FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MAY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File Number 0-12353
PLASMA-THERM, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 04-2554632
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10050 16TH STREET NORTH, ST. PETERSBURG, FLORIDA 33716
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(Address of principal executive offices and zip code)
(813)577-4999
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Registrant's telephone number, including area code
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
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
Outstanding at June 5, 1998:
11,197,061
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Page 1 of 16 Pages
<PAGE>
INDEX
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PAGE
NUMBER
------
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Balance Sheets - May 31, 1998 and
November 30, 1997......................................................3
Statements of Income - Three Months and Six Months Ended
May 31, 1998 and May 31, 1997 .........................................5
Statements of Cash Flows - Six Months Ended
May 31, 1998 and May 31, 1997 .........................................6
Notes to Consolidated Financial Statements ..............................8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ..........................11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .............................14
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<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MAY 31, NOVEMBER 30,
ASSETS 1998 1997
----------- -----------
(UNAUDITED)
Current assets
Cash and cash equivalents $ 6,741,021 $ 5,398,030
Accounts receivable 13,917,749 13,755,778
Inventories 11,520,504 9,875,801
Prepaid expenses and other 785,268 414,521
Deferred tax asset 260,256 293,814
----------- -----------
Total current assets 33,224,798 29,737,944
----------- -----------
Property, plant and equipment
Land 1,012,992 786,017
Building 4,594,517 4,444,649
Machinery and equipment 8,008,763 7,678,097
Leasehold improvements 149,505 148,055
----------- -----------
13,765,777 13,056,818
Less accumulated depreciation and
amortization 3,427,852 3,405,935
----------- -----------
10,337,925 9,650,883
----------- -----------
Other assets 180,442 218,263
----------- -----------
$43,743,165 $39,607,090
=========== ===========
See accompanying notes to these consolidated financial statements.
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<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MAY 31, NOVEMBER 30,
LIABILITIES 1998 1997
----------- ------------
Current liabilities
Short-term borrowings $ 2,000,000 $ 2,000,000
Current maturities of long-term obligations 694,613 723,968
Accounts payable 3,876,446 3,141,397
Accrued payroll and related 752,352 651,505
Accrued expenses 899,197 734,720
Customer deposits 25,500 --
----------- -----------
Total current liabilities 8,248,108 7,251,590
----------- -----------
Long-term obligations 3,341,041 3,670,581
----------- -----------
SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock, $.01 par value (25,000,000
shares authorized, 11,197,061 and
11,126,561 shares issued and outstanding
at May 31, 1998 and November 30, 1997) 111,972 111,267
Additional paid-in capital 17,110,052 16,695,253
Retained earnings 14,931,992 11,878,399
----------- -----------
32,154,016 28,684,919
----------- -----------
$43,743,165 $39,607,090
=========== ===========
See accompanying notes to these consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
MAY 31, MAY 31,
--------------------------- ---------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 14,962,868 $ 10,241,534 $ 27,274,588 $ 19,722,114
Cost of sales 8,156,422 5,826,751 15,126,526 11,539,714
------------ ------------ ------------ ------------
Gross profit 6,806,446 4,414,783 12,148,062 8,182,400
------------ ------------ ------------ ------------
Operating expenses:
Research and development 1,659,290 903,086 2,763,017 1,695,635
Selling and administrative 2,553,521 1,704,702 4,400,772 3,279,756
------------ ------------ ------------ ------------
Total operating expenses 4,212,811 2,607,788 7,163,789 4,975,391
------------ ------------ ------------ ------------
Operating income 2,593,635 1,806,995 4,984,273 3,207,009
Interest (income) expense, net 60,879 (18,617) 106,634 2,514
------------ ------------ ------------ ------------
Income before income taxes 2,532,756 1,825,612 4,877,639 3,204,495
Income taxes 952,843 660,136 1,824,046 1,207,359
------------ ------------ ------------ ------------
Net income $ 1,579,913 $ 1,165,476 $ 3,053,593 $ 1,997,136
============ ============ ============ ============
Earnings per share:
Basic $ 0.14 $ 0.11 $ 0.27 $ 0.19
============ ============ ============ ============
Diluted $ 0.14 $ 0.10 $ 0.27 $ 0.18
============ ============ ============ ============
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED MAY 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 3,053,593 $ 1,997,136
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 1,134,281 859,948
Deferred taxes 33,558 91
Compensation - stock options 12,000 4,550
Tax benefit related to certain stock options
and warrants 97,059 198,427
Changes in assets and liabilities
Increase in accounts receivable (161,971) (1,417,575)
Increase in inventories (1,644,703) (1,516,282)
Increase in prepaid expenses and other (370,747) (219,569)
Increase in accounts payable 735,049 876,607
Increase (decrease) in accrued payroll and related 100,847 (34,918)
Increase (decrease) in accrued expenses 164,477 (23,084)
Increase in customer deposits 25,500 7,840
----------- -----------
Net cash provided by
operating activities 3,178,943 733,171
----------- -----------
Cash flows from investing activities
Capital expenditures (1,806,323) (547,393)
Other 22,821 (8,801)
----------- -----------
Net cash used in investing activities (1,783,502) (556,194)
----------- -----------
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
PLASMA-THERM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
SIX MONTHS ENDED MAY 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from financing activities
Principal payments on long-term obligations (358,895) (343,116)
Net proceeds (payments) under line of credit agreements -- --
Exercise of stock options and warrants 306,445 962,870
----------- -----------
Net cash provided by (used in)
financing activities (52,450) 619,754
----------- -----------
Net increase in cash and
cash equivalents 1,342,991 796,731
----------- -----------
Cash and cash equivalents, beginning of period 5,398,030 5,266,279
----------- -----------
Cash and cash equivalents, end of period $ 6,741,021 $ 6,063,010
=========== ===========
</TABLE>
See accompanying notes to these consolidated financial statements.
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<PAGE>
PLASMA-THERM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1998 AND NOVEMBER 30, 1997
(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 May 31, 1998 and November 30, 1997 and the results of
operations and cash flows for the six months ended May 31, 1998 and
1997.
The results of operations for the six months ended May 31, 1998 and
1997 are not necessarily indicative of results for the full year.
The November 30, 1997 balance sheet amounts and disclosures included
herein have been derived from the November 30, 1997 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 INVENTORIES
Inventories consist of the following:
May 31, November 30,
1998 1997
------- ------------
Raw materials $ 6,546,269 $ 6,738,918
Work-in-process 4,412,313 2,494,527
Finished goods 561,922 642,356
----------- -----------
$11,520,504 $ 9,875,801
=========== ===========
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<PAGE>
NOTE 4 EARNINGS PER SHARE DISCLOSURES
FOR THE THREE MONTHS ENDED MAY 31, 1998
---------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
Basic EPS:
Income available to common
shareholders $1,579,913 11,169,632 $.14
====
Effect of Dilutive Securities:
Options -- 255,191
---------- ----------
Diluted EPS:
Income available to common
shareholders + assumed conversions $1,579,913 11,424,823 $.14
========== ========== ====
FOR THE THREE MONTHS ENDED MAY 31, 1997
---------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
Basic EPS:
Income available to common
shareholders $1,165,476 10,997,811 $.11
====
Effect of Dilutive Securities:
Options -- 108,550
---------- ----------
Diluted EPS:
Income available to common
shareholders + assumed conversions $1,165,476 11,106,361 $.10
========== ========== ====
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<PAGE>
FOR THE SIX MONTHS ENDED MAY 31, 1998
---------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
Basic EPS:
Income available to common
shareholders $3,053,593 11,155,564 $.27
====
Effect of Dilutive Securities:
Options -- 250,331
---------- ----------
Diluted EPS:
Income available to common
shareholders + assumed conversions $3,053,593 11,405,895 $.27
========== ========== ====
FOR THE SIX MONTHS ENDED MAY 31, 1997
-------------------------------------
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
Basic EPS:
Income available to common
shareholders $1,997,136 10,797,528 $.19
====
Effect of Dilutive Securities:
Options -- 216,974
---------- ----------
Diluted EPS:
Income available to common
shareholders + assumed conversions $1,997,136 11,014,502 $.18
========== ========== ====
NOTE 5 SHORT-TERM BORROWINGS
In March, 1998 the Company increased its existing line of credit with its bank
from $7,000,000 to $10,000,000. The term of the line of credit agreement is
through May, 1999. Interest is payable monthly at the one month LIBOR rate plus
2% (7.66% at May 31, 1998). The line is collateralized by accounts receivable.
The line is cross-collateralized with the term loan, and the bank has a security
interest in the proceeds for the collection of accounts receivable and the
Company's depository accounts. The agreements include financial covenants
relating to the Company's operating performance and financial condition. In
addition, a negative pledge agreement was executed which does not permit the
Company to hold a lien or encumbrance on its inventory.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Net sales of $14,962,868 for the second quarter of 1998 increased by
46% from net sales of $10,241,534 for the second quarter of 1997. For the first
six months of 1998, the Company reported net sales of $27,274,588, which was 38%
higher than net sales of $19,722,114 for the first six months of 1997. The
increase in net sales for both the second quarter and first six months was
attributable to higher product demand and sales of the Company's premier
product, the Versalock(R) 700 Series.
Gross profit of $6,806,446 for the second quarter of 1998 was 45.5% of
net sales, compared to $4,414,783 for the second quarter of 1997 which was 43.1%
of net sales. Gross profit of $12,148,062 for the first six months of 1998 was
44.5% of net sales, compared to $8,182,400 for the first six months of 1997
which was 41.5% of net sales. The increase in gross profit for the second
quarter and first six months of 1998 was due to increased sales of the
Versalock(R) 700 product line described in the previous paragraph which has a
higher gross margin than the Company's other product lines.
Research and development expense for the second quarter of 1998 and
1997 was $1,659,290 and $903,086, respectively, which was 11.1% and 8.8% of net
sales, respectively. Research and development expense for the first six months
of 1998 and 1997 was $2,763,017 and $1,695,635, respectively, which was 10.1%
and 8.6% of net sales, respectively. Research and development programs continue
to be implemented to enhance development efforts in the Company's target
markets: optoelectronics/telecommunications, thin film head, photomask, and
microelectromechanical (MEMS). As a result, the Company's R&D lab is expanding
requiring additional capital outlay. The Company operates in constantly changing
and highly competitive markets. Therefore, the Company believes it is critical
to continue to increase its investment in research and development programs in
order to continue to provide innovative, high-quality products, as well as
maintain and increase its position as a technology leader in the markets served.
Selling and administrative expense was $2,553,521 for the second
quarter of 1998, up from $1,704,702 for the second quarter of 1997 which was
17.1% and 16.6% of net sales, respectively. Selling and administrative expense
for the first six months of 1998 was $4,400,772, up from $3,279,756 for the
first six months of 1997 which was 16.1% and 16.6% of net sales, respectively.
For the second quarter and the first six months of 1998 spending has increased
for marketing and investor relations initiatives to support the ongoing
development of markets and increased awareness of the Company and its products.
In addition, to a lesser extent, the increase in absolute dollars resulted from
a generally higher level of overhead required to support the increased sales
volume. As a percentage of net sales, for the first six
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<PAGE>
months of 1998 these expenses have decreased as revenue growth has exceeded the
growth in spending.
Income before income taxes for the second quarter of 1998 was
$2,532,756, an increase of $707,144 from $1,825,612 earned the second quarter of
1997. Net income per share (diluted) was $.14 for the second quarter of 1998, an
increase of $.04 from $.10 for the second quarter of 1997. Income before income
taxes for the first six months of 1998 was $4,877,639, an increase of $1,673,144
from $3,204,495 earned the first six months of 1997. Net income per share
(diluted) was $.27 for the first six months of 1998, an increase of $.09 from
$.18 for the first six months of 1997. The primary reasons for the increase for
both the second quarter and first six months of 1998 relates to increased net
sales with higher margins as described in the previous paragraphs.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS
Net cash provided by operations totaled $3,178,943 for the first six
months of 1998, compared to $733,171 for the same period in 1997. Cash generated
from operations for the first six months of 1998 consisted of various
components, including net income of $3,053,593 plus non-cash expenses
(depreciation and amortization) of $1,134,282. Other primary sources of cash
include an increase in accounts payable and accrued expenses of $1,000,373.
Primary sources of cash were partially offset by an increase in inventories of
$1,644,703. The 22% increase in accounts payable and accrued expenses and the
17% increase in inventories were primarily related to a higher level of
purchases required for the increased level of sales.
Net cash used in investing activities for the first six months of 1998
was $1,783,502 compared to $556,194 for the same period in 1997. For the first
six months of 1998, the Company incurred approximately $1,806,000 in capital
expenditures, of which $227,000 was for the purchase of land to construct a
33,000 square foot building to be used for additional research and development
and office space. Approximately $1,229,000 was for the purchase and construction
of various lab equipment to be used for research and development. The remaining
$350,000 was primarily for various computer equipment.
March, 1998 the Company increased its existing line of credit with its
bank from $7,000,000 to $10,000,000. The term of the line of credit agreement is
through May, 1999. Interest is payable monthly at the one month LIBOR rate plus
2% (7.66% at May 31, 1998). The line is collateralized by accounts receivable
and is cross-collateralized with the Company's $1,000,000 term loan.
Net cash used in financing activities for the first six months of 1998
was $52,450 as compared to $619,754 provided by financing activities for the
same period in 1997. Cash used for financing activities in the first half of
1998 included the principal repayment of approximately $359,000 of long-term
obligations. Cash provided by financing activities included net receipts of
$306,000 from the exercise of stock options in connection with the Company's
stock option plan.
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<PAGE>
The Company has extensive ongoing capital requirements for research and
development, the repayment of debt, capital equipment and inventory. The Company
believes that its current cash reserves, together with the funds available under
its line of credit, should be sufficient to meet its capital requirements for
the immediate future.
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, inventory, research and
development activities and expenditures 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, the Company sells equipment directly to
manufacturers in the optoelectronics/telecommunications, thin film head,
photomask and microelectromechanical (MEMS) industries. A slowdown in more than
one of these industries 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.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.15* Amendment to Employment Agreement between the Registrant
and Stacy L. Wagner, effective August 19, 1997.
10.47* Loan Agreement dated March 25, 1998 between
the Company and NationsBank, N.A. (South)
including Amendment to Credit Agreement,
Amendment to Security Agreement, Amendment
to Negative Pledge Agreement, Guaranty
Agreement, Line of Credit Note and Line of
Credit Consolidation Note.
27* Financial Data Schedule (for SEC use only)
*Filed electronically herewith.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the second quarter of fiscal
1998.
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<PAGE>
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: June 12, 1998
By: /s/STACY WAGNER
----------------------------------
Stacy Wagner
V.P. of Finance and Administration
Date: June 12, 1998
By: /s/RONALD S. DEFERRARI
----------------------------------
Ronald S. Deferrari
President, Chief Operating Officer
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<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
10.15* Amendment to Employment Agreement between the Registrant
and Stacy L. Wagner, effective August 19, 1997.
