UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the Year Ended December 31, 1998 Commission File Number 0-6866
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
HELIX TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2423640
(State of incorporation) (IRS Employer Identification No.)
Mansfield Corporate Center, Nine Hampshire Street,
Mansfield, Massachusetts 02048-9171
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (508) 337-5111
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$1 Par Value
(Title of Class)
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the registrant's common stock held by
nonaffiliates of the registrant as of February 26, 1999, (computed by reference
to the quoted selling prices of such stock in the over-the-counter market), was
$430,281,855.
The number of shares outstanding of the registrant's Common Stock, $1 Par Value,
as of February 26, 1999, was 22,319,131.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Proxy Statement for the registrant's 1999 Annual Meeting
of Stockholders to be filed with the SEC in March 1999 are incorporated by
reference into Part III, Items 10-12.
<PAGE>
HELIX TECHNOLOGY CORPORATION 10-K Annual Report
Commission File No. 0-6866 For the Year Ended
December 31, 1998
PART I
Item 1. Business
General HELIX TECHNOLOGY CORPORATION (the "Company"), a Delaware
corporation organized in 1967, provides critical enabling vacuum system
technology to a broad range of electronic component manufacturers, principally
for the production of semiconductors, disk drives and flat panel displays.
The Company's On-Board technology is a comprehensive package of hardware and
software that can integrate both Helix and non-Helix vacuum products. (On-Board
is a registered trademark of Helix Technology Corporation.) These systems
provide original equipment manufacturers the flexibility to rapidly implement a
full range of process-driven solutions and end-users performance-enhancing
process controls, advanced diagnostics and communications capabilities to
increase system uptime and to lower the cost of ownership.
The Company's On-Board Cryopump product continues to be the industry standard
high-vacuum pump for both the PVD (Physical Vapor Deposition or "sputtering")
and ion implantation markets. Its On-Board Waterpumps, On-Board Turbopumps and
On-Board TurboPlus give the Company products to support the CVD (Chemical Vapor
Deposition) and etch processes.
The Company's STABIL-ION and CONVECTRON vacuum measurement systems are
considered industry standards and are used in the PVD, ion implantation, CVD and
etch processes. (STABIL-ION and CONVECTRON are registered trademarks of Helix
Technology Corporation.) The Company's vacuum gauging products are also
integrated into analytical instruments, primarily mass spectrometers.
The Company maintains Customer Support Centers strategically located throughout
the world to provide replacement parts, overhaul, repair and upgrade services.
The Company's unique GUTS (Guaranteed Up-Time Support) rapid response system,
which has been the industry benchmark since 1985, is designed to assure that
users of the Company's products have direct, twenty-four-hour-a-day access to
the resources of the Customer Support Centers. (GUTS is a registered trademark
of Helix Technology Corporation.)
The Company encounters competition in both domestic and foreign markets for its
products. Competition comes from smaller firms and from larger firms which have
greater total resources than the Company. Customer service, product quality,
performance and price are all factors in selling the Company's products.
The Company's business is, generally, not dependent on the availability of raw
materials or components from any single source. Certain components, however, may
be available from only one or two qualified sources. The Company's policy is to
develop alternative sources for components and, where possible, to avoid using
scarce raw materials in its products.
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<PAGE>
PART I
Item 1. Business (continued)
The Company holds many U.S. and foreign patents in the fields of vacuum pumping,
gauging and cryogenics that it believes are significant to its operations. These
patents expire at various years through 2016. No patents which the Company
considers significant expire during the next five years. Trademarks are
considered important to the Company's business. These trademarks are protected
by registration in the United States and other countries in which the Company's
products are marketed.
The Company and Ulvac Corporation of Chigasaki, Japan, operate a joint venture,
Ulvac Cryogenics, Inc. ("UCI") formed in 1981, which manufactures and sells
cryogenic vacuum pumps, principally to Ulvac Corporation. Each company owns 50%
of UCI and made initial cash investments of approximately $100,000, with no
subsequent cash investments. The joint venture arrangement includes a license
and technology agreement from the Company and a management and consultation
agreement from Ulvac Corporation. The Company and Ulvac Corporation essentially
share control of the joint venture.
On May 7, 1998, the Company acquired Granville-Phillips Company ("GPC"). GPC is
a world leader in the development and manufacture of instrumentation for vacuum
measurement and control used principally in the semiconductor, flat panel
display and disk drive manufacturing processes.
Backlog - The backlog of orders believed to be firm was approximately $4.8
million at December 31, 1998, compared to $7.0 million at December 31, 1997. The
Company expects to recognize revenues from essentially all of the December 31,
1998, backlog during 1999.
Research and Development - The Company expended $10,106,000 in 1998 on
research and development efforts compared to $11,540,000 and $10,213,000 in 1997
and 1996, respectively. These expenditures reflect development activities
relating to product enhancements and new products for commercial applications.
Employment - Total employment in the Company at the end of 1998 was 457
compared with 606 and 503 at the end of 1997 and 1996, respectively. This
includes temporary employees of eight at the end of 1998 compared to 65 and 27
in 1997 and 1996, respectively.
Environmental Affairs - Compliance with federal, state and local provisions
relating to environmental quality has not had, and is not expected to have, a
material impact upon capital expenditures, earnings or the competitive position
of the Company.
Financial Information about One Operating Segment and Major Customers - The
Company's one operating segment is cryogenic and vacuum equipment. The Company's
largest customer is Applied Materials, the world's largest manufacturer of
semiconductor capital equipment, representing 20%, 30% and 28% of net sales for
1998, 1997 and 1996, respectively. Information concerning the Company's industry
segment information and different geographical areas are included in Note G of
Notes to Consolidated Financial Statements included elsewhere in this report.
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<PAGE>
PART I
Item 2. Properties
The Company occupies approximately 230,000 square feet worldwide, as described
in the table below.
Size Lease
Location (Sq. Ft.) Expires Functions
-------- --------- ------- ---------
Mansfield, Massachusetts 155,000 2006 Corporate headquarters, engineering,
manufacturing, sales and
marketing and administration
Boulder, Colorado 22,000 Owned Engineering, manufacturing, and
9,000 2001 sales and marketing
Santa Clara, California 11,000 2000 Sales office, customer support and
repair depot
Austin, Texas 12,000 1999 Sales office and customer support
Phoenix, Arizona 1,300 2000 Sales office and customer support
Scotland 5,300 2020 Sales office and customer support
Germany 2,500 2000 Sales office and customer support
France 6,400 2000 Sales office, customer support and
repair depot
Japan 5,160 2000 Sales office and customer support
The Company believes that its existing facilities will be adequate to meet its
currently anticipated requirements and that suitable additional or substitute
facilities will be available as required. The lease on the Mansfield,
Massachusetts, facility provides for renewal options for up to fifteen
additional years.
Item 3. Legal Proceedings
In the normal course of business, the Company is subject to various legal
proceedings and claims. The Company believes that the ultimate outcome of these
matters will not have a material effect on its financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1998, no matters were submitted to a vote
of security holders through the solicitation of proxies or otherwise.
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<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
The Company's common stock is traded on the NASDAQ National Market (NASDAQ
symbol HELX). At December 31, 1998, there were 22,319,131 shares of common stock
outstanding and approximately 854 common stockholders of record.
Price Range of Common Stock and Cash Dividend Per Common Share
The price range and cash dividend per common share of the Company's common stock
by quarter are:
First Second Third Fourth
1998 Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------
Stock price
High $25.13 $20.63 $15.50 $14.00
Low $17.75 $14.75 $ 9.25 $ 6.81
Cash dividends per share (1) $ .21 $ .21 $ .21 $ .12
First Second Third Fourth
1997 Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------
Stock price
High (2) $18.63 $21.00 $33.38 $31.53
Low (2) $14.13 $15.00 $19.50 $17.50
Cash dividends per share (1)(2) $ .175 $ .175 $ .175 $ .21
(1) Cash dividends per share declared in periods prior to the acquisition of
Granville-Phillips Company are based on shares outstanding at that time and
therefore do not reflect the 2,383,000 shares issued as part of the acquisition.
(2) Market prices and per share data reflect a two-for-one common stock split
effective November 1997.
The Board of Directors declared a quarterly cash dividend of $0.12 per common
share payable on March 11, 1999, to common stockholders of record at the close
of business on February 25, 1999.
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<PAGE>
PART II
Item 6. Selected Financial Data
The following table summarizes certain selected consolidated financial data,
which should be read in conjunction with "Management's Discussion and Analysis
of Financial Conditions and Results of Operations" and the Company's
consolidated financial statements and related notes included elsewhere herein.
In connection with the acquisition of Granville-Phillips Company in 1998,
accounted for as a pooling of interests, all prior-period financial data has
been restated to include the impact of the combination.
<TABLE>
<CAPTION>
(in thousands except per share data) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales ........................ $ 95,345 $157,076 $151,665 $145,370 $103,176
Net income (loss) (1) ............ $ (1,920) $ 25,544 $ 25,126 $ 24,694 $ 11,786
Basic net income (loss)
per share (2) ................. $ (0.09) $ 1.15 $ 1.15 $ 1.14 $ 0.55
Diluted net income (loss)
per share (2) ................. $ (0.09) $ 1.14 $ 1.14 $ 1.12 $ 0.54
Cash dividends per share (1)(2)(3) $ .75 $ 0.735 $ 0.65 $ 0.29 $ 0.145
Total assets ..................... $ 75,652 $ 96,219 $ 83,005 $ 79,509 $ 53,173
Basic shares (2) ................. 22,262 22,151 21,788 21,592 21,260
Diluted shares (2) ............... 22,262 22,353 22,096 22,124 21,812
(1) Net loss for the year ended December 31, 1998, reflects merger and other
special charges of $3,546,000 related to the acquisition of Granville-Phillips
Company and restructuring and other special charges of $2,500,000 related to
work force reductions, exit costs for a leased facility and impairment of
certain assets. (See Note 1 of Notes to Consolidated Financial Statements.)
(2) All share and per share data reflect a two-for-one common stock split
effective November 1997.
(3) Cash dividends per share declared in periods prior to the acquisition are
based on shares outstanding at that time and therefore do not reflect the
2,383,000 shares issued as part of the acquisition.
</TABLE>
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<PAGE>
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
On May 7, 1998, the Company acquired Granville-Phillips Company ("GPC"). GPC is
a world leader in the development and manufacture of instrumentation for vacuum
measurement and control used principally in the semiconductor, flat panel
display and disk drive manufacturing processes. The transaction was accounted
for as a pooling of interests; and accordingly, the financial results of the
Company for all periods presented include the financial position, results of
operations, stockholders' equity, comprehensive income and cash flows of GPC.
Results of Operations - 1998 Compared with 1997
Net sales for 1998 were $95.3 million compared to $157.1 million in 1997, a
decrease of $61.8 million. This decline is attributable to the excess capacity
in the worldwide semiconductor industry, combined with the economic slump in the
Pacific Rim.
Total gross profit as a percentage of net sales was 39.8% for 1998, compared to
48.2% for the prior year. The reduction in gross margin was caused by the
substantial decline in production volume and the related increase in excess
capacity and manufacturing unit costs.
Research and development expenses for 1998 were $10.1 million or 10.6% of net
sales, compared to $11.5 million or 7.3% of net sales for 1997. As industry
conditions worsened during the year, the Company delayed certain expenditures on
projects it believed were not critical during the downturn. Despite the decline
in the semiconductor capital equipment business environment and the continued
weakness of the Asian markets, the Company continues to fund its long-term
strategic development programs. These actions are expected to position the
Company for growth as the economics improve in the worldwide semiconductor
industry.
Selling, general and administrative expenses decreased in 1998 to $26.6 million
from $30.9 million in the prior year. This reduction in spending is primarily
attributable to a decrease in variable compensation, lower sales commission
expense and a reduction in advertising and promotional expenditures, which was
partially offset by expenses associated with the opening of the Company's sales
office in Japan.
During 1998, the Company incurred certain special charges. In the second
quarter, the Company acquired GPC in a transaction accounted for as a pooling of
interests. Direct acquisition costs, including professional fees and
compensation expense for various incentive plans for certain GPC employees,
amounted to $3.5 million and were charged against results of operations. During
the third quarter, the Company restructured its domestic operations to eliminate
non-strategic spending, while redirecting resources to the Company's global
customer support structure and other strategic initiatives and took a charge of
$2.5 million. The restructuring included provisions for termination benefits of
$1.3 million paid to approximately 80 personnel, $1.0 million relating to the
closing of a leased facility and $0.2 million for the impairment of certain
assets. Approximately $0.7 million of the charge was non-cash, relating to the
write-off of certain leasehold improvements in the closed facility and the
impairment of the assets. The Company expects that these changes will provide
approximately $5.0 million of
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<PAGE>
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations - 1998 Compared with 1997 (continued)
annual cost savings in 1999. At December 31, 1998, $0.9 million of restructuring
and special charges remained in other accrued expenses, which the Company
expects to be paid or amortized by the end of the third quarter of 1999.
As a result of the decline in net sales and the special charges recorded during
1998, the Company experienced an operating loss of $4.8 million or 5.0% of net
sales, compared to an operating profit of $33.3 million or 21.2% of net sales
for the prior year.
Royalty and equity income from the Company's joint venture in Japan decreased by
$0.8 million in 1998 due to the downturn in the Japanese semiconductor capital
equipment market.
Interest and other income for 1998 was $1.2 million compared with $1.8 million
for 1997, reflecting lower cash, cash equivalent and investment balances during
the year.
The Company recorded an income tax benefit of $0.7 million for 1998 compared to
a tax provision of $11.3 million for the previous year. In 1998, the Company had
an operating loss before taxes due to merger, restructuring and special charges.
The Company benefited from research and development and other tax credits. The
1997 provision of 30.6% is less than the federal statutory rate of 35% because
Granville-Phillips Company was an S-Corporation prior to the acquisition and,
therefore, not subject to federal income tax.
Liquidity and Capital Resources
Net cash provided by operating activities was $7.4 million in 1998. The Company
invested $2.6 million, primarily in machinery and equipment, during 1998. As of
December 31, 1998, there are no anticipated material future capital
expenditures. Cash dividends paid to stockholders during 1998 were $16.1 million
compared to $16.3 million for 1997. In October 1998, the Company's Board of
Directors decided to reduce the quarterly dividend from $.21 per common share to
$.12 per common share due to the uncertain business environment in the
semiconductor capital equipment market.
At December 31, 1998, the Company had informal bank money market lines of credit
of $12.0 million. There have been no borrowings under these agreements since
1993. Since the agreements are informal and unused, terms would be negotiated as
necessary. The Company does not anticipate utilizing these lines of credit in
the near term.
