<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended February 28, 1997 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.)
10050 16TH STREET NORTH, ST. PETERSBURG, FLORIDA 33716
------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (813) 577-4999
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, par value $.01 per share 10,595,061
-------------------------------------- -----------------------------
Class Outstanding at March 25, 1997
Page 1 of 14 Pages
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets - February 28, 1997 and
November 30, 1996 .................................................................... 3
Statements of Income - Three Months Ended
February 28, 1997 and February 29, 1996 .............................................. 5
Statements of Cash Flows - Three Months Ended
February 28, 1997 and February 29, 1996 .............................................. 6
Notes to Consolidated Financial Statements ............................................ 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .............................. 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .................................................... 13
</TABLE>
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<PAGE> 3
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
1997 1996
------------ ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 6,780,093 $ 5,266,279
Accounts receivable 8,463,851 8,046,130
Prepaid income taxes - 94,233
Inventories 7,266,649 7,958,620
Prepaid expenses and other 242,827 232,650
Deferred tax asset 353,702 388,313
----------- -----------
Total current assets 23,107,122 21,986,225
----------- -----------
Property, plant and equipment
Building 4,394,649 4,394,649
Machinery and equipment 6,299,134 6,026,387
Leasehold improvements 142,915 142,915
----------- -----------
10,836,698 10,563,951
Less accumulated depreciation and
amortization 2,551,862 2,155,143
----------- -----------
8,284,836 8,408,808
Land 786,017 786,017
----------- -----------
9,070,853 9,194,825
----------- -----------
Other assets 269,797 294,126
----------- -----------
$32,447,772 $31,475,176
=========== ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 4
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
1997 1996
-------------- ------------
<S> <C> <C>
LIABILITIES
Current liabilities
Short-term borrowings $ - $1,000,000
Current portion of notes payable 366,366 443,946
Current maturities of obligations under
capital leases 83,070 80,955
Accounts payable 2,179,698 2,223,826
Accrued payroll and related 917,699 676,674
Accrued expenses 454,741 414,094
Accrued warranty reserve 625,000 610,000
Income taxes payable 131,195 -
Customer deposits - 218,000
----------- -----------
Total current liabilities 4,757,769 5,667,495
----------- -----------
Long-term obligations
Notes payable 3,359,114 3,431,475
Obligations under capital leases 135,972 157,519
----------- -----------
3,495,086 3,588,994
----------- -----------
SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock
$.01 par value
Authorized - 25,000,000 shares
Issued and outstanding - 10,595,061
shares - 1997 and 10,396,061 shares -
1996 109,952 103,962
Additional paid-in capital 16,036,026 14,897,446
Retained earnings 8,048,939 7,217,279
----------- -----------
24,194,917 22,218,687
----------- -----------
$32,447,772 $31,475,176
=========== ============
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 5
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------
FEBRUARY 28, FEBRUARY 29,
1997 1996
------------ -------------
<S> <C> <C>
Net sales $9,480,580 $8,290,002
---------- ----------
Costs and expenses
Cost of products sold 5,712,963 5,288,305
Research and development 792,549 619,323
Selling and administrative 1,565,964 1,338,436
Interest expense 102,674 58,217
Interest income (81,543) (71,606)
Other expense, net 9,090 678
---------- ----------
8,101,697 7,233,353
---------- ----------
Income before income taxes 1,378,883 1,056,649
Income taxes 547,223 411,090
---------- ----------
Net income $ 831,660 $ 645,559
========== ==========
Income per share (primary and fully diluted) $ 0.08 $ 0.06
========== ==========
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 6
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------
FEBRUARY 28, 1997 FEBRUARY 29, 1996
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 831,660 $ 645,559
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 411,717 162,120
Deferred taxes 34,611 175,102
Compensation - stock options 2,280 27,015
Changes in assets and liabilities
(Increase) decrease in accounts receivable (417,721) 491,319
Decrease in income tax deposits 94,233 18,048
(Increase) decrease in inventories 691,971 (871,739)
Increase in prepaid expenses and other (10,177) (82,584)
Decrease in accounts payable (44,128) (1,224,182)
Increase (decrease) in accrued payroll and
related 241,025 (50,376)
Increase (decrease) in accrued expenses 40,647 (131,187)
Increase in accrued warranty reserve 15,000 -
Increase in income taxes payable
(exclusive of tax benefits derived from
exercise of options/warrants) 324,925 132,140
Decrease in customer deposits (218,000) -
----------- -----------
Net cash (used in) provided by
operating activities 1,998,043 (708,765)
----------- -----------
Cash flows from investing activities
Capital expenditures (272,745) (1,472,945)
Payments received on note receivable - 20,000
Other 9,329 (173,816)
----------- -----------
Net cash used in investing activities (263,416) (1,626,761)
----------- -----------
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 7
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------
FEBRUARY 28, 1997 FEBRUARY 29, 1996
----------------- -----------------
<S> <C> <C>
Cash flows from financing activities
Proceeds from issuance of notes payable - 1,643,215
Principal payments on notes payable (149,941) (83,333)
Principal payments under capital lease obligations (19,432) (23,561)
Net issuances under line of credit agreements (1,000,000) -
Proceeds from exercise of stock options and warrants 948,560 26,420
------------ ------------
Net cash provided by (used in)
financing activities (220,813) 1,562,741
------------ ------------
Net increase (decrease) in cash and cash
equivalents 1,513,814 (772,785)
------------ ------------
Cash and cash equivalents beginning of period 5,266,279 5,058,718
------------ ------------
Cash and cash equivalents end of period $ 6,780,093 $ 4,285,933
============ ============
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE> 8
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997 AND NOVEMBER 30, 1996
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly the financial position as of February 28, 1997
and the results of operations and cash flows for the three
months ended February 28, 1997 and February 29, 1996.
The results of operations for the three months ended February
28, 1997 and February 29, 1996 are not necessarily indicative
of results for the full year.
The November 30, 1996 balance sheet amounts and disclosures
included herein have been derived from the November 30, 1996
audited financial statements of the Registrant. While the
Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that
these consolidated financial statements be read in conjunction
with the consolidated financial statements and the notes
included in the Company's latest annual report on Form 10-K.
NOTE 2 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.
NOTE 3 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 diluted
income per share are the same for all periods presented. The
following is the weighted average outstanding share information.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------
February 28, 1997 February 29, 1996
----------------- -----------------
<S> <C> <C>
Primary 10,960,820 10,611,434
Fully Diluted 11,012,717 10,611,017
</TABLE>
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<PAGE> 9
NOTE 4 SHORT-TERM AND LONG-TERM BORROWINGS
In March, 1997 the Company signed a commitment letter with its bank
to increase its line of credit to $7,000,000 and renew the
$1,000,000 term loan upon payoff of the existing term loan. The
terms and conditions are more favorable than the terms and
conditions under the existing agreements. Among the revised terms
and conditions include a decrease in the interest rate from the
bank's prime rate (8.25% at February 28, 1997) to the one month
LIBOR plus 2% (7.44% at February 28, 1997) and LIBOR plus 2.25%
(7.69% at February 28, 1997) for the line of credit and term loan,
respectively. The Company anticipates finalizing the Loan Documents
in approximately 30 days from the date of this filing.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales of $9,480,580 for the first quarter of 1997 increased by 14%
from net sales of $8,290,002 for the first quarter of 1996. The increase in net
sales was attributable to higher product demand and sales of the Company's
newest products, the Versalock(R) 700 Series and the Shuttlelock(R) 770 ICP
Series. Sales of the Versalock(R) 700 Series began in the fourth quarter of
1995 while sales of the Shuttlelock(R) 770 ICP Series began in fiscal 1996.
Total sales related to these products in the first quarter of 1997 and 1996 were
$5,059,700 and $3,611,572, respectively.
Cost of products sold of $5,712,963 for the first quarter of 1997 was
60.3% of net sales, compared to $5,288,305 for the first quarter of 1996 which
was 63.8% of net sales. The decrease was due to a combination of slightly
higher margins on the new product lines described in the previous paragraph and
the fixed costs associated with cost of products sold. Fixed costs as a
percentage of net sales was lower for the first quarter of 1997 as compared to
the first quarter of 1996 because net sales increased by 14% the first quarter
of 1997 over the first quarter of 1996.
Research and development expenses for the first quarter of 1997 were
$792,549 compared to $619,323 for the first quarter of 1996, which was 8.4% and
7.5% of net sales, respectively. In 1997 several research and development
programs have been implemented to enhance the development efforts in the
Company's target markets. In addition, as new products and technology continue
to be introduced, total dollars expended on research and development are
expected to increase.
Selling and administrative expense for the quarter ended February 28,
1997 was $1,565,964, up from $1,338,436 for the quarter ended February 29, 1996,
which was 16.5% and 16.1% of net sales, respectively. The increase related to
increased expenditures associated with the higher sales volume, including
commissions paid to international manufacturer's representatives amounting to
$224,110, a $104,110 increase over the first quarter of 1996 commissions of
$120,000. The increase in international sales representative commissions
directly relates to a 35% increase in international sales from $2,094,097 to
$2,837,578 in the first quarter of 1997. In addition, foreign sales as a
percentage of total sales increased from 26.9% in the first quarter of 1996 to
31.3% in the first quarter of 1997.
Income before income taxes for the first quarter of 1997 was $1,378,883,
an increase of $322,234 from $1,056,649 earned for the first quarter of 1996.
Net income per share was $.08 for the first quarter of 1997, an increase of $.02
from $.06 for the first quarter of 1996. The components of this increase are
described above.
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<PAGE> 11
FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS
Working capital at February 28, 1997 was $18,349,353 which is an
increase of $2,030,623 over $16,318,730 at November 30, 1996. Working capital
in 1997 benefited from, among other things, funds provided by the Company's
increased earnings from its operations in the first quarter of 1997 which also
allowed the Company to completely pay off short term borrowings of $1,000,000.
See the following discussion of material changes in assets and liabilities from
November 30, 1996 to February 28, 1997 which further supplements this commentary
on working capital.