10.47* Loan Agreement dated March 25, 1998 between
the Company and NationsBank, N.A. (South)
including Amendment to Credit Agreement,
Amendment to Security Agreement, Amendment
to Negative Pledge Agreement, Guaranty
Agreement, Line of Credit Note and Line of
Credit Consolidation Note.
27* Financial Data Schedule (for SEC use only)
*Filed electronically herewith.
AMENDMENT TO EMPLOYMENT AGREEMENT (dated 1/22/97)
Effective August 19, 1997
This document shall serve as an Amendment to Stacy L. Wagner's Employment
Agreement dated January 22, 1997. This document is hereby amended to reflect the
following changes to sections 3 and 4 of the Agreement.
3. DUTIES
The Employee shall be employed as Vice President of Finance and
Administration, 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
4.1 A base annual salary of $85,000 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 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 $100,000.00 annually; and
4.3 A car allowance of $600, payable monthly.
FOR PLASMA-THERM, INC.
By:/s/RONALD S. DEFERRARI
-------------------------
Ronald S. Deferrari,
President and Chief Operating Officer
EMPLOYEE
By:/s/STACY L. WAGNER
- ---------------------
Stacy L. Wagner
EXHIBIT 10.47
AMENDMENT TO CREDIT AGREEMENT
THIS AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), is executed this 25th
day of March, 1998, by and between PLASMA-THERM, INC., a Florida corporation
whose address is 10050 16th Street North, St. Petersburg, Florida 33716
(hereinafter called "Borrower") and NATIONSBANK, N.A., a national banking
association, f/k/a NationsBank, N.A. (South), whose address is 400 North Ashley
Drive, 2nd Floor, Tampa, Florida 33602 (hereinafter called "Lender").
W I T N E S S E T H:
WHEREAS, on April 18, 1997, Borrower and Lender executed that certain
Credit Agreement (the "Credit Agreement") to set forth the terms and provisions
relating to certain loans made by Lender to Borrower, including without
limitation, the revolving line of credit loan evidenced by that certain Line of
Credit Promissory Note in the amount of SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00), dated April 18, 1997, executed by Borrower in favor of Lender,
which loan is referred to in the Credit Agreement, and in this Amendment, as the
"Line Loan".
WHEREAS, Borrower desires to increase the credit limit of the Line Loan to
TEN MILLION AND NO/100 DOLLARS ($10,000,000.00), and Lender is agreeable to such
increase subject to the terms and provisions set forth in that certain
Commitment Letter dated March 18, 1998 and the terms and provisions of this
Amendment to Credit Agreement.
WHEREAS, on or about even date herewith, Borrower has executed, in addition
to other documentation, a Line of Credit Promissory Note in the amount of THREE
MILLION AND NO/100 DOLLARS ($3,000,000.00) and a Line of Credit Consolidation
Promissory Note in the amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00).
NOW THEREFORE, for and in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by all of the parties hereto, the parties hereby covenant and agree
as follows:
1. AMENDMENTS TO CREDIT AGREEMENT. The terms of the Credit Agreement are
hereby modified, supplemented and amended as follows:
a. All references in the Credit Agreement to "NATIONSBANK, N.A.
(SOUTH)" are hereby amended to read "NATIONSBANK, N.A.".
b. The Borrowing Base Certificate attached as Exhibit "A" to the
Credit Agreement is hereby deleted in its entirety and replaced by that certain
Borrowing Base Certificate Form attached as Exhibit "A" to this Amendment.
c. The Line of Credit Promissory Note form attached as Exhibit "B" to
the Credit Agreement is hereby deleted in its entirety and replaced by that
certain Line of Credit Consolidation Promissory Note form attached as Exhibit
"B" to this Amendment.
<PAGE>
d. The definition of "Closing" set forth in Section 1.i. of the Credit
Agreement is deleted in its entirety and replaced by the following definition:
"Closing" shall mean the closing which occurred on April 18, 1997
in Chicago, Illinois, or the date of execution of this Amendment in
Charlotte, N.C. or such other place as the parties hereto may
agree, as applicable.
e. The definition of "Commitment Letter" set forth in Section 1.k. of
the Credit Agreement is deleted in its entirety and replaced by the following
definition:
"Commitment Letter" means the Commitment Letter dated March 19,
1997, or the Commitment Letter dated March 18, 1998, as applicable.
f. The principal sum amount of "SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00)" set forth in Section 2.I.a. of the Credit Agreement is amended
to read "TEN MILLION AND NO/100 DOLLARS ($10,000,000.00)".
g. The principal sum amount of "SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00) set forth in Section 2.I.f. of the Credit Agreement is amended
to read "TEN MILLION AND NO/100 DOLLARS ($10,000,000.00)".
h. The covenant set forth in Section 7.g. of the Credit Agreement is
deleted in its entirety and replaced with the following covenant:
"g. Borrower shall not create any subsidiaries or holding
companies without the prior written consent of Lender, and as a
condition of giving such consent, Lender may require that such
subsidiary or holding company execute a continuing and
unconditional guaranty of all loans or indebtedness of Borrower
owing to Lender."
i. The covenant set forth in Section 7.i. of the Credit Agreement is
deleted in its entirety and replaced with the following covenant:
"i. Allow its Cash Flow Coverage Ratio to be less than
2.00:1.00. The Cash Flow Coverage Ratio shall be defined as EBITDA
less cash taxes, less fifty percent (50%) of all capital
expenditures, less stock repurchases and dividends, all divided by
Interest Expense plus all scheduled principal payments. For
purposes of this Agreement, EBITDA shall be defined as Net Income
(or Net Loss) plus Interest
2
<PAGE>
Expense, plus state and federal taxes on income, plus depreciation
and amortization, all determined on a consolidated basis in
accordance with generally accepted accounting principals, as
applied on a consistent basis. Borrower's compliance with this
covenant shall be measured quarterly on a rolling four quarter
basis. All components of the Cash Flow Coverage Ratio shall be
determined based upon the previous four fiscal quarters, with the
exception of scheduled principal payments which will be determined
based upon the subject fiscal quarter end. The "capital
expenditure" component of Cash Flow Coverage Ratio shall not
include any capital expenditures funded by a NationsBank loan to
the Borrower."
The Credit Agreement, as modified by this Amendment, shall remain in full force
and effect, shall conform fully with this Amendment, and shall apply with full
force and effect to the increase in the credit limit of the Line Loan described
herein.
2. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby restates,
reaffirms, and where necessary updates, all representations and warranties set
forth in Section 8 of the Credit Agreement and elsewhere in the Credit
Agreement.
3. CLOSING. The closing of this transaction shall be held on or before
March 25, 1998, upon the fulfillment of all the conditions and agreements
contained in the Credit Agreement and in this Amendment, in Charlotte, N.C. or
at such other place as the parties hereto may agree.
IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment the
day and year first above written.
Signed, sealed and delivered in the
presence of: PLASMA-THERM, INC., a Florida corporation
("Borrower")
/s/ TERRY L. WITCHER
- ---------------------------
Signature of Witness
By: /s/ STACEY L. WAGNER
-----------------------
Stacy L. Wagner
Vice President-Finance and
Administration
Terry L. Witcher
- --------------------------- (CORPORATE SEAL)
Legibly Print Name of Witness
/s/ JAMES E. HARDEN, JR.
- ---------------------------
Signature of Witness
James E. Harden, Jr.
- ---------------------------
Legibly Print Name of Witness
3
<PAGE>
NATIONSBANK, N.A., a national banking
association, f/k/a NATIONSBANK, N.A.
(SOUTH) ("Lender")
/s/ TERRY L WITCHER
- -------------------------
Signature of Witness
By: /s/ JAMES E. HARDEN, JR.
Terry L. Witcher --------------------------
- ------------------------- James E. Harden, Jr.
Legibly Print Name of Witness Senior Vice President
/s/ BABETTE M. REYNOLDS CORPORATE SEAL)
- -------------------------
Signature of Witness
Babette M. Reynolds
- -------------------------
Legibly Print Name of Witness
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by STACY L. WAGNER, as Vice President-Finance and Administration of
PLASMA-THERM, INC., a Florida corporation, on behalf of the corporation. She is
[x] personally known to me or [ ] has produced ______________________________
as identification.
My commission expires: 8/19/99 TERRY L. WITCHER
--------------------------
Signature of Notary Public
(SEAL) Terry L. Witcher (Commissioned: Terry L. Scaggs)
--------------------------
Legibly Print Name of Notary Public
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by JAMES E. HARDEN, JR., as Senior Vice President of NATIONSBANK, N.A., a
national banking association, f/k/a NATIONSBANK, N.A. (SOUTH), on behalf of the
association. He is [X] personally known to me or [ ] has produced______________
______________________ as identification.
My commission expires: 8/19/99 /s/ TERRY L. WITCHER
--------------------------
Signature of Notary Public
(SEAL)
Terry L. Witcher (Commissioned: Terry L. Scaggs)
--------------------------
Legibly Print Name of Notary Public
4
<PAGE>
EXHIBIT "A"
BORROWING BASE CERTIFICATE FORM
PAGE 1 OF 2
NATIONSBANK, N.A. DATE: __________________
P.O. Box 31590
FL1-010-02-01
Tampa, Florida 33631
Credit Agreement between us, the undersigned hereby certifies to you, as of the
above date, the following:
(A) Aggregate amount of Accounts as of quarter end $___________________
(B) Less Ineligibles:
Invoices more than 60 days old $___________________
(C) Net Amount of Eligible Accounts (A-B) $___________________
(D) Less Foreign Accounts less than 60 days old $___________________
(E) Total Eligible Domestic Accounts (C-D) $___________________
(F) 80% of Item (E) $___________________
(G) Foreign accounts less than 60 days old backed by
letters of credit $___________________
(H) 80% of Item (G) $___________________
(I) All other Foreign accounts less than 60 days old $___________________
(J) 55% of Item (I) $___________________
(K) Total Item (F), (H), and (J) $___________________
(L) The lesser of $10,000,000 and Item (K) $___________________
(M) The aggregate unpaid principal Line Loan we now owe
Lender as of quarter end $___________________
(N) The aggregate amount of issued, outstanding Standby
Letters of Credit as of quarter end $___________________
(O) Total of unpaid principal Line Loan and issued
Standby Letters of Credit is as of quarter end $___________________
(P) Availability [(L)-(O)] [If Item (P) is negative,
paydown of at least a like amount is required] $___________________
<PAGE>
EXHIBIT "A"
BORROWING BASE CERTIFICATE FORM
PAGE 2 OF 2
The undersigned hereby certifies, represents and warrants to NationsBank, N.A.,
a national banking association as follows:
1. All of the representations and warranties contained in the Credit
Agreement or in any other Loan Document are true and correct in all
material respects on the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date.
2. No event has occurred, or would result from the Advance made in
connection herewith, that constitutes an Event of Default or a Default
that, with the giving of notice, the passage of time, or both would
constitute an Event of Default under the Credit Agreement or any other
Loan Document.
3. The description of Eligible Accounts and the values assigned thereto
are true and correct in all material respects.
4. The aggregate unpaid principal balance of the Line Loan does not
exceed the lesser of (i) the Line Commitment or (ii) the Borrowing
Base.
Unless the context otherwise requires, all capital terms used in this
Certificate if not separately defined herein, shall have the meanings
assigned to them in the Credit Agreement
PLASMA-THERM, INC., a Florida corporation
By: ____________________________
Name ___________________________
Title: _________________________
Date: __________________________
2
<PAGE>
EXHIBIT "B"
LINE OF CREDIT CONSOLIDATION PROMISSORY NOTE
10,000,000.00 March 25, 1998
FOR VALUE RECEIVED, the undersigned PLASMA-THERM, INC., a Florida
corporation (hereinafter called "Borrower") promises to pay to the order of
NATIONSBANK, N.A., a national banking association, f/k/a NationsBank, N.A.
(South) (hereinafter sometimes referred to as "Lender" and together with any
holder hereof called "Holder"), at 400 N. Ashley Drive, 2nd Floor, Tampa,
Florida 33602, or at such other place as Holder may from time to time designate
in writing, the principal sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00), or so much thereof as has been advanced hereunder, together
with interest on the unpaid balance of the principal (the "Loan") from time to
time outstanding from the date of each advance of principal at the rate for each
day equal to the "Variable Adjusted LIBOR Rate" (as hereinafter defined) as
determined by Lender and adjusted daily, plus two hundred (200) basis points,
per annum. In no event, however, shall the interest rate be greater than the
maximum rate of interest allowed to be contracted for by applicable law. The
term "Variable Adjusted LIBOR Rate" means the interest rate per annum determined
in accordance with the following definitions and procedures:
a. The "LIBOR Rate" for a particular day shall be the interest rate as
published in the final New York edition of The Wall Street Journal as the
appropriate London InterBank Offered Rate (LIBOR) for such particular day for a
non-domestic certificate of deposit in an amount approximately equal to the
amount of the Note having a term of thirty (30) days, or if The Wall Street
Journal is not published on any such date, then as published therein for the
immediately preceding business day provided, however, that in the event that The
Wall Street Journal is not published, or does not report the London InterBank
Offered Rate, for three consecutive business days, then the "LIBOR Rate" shall
be deemed to be the interest rate which it would be necessary for Lender to pay
in connection with a sale by Lender, if possible, of a certificate of deposit
for a non-domestic deposit in an amount approximately equal to the amount of the
Note and having a term of thirty (30) days.
b. The "Variable Adjusted LIBOR Rate" for a particular day shall be equal
to the quotient of the LIBOR Rate divided by the difference of (a) one minus (b)
the maximum rate (expressed as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable from time to time to any member bank of the
Federal Reserve System, in respect to Eurocurrency liabilities as specified in
Regulation D (or any successor category of liabilities under Regulation D). The
computation of the Variable Adjusted LIBOR Rate shall also include such
adjustments as may be necessary in respect to impositions on Lender for Federal
Deposit Insurance Corporation insurance and other insurance, fees, assessments
and surcharges which occur because of Lender's sale of a certificate of deposit
which would establish the LIBOR Rate or for insuring time deposits.
<PAGE>
c. The LIBOR Rate used in determining the Variable Adjusted LIBOR Rate for
a particular day shall be the LIBOR Rate for such day if the interest rate is
published in The Wall Street Journal as specified above, and otherwise shall be
the LIBOR Rate which is two "business days" prior to the date of determination,
or if such day is not a business day, then the next preceding business day.
d. A "business day" for purposes of determination of Lender's Variable
Adjusted LIBOR Rate shall mean any day on which Lender is open in Charlotte,
North Carolina for the transaction of domestic and foreign exchange business.