The Company manages its foreign exchange rate risk arising from intercompany
foreign currency denominated transactions through the use of foreign currency
forward contracts. The gains and losses on these transactions are not material.
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<PAGE>
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Liquidity and Capital Resources (continued)
The Company believes that existing cash, cash equivalents and investment
balances, anticipated cash flow from operations and funds available under
existing credit lines will be adequate to fund operations and that it has
further financing options should additional funds be required.
Results of Operations - 1997 Compared with 1996
Net sales for 1997 were $157.1 million compared to $151.7 million in 1996, an
increase of $5.4 million. The growth in sales resulted primarily from record
sales of the Company's cryogenic vacuum products and instruments for vacuum
measurement and control, used principally by semiconductor manufacturers
worldwide. Net sales showed sequential quarterly improvement during the first
three quarters of 1997 as the global market for semiconductor capital equipment
strengthened. Net sales decreased in the fourth quarter due to the downturn in
the worldwide semiconductor industry.
Total gross profit as a percentage of net sales was 48.2% in 1997 compared with
48.0% in 1996. The increase in gross profit was attributable to the efficiencies
derived from the Company's high production volumes and ongoing cost-reduction
initiatives.
Research and development expenses increased to $11.5 million or 7.3% of net
sales for 1997 compared to $10.2 million or 6.7% of net sales for 1996. This
increase reflects continued funding by the Company of long-term strategic
development programs in response to the increasing demand from the semiconductor
industry for new products and product enhancements.
Selling, general and administrative expenses increased to $30.9 million or 19.7%
of net sales for 1997 compared to $27.8 million or 18.3% of net sales for the
prior year. This increase is primarily due to increases in salaries and variable
compensation expense, and to increased sales and marketing efforts worldwide.
Royalty and equity income from the Company's joint venture in Japan improved
$0.3 million over 1996.
Interest and other income for 1997 was $1.8 million compared with $1.5 million
for 1996, reflecting higher cash and cash equivalent balances during the year.
The Company's provision for income taxes was $11.3 million and $12.6 million in
1997 and 1996, respectively. The difference between the statutory federal tax
rate of 35% and the Company's effective tax rate of 30.6% and 33.4% for 1997 and
1996, respectively, is principally due to the impact of Granville-Phillips
Company's status as an S-Corporation, which is not subject to federal income
taxes. Also in 1997, the Company generated a greater benefit from tax credits
for research and development expenditures.
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<PAGE>
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments
and Hedging Activities." The adoption of SFAS 133 in 2000 is not expected to
have a material impact on the Company's financial statements.
Certain Factors That May Affect Future Results
From time to time, information provided by the Company, statements made by its
employees or information included in its filings with the Securities and
Exchange Commission may contain statements that are not historical facts but
that are "forward-looking statements" involving risks and uncertainties. In
particular, statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" relating to the Company's shipment levels,
profitability, sufficiency of capital to meet working capital and capital
expenditure requirements may be forward-looking statements. The words "expect,"
"anticipate," "internal," "plan," "believe," "seek," "estimate" and similar
expressions are intended to identify such forward-looking statements. Such
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions that could cause the Company's future results to
differ materially from those expressed in any forward-looking statements made by
or on behalf of the Company. Many such factors are beyond the Company's ability
to control or predict. Readers are accordingly cautioned not to place undue
reliance on forward-looking statements. The Company disclaims any intent or
obligation to update publicly any forward-looking statements, whether in
response to new information or future events or otherwise. Important factors
that may cause the Company's actual results to differ from such forward-looking
statements include, but are not limited to, the factors discussed below.
The Company's business depends in large part upon the capital expenditures of
semiconductor manufacturers, which, in turn, depend on the current and
anticipated market demand for integrated circuits and products utilizing
integrated circuits. The semiconductor industry is highly cyclical and has
historically experienced periodic downturns, which generally have had a severe
effect on the semiconductor industry's demand for capital equipment and have
affected the Company's results of operations. There can be no assurance that
developments in the semiconductor industry or the semiconductor equipment
industry will occur at the rate or in the manner expected by the Company.
In addition to the cyclical nature, risks and uncertainties of the semiconductor
industry, the Company faces the following risks and uncertainties: the need to
continuously develop, manufacture and gain customers' acceptance of new products
and product enhancements; dependence on a limited number of customers (the
Company's ten largest customers accounted for approximately 39% of net sales,
and its largest customer, Applied Materials, Inc, accounted for approximately
20% of net sales in 1998); its ability to attract and retain certain key
personnel; the ability of the Company to protect its technology assets by
obtaining and enforcing patents; dependence on sole and limited source suppliers
for certain components and subassemblies included in the Company's products and
systems. As a result of the
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<PAGE>
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Certain Factors That May Effect Future Results (continued)
foregoing and other factors, the Company may experience material fluctuations in
its future operating results on a quarterly or annual basis which could
materially affect its business, financial position, results of operations and
stock price.
Year 2000
The Year 2000 problem refers to the potential for information systems to be
unable to correctly recognize and process calendar dates and date-sensitive
information involving dates on or after January 1, 2000. The Company is
addressing its Year 2000 risk within four categories: 1) internal business
software, 2) internal systems (hardware and software, exclusive of business
software), 3) external suppliers of goods and services, and 4) the Company's
products.
INTERNAL BUSINESS SOFTWARE. The Company's internal business systems that
collectively provide the major processing functions for its operations are not
Year 2000 compliant. The remediation/replacement of those systems was begun in
mid-1998 and is scheduled for completion by March 1999.
INTERNAL SYSTEMS. The Company utilizes other systems (exclusive of business
systems discussed above) to perform certain data processing, including
computer-based programs, networking equipment, laboratory equipment, building
security and atmosphere control systems, fax and copy machines, and others.
Starting in the first quarter of 1998, the Company initiated a comprehensive
program to address Year 2000 problems with such internal systems, consisting of:
forming a project team of representatives from across the Company; inventorying
and assessing each internal system to determine whether it was compliant or
non-compliant to Year 2000 problems; and developing a plan to address all
non-compliant systems.
The Company is on schedule with its remediation efforts and expects to be
completed by June 1999. Testing of each remediated initial system is performed
at the time of such remediation. Additional testing will be performed during the
second half of 1999, focusing on those systems classified as high risk of
failure as well as critical to the business. Independent organizations might be
employed to assist the Company as needed to test and verify such internal
systems are Year 2000 compliant.
EXTERNAL SUPPLIERS OF GOODS AND SERVICES. Starting in January 1998, the Company
undertook a program to understand and mitigate Year 2000 problems with those
external suppliers who are crucial to the Company's operations, including parts
providers, carriers, telecommunications providers, utilities, financial
institutions and others. A series of questionnaires was sent to external
suppliers. As a result, the Company has determined that the majority of the
Company's suppliers are either Year 2000 compliant or are aware of the problem
and have an active program underway to address their particular problems. For
each supplier who is not Year 2000 compliant, the Company has defined a
contingency plan in case the supplier cannot or will not resolve its Year 2000
problems in a timely
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<PAGE>
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Year 2000 (continued)
manner. The plan elements differ for each supplier but generally consist of one
or more actions such as: work with the supplier to help resolve their Year 2000
problems; develop alternative suppliers for sole-source components; redesign
products to negate the need for non-compliant suppliers; maintain back-up
inventories of critical components to protect against temporary disruptions in
supply; evaluate alternative component and product delivery mechanisms; and
monitor those suppliers who have active Year 2000 programs underway to verify
progress against those suppliers' scheduled milestones.
The Company will continue these monitoring activities until satisfied that all
crucial suppliers are Year 2000 compliant. In addition, the Company has enhanced
its new supplier qualification process to require new suppliers to be Year 2000
compliant in all aspects of their operations and products.
THE COMPANY'S PRODUCTS. Certain of the Company's products contain embedded
software. In 1997, the Company performed an assessment of all such software to
determine Year 2000 compliance. As a result, the Company believes that there are
no material issues regarding the use of its products. The Company also has
enhanced its product development and testing processes to ensure that all new
products are Year 2000 compliant.
The Company estimates that the total cost associated with addressing the Year
2000 problem is approximately $0.9 million, of which approximately $0.7 million
has been incurred to date. Of the total cost, approximately $0.7 million relates
to new systems and has been capitalized, and the remainder has or will be
expensed as incurred. These cost estimates are approximate and subject to change
due to unforeseen internal or external conditions.
While the Company believes that it is addressing all material Year 2000
problems, there are a number of risks associated with Year 2000, only some of
which are within the control of the Company. These risks include unforeseen
difficulties in completing certain Year 2000 programs, an incomplete inventory
of internal systems, and the failure of one or more suppliers to adequately
address the Year 2000 problem. The Company's Year 2000 efforts are meant to help
manage and mitigate these risks.
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<PAGE>
PART II
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
A portion of the Company's business is conducted outside of the United States
through its foreign subsidiaries. The foreign subsidiaries maintain their
accounting records in their local currencies. Consequently, period-to-period
comparability of results of operations is affected by fluctuations in exchange
rates. To reduce the risks associated with foreign currency rate fluctuations,
the Company has entered into forward exchange contracts on a continuing basis to
hedge the currency exposures. Gains and losses on forward exchange contracts
qualifying for hedge accounting were immaterial for years presented and are
classified in cost of sales. The Company plans to continue to use forward
exchange contracts to mitigate the impact of exchange rate fluctuations. The
potential fair value loss for a hypothetical 10% adverse change in forward
currency exchange rates at December 31, 1998, would be $240,000. The potential
loss was estimated calculating the fair value of the forward exchange
contracts at December 31, 1998, and comparing that with the value calculated
using the hypothetical forward currency exchange rates.
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<PAGE>
PART II
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
SCHEDULES COVERED BY THE REPORT OF
INDEPENDENT ACCOUNTANTS
Page(s)
Report of Independent Accountants..........................................23
Consolidated Financial Statements of Helix Technology Corporation
Consolidated Balance Sheets as of December 31, 1998 and 1997..........24
Consolidated Statements of Operations for the Years Ended
December 31, 1998, 1997 and 1996...................................25
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1998, 1997 and 1996...............26
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1998, 1997 and 1996.............................27
Consolidated Statements of Comprehensive Income (Loss) for the
Years Ended December 31, 1998 and 1997 28
Notes to Consolidated Financial Statements.... .......................29-42
Report of Independent Accountants..........................................43
Quarterly Results (Unaudited)..............................................44
Financial Statement Schedule for the Years Ended December 31, 1998, 1997
and 1996
II. Valuation and Qualifying Accounts...............................45
Schedules other than those listed above have been omitted since they are either
inapplicable or not required.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company did not change accountants or file a Form 8-K reporting a
disagreement on an accounting principle, practice or financial statement
disclosure during the two-year period ended December 31, 1998.
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<PAGE>
PART III
Item 10. Directors and Executive Officers of The Registrant
Officers are elected annually by the Board and serve at the discretion of the
Board. Set forth below is information regarding the current Executive Officers
of the Company who are not Directors of the Company.
Mr. Robert E. Anastasi is 52 and has served the Company as Senior Vice President
since July 1997 and Vice President since June 1991.
Mr. Michael El-Hillow is 47 and has served the Company as Senior Vice President
and Chief Financial Officer since July 1997 and Vice President and Chief
Financial Officer since April 1997. He was Vice President and Chief Financial
Officer of A.T. Cross Company from January 1991 until April 1997.
Mr. Christopher Moody is 43 and has served the Company as Senior Vice President
since August 1997. He was Vice President of Japan Sales at KLA-Tencor
Corporation from April 1996 until August 1997 and Director of Sales for KLA
Instruments Wafer Inspection Division from January 1995 until April 1996. He
served as National Sales Manager at Eaton Corporation, Semiconductor Equipment
Division, from 1993 until January 1995.
Mr. Richard J. Paynting is 51 and has served the Company as Senior Vice
President since July 1997 and Vice President since August 1996. He was Director
of New Products at Bose Corporation from May 1991 until August 1996.
Additional information required by this item is incorporated herein by reference
to the registrant's proxy statement for its 1999 Annual Meeting of Stockholders
which will be filed with the SEC in March 1999, pursuant to Regulation 14A.
Item 11. Executive Compensation
Information required by this item is incorporated herein by reference to the
registrant's proxy statement for its 1999 Annual Meeting of Stockholders which
will be filed with the SEC in March 1999, pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required by this item is incorporated herein by reference to the
registrant's proxy statement for its 1999 Annual Meeting of Stockholders which
will be filed with the SEC in March 1999, pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions
There were no related-party transactions.
- 15 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
Page Number(s)
or
Incorporation
by
Description Reference to
- ----------- --------------
(a) Financial Statements, Schedules & Exhibits:
(1), (2) The Consolidated Financial Statements and required 14
schedules are indexed under Item 8.
(3) Exhibits required by Item 601 of SEC Regulation S-K.
(Exhibit numbers refer to exhibit number on Table I.)
2.1 Agreement and Plan of Merger dated as of Exhibit 2.1 to
April 16, 1998 among Helix Technology Corporation, the Company's
Helix Acquisition Corporation, Granville-Phillips Form 8-K filed
Company and certain principal stockholders of May 15, 1998.
Granville-Phillips Company.
2.2 Registration Rights Agreement dated May 7, 1998. Exhibit 2.2 to
the Company's
Form 8-K filed
May 15, 1998.
2.3 Escrow Agreement dated May 7, 1998. Exhibit 2.3 to
the Company's
Form 8-K filed
May 15, 1998.
3. Articles of Incorporation Exhibit 3 to
Restated articles of incorporation as amended the Company's
on May 7, 1987, and May 18, 1988. Form 10-Q for
the Quarter
Ended
September 30,
1988.
By-laws Exhibit (3)-3
As amended on December 10, 1986, and to the
December 9, 1987. Company's Form
10-K for the
Year Ended
December 31,
1987.
4A. Description of Common Stock Exhibit 3 to
the Company's
Form 10-Q for
the Quarter
Ended
September 30,
1988.
- 16 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s)
or
Incorporation
by
Description Reference to
- ----------- --------------
4B. Description of Preferred Stock Exhibit 3 to
the Company's
Form 10-Q for
the Quarter
Ended
September 30,
1988.
10. Material Contracts:
(1) Basic agreement between the Company and Exhibit 10.13
Ulvac Corporation dated August 17, 1981. to a
Registration
Statement on
Form S-2,
Registration
No. 2-84880.
(2) Lease agreement dated July 24, 1984, Exhibit
between WRC Properties, Inc. as Lessor 10-(14) to
and the Company as Lessee. the Company's
Form 10-K for
the Year Ended
December 31,
1984.