Net cash provided by operating activities in the first quarter of 1997
was $1,998,043. This increase consisted of various components, including net
income in the first quarter of 1997 of $831,660, increase in accounts receivable
of $417,721, decrease in inventories of $691,971, increase in accrued expenses
of $281,672, and increase in income taxes payable of $324,925. The 5.2%
increase in accounts receivable was primarily related to the timing of sales and
related payments. The 8.7% decrease in inventories was primarily due to
continued refined material requirements planning and enhanced inventory
management. In addition, timing of the shipment of orders in correlation to the
backlog affected the level of work in process inventory. The level of work in
process inventory at February 28, 1997 was approximately $322,000 lower than the
level at November 30, 1996. The backlog remained unchanged at approximately
$12,000,000 at February 28, 1997. The 25.8% increase in accrued expenses
related primarily to a timing difference for an accrual for payroll taxes
withheld at February 28, 1997 which were not paid until March 1997. This accrual
did not exist at November 30, 1996. Of the increase in income taxes payable of
$324,925, approximately $158,000 related primarily to taxes owed for federal
income tax for the quarter ended February 28, 1997, less tax deposits made
through that date. As of November 30, 1996, all federal and state income tax
payments had been previously made for the year ended November 30, 1996, leaving
a balance in the income tax deposits account in excess of actual tax due of
$94,233 (See accompanying Consolidated Balance Sheets). In addition,
approximately $194,000 of the increase in income taxes payable at February 28,
1997 related to the tax benefits derived from the exercise of stock options and
warrants which are recorded in additional paid in capital.
Net cash used in investing activities for the quarter ended February
28, 1997 was $263,416. The Company incurred $272,745 in capital expenditures,
of which approximately $241,000 was for the construction and purchase of various
lab equipment to be used in research and development.
Net cash used in financing activities for the quarter ended February 28,
1997 was $220,813. Cash used for financing activities included the principal
repayment of $169,373 of notes payable and capital lease obligations and the pay
off of the line of credit of $1,000,000. Additionally, the Company received
$948,560 from the exercise of stock options and warrants.
The Company has extensive ongoing capital requirements for research and
development, the repayment of debt, capital equipment and inventory. To meet
these
-11-
<PAGE> 12
requirements, in March, 1997 the Company signed a commitment letter with
its bank to increase its line of credit to $7,000,000 and renew the $1,000,000
term loan upon payoff of the existing term loan. The terms and conditions are
more favorable than the terms and conditions under the existing agreements.
Among the revised terms and conditions include a decrease in the interest rate
from the bank's prime rate (8.25% at February 28, 1997) to the one month LIBOR
plus 2% (7.44% at February 28, 1997) and LIBOR plus 2.25% (7.69% at February 28,
1997) for the line of credit and term loan, respectively. The Company
anticipates finalizing the Loan Documents in approximately 30 days from the date
of this filing.
FORWARD LOOKING INFORMATION
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and development
activities and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in the Company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development and results of the Company's business
include, but are not limited to, the following:
The Company sells relatively expensive capital equipment, and, in any
given quarter or financial period, any one customer or any individual shipment
may represent a significant portion of revenue in that period. Therefore a
delay or cancellation of that shipment could cause the Company to experience a
revenue or earnings shortfall for a given financial period.
The Company relies on distributors and representatives, which
complement its direct sales and service staff, to sell and service its products
in various geographic locations. Should these sales and service channels be
rendered ineffective, it could materially impact the Company's business. Some
of the Company's competitors have more extensive direct sales and service
locations in the Company's distributor's and representatives' channels, which
could provide these competitors with a competitive advantage in certain
geographic areas.
The Company depends heavily on the success and growth of the high
technology marketplace. In particular, a slowdown in personal computer
consumption could cause a slowdown of disk drive production, resulting in lower
output of thin film heads, which could materially effect the Company's business.
The Company also relies on the health of the general semiconductor
equipment marketplace. A slowdown in semiconductor capital equipment purchases
could also affect the Company's business from time to time.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.12 Employment Agreement between the Registrant
and Edmond A. Richards, dated January 22,
1997.
10.13 Employment Agreement between the Registrant
and Ronald S. Deferrari, dated January 22,
1997.
10.14 Employment Agreement between the Registrant
and Stacy L. Wagner, dated January 22,
1997.
11 Commitment Letter between Registrant and
NationsBank, N.A. (South), dated March 19,
1997.
27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of
fiscal 1996.
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<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLASMA-THERM, INC.
Date: March 27, 1997 By: /s/ STACY WAGNER
----------------------------
Stacy Wagner
V.P. of Finance
Date: March 27, 1997 By: /s/ RONALD S. DEFERRARI
----------------------------
Ronald S. Deferrari
President, Chief Operating Officer
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<PAGE> 1
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of this 22nd day of
January, 1997, by and between Plasma-Therm, Inc., a Florida corporation
(hereinafter referred to as the "Company"), and Edmond A. Richards (hereinafter
referred to as "Employee").
WHEREAS, Company desires to employ Employee and Employee desires to accept
such employment and both parties are entering into this Agreement to set forth
their entire understanding with respect to such employment;
NOW, THEREFORE, the parties hereto intending to be legally bound hereby,
and in consideration of the mutual covenants herein contained, agree as follows:
1. EMPLOYMENT
Company hereby employs Employee and Employee hereby accepts such employment
upon the terms and subject to the conditions set forth herein.
2. TERM
The term of this Agreement shall be for a period of three (3) years
commencing on the 22nd day of January, 1997, and terminating on the 21st day of
January, 2000 (the "Term"). Upon expiration of the initial Term and any
subsequent terms, this Agreement shall automatically renew for additional
subsequent three (3) year Terms unless at least ninety (90) days prior to the
end of the then current Term, either Company or Employee has given written
notice to the other of its or his election to terminate the employment at or
prior to the end of such Term.
3. DUTIES
The Employee shall be employed as Vice President of Engineering, an
executive position, and Employee's particular duties and power in such capacity
shall be such as may be determined from time to time by the Company. Any
material diminution of Employee's duties or responsibilities pursuant to this
Agreement will be considered a breach of this Agreement.
4. COMPENSATION
Company agrees to pay and Employee agrees to accept as compensation for all
services rendered hereunder:
4.1 A base annual salary of $146,772.00 payable in accordance with the
Company's usual payroll procedures as they may exist from time to time;
4.2 An annual bonus based on one-half percent ( 1/2%) of fiscal year
Net Earnings, as defined by Company policy, to be paid on a quarterly basis
and reconciled at year end, not to exceed $50,000.00 annually; and
4.3 Reimbursement for reasonable car-related expenses including fuel
and oil, but not maintenance or repair items.
5. EXPENSES
The parties recognize that in the course of performing his duties
hereunder, Employee may incur expenses. Company agrees to reimburse Employee
upon presentation of vouchers for reasonable expenses incurred by Employee in
the performance of his duties hereunder according to the Company Travel and
Expense policy. Additionally, Employee will be entitled to reimbursement for
such reasonable expenses
1
<PAGE> 2
granted to other executive level employees which may or may not be included in
the Company Travel and Expense policy.
6. FRINGE BENEFITS
Employee shall be entitled to such fringe benefits paid for or supplied by
Company and shall be further entitled to the following:
6.1 Participation in retirement and Employee benefit plans such as
401k, tuition reimbursement, health, dental, accident, disability, life, or
other group insurance plans, and other plans as the Company determines from
time to time to make available generally to the other executive employees
of Company.
6.2 Company may elect to pay for the Employee's entire health
insurance premium payments to the extent that this is offered to the other
executive employees of Company. Otherwise, Employee bears the cost of such
benefits, as determined by then existing Company policy.
6.3 If the insurance policy permits, the Employee may at any time
direct Company, in writing to assign the insurance policy or policies to
the Employee. In the event of Employee's termination for any reason
whatsoever, whether or not with cause, payments on the policy or policies,
and Company's obligations, if any, under the policy or policies shall
cease.
6.4 Nothing herein shall be construed to alter, amend or modify the
terms of any stock option plan or policy that may be made available to
Employee by Company. Upon termination of this Agreement for any reason, any
and all such benefits granted under any such plan or policy shall be
governed by the terms and conditions of that plan or policy as it may exist
from time to time.
6.5 Company presently maintains, and shall continue to maintain
Directors and Officers Liability Insurance coverage for the benefit of
Employee for so long as Employee remains an officer of Company.
7. DEATH OR DISABILITY
In the event the Employee becomes permanently disabled so that he is unable
to perform his essential employment duties hereunder, and no requested
reasonable accommodation of Employee's disability is possible, this Agreement
shall terminate. Notwithstanding the foregoing, the compensation then payable by
Company to Employee pursuant to Section 4 hereof shall continue to be paid as if
Employee were not disabled in any way, until the end of the current Term of
employment pursuant to Section 2 hereof. For the purposes of this Agreement, the
term "permanent disability" shall mean any disability lasting ninety (90)
calendar days or more.
In the event Employee becomes temporarily disabled so that he is unable to
perform his essential employment duties hereunder, and no requested reasonable
accommodation of Employee's disability is possible, then Company has the right
to terminate this Agreement without cause consistent with the obligations set
forth in Section 8.3.1, except as otherwise provided by law. For the purpose of
this Agreement, the term "temporary disability" shall mean any disability
lasting less than ninety (90) calendar days.
In the event Employee becomes either permanently or temporarily disabled,
Company shall be entitled to credit against its obligations under Section 7 of
this Agreement the amount of any and all other disability benefits provided by
or paid for by the Company that inure to Employee's benefit. In the event this
Agreement is terminated pursuant to this Section, should an Employee's
disability cease prior to the expiration of the Term of employment during which
the Agreement was terminated, then Employee remains obligated to return to his
employment duties with the Company for the balance of the then current Term, at
the Company's option.
The terms "disability" and "disabled" as used in this Agreement connote the
inability of Employee, for a period of time greater than seven (7) consecutive
business days, to perform his regular employment duties hereunder as a result of
death, mental or physical illness, or injury or accident.
2
<PAGE> 3
8. TERMINATION
8.1 Notwithstanding anything herein contained to the contrary, subject to
Section 7 hereof, Company shall have the right to terminate this Agreement "with
cause." A termination "with cause" may occur as provided by law or as a result
of any criminal activity, reckless misconduct, gross negligence or abandonment
of corporate responsibility. In the event of a termination by Company with
cause, Company agrees to provide Employee with one (1) day's notice and pay, but
will not have any further obligations under this Agreement, except as provided
by law. Company may elect to waive the one (1) day notice requirement by
providing one (1) day's pay in lieu of notice.