Each determination by Lender of the Variable Adjusted LIBOR Rate shall, in the
absence of manifest error, be conclusive and binding.
Interest owing under this Note shall be computed on the basis of a 360-day
year.
Principal and interest shall be due and payable as follows:
a. Accrued interest only, as stated above, shall be payable monthly
commencing on the last day of March, 1998, and continuing on the last day of
each month thereafter until May 19, 1999, at which time all outstanding
indebtedness, whether principal, accrued interest or otherwise, shall be due and
payable in full.
b. The principal amount evidenced hereby may be borrowed (and to the
extent any principal amount advanced hereunder is repaid by Borrower, such sum
may be borrowed again) prior to May 19, 1999, but only in accordance with the
terms of that Credit Agreement dated April 18, 1997, as amended on even date
herewith, and only if this Note is not in default as hereinafter defined. At no
time, however, shall the principal balance outstanding hereunder exceed TEN
MILLION AND NO/100 DOLLARS ($10,000,000.00).
Borrower may prepay all or part of the principal balance at any time
without penalty. Such prepayment shall be accompanied by payment of any unpaid
interest accrued to the time of such prepayment. All payments made hereunder
shall at Holder's option first be applied to late charges, then to accrued
interest, then to principal.
Permitted partial prepayments shall not affect or vary the duty of Borrower
to pay all obligations when due, and they shall not affect or impair the right
of Holder to pursue all remedies available to it hereunder, under the security
instruments securing this indebtedness, or under any other loan documents or
guaranty executed in connection herewith.
If any event of default set forth in this Note or in any of the Loan
Documents (as defined herein) shall occur, or in the event Lender has, in
accordance with the terms of the Note or the Loan Documents, made a demand for
repayment of the indebtedness evidenced by this Note and the Loan Documents,
Lender, at its option, may notify Borrower that its commitment to lend under
this line of credit is terminated and Lender shall be relieved of all
obligations to lend any further sums thereafter to Borrower.
2
<PAGE>
This Note is secured by a certain Security Agreement dated April 18, 1997,
as amended on even date herewith which, together with this Note, the Credit
Agreement, as amended on even date herewith, and all other agreements,
instruments and documents delivered in connection therewith and/or herewith, are
hereinafter sometimes referred to as the "Loan Documents."
This Note and the Loan Documents are to be governed by and construed under
the laws of the State of Florida and of the United States of America, and the
rules and regulations promulgated under the authority thereof. It is the intent
of this Note that such laws shall be interpreted in such a manner that the
maximum rate of interest allowed to be contracted for by applicable law as
changed from time to time which is applicable to this Note (hereinafter called
the "Maximum Rate") be as great as possible. The interest due hereunder is being
charged pursuant to the provisions of The Florida Banking Code (as defined by
statute), and Chapter 687 FLORIDA STATUTES. In the event that any law, rule or
regulation of the United States of America or the State of Florida, as changed
from time to time, allows interest to be contracted for at a rate that is
greater than the rate permitted by The Florida Banking Code (as defined by
statute), and Chapter 687, FLORIDA STATUTES, then such law, rule or regulation
shall apply. References to laws, statutes, rules and regulations in this Note
refer to such as amended from time to time.
In the event that any payment of principal or interest is not made within
ten (10) days after the same become due hereunder, it is hereby agreed that
Holder shall have the option of collecting a late charge equal to four percent
(4%) of the amount of each such delinquent payment. Said late charge and/or
interest shall be immediately due and payable in full on demand by Holder.
In no event shall Holder have the right to charge or collect, nor shall
Borrower be required or obligated to pay, interest or payments in the nature of
interest, which would result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment which is interest or
in the nature of interest is made by Borrower or received by Holder which would
result in the rate of interest being charged or collected by Holder being in
excess of the Maximum Rate, then the portion of any such payment which causes
the rate of interest being charged or collected by Holder to exceed the Maximum
Rate (hereinafter called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Holder in writing that Borrower elects to have
such excess sum returned to Borrower, such excess sum shall be returned to
Borrower. In the event that any such overcharge is discovered after this Note
has been paid in full, then the amount of such excess sum shall be returned to
Borrower together with interest thereon from the date such excess sum was paid
or collected at the same rate as was due Holder during such period under the
terms of this Note. All excess sums credited to principal shall be credited as
of the date paid to Holder. It is recognized by Borrower that the Maximum Rate
may vary from time to time, and that from time to time the Maximum Rate may be
uncertain. Therefore, Holder may seek judicial determination of the applicable
rate of interest. In such event, the withholding of credit to principal or the
withholding of payment to Borrower of any proposed excess sum during the period
of judicial determination (including all appeals) shall not be deemed a breach
of the obligations of Holder hereunder or of applicable law. It is the intent of
Holder to conform strictly to the limitations of applicable laws governing the
charging and collection of interest as changed from time to time.
3
<PAGE>
The "Default Interest Rate" shall be a rate equal to three percent (3%)
above the rate of interest required to be paid by the terms of this Note.
Holder shall have the optional right to declare the amount of the total
unpaid balance hereof to be due and forthwith payable in advance of the maturity
date of any sum due or installment, as fixed herein, upon the occurrence of an
event of default. An event of default shall be deemed to occur under this Note
upon the failure of Borrower to pay, within fifteen (15) days after the same
become due, any of the installments of interest or principal, or other sums due
hereunder, or upon the occurrence of any other default under or failure to
perform by any party (other than Holder) in accordance with any of the terms and
conditions of this Note within thirty (30) days after notice of such default or
failure from Holder or upon the occurrence of any default under or failure to
perform by any party (other than Holder) in accordance with any of the terms and
conditions of any of the Loan Documents after the expiration of any applicable
grace period, or upon the default under or the failure of Borrower to perform in
accordance with any and all notes, obligations, instruments or documents between
Borrower and Lender after any applicable grace period (including but not limited
to that certain Term Promissory Note by Borrower in favor of Lender in the
principal amount of $1,000,000.00 dated April 18, 1997, and that certain
Promissory Note by Borrower in favor of Lender in the original principal amount
of $3,375,000.00 dated August 14, 1995). Upon exercise of any of these options
by Holder, the entire unpaid principal balance shall bear interest at the
"Default Interest Rate." In addition to the rights described in this paragraph,
Holder shall have the right to exercise all other rights or remedies provided by
law or at equity or as provided in any of the Loan Documents and shall
specifically have the right to recover all damages resulting from such default
including, without limitation, the right to recover the payment of all amounts
owing to Holder. Exercise of any of these options shall be without any
additional notice to Borrower, notice of such exercise being hereby expressly
waived.
Time is of the essence hereunder. In the event that this Note is collected
by law or through attorneys at law, or under advice therefrom, Borrower and any
other person liable for payment hereof hereby, severally and jointly, agree to
pay all costs of collection, including reasonable out-of-pocket attorneys' fees
and costs (including charges for paralegals and others working under the
direction or supervision of Holder's attorneys) and all sales or use taxes
thereon, whether or not suit is brought, and whether incurred in connection with
collection, trial, appeal, bankruptcy or other creditors' proceedings or
otherwise, and, if Holder's attorneys shall include employees of Holder or of
any person controlling, controlled by or under common control with Holder, such
reasonable attorney's fees shall include costs allocated by Holder's or such
person's internal legal department.
Borrower authorizes Holder, when payment is due, to set off for any payment
of principal or interest past due hereunder for the amount of such payment of
principal or interest. Exercise of this right shall be optional with Holder and
the provisions of this paragraph shall not be construed as releasing Borrower
from the obligation to make payments of principal or interest according to the
terms hereof.
4
<PAGE>
The remedies of Holder as provided herein and in the Loan Documents shall
be cumulative and concurrent, and may be pursued singularly, successively, or
together, at the sole discretion of Holder. No act of omission or commission of
Holder, including specifically any failure to exercise any right, remedy or
recourse, shall be deemed to be a waiver or release of the same, such waiver or
release to be effected only through a written document executed by Holder and
then only to the extent specifically recited therein. A waiver or release with
reference to any one event shall not be construed as continuing, as a bar to, or
as a waiver or release of, any subsequent right, remedy or recourse as to a
subsequent event.
All persons (including corporations) now or at any time liable whether
primarily or secondarily, for the payment of the indebtedness hereby evidenced,
for themselves, their heirs, legal representatives, successors and assigns,
respectively, hereby (a) expressly waive any presentment, demand for payment,
notice of dishonor, protest, notice of nonpayment or protest, and diligence in
collection; (b) consent that Holder may, from time to time and without notice to
them or demand, (i) extend, rearrange, renew or postpone any or all payments
and/or (ii) release, exchange, add to or substitute all or any part of the
collateral for this Note, without in any way modifying, altering, releasing,
affecting or limiting their respective liability or the lien of any security
instrument; (c) agree that Holder, in order to enforce payment of this Note
against them shall not be required first to institute any suit or to exhaust any
of its remedies against Borrower or any other person or party or to attempt to
realize on the collateral for this Note.
This Note consolidates the principal balances of the following promissory
notes:
a. A line of credit promissory note dated April 18, 1997, executed by
Borrower in favor of NationsBank, N.A. (South) in the original principal amount
of SEVEN MILLION AND N0/100 DOLLARS ($7,000,000.00); and
b. A line of credit promissory note executed by Borrower in favor of
Lender on even date herewith in the original principal amount of THREE MILLION
AND N0/100 DOLLARS ($3,000,000.00).
In the event of any conflict between the terms and provisions of this Note and
the terms and provisions of the above-referenced two notes, the terms and
provisions of this Note shall govern.
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 OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
5
<PAGE>
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 INSTRUMENT, AGREEMENT OR DOCUMENT 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 COUNTY OF ANY
BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT
OR DOCUMENT OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE COUNTY
WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, 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.
b. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY 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 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. 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. d. a.
Borrower acknowledges that the above paragraphs have been expressly
bargained for by Holder as part of the Loan evidenced hereby and that, but for
Borrower's agreement and the
6
<PAGE>
agreement of any other person liable for payment hereof thereto, Holder would
not have extended the Loan for the term and with the interest rate provided
herein.
If more than one party shall execute this Note, the term "Borrower", as
used herein, shall mean all parties signing this Note and each of them, who
shall be jointly and severally obligated hereunder. In this Note, whenever the
context so requires, the neuter gender includes the feminine and/or masculine,
as the case may be and the singular number includes the plural.
IN WITNESS WHEREOF Borrower has caused this Note to be executed in its name
on the day and year first above written.
PLASMA-THERM, INC., a Florida corporation
("Borrower")
By: /s/ STACY L. WAGNER
------------------------------
Stacy L. Wagner
Vice President-Finance and Administration
(CORPORATE SEAL)
STATE OF ________________ )
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by STACY L. WAGNER, as Vice President-Finance and Administration of
PLASMA-THERM, INC., a Florida corporation, on behalf of the corporation. She is
[ ] personally known to me or [ ] has produced _____________________________ as
identification.
My commission expires: __________
_________________________________
Signature of Notary Public
(SEAL)
_________________________________
Legibly Print Name of Notary Public
7
<PAGE>
AMENDMENT TO SECURITY AGREEMENT
THIS AMENDMENT TO SECURITY AGREEMENT (the "Amendment"), is executed this
25th day of March, 1998, by and between PLASMA-THERM, INC. a Florida corporation
whose address is 10050 16h Street North, St. Petersburg, Florida 336
(hereinafter called "Debtor") and NATIONSBANK, N.A., a national banking
association, f/k/a NationsBank, N.A. (South), whose address is 400 North Ashley
Drive, 2nd Floor, Tampa, Florida 33602 (hereinafter called the "Secured Party")
W I T N E S S E T H:
WHEREAS, on April 18, 1997, the Debtor and the Secured Party executed that
certain Security Agreement (the "Security Agreement") to secure certain loans
made by the Secured Party to Debtor, including without limitation, the revolving
line of credit loan evidenced by the certain Line of Credit Promissory Note in
the amount of SEVEN MILLION AND NO/100 DOLLARS ($7,000,000.00), dated April 18,
1997, executed by the Debtor in favor of the Secured Party, which loan is
referred to in the Security Agreement, and in this Amendment, as the "Line
Loan".
WHEREAS, the Debtor desires to increase the credit limit of the Line Loan
to TEN MILLION AND NO/100 DOLLARS ($10,000,000.00), and the Secured Party is
agreeable to such increase subject to the terms and provisions set forth in the
certain Commitment Letter dated March 18, 1998 and the terms and provisions of
this Amendment to Security Agreement.
WHEREAS, on or about even date herewith, the Debtor has executed, in
addition to other documentation, a Line of Credit Promissory Note in the amount
of THREE MILLION AND NO/100 DOLLARS ($3,000,000.00) and a Line of Credit
Consolidation Promissory Note in the amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00).
NOW THEREFORE, for and in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by all of the parties hereto, the parties hereby covenant and agree
as follows;
1. AMENDMENTS TO CREDIT AGREEMENT. The terms of the Security Agreement are
hereby modified, supplemented and amended as follows:
a. All references in the Security Agreement to the "Credit Agreement" shall
be deemed to include amendments thereto, as applicable.
b. The definition of the "Line of Credit Note" set forth in Section 2.2 of
the Security Agreement is deleted in its entirety and replaced by the following
definition.
<PAGE>
Line of Credit Consolidation Promissory Note dated
March 25, 1998 in the original principal amount of
$10,000,000.00 (the "Line of Credit Note");
The Security Agreement, as modified by this Amendment, shall remain in full
force and effect, shall conform fully with this Amendment, and shall apply with
full force and effect to the increase in the credit limit of the Line Loan
described herein.
2. REPRESENTATIONS AND WARRANTIES OF BORROWER. The Debtor hereby restates,
reaffirms, and where necessary updates, all representations and warranties set
forth in Section 3 of the Security Agreement and elsewhere in the Security
Agreement.
IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment the
day and year above written.
Signed, sealed and delivered in the
presence of: PLASMA-THERM, INC., a Florida
corporation ("Debtor")
/s/ TERRY L. WITCHER
- ------------------------- By: /s/ STACEY L. WAGNER
Signature of Witness --------------------------
Stacey L. Wagner
Terry L. Witcher Vice President-Finance and
- ------------------------- Administration
Legibly Print Name of Witness
(CORPORATE SEAL)
/s/ JAMES E. HARDEN, JR.
- -------------------------
Signature of Witness
James E. Harden, Jr.
- -------------------------
Legibly Print Name of Witness
NATIONSBANK, N.A., a national banking
association, f/k/a NATIONSBANK, N.A.
(SOUTH) ("Secured Party")
/s/ TERRY L WITCHER
- -------------------------
Signature of Witness
By: /s/ JAMES E. HARDEN, JR.
Terry L. Witcher --------------------------
- ------------------------- James E. Harden, Jr.