(3) Lease agreement dated May 23, 1991, between Exhibit
Mansfield Corporate Center Limited 10-(14) to the
Partnership as Lessor and the Company Company's Form
as Lessee. 10-K for the
Year Ended
December 31,
1991.
(4) Lease agreement dated May 21, 1996 between
LakeCenter Plaza, Ltd., LLLP as Lessor and
the Company as Lessee.
(5) Lease agreement dated August 7, 1998 between
Mitsubishi Jisho Co., Ltd. as Lessor and the
Company as Lessee.
- 17 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s)
or
Incorporation
by
Description Reference to
- ----------- -----------------
Compensation Plans, Contracts and Arrangements:
(6) The Company's 1996 Equity Incentive Plan. Exhibit A to
the Company's
Proxy
Statement for
its 1996
Annual Meeting
of
Stockholders
held on
April 24,
1996.
(7) The Company's 1996 Stock Option Plan for Exhibit B to the
Non-Employee Directors. Company's Proxy
Statement for its
1996 Annual
Meeting of
Stockholders held
on April 24,
1996.
(8) The Company's informal incentive bonus plan. Exhibit 10.9 to a
Registration
Statement on Form
S-2, Registration
No. 2-84880.
(9) Employment agreement dated December 13, 1989, Exhibit 9-(14) to
as amended and restated on February 13, 1992, the Company's
and re-executed on May 28, 1992, between the Form 10-K for the
Company and Robert J. Lepofsky. Year Ended
December 31,
1992.
(10) The Company's Section 125 Plan. Exhibit 18 to
Form 8, Amendment
No. 1 to the
1985 Annual
Report on Form
10-K.
(11) The Company's Amended and Restated Exhibit 10-(12)
Employees' Pension Plan dated December 15, to the Company's
1994. Form 10-K for the
Year Ended
December 31,
1994.
- 18 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
Page Number(s) or
Incorporation by
Description Reference to
- ----------- ------------------
(12) The Company's Amended and Restated Exhibit 10-(13) to
Employee Personal Account Plan dated the Company's Form
December 15, 1994. 10-K for the Year
Ended December 31,
1994.
(13) The Company's Supplemental Key Executive Exhibit 14-(14) to
Retirement Plan effective February 13, 1992. the Company's Form
10-K for the Year
Ended December 31,
1992.
(14) Employment Agreement dated July 18, 1997, Exhibit 10-(13) to
between the Company and Robert E. Anastasi. the Company's Form
10-K for the Year
Ended December 31,
1997.
(15) Employment Agreement dated July 18, 1997, Exhibit 10-(14) to
between the Company and Michael El-Hillow. the Company's Form
10-K for the Year
Ended December 31,
1997.
(16) Employment Agreement dated August 18, 1997, Exhibit 10-(15) to
between the Company and Christopher Moody. the Company's Form
10-K for the Year
Ended December 31,
1997.
(17) Employment Agreement dated July 18, 1997, Exhibit 10-(16) to
between the Company and Richard J. Paynting. the Company's Form
10-K for the Year
Ended December 31,
1997.
(18) The Company's Amended and Restated
Employee Savings Plan dated April 1, 1998.
- 19 -
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
21. Subsidiaries of the Registrant
23. Consent of Independent Accountants
27.1 Financial Data Schedule (EDGAR version only)
27.2 Financial Data Schedule (EDGAR version only)
(b) The Company did not file any reports on Form 8-K during the quarter ended
December 31, 1998.
(c) Exhibits required by Item 601 of Regulation S-K are indexed under (a)(3)
above.
(d) Separate financial statements of: (1) subsidiaries not consolidated and
fifty percent or less owned persons; (2) affiliates whose securities are pledged
as collateral; and (3) other Schedules are not filed because they are either not
applicable or the items do not exceed the various disclosure levels.
- 20 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, this
19th day of March, 1999.
HELIX TECHNOLOGY CORPORATION
(Registrant)
/s/Robert J. Lepofsky
----------------------------------------
Robert J. Lepofsky
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant on this 19th day of March, 1999, in the capacities
indicated.
Signatures Titles
(i) Principal Executive Officer
/s/Robert J. Lepofsky
---------------------
Robert J. Lepofsky President and Chief Executive Officer
(ii) Principal Financial and
Accounting Officer
/s/Michael El-Hillow
--------------------
Michael El-Hillow Senior Vice President and Chief
Financial Officer
- 21 -
<PAGE>
(iii) A Majority of the Board of Directors
/s/ Arthur R. Buckland Director
-------------------------
Arthur R. Buckland
/s/ Matthew O. Diggs, Jr. Director
-------------------------
Matthew O. Diggs, Jr.
/s/ Frank Gabron Director
-------------------------
Frank Gabron
/s/ Robert H. Hayes Director
-------------------------
Robert H. Hayes
/s/ Robert J. Lepofsky Director
-------------------------
Robert J. Lepofsky
/s/ Marvin G. Schorr Director and Chairman of the Board
-------------------------
Marvin G. Schorr
/s/ Wickham Skinner Director
-------------------------
Wickham Skinner
/s/ Mark S. Wrighton Director
-------------------------
Mark S. Wrighton
- 22 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors and Stockholders
of Helix Technology Corporation:
In our opinion, the accompanying consolidated balance sheets and related
consolidated statements of operations, stockholders' equity, comprehensive
income and cash flows present fairly, in all material respects, the financial
position of Helix Technology Corporation at December 31, 1997 and 1998 and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 29, 1999
- 23 -
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
(in thousands except share data) Notes 1998 1997
- ---------------------------------------------------------------------------------------------
ASSETS
Current:
<S> <C> <C> <C>
Cash and cash equivalents A $ 8,843 $34,717
Investments A 18,152 3,675
Receivables - net of allowances of $228 in
1998 and $240 in 1997 9,783 18,185
Inventories A 14,811 15,371
Deferred income taxes A&D 5,157 4,234
Other current assets 1,106 1,119
- ---------------------------------------------------------------------------------------------
Total Current Assets 57,852 77,301
- ---------------------------------------------------------------------------------------------
Property, plant and equipment at cost A 36,691 34,252
Less: accumulated depreciation (25,990) (22,109)
- ---------------------------------------------------------------------------------------------
Net property, plant and equipment 10,701 12,143
Other assets A&F 7,099 6,775
- ---------------------------------------------------------------------------------------------
TOTAL ASSETS $75,652 $96,219
=============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable $ 3,752 $ 5,036
Payroll and compensation 2,884 4,298
Retirement costs H 3,588 3,501
Income taxes A&D 507 3,022
Other accrued liabilities I 1,553 667
- ---------------------------------------------------------------------------------------------
Total Current Liabilities 12,284 16,524
- ---------------------------------------------------------------------------------------------
Commitments C - -
Stockholders' Equity:
Preferred stock, $1 par value; authorized
2,000,000 shares; issued and outstanding: none - -
Common stock, $1 par value; authorized 60,000,000
shares; issued and outstanding: 22,319,131 in 1998
and 22,213,131 in 1997 E 22,319 22,213
Capital in excess of par value 7,936 3,684
Deferred compensation I - (953)
Treasury stock, $1 par value 34,000 shares (438) -
Accumulated other comprehensive income (loss) (359) 71
Retained earnings 33,910 54,680
- ---------------------------------------------------------------------------------------------
Total Stockholders' Equity 63,368 79,695
- ---------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $75,652 $96,219
=============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 24 -
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
For the years ended December 31,
(in thousands except per share data) Notes 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 95,345 $157,076 $151,665
- -----------------------------------------------------------------------------------------------
Costs and expenses:
Cost of sales 57,373 81,325 78,892
Research and development A 10,106 11,540 10,213
Selling, general and administrative E 26,581 30,891 27,773
Merger, restructuring and special charges I 6,046 - -
- -----------------------------------------------------------------------------------------------
100,106 123,756 116,878
- -----------------------------------------------------------------------------------------------
Operating income (loss) (4,761) 33,320 34,787
Joint venture income F 957 1,744 1,480
Interest and other income 1,234 1,754 1,457
- -----------------------------------------------------------------------------------------------
Income (loss) before taxes (2,570) 36,818 37,724
Income tax benefit (provision) A&D 650 (11,274) (12,598)
- -----------------------------------------------------------------------------------------------
Net income (loss) $ (1,920) $ 25,544 $ 25,126
===============================================================================================
Net income (loss) per share:
Basic A&E $ (0.09) $ 1.15 $ 1.15
Diluted A&E $ (0.09) $ 1.14 $ 1.14
===============================================================================================
Number of shares used in per share calculations:
Basic A&E 22,262 22,151 21,788
Diluted A&E 22,262 22,353 22,096
===============================================================================================
Pro Forma Results (unaudited)
Income (loss) before taxes $ (2,570) $ 36,818 $ 37,724
Income tax benefit (provision) 824 (12,767) (13,675)
- -----------------------------------------------------------------------------------------------
Pro forma net income (loss) $ (1,746) $ 24,051 $ 24,049
===============================================================================================
Pro forma net income (loss) per share:
Basic $ (0.08) $ 1.09 $ 1.10
Diluted $ (0.08) $ 1.08 $ 1.09
===============================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 25 -
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Common Stock Accumulated
------------------- Other
Capital in Comprehensive
Par Excess Deferred Treasury Income/ Retained
(in thousands) Value of Par Compensation Stock (Loss) Earnings Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 ...... $ 21,765 $ 1,937 $ (508) $ -- $ 1,307 $ 35,787 $ 60,288
Shares issued for stock options . 419 1,417 -- -- -- -- 1,836
Income tax benefit from
exercise of stock options ..... -- 1,739 -- -- -- -- 1,739
Restricted stock (Note I) ....... 99 749 (377) -- -- -- 471
Shares tendered for exercise
of stock options .............. (168) (2,843) -- -- -- -- (3,011)
Retirement of treasury stock .... (80) (895) -- -- -- -- (975)
Other comprehensive loss ........ -- -- -- -- (474) -- (474)
Net income ...................... -- -- -- -- -- 25,126 25,126
Cash dividends .................. -- -- -- -- -- (15,517) (15,517)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 ...... 22,035 2,104 (885) -- 833 45,396 69,483
- ---------------------------------------------------------------------------------------------------------------------
Shares issued for stock options . 157 1,625 -- -- -- -- 1,782
Income tax benefit from
exercise of stock options ..... -- 448 -- -- -- -- 448
Restricted stock (Note I) ....... 73 494 (68) -- -- -- 499
Shares tendered for exercise
of stock options .............. (52) (987) -- -- -- -- (1,039)
Other comprehensive loss ........ -- -- -- -- (762) -- (762)
Net income ...................... -- -- -- -- -- 25,544 25,544
Cash dividends .................. -- -- -- -- -- (16,260) (16,260)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 ...... 22,213 3,684 (953) -- 71 54,680 79,695
- ---------------------------------------------------------------------------------------------------------------------
Shares issued for stock options . 106 1,785 -- -- -- -- 1,891
Income tax effect from exercise
of stock options .............. -- (224) -- -- -- -- (224)
Restricted stock and
acquisition adjustment (Note I) -- 2,691 953 -- -- (2,783) 861
Shares tendered for exercise of
stock options ................. -- -- -- (438) -- -- (438)
Other comprehensive loss ........ -- -- -- -- (430) -- (430)
Net loss ........................ -- -- -- -- -- (1,920) (1,920)
Cash dividends .................. -- -- -- -- -- (16,067) (16,067)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 ...... $ 22,319 $ 7,936 $ -- $ (438) $ (359) $ 33,910 $ 63,368
=====================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 26 -
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the years ended December 31,
(in thousands) 1998 1997 1996
- -------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss) ......................................... $ (1,920) $ 25,544 $ 25,126
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization .......................... 3,999 3,713 3,632
Deferred income taxes .................................. (923) (820) (763)
Restructuring charge ................................... 667 -- --
Undistributed earnings of joint venture, other ......... (769) (1,561) (984)
Amortization of deferred compensation .................. 861 499 471
Performance-based stock compensation ................... 959 1,300 750
Net change in other operating assets and liabilities (1) 4,535 (1,216) 2,325
- -------------------------------------------------------------------------------------------------
Net cash provided by operating activities ................. 7,409 27,459 30,557
- -------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures ...................................... (2,557) (5,248) (3,819)
Purchase of investments ................................... (53,047) (4,444) (4,277)
Sale of investments ....................................... 38,585 3,470 3,704
- -------------------------------------------------------------------------------------------------
Net cash used by investing activities ..................... (17,019) (6,222) (4,392)
- -------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Shares tendered for exercise of stock options ............. (438) (1,039) (3,011)
Net cash provided by employee stock plans ................. 241 543 1,061
Purchase of treasury stock ................................ -- -- (975)
Cash dividends paid ....................................... (16,067) (16,260) (15,517)
- -------------------------------------------------------------------------------------------------
Net cash used by financing activities ..................... (16,264) (16,756) (18,442)
- -------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents ............ (25,874) 4,481 7,723
Cash and cash equivalents, January 1 ........................ 34,717 30,236 22,513
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents, December 31 ...................... $ 8,843 $ 34,717 $ 30,236
=================================================================================================
(1) Change in other operating assets and liabilities:
(Increase)/decrease in accounts receivable ............ $ 8,402 $ (4,871) $ 7,114
(Increase)/decrease in inventories .................... 560 484 (948)
(Increase)/decrease in other current assets ........... 12 (218) (293)
Increase/(decrease) in accounts payable ............... (1,284) 67 (1,950)
Increase/(decrease) in other accrued expenses ......... (3,155) 3,322 (1,598)
- -------------------------------------------------------------------------------------------------
Net change in other operating assets and liabilities ... $ 4,535 $ (1,216) $ 2,325
=================================================================================================
Income taxes paid ........................................... $ 3,528 $ 10,131 $ 15,482
=================================================================================================
Supplemental disclosure of non-cash activity in 1998, 1997 and 1996, $1,650,000, $1,240,000
and $775,000, respectively, was reclassed from accrued executive compensation to equity in
connection with issuance of stock options.
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 27 -
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
<CAPTION>
For the years ended December 31,
(in thousands) 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net income (loss) ....................................... $ (1,920) $ 25,544
- --------------------------------------------------------------------------------------
Other comprehensive loss, before tax
Foreign currency translation adjustment .............. (662) (1,047)
Unrealized gain on available-for-sale investment ..... 15 --
- --------------------------------------------------------------------------------------
(647) (1,047)
Income tax related to items of other comprehensive income 217 285
- --------------------------------------------------------------------------------------
Other comprehensive loss, net of tax .................... (430) (762)
- --------------------------------------------------------------------------------------
Comprehensive income (loss) ............................. $ (2,350) $ 24,782
======================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
- 28 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Certain reclassifications have been made to prior years' consolidated
financial statements to conform with the current presentation.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries after elimination of all intercompany
transactions. The investment in and operating results of the Company's 50%-owned
joint venture are included on the basis of the equity method of accounting.