8.2 During the Term of this Agreement, Employee will not have, either
directly or indirectly, any more than ten percent (10%) equity interest in any
entity, including any person, partnership, trust or incorporated or
unincorporated association or entity, that is manufacturing, distributing or
marketing products or services directly competitive to those manufactured,
distributed or marketed by Company. It is expressly understood that such
ownership or interest may represent a conflict of interest which may be grounds
for Company to terminate this Agreement with cause.
8.3 Notwithstanding anything herein contained to the contrary, subject to
Sections 7 and 8 herein, Company and Employee shall have the right to terminate
the Agreement hereunder without cause.
8.3.1 In the event Company terminates the Agreement without cause, pursuant
to Section 8.3 herein, Employee shall receive the full compensation hereunder
for the then remaining Term of this Agreement pursuant to Section 2. Company
reserves the right to exercise its option to pay the comparable value of any
benefit set forth in Section 6, above, to which employee is entitled, rather
than continuing the benefit for the balance of the Term; except that, Employee
will not have any continuing rights under the 401(k) plan or other defined
benefit plan, except as otherwise provided by law.
8.3.2 In the event Employee terminates the Agreement without cause,
Employee must provide Company with at least ninety (90) days' advance written
notice. Upon the expiration of the ninety (90) day notice period, all
obligations by the Company to the Employee, except those provided by law, shall
cease. Failure to provide Company with at least ninety (90) days' advance
written notice constitutes grounds for Company to terminate the Agreement with
"cause" as provided in Section 8.1 above, and voids any other right that
Employee may have to compensation, benefits or plans pursuant to Company
programs or policies, except those required to be provided by law.
8.4 In the event of a "Change in Control" of Company, as defined in
Sections 10 and 11 below, the following shall apply:
(a) Upon a Change in Control, if the Term of the Agreement has less
than eighteen (18) months remaining, the Term of this Agreement shall be
extended so that an eighteen (18) month Term remains from the time of the
Change in Control to the end of the Term. The extended Term of the
Agreement will be on terms identical to those in effect at the time of the
Change in Control. In the event that more than eighteen (18) months of the
Term exists as of the time of a Change in Control, there will be no change
in the Term.
(b) Employee commits to continue to perform his duties under this
Agreement for a minimum of eighteen (18) months after a Change in Control.
At the end of eighteen (18) months after a Change in Control, Employee has
the option to voluntarily terminate this Agreement without a loss of
benefits, as if Company had terminated this Agreement "without cause"
pursuant to Section 8.3.1 above.
(c) In the event of a Change in Control, Section 4.2, providing for an
annual bonus, will be modified to provide that Employee's current fiscal
year annual bonuses will in no event, be less than the annual bonus given
in the full year prior to the Change in Control.
8.5 With respect to any payments due and owing as a result of any
termination pursuant to this Section 8, Employee may, at his option, receive
payment for any such obligations in a one-time lump sum payment, or, may
continue to receive payments in accordance with Company's usual payroll
procedures, as they may exist from time to time.
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9. COVENANTS BY EMPLOYEE
9.1 Employee hereby acknowledges that Company is one of only a small number
of companies worldwide that designs, manufactures and sells plasma process thin
film etching and deposition equipment. Employee also acknowledges that pursuant
to his prior relationship with Company, and under the terms of this Agreement,
he will gain access to valuable trade secrets of Company and other valuable
confidential business and proprietary information, and will become aware of and
a part of Company's substantial relationships with customers, potential
customers, suppliers, and sources. Accordingly, Employee hereby covenants that
he shall not, either directly or indirectly, as a principal, partner,
stockholder, officer, director, agent or employee, or in any other capacity,
enter into any employment agreement, or accept employment with or render
services for, any company, partnership, person or entity that competes or
attempts to compete, whether directly or indirectly, with Company, for the
balance of the then remaining Term of this Agreement or for a period of twelve
months (12) from the termination of this Agreement, whichever is greater,
regardless of the reason for said termination.
9.2 The Employee agrees that he shall not solicit or attempt to solicit,
sell to, lease to or offer to sell to, or offer to lease to, except on behalf of
Company or any Affiliate, any present or future customer of Company or
Affiliate, any goods or services competitive to the goods and services now or
hereafter offered for sale or lease by Company or any Affiliate for the periods
of time set forth in Section 9.1 herein.
9.3 The parties hereto recognize that the covenants of Employee herein
contained are unique and that in the event there is a breach or threatened
breach of such covenants, Company shall be entitled, in addition to any other
remedies available to it, to institute and prosecute proceedings in any court of
competent jurisdiction either in law or in equity, to obtain damages for any
breach of covenants or to enforce a specific performance thereof by Employee, or
to enjoin Employee from performing services or doing any act in breach of such
covenants.
9.4 For the purposes of this Agreement, the term "Affiliate" shall mean any
person who or which, directly and/or indirectly, controls, is controlled by or
is under common control with another person. For the purpose of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of management and policies, whether through the ownership
of voting securities, by contract or otherwise. For the purpose of this
definition, "person," refers to an individual, partnership, company,
corporation, or other entity.
9.5 Employee agrees that during the Term hereof and after the termination
of Employee for any reason whatsoever, the Employee shall not disclose to any
person, firm, partnership, company, or other legal entity any information
concerning any of the methods of conducting business utilized by Company or any
Affiliate or any details relating thereto including, but not limited to, the
names of suppliers, customers and methods of operation of Company or any of its
Affiliates; Employee hereby acknowledges that this information is confidential
in nature. This provision shall not be construed to prevent Employee from using
any knowledge that he possessed at the time he commenced his employment with
Company or from using any information that is not confidential.
9.6 Employee has carefully read the provisions of Section 9 herein, and of
each subsection or subparagraph thereof, and having done so agrees that:
(a) the restrictions set forth therein are fair and reasonable and are
reasonably required for the protection of the interests of Company; and
(b) each subsection or subparagraph set forth therein is separate and
independent and all are to be construed as separate and independent of any
other so as to promote their enforcement to the maximum extent possible.
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10. CHANGE IN CONTROL
"Change in Control" as used in this Agreement shall refer to any one or
more of the following:
(a) the acquisition in any manner of the beneficial ownership of
shares of Company having 20% or more of the total number of votes that may
be cast for the election of one or more directors of Company by any person,
or persons acting as a group within the meaning of Section 13(d) of the
Securities and Exchange Act of 1934, if the Board has made a determination
that such acquisition constitutes or will constitute control of Company;
(b) any liquidation, dissolution or sale of all or substantially all
of the assets of Company; or
(c) any action taken following, as a result of, or in connection with,
any tender or exchange, offer, merger or other business combination of the
foregoing whereby the persons who were the Directors of Company immediately
prior to such action shall cease to constitute a majority of the Board of
Company or any successor to Company.
The term "person," as used in this Section 10, refers to an individual,
partnership, company, corporation, or other entity.
11. ASSIGNABILITY
Employee may not transfer or assign this Agreement to any other person.
Company may assign this Agreement to any other company or entity that acquires
all or substantially all of the assets of Company, without further permission of
the Employee. In the event Company assigns this Agreement, said assignment will
be deemed to constitute a "Change in Control" as referred to in Sections 8.4 and
10, above.
12. PAID TIME OFF
Employee shall be entitled to take Paid Time Off at such time as shall
reasonably be requested by Employee and approved by Company in accordance with
Company policy, not to exceed five (5) weeks per annum. Paid Time Off less than
five (5) weeks per annum not used, shall either be "cashed out" or forfeited
according to Company policy. In the event of termination without cause by
Company or by Employee or with cause by Employee, Employee will receive cash
equivalent of time not yet taken during the Term in accordance with Company
policy.
13. MISCELLANEOUS PROVISIONS
13.1 NOTICES
Any notice required or permitted to be given under this Agreement shall be
in writing, and shall be deemed to have been given when delivered personally or
sent by registered or certified mail, postage prepaid, addressed as follows:
If to Company: Diana M. DeFerrari, Senior Vice President
Plasma-Therm, Inc.
10050 16th Street North
St. Petersburg, FL 33716
If to Employee: Edmond A. Richards
908 Lake Placido Court NE
St. Petersburg, Florida 33703
The designation of the person to be so notified or the address of such
person for the purposes of such notice may be changed from time to time by a
similar notice to be effective ten (10) days after such changed designation is
supplied.
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13.2 CHOICE OF LAW
This Agreement, and any dispute arising between the parties by virtue of
their relationship under this Agreement, shall be governed by and construed in
accordance with the applicable laws of the State of Florida. The parties further
agree that any lawsuit or action pertaining to, or arising from, this Agreement,
shall be brought in the state or federal courts within the State of Florida, and
the parties expressly waive the right to proceed in any other jurisdiction or
forum.
13.3 ENTIRE AGREEMENT
This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements,
and may not be modified or amended orally, but only by an agreement in writing,
signed by the party against whom enforcement of the Agreement, or of or any
waiver, change, modification, extension or discharge of the Agreement, is
sought.
13.4 SEVERABILITY
This Agreement shall be construed to be valid and enforceable to the full
extent allowed by law. It is understood and agreed by the parties that if any
part, term or provision of this Agreement is determined to be illegal or in
conflict with applicable law, the validity of the remaining portions or
provisions shall not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the part,
term or provision held to be invalid.
13.5 INDEMNIFICATION
(a) Third-Party Proceeding: Company shall indemnify Employee, his heirs,
or personal representative, made, or threatened to be made, a party to any
threatened, pending, or completed action or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that he was or is a
corporate agent, or serves or served any other corporation or other enterprise
in any capacity at the request of Company, to the full extent permitted by
Florida law, including, without limitation, indemnification against his expenses
and liabilities in connection with the third party proceeding if he acted in
good faith and in a manner reasonably believed by him to be in, or not opposed
to, the best interests of Company, and with respect to any criminal third party
proceeding, had no reasonable cause to believe his conduct was unlawful or in
violation of applicable rules. The termination of any third party proceeding by
judgment, order, settlement, consent, filing of a criminal complaint or
information, indictment, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Employee did not act
in good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of Company or, with respect to any criminal third
party proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Derivative Actions: Company shall indemnify any director or officer of
Company, who was or is a party or is threatened to be made a party to any
derivative action by reason of the fact that such director or officer was or is
a corporate agent, against his expenses in the action if he acted in good faith
and in a manner reasonably believed by him to be in, or not opposed to, the best
interest of Company; except, that no indemnification shall be made in respect of
any claim, issue or matter as to which he shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to Company unless
and only to the extent that the court in which such derivative action is or was
pending shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, he is fairly and
reasonably entitled to indemnity for such items as the court shall deem proper.