Legibly Print Name of Witness Senior Vice President
/s/ BABETTE M. REYNOLDS CORPORATE SEAL)
- -------------------------
Signature of Witness
Babette M. Reynolds
- -------------------------
Legibly Print Name of Witness
2
<PAGE>
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by STACY L. WAGNER, as Vice President-Finance and Administration of
PLASMA-THERM, INC., a Florida corporation, on behalf of the corporation. She is
[X] personally known to me or [ ] has produced ______________________________
as identification.
My commission expires: 8/19/99 TERRY L. WITCHER
--------------------------
Signature of Notary Public
(SEAL) Terry L. Witcher (Commissioned: Terry L. Scaggs)
--------------------------
Legibly Print Name of Notary Public
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by JAMES E. HARDEN, JR., as Senior Vice President of NATIONSBANK, N.A., a
national banking association, f/k/a NATIONSBANK, N.A. (SOUTH), on behalf of the
association. He is [X] personally known to me or [ ] has produced______________
______________________ as identification.
My commission expires: 8/19/99 /s/ TERRY L. WITCHER
--------------------------
Signature of Notary Public
(SEAL)
Terry L. Witcher (Commissioned: Terry L. Scaggs)
--------------------------
Legibly Print Name of Notary Public
3
<PAGE>
AMENDMENT TO NEGATIVE PLEDGE AGREEMENT
THIS AMENDMENT TO NEGATIVE PLEDGE AGREEMENT (the "Amendment"), is executed
this 25th day of March, 1998, by and between PLASMA-THERM, INC., a Florida
corporation whose address is 10050 16th Street North, St. Petersburg, Florida
33716 (hereinafter called "Borrower") and NATIONSBANK, N.A., a national banking
association, f/k/a NationsBank, N.A. (South), whose address is 400 North Ashley
Drive, 2nd Floor, Tampa, Florida 33602 (hereinafter called "Bank").
W I T N E S S E T H:
WHEREAS, on April 18, 1997, the Borrower and the Bank executed that certain
Agreement wherein the Borrower agreed not to create or permit encumbrances
against its inventory without prior written consent of the Bank (the
"Agreement"), which Agreement was executed as security for two (2) loans made by
the Bank to the Borrower totaling $8,000,000.00 (the "Loans").
WHEREAS, the Borrower desires to increase the credit limit of one of the
Loans so that the maximum combined indebtedness of the Loans would be
$11,000,000.00, and the Bank is agreeable to such increase subject to the terms
and provisions set forth in that certain Commitment Letter dated March 18, 1998
and the terms and provisions of this Amendment.
NOW THEREFORE, for and in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by all of the parties hereto, the parties hereby covenant and agree
as follows:
1. AMENDMENTS TO AGREEMENT. The terms of the Agreement are hereby modified,
supplemented and amended as follows:
a. The reference to a combined amount of "$8,000,000.00" in the
recital paragraph of the Agreement is hereby changed to reflect a combined
amount of "$11,000,000.00".
b. All references in the Agreement to the "Credit Agreement" shall be
deemed to include amendments thereto, as applicable.
The Agreement, as modified by this Amendment, shall remain in full force and
effect, shall conform fully with this Amendment, and shall apply with full force
and effect to the increase in the combined amount of the Loans described herein.
2. REPRESENTATIONS AND WARRANTIES OF BORROWER. The Borrower hereby
restates, reaffirms, and where necessary updates, all representations and
warranties set forth in Section 3 of the Agreement and elsewhere in the
Agreement.
<PAGE>
WITNESS WHEREOF, Borrower and Lender have executed this Amendment the day
and year first above written.
Signed, sealed and delivered in the
presence of: PLASMA-THERM, INC., a Florida
corporation ("Borrower")
/s/ TERRY L. WITCHER
- ------------------------- By: /s/ STACEY L. WAGNER
Signature of Witness --------------------------
Stacey L. Wagner
Terry L. Witcher Vice President-Finance and
- ------------------------- Administration
Legibly Print Name of Witness
(CORPORATE SEAL)
/s/ JAMES E. HARDEN, JR.
- -------------------------
Signature of Witness
James E. Harden, Jr.
- -------------------------
Legibly Print Name of Witness
NATIONSBANK, N.A., a national banking
association, f/k/a NATIONSBANK, N.A.
(SOUTH) ("Bank")
/s/ TERRY L WITCHER
- -------------------------
Signature of Witness
By: /s/ JAMES E. HARDEN, JR.
Terry L. Witcher --------------------------
- ------------------------- James E. Harden, Jr.
Legibly Print Name of Witness Senior Vice President
/s/ BABETTE M. REYNOLDS CORPORATE SEAL)
- -------------------------
Signature of Witness
Babette M. Reynolds
- -------------------------
Legibly Print Name of Witness
2
<PAGE>
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by STACY L. WAGNER, as Vice President-Finance and Administration of
PLASMA-THERM, INC., a Florida corporation, on behalf of the corporation. She is
[x] personally known to me or [ ] has produced ______________________________
as identification.
My commission expires: 8/19/99 TERRY L. WITCHER
--------------------------
Signature of Notary Public
(SEAL) Terry L. Witcher (Commissioned: Terry L. Scaggs)
--------------------------
Legibly Print Name of Notary Public
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by JAMES E. HARDEN, JR., as Senior Vice President of NATIONSBANK, N.A., a
national banking association, f/k/a NATIONSBANK, N.A. (SOUTH), on behalf of the
association. He is [X] personally known to me or [ ] has produced______________
______________________ as identification.
My commission expires: 8/19/99 /s/ TERRY L. WITCHER
--------------------------
Signature of Notary Public
(SEAL)
Terry L. Witcher (Commissioned: Terry L. Scaggs)
--------------------------
Legibly Print Name of Notary Public
3
<PAGE>
GUARANTY AGREEMENT
This Guaranty Agreement (this "Guaranty") is made as of the 25th day of
March, 1998, by MAGNETRAN, INC., a New Jersey corporation ("Guarantor"), in
favor of NATIONSBANK, N.A., a national banking association, f/k/a NationsBank,
N.A. (South) ("Bank"), and its successors and assigns.
RECITALS
A. On April 18, 1997, PLASMA-THERM, INC., a Florida corporation
("Borrower") executed a $7,000,000.00 line of credit promissory note (the
"Original LOC Note"), to evidence a revolving line of credit with a maximum
credit limit of $7,000,000.00 (the "Line Loan"). The Line Loan was also
evidenced and/or secured by certain documents including, but not limited to the
following:
(1) A credit agreement executed by Borrower and NationsBank, N.A.
(South) on April 18, 1997 (the "Credit Agreement"); and,
(2) A security agreement executed by Borrower and NationsBank, N.A.
(South) on April 18, 1997 (the "Security Agreement").
B. Bank and Borrower have on even date herewith increased the credit limit
of the Line Loan to $10,000,000.00 (the "Loan") as evidenced and/or secured by a
$3,000,000.00 line of credit promissory note executed by Borrower in favor of
Lender on even date herewith (the "Second LOC Note"), also the Second LOC Note
and the Original LOC Note have been consolidated into one line of credit
consolidation promissory note executed by Borrower in favor of Lender on even
date herewith in the amount of $10,000,000.00 (the "LOC Consolidation Note");
the LOC Consolidation Note, as it may hereafter be renewed, extended,
supplemented, increased or modified and in effect from time to time, and all
other notes given in substitution therefor, or in modification, renewal, or
extension thereof, in whole or in part, is hereinafter referred to as the
"Note".
C. A condition precedent to Bank's agreement to increase the credit limit
as described above is Guarantor's execution and delivery to Bank of this
Guaranty.
D. The Credit Agreement, Security Agreement, and certain other loan
documents relating to the Line Loan have on even date herewith been amended so
as to secure the Loan and the Note. Said Credit Agreement, Security Agreement,
and other loan documents, as amended, shall hereinafter be collectively referred
to as the "Loan Documents". References in this Guaranty to the terms "Credit
Agreement" and "Security Agreement" shall include the amendments thereto.
E. Any capitalized term used and not defined in this Guaranty shall have
the meaning given to such term in the Credit Agreement. This Guaranty is one of
the Loan Documents described
<PAGE>
in the Credit Agreement. As used herein, the term "Default" shall mean a default
under this Guaranty or an "Event of Default" as defined in the Credit Agreement.
F. Guarantor is a wholly owned subsidiary corporation of Borrower.
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and as a material inducement to Bank to extend credit to
Borrower, Guarantor hereby guarantees to Bank the prompt and full payment and
performance of the indebtedness and obligations described below in this Guaranty
(collectively called the "Guaranteed Obligations"), this Guaranty being upon the
following terms and conditions:
1. GUARANTY OF PAYMENT. Guarantor hereby unconditionally and irrevocably
guarantees to Bank the punctual payment when due, whether by lapse of time, by
acceleration of maturity, or otherwise, and at all times thereafter, of all
principal, interest (including interest accruing after the commencement of any
bankruptcy or insolvency proceeding by or against Borrower, whether or not
allowed in such proceeding), fees, costs, expenses, indemnification
indebtedness, attorneys' fees, and other sums of money now or hereafter due and
owing pursuant to (i) the terms of the Note, the Credit Agreement, the Security
Agreement and the other Loan Documents, including the making of any required
Borrower's deposits, and any indemnifications contained in such Loan Documents,
now or hereafter existing, and (ii) all renewals, extensions, refinancings,
modifications, supplements or amendments of such indebtedness, or any of the
Loan Documents, or any part thereof (the indebtedness described in clauses (i)
and (ii) above in this Section 1 is herein collectively called the
"Indebtedness"). This Guaranty covers the Indebtedness, whether presently
outstanding or arising subsequent to the date hereof, including all amounts
advanced by Bank in stages or installments. The guaranty of Guarantor as set
forth in this Section 1 is a continuing guaranty of payment and not a guaranty
of collection.
2. GUARANTY OF PERFORMANCE. Guarantor additionally hereby unconditionally
and irrevocably guarantees to Bank the timely performance of all other
obligations of Borrower under all of the Loan Documents. If any of such
obligations of Borrower are not complied with, in any respect whatsoever, and
without the necessity of any notice from Bank to Guarantor, Guarantor agrees to
(i) assume all responsibility for compliance with all terms and provisions of
Loan Documents, at Guarantor's own cost and expense, and (ii) indemnify and hold
Bank harmless from any and all loss, cost, liability or expense that Bank may
suffer by any reason of any such non-compliance. So long as all of such
obligations are being performed by Borrower or Guarantor and no Default exists,
Bank will make the Loan proceeds available under and subject to the terms of the
Credit Agreement. If after the occurrence of a Default, and without limiting
Bank's rights and remedies, Bank, in its sole discretion, and without any
obligation, may expend such funds as Bank deems necessary to cure such Default,
and the amount of any and all such expenditures made by Bank for such purposes
shall bear interest from the date made until repaid to Bank, at a rate per annum
equal to the interest rate provided for in the Note and, together with such
interest, shall be due and payable by Guarantor to Bank upon demand. The
obligations and liability of Guarantor under this Section 2 shall not be limited
or restricted by the existence of (or any terms of) the guaranty of payment
under Section 1.
2
<PAGE>
3. PRIMARY LIABILITY OF GUARANTOR.
a. This Guaranty is an absolute, irrevocable and unconditional guaranty of
payment and performance. Guarantor shall be liable for the payment and
performance of the Guaranteed Obligations, as set forth in this Guaranty, as a
primary obligor. This Guaranty shall be effective as a waiver of, and Guarantor
hereby expressly waives, any and all rights to which Guarantor may otherwise
have been entitled under any suretyship laws in effect from time to time.
b. In the event of default by Borrower in payment or performance of the
Guaranteed Obligations, or any part thereof, when such indebtedness or
performance becomes due, either by its terms or as the result of the exercise of
any power to accelerate, Guarantor shall, on demand and without presentment,
protest, notice of protest, further notice of nonpayment or of dishonor or of
default or nonperformance, or notice of acceleration or of intent to accelerate,
or any other notice whatsoever, without any notice having been given to
Guarantor previous to such demand of the acceptance by Bank of this Guaranty,
and without any notice having been given to Guarantor previous to such demand of
the creating or incurring of such indebtedness or of such obligation to perform,
all such notices being hereby waived by Guarantor, pay the amount due thereon to
Bank or perform or observe the agreement, covenant, term or condition, as the
case may be, and it shall not be necessary for Bank, in order to enforce such
payment or performance by Guarantor, first to institute suit or pursue or
exhaust any rights or remedies against Borrower or others liable on such
indebtedness or for such performance, or to enforce any rights against any
security that shall ever have been given to secure such indebtedness or
performance, or to join Borrower or any others liable for the payment or
performance of the Guaranteed Obligations or any part thereof in any action to
enforce this Guaranty, or to resort to any other means of obtaining payment or
performance of the Guaranteed Obligations.
c. Suit may be brought or demand may be made against all parties who have
signed this Guaranty or any other guaranty covering all or any part of the
Guaranteed Obligations, or against any one or more of them, separately or
together, without impairing the rights of Bank against any party hereto. Any
time that Bank is entitled to exercise its rights or remedies hereunder, it may
in its discretion elect to demand payment and/or performance. If Bank elects to
demand performance, it shall at all times thereafter have the right to demand
payment until all of the Guaranteed Obligations have been paid and performed in
full. If Bank elects to demand payment, it shall at all times thereafter have
the right to demand performance until all of the Guaranteed Obligations have
been paid and performed in full.