Business Combination
In May 1998, the Company acquired Granville-Phillips Company ("GPC"). The
acquisition was accounted for as a pooling of interests under Accounting
Principles Board Opinion No. 16 "Business Combinations". All prior period
consolidated financial statements have been restated to include the financial
position, results of operations, stockholders equity and cash flows of GPC.
Foreign Currency Translation
Assets and liabilities of operations outside the United States are
translated into U.S. dollars using current exchange rates. Income and expense
accounts are translated at the average rates in effect during the year. The
effects of foreign currency translation adjustments are included in
comprehensive income as a component of stockholders' equity. The cumulative
translation adjustment for the Company's 50%-owned joint venture is reported net
of income taxes. Transaction gains/losses were not material. The effect of
foreign currency exchange rates on cash and cash equivalents was not material.
Comprehensive Income
In January 1998, the Company adopted Financial Accounting Standard No. 130
"Reporting Comprehensive Income," which requires unrealized gains or losses on
the Company's investments and foreign currency translation adjustments to be
included in other comprehensive income.
- 29 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Cash and Cash Equivalents
Cash and cash equivalents include demand deposits, money market accounts
and other highly liquid investments with original maturities of three months or
less.
Investments
The Company's investments are classified as available-for-sale securities,
and the difference in the cost and fair value of these investments is included
in comprehensive income. The Company's investments consist of the following:
December 31,
1998 1997
------------------- ------------------
(in thousands) Cost Fair Value Cost Fair Value
- -------------------------------------------------------------------------------
Money market funds $ 2,336 $ 2,336 - -
Municipal and tax-free bonds 15,516 15,531 - -
Treasury bills 285 285 $3,675 $3,675
-----------------------------------------------------------------------------
$18,137 $18,152 $3,675 $3,675
=============================================================================
Financial Instruments
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash equivalents,
short-term investments and trade accounts receivable. The Company invests in
investment-grade securities. The Company's customers are concentrated in one
industry segment, the semiconductor manufacturing industry, and, historically, a
significant portion of the Company's sales have been to a limited number of
customers within this industry. The Company performs ongoing credit evaluations
of its customers' financial condition and may require deposits on large orders
but does not require collateral or other security to support customer
receivables.
- 30 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Inventories
December 31,
(in thousands) 1998 1997
--------------------------------------------------------------------
Finished goods $ 3,067 $ 4,355
Work in process 7,597 7,367
Materials and parts 4,147 3,649
--------------------------------------------------------------------
$14,811 $15,371
====================================================================
Inventories are stated at the lower of cost or market on a first-in,
first-out basis.
Property, Plant and Equipment
December 31,
(in thousands) 1998 1997
--------------------------------------------------------------------
Land $ 20 $ 20
Leasehold improvements 5,454 4,710
Machinery and equipment 31,217 29,522
--------------------------------------------------------------------
$36,691 $34,252
====================================================================
Depreciation is provided on the straight-line method over the estimated
useful lives of the assets. Leasehold improvements are amortized over the lesser
of their useful life or the remaining life of the lease. Estimated useful lives
of machinery and equipment range from 3 to 15 years.
Maintenance and repairs are charged to expense as incurred, and betterments
are capitalized. The cost of assets sold or retired and related depreciation are
removed from the accounts at the time of sale and any resulting gain or loss is
reflected in income.
Revenue Recognition
The Company records revenue on its products when units are shipped and when
services are performed.
Research and Development
Research and development costs are expensed as incurred.
- 31 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
Income Taxes
Deferred income taxes result from temporary differences in the recognition
of revenues and expenses between financial statements and tax returns. Tax
credits are recognized when realized for tax purposes using the "flow-through"
method of accounting. The Company has not provided for federal income taxes
applicable to undistributed earnings of its foreign subsidiaries since these
earnings are indefinitely reinvested.
Net Income Per Share
In 1997, the Company adopted Financial Accounting Standards No. 128
"Earnings per Share" which specifies the computation, presentation and
disclosure of net income per share. Basic net income (loss) per common share is
based on the weighted average number of common shares outstanding during the
year. Diluted net income (loss) per common share reflects the potential dilution
that could occur if outstanding stock options were exercised. All prior period
net income per share figures have been restated.
The following table sets forth the computation of basic and diluted net
income (loss) per common share:
For the years ended December 31,
(in thousands except per share data) 1998 1997 1996
--------------------------------------------------------------------------
Net income (loss) $(1,920) $25,544 $25,126
==========================================================================
Basic Shares 22,262 22,151 21,788
Add: Common equivalent shares (1) - 202 308
--------------------------------------------------------------------------
Diluted shares 22,262 22,353 22,096
Basic net income (loss) per share $ (0.09) $ 1.15 $ 1.15
==========================================================================
Diluted net income (loss) per share $ (0.09) $ 1.14 $ 1.14
==========================================================================
(1) Common equivalent shares representing shares issuable upon conversion
of stock options (using the treasury stock method). Options outstanding not
included in the computation of diluted shares were 491,000 in 1998 because the
Company was in a net loss position, and the inclusion of such shares would be
anti-dilutive. For 1997 and 1996, respectively, 30,000 and 120,000 options
outstanding were not included in the computation, because the option price was
greater than the average market price of the common shares.
- 32 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (continued)
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities." The adoption of this Standard in 2000 is not expected to have a
material impact on the Company's financial statements.
B. Bank Credit Arrangements
The Company's informal bank money market lines of credit amounted to
$12,000,000 at December 31, 1998 and 1997.
C. Lease Obligations and Commitments
The Company leases certain facilities and equipment under long-term
operating leases. The Company has a noncancelable operating lease for its
corporate headquarters and manufacturing operations, which expires in 2006. The
lease includes scheduled base rent increases through the term of the lease and
renewal options for up to fifteen additional years.
Future minimum lease payments under the noncancelable operating leases are:
(in thousands) Operating Leases
------------------------------------------------
1999 $3,534
2000 2,870
2001 2,165
2002 2,195
2003 2,189
Later years 6,119
------------------------------------------------
Total $19,072
================================================
Total rental expense under operating leases was $3,526,000 in 1998,
$3,289,000 in 1997, and $3,159,000 in 1996.
The Company enters into short-term foreign currency forward contracts with
its primary bank to minimize the effect of foreign currency exchange rate
fluctuations on certain intercompany transactions with its wholly owned European
and Japanese subsidiaries. Net realized and unrealized gains and losses on these
transactions are not material and are recorded in the statements of operations.
The notional amounts of the Company's outstanding foreign currency forward
contracts at December 31, 1998 and 1997, were $2,153,000 and $2,224,000,
respectively.
- 33 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. Income Taxes
The components of income (loss) before income taxes and the related
provision for (benefit from) income taxes are presented below:
For the years ended December 31,
(in thousands) 1998 1997 1996
-----------------------------------------------------------------------
Income (loss) before income taxes:
Domestic $(2,572) $36,106 $37,152
Foreign 2 712 572
-----------------------------------------------------------------------
$(2,570) $36,818 $37,724
=======================================================================
Provision for (benefit from) income
taxes:
Current:
Federal $ 176 $10,096 $10,593
Foreign 18 250 285
State 79 1,729 2,482
-----------------------------------------------------------------------
273 12,075 13,360
Deferred:
Federal (611) (656) (624)
Foreign - - -
State (312) (145) (138)
-----------------------------------------------------------------------
(923) (801) (762)
-----------------------------------------------------------------------
Total $ (650) $11,274 $12,598
=======================================================================
The Company's deferred tax assets and (liabilities) are comprised of the
following:
December 31,
(in thousands) 1998 1997
-----------------------------------------------------------------------
Deferred tax assets:
Inventory valuation $1,411 $1,312
Compensation and benefit plans 2,208 2,483
Leases 223 262
Depreciation 305 -
Net operating loss and tax credit carryforwards 656 -
Other 434 230
------------------------------------------------------------------------
Total deferred tax assets $5,237 $4,287
Deferred tax liabilities:
Depreciation $ - $ (53)
Other (80) -
------------------------------------------------------------------------
Total deferred tax liabilities $ (80) $ (53)
------------------------------------------------------------------------
Net deferred tax assets $5,157 $4,234
========================================================================
Deferred income taxes on undistributed earnings of the foreign subsidiaries
are not material. The Company believes that its deferred tax assets are more
likely than not realizable; therefore, no valuation allowance is required.
- 34 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. Income Taxes (continued)
The table below reconciles the expected U.S. federal income tax provision
(benefit) to the recorded income tax provision (benefit) in the statements of
operations:
December 31,
(in thousands) 1998 1997 1996
---------------------------------------------------------------------------
Federal tax computed at statutory rate
of 35% $(899) $12,886 $13,203
State income taxes, net of federal income
tax benefit (151) 1,063 1,563
Non-taxable S-Corporation (income) loss 165 (1,514) (1,148)
Foreign sales corporation tax benefit - (907) (923)
Earnings not subject to U.S. income taxes (191) (414) (333)
R&D and foreign tax credits (357) (516) (177)
Non-deductible acquisition costs 620 - -
Other, net 163 676 413
---------------------------------------------------------------------------
Income tax provision (benefit) $(650) $11,274 $12,598
===========================================================================
Prior to the acquisition on May 7, 1998, Granville-Phillips Company ("GPC")
had elected to be treated as an S-Corporation for federal income tax reporting
purposes. Under this election, the individual stockholders of GPC are deemed to
have received a pro rata distribution of taxable income of GPC (whether or not
an actual distribution was made), which is included in their taxable income.
Accordingly, GPC did not provide for federal income taxes. Unaudited pro forma
net income (loss) per share reflects unaudited pro forma income tax benefit
(provision) of GPC as if GPC was combined and subject to the effective federal
and state statutory rates of approximately 38% throughout the periods presented.
GPC's S-Corporation tax reporting status was terminated on the date of the
acquisition and, therefore, the undistributed earnings of $2.8 million as of the
date of acquisition have been reclassified to additional paid-in capital.
For U.S. federal income tax purposes, the Company has a net operating loss
carryforward of approximately $1.0 million. This carryforward will expire in
2018.
E. Capital Stock
On October 16, 1997, the Company's Board of Directors authorized a
two-for-one common stock split that was effected in the form of a 100% stock
dividend. Stock certificates were distributed on November 13, 1997, to
stockholders of record on October 30, 1997. All references in the financial
statements and notes to number of shares, per share amounts and market prices of
the Company's common stock have been retroactively restated to reflect the
increased number of common shares outstanding.
Options for the purchase of shares of the Company's common stock have been
granted to officers, directors and key employees under various incentive and
nonqualified stock option agreements. The terms of these agreements provide that
the options are exercisable over a number of years from the date of grant at not
less than the fair market value at the date of grant.
- 35 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
E. Capital Stock (continued)
Options expire at various dates through the year 2008. At December 31, 1998
and 1997, respectively, 1,207,774 and 1,313,774 shares of common stock were
reserved for stock options. At December 31, 1998 and 1997, respectively, 97,024
and 75,774 nonqualified stock options were exercisable. In 1989, the Company
entered into an agreement with its President under which options to purchase up
to 800,000 shares of the Company's common stock were granted, at a price of
$1.69 per share, exercisable over a ten-year period subject to the attainment of
certain financial performance targets. At December 31, 1998, options for the
purchase of 640,000 shares had become exercisable. In connection with this
agreement, compensation expense of $959,000, $1,300,000 and $750,000 was charged
in 1998, 1997 and 1996, respectively.
The following table summarizes option activity for the years ended 1998,
1997 and 1996:
Number of Weighted Average
Options Outstanding Common Shares Exercise Price
---------------------------------------------------------------------
December 31, 1995 895,400 $ 2.71
Options granted 140,000 $16.40
Options exercised (420,400) $ 2.52
---------
December 31, 1996 615,000 $ 5.95
Options granted 121,000 $20.90
Options exercised (157,226) $ 3.45
Options cancelled (82,000) $14.66
---------
December 31, 1997 496,774 $ 8.95
Options granted 180,000 $22.33
Options exercised (106,000) $ 2.27
---------
December 31, 1998 570,774 $14.41
The following table summarizes information concerning currently outstanding
and exercisable options:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------- -----------------------------
Range of Number Weighted Average Weighted Number Weighted
Exercise Outstanding Remaining Average Exercisable Average
Prices at 12/31/98 Contractual Life Exercise Price at 12/31/98 Exercise Price
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1.69 - $ 9.13 199,774 2.17 years $ 2.37 29,774 $ 3.78
$14.31 - $18.44 161,000 6.47 years $17.06 57,750 $16.74
$23.11 - $27.03 210,000 8.84 years $23.83 9,500 $26.91
</TABLE>
- 36 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
E. Capital Stock (continued)
The Company adopted the disclosure only option under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
123) as of December 31, 1996. If the accounting provisions of SFAS 123 had been
adopted, the effect on net income (loss) and basic and diluted net income (loss)
per share would have been as follows:
(in thousands except per share data) 1998 1997 1996
------------------------------------------------------------------------
As Reported
Net income (loss) $(1,920) $25,544 $25,126
Basic net income (loss) per share $ (0.09) $ 1.15 $ 1.15
Diluted net income (loss) per share $ (0.09) $ 1.14 $ 1.14
Pro Forma
Net income (loss) $(2,438) $25,371 $25,015
Basic net income (loss) per share $ (0.11) $ 1.15 $ 1.15
Diluted net income (loss) per share $ (0.11) $ 1.14 $ 1.14
The weighted average fair value of options granted during 1998, 1997 and
1996 was $8.44, $8.06 and $6.16, respectively. The fair value of each option
grant is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions:
1998 1997 1996
-----------------------------------------------------------------------
Dividend yield 4.2% 4.2% 4.2%
Expected stock price volatility 50% 50% 50%
Risk-free interest rate 5.49% 6.34% 6.08%
Expected holding period (years) 6.4 6.4 6.3
- 37 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F. Other Assets
The Company has a 50/50 joint venture company, Ulvac Cryogenics, Inc., with
an unrelated Japanese manufacturer to produce cryogenic vacuum pumps in Japan.