(c) Independent Legal Counsel: In the event of an actual or potential
conflict of interest, Employee shall be entitled to an independent legal counsel
and said counsel shall be chosen by Company, subject to the consent of Employee,
and all such reasonable expenses incurred in defense of Employee shall be paid
directly by Company, or reimbursed to Employee at Employee's sole option.
(d) Scope of Employment: Pursuant to this Section 13.5, Company shall only
indemnify Employee, his heirs, or personal representative, made, or threatened
to be made, a party to any threatened, pending, or
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completed action or proceeding, for claims relating to or arising out of
Employee's actions, or omissions, within the scope of his employment by Company.
(e) The term and conditions of this Section 13.5 shall survive the
termination of this Agreement and shall apply to any claims made against
Employee, relating to, or arising from Employee's actions pursuant to this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
Witnesses: PLASMA-THERM, INC.
/s/ RONALD S. DEFERRARI /s/ DIANA M. DEFERRARI
- ------------------------------- --------------------------------------
Diana M. DeFerrari
Senior Vice President
Witnesses: Employee
/s/ SHARON SMITH /s/ EDMOND A. RICHARDS
- ------------------------------- ---------------------------------------
Edmond A. Richards
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EXHIBIT 10.13
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of this 22nd day of
January, 1997, by and between Plasma-Therm, Inc., a Florida corporation
(hereinafter referred to as the "Company"), and Ronald Scott Deferrari
(hereinafter referred to as "Employee").
WHEREAS, Company desires to employ Employee and Employee desires to accept
such employment and both parties are entering into this Agreement to set forth
their entire understanding with respect to such employment;
NOW, THEREFORE, the parties hereto intending to be legally bound hereby,
and in consideration of the mutual covenants herein contained, agree as follows:
1. EMPLOYMENT
Company hereby employs Employee and Employee hereby accepts such employment
upon the terms and subject to the conditions set forth herein.
2. TERM
The term of this Agreement shall be for a period of three (3) years
commencing on the 22nd day of January, 1997, and terminating on the 21st day of
January, 2000 (the "Term"). Upon expiration of the initial Term and any
subsequent terms, this Agreement shall automatically renew for additional
subsequent three (3) year Terms unless at least ninety (90) days prior to the
end of the then current Term, either Company or Employee has given written
notice to the other of its or his election to terminate the employment at or
prior to the end of such Term.
3. DUTIES
The Employee shall be employed by Company as President and Chief Operating
Officer. Employee's particular duties and power in such capacity shall be such
as may be determined from time to time by the Board of Directors of Company. Any
material diminution of Employee's duties or responsibilities pursuant to this
Agreement will be considered a breach of this Agreement.
4. COMPENSATION
Company agrees to pay and Employee agrees to accept as compensation for all
services rendered hereunder:
4.1 A base annual salary of $160,000.00 payable in accordance with the
Company's usual payroll procedures as they may exist from time to time;
4.2 An annual bonus based on five percent (5%) of fiscal year Net
Earnings, as defined by Company policy, to be paid on a quarterly basis and
reconciled at year end, not to exceed $250,000.00 annually; and
4.3 Reimbursement for two (2) automobiles, and other reasonable
car-related expenses including fuel, oil, maintenance and repair items.
5. EXPENSES
The parties recognize that in the course of performing his duties
hereunder, Employee may incur expenses. Company agrees to reimburse Employee
upon presentation of vouchers for reasonable expenses incurred by Employee in
the performance of his duties hereunder according to the Company Travel and
Expense policy. Additionally, Employee will be entitled to reimbursement for
such reasonable expenses granted to other executive level employees which may or
may not be included in the Company Travel and Expense policy.
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6. FRINGE BENEFITS
Employee shall be entitled to such fringe benefits paid for or supplied by
Company and shall be further entitled to the following:
6.1 Participation in retirement and Employee benefit plans such as
401k, tuition reimbursement, health, dental, accident, disability, life, or
other group insurance plans, and other plans as the Company determines from
time to time to make available generally to the other executive employees
of Company.
6.2 Company may elect to pay for the Employee's entire health
insurance premium payments to the extent that this is offered to the other
executive employees of Company. Otherwise, Employee bears the cost of such
benefits, as determined by then existing Company policy.
6.3 If the insurance policy permits, the Employee may at any time
direct Company, in writing to assign the insurance policy or policies to
the Employee. In the event of Employee's termination for any reason
whatsoever, whether or not with cause, payments on the policy or policies,
and Company's obligations, if any, under the policy or policies shall
cease.
6.4 Nothing herein shall be construed to alter, amend or modify the
terms of any stock option plan or policy that may be made available to
Employee by Company. Upon termination of this Agreement for any reason, any
and all such benefits granted under any such plan or policy shall be
governed by the terms and conditions of that plan or policy as it may exist
from time to time.
6.5 Company presently maintains, and shall continue to maintain
Directors and Officers Liability Insurance coverage for the benefit of
Employee for so long as Employee remains an officer of Company.
7. DEATH OR DISABILITY
In the event the Employee becomes permanently disabled so that he is unable
to perform his essential employment duties hereunder, and no requested
reasonable accommodation of Employee's disability is possible, this Agreement
shall terminate. Notwithstanding the foregoing, the compensation then payable by
Company to Employee pursuant to Section 4 hereof shall continue to be paid as if
Employee were not disabled in any way, until the end of the current Term of
employment pursuant to Section 2 hereof. For the purposes of this Agreement, the
term "permanent disability" shall mean any disability lasting ninety (90)
calendar days or more.
In the event Employee becomes temporarily disabled so that he is unable to
perform his essential employment duties hereunder, and no requested reasonable
accommodation of Employee's disability is possible, then Company has the right
to terminate this Agreement without cause consistent with the obligations set
forth in Section 8.3.1, except as otherwise provided by law. For the purpose of
this Agreement, the term "temporary disability" shall mean any disability
lasting less than ninety (90) calendar days.
In the event Employee becomes either permanently or temporarily disabled,
Company shall be entitled to credit against its obligations under Section 7 of
this Agreement the amount of any and all other disability benefits provided by
or paid for by the Company that inure to Employee's benefit. In the event this
Agreement is terminated pursuant to this Section, should an Employee's
disability cease prior to the expiration of the Term of employment during which
the Agreement was terminated, then Employee remains obligated to return to his
employment duties with the Company for the balance of the then current Term, at
the Company's option.
The terms "disability" and "disabled" as used in this Agreement connote the
inability of Employee, for a period of time greater than seven (7) consecutive
business days, to perform his regular employment duties hereunder as a result of
death, mental or physical illness, or injury or accident.
8. TERMINATION
8.1 Notwithstanding anything herein contained to the contrary, subject to
Section 7 hereof, Company shall have the right to terminate this Agreement "with
cause." A termination "with cause" may occur as
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provided by law or as a result of any criminal activity, or may occur as a
result of reckless misconduct, or gross negligence arising out of this Agreement
or Employee's duties and responsibilities as an officer or employee of Company.
In the event of a termination by Company with cause, Company agrees to provide
Employee with one (1) day's notice and pay. Company may elect to waive the one
(1) day notice requirement by providing one (1) day's pay in lieu of notice.
Notwithstanding that Company terminates this Agreement for cause, Employee shall
be entitled to the severance package set forth in Section 8.7 below.
8.2 During the Term of this Agreement, Employee will not have, either
directly or indirectly, any more than ten percent (10%) equity interest in any
entity, including any person, partnership, trust or incorporated or
unincorporated association or entity, that is manufacturing, distributing or
marketing products or services directly competitive to those manufactured,
distributed or marketed by Company. It is expressly understood that such
ownership or interest may represent a conflict of interest which may be grounds
for Company to terminate this Agreement with cause.
8.3 Notwithstanding anything herein contained to the contrary, subject to
Sections 7 and 8 hereof, Company and Employee shall have the right to terminate
the Agreement hereunder without cause.
8.3.1 In the event Company terminates the Agreement without cause, pursuant
to Section 8.3 herein, Employee shall receive the full compensation hereunder
for the then remaining Term of this Agreement pursuant to Section 2, as well as
payment of the severance package set forth in Section 8.7 below. Company
reserves the right to exercise its option to pay the comparable value of any
benefit set forth in Section 6, above, to which employee is entitled, rather
than continuing the benefit for the balance of the Term; except that, Employee
will not have any continuing rights under the 401(k) plan or other defined
benefit plan, unless provided by law.
8.3.2 In the event Employee terminates the Agreement without cause,
Employee must provide Company with at least ninety (90) days' advance written
notice. Upon the expiration of the ninety (90) day notice period, Employee shall
be entitled to the severance package set forth in Section 8.7 below; all other
obligations by the Company to the Employee, except those provided by law, shall
cease. Failure to provide Company with at least ninety (90) days' advance
written notice constitutes grounds for Company to terminate the Agreement with
cause as provided in Section 8.1 above, and voids any other right that Employee
may have to compensation, benefits or plans pursuant to Company programs or
policies, except those specified in Section 8.1 above and those required to be
provided by law.
8.4 In the event of a "Change in Control" of Company, as defined in
Sections 10 or 11 below, or in the event of a "Change in the Board" as defined
in Section 8.6 below, the following shall apply:
(a) Upon a Change in Control, or upon a Change in the Board, if the
Term of the Agreement has less than eighteen (18) months remaining, the
Term of this Agreement shall be extended so that an eighteen (18) month
Term remains from the time of the Change in Control or a Change in the
Board, to the end of the Term. The extended Term of the Agreement will be
on terms identical to those in effect at the time of the Change in Control
or the Change in the Board. In the event that more than eighteen (18)
months of the Term exists as of the time of a Change in Control or a Change
in the Board, there will be no change in the Term.
(b) Employee commits to continue to perform his duties under this
Agreement for a minimum of eighteen (18) months after a Change in Control
or a Change in the Board. At the end of eighteen (18) months after a Change
in Control or a Change in the Board, Employee has the option to voluntarily
terminate this Agreement without a loss of benefits, as if Company had
terminated this Agreement "without cause" pursuant to Section 8.3.1 above;
except that if
(i) Employee exercises his option to terminate this Agreement
pursuant to this subparagraph in the event of a Change in Control, the
minimum compensation to which Employee shall be entitled pursuant to
Section 8.3.1 above shall be no less than twelve (12) months of salary
and benefits; or
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(ii) Company terminates this Agreement pursuant to Section 8.3.1
above subsequent to a Change in Control, the minimum compensation to
which Employee shall be entitled pursuant to Section 8.3.1 shall be no
less than twelve (12) months of salary and benefits.