4. CERTAIN AGREEMENTS AND WAIVERS BY GUARANTOR.
a. Guarantor hereby agrees that neither Bank's rights or remedies nor
Guarantor's obligations under the terms of this Guaranty shall be released,
diminished, impaired, reduced or affected by any one or more of the following
events, actions, facts, or circumstances, and the liability of Guarantor under
this Guaranty shall be absolute and unconditional irrespective of:
3
<PAGE>
(i) any limitation of liability or recourse in any other Loan
Document or arising under any law;
(ii) the taking or accepting of any other security or guaranty
for, or right of recourse with respect to, any or all of the Guaranteed
Obligations;
(iii) any release, surrender, abandonment, exchange, alteration,
sale or other disposition, subordination, deterioration, waste, failure to
protect or preserve, impairment, or loss of, or any failure to create or perfect
any lien or security interest with respect to, or any other dealings with, any
collateral or security at any time existing or purported, believed or expected
to exist in connection with any or all of the Guaranteed Obligations, including
any impairment of Guarantor's recourse against any Person or collateral;
(iv) whether express or by operation of law, any partial release
of the liability of Guarantor hereunder, or if one or more other guaranties are
now or hereafter obtained by Bank covering all or any part of the Guaranteed
Obligations, any complete or partial release of any one or more of such
guarantors under any such other guaranty, or any complete or partial release of
Borrower or any other party liable, directly or indirectly, for the payment or
performance of any or all of the Guaranteed Obligations;
(v) the death, insolvency, bankruptcy, disability, dissolution,
liquidation, termination, receivership, reorganization, merger, consolidation,
change of form, structure or ownership, sale of all assets, or lack of
corporate, partnership or other power of Borrower or any other party at any time
liable for the payment or performance of any or all of the Guaranteed
Obligations;
(vi) either with or without notice to or consent of Guarantor:
any renewal, extension, modification or rearrangement of the terms of any or all
of the Guaranteed Obligations and/or any of the Loan Documents, including,
without limitation, material alterations of the terms of payment (including
changes in maturity date(s) and interest rate(s)) or performance or any other
terms thereof, or any waiver, termination, or release of, or consent to
departure from, any of the Loan Documents or any other guaranty of any or all of
the Guaranteed Obligations, or any adjustment, indulgence, forbearance, or
compromise that may be granted from time to time by Bank to Borrower, Guarantor,
and/or any other Person at any time liable for the payment or performance of any
or all of the Guaranteed Obligations;
(vii) any neglect, lack of diligence, delay, omission, failure,
or refusal of Bank to take or prosecute (or in taking or prosecuting) any action
for the collection or enforcement of any of the Guaranteed Obligations, or to
foreclose or take or prosecute any action to foreclose (or in foreclosing or
taking or prosecuting any action to foreclose) upon any security therefor, or to
exercise (or in exercising) any other right or power with respect to any
security therefor, or to take or prosecute (or in taking or prosecuting) any
action in connection with any Loan Document, or any
4
<PAGE>
failure to sell or otherwise dispose of in a commercially reasonable manner any
collateral securing any or all of the Guaranteed Obligations;
(viii) any failure of Bank to notify Guarantor of any creation,
renewal, extension, rearrangement, modification, supplement, subordination, or
assignment of the Guaranteed Obligations or any part thereof, or of any Loan
Document, or of any release of or change in any security, or of any other action
taken or refrained from being taken by Bank against Borrower or any security or
other recourse, or of any new agreement between Bank and Borrower, it being
understood that Bank shall not be required to give Guarantor any notice of any
kind under any circumstances with respect to or in connection with the
Guaranteed Obligations, any and all rights to notice Guarantor may have
otherwise had being hereby waived by Guarantor;
(ix) if for any reason Bank is required to refund any payment by
Borrower to any other party liable for the payment or performance of any or all
of the Guaranteed Obligations or pay the amount thereof to someone else;
(x) the existence of any claim, set-off, or other right that
Guarantor may at any time have against Borrower, Bank, or any other Person,
whether or not arising in connection with this Guaranty, the Note, the Credit
Agreement, or any other Loan Document;
(xi) the unenforceability of all or any part of the Guaranteed
Obligations against Borrower, whether because the Guaranteed Obligations exceed
the amount permitted by law or violate any usury law, or because the act of
creating the Guaranteed Obligations, or any part thereof, is ULTRA VIRES, or
because the officers or Persons creating same acted in excess of their
authority, or because of a lack of validity or enforceability of or defect or
deficiency in any of the Loan Documents, or because Borrower has any valid
defense, claim or offset with respect thereto, or because Borrower's obligation
ceases to exist by operation of law, or because of any other reason or
circumstance, it being agreed that Guarantor shall remain liable hereon
regardless of whether Borrower or any other Person be found not liable on the
Guaranteed Obligations, or any part thereof, for any reason (and regardless of
any joinder of Borrower or any other party in any action to obtain payment or
performance of any or all of the Guaranteed Obligations); or
(xii) any order, ruling or plan of reorganization emanating from
proceedings under Title 11 of the United States Code with respect to Borrower or
any other Person, including any extension, reduction, composition, or other
alteration of the Guaranteed Obligations, whether or not consented to by Bank.
b. In the event any payment by Borrower or any other Person to Bank is
held to constitute a preference, fraudulent transfer or other voidable payment
under any bankruptcy, insolvency or similar law, or if for any other reason Bank
is required to refund such payment or pay the amount thereof to any other party,
such payment by Borrower or any other party to Bank shall not constitute a
release of Guarantor from any liability hereunder, and this Guaranty shall
continue to be effective or shall be reinstated (notwithstanding any prior
release, surrender or discharge by
5
<PAGE>
Bank of this Guaranty or of Guarantor), as the case may be, with respect to, and
this Guaranty shall apply to, any and all amounts so refunded by Bank or paid by
Bank to another Person (which amounts shall constitute part of the Guaranteed
Obligations), and any interest paid by Bank and any attorneys' fees, costs and
expenses paid or incurred by Bank in connection with any such event. It is the
intent of Guarantor and Bank that the obligations and liabilities of Guarantor
hereunder are absolute and unconditional under any and all circumstances and
that until the Guaranteed Obligations are fully and finally paid and performed,
and not subject to refund or disgorgement, the obligations and liabilities of
Guarantor hereunder shall not be discharged or released, in whole or in part, by
any act or occurrence that might, but for the provisions of this Guaranty, be
deemed a legal or equitable discharge or release of a guarantor. Bank shall be
entitled to continue to hold this Guaranty in its possession for a period of one
year from the date the Guaranteed Obligations are paid and performed in full and
for so long thereafter as may be necessary to enforce any obligation of
Guarantor hereunder and/or to exercise any right or remedy of Bank hereunder.
c. If acceleration of the time for payment of any amount payable by
Borrower under the Note, the Credit Agreement, or any other Loan Document is
stayed or delayed by any law or tribunal, all such amounts shall nonetheless be
payable by Guarantor on demand by Bank.
d. Guarantor hereby waives and agrees not to assert or take advantage of
(i) any right or claim of right to cause a marshalling of any of Borrower's
assets or the assets of any other party now or hereafter held as security for
the Indebtedness; (ii) the defense of the statute of limitations in any action
hereunder or for the payment of the Indebtedness and performance of any
obligation hereby guaranteed; (iii) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of Guarantor, any other
guarantor of the Loan, or Borrower or any other person or entity, or the
voluntary or involuntary dissolution of Borrower or Guarantor, or the failure of
Bank to file or enforce a claim against the estate (either in administration,
bankruptcy, or any other proceeding) or Borrower or any other person or entity;
(iv) any defense based on the failure of Bank to give notice of the existence,
creation, or incurring of any new or additional indebtedness or obligation, or
of any action or nonaction on the part of any other person whomsoever, or any
modification of the terms of the Loan Documents, or the Indebtedness, in
connection with any obligation hereby guaranteed; (v) any defense based upon an
election of remedies by Bank which destroys or otherwise impairs any subrogation
rights of Guarantor or any other guarantor of the Loan or the right of Guarantor
to proceed against Borrower or any other guarantor for reimbursement, or both;
(vi) any defense based upon failure of Bank to commence an action against
Borrower; (vii) any defense based upon acceptance of this Guaranty by Bank;
(viii) any defense based upon the invalidity or unenforceability of any of the
Loan Documents; (ix) any defense based upon any limitation of liability
contained in any of the Loan Documents; (x) any defense based upon any transfer
by Borrower of all or any part of the Collateral; (xi) any defense based upon
the failure of Bank to perfect any security or to extend or renew the perfection
of any security; and (xii) any other legal or equitable defenses whatsoever to
which Guarantor might otherwise be entitled. Guarantor also hereby waives any
claim, right or remedy which Guarantor may now have or hereafter acquire against
Borrower that arises hereunder and/or from the performance by Guarantor,
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, indemnification
6
<PAGE>
or participation in any claim, right or remedy of Bank against Borrower or any
security which Bank now has or hereafter acquires, whether or not such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise.
5. SUBORDINATION. If, for any reason whatsoever, Borrower is now or
hereafter becomes indebted to Guarantor:
a. such indebtedness and all interest thereon and all liens, security
interests and rights now or hereafter existing with respect to property of
Borrower securing same shall, at all times, be subordinate in all respects to
the Guaranteed Obligations and to all liens, security interests and rights now
or hereafter existing to secure the Guaranteed Obligations;
b. Guarantor shall not be entitled to enforce or receive payment,
directly or indirectly, of any such indebtedness of Borrower to Guarantor until
the Guaranteed Obligations have been fully and finally paid and performed;
c. Guarantor hereby assigns and grants to Bank a security interest in
all such indebtedness and security therefor, if any, of Borrower to Guarantor
now existing or hereafter arising, including any dividends and payments pursuant
to debtor relief or insolvency proceedings referred to below. In the event of
receivership, bankruptcy, reorganization, arrangement or other debtor relief or
insolvency proceedings involving Borrower as debtor, Bank shall have the right
to prove its claim in any such proceeding so as to establish its rights
hereunder and shall have the right to receive directly from the receiver,
trustee or other custodian (whether or not a Default shall have occurred or be
continuing under any of the Loan Documents), dividends and payments that are
payable upon any obligation of Borrower to Guarantor now existing or hereafter
arising, and to have all benefits of any security therefor, until the Guaranteed
Obligations have been fully and finally paid and performed. If, notwithstanding
the foregoing provisions, Guarantor should receive any payment, claim or
distribution that is prohibited as provided above in this SECTION 5, Guarantor
shall pay the same to Bank immediately, Guarantor hereby agreeing that it shall
receive the payment, claim or distribution in trust for Bank and shall have
absolutely no dominion over the same except to pay it immediately to Bank; and
d. Guarantor shall promptly upon request of Bank from time to time
execute such documents and perform such acts as Bank may require to evidence and
perfect its interest and to permit or facilitate exercise of its rights under
this SECTION 5, including, but not limited to, execution and delivery of
financing statements, proofs of claim, further assignments and security
agreements, and delivery to Bank of any promissory notes or other instruments
evidencing indebtedness of Borrower to Guarantor. All promissory notes, accounts
receivable ledgers or other evidences, now or hereafter held by Guarantor, of
obligations of Borrower to Guarantor shall contain a specific written notice
thereon that the indebtedness evidenced thereby is subordinated under and is
subject to the terms of this Guaranty.
7
<PAGE>
6. OTHER LIABILITY OF GUARANTOR OR BORROWER. If Guarantor is or becomes
liable, by endorsement or otherwise, for any indebtedness owing by Borrower to
Bank other than under this Guaranty, such liability shall not be in any manner
impaired or affected hereby, and the rights of Bank hereunder shall be
cumulative of any and all other rights that Bank may have against Guarantor. If
Borrower is or becomes indebted to Bank for any indebtedness other than or in
excess of the Indebtedness for which Guarantor is liable under this Guaranty,
any payment received or recovery realized upon any indebtedness of Borrower to
Bank may, except to the extent paid by Guarantor on the Indebtedness for which
Guarantor is liable under this Guaranty or specifically required by law or
agreement of Bank to be applied to the Indebtedness for which Guarantor is
liable under this Guaranty, in Bank's sole discretion, be applied upon
indebtedness of Borrower to Bank other than the Indebtedness for which Guarantor
is liable under this Guaranty.
7. BANK ASSIGNS. This Guaranty is for the benefit of Bank and Bank's
successors and assigns, and in the event of an assignment of the Guaranteed
Obligations, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the Guaranteed Obligations so assigned, may be transferred
with such Guaranteed Obligations. Guarantor waives notice of any transfer or
assignment of the Guaranteed Obligations, or any part thereof, and agrees that
failure to give notice will not affect the liabilities of Guarantor hereunder.
Bank may sell or offer to sell the Loan or interests in the Loan to one or more
assignees or participants and may disclose to any such assignee or participant
or prospective assignee or participant any information Bank has pertaining to
the Guaranteed Obligations, this Guaranty, or Guarantor, including, without
limitation, information regarding any security for the Guaranteed Obligations or
for this Guaranty, credit information on Guarantor, Borrower, and/or any other
party liable, directly or indirectly, for any part of the Guaranteed
Obligations. Bank may also disclose any such information to any regulatory body
having jurisdiction over Bank.
8. BINDING EFFECT. This Guaranty is binding not only on Guarantor, but also
on Guarantor's heirs, personal representatives, successors and assigns. Upon the
death of Guarantor, if Guarantor is a natural person, this Guaranty shall
continue against Guarantor's estate as to all of the Guaranteed Obligations,
including that portion incurred or arising after the death of Guarantor and
shall be provable in full against Guarantor's estate, whether or not the
Guaranteed Obligations are then due and payable. If this Guaranty is signed by
more than one Person, then all of the obligations of Guarantor arising hereunder
shall be jointly and severally binding on each of the undersigned, and their
respective heirs, personal representatives, successors and assigns, and the term
"GUARANTOR" shall mean all of such Persons and each of them individually.
9. GOVERNING LAW; FORUM. This Guaranty, and its validity, enforcement, and
interpretation, shall for all purposes be governed by and construed in
accordance with the laws of the State of Florida and applicable United States
federal law, and is intended to be performed in accordance with, and only to the
extent permitted by, such laws. All obligations of Guarantor hereunder are
payable and performable at the place or places where the Guaranteed Obligations
are payable and performable. Guarantor hereby irrevocably submits generally and
unconditionally for Guarantor and in respect of Guarantor's property to the
jurisdiction of any state court, or any United
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States federal court, sitting in the state specified in the first sentence of
this Section, over any suit, action or proceeding arising out of or relating to
this Guaranty or the Guaranteed Obligations. Guarantor hereby irrevocably
waives, to the fullest extent permitted by law, any objection that Guarantor may
now or hereafter have to the laying of venue in any such court and any claim
that any such court is an inconvenient forum. Guarantor hereby agrees and
consents that, in addition to any methods of service of process provided for
under applicable law, all service of process in any such suit, action or
proceeding in any state court, or any United States federal court, sitting in
the state specified in the first sentence of this Section may be made by
certified or registered mail, return receipt requested, directed to Guarantor at
its address stated in SECTION 15, or at a subsequent address of which Bank
received actual notice from Guarantor in accordance with said Section, and
service so made shall be complete five (5) days after the same shall have been
so mailed. Nothing herein shall affect the right of Bank to serve process in any
manner permitted by law or limit the right of Bank to bring proceedings against
Guarantor in any other court or jurisdiction.
10. INVALIDITY OF CERTAIN PROVISIONS. If any provision of this Guaranty or
the application thereof to any Person or circumstance shall, for any reason and
to any extent, be declared to be invalid or unenforceable, neither the remaining
provisions of this Guaranty nor the application of such provision to any other
Person or circumstance shall be affected thereby, and the remaining provisions
of this Guaranty, or the applicability of such provision to other Persons or
circumstances, as applicable, shall remain in effect and be enforceable to the
maximum extent permitted by applicable law.
11. ATTORNEYS' FEES AND COSTS OF COLLECTION. Guarantor shall pay on demand
all reasonable attorneys' fees, paralegals' fees, and all other costs and
expenses incurred by Bank in the enforcement of or preservation of Bank's rights
under this Guaranty (including all fees incurred in connection with
arbitration). Guarantor agrees to pay interest on any expenses or other sums due
to Bank under this SECTION 11 that are not paid when due, at a rate per annum
equal to the interest rate provided for in the Note, but in no event shall such
interest exceed the maximum amount. Guarantor's obligations and liabilities
under this SECTION 11 shall survive any payment or discharge in full of the
Guaranteed Obligations.