Condensed results of operations for the joint venture for each of the three
fiscal years ended September 30 are as follows:
(in thousands) 1998 1997 1996
------------------------------------------------------------------------
Net sales $19,511 $27,638 $25,751
========================================================================
Gross profit $ 5,280 $ 8,488 $ 7,415
========================================================================
Net income $ 1,092 $ 2,364 $ 1,901
========================================================================
Fee income, including royalty income
and equity income $ 957 $ 1,744 $ 1,480
========================================================================
Condensed balance sheet information as of September 30, is as follows:
(in thousands) 1998 1997
------------------------------------------------------------------------
Current assets $15,314 $20,724
Noncurrent assets 2,906 3,399
------------------------------------------------------------------------
Total assets $18,220 $24,123
========================================================================
Current liabilities $ 4,572 $ 9,710
Long-term liabilities 829 915
Stockholders' equity 12,819 13,498
------------------------------------------------------------------------
Total liabilities and stockholders' equity $18,220 $24,123
========================================================================
The Company's net investment in the joint venture of approximately
$6,500,000 and $6,552,000 at December 31, 1998 and 1997, respectively, is
reported in other assets. The Company's net investment at December 31, 1998 and
1997, reflects a cumulative translation gain (loss) of ($168,000) and $366,000,
respectively (net of income tax benefit of $90,000 and provision of $197,000,
respectively). This currency translation gain or loss, which is included in
stockholders' equity, resulted from translating the balance sheet of the joint
venture into U.S. dollars.
G. Segment Information
Line of Business and Foreign Operations
The Company adopted Statement of Financial Accounting Standards No. 131,
"Disclosure about Segments of an Enterprise and Related Information" for 1998.
The Company operates in one line of business; the development, manufacture, sale
and support of cryogenic and vacuum equipment.
- 38 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
G. Segment Information (continued)
The consolidated financial statements include the accounts of wholly owned
international subsidiaries which operate customer support facilities to sell and
service products manufactured in the United States. A summary of United States
and International operations follows for the years ended December 31:
Corporate
Expenses
United and Assets/
(in thousands) States International Eliminations Consolidated
---------------------------------------------------------------------------
1998
Net sales $ 90,278 $13,598 $(8,531) $ 95,345
Operating income (loss) 3,843 85 (8,689) (4,761)
Identifiable assets 42,530 8,026 25,096 75,652
1997
Net sales $152,448 $13,993 $(9,365) $157,076
Operating income 37,733 751 (5,164) 33,320
Identifiable assets 52,231 7,457 36,531 96,219
1996
Net sales $147,175 $13,093 $(8,603) $151,665
Operating income 38,324 561 (4,098) 34,787
Identifiable assets 44,706 7,183 31,116 83,005
Corporate expenses consist of certain general and administrative expenses,
including merger, restructuring and special charges in 1998, which are not
allocable to geographic operations. Corporate assets consist primarily of cash,
cash equivalents and investments. Intercompany transactions are at prices that
are comparable to third-party sales.
Export Sales and Significant Customers
The Company's export sales, principally to customers in the Far East, were
$6,322,000 in 1998, $13,105,000 in 1997 and $11,524,000 in 1996.
The Company's largest customer represented 20%, 30%, and 28% of net sales
for 1998, 1997 and 1996, respectively.
- 39 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. Employee Benefit Plans
The Company's retirement and savings plans cover substantially all of the
Company's employees who have one year of service. A noncontributory defined
benefit pension plan and a defined contribution plan function together as the
Company's retirement program.
The Company's funding policy is to contribute not less than the minimum
required amount in accordance with the Internal Revenue Code and ERISA. The
Company adopted Statement of Financial Accounting Standards No. 132, "Employee's
Disclosure about Pensions and Other Retirement Benefits," during 1998. The
following tables set forth the funded status, projected benefit obligation and
fair value of assets of the defined benefit pension plan.
Reconciliation of Funded Status
December 31,
(in thousands) 1998 1997
---------------------------------------------------------------------------
Funded status $ 1,402 $ 1,821
Unrecognized prior service cost 40 52
Unrecognized net transition asset (184) (223)
Unrecognized net actuarial gain (4,018) (4,135)
---------------------------------------------------------------------------
Accrued pension cost $(2,760) $(2,485)
===========================================================================
Reconciliation of Projected Benefit Obligation
(in thousands) 1998 1997
---------------------------------------------------------------------------
Beginning of year benefit obligation (January 1) $ 6,369 $ 5,964
Service cost 981 894
Interest cost 508 481
Actuarial loss 963 99
Benefits paid (1,061) (1,069)
Curtailment gain (1) (489) -
---------------------------------------------------------------------------
End of year benefit obligation (December 31) $ 7,271 $ 6,369
===========================================================================
Reconciliation of Fair Value of Assets
(in thousands) 1998 1997
---------------------------------------------------------------------------
Beginning of year, fair value of assets (January 1) $ 8,190 $ 7,553
Actual return on plan assets 1,544 1,706
Benefits paid (1,061) (1,069)
---------------------------------------------------------------------------
End of year, fair value of assets (December 31) $ 8,673 $ 8,190
===========================================================================
- 40 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. Employee Benefit Plans (continued)
The Company's net pension cost included the following components:
(in thousands) 1998 1997 1996
---------------------------------------------------------------------------
Service cost $ 981 $ 894 $ 840
Interest cost 508 481 443
Expected return on assets (563) (537) (505)
Net amortization of:
Prior service cost 8 8 8
Net actuarial gain (131) (131) (38)
Transition obligation (39) (39) (39)
Curtailment gain(1) (489) - -
-------------------------------------------------------------------------
Net periodic pension cost $ 275 $ 676 $ 709
=========================================================================
(1) The curtailment gain relates to certain participants in the pension
plan who were terminated from employment in connection with the Company's
restructuring plan. (Note I).
Key assumptions used in computing year-end obligations for the defined
benefit plan were:
1998 1997 1996
-------------------------------------------------------------------------
Discount rate for obligations 6.75% 7.0% 7.5%
Rate of compensation increase 5.0% 5.0% 5.5%
Long-term rate of return on assets 9.0% 9.0% 9.0%
Defined benefit plan assets include marketable equity securities, corporate
and government debt securities and cash.
The Company has Employee Savings Plans, qualified under Section 401(k),
that are designed to supplement retirement income. The Company contributes a
percentage of the participants' contributions up to a defined maximum amount.
The contributions expense, net of forfeitures, was $826,000 in 1998, $812,000 in
1997 and $761,000 in 1996.
The Company has a Supplemental Key Executive Retirement Plan which is
designed to supplement benefits paid to participants under Company-funded,
tax-qualified retirement plans. The Company recorded additional retirement costs
of $170,000 in 1998, $69,000 in 1997 and $140,000 in 1996 in connection with
this Plan.
- 41 -
<PAGE>
HELIX TECHNOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
I. Merger, Restructuring and Special Charges
In the second quarter of 1998, the Company acquired Granville-Phillips Company
("GPC") in a transaction accounted for as a pooling of interests. GPC operates
in the same line of business as the Company; the development, manufacture, sale
and support of vacuum equipment. The Company issued 2,382,925 shares of common
stock in exchange for all outstanding common stock of GPC at May 7, 1998. Direct
acquisition costs, primarily compensation expense relating to shares issued to
certain GPC employees as part of a restricted stock plan, and professional fees
amounted to $3.5 million and were charged against the results of operations. At
the time of the acquisition, GPC common shares included in the restricted stock
plan were exchanged for the equivalent value of the Company's common shares. GPC
was an S-Corporation for tax purposes prior to the acquisition. In accordance
with SAB topic 4B, the amount of undistributed earnings of $2.8 million
generated during the periods that GPC was taxed as an S-Corporation was
reclassified from retained earnings to capital in excess of par value at the
time of the merger and $0.8 million was recorded in capital in excess of par
value for stock incentive plans in 1998.
The following information presents certain statement of operations data of the
Company and GPC for the periods prior to the acquisition.
(Unaudited)
Three Months Ended Year Ended Year Ended
(in thousands) Mar. 31, 1998 Dec. 31, 1997 Dec. 31, 1996
---------------------------------------------------------------------------
Net sales for:
Helix $25,872 $ 131,519 $128,383
GPC 5,622 25,557 23,282
---------------------------------------------------------------------------
Combined $31,494 $ 157,076 $151,665
===========================================================================
Net income (loss) for:
Helix $ 2,941 $ 21,315 $ 21,957
GPC (1,075) 4,229 3,169
---------------------------------------------------------------------------
Combined $ 1,866 $ 25,544 $ 25,126
===========================================================================
During the third quarter of 1998, the Company recorded restructuring and other
special charges of $2.5 million. The Company restructured its domestic
operations to eliminate non-strategic spending, while redirecting resources to
the Company's global customer support structure and other strategic initiatives.
The charges primarily included provisions for termination benefits of $1.3
million for approximately 80 personnel, exit costs related to a leased facility
of $1.0 million and $0.2 million for the impairment of certain assets. At
December 31, 1998, $0.9 million of restructuring and special charges remained in
other accrued expenses, which the Company expects to be paid or amortized by the
third quarter of 1999.
The amounts accrued and charged against the provisions described above were as
follows:
Cash Payments
and Asset December 31, 1998
(in thousands) 1998 Provision Write-offs Balance
- --------------------------------------------------------------------------------
Employee termination benefits $1,300 $1,000 $300
Exit leased facility 1,000 400 600
Asset impairment 200 200 -
- --------------------------------------------------------------------------------
Total $2,500 $1,600 $900
================================================================================
- 42 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board Of Directors and Stockholders
of Helix Technology Corporation:
Our report on the consolidated financial statements of Helix Technology
Corporation is included on Page 23 of this Form 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed in the index on Page 14 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 29, 1999
- 43 -
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
QUARTERLY RESULTS
(UNAUDITED)
<CAPTION>
First Second Third Fourth
(in thousands except per share data) Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------------
1998
<S> <C> <C> <C> <C>
Net sales ............................. $ 31,494 $ 25,706 $ 18,550 $ 19,595
Gross profit .......................... 14,702 9,955 5,948 7,367
Operating income (loss) ............... 2,821 (1,873) (4,765) (944)
Net income (loss) ..................... 1,866 (434) (3,431) 79
Basic net income (loss) per share (1) . $ 0.08 $ (0.02) $ (0.15) $ 0.00
Diluted net income (loss) per share (1) $ 0.08 $ (0.02) $ (0.15) $ 0.00
1997
Net sales ............................. $ 34,408 $ 39,440 $ 42,508 $ 40,720
Gross profit .......................... 16,196 18,854 20,349 20,352
Operating income ...................... 6,590 8,188 9,552 8,990
Net income ............................ 4,896 6,266 7,343 7,039
Basic net income per share (1) ........ $ 0.22 $ 0.28 $ 0.33 $ 0.32
Diluted net income per share (1) ...... $ 0.22 $ 0.28 $ 0.33 $ 0.31
(1) All per share data reflects a two-for-one common stock split effective
November 1997.
</TABLE>
- 44 -
<PAGE>
<TABLE>
HELIX TECHNOLOGY CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1998, 1997 and 1996
(in thousands)
<CAPTION>
Column A Column B Column C Column D Column E
- ------------------------------------------------------------------------------------------------------
Additions
------------------------
Balance at Charged to Charged to Deductions Balance at
Beginning Costs and Other from End of
Description of Period Expenses Accounts Reserves Period
- ------------------------------------------------------------------------------------------------------
Year ended December 31, 1998
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts $240 $ 5 $ - $ 17 $ 228
======================================================================================================
Warranty $292 $1,375 $ - $1,370 $ 297
======================================================================================================
Year ended December 31, 1997
Allowance for doubtful accounts $238 $ 17 $ - $ 15 $ 240
======================================================================================================
Warranty $303 $1,614 $ - $1,625 $ 292
======================================================================================================
Year ended December 31, 1996
Allowance for doubtful accounts $240 $ 6 $ - $ 8 $ 238
======================================================================================================
Warranty $305 $1,305 $ - $1,307 $ 303
======================================================================================================
</TABLE>
- 45 -
LEASE AGREEMENT
OFFICE AND INDUSTRIAL SPACE
This Lease Agreement is made and entered into as of the 21 day of May, 1996, by
and between LakeCenter Plaza, Ltd., LLLP ("Landlord"), whose address is 4875
Pearl East Circle, Suite 300, Boulder Colorado 80301, and Granvi1le-Phi11ips
Company ("Tenant"), whose address is 5675 Arapahoe Ave. Boulder Colorado 80303
in consideration of the covenants, terms, conditions, agreements and payments as
herein set forth, the Landlord and Tenant hereby enter into the following Lease:
1. Definitions. Whenever the following words or phrases are used in this Lease,
said words or phrases shall have the following meaning:
A. "Area" shall mean the parcel of land depicted on Exhibit "A" attached
hereto and commonly known and referred to as LakeCenter Plaza Boulder, Colorado.
The Area includes the Leased Premises and one or more buildings. The Area may
include Common Areas.
B. "Building" shall mean a building located in the Area.
C. "Common Areas" shall mean all entrances, exits, driveways, curbs,
walkways, hallways, parking areas, landscaped areas, restrooms, loading and
service areas, and like areas or facilities which are located in the Area and
which are designated by the Landlord as areas or facilities available for the
nonexclusive use in common by persons designated by the Landlord.
D. "Leased Premises" shall mean the premises herein leased to the Tenant by
the Landlord.
E. "Tenant's Pro rata Share" as to the Building in which the Leased
Premises are located shall mean an amount (expressed as a percentage) equal to
the number of square feet included in the Leased Premises divided by the total
number of leasable square feet included in said Building. The Tenant's Pro rata
Share as to Common Areas shall mean an amount (expressed as a percentage) equal
to the number of square feet included in the Leased Premises divided by the
total number of leasable square feet included in all Buildings located in the
Area. The Tenant's Pro rata Share for Common Areas may change from time to time
as the leasable square footage in all Buildings located in the Area is increased
or decreased.
2. Leased Premises. The landlord hereby leases unto the Tenant, and the Tenant
hereby leases from the Landlord, the following described premises:
Space Suite 101 in Building 5665/Building "B" consisting of 12.154 square feet,
all as depicted on Exhibit "B" attached hereto.
3. Base Term. The term of this Lease shall commence at 12:00 noon on July 15.
1996, and, unless sooner terminated as herein provided for, shall end at 12:00
noon on August 1, 2001, ("Lease Term"). Except as specifically provided to the
<PAGE>
contrary herein, the Leased Premises shall, upon the termination of this Lease,
by virtue of the expiration of the Lease Term or otherwise, be returned to the
Landlord by the Tenant in as good or better condition than when entered upon by
the Tenant, ordinary wear and tear excepted.