(c) In the event of a Change in Control, Section 4.2, providing for an
annual bonus will be modified to provide that Employee's current fiscal
year annual bonuses will in no event, be less than the annual bonus given
in the full year prior to the Change in Control.
8.5 With respect to any payments due and owing as a result of any
termination pursuant to this Section 8, Employee may, at his option, receive
payment for any such obligations in a one-time lump sum payment, or, may
continue to receive payments in accordance with Company's usual payroll
procedures, as they may exist from time to time.
8.6 In the event that 50% or more of the Directors comprising a sitting
Board of Directors is replaced, this change in the Board of Directors will
constitute, and is defined herein as, a "Change in the Board." However, this
Section is not applicable if any such change in a sitting Board of Directors
occurs as a result of a Change in Control of the Company, as set forth in
Section 10 or 11 below.
8.7 Except as set forth in Sections 8.4(b)(i) and (ii) above, upon
termination or cancellation of this Agreement for any other reason, Employee
shall be entitled to a severance package of six (6) months of salary and
benefits, as set forth above in Sections 4 and 6 respectively; except that,
Employee will not have any continuing rights under the 401(k) plan or other
defined benefit plan, unless provided by law.
9. COVENANTS BY EMPLOYEE
9.1 Employee hereby acknowledges that Company is one of only a small number
of companies worldwide that designs, manufactures and sells plasma process thin
film etching and deposition equipment. Employee also acknowledges that pursuant
to his prior relationship with Company, and under the terms of this Agreement,
he will gain access to valuable trade secrets of Company and other valuable
confidential business and proprietary information, and will become aware of and
a part of Company's substantial relationships with customers, potential
customers, suppliers, and sources. Accordingly, Employee hereby covenants that
he shall not, either directly or indirectly, as a principal, partner,
stockholder, officer, director, agent or employee, or in any other capacity,
enter into any employment agreement, or accept employment with or render
services for, any company, partnership, person or entity that competes or
attempts to compete, whether directly or indirectly, with Company, for the
balance of the then remaining Term of this Agreement or for a period of twelve
months (12) from the termination of this Agreement, whichever is greater,
regardless of the reason for said termination.
9.2 The Employee agrees that he shall not solicit or attempt to solicit,
sell to, lease to or offer to sell to, or offer to lease to, except on behalf of
Company or any Affiliate, any present or future customer of Company or
Affiliate, any goods or services competitive to the goods and services now or
hereafter offered for sale or lease by Company or any Affiliate for the periods
of time set forth in Section 9.1 herein.
9.3 The parties hereto recognize that the covenants of Employee herein
contained are unique and that in the event there is a breach or threatened
breach of such covenants, Company shall be entitled, in addition to any other
remedies available to it, to institute and prosecute proceedings in any court of
competent jurisdiction either in law or in equity, to obtain damages for any
breach of covenants or to enforce a specific performance thereof by Employee, or
to enjoin Employee from performing services or doing any act in breach of such
covenants.
9.4 For the purposes of this Agreement, the term "Affiliate" shall mean any
person who or which, directly and/or indirectly, controls, is controlled by or
is under common control with another person. For the purpose of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of management and policies, whether through the ownership
of voting securities, by contract or otherwise. For the purpose of this
definition, "person," refers to an individual, partnership, company,
corporation, or other entity.
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9.5 Employee agrees that during the Term hereof and after the termination
of Employee for any reason whatsoever, the Employee shall not disclose to any
person, firm, partnership, company, or other legal entity any information
concerning any of the methods of conducting business utilized by Company or any
Affiliate or any details relating thereto including, but not limited to, the
names of suppliers, customers and methods of operation of Company or any of its
Affiliates; Employee hereby acknowledges that this information is confidential
in nature. This provision shall not be construed to prevent Employee from using
any knowledge that he possessed at the time he commenced his employment with
Company or from using any information that is not confidential.
9.6 Employee has carefully read the provisions of Section 9 herein, and of
each subsection or subparagraph thereof, and having done so agrees that:
(a) the restrictions set forth therein are fair and reasonable and are
reasonably required for the protection of the interests of Company; and
(b) each subsection or subparagraph set forth therein is separate and
independent and all are to be construed as separate and independent of any
other so as to promote their enforcement to the maximum extent possible.
10. CHANGE IN CONTROL
"Change in Control" as used in this Agreement shall refer to any one or
more of the following:
(a) the acquisition in any manner of the beneficial ownership of
shares of Company having 20% or more of the total number of votes that may
be cast for the election of one or more directors of Company by any person,
or persons acting as a group within the meaning of Section 13(d) of the
Securities and Exchange Act of 1934, if the Board has made a determination
that such acquisition constitutes or will constitute control of Company;
(b) any liquidation, dissolution or sale of all or substantially all
of the assets of Company; or
(c) any action taken following, as a result of, or in connection with,
any tender or exchange offer, merger or other business combination of the
foregoing whereby the persons who were the Directors of Company immediately
prior to such action shall cease to constitute a majority of the Board of
Company or any successor to Company.
The term "person," as used in Sections 10 and 11 herein, refers to an
individual, partnership, company, corporation, or other entity. A Change in the
Board not pursuant to any of the events set forth in Section 10 or 11 herein
shall not constitute a Change in Control, but shall constitute a Change in the
Board as set forth in Section 8.6 above.
11. ASSIGNABILITY
Employee may not transfer or assign this Agreement to any other person.
Company may assign this Agreement to any other company or entity that acquires
all or substantially all of the assets of Company, without further permission of
the Employee. In the event Company assigns this Agreement, said assignment will
be deemed to constitute a "Change in Control" as referred to in Sections 8.4,
and 10 herein.
12. PAID TIME OFF
Employee shall be entitled to take Paid Time Off at such time as shall
reasonably be requested by Employee and approved by Company in accordance with
Company policy, not to exceed five (5) weeks per annum. Paid Time Off less than
five (5) weeks per annum not used, shall either be "cashed out" or forfeited
according to Company policy. In the event of termination without cause by
Company or by Employee or with cause by Employee, Employee will receive cash
equivalent of time not yet taken during the Term in accordance with Company
policy.
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13. MISCELLANEOUS PROVISIONS
13.1 NOTICES
Any notice required or permitted to be given under this Agreement shall be
in writing, and shall be deemed to have been given when delivered personally or
sent by registered or certified mail, postage prepaid, addressed as follows:
If to Company: Diana M. DeFerrari, Senior Vice President
Plasma-Therm, Inc.
10050 16th Street North
St. Petersburg, FL 33716
If to Employee: Ronald Scott DeFerrari
Plasma-Therm, Inc.
10050 16th Street North
St. Petersburg, FL 33716
The designation of the person to be so notified or the address of such
person for the purposes of such notice may be changed from time to time by a
similar notice to be effective ten (10) days after such changed designation is
supplied.
13.2 CHOICE OF LAW
This Agreement, and any dispute arising between the parties by virtue of
their relationship under this Agreement, shall be governed by and construed in
accordance with the applicable laws of the State of Florida. The parties further
agree that any lawsuit or action pertaining to, or arising from, this Agreement,
shall be brought in the state or federal courts within the State of Florida, and
the parties expressly waive the right to proceed in any other jurisdiction or
forum.
13.3 ENTIRE AGREEMENT
This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements,
and may not be modified or amended orally, but only by an agreement in writing,
signed by the party against whom enforcement of the Agreement, or of or any
waiver, change, modification, extension or discharge of the Agreement, is
sought.
13.4 SEVERABILITY
This Agreement shall be construed to be valid and enforceable to the full
extent allowed by law. It is understood and agreed by the parties that if any
part, term or provision of this Agreement is determined to be illegal or in
conflict with applicable law, the validity of the remaining portions or
provisions shall not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the part,
term or provision held to be invalid.
13.5 INDEMNIFICATION
(a) Third-Party Proceeding: Company shall indemnify Employee, his heirs,
or personal representative, made, or threatened to be made, a party to any
threatened, pending, or completed action or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that he was or is a
corporate agent, or serves or served any other corporation or other enterprise
in any capacity at the request of Company, to the full extent permitted by
Florida law, including, without limitation, indemnification against his expenses
and liabilities in connection with the third party proceeding if he acted in
good faith and in a manner reasonably believed by him to be in, or not opposed
to, the best interests of Company, and with respect to any criminal third party
proceeding, had no reasonable cause to believe his conduct was unlawful or in
violation of applicable rules. The termination of any third party proceeding by
judgment, order, settlement, consent, filing of a criminal complaint or
information, indictment, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Employee did not act
in good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of Company or, with respect to any criminal third
party proceeding, had reasonable cause to believe that his conduct was unlawful.
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(b) Derivative Actions: Company shall indemnify any director or officer of
Company, who was or is a party or is threatened to be made a party to any
derivative action by reason of the fact that such director or officer was or is
a corporate agent, against his expenses in the action if he acted in good faith
and in a manner reasonably believed by him to be in, or not opposed to, the best
interest of Company; except, that no indemnification shall be made in respect of
any claim, issue or matter as to which he shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to Company unless
and only to the extent that the court in which such derivative action is or was
pending shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, he is fairly and
reasonably entitled to indemnity for such items as the court shall deem proper.
(c) Independent Legal Counsel: In the event of an actual or potential
conflict of interest, Employee shall be entitled to an independent legal counsel
and said counsel shall be chosen by Company, subject to the consent of Employee,
and all such reasonable expenses incurred in defense of Employee shall be paid
directly by Company, or reimbursed to Employee at Employee's sole option.
(d) Scope of Employment: Pursuant to this Section 13.5, Company shall only
indemnify Employee, his heirs, or personal representative, made, or threatened
to be made, a party to any threatened, pending, or completed action or
proceeding, for claims relating to or arising out of Employee's actions, or
omissions, within the scope of his employment by Company.
(e) The term and conditions of this Section 13.5 shall survive the
termination of this Agreement and shall apply to any claims made against
Employee, relating to, or arising from Employee's actions pursuant to this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
Witnesses: PLASMA-THERM, INC.