12. PAYMENTS. All sums payable under this Guaranty shall be paid in lawful
money of the United States of America that at the time of payment is legal
tender for the payment of public and private debts.
13. CONTROLLING AGREEMENT. It is not the intention of Bank or Guarantor to
obligate Guarantor to pay interest in excess of that lawfully permitted to be
paid by Guarantor under applicable law. Should it be determined that any portion
of the Guaranteed Obligations or any other amount payable by Guarantor under
this Guaranty constitutes interest in excess of the maximum amount of interest
that Guarantor, in Guarantor's capacity as guarantor, may lawfully be required
to pay under applicable law, the obligation of Guarantor to pay such interest
shall automatically be limited to the payment thereof in the maximum amount so
permitted under applicable law. The
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<PAGE>
provisions of this Section 13 shall override and control all other provisions of
this Guaranty and of any other agreement between Guarantor and Bank.
14. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF Guarantor. Guarantor
hereby represents, warrants, and covenants that (a) Guarantor will derive
substantial benefit, directly or indirectly, from the making of the Loan to
Borrower and from the making of this Guaranty by Guarantor; (b) this Guaranty is
duly authorized and valid, and is binding upon and enforceable against
Guarantor; (c) Guarantor is not, and the execution, delivery and performance by
Guarantor of this Guaranty will not cause Guarantor to be, in violation of or in
default with respect to any law or in default (or at risk of acceleration of
indebtedness) under any agreement or restriction by which Guarantor is bound or
affected; (d) Guarantor is duly organized, validly existing, and in good
standing under the laws of the State of Florida and is lawfully doing business
in Florida, and has full power and authority to enter into and perform this
Guaranty; (e) there is no litigation pending or, to the knowledge of Guarantor,
threatened before or by any tribunal against or affecting Guarantor; (f) all
financial statements and information heretofore furnished to Bank by Guarantor
do, and all financial statements and information hereafter furnished to Bank by
Guarantor will, fully and accurately present the condition (financial or
otherwise) of Guarantor as of their dates and the results of Guarantor's
operations for the periods therein specified, and, since the date of the most
recent financial statements of Guarantor heretofore furnished to Bank, no
material adverse change has occurred in the financial condition of Guarantor,
nor, except as heretofore disclosed in writing to Bank, has Guarantor incurred
any material liability, direct or indirect, fixed or contingent; (g) after
giving effect to this Guaranty, Guarantor is solvent, is not engaged or about to
engage in business or a transaction for which the property of Guarantor is an
unreasonably small capital, and does not intend to incur or believe that it will
incur debts that will be beyond its ability to pay as such debts mature; (h)
Bank has no duty at any time to investigate or inform Guarantor of the financial
or business condition or affairs of Borrower or any change therein, and
Guarantor will keep fully appraised of Borrower's financial and business
condition; (i) Guarantor acknowledges and agrees that Guarantor may be required
to pay and perform the Guaranteed Obligations in full without assistance or
support from the Borrower or any other Person; and (j) Guarantor has read and
fully understands the provisions contained in the Note, the Credit Agreement,
the Security Agreement, and the other Loan Documents. Guarantor's
representations, warranties and covenants are a material inducement to Bank to
enter into the other Loan Documents and shall survive the execution hereof and
any bankruptcy, foreclosure, transfer of security or other event affecting
Borrower, Guarantor, any other party, or any security for all or any part of the
Guaranteed Obligations.
15. NOTICES. Unless specifically provided otherwise, any notice for
purposes of this Guaranty shall be given in writing or by telex or by facsimile
(fax) transmission and shall be addressed or delivered to the respective
addresses set forth at the end of this Guaranty, or to such other address as may
have been previously designated by the intended recipient by notice given in
accordance with this Section. If sent by prepaid, registered or certified mail
(return receipt requested), the notice shall be deemed effective when the
receipt is signed or when the attempted initial delivery is refused or cannot be
made because of a change in address of which the sending party has not been
notified; if transmitted by telex, the notice shall be effective when
transmitted (answerback confirmed); and if
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<PAGE>
transmitted by facsimile or personal delivery, the notice shall be effective
when received. No notice of change of address shall be effective except upon
actual receipt. This SECTION 15 shall not be construed in any way to affect or
impair any waiver of notice or demand provided in this Guaranty or in any other
Loan Document or to require giving notice or demand to or upon any Person in any
situation or for any reason.
16. CUMULATIVE RIGHTS. The exercise by Bank of any right or remedy
hereunder or under any other Loan Document, or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
Bank shall have all rights, remedies and recourses afforded to Bank by reason of
this Guaranty or any other Loan Document or by law or equity or otherwise, and
the same (a) shall be cumulative and concurrent, (b) may be pursued separately,
successively or concurrently against Guarantor or others obligated for the
Guaranteed Obligations, or any part thereof, or against any one or more of them,
or against any security or otherwise, at the sole discretion of Bank, (c) may be
exercised as often as occasion therefor shall arise, it being agreed by
Guarantor that the exercise of, discontinuance of the exercise of or failure to
exercise any of such rights, remedies, or recourses shall in no event be
construed as a waiver or release thereof or of any other right, remedy, or
recourse, and (d) are intended to be, and shall be, nonexclusive. No waiver of
any default on the part of Guarantor or of any breach of any of the provisions
of this Guaranty or of any other document shall be considered a waiver of any
other or subsequent default or breach, and no delay or omission in exercising or
enforcing the rights and powers granted herein or in any other document shall be
construed as a waiver of such rights and powers, and no exercise or enforcement
of any rights or powers hereunder or under any other document shall be held to
exhaust such rights and powers, and every such right and power may be exercised
from time to time. The granting of any consent, approval or waiver by Bank shall
be limited to the specific instance and purpose therefor and shall not
constitute consent or approval in any other instance or for any other purpose.
No notice to or demand on Guarantor in any case shall of itself entitle
Guarantor to any other or further notice or demand in similar or other
circumstances. No provision of this Guaranty or any right, remedy or recourse of
Bank with respect hereto, or any default or breach, can be waived, nor can this
Guaranty or Guarantor be released or discharged in any way or to any extent,
except specifically in each case by a writing intended for that purpose (and
which refers specifically to this Guaranty) executed, and delivered to
Guarantor, by Bank.
17. TERM OF GUARANTY. This Guaranty shall continue in effect until all the
Guaranteed Obligations are fully and finally paid, performed, and discharged,
except that, and notwithstanding any return of this Guaranty to Guarantor, this
Guaranty shall continue in effect (i) with respect to any of the Guaranteed
Obligations that survive the discharge of the Guaranteed Obligations, (ii) with
respect to all obligations and liabilities of Guarantor under Section 11, and
(iii) as provided in Section 4(b).
18 DISCLOSURE OF INFORMATION. Bank may sell or offer to sell the Loan or
interests in the Loan to one or more assignees or participants and may disclose
to any such assignee or participant or prospective assignee or participant any
information Bank has pertaining to the Guaranteed Obligations, this Guaranty, or
Guarantor, including, without limitation, information regarding any
11
<PAGE>
security for the Guaranteed Obligations or for this Guaranty, credit information
on Guarantor, Borrower, and/or any other party liable, directly or indirectly,
for any part of the Guaranteed Obligations. Bank also may disclose any such
information to any regulatory body having jurisdiction over Bank and to any
agent or attorney of Bank and in such other circumstances and to such other
parties as necessary or appropriate in Bank's reasonable judgment.
19. RIGHT OF SET-OFF. Upon the occurrence and during the continuance of any
Default in the payment or performance when due of any of the Guaranteed
Obligations, Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by applicable law, without notice to any Person (any
such notice being expressly waived by Guarantor to the fullest extent permitted
by applicable law), to set off and apply any and all deposits funds, or assets
at any time held and other indebtedness at any time owing by Bank to or for the
credit or the account of Guarantor against any and all of the obligations of
Guarantor now or hereafter existing under this Guaranty, whether or not Bank
shall have made any demand under this Guaranty or exercised any other right or
remedy hereunder. Bank will promptly notify Guarantor after any such set-off and
application made by Bank, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of Bank
under this Section 20 are in addition to the other rights and remedies
(including other rights of set-off) that Bank may have.
20. GRANT. To secure the performance of this Guaranty, Guarantor grants to
Bank a security interest in all property of Guarantor to the extent such
property is delivered concurrently herewith or is now, or at any time hereafter
is in the possession of Bank, and all proceeds, replacements, or substitutions
of all such property. Guarantor agrees that Bank shall have the rights and
remedies of a secured party under the Uniform Commercial Code as adopted by the
State of Florida with respect to all of the aforesaid property, including,
without limitation, the right to sell or otherwise dispose of any or all of such
property. Any notification of intended disposition of any property required by
law shall be deemed reasonably and properly given if at least five (5) calendar
days before such disposition. Notwithstanding the foregoing, Bank may, without
further notice to anyone, apply or set off any balances, credits, deposits,
accounts, monies or other indebtedness at any time created by or due from Bank
to Guarantor against the amounts due hereunder.
21. SUBROGATION. Notwithstanding anything to the contrary contained herein,
until the Loan is paid in full, Guarantor irrevocably waives any present or
future right to which Guarantor is or becomes entitled to be subrogated to
Bank's rights against Borrower or to seek contribution, reimbursement,
indemnification, or the like from Borrower on account of this Guaranty or to
assert any other claim or right of action against Borrower on account of,
arising under, or relating to this Guaranty.
22. FURTHER ASSURANCES. Guarantor at Guarantor's expense will promptly
execute and deliver to Bank upon Bank's request all such other and further
documents, agreements, and instruments in compliance with or accomplishment of
the agreements of Guarantor under this Guaranty.
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<PAGE>
23. NO FIDUCIARY RELATIONSHIP. The relationship between Bank and Guarantor
is solely that of lender and guarantor. Bank has no fiduciary or other special
relationship with or duty to Guarantor and none is created hereby or may be
inferred from any course of dealing or act or omission of Bank.
24. INTERPRETATION. If this Guaranty is signed by more than one Person as
"Guarantor", then the term "Guarantor" as used in this Guaranty shall refer to
all such Persons jointly and severally, and all promises, agreements, covenants,
waivers, consents, representations, warranties and other provisions in this
Agreement are made by and shall be binding upon each and every such undersigned
Person, jointly and severally. The term "Bank" shall be deemed to include any
subsequent holder(s) of the Note. Whenever the context of any provisions hereof
shall require it, words in the singular shall include the plural, words in the
plural shall include the singular, and pronouns of any gender shall include the
other genders. Captions and headings in the Loan Documents are for convenience
only and shall not affect the construction of the Loan Documents. All references
in this Guaranty to Schedules, Articles, Sections, Subsections, paragraphs and
subparagraphs refer to the respective subdivisions of this Guaranty, unless such
reference specifically identifies another document. The terms "herein",
"hereof", "hereto", "hereunder" and similar terms refer to this Guaranty and not
to any particular Section or subsection of this Guaranty. The terms "include"
and "including" shall be interpreted as if followed by the words "without
limitation". All references in this Guaranty to sums denominated in dollars or
with the symbol "$" refer to the lawful currency of the United States of
America, unless such reference specifically identifies another currency. For
purposes of the Agreement, "Person" or "Persons" shall include firms,
associations, partnerships (including limited partnerships), joint ventures,
trusts, corporations, limited liability companies, and other legal entities,
including governmental bodies, agencies, or instrumentalities, as well as
natural persons.
25. TIME OF ESSENCE. Time shall be of the essence in this Guaranty with
respect to all of Guarantor's obligations hereunder.
26. EXECUTION. This Guaranty may be executed in multiple counterparts, each
of which, for all purposes, shall be deemed an original, and all of which
together shall constitute one and the same agreement.
27. ENTIRE AGREEMENT. This Guaranty embodies the entire agreement between
Bank and Guarantor with respect to the guaranty by Guarantor of the Guaranteed
Obligations. This Guaranty supersedes all prior agreements and understandings,
if any, with respect to guaranty by Guarantor of the Guaranteed Obligations. No
condition or conditions precedent to the effectiveness of this Guaranty exist.
This Guaranty shall be effective upon execution by Guarantor and delivery to
Bank. This Guaranty may not be modified, amended or superseded except in a
writing signed by Bank and Guarantor referencing this Guaranty Agreement by its
date and specifically identifying the portions hereof that are to be modified,
amended or superseded.
13
<PAGE>
THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
28. MANDATORY ARBITRATION. Any controversy or claim between or among the
parties hereto including but not limited to those arising out of or relating to
this Agreement or any related agreements or instruments, 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 or 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 Pinellas
County, Florida 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.
b. RESERVATIONS OF RIGHTS. Nothing in this Agreement 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 Bank of the protection afforded to it by 12 U.S.C. ss. 91 or any
substantially equivalent state law; or (iii) limit the right of Bank (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. 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 Agreement. Neither the 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.
No provision in the Loan Documents regarding submission to jurisdiction and/or
venue in any court is intended or shall be construed to be in derogation of the
provisions in any Loan Document for arbitration of any controversy or claim.
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<PAGE>
29. RELEASE OF GUARANTOR. Notwithstanding any provisions in this Guaranty
to the contrary, the Bank agrees that upon written request by the Guarantor, the
Bank will release the Guarantor from all obligations under this Guaranty so long
as Borrower is not in default under the terms of the Loan.
IN WITNESS WHEREOF, Guarantor duly executed this Guaranty as of the date
first written above.
Address of Guarantor: GUARANTOR:
10050 16th Street North MAGNETRAN, INC., a New Jersey corporation
St. Petersburg, Florida 33716
Fax No. (813) 579-0801 By: /s/ STACEY L. WAGNER
-----------------------------
Stacy L. Wagner
Vice President-Finance and Administration
(CORPORATE SEAL)
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by STACY L. WAGNER, as the Vice President-Finance and Administration of
MAGNETRAN, INC. on behalf of the corporation. She is [X] personally known to me
or [ ] has produced________________________ as identification.
My commission expires: 8/19/99 /s/ TERRY L. WITCHER
----------------------------
Signature of Notary Public
(SEAL) Terry L. Witcher (Commmissioned: Terry L. Scaggs)
-----------------------------
Legibly Print Name of Notary Public
Address of Bank:
NationsBank, N.A.
400 North Ashley Drive, 2nd Floor
Tampa, Florida 33602
Attn: Ms. Sadahri Berry
Fax No. (813) 224-5770
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<PAGE>
LINE OF CREDIT PROMISSORY NOTE
Charlotte, North Carolina
$3,000,000.00 March 25, 1998
FOR VALUE RECEIVED, the undersigned PLASMA-THERM, INC., a Florida
corporation (hereinafter called "Borrower") promises to pay to the order of
NATIONSBANK, N.A., a national banking association, f/k/a NationsBank, N.A.
