communications required or permitted under this Agreement
shall be in writing and shall be deemed to have been duly given,
made and received only when delivered (personally, by courier
service such as Federal Express, or by other messenger) or sent
by telecopy with the original deposited in the United States
mail, registered or certified mail, postage prepaid, return
receipt requested, addressed as set forth below:
(1) When intended for Plasma-Therm:
Scott Deferrari, President
Plasma-Therm, Inc.
9509 International Court
St. Petersburg, FL , USA 33716
Facsimile No. 813-577-6844
(2) When intended for Distributor:
Toshi Hirai, Vice President, General Manager
Hakuto Co., Ltd.
1-13, Shinjuku 1-Chome
Sinujuku-ku, Tokyo 160 Japan
Facsimile No.: 81-3-3225-9012
(d) Binding Nature of Agreement; (No Assignment).
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
except that no party may assign or transfer its rights or
obligations under this Agreement without the prior written
consent of the other parties hereto.
(e) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one
and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken
together, shall be the signatures of all the parties reflected
hereon as the signatories.
(f) Entire Agreement. The Agreement contains the
entire understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any
course or performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing. The amendment of
one part of this Agreement does not invalidate the remainder of
this Agreement and is in full force and effect.
(g) Paragraph Headings. The paragraph headings in
this Agreement are for convenience only; they form no part of
this Agreement and shall not affect its interpretation.
(h) Gender, Etc. Words used herein, regardless of
the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and
any other gender, masculine, feminine or neuter, as the context
indicates is appropriate.
(i) Plasma-Therm and Distributor generally agree
that it is the responsibility of both parties to satisfy the
Japanese customers' expectations on service and process
commitments. Plasma-Therm will work diligently and in good faith
to resolve any outstanding service or process support issues that
may arise with any of the Distributor's customers. Plasma-Therm
is fully committed to Hakuto Co., Ltd. as its new Japanese
Distributor.
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement on the date first above written.
PLASMA-THERM, INC.
By:/s/Ronald S. Deferrari
Scott Deferrari
President
Attest:/s/Lisa L. Disotelle
[Corporate Seal]
HAKUTO CO., LTD.
By:/s/Toshi Hirai
Toshi Hirai
Vice President,
GeneralManager
Attest:/s/A. Shimizu
[Corporate Seal]
Exhibit 11
Statement RE: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Year Ended November 30,
1995 1994 1993
(Amounts in thousands,except per share data)
<S> <C> <C> <C>
PRIMARY
Average shares outstanding 10,093 8,382 8,135
Net effect of dilutive stock options and
warrants based on the treasury stock
method using average market price 449 676 229
TOTAL 10,542 9,058 8,364
Income before extraordinary item
and cumulative effect of change in
accounting principle $1,089 $1,613 $191
Income before cumulative effect of
change in accounting principle $1,089 $1,613 $233
Net income $1,089 $1,613 $233
Income per share before extraordinary item
and cumulative effect of change in
accounting principle $0 $0 $0
Extraordinary item 0.00 0.00 0.01
Cumulative effect of change in accounting
principle 0.00 0.04 0.00
Net income per share $0 $0 $0
FULLY DILUTED
Average shares outstanding 10,093 8,382 8,135
Net effect of dilutive stock options and
warrants based on the treasury stock
method using the year-end market price,
if higher than average market price 479 711 705
TOTAL 10,572 9,093 8,840 <PAGE>
Income before extraordinary item
and cumulative effect of change in
accounting principle $1,089 $1,613 $191
Income before cumulative effect of
change in accounting principle $1,089 $1,613 $233
Net income $1,089 $1,613 $233
Income per share before extraordinary item
and cumulative effect of change in
accounting principle $0 $0 $0
Extraordinary item 0.00 0.00 0.01
Cumulative effect of change in accounting
principle 0.00 0.04 0.00
Net income per share $0 $0 $0
Exhibit 11
</TABLE>