4. Rent. Tenant shall pay the following rent for the Leased Premises:
A. Base Month1y Rent. Tenant shall pay to Landlord, without notice and
without setoff, at the address of Landlord as herein set forth, the following
Base Monthly Rent ("Base Monthly Rent"), said Base Monthly Rent to be paid in
advance on the first day of each month during the term hereof. In the event that
this Lease commences on a date other than the first day of a month, the Base
Monthly Rent for the first month of the Lease Term shall be prorated for said
partial month. Below is a schedule of Base Monthly Rental payments as agreed
upon:
During Lease Term
-----------------
For Period To Period A Base Monthly
Starting Ending Rent of
---------- --------- --------------
July 15, 1996 August 1, 1996 $4,810.96
August 1, 1996 August 1, 1997 $9,621.92
August 1, 1997 August 1, 2001 $9,621.92 Plus any
cost of living
adjustment per
paragraph 4C below.
B. Lease Term Adjustment. If, for any reason, other than delays caused by
the Tenant, the Leased Premises are not ready for Tenant's occupancy on July 15,
1996 the Tenant's rental obligation end other monetary expenses (i.e. taxes,
utilities, etc.) shall be abated in direct proportion to the number of days of
delay. It is hereby agreed that the premises shall be deemed ready for occupancy
on the day the Landlord receives a T. C .O. or C. O. from the appropriate
authority, or on the day the Landlord gives Tenant the keys to the Leased
Premises if a building permit has not been applied for and/or is not required by
the appropriate authority and in accordance with the terms, conditions and
exhibits to this Lease Agreement.
C. Cost of Living Adjustment. The Base Monthly Rental specified in
paragraph 4A above shall be recalculated for each Lease Year as defined
hereinafter following the first Lease Year of this Lease Agreement. The
recalculated Base Monthly Rental shall be hereinafter referred to as the
"Adjusted Monthly Rental". The Adjusted Monthly Rental for each Lease Year after
the first Lease Year shall be the greater of: (i) the amount of the Base Monthly
Rental, or (ii) an amount calculated by the rent adjustment formula set forth
below. In applying the rent adjustment formula, the following definitions shall
apply:
<PAGE>
(1) "Lease Year" shall mean a period of twelve (12) consecutive full
calendar months with the first Lease Year commencing on the date of the
commencement of the term of this Lease and each succeeding Lease Year commencing
upon the anniversary date of the first Lease Year; however, if this Lease does
not commence on the first day of a month, then, the first Lease Year and each
succeeding Lease Year shall commence on the first day of the first month
following each anniversary date of this Lease;
(2) "Bureau" shall mean the Bureau of Labor Statistics of the United States
Department of Labor or any successor agency that shall issue the Price Index
referred to in this Lease Agreement.
(3) "Price Index" shall mean the "Consumer Price Index-All Urban
Consumers-All Items (CPI-U) U.S. City Average (1982-84=100)" issued from time to
time by the Bureau. In the event the Price Index shall hereafter be converted to
a different standard reference base or otherwise revised, the determination of
the increase in the Price Index shall be made with the use of such conversion
factor, formula or table as may be published by Prentice-Hall, Inc. or failing
such publication, by another nationally recognized publisher of similar
statistical information. In the event the Price Index shall cease to be
published, then, for the purposes of this paragraph 4C there shall be
substituted for the Price Index such other index as the Landlord and the Tenant
shall agree upon, and if they are unable to agree within sixty (60) days after
the Price Index ceases to be published, such matter shall be determined by
arbitration in accordance with the Rules of the American Arbitration
Association.
(4) "Base Price Index" shall mean the Price Index released to the public
during the second calendar month preceding the commencement of this Lease
Agreement,
(5) "Revised Price Index" shall mean the Price Index released to the public
during the second calendar month preceding the Lease Year for which the Base
Annual Rental is to be adjusted;
(6) "Base Monthly Rental" shall mean the Base Monthly Rental set forth in
subparagraph 4A above. The rent adjustment formula used to calculate the
Adjusted Monthly Rental is as follows:
Adjusted Monthly = Revised Price Index X Base Monthly Rental
Rental Base Price Index
The Adjusted Monthly Rental as hereinabove provided shall continue to be payable
monthly as required in paragraph 4A above without necessity of any further
notice by the Landlord to the Tenant.
D. Total Net Lease. The Tenant understands and agrees that this Lease is a
total net lease (a "net, net, net lease"), whereby the Tenant has the obligation
to reimburse the Landlord for a share of all costs and expenses (taxes,
insurance, trash removal, Common Area operation and maintenance and like costs
and expenses), incurred by the Landlord as a result of the Landlord's ownership
and operation of the Area.
<PAGE>
5. N/A
6. Use of Premises. Tenant shall use the Leased Premises only for manufacturing
and related activities and for no other purpose whatsoever except with the
written consent of Landlord. Tenant shall not allow any accumulation of trash or
debris on the Leased Premises or within any portion of the Area. All receiving
and delivery of goods and merchandise and all removal of garbage and refuse
shall be made only by way of the rear and/or other service door provided
therefore. In the event the Leased Premises shall have no such door, then these
matters shall be handled in a manner satisfactory to Landlord. No storage of any
material outside of the Leased Premises shall be allowed unless first approved
by Landlord in writing, and then in only such areas as are designated by
Landlord. Tenant shall not commit or suffer any waste on the Leased Premises nor
shall Tenant permit any nuisance to be maintained on the Leased Premises or
permit any disorderly conduct or other activity having a tendency to annoy or
disturb any occupants of any part of the Area and/or any adjoining property.
7. Laws and Regulations. Tenant Responsibility. The Tenant shall, at its sole
cost and expense, comply with all laws and regulations of any governmental
entity, board, commission or agency having jurisdiction over the Leased
Premises. Tenant agrees not to install any electrical equipment that overloads
any electrical paneling, circuitry or wiring and further agrees to comply with
the requirements of the insurance underwriter or any governmental authorities
having jurisdiction thereof.
8. Landlord's Rules and Regulations. Landlord reserves the right to adopt and
promulgate rules and regulations applicable to the Leased Premises and from time
to time amend or supplement said rules or regulations. Notice of such rules and
regulations and amendments and supplements thereto shall be given to Tenant, and
Tenant agrees to comply with and observe such rules and regulations and
amendments and supplements thereto provided that the same apply uniformly to all
Tenants of the Landlord in the Area. Any additional rules and regulations shall
be reasonable, not interfere with Tenant's business operation, and not increase
Tenant's operating costs.
9. Parking. If the Landlord provides off street parking for the common use of
Tenants, employees and customers of the Area, the Tenant shall park all vehicles
of whatever type used by Tenant and/or Tenant's employees only in such areas
thereof as are designated by Landlord for this purpose, and Tenant accepts the
responsibility of seeing that Tenant's employees park only in the areas so
designated. Tenant shall, upon the request of the Landlord, provide to the
Landlord license numbers of the Tenant's vehicles and the vehicles of Tenant's
employees.
10. Control of Common Areas. -- Exclusive control of the Landlord. All Common
Areas shall at all times be subject to the exclusive control and management of
Landlord, notwithstanding that Tenant and/or Tenant's employees and/or customers
may have a nonexclusive right to the use thereof. Landlord shall have the right
from time to time to establish, modify and enforce rules and regulations with
respect to the use of said facilities and Common Areas.
<PAGE>
11. Taxes.
A. Real Property Taxes and Assessments. The Tenant shall pay to the
Landlord on the first day of each month, as additional rent, the Tenant's Pro
rata Share of all real estate taxes and special assessments levied and assessed
against the Building in which the Leased Premises are located and the Common
Areas. If the first and last years of the Lease Term are not calendar years, the
obligations of the Tenant hereunder shall be prorated for the number of days
during the calendar year that this Lease is in effect. The monthly payments for
such taxes and assessments shall be $1,266.00 until the Landlord receives the
first tax statement for the referred to properties. Thereafter, the monthly
payments shall be based upon 1/12th of the prior year's taxes and assessments.
Once each year the Landlord shall determine the actual Tenant's Pro rata Share
of taxes and assessments for the prior year and if the Tenant has paid less than
the Tenant's Pro rata Share for the prior year the Tenant shall pay the
deficiency to the Landlord with the next payment of Base Monthly Rent, or, if
the Tenant has paid in excess of the Tenant's Pro rata Share for the prior year
the Landlord shall forthwith refund said excess to the Tenant.
B. Personal Property Taxes. Tenant shall be responsible for, and shall pay
promptly when due, any and all taxes and/or assessments levied and/or assessed
against any furniture, fixtures, equipment and items of a similar nature
installed and/or located in or about the Leased Premises by Tenant.
C. N/A
D. Should Landlord protest and win a reduction in the real estate taxes for
the Building and Area, Tenant shall be obligated to pay its Pro rata Share of
the cost of such protest, not to exceed Tenants pro rata share of said
reduction, if the protest is handled by a party other than the Landlord.
12. Insurance.
A. Landlord's Insurance. The Landlord shall procure and maintain such fire
and casualty, loss of rents and liability insurance as it, from time to time,
deems proper and appropriate in reference to the Building in which the Leased
Premises are located and the Common Areas. Such insurance shall not be required
to cover any of the Tenant's property and the Tenant shall have no interest in
any of the proceeds of such insurance. Landlord shall show evidence of said
insurance upon each policy renewal.
B. Tenant's Insurance. Tenant shall, at its sole cost and expense, insure
on a full replacement cost basis, Tenant's inventory, fixtures, leasehold
improvements and betterments located on the Leased Premises against loss
resulting from fire and other all risk perils. Tenant shall procure, pay for and
maintain comprehensive public liability insurance providing coverage from and
against any loss or damage occasioned by an accident or casualty on the Leased
Premises. Said liability policy shall be written on an "occurrence basis" with
limits of not less than $1,000,000 combined single limit coverage. Certificates
for such insurance shall be delivered to Landlord and shall provide that said
insurance shall not be changed, modified, reduced or cancelled without thirty
(30) days prior written notice thereof being given to Landlord.
<PAGE>
C. Tenant's High Pressure Steam Boiler Insurance. If Tenant makes use of
any kind of steam or other high pressure boiler or other apparatus which
presents a risk of damage to the Leased Premises or to the Building or other
improvements of which the Leased Premises are a part or to the life or limb of
persons within such premises, Tenant shall secure and maintain appropriate
boiler insurance in an amount satisfactory to Landlord. Certificates for such
insurance shall be delivered to Landlord and shall provide that said insurance
shall not be changed, modified, reduced or cancelled without thirty (30) days
prior written notice thereof being given to Landlord.
D. Tenant's Share of Landlord Insurance. Tenant shall pay the Landlord as
additional rent Tenant's Pro rata Share of the insurance secured by the Landlord
pursuant to "12A" above. Payment shall be made on the first day of each month as
additional rent. The monthly payments for such insurance shall be $51.00 until
changed by Landlord as a result of an increase or decrease in the cost of such
insurance.
E. Mutual Subrogation Waiver. Landlord and Tenant hereby grant to each
other, on behalf of any insurer providing fire and extended coverage to either
of them covering the Leased Premises, Buildings or other improvements thereon or
contents thereof, a waiver of any right of subrogation any such insurer of one
party may acquire against the other or as against the Landlord or Tenant by
virtue of payments of any loss under such insurance. Such a waiver shall be
effective so long as the Landlord and Tenant are empowered to grant such waiver
under the terms of their respective insurance policy or policies and such waiver
shall stand mutually terminated as of the date either Landlord or Tenant gives
notice to the other that the power to grant such waiver has been so terminated.
13. Utilities. Tenant shall be solely responsible for and promptly pay all
charges for heat, water, gas, electric, sewer service arid any other utility
service used or consumed on the Leased Premises. Should Landlord elect to supply
all or any of the utility services to be used or consumed on the Leased
Premises, Tenant shall, within ten (10) days from presentation of the statement
for such utility service, pay to Landlord, as additional rent under the terms
hereof, the amount of said statement if it represents utility service furnished
to the Leased Premises only or its Pro rata Share of said statement if it
includes utility service to an area greater than the Leased Premises. Said pro
ration of utilities shall be reviewed by Landlord and Tenant at the end of the
first year of occupancy, at which time Landlord shall determine if the present
percentage of said total utilities is equitable in relation to the use of total
services by all the Tenants and will be adjusted by Landlord, if necessary. The
Tenant shall forthwith upon taking occupancy of the Leased Premises make
arrangements with the Public Service Company, U.S. West or other appropriate
utility company to pay the utilities used on the Leased Premises and to have the
same billed to the Tenant at the address designated by the Tenant. Should there
be a time where the Landlord remains responsible for utilities supplied to the
Leased Premises, the Landlord shall bill the Tenant therefore and the Tenant
shall promptly reimburse the Landlord therefore. In no event shall Landlord be
liable for any interruption or failure in the supply of any such utility to the
Leased Premises.
<PAGE>
In the event the utility company supplying water and/or sewer to the Leased
Premises determines that an additional service fee, impact fee, and/or
assessment, or any other type of payment or penalty is necessary due to Tenant's
use and occupancy of the Building, nature of operation and/or consumption of
utilities, said expense shall be borne solely by the Tenant. Said expense shall
be paid promptly and any repairs requested by the utility company shall be
performed by Tenant immediately and without any delay.
14. Maintenance Obligations of Landlord. Except as herein otherwise specifically
provided for, Landlord shall keep and maintain the roof and exterior of the
Building of which the Leased Premises are a part in good repair and condition.
Tenant shall repair and pay for any damage to roof, foundation and external
walls caused by Tenant's action, negligence or fault.
15. Maintenance Obligations of the Tenant. Subject only to the maintenance
obligations of the Landlord as herein provided for, the Tenant shall, during the
entire Lease Term, including all extensions thereof, at the Tenant's sole cost
and expense, keep and maintain the Leased Premises in good condition and repair,
including specifically the following:
A. Electrical Systems. Tenant agrees to maintain in good working order and
to make all required repairs and replacements to the electrical systems for the
Leased Premises.
B. Plumbing Systems. Tenant agrees to maintain in good working order and to
make all required repairs or replacements to the plumbing systems for the Leased
Premises.
C. N/A
D. Tenant's Responsibility for Building and Area Repairs. Tenant shall be
responsible for any repairs required for any part of the Building or Area of
which the Leased Premises are a part if such repairs are necessitated by the
actions or inactions of Tenant.
E. Cutting Roof. Tenant must obtain in writing the Landlord's approval
prior to making any roof penetrations. Failure by Tenant to obtain written
permission to penetrate a roof shall relieve Landlord of any roof repair
obligations as set forth in Paragraph "14" hereof. Tenant further agrees to
repair, at its sole cost and expense, all roof penetrations made by the Tenant
and to use, if so requested by Landlord, a licensed contractor selected by the
Landlord to make such penetrations and repairs.