(South) (hereinafter sometimes referred to as "Lender" and together with any
holder hereof called "Holder"), at 400 N. Ashley Drive, 2nd Floor, Tampa,
Florida 33602, or at such other place as Holder may from time to time designate
in writing, the principal sum of THREE MILLION AND NO/100 DOLLARS
($3,000,000.00), or so much thereof as has been advanced hereunder, together
with interest on the unpaid balance of the principal (the "Loan") from time to
time outstanding from the date of each advance of principal at the rate for each
day equal to the "Variable Adjusted LIBOR Rate" (as hereinafter defined) as
determined by Lender and adjusted daily, plus two hundred (200) basis points,
per annum. In no event, however, shall the interest rate be greater than the
maximum rate of interest allowed to be contracted for by applicable law. The
term "Variable Adjusted LIBOR Rate" means the interest rate per annum determined
in accordance with the following definitions and procedures:
a. The "LIBOR Rate" for a particular day shall be the interest rate as
published in the final New York edition of The Wall Street Journal as the
appropriate London InterBank Offered Rate (LIBOR) for such particular day for a
non-domestic certificate of deposit in an amount approximately equal to the
amount of the Note having a term of thirty (30) days, or if The Wall Street
Journal is not published on any such date, then as published therein for the
immediately preceding business day provided, however, that in the event that The
Wall Street Journal is not published, or does not report the London InterBank
Offered Rate, for three consecutive business days, then the "LIBOR Rate" shall
be deemed to be the interest rate which it would be necessary for Lender to pay
in connection with a sale by Lender, if possible, of a certificate of deposit
for a non-domestic deposit in an amount approximately equal to the amount of the
Note and having a term of thirty (30) days.
b. The "Variable Adjusted LIBOR Rate" for a particular day shall be equal
to the quotient of the LIBOR Rate divided by the difference of (a) one minus (b)
the maximum rate (expressed as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable from time to time to any member bank of the
Federal Reserve System, in respect to Eurocurrency liabilities as specified in
Regulation D (or any successor category of liabilities under Regulation D). The
computation of the Variable Adjusted LIBOR Rate shall also include such
adjustments as may be necessary in respect to impositions on Lender for Federal
Deposit Insurance Corporation insurance and other insurance, fees, assessments
and surcharges which occur because of Lender's sale of a certificate of deposit
which would establish the LIBOR Rate or for insuring time deposits.
<PAGE>
c. The LIBOR Rate used in determining the Variable Adjusted LIBOR Rate for
a particular day shall be the LIBOR Rate for such day if the interest rate is
published in The Wall Street Journal as specified above, and otherwise shall be
the LIBOR Rate which is two "business days" prior to the date of determination,
or if such day is not a business day, then the next preceding business day.
d. A "business day" for purposes of determination of Lender's Variable
Adjusted LIBOR Rate shall mean any day on which Lender is open in Charlotte,
North Carolina for the transaction of domestic and foreign exchange business.
Each determination by Lender of the Variable Adjusted LIBOR Rate shall, in the
absence of manifest error, be conclusive and binding.
Interest owing under this Note shall be computed on the basis of a 360-day
year.
Principal and interest shall be due and payable as follows:
a. Accrued interest only, as stated above, shall be payable monthly
commencing on the last day of March, 1998, and continuing on the last day of
each month thereafter until May 19, 1999, at which time all outstanding
indebtedness, whether principal, accrued interest or otherwise, shall be due and
payable in full.
b. The principal amount evidenced hereby may be borrowed (and to the
extent any principal amount advanced hereunder is repaid by Borrower, such sum
may be borrowed again) prior to May 19, 1999, but only in accordance with the
terms of that Credit Agreement dated April 18, 1997, as amended on even date
herewith, and only if this Note is not in default as hereinafter defined. At no
time, however, shall the principal balance outstanding hereunder exceed THREE
MILLION AND NO/100 DOLLARS ($3,000,000.00).
Borrower may prepay all or part of the principal balance at any time
without penalty. Such prepayment shall be accompanied by payment of any unpaid
interest accrued to the time of such prepayment. All payments made hereunder
shall at Holder's option first be applied to late charges, then to accrued
interest, then to principal.
Permitted partial prepayments shall not affect or vary the duty of Borrower
to pay all obligations when due, and they shall not affect or impair the right
of Holder to pursue all remedies available to it hereunder, under the security
instruments securing this indebtedness, or under any other loan documents or
guaranty executed in connection herewith.
If any event of default set forth in this Note or in any of the Loan
Documents (as defined herein) shall occur, or in the event Lender has, in
accordance with the terms of the Note or the Loan Documents, made a demand for
repayment of the indebtedness evidenced by this Note and the Loan Documents,
Lender, at its option, may notify Borrower that its commitment to lend under
this line
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<PAGE>
of credit is terminated and Lender shall be relieved of all obligations to lend
any further sums thereafter to Borrower.
This Note is secured by a certain Security Agreement dated April 18, 1997,
as amended on even date herewith which, together with this Note, the Credit
Agreement, as amended on even date herewith, and all other agreements,
instruments and documents delivered in connection therewith and/or herewith, are
hereinafter sometimes referred to as the "Loan Documents."
This Note and the Loan Documents are to be governed by and construed under
the laws of the State of Florida and of the United States of America, and the
rules and regulations promulgated under the authority thereof. It is the intent
of this Note that such laws shall be interpreted in such a manner that the
maximum rate of interest allowed to be contracted for by applicable law as
changed from time to time which is applicable to this Note (hereinafter called
the "Maximum Rate") be as great as possible. The interest due hereunder is being
charged pursuant to the provisions of The Florida Banking Code (as defined by
statute), and Chapter 687 FLORIDA STATUTES. In the event that any law, rule or
regulation of the United States of America or the State of Florida, as changed
from time to time, allows interest to be contracted for at a rate that is
greater than the rate permitted by The Florida Banking Code (as defined by
statute), and Chapter 687, FLORIDA STATUTES, then such law, rule or regulation
shall apply. References to laws, statutes, rules and regulations in this Note
refer to such as amended from time to time.
In the event that any payment of principal or interest is not made within
ten (10) days after the same become due hereunder, it is hereby agreed that
Holder shall have the option of collecting a late charge equal to four percent
(4%) of the amount of each such delinquent payment. Said late charge and/or
interest shall be immediately due and payable in full on demand by Holder.
In no event shall Holder have the right to charge or collect, nor shall
Borrower be required or obligated to pay, interest or payments in the nature of
interest, which would result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment which is interest or
in the nature of interest is made by Borrower or received by Holder which would
result in the rate of interest being charged or collected by Holder being in
excess of the Maximum Rate, then the portion of any such payment which causes
the rate of interest being charged or collected by Holder to exceed the Maximum
Rate (hereinafter called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Holder in writing that Borrower elects to have
such excess sum returned to Borrower, such excess sum shall be returned to
Borrower. In the event that any such overcharge is discovered after this Note
has been paid in full, then the amount of such excess sum shall be returned to
Borrower together with interest thereon from the date such excess sum was paid
or collected at the same rate as was due Holder during such period under the
terms of this Note. All excess sums credited to principal shall be credited as
of the date paid to Holder. It is recognized by Borrower that the Maximum Rate
may vary from time to time, and that from time to time the Maximum Rate may be
uncertain. Therefore, Holder may seek judicial determination of the applicable
rate of interest. In such event, the withholding of credit to principal or the
withholding of
3
<PAGE>
payment to Borrower of any proposed excess sum during the period of judicial
determination (including all appeals) shall not be deemed a breach of the
obligations of Holder hereunder or of applicable law. It is the intent of Holder
to conform strictly to the limitations of applicable laws governing the charging
and collection of interest as changed from time to time.
The "Default Interest Rate" shall be a rate equal to three percent (3%)
above the rate of interest required to be paid by the terms of this Note.
Holder shall have the optional right to declare the amount of the total
unpaid balance hereof to be due and forthwith payable in advance of the maturity
date of any sum due or installment, as fixed herein, upon the occurrence of an
event of default. An event of default shall be deemed to occur under this Note
upon the failure of Borrower to pay, within fifteen (15) days after the same
become due, any of the installments of interest or principal, or other sums due
hereunder, or upon the occurrence of any other default under or failure to
perform by any party (other than Holder) in accordance with any of the terms and
conditions of this Note within thirty (30) days after notice of such default or
failure from Holder or upon the occurrence of any default under or failure to
perform by any party (other than Holder) in accordance with any of the terms and
conditions of any of the Loan Documents after the expiration of any applicable
grace period, or upon the default under or the failure of Borrower to perform in
accordance with any and all notes, obligations, instruments or documents between
Borrower and Lender after any applicable grace period (including but not limited
to that certain Term Promissory Note by Borrower in favor of Lender in the
principal amount of $1,000,000.00 dated April 18, 1997, and that certain
Promissory Note by Borrower in favor of Lender in the original principal amount
of $3,375,000.00 dated August 14, 1995). Upon exercise of any of these options
by Holder, the entire unpaid principal balance shall bear interest at the
"Default Interest Rate." In addition to the rights described in this paragraph,
Holder shall have the right to exercise all other rights or remedies provided by
law or at equity or as provided in any of the Loan Documents and shall
specifically have the right to recover all damages resulting from such default
including, without limitation, the right to recover the payment of all amounts
owing to Holder. Exercise of any of these options shall be without any
additional notice to Borrower, notice of such exercise being hereby expressly
waived.
Time is of the essence hereunder. In the event that this Note is collected
by law or through attorneys at law, or under advice therefrom, Borrower and any
other person liable for payment hereof hereby, severally and jointly, agree to
pay all costs of collection, including reasonable out-of-pocket attorneys' fees
and costs (including charges for paralegals and others working under the
direction or supervision of Holder's attorneys) and all sales or use taxes
thereon, whether or not suit is brought, and whether incurred in connection with
collection, trial, appeal, bankruptcy or other creditors' proceedings or
otherwise, and, if Holder's attorneys shall include employees of Holder or of
any person controlling, controlled by or under common control with Holder, such
reasonable attorney's fees shall include costs allocated by Holder's or such
person's internal legal department.
4
<PAGE>
Borrower authorizes Holder, when payment is due, to set off for any payment
of principal or interest past due hereunder for the amount of such payment of
principal or interest. Exercise of this right shall be optional with Holder and
the provisions of this paragraph shall not be construed as releasing Borrower
from the obligation to make payments of principal or interest according to the
terms hereof.
The remedies of Holder as provided herein and in the Loan Documents shall
be cumulative and concurrent, and may be pursued singularly, successively, or
together, at the sole discretion of Holder. No act of omission or commission of
Holder, including specifically any failure to exercise any right, remedy or
recourse, shall be deemed to be a waiver or release of the same, such waiver or
release to be effected only through a written document executed by Holder and
then only to the extent specifically recited therein. A waiver or release with
reference to any one event shall not be construed as continuing, as a bar to, or
as a waiver or release of, any subsequent right, remedy or recourse as to a
subsequent event.
All persons (including corporations) now or at any time liable whether
primarily or secondarily, for the payment of the indebtedness hereby evidenced,
for themselves, their heirs, legal representatives, successors and assigns,
respectively, hereby (a) expressly waive any presentment, demand for payment,
notice of dishonor, protest, notice of nonpayment or protest, and diligence in
collection; (b) consent that Holder may, from time to time and without notice to
them or demand, (i) extend, rearrange, renew or postpone any or all payments
and/or (ii) release, exchange, add to or substitute all or any part of the
collateral for this Note, without in any way modifying, altering, releasing,
affecting or limiting their respective liability or the lien of any security
instrument; (c) agree that Holder, in order to enforce payment of this Note
against them shall not be required first to institute any suit or to exhaust any
of its remedies against Borrower or any other person or party or to attempt to
realize on the collateral for this Note.
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 OR
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 INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
5
<PAGE>
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 COUNTY OF
ANY BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT,
AGREEMENT OR DOCUMENT OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN
THE COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, 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.
b. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY 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 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. 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.
Borrower acknowledges that the above paragraphs have been expressly
bargained for by Holder as part of the Loan evidenced hereby and that, but for
Borrower's agreement and the agreement of any other person liable for payment
hereof thereto, Holder would not have extended the Loan for the term and with
the interest rate provided herein.
If more than one party shall execute this Note, the term "Borrower", as
used herein, shall mean all parties signing this Note and each of them, who
shall be jointly and severally obligated
6
<PAGE>
hereunder. In this Note, whenever the context so requires, the neuter gender
includes the feminine and/or masculine, as the case may be and the singular
number includes the plural.
IN WITNESS WHEREOF Borrower has caused this Note to be executed in its name
on the day and year first above written.
PLASMA-THERM, INC., a Florida corporation
("Borrower")
By: /s/ STACY L. WAGNER
------------------------------
Stacy L. Wagner
Vice President-Finance and Administration
interim
"Florida documentary stamp tax
required by law in the amount of
$ exempt-out-of-state has been or will (CORPORATE SEAL)
be paid directly to the Department of
Revenue. Certificate of Registration
#59-0155622 032798
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by STACY L. WAGNER, as Vice President-Finance and Administration of
PLASMA-THERM, INC., a Florida corporation, on behalf of the corporation. She is
[X] personally known to me or [ ] has produced _____________________________ as
identification.
My commission expires: 8/19/99 /s/ TERRY L. WITCHER
----------------------------
Signature of Notary Public
(SEAL) Terry L. Witcher (Commissioned: Terry L. Scaggs)
-----------------------------------------------
Legibly Print Name of Notary Public
7
<PAGE>
LINE OF CREDIT CONSOLIDATION PROMISSORY NOTE
Charlotte, North Carolina
10,000,000.00 March 25, 1998
FOR VALUE RECEIVED, the undersigned PLASMA-THERM, INC., a Florida
corporation (hereinafter called "Borrower") promises to pay to the order of
NATIONSBANK, N.A., a national banking association, f/k/a NationsBank, N.A.