/s/ SHARON SMITH /s/ RONALD H. DEFERRARI
- -------------------------------- ----------------------------------------
Ronald H. DeFerrari
Chief Executive Office
Witnesses: Employee
/s/ STACY WAGNER /s/ RONALD SCOTT DEFERRARI
- -------------------------------- ----------------------------------------
Ronald Scott DeFarrari
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<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of this 22nd day of
January, 1997, by and between Plasma-Therm, Inc., a Florida corporation
(hereinafter referred to as the "Company"), and Stacy L. Wagner (hereinafter
referred to as "Employee").
WHEREAS, Company desires to employ Employee and Employee desires to accept
such employment and both parties are entering into this Agreement to set forth
their entire understanding with respect to such employment;
NOW, THEREFORE, the parties hereto intending to be legally bound hereby,
and in consideration of the mutual covenants herein contained, agree as follows:
1. EMPLOYMENT
Company hereby employs Employee and Employee hereby accepts such employment
upon the terms and subject to the conditions set forth herein.
2. TERM
The term of this Agreement shall be for a period of three (3) years
commencing on the 22nd day of January, 1997, and terminating on the 21st day of
January, 2000 (the "Term"). Upon expiration of the initial Term and any
subsequent terms, this Agreement shall automatically renew for additional
subsequent three (3) year Terms unless at least ninety (90) days prior to the
end of the then current Term, either Company or Employee has given written
notice to the other of its or his election to terminate the employment at or
prior to the end of such Term.
3. DUTIES
The Employee shall be employed as Vice President of Finance and Controller
an executive position, and Employee's particular duties and power in such
capacity shall be such as may be determined from time to time by the Company.
Any material diminution of Employee's duties or responsibilities pursuant to
this Agreement will be considered a breach of this Agreement.
4. COMPENSATION
Company agrees to pay and Employee agrees to accept as compensation for all
services rendered hereunder:
4.1 A base annual salary of $70,000.00 payable in accordance with the
Company's usual payroll procedures as they may exist from time to time; and
4.2 An annual bonus based on one percent (1%) of fiscal year Net Earnings,
as defined by Company policy, to be paid on a quarterly basis and reconciled at
year end, not to exceed $50,000.00 annually.
5. EXPENSES
The parties recognize that in the course of performing her duties
hereunder, Employee may incur expenses. Company agrees to reimburse Employee
upon presentation of vouchers for reasonable expenses incurred by Employee in
the performance of her duties hereunder according to the Company Travel and
Expense policy. Additionally, Employee will be entitled to reimbursement for
such reasonable expenses granted to other executive level employees which may or
may not be included in the Company Travel and Expense policy.
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6. FRINGE BENEFITS
Employee shall be entitled to such fringe benefits paid for or supplied by
Company and shall be further entitled to the following:
6.1 Participation in retirement and Employee benefit plans such as
401k, tuition reimbursement, health, dental, accident, disability, life, or
other group insurance plans, and other plans as Company determines from
time to time to make available generally to the other executive employees
of Company.
6.2 Company may elect to pay for the Employee's entire health
insurance premium payments to the extent that this is offered to the other
executive employees of Company. Otherwise, Employee bears the cost of such
benefits, as determined by then existing Company policy.
6.3 If the insurance policy permits, the Employee may at any time
direct Company, in writing to assign the insurance policy or policies to
the Employee. In the event of Employee's termination for any reason
whatsoever, whether or not with cause, payments on the policy or policies,
and Company's obligations, if any, under the policy or policies shall
cease.
6.4 Nothing herein shall be construed to alter, amend or modify the
terms of any stock option plan or policy that may be made available to
Employee by Company. Upon termination of this Agreement for any reason, any
and all such benefits granted under any such plan or policy shall be
governed by the terms and conditions of that plan or policy as it may exist
from time to time.
6.5 Company presently maintains, and shall continue to maintain
Directors and Officers Liability Insurance coverage for the benefit of
Employee for so long as Employee remains an officer of Company.
7. DEATH OR DISABILITY
In the event the Employee becomes permanently disabled so that she is
unable to perform her essential employment duties hereunder, and no requested
reasonable accommodation of Employee's disability is possible, this Agreement
shall terminate. Notwithstanding the foregoing, the compensation then payable by
Company to Employee pursuant to Section 4 hereof shall continue to be paid as if
Employee were not disabled in any way, until the end of the current Term of
employment pursuant to Section 2 hereof. For the purposes of this Agreement, the
term "permanent disability" shall mean any disability lasting ninety (90)
calendar days or more.
In the event Employee becomes temporarily disabled so that she is unable to
perform her essential employment duties hereunder, and no requested reasonable
accommodation of Employee's disability is possible, then Company has the right
to terminate this Agreement without cause consistent with the obligations set
forth in Section 8.3.1, except as otherwise provided by law. For the purpose of
this Agreement, the term "temporary disability" shall mean any disability
lasting less than ninety (90) calendar days.
In the event Employee becomes either permanently or temporarily disabled,
Company shall be entitled to credit against its obligations under Section 7 of
this Agreement the amount of any and all other disability benefits provided by
or paid for by the Company that inure to Employee's benefit. In the event this
Agreement is terminated pursuant to this Section, should an Employee's
disability cease prior to the expiration of the Term of employment during which
the Agreement was terminated, then Employee remains obligated to return to her
employment duties with the Company for the balance of the then current Term, at
the Company's option.
The terms "disability" and "disabled" as used in this Agreement connote the
inability of Employee, for a period of time greater than seven (7) consecutive
business days, to perform her regular employment duties hereunder as a result of
death, mental or physical illness, or injury or accident.
8. TERMINATION
8.1 Notwithstanding anything herein contained to the contrary, subject to
Section 7 hereof, Company shall have the right to terminate this Agreement "with
cause." A termination "with cause" may occur as
2
<PAGE> 3
provided by law or as a result of any criminal activity, reckless misconduct,
gross negligence or abandonment of corporate responsibility. In the event of a
termination by Company with cause, Company agrees to provide Employee with one
(1) day's notice and pay, but will not have any further obligations under this
Agreement, except as provided by law. Company may elect to waive the one (1) day
notice requirement by providing one (1) day's pay in lieu of notice.
8.2 During the Term of this Agreement, Employee will not have, either
directly or indirectly, any more than ten percent (10%) equity interest in any
entity, including any person, partnership, trust or incorporated or
unincorporated association or entity, that is manufacturing, distributing or
marketing products or services directly competitive to those manufactured,
distributed or marketed by Company. It is expressly understood that such
ownership or interest may represent a conflict of interest which may be grounds
for Company to terminate this Agreement with cause.
8.3 Notwithstanding anything herein contained to the contrary, subject to
Sections 7 and 8 herein, Company and Employee shall have the right to terminate
the Agreement hereunder without cause.
8.3.1 In the event Company terminates the Agreement without cause, pursuant
to Section 8.3 herein, Employee shall receive the full compensation hereunder
for the then remaining Term of this Agreement pursuant to Section 2. Company
reserves the right to exercise its option to pay the comparable value of any
benefit set forth in Section 6, above, to which employee is entitled, rather
than continuing the benefit for the balance of Term; except that, Employee will
not have any continuing rights under the 401(k) plan or other defined benefit
plan, except as otherwise provided by law.
8.3.2 In the event Employee terminates the Agreement without cause,
Employee must provide Company with at least ninety (90) days' advance written
notice. Upon the expiration of the ninety (90) day notice period, all
obligations by Company to the Employee, except those provided by law, shall
cease. Failure to provide Company with at least ninety (90) days' advance
written notice constitutes grounds for Company to terminate the Agreement with
"cause" as provided in Section 8.1 above, and voids any other right that
Employee may have to compensation, benefits or plans pursuant to Company
programs or policies, except those required to be provided by law.
8.4 In the event of a "Change in Control" of Company, as defined in
Sections 10 and 11 below, the following shall apply:
(a) Upon a Change in Control, if the Term of the Agreement has less
than twelve (12) months remaining, the Term of this Agreement shall be
extended so that a twelve (12) month Term remains from the time of the
Change in Control to the end of the Term. The extended Term of the
Agreement will be on terms identical to those in effect at the time of the
Change in Control. In the event that more than twelve (12) months of the
Term exists as of the time of a Change in Control, there will be no change
in the Term.
(b) Employee commits to continue to perform her duties under this
Agreement for a minimum of twelve (12) months after a Change in Control. At
the end of twelve (12) months after a Change in Control, Employee has the
option to voluntarily terminate this Agreement without a loss of benefits,
as if Company had terminated this Agreement "without cause" pursuant to
Section 8.3.1 above.
(c) In the event of a Change in Control, Section 4.2, providing for an
annual bonus, will be modified to provide that Employee's current fiscal
year annual bonuses will in no event, be less than the annual bonus given
in the full year prior to the Change in Control.
8.5 With respect to any payments due and owing as a result of any
termination pursuant to this Section 8, Employee may, at her option, receive
payment for any such obligations in a one-time lump sum payment, or, may
continue to receive payments in accordance with Company's usual payroll
procedures, as they may exist from time to time.
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<PAGE> 4
9. COVENANTS BY EMPLOYEE
9.1 Employee hereby acknowledges that Company is one of only a small number
of companies worldwide that designs, manufactures and sells plasma process thin
film etching and deposition equipment. Employee also acknowledges that pursuant
to her prior relationship with Company, and under the terms of this Agreement,
she will gain access to valuable trade secrets of Company and other valuable
confidential business and proprietary information, and will become aware of and
a part of Company's substantial relationships with customers, potential
customers, suppliers, and sources. Accordingly, Employee hereby covenants that
she shall not, either directly or indirectly, as a principal, partner,
stockholder, officer, director, agent or employee, or in any other capacity,
enter into any employment agreement, or accept employment with or render
services for, any company, partnership, person or entity that competes or
attempts to compete, whether directly or indirectly, with Company, for the
balance of the then remaining Term of this Agreement or for a period of twelve
months (12) from the termination of this Agreement, whichever is greater,
regardless of the reason for said termination.
9.2 The Employee agrees that she shall not solicit or attempt to solicit,
sell to, lease to or offer to sell to, or offer to lease to, except on behalf of
Company or any Affiliate, any present or future customer of Company or
Affiliate, any goods or services competitive to the goods and services now or
hereafter offered for sale or lease by Company or any Affiliate for the periods
of time set forth in Section 9.1 herein.