F. Glass and Doors. The repair and replacement of all glass and doors on
the Leased Premises shall be the responsibility of the Tenant. Any such
replacements or repairs shall be promptly completed at the expense of the
Tenant.
G. Liability for Overload. Tenant shell be responsible for the repair or
replacement of any damage to the Leased Premises, the Building or the Area which
result from the Tenant's movement of heavy articles therein or thereon. Tenant
shall not overload the floors of any part of the Leased Premises.
<PAGE>
H. Liability for Overuse and Overload of Operating Systems. Tenant shall be
responsible for the repair, upgrade, modification, and/or replacement of any
operating systems servicing the Leased Premises and/or all or part of the
Building which is necessitated by Tenant's change or increase in use of or
non-disclosed use of all or a part of the Leased Premises. Operating systems
include, but are not limited to, electrical systems; plumbing systems (both
water and natural gas); heating, ventilating, and air conditioning systems;
telecommunications systems; computer and network systems; lighting systems, fire
sprinkler systems; security systems; and building control systems, if any.
I. N/A
J. Failure of Tenant to Maintain Premises. Should Tenant neglect to keep
and maintain the Leased Premises as required herein, the Landlord shall have the
right, but not the obligation, to have the work done and any reasonable costs
plus a five percent (5%) overhead charge therefore shall be charged to Tenant as
additional rental and shall become payable by Tenant with the payment of the
rental next due.
K. Said approvals from landlord shall not be unreasonably withheld.
16. Common Area Maintenance. Tenant shall be responsible for Tenant's Pro rata
Share of the total costs incurred for the operation, maintenance and repair of
the Common Areas, including, but not limited to, the costs and expenses incurred
for the operation, maintenance and repair of parking areas (including restriping
and repaving); removal of snow; utilities for common lighting and signs; normal
HVAC maintenance and elevator maintenance (if applicable); trash removal;
security to protect and secure the Area; common entrances, exits, and lobbies of
the Building; all common utilities, including water to maintain landscaping;
replanting in order to maintain a smart appearance of landscape areas; supplies;
depreciation on the machinery and equipment used in such operation, maintenance
and repair; the cost of personnel to implement such services; the cost of
maintaining in good working condition the HVAC system(s) for the Leased
premises; the cost of maintaining in good working condition the elevator(s) for
the Leased Premises, if applicable; and ten percent (10%) of all such
operational, maintenance and repair costs to cover Landlord's administrative and
overhead costs. These costs shall be estimated on an annual basis by the
Landlord and shall be adjusted upwards or downwards depending on the actual
costs for the preceding twelve months. Tenant shall pay monthly, commencing with
the first month of the Lease Term, as additional rent due under the terms
hereof, a sum equal to Tenant's Pro rata Share of the estimated costs for said
twelve (12) month period, divided by 12. The estimated initial monthly costs are
$760.00. Once each year the Landlord shall determine the actual costs of the
foregoing expenses for the prior year and if the actual costs are greater than
the estimated costs, the Tenant shall pay its Tenant's Pro rata Share of the
difference between the estimated costs and the actual costs to the Landlord with
the next payment of Base Monthly Rent, or, if the actual costs are less than the
estimated costs, the Landlord shall forthwith refund the amount of the Tenant's
excess payment to the Tenant.
17. Inspection of and Right of Entry to Leased Premises--Regu1ar, Emergency,
Reletting. Landlord and/or Landlord's agents and employees, shall have the right
to enter the Leased Premises at all times during regular business hours and, at
all times during emergencies, to examine the Leased Premises, to make such
<PAGE>
repairs, alterations, improvements or additions as Landlord deems necessary, and
Landlord shall be allowed to take all materials into and upon said Leased
Premises that may be required therefore without the same constituting an
eviction of Tenant in whole or in part, and the rent reserved shall in no way
abate while such repairs, alterations, improvements or additions are being made,
by reason of loss or interruption of business of Tenant or otherwise. During the
six months prior to the expiration of the term of this Lease or any renewal
thereof, Landlord may exhibit the Leased Premises to prospective tenants and/or
purchasers and may place upon the Leased Premises the usual notices indicating
that the Leased Premises are for lease and/or sale.
Prior to entering the Leased Premises for any reason other than an emergency,
the Landlord must give the Tenant reasonable notice and be accompanied by the
Tenant. The Landlord may not exhibit the Leased Premises to prospective tenants
and/or purchasers without being accompanied by the Tenant.
In the event of an emergency and prior to entering the Leased Premises, the
Landlord must make every available effort to first contact the Tenant. Should
the Landlord enter the Leased Premises after working hours, he is responsible
for securing the areas against intruders and rearming the Premises.
18. A1teration-Changes and Additions-Responsibi1iy. Unless the Landlord's
approval is first secured in writing, the Tenant shall not install or erect
inside partitions, add to existing electric power service, add telephone
outlets, add light fixtures, install additional heating and/or air conditioning
or make any other changes or alterations to the interior or exterior of the
Leased Premises that exceed five thousand dollars ($5,000.00) in total cost. Any
such changes or alterations shall be made at the sole cost and expense of the
Tenant. At the end of this Lease, all such fixtures, equipment, additions,
changes and/or alterations (except trade fixtures, portable wall partitions,
signs, and security systems installed by Tenant) shall be and remain the
property of Landlord; provided, however, Landlord shall have the option to
require Tenant to remove any or all such fixtures, equipment, additions and/or
alterations and restore the Leased Premises to the condition existing
immediately prior to such change and/or installation, normal wear and tear
excepted, all at Tenant's cost and expense. All such work shall be done in a
good and workmanlike manner and shall consist of new materials unless agreed to
otherwise by Landlord. Any and all repairs, changes and/or modifications thereto
shall be the responsibility of, and at the cost of, Tenant. Landlord may post
the Leased Premises, or take such other action as is then permitted by law, to
protect the Landlord and the Leased Premises against mechanics' liens. Landlord
may also require adequate security to assure Landlord that the Leased Premises
will be restored to their original condition upon termination of this Lease.
Landlord approval shall not be unreasonably withheld.
19. Sign Approval. Except for signs which are located inside of the Leased
Premises and which are not attached to any part of the Leased Premises, the
Landlord must approve in writing any sign to be placed in or on the interior or
exterior of the Leased Premises, regardless of size or value. Specifically,
<PAGE>
signs attached to windows of the Leased Premises must be so approved by the
Landlord. As a condition to the granting of such approval, Landlord shall have
the right to require Tenant to furnish a bond or other security acceptable to
Landlord sufficient to insure completion of and payment for any such sign work
to be so performed. Tenant shall, during the entire Lease Term, maintain
Tenant's signs in good condition and repair at Tenant's sole cost and expense.
Tenant shall, remove all signs at the termination of this Lease, at Tenant's
sole risk and expense and shall in a workmanlike manner properly repair any
damage and close any holes caused by the installation and/or removal of Tenant's
signs. Tenant shall give Landlord prior notice of such removal so that a
representative of Landlord shall have the opportunity of being present when the
signage is removed, or shall pre-approve the manner and materials used to repair
damage and close the holes caused by removal. Approval shall not be unreasonably
withheld.
20. Right of Landlord Make Changes and Additions. Landlord reserves the right at
any time to make alterations or additions to the Building or Area of which the
Leased Premises are a part. Landlord also reserves the right to construct other
buildings and/or improvements in the Area and to make alterations or additions
thereto, all as Landlord shall determine. Easements for light and air are not
included in the leasing of the Leased Premises to Tenant. Landlord further
reserves the exclusive right to the roof of the Building of which the Leased
Premises are a part. Landlord also reserves the right at any time to relocate,
vary and adjust the size of any of the improvements or Common Areas located in
the Area, provided, however, that all such changes shall be in compliance with
the requirements of governmental authorities having jurisdiction over the Area.
Said changes shall not interfere with Tenants use and operations or incur
Tenant's fees.
21. Damage or Destruction of Leased Premises. In the event the Leased Premises
and/or the Building of which the Leased Premises are a part shall be totally
destroyed by fire or other casualty or so badly damaged that, in the opinion of
Landlord, it is not feasible to repair or rebuild same. Landlord shall have the
right to terminate this Lease upon written notice to Tenant. If the Leased
Premises are partially damaged by fire or other casualty, except if caused by
Tenant's negligence, and said Leased Premises are not rendered untenantable
<PAGE>
thereby, as determined by Landlord, an appropriate reduction of the rent shall
be allowed for the unoccupied portion of the Leased Premises until repair
thereof shall be substantially completed. If the Landlord elects to exercise the
right herein vested in it to terminate this Lease as a result of damage to or
destruction of the Leased Premises or the Building in which the Leased Premises
are located, said election shall be made by giving notice thereof to the Tenant
within thirty (30) days after the date of said damage or destruction.
22. Governmental Acquisition of Property. The parties agree that Landlord shall
have complete freedom of negotiation and settlement of all matters pertaining to
the acquisition of the Leased Premises, the Building, the Area, or any part
thereof, by any governmental body or other person or entity via the exercise of
the power of eminent domain, it being understood and agreed that any financial
settlement made or compensation paid respecting said land or improvements to be
so taken, whether resulting from negotiation and agreement or legal proceedings,
shall be the exclusive property of Landlord, there being no sharing whatsoever
between Landlord and Tenant of any sum so paid. In the event of any such taking,
Landlord shall have the right to terminate this Lease on the date possession is
delivered to the condemning person or authority. Such taking of the property
shall not be a breach of this Lease by Landlord nor give rise to any claims in
Tenant for damages or compensation from Landlord. Nothing herein contained shall
be construed as depriving the Tenant of the right to retain as its sole property
any compensation paid for any tangible personal property owned by the Tenant
which is taken in any such condemnation proceeding.
23. Assignment or Subletting. Tenant may not assign this Lease, or sublet the
Leased Premises or any part thereof, without the written consent of Landlord,
such consent not to be unreasonably withheld. No such assignment or subletting
if approved by the Landlord shall relieve Tenant of any of its obligations
hereunder, and, the performance or nonperformance of any of the covenants herein
contained by subtenants shall be considered as the performance or the
nonperformance by the Tenant.
24. Warranty of Title. Subject to the provisions of the following three (3)
paragraphs hereof, Landlord covenants it has good right to lease the Leased
Premises in the manner described herein and that Tenant shall peaceably and
quietly have, hold, occupy and enjoy the Leased Premises during the term of the
Lease.
25. Access. Landlord shall provide Tenant nonexclusive access to the Leased
Premises through and across land and/or other improvements owned by Landlord.
Landlord shall have the right, during the term of this Lease, to designate, and
to change, such nonexclusive access.
26. Subordination. Tenant agrees that this Lease shall be subordinate to any
mortgages, trust deeds or ground leases that may now exist or which may
hereafter be placed upon said Leased Premises and to any and all advances to be
made thereunder, and to the interest thereon, and all renewals, replacements and
extensions thereof. Tenant shall execute and deliver whatever instruments may be
required for the above purposes, and failing to do so within ten (10) days after
demand in writing, does hereby make, constitute and irrevocably appoint Landlord
as its attorney-in-fact and in its name, place and stead so to do. Tenant shall
in the event of the sale or assignment of Landlord's interest in the Area or in
the Building of which the Leased Premises form a part, or in the event of any
proceedings brought for the foreclosure of or in the event of exercise of the
power of sale under any mortgage made by Landlord covering the Leased Premises,
attorn to the purchaser and recognize such purchaser as Landlord under this
Lease.
<PAGE>
27. Easements. The Landlord shall have the right to grant any easement on, over,
under and above the Area for such purposes as Landlord determines, provided that
such easements do not materially interfere with Tenant's occupancy and use of
the Leased Premises.
28. Landlord/Tenant's Hold Harmless and Indemnification Agreement. Tenant shall
indemnify and hold Landlord harmless from and against any and all claims,
losses, expenses, costs, judgments, and/or demands, including court costs and
attorney's fees, suffered or incurred by the Landlord, arising from activities
of Tenant on the Leased Premises or in the Building or in the Area and/or on
account of any operation or action by Tenant and/or from and against all claims
arising from any breach or default on the part of Tenant or any act of
negligence of Tenant, its agents, contractors, servants, employees, licensees,
or invitees; or any accident, injury or death of any person or damage to any
property in or about the Leased Premises, the Building or the Area.
Landlord shall indemnify and hold Tenant harmless from and against any and all
claims, losses, expenses, costs, judgments, and/or demands, including court
costs and attorney's fees, suffered or incurred by the Tenant, arising from
activities of Landlord on the Leased Premises or in the Building or in the Area
and/or on account of any operation or action by Landlord and/or from and against
all claims arising from any breach or default on the part of Landlord or any act
of negligence of Landlord, its agents, contractors, servants, employees,
licensees, or invitees; or any accident, injury or death of any person or damage
to any property in or about the Leased Premises, the Building or the Area.
29. Acts or Omission of Others. The Landlord, or its employees or agents, or any
of them, shall not be responsible or liable to the Tenant or to the Tenant's
guests, invitees, employees, agents or any other person or entity, for any loss
or damage that may be caused by the acts or omissions of other tenants, their
guests or invitees, occupying any other part of the Area or by persons who are
trespassers on or in the Area, or for any loss or damage caused or resulting
from the bursting, stoppage, backing up or leaking of water, gas, electricity or
sewers or caused in any other manner whatsoever, unless such loss or damage is
caused by or results from the negligent acts of the Landlord, its agents or
contractors.
30. Interest on Past Due Obligations. Any amount due to Landlord not paid when
due shall bear interest at one and one half (1.5%) percent per month from due
date until paid. Payment of such interest shall not excuse or cure any default
by Tenant under this Lease.
<PAGE>
31. Holding Over One and One Half Last Month's Rent. If Tenant shall remain in
possession of the Leased Premises after the termination of this Lease,
whether by expiration of the Lease Term or otherwise, without a written
agreement as to such possession, then Tenant shall be deemed a
month-to-month Tenant. The rent rate during such holdover tenancy shall be
equivalent to one and one half (1.5) the monthly rent paid for the last
full month of tenancy under this Lease, excluding any free rent concessions
which may have been made for the last full month of the Lease. No holding
over by Tenant shall operate to renew or extend this Lease without the
written consent of Landlord to such renewal or extension having been first
obtained. Tenant shall indemnify Landlord against loss or liability
resulting from the delay by Tenant in surrendering possession of the Leased
Premises including, without limitation, any claims made with regard to any
succeeding occupancy bounded by such holdover period.