(South) (hereinafter sometimes referred to as "Lender" and together with any
holder hereof called "Holder"), at 400 N. Ashley Drive, 2nd Floor, Tampa,
Florida 33602, or at such other place as Holder may from time to time designate
in writing, the principal sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00), or so much thereof as has been advanced hereunder, together
with interest on the unpaid balance of the principal (the "Loan") from time to
time outstanding from the date of each advance of principal at the rate for each
day equal to the "Variable Adjusted LIBOR Rate" (as hereinafter defined) as
determined by Lender and adjusted daily, plus two hundred (200) basis points,
per annum. In no event, however, shall the interest rate be greater than the
maximum rate of interest allowed to be contracted for by applicable law. The
term "Variable Adjusted LIBOR Rate" means the interest rate per annum determined
in accordance with the following definitions and procedures:
a. The "LIBOR Rate" for a particular day shall be the interest rate as
published in the final New York edition of The Wall Street Journal as the
appropriate London InterBank Offered Rate (LIBOR) for such particular day for a
non-domestic certificate of deposit in an amount approximately equal to the
amount of the Note having a term of thirty (30) days, or if The Wall Street
Journal is not published on any such date, then as published therein for the
immediately preceding business day provided, however, that in the event that The
Wall Street Journal is not published, or does not report the London InterBank
Offered Rate, for three consecutive business days, then the "LIBOR Rate" shall
be deemed to be the interest rate which it would be necessary for Lender to pay
in connection with a sale by Lender, if possible, of a certificate of deposit
for a non-domestic deposit in an amount approximately equal to the amount of the
Note and having a term of thirty (30) days.
b. The "Variable Adjusted LIBOR Rate" for a particular day shall be equal
to the quotient of the LIBOR Rate divided by the difference of (a) one minus (b)
the maximum rate (expressed as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable from time to time to any member bank of the
Federal Reserve System, in respect to Eurocurrency liabilities as specified in
Regulation D (or any successor category of liabilities under Regulation D). The
computation of the Variable Adjusted LIBOR Rate shall also include such
adjustments as may be necessary in respect to impositions on Lender for Federal
Deposit Insurance Corporation insurance and other insurance, fees, assessments
and surcharges which occur because of Lender's sale of a certificate of deposit
which would establish the LIBOR Rate or for insuring time deposits.
<PAGE>
c. The LIBOR Rate used in determining the Variable Adjusted LIBOR Rate for
a particular day shall be the LIBOR Rate for such day if the interest rate is
published in The Wall Street Journal as specified above, and otherwise shall be
the LIBOR Rate which is two "business days" prior to the date of determination,
or if such day is not a business day, then the next preceding business day.
d. A "business day" for purposes of determination of Lender's Variable
Adjusted LIBOR Rate shall mean any day on which Lender is open in Charlotte,
North Carolina for the transaction of domestic and foreign exchange business.
Each determination by Lender of the Variable Adjusted LIBOR Rate shall, in the
absence of manifest error, be conclusive and binding.
Interest owing under this Note shall be computed on the basis of a 360-day
year.
Principal and interest shall be due and payable as follows:
a. Accrued interest only, as stated above, shall be payable monthly
commencing on the last day of March, 1998, and continuing on the last day of
each month thereafter until May 19, 1999, at which time all outstanding
indebtedness, whether principal, accrued interest or otherwise, shall be due and
payable in full.
b. The principal amount evidenced hereby may be borrowed (and to the
extent any principal amount advanced hereunder is repaid by Borrower, such sum
may be borrowed again) prior to May 19, 1999, but only in accordance with the
terms of that Credit Agreement dated April 18, 1997, as amended on even date
herewith, and only if this Note is not in default as hereinafter defined. At no
time, however, shall the principal balance outstanding hereunder exceed TEN
MILLION AND NO/100 DOLLARS ($10,000,000.00).
Borrower may prepay all or part of the principal balance at any time
without penalty. Such prepayment shall be accompanied by payment of any unpaid
interest accrued to the time of such prepayment. All payments made hereunder
shall at Holder's option first be applied to late charges, then to accrued
interest, then to principal.
Permitted partial prepayments shall not affect or vary the duty of Borrower
to pay all obligations when due, and they shall not affect or impair the right
of Holder to pursue all remedies available to it hereunder, under the security
instruments securing this indebtedness, or under any other loan documents or
guaranty executed in connection herewith.
If any event of default set forth in this Note or in any of the Loan
Documents (as defined herein) shall occur, or in the event Lender has, in
accordance with the terms of the Note or the Loan Documents, made a demand for
repayment of the indebtedness evidenced by this Note and the Loan Documents,
Lender, at its option, may notify Borrower that its commitment to lend under
this line of credit is terminated and Lender shall be relieved of all
obligations to lend any further sums thereafter to Borrower.
2
<PAGE>
This Note is secured by a certain Security Agreement dated April 18, 1997,
as amended on even date herewith which, together with this Note, the Credit
Agreement, as amended on even date herewith, and all other agreements,
instruments and documents delivered in connection therewith and/or herewith, are
hereinafter sometimes referred to as the "Loan Documents."
This Note and the Loan Documents are to be governed by and construed under
the laws of the State of Florida and of the United States of America, and the
rules and regulations promulgated under the authority thereof. It is the intent
of this Note that such laws shall be interpreted in such a manner that the
maximum rate of interest allowed to be contracted for by applicable law as
changed from time to time which is applicable to this Note (hereinafter called
the "Maximum Rate") be as great as possible. The interest due hereunder is being
charged pursuant to the provisions of The Florida Banking Code (as defined by
statute), and Chapter 687 FLORIDA STATUTES. In the event that any law, rule or
regulation of the United States of America or the State of Florida, as changed
from time to time, allows interest to be contracted for at a rate that is
greater than the rate permitted by The Florida Banking Code (as defined by
statute), and Chapter 687, FLORIDA STATUTES, then such law, rule or regulation
shall apply. References to laws, statutes, rules and regulations in this Note
refer to such as amended from time to time.
In the event that any payment of principal or interest is not made within
ten (10) days after the same become due hereunder, it is hereby agreed that
Holder shall have the option of collecting a late charge equal to four percent
(4%) of the amount of each such delinquent payment. Said late charge and/or
interest shall be immediately due and payable in full on demand by Holder.
In no event shall Holder have the right to charge or collect, nor shall
Borrower be required or obligated to pay, interest or payments in the nature of
interest, which would result in interest being charged or collected at a rate in
excess of the Maximum Rate. In the event that any payment which is interest or
in the nature of interest is made by Borrower or received by Holder which would
result in the rate of interest being charged or collected by Holder being in
excess of the Maximum Rate, then the portion of any such payment which causes
the rate of interest being charged or collected by Holder to exceed the Maximum
Rate (hereinafter called the "excess sum") shall be credited as a payment of
principal. If Borrower notifies Holder in writing that Borrower elects to have
such excess sum returned to Borrower, such excess sum shall be returned to
Borrower. In the event that any such overcharge is discovered after this Note
has been paid in full, then the amount of such excess sum shall be returned to
Borrower together with interest thereon from the date such excess sum was paid
or collected at the same rate as was due Holder during such period under the
terms of this Note. All excess sums credited to principal shall be credited as
of the date paid to Holder. It is recognized by Borrower that the Maximum Rate
may vary from time to time, and that from time to time the Maximum Rate may be
uncertain. Therefore, Holder may seek judicial determination of the applicable
rate of interest. In such event, the withholding of credit to principal or the
withholding of payment to Borrower of any proposed excess sum during the period
of judicial determination (including all appeals) shall not be deemed a breach
of the obligations of Holder hereunder or of applicable law. It is the intent of
Holder to conform strictly to the limitations of applicable laws governing the
charging and collection of interest as changed from time to time.
3
<PAGE>
The "Default Interest Rate" shall be a rate equal to three percent (3%)
above the rate of interest required to be paid by the terms of this Note.
Holder shall have the optional right to declare the amount of the total
unpaid balance hereof to be due and forthwith payable in advance of the maturity
date of any sum due or installment, as fixed herein, upon the occurrence of an
event of default. An event of default shall be deemed to occur under this Note
upon the failure of Borrower to pay, within fifteen (15) days after the same
become due, any of the installments of interest or principal, or other sums due
hereunder, or upon the occurrence of any other default under or failure to
perform by any party (other than Holder) in accordance with any of the terms and
conditions of this Note within thirty (30) days after notice of such default or
failure from Holder or upon the occurrence of any default under or failure to
perform by any party (other than Holder) in accordance with any of the terms and
conditions of any of the Loan Documents after the expiration of any applicable
grace period, or upon the default under or the failure of Borrower to perform in
accordance with any and all notes, obligations, instruments or documents between
Borrower and Lender after any applicable grace period (including but not limited
to that certain Term Promissory Note by Borrower in favor of Lender in the
principal amount of $1,000,000.00 dated April 18, 1997, and that certain
Promissory Note by Borrower in favor of Lender in the original principal amount
of $3,375,000.00 dated August 14, 1995). Upon exercise of any of these options
by Holder, the entire unpaid principal balance shall bear interest at the
"Default Interest Rate." In addition to the rights described in this paragraph,
Holder shall have the right to exercise all other rights or remedies provided by
law or at equity or as provided in any of the Loan Documents and shall
specifically have the right to recover all damages resulting from such default
including, without limitation, the right to recover the payment of all amounts
owing to Holder. Exercise of any of these options shall be without any
additional notice to Borrower, notice of such exercise being hereby expressly
waived.
Time is of the essence hereunder. In the event that this Note is collected
by law or through attorneys at law, or under advice therefrom, Borrower and any
other person liable for payment hereof hereby, severally and jointly, agree to
pay all costs of collection, including reasonable out-of-pocket attorneys' fees
and costs (including charges for paralegals and others working under the
direction or supervision of Holder's attorneys) and all sales or use taxes
thereon, whether or not suit is brought, and whether incurred in connection with
collection, trial, appeal, bankruptcy or other creditors' proceedings or
otherwise, and, if Holder's attorneys shall include employees of Holder or of
any person controlling, controlled by or under common control with Holder, such
reasonable attorney's fees shall include costs allocated by Holder's or such
person's internal legal department.
Borrower authorizes Holder, when payment is due, to set off for any payment
of principal or interest past due hereunder for the amount of such payment of
principal or interest. Exercise of this right shall be optional with Holder and
the provisions of this paragraph shall not be construed as releasing Borrower
from the obligation to make payments of principal or interest according to the
terms hereof.
4
<PAGE>
The remedies of Holder as provided herein and in the Loan Documents shall
be cumulative and concurrent, and may be pursued singularly, successively, or
together, at the sole discretion of Holder. No act of omission or commission of
Holder, including specifically any failure to exercise any right, remedy or
recourse, shall be deemed to be a waiver or release of the same, such waiver or
release to be effected only through a written document executed by Holder and
then only to the extent specifically recited therein. A waiver or release with
reference to any one event shall not be construed as continuing, as a bar to, or
as a waiver or release of, any subsequent right, remedy or recourse as to a
subsequent event.
All persons (including corporations) now or at any time liable whether
primarily or secondarily, for the payment of the indebtedness hereby evidenced,
for themselves, their heirs, legal representatives, successors and assigns,
respectively, hereby (a) expressly waive any presentment, demand for payment,
notice of dishonor, protest, notice of nonpayment or protest, and diligence in
collection; (b) consent that Holder may, from time to time and without notice to
them or demand, (i) extend, rearrange, renew or postpone any or all payments
and/or (ii) release, exchange, add to or substitute all or any part of the
collateral for this Note, without in any way modifying, altering, releasing,
affecting or limiting their respective liability or the lien of any security
instrument; (c) agree that Holder, in order to enforce payment of this Note
against them shall not be required first to institute any suit or to exhaust any
of its remedies against Borrower or any other person or party or to attempt to
realize on the collateral for this Note.
This Note consolidates the principal balances of the following promissory
notes:
a. A line of credit promissory note dated April 18, 1997, executed by
Borrower in favor of NationsBank, N.A. (South) in the original principal amount
of SEVEN MILLION AND N0/100 DOLLARS ($7,000,000.00); and
b. A line of credit promissory note executed by Borrower in favor of
Lender on even date herewith in the original principal amount of THREE MILLION
AND N0/100 DOLLARS ($3,000,000.00).
In the event of any conflict between the terms and provisions of this Note and
the terms and provisions of the above-referenced two notes, the terms and
provisions of this Note shall govern.
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 OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
5
<PAGE>
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 INSTRUMENT, AGREEMENT OR DOCUMENT 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 COUNTY OF ANY
BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT
OR DOCUMENT OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE COUNTY
WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, 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.
b. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY 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 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. 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. d. a.
Borrower acknowledges that the above paragraphs have been expressly
bargained for by Holder as part of the Loan evidenced hereby and that, but for
Borrower's agreement and the
6
<PAGE>
agreement of any other person liable for payment hereof thereto, Holder would
not have extended the Loan for the term and with the interest rate provided
herein.
If more than one party shall execute this Note, the term "Borrower", as
used herein, shall mean all parties signing this Note and each of them, who
shall be jointly and severally obligated hereunder. In this Note, whenever the
context so requires, the neuter gender includes the feminine and/or masculine,
as the case may be and the singular number includes the plural.
IN WITNESS WHEREOF Borrower has caused this Note to be executed in its name
on the day and year first above written.
PLASMA-THERM, INC., a Florida corporation
("Borrower")
By: /s/ STACY L. WAGNER
------------------------------
Stacy L. Wagner
Vice President-Finance and Administration
Consolidation
"Florida documentary stamp tax
required by law in the amount of (CORPORATE SEAL)
$ renewal-out-of-state has been or will
be paid directly to the Department of
Revenue. Certificate of Registration
#59-0155622 032798
STATE OF NORTH CAROLINA )
COUNTY OF MECKLENBURG )
The foregoing instrument was acknowledged before me this 25th day of March,
1998, by STACY L. WAGNER, as Vice President-Finance and Administration of
PLASMA-THERM, INC., a Florida corporation, on behalf of the corporation. She is
[X] personally known to me or [ ] has produced _____________________________ as
identification.
My commission expires: 8/19/99 /s/ TERRY L. WITCHER
----------------------------
Signature of Notary Public
(SEAL) Terry L. Witcher (Commissioned: Terry L. Scaggs)
----------------------------------------------
Legibly Print Name of Notary Public
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 1998, AND CONSOLIDATED STATEMENTS OF
INCOME FOR THE PERIOD ENDED MAY 31, 1998 AND IS QUALIFIED IN ITS ENTIRELY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> DEC-01-1997
<CASH> 6,741,021
<SECURITIES> 0
<RECEIVABLES> 13,917,749
<ALLOWANCES> 0
<INVENTORY> 11,520,504
<CURRENT-ASSETS> 33,224,798
<PP&E> 13,765,777
<DEPRECIATION> 3,427,852
<TOTAL-ASSETS> 43,743,165
<CURRENT-LIABILITIES> 8,248,108
<BONDS> 3,341,041
0
0
<COMMON> 111,972
<OTHER-SE> 32,042,044
<TOTAL-LIABILITY-AND-EQUITY> 43,743,165
<SALES> 27,274,588
<TOTAL-REVENUES> 27,274,588
<CGS> 15,126,526
<TOTAL-COSTS> 7,163,789
<OTHER-EXPENSES> (195,352)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 301,986
<INCOME-PRETAX> 4,877,639
<INCOME-TAX> 1,824,046
<INCOME-CONTINUING> 3,053,593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,053,593
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