9.3 The parties hereto recognize that the covenants of Employee herein
contained are unique and that in the event there is a breach or threatened
breach of such covenants, Company shall be entitled, in addition to any other
remedies available to it, to institute and prosecute proceedings in any court of
competent jurisdiction either in law or in equity, to obtain damages for any
breach of covenants or to enforce a specific performance thereof by Employee, or
to enjoin Employee from performing services or doing any act in breach of such
covenants.
9.4 For the purposes of this Agreement, the term "Affiliate" shall mean any
person who or which, directly and/or indirectly, controls, is controlled by or
is under common control with another person. For the purpose of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of management and policies, whether through the ownership
of voting securities, by contract or otherwise. For the purpose of this
definition, "person," refers to an individual, partnership, company,
corporation, or other entity.
9.5 Employee agrees that during the Term hereof and after the termination
of Employee for any reason whatsoever, the Employee shall not disclose to any
person, firm, partnership, company, or other legal entity any information
concerning any of the methods of conducting business utilized by Company or any
Affiliate or any details relating thereto including, but not limited to, the
names of suppliers, customers and methods of operation of Company or any of its
Affiliates; Employee hereby acknowledges that this information is confidential
in nature. This provision shall not be construed to prevent Employee from using
any knowledge that she possessed at the time she commenced her employment with
Company or from using any information that is not confidential.
9.6 Employee has carefully read the provisions of Section 9 herein, and of
each subsection or subparagraph thereof, and having done so agrees that:
(a) the restrictions set forth therein are fair and reasonable and are
reasonably required for the protection of the interests of Company; and
(b) each subsection or subparagraph set forth therein is separate and
independent and all are to be construed as separate and independent of any
other so as to promote their enforcement to the maximum extent possible.
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10. CHANGE IN CONTROL
"Change in Control" as used in this Agreement shall refer to any one or
more of the following:
(a) the acquisition in any manner of the beneficial ownership of
shares of Company having 20% or more of the total number of votes that may
be cast for the election of one or more directors of Company by any person,
or persons acting as a group within the meaning of Section 13(d) of the
Securities and Exchange Act of 1934, if the Board has made a determination
that such acquisition constitutes or will constitute control of Company;
(b) any liquidation, dissolution or sale of all or substantially all
of the assets of Company; or
(c) any action taken following, as a result of, or in connection with,
any tender or exchange, offer, merger or other business combination of the
foregoing whereby the persons who were the Directors of Company immediately
prior to such action shall cease to constitute a majority of the Board of
Company or any successor to Company.
The term "person," as used in this Section 10, refers to an individual,
partnership, company, corporation, or other entity.
11. ASSIGNABILITY
Employee may not transfer or assign this Agreement to any other person.
Company may assign this Agreement to any other company or entity that acquires
all or substantially all of the assets of Company, without further permission of
the Employee. In the event Company assigns this Agreement, said assignment will
be deemed to constitute a "Change in Control" as referred to in Sections 8.4 and
10, above.
12. PAID TIME OFF
Employee shall be entitled to take Paid Time Off at such time as shall
reasonably be requested by Employee and approved by Company in accordance with
Company policy, not to exceed five (5) weeks per annum. Paid Time Off less than
five (5) weeks per annum not used, shall either be "cashed out" or forfeited
according to Company policy. In the event of termination without cause by
Company or by Employee or with cause by Employee, Employee will receive cash
equivalent of time not yet taken during the Term in accordance with Company
policy.
13. MISCELLANEOUS PROVISIONS
13.1 NOTICES
Any notice required or permitted to be given under this Agreement shall be
in writing, and shall be deemed to have been given when delivered personally or
sent by registered or certified mail, postage prepaid, addressed as follows:
If to Company: Diana M. DeFerrari, Senior Vice President
Plasma-Therm, Inc.
10050 16th Street North
St. Petersburg, FL 33716
If to Employee: Stacy L. Wagner
4928 Dartmouth Ave. N.
St. Petersburg, Florida 33710
The designation of the person to be so notified or the address of such person
for the purposes of such notice may be changed from time to time by a similar
notice to be effective ten (10) days after such changed designation is supplied.
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13.2 CHOICE OF LAW
This Agreement, and any dispute arising between the parties by virtue of
their relationship under this Agreement, shall be governed by and construed in
accordance with the applicable laws of the State of Florida. The parties further
agree that any lawsuit or action pertaining to, or arising from, this Agreement,
shall be brought in the state or federal courts within the State of Florida, and
the parties expressly waive the right to proceed in any other jurisdiction or
forum.
13.3 ENTIRE AGREEMENT
This Agreement constitutes the full and complete understanding and
agreement of the parties and supersedes all prior understandings and agreements,
and may not be modified or amended orally, but only by an agreement in writing,
signed by the party against whom enforcement of the Agreement, or of or any
waiver, change, modification, extension or discharge of the Agreement, is
sought.
13.4 SEVERABILITY
This Agreement shall be construed to be valid and enforceable to the full
extent allowed by law. It is understood and agreed by the parties that if any
part, term or provision of this Agreement is determined to be illegal or in
conflict with applicable law, the validity of the remaining portions or
provisions shall not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the part,
term or provision held to be invalid.
13.5 INDEMNIFICATION
(a) Third-Party Proceeding: Company shall indemnify Employee, her heirs,
or personal representative, made, or threatened to be made, a party to any
threatened, pending, or completed action or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that she was or is a
corporate agent, or serves or served any other corporation or other enterprise
in any capacity at the request of Company, to the full extent permitted by
Florida law, including, without limitation, indemnification against her expenses
and liabilities in connection with the third party proceeding if she acted in
good faith and in a manner reasonably believed by her to be in, or not opposed
to, the best interests of Company, and with respect to any criminal third party
proceeding, had no reasonable cause to believe her conduct was unlawful or in
violation of applicable rules. The termination of any third party proceeding by
judgment, order, settlement, consent, filing of a criminal complaint or
information, indictment, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Employee did not act
in good faith and in a manner which she reasonably believed to be in, or not
opposed to, the best interests of Company or, with respect to any criminal third
party proceeding, had reasonable cause to believe that her conduct was unlawful.
(b) Derivative Actions: Company shall indemnify any director or officer of
Company, who was or is a party or is threatened to be made a party to any
derivative action by reason of the fact that such director or officer was or is
a corporate agent, against her expenses in the action if she acted in good faith
and in a manner reasonably believed by her to be in, or not opposed to, the best
interest of Company; except, that no indemnification shall be made in respect of
any claim, issue or matter as to which she shall have been adjudged to be liable
for negligence or misconduct in the performance of her duty to Company unless
and only to the extent that the court in which such derivative action is or was
pending shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, she is fairly and
reasonably entitled to indemnity for such items as the court shall deem proper.
(c) Independent Legal Counsel: In the event of an actual or potential
conflict of interest, Employee shall be entitled to an independent legal counsel
and said counsel shall be chosen by Company, subject to the consent of Employee,
and all such reasonable expenses incurred in defense of Employee shall be paid
directly by Company, or reimbursed to Employee at Employee's sole option.
(d) Scope of Employment: Pursuant to this Section 13.5, Company shall only
indemnify Employee, her heirs, or personal representative, made, or threatened
to be made, a party to any threatened, pending, or
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completed action or proceeding, for claims relating to or arising out of
Employee's actions, or omissions, within the scope of her employment by Company.
(e) The term and conditions of this Section 13.5 shall survive the
termination of this Agreement and shall apply to any claims made against
Employee, relating to, or arising from Employee's actions pursuant to this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
Witnesses: PLASMA-THERM, INC.
/s/ RONALD S. DEFERRARI /s/ DIANA M. DEFERRARI
- -------------------------------- --------------------------------------
Diana M. DeFerrari
Senior Vice President
Witnesses: Employee
/s/ SHARON SMITH /s/ STACY L. WAGNER
- -------------------------------- --------------------------------------
Stacy L. Wagner
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EXHIBIT 11
March 19, 1997
Ms. Dee DeFerrari, Senior Vice President
Plasma-Therm, Inc.
10050 16th Street North
St. Petersburg, Florida 33716
Dear Dee:
Thank you for the opportunity to make the following commitment to you.
NationsBank, N.A. (South) (the "Bank") is pleased to have approved for
Plasma-Therm, Inc. (the "Borrower") a credit facility consisting of a
$7,000,000 Confirmed Line of Credit and a $1,000,000 Term Loan (the "Loans").
This commitment is subject to the execution and delivery to the Bank of legal
documents yet to be prepared, including, without limitation, a loan agreement
and promissory notes. All such documents must be satisfactory in form and
substance to the Bank and its counsel. The making and funding of any loans
under this commitment is expressly subject in the Terms and Conditions
described herein:
TERMS AND CONDITIONS
BORROWER: Plasma-Therm, Inc.
AMOUNT AND TYPE OF LOANS:
(1) $7,000,000 Confirmed Line of Credit (the "Line")
(2) $1,000,000 Term Loan (the "Term Loan")
PURPOSE:
1) Fund short term working capital needs and support the issuance of letters
of credit.
2) Finance the purchase of capital equipment.
INTEREST RATE:
(1) Interest shall accrue on the unpaid principal balance at a floating rate
equal to the one month LIBOR, as determined by the Bank and adjusted for
reserves, deposit insurance assessments and other regulatory costs, plus 2.0%.
(2) Interest shall accrue on the unpaid principal balance at a floating rate
equal to the one month LIBOR, as determined by the Bank and adjusted for
reserves, deposit insurance assessments and other regulatory costs, plus 2.25%.
COMMITMENT FEES:
(1) Borrower agrees to pay a commitment fee equal to 3/4% of the Line upon the
closing of the Line. In addition, should the Bank elect to renew the Line at
its maturity and as long
<PAGE> 2
as no event of default occurred during the term of the Line, the renewal fee
shall be limited to 1/2% of the exiting loan amount.
(2) Borrower agrees to pay a commitment fee equal to 3/4% of the Term Loan upon
the closing of the Term Loan.
REPAYMENT TERMS:
(1) Repayment of the Line will consist of accrued interest paid monthly with
the principal balance and any accrued interest payable at maturity on May 19,
1998.
(2) The Term Loan shall be repaid in 35 consecutive monthly installments of
principal in the amount of $27,778, together with accrued interest payable and
one final installment of all unpaid principal and accrued interest on the 36th
and final payment.
LOAN DOCUMENTS: The Loans shall be made under and governed by definitive Loan
Documents to be executed and delivered by the Borrower to the Bank and
containing the terms set forth in this commitment and such other terms,
conditions, representations, warranties and covenants as are usual and
customary in lending transactions such as the Loans, which documents may
include one or more promissory notes, a loan agreement, security agreements,
financing statements and such other documents, instruments, certificates and
agreements executed and/or delivered by Borrower in connection with the Loans
(collectively, the "Loan Documents").
COLLATERAL:
(1) A first priority security interest in all accounts receivables owned by
the Borrower or hereafter acquired and all replacements and substitutions
thereof and proceeds thereof. In addition, the Borrower shall agree not to
encumber its inventory during the term of the Line.
(2) A first priority security interest in equipment to be purchased with the
Term Loan.
The Line and the Term Loan shall be cross-collateralized.
SURVIVAL: This commitment letter shall constitute one of the Loan Documents
and shall survive the closing of the Loans, the execution and delivery of all
Loan Documents, and the making of any advances or disbursements thereunder. In
the event of a conflict between a provision contained in this commitment letter
and a provision of any other Loan Document, the terms of the other Loan
Document shall control.
CONDITIONS TO FIRST ADVANCE: Prior to the making by the Bank of the first
advance to the Borrower, the following conditions precedent shall have been
satisfied:
1. The Bank shall have received, duly executed, all Loan Documents and any
other documents and instruments necessary or advisable in connection with the
Loan, all of which shall be in form and substance satisfactory to the Bank and
its counsel.
2. With respect to the personal property or other collateral described herein
referred to above, the Bank shall have received (i) casualty insurance policies
on tangible personal
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property naming the Bank as a loss payee thereunder, and (ii) evidence
satisfactory to the Bank as to the validity, enforceability and priority of the
Bank's security interest therein subject only to prior liens referred to in
this commitment and such other exceptions as may be acceptable to the Bank in
its sole discretion.
ADVANCE PROCEDURE: Advances under the Line will be made by telephonic or
written communication from a person reasonably believed by the Bank to be an
authorized representative of the Borrower. Unless otherwise agreed by the
Bank, all advances will be made to a demand deposit account maintained at the
Bank in the name of the Borrower.
BORROWING BASE: Notwithstanding the maximum amount of the Line, the total of
advances outstanding under the Line at any time shall not exceed an amount
equal to the sum of 80% of the book value of Borrower's eligible domestic
receivables, 80% of all foreign receivables backed by letters of credit and 50%
of all other eligible foreign receivables. For the purposes of the Line,
eligible accounts receivable shall mean all accounts receivables less than 60
days. To the extent the total of advances outstanding hereunder at any time
exceeds the Borrowing Base, Borrower shall immediately prepay the Line to such
extent.
REPORTING REQUIREMENTS: So long as the Borrower is indebted to the Bank, the
Borrower shall submit to the Bank the following:
1. Quarterly, within forty-five (45) days of the end of each fiscal quarter a
10Q report of the Borrower, including a balance sheet and income statement.
2. Annually, within one hundred and twenty (120) days following the end of the
Borrower's fiscal year, a balance sheet and income statement prepared in
accordance with generally accepted accounting principles on an audited basis by
an independent certified public accountant, including statements of financial
condition, income, cash flows and changes in shareholders' equity.
3. The Borrower shall submit to the Bank on a quarterly basis a report showing
a detailed aging of accounts receivable within thirty (30) days of the end of
each fiscal quarter.
4. The Borrower shall submit a quarterly borrowing base certificate showing
all eligible accounts receivable and the total of advances outstanding under
the Line within thirty (30) days of the end of each fiscal quarter. At each
submission, the borrowing base certificate shall be calculated based on
accounts receivables as of the previous fiscal quarter end.
REPRESENTATIONS AND WARRANTIES: Customary, including confirmation of corporate
status and authority; execution, delivery and performance of Loan Documents do
not violate law or existing agreements; no litigation except as disclosed to
Bank; ownership of property; payment of taxes; no material adverse change in
financial condition or operations since November 30, 1996; principal place of
business; compliance with environmental laws and continuation of
representations and warranties.
FINANCIAL COVENANTS: Until full payment and performance of all obligations of
the Borrower under the Loans, Borrower will, unless Bank consents otherwise in
writing (and without limiting any requirement of any other loan document):
3
<PAGE> 4
1. Total Liabilities to Tangible Net Worth Ratio: Maintain a ratio of Total
Liabilities to Tangible Net Worth of not greater than 1.00 to 1.00 as of the
end of each of Borrower's fiscal quarters. Tangible Net Worth is defined as
total assets less total liabilities less intangibles, goodwill, leasehold
improvements, and due from officers, stockholders and affiliates.
2. Cash Flow Coverage Ratio: Maintain a minimum Cash Flow Coverage Ratio of
not less than 2.00 to 1.00. This ratio shall be defined as: net income plus
depreciation expense plus amortization expense, plus interest expense, plus
non-cash expenses less non-cash gains, less cash dividend payments, less
capital stock repurchases all divided by the sum of current maturities of long
term debt and capital lease obligations plus interest expense. This covenant
shall be measured quarterly on a rolling four quarter basis. At each quarter
end, the numerator will be determined based on the previous four fiscal
quarters while the denominator will be determined based on the subject fiscal
quarter end. Interest expense for both the numerator and the denominator will
be determined based on the subject fiscal quarter end.
All accounting terms not specifically defined or specified herein shall have
the meanings generally attributed to such terms under generally accepted
accounting principles ("GAAP"), as in effect from time to time, consistently
applied.
AFFIRMATIVE COVENANTS: Customary, including the delivery of financial
statements, reports and other information requested by Bank; maintenance of
insurance; continuation of business and maintenance of existence; compliance
with laws; payment of taxes; maintenance of property and notice of
environmental claims.
NEGATIVE COVENANTS: Customary, including: capital expenditures of not more
than $4,000,000 each fiscal year; transfer of assets; additional borrowings
shall not exceed $1,000,000 annually; no additional liens on assets with the
exception of those associated with the $1,000,000 in additional borrowings
permitted.
EVENTS OF DEFAULT: A default shall occur under this letter of commitment and
under each of the Loan Documents and under any other promissory note executed
by Borrower in favor of Bank if the Borrower defaults in the payment of any
amounts due and owing under the Loan or any other indebtedness owing to Bank
within fifteen (15) days of its due date or fails to timely and properly
observe, keep or perform any term, covenant, agreement or condition in any of
the Loan Documents or in any other loan agreement, promissory note, or other
contract securing or evidencing payment of any indebtedness of Borrower, any
endorser or any guarantor of any loan to the Bank.
REMEDIES UPON DEFAULT: If the event a default shall occur Bank shall have all
rights, powers and remedies available under each of the Loan Documents as well
as all rights and remedies available at law or in equity.
CLOSING COSTS AND EXPENSES: The Borrower shall be responsible and liable for,
and shall hold the Bank harmless from, and shall pay, all costs and expenses
incurred by
4
<PAGE> 5
the Bank in connection with the Bank's review, due diligence and closing of the
Loans except reasonable attorney fees which are to be paid by the Bank.
MATERIAL ADVERSE CHANGE: This commitment may be terminated, in the sole
discretion of the Bank, upon the occurrence of a material adverse change in the
financial condition of the Borrower.
NON-ASSIGNABLE: This commitment and the right of the Borrower to receive loans
hereunder may not be assigned by Borrower.
RELIANCE: This commitment constitutes an offer by the Bank to the Borrower to
make the Loans on the terms and conditions set forth herein and should not be
relied upon by any third party for any purpose.
AMENDMENT AND WAIVER: No alteration, modification, amendment or waiver of any
terms and conditions of this commitment, or of any of the documents required by
or delivered to the Bank under this commitment, shall be effective or
enforceable against the Bank unless set forth in a writing signed by the Bank.
GOVERNING LAW: This commitment and the Loans shall be governed by and
construed in accordance with the laws of the State of Florida (without regard
to choice of law principles).
INTEGRATION: The terms set forth above represent the entire understanding
between the Borrower and the Bank with respect to the subject matter of this
commitment, and this commitment supersedes any prior and contemporaneous
agreements, commitments, discussions and understandings, oral or written, with
respect to the subject matter of this commitment.
ARBITRATION: ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE AND
ANY SUCCESSOR THEREOF (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY
PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS
AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN
THE CITY OF THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS
INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT
AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING
THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
5
<PAGE> 6
B. RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT,
AGREEMENT OR DOCUMENT SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY
OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED
IN THIS AGREEMENT; OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED
TO IT BY 12 U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF THE BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS
(BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL
PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR
THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE SUCH SELF HELP RIGHTS,
FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES
BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF
SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE
THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
EXPIRATION: This commitment shall expire on March 30, 1997. In addition, this
commitment is to be closed within thirty (30) days of the acceptance date.
Should this commitment not be accepted by the expiration date, and not closed
within thirty (30) days of the acceptance date, then the Bank shall have no
further obligation to extend credit hereunder.
Thank you for the opportunity to provide you with the financial services of
NationsBank.
Sincerely,
/s/ James E. Harden, Jr.
- ------------------------
James E. Harden, Jr.
Vice President
The terms and conditions set forth above are accepted this 19th day of March,
1997.
Plasma-Therm, Inc.
/s/ Dee DeFerrari
- -----------------
Dee DeFerrari
Senior Vice President
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF FEBRUARY 28, 1997, AND CONSOLIDATED STATEMENTS
OF INCOME FOR THE PERIOD ENDED FEBRUARY 28, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 6,780,093
<SECURITIES> 0
<RECEIVABLES> 8,463,851
<ALLOWANCES> 0
<INVENTORY> 7,266,649
<CURRENT-ASSETS> 23,107,122
<PP&E> 11,622,715
<DEPRECIATION> 2,551,862
<TOTAL-ASSETS> 32,447,772
<CURRENT-LIABILITIES> 4,757,769
<BONDS> 3,944,522
0
0
<COMMON> 109,952
<OTHER-SE> 24,084,965
<TOTAL-LIABILITY-AND-EQUITY> 32,447,772
<SALES> 9,480,580
<TOTAL-REVENUES> 9,480,580
<CGS> 5,712,963
<TOTAL-COSTS> 8,071,476
<OTHER-EXPENSES> (72,453)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,674
<INCOME-PRETAX> 1,378,883
<INCOME-TAX> 547,223
<INCOME-CONTINUING> 831,660
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 831,660
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