32. Modifications or Extensions. No modification or extension of this Lease
shall be binding upon the parties hereto unless in writing and unless signed by
the parties hereto.
33. Notice Procedure. All notices, demands and requests which may be or are
required to be given by either party to the other shall be in writing and such
that are to be given to Tenant shall be deemed to have been properly given if
served on Tenant or an employee of Tenant or sent to Tenant by United States
registered or certified mail, return receipt requested, properly sealed, stamped
and addressed to Tenant at see page 1 or at such other place as Tenant may from
time to time designate in a written notice to Landlord; and, such as are to be
given to Landlord shall be deemed to have been properly given if personally
served on Landlord or if sent to Landlord, United States registered or certified
mail, return receipt requested, properly sealed, stamped and addressed to
Landlord at see page 1 or at such other place as Landlord may from time to time
designate in a written notice to Tenant. Any notice given by mailing shall be
effective as of the date of mailing.
34. Memorandum of Lease-Notice to Mortgagee. The Landlord and Tenant agree not
to place this Lease of record, but upon the request of either party to execute
and acknowledge so the same may be recorded a short form lease indicating the
names and respective addresses of the Landlord and Tenant, the Leased Premises,
the Lease Term, the dates of the commencement and termination of the Lease Term
and options for renewal, if any, but omitting rent and other terms of this
Lease. Tenant agrees to an assignment by Landlord of rents and of the Landlord's
interest in this Lease to a mortgagee, if the same be made by Landlord. Tenant
further agrees if requested to do so by the Landlord that it will give to said
mortgagee a copy of any request for performance by Landlord or notice of default
by Landlord; and in the event Landlord fails to cure such default, the Tenant
will give said mortgagee a sixty (60) day period in which to cure the same. Said
period shall begin with the last day on which Landlord could cure such default
before Tenant has the right to exercise any remedy by reason of such default.
All notices to the mortgagee shall be sent by United States registered or
certified mail, postage prepaid, return receipt requested.
<PAGE>
35. Controlling Law. The Lease and all terms hereunder shall be construed
consistent with the laws of the State of Colorado. Any dispute resulting in
litigation hereunder shall be resolved in court proceedings instituted in
Boulder County and in no other jurisdiction.
36. Landlord Not a Partner With the Tenant. Nothing contained in this Lease
shall be deemed, held or construed as creating Landlord as a partner, agent,
associate of or in joint venture with Tenant in the conduct of Tenant's
business, it being expressly understood and agreed that the relationship between
the parties hereto is and shall at all times remain that of Landlord and Tenant.
37. Partial Invalidity. If any term, covenant or condition of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease or the application of such
term, covenant or condition to persons and circumstances other then those to
which it has been held invalid or unenforceable, shall not be affected thereby,
and each term, covenant and condition of this Lease shall be valid and shall be
enforced to the fullest extent permitted by law.
38. Defau1t-Remedies of Landlord
A. If Tenant shall default in the payment of rent or in the keeping of any
of the terms, covenants or conditions of this Lease to be kept and/or performed
by Tenant, Landlord may immediately, or at any time thereafter, reenter the
Leased Premises, remove all persons and property therefrom, without being liable
to indictment, prosecution for damage therefore, or for forcible entry and
detainer and repossess and enjoy the Leased Premises, together with all
additions thereto or alterations and improvements thereof. Landlord may, at its
option, at any time and from time to time thereafter, relet the Leased Premises
or any part thereof for the account of Tenant or otherwise, and receive and
collect the rents therefore and apply the same first to the payment of such
expenses as Landlord may have incurred in recovering possession and for putting
the same in good order and condition for rerental, and expense, commissions and
charges paid by Landlord in reletting the Leased Premises. Any such reletting
may be for the remainder of the term of this Lease or for a longer or shorter
period. In lieu of reletting such Leased Premises, Landlord may occupy the same
or cause the same to be occupied by others. Whether or not the Leased Premises
or any part thereof be relet, Tenant shall pay the Landlord the rent and all
other charges required to be paid by Tenant up to the time of the expiration of
this Lease or such recovered possession, as the case may be and thereafter,
Tenant, if required by Landlord, shall pay to Landlord until the end of the term
of this Lease, the equivalent of the amount of all rent reserved herein and all
other charges required to be paid by Tenant, less the net amount received by
Landlord for such reletting, if any, unless waived by written notice from
Landlord to Tenant. No action by Landlord to obtain possession of the Leased
<PAGE>
Premises and/or to recover any amount due to Landlord hereunder shall be taken
as a waiver of Landlord's right to require full and complete performance by
Tenant of all terms hereof, including payment of all amounts due hereunder or as
an election on the part of Landlord to terminate this Lease Agreement. If the
Leased Premises shall be reoccupied by Landlord, then, from and after the date
of repossession, Tenant shall be discharged of any obligations to Landlord under
the provisions hereof for the payment of rent. If the Leased Premises are
reoccupied by the Landlord pursuant hereto, and regardless of whether the Leased
Premises shall be relet or possessed by Landlord, all fixtures, additions,
furniture, and the like then on the Leased Premises which were initially
installed or constructed by the Landlord may be retained by Landlord. In the
event Tenant is in default under the terms hereof and, by the sole determination
of Landlord, has abandoned the Leased Premises, Landlord shall have the right to
remove all the Tenant's property from the Leased Premises and dispose of said
property in such a manner as determined best by Landlord, at the sole cost and
expense of Tenant and without liability of Landlord for the actions so taken.
B. In the event an assignment of Tenant's business or property shall be
made for the benefit of creditors, or, if the Tenant's leasehold interest under
the terms of this Lease Agreement shall be levied upon by execution or seized by
virtue of any writ of any court of law, or, if application be made for the
appointment of a receiver for the business or property of Tenant, or, if a
petition in bankruptcy shall be filed by or against Tenant, then and in any such
case, at Landlord's option, with or without notice, Landlord may terminate this
Lease and immediately retake possession of the Leased Premises without the same
working any forfeiture of the obligations of Tenant hereunder
C. N/A
D. In addition to any remedy granted to Landlord by the terms hereof,
Landlord shall have available any and all rights and remedies available under
the statutes of the State of Colorado. No remedy herein or otherwise conferred
upon or reserved to Landlord shall be considered exclusive of any other remedy
but shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.
Further, all powers and remedies given by this Lease to Landlord may be
exercised, from time to time, and as often as occasion may arise or as may be
deemed expedient. No delay or omission of Landlord to exercise any right or
power arising from any default shall impair any such right or power or shall be
considered to be a waiver of any such default or acquiescence thereof. The
acceptance of rent by Landlord shall not be deemed to be a waiver of any breach
of any of the covenants herein contained or of any of the rights of Landlord to
any remedies herein given.
E. N/A
<PAGE>
39. Legal Proceedings-Responsibilities. In the event of proceeding at law or in
equity by either party hereto, the defaulting party shall pay all costs and
expenses, including all reasonable attorney's fees incurred by the
non-defaulting party in pursuing such remedy, if such non-defaulting party is
awarded substantially the relief requested.
40. Administrative Charges. In the event any check, bank draft or negotiable
instrument given for any money payment hereunder shall be dishonored at any time
and from time to time, for any reason whatsoever not attributable to Landlord,
Landlord shall be entitled, in addition to any other remedy that may be
available, (1) to make an administrative charge of $100.00 or three times the
face value of the check, bank draft or negotiable instrument, whichever is
smaller, and (2) at Landlord's sole option, to require Tenant to make all future
rental payments in cash or cashiers check.
41. Hazardous Materials and Environmental Considerations.
A. Tenant covenants and agrees that Tenant and its agents, employees,
contractors and Invitees shall comply with all Hazardous Materials Laws (as
hereinafter defined). Without limiting the foregoing, Tenant covenants and
agrees that it will not use, generate, store or dispose of, nor permit the use,
generation, storage or disposal of Hazardous Materials (as hereinafter defined)
on, under or about the Leased Premises, nor will it transport or permit the
transportation of Hazardous Materials to or from the Leased Premises, except in
full compliance with any applicable Hazardous Materials Laws. Any Hazardous
Materials located on the Leased Premises shall be handled in an appropriately
controlled environment which shall include the use of such equipment (at
Tenant's expense) as is necessary to meet or exceed standards imposed by any
Hazardous Materials Laws and in such a way as not to interfere with any other
tenant's use of its premises. Upon breach of any covenant contained herein,
Tenant shall, at Tenant's sole expense, cure such breach by taking all action
prescribed by any applicable Hazardous Materials Laws or by any governmental
authority with jurisdiction over such matters.
B. Tenant shall inform Landlord at any time of (i) any Hazardous Materials
it intends to use, generate, handle, store or dispose of, on or about or
transport from, the Leased Premises and (ii) of Tenant's discovery of any event
or condition which constitutes a violation of any applicable Hazardous Materials
Laws. Tenant shall provide to Landlord copies of all communications to or from
any governmental authority or any other party relating to Hazardous Materials
affecting the Leased Premises.
<PAGE>
C. Tenant shall indemnify and hold Landlord harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities, expenses or
losses (including, without limitation, diminution on value of the Leased
Premises, damages for loss or restriction on use of all or part of the Leased
Premises, sums paid in settlement of claims, investigation of site conditions,
or any cleanup, removal or restoration work required by any federal, state or
local governmental agency, attorney's fees, consultant fees, and expert fees)
which arise as a result of or in connection with any breach of the foregoing
covenants or any other violation of any Hazardous Materials laws by Tenant. The
indemnification contained herein shall also accrue to the benefit of the
employees, agents, officers, directors and/or partners of Landlord.
D. Upon termination of this Lease and/or vacation of the Leased Premises,
Tenant shall properly remove all Hazardous Materials and shall then provide to
Landlord an environmental audit report, prepared by a professional consultant
satisfactory to Landlord and at Tenant's sole expense, certifying that the
Leased Premises have not been subjected to environmental harm caused by Tenant's
use and occupancy of the Leased Premises. Landlord shall grant to Tenant and its
agents or contractors such access to the Leased Premises as is necessary to
accomplish such removal and prepare such report.
E. "Hazardous Materials" shall mean (a) any chemical, material, substance
or pollutant which poses a hazard to the Leased Premises or to persons on or
about the Leased Premises or would cause a violation of or is regulated by any
Hazardous Materials Laws, and (b) any chemical, material or substance defined as
or included in the definitions of "hazardous substances", "hazardous wastes",
"extremely hazardous waste", "restricted hazardous waste", "toxic substances",
"regulated substance", or words of similar import under any applicable federal,
state or local law or under the regulations adopted or publications promulgated
pursuant thereto, including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sec.
9601, et seg.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Sec. 1801, et seg.; the Resource Conservation and Recovery Act as amended, 42
U.S.C. Sec 6901, et seg.; the Solid Waste Disposal Act, 42 U.S.C. Sec. 6991 et
seg.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Sec. 1251,
et seg. and Sections 25-15-101, et seg. , 25-16-101, et seg., 25-7-101, et seg.,
and 25-8-101, et seg., of the Colorado Revised Statutes. "Hazardous Materials
Laws" shall mean any federal state or local laws, ordinances, rules,
regulations, or policies (including, but not limited to, those laws specified
above) relating to the environment, health and safety or the use, handling,
transportation, production, disposal, discharge or storage of Hazardous
Materials, or to industrial hygiene or the environmental conditions on, under or
about the Leased Premises. Said term shall be deemed to include all such laws as
are now in effect or as hereafter amended and all other such laws as may
hereafter be enacted or adopted during the term of this Lease.
F. All obligations of Tenant hereunder shall survive and continue after the
expiration of this Lease or its earlier termination for any reason.
<PAGE>
G. Tenant further covenants and agrees that it shall not install any
storage tank (whether above or below the ground) on the Leased Premises without
obtaining the prior written consent of the Landlord, which consent may be
conditioned upon further requirements imposed by Landlord with respect to, among
other things, compliance by Tenant with any applicable laws, rules, regulations
or ordinances and safety measures or financial responsibility requirements.
H. Should any local governmental entity having jurisdiction over the Leased
Premises require any type of environmental audit or report prior to or during
the occupancy of the Leased Premises by the Tenant, such cost of the audit or
report shall be the sole responsibility of the Tenant.
42. Entire Agreement. It is expressly understood and agreed by and between the
parties hereto that this Lease sets forth all the promises, agreements,
conditions, and understandings between Landlord and/or its agents and Tenant
relative to the Leased Premises and that there are no promises, agreements,
conditions, or understandings either oral or written, between them other than
that are herein set forth.
43. N/A
44. Estoppel Certificates. Within no more than 10 days after receipt of written
request, the Tenant shall furnish to the owner a certificate, duly acknowledged,
certifying, to the extent true:
A. That this Lease is in full force and effect.
B. That the Tenant knows of no default hereunder on the part of the owner,
or if it has reason to believe that such a default exists, the nature thereof in
reasonable detail.
C. The amount of the rent being paid and the last date to which rent has
been paid.
D. That this Lease has not been modified, or if it has been modified, the
terms and dates of such modifications.
E. That the term of this Lease has commenced.
F. The commencement and expiration dates.
G. Whether all work to be performed by the owner has been completed.
H. Whether the renewal term option has been exercised if applicable.
I. Whether there exist any claims or deductions from, or defenses to, the
payment of rent.
J. Such other matters as may be reasonably requested by owner.
<PAGE>
If the Tenant fails to execute and deliver to the owner a completed certificate
as required under this section, the Tenant hereby appoints the owner as its
Attorney-In-Fact to execute and deliver such certificate for and on behalf of
the Tenant.
45. Financial Statements. As requested by the Landlord, Tenant shall provide
copies of its most recent financial statements and shall also provide Landlord
with up to three (3) prior years of financial statements, if so requested.
46. Lease Exhibits Attached. This Lease includes the following Lease Exhibits,
which are incorporated herein and made a part of this Lease Agreement:
Exhibit "A" - Site Plan Depicting Area (Drawing)
Exhibit "B" - Interior Space Plan (Drawing)
Exhibit "C" - Landlord and Tenant's Construction Obligations
Exhibit "D"- Sign Code Obligations
Exhibit "K" - Additional Terms and Conditions
Exhibit "F" - Option to Extend
47. Miscellaneous. All marginal notations and paragraph headings are for
purposes of reference and shall not affect the true meaning and intent of the
terms hereof. Throughout this Lease, wherever the words "Landlord" and "Tenant"
are used they shall include and imply to the singular, plural, persons both male
and female, companies, partnerships and corporations, end in reading said Lease,
the necessary grammatical changes required to make the provisions hereof mean
and apply as aforesaid shall be made in the same manner as though originally
included in said Lease.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the date hereof.
LANDLORD: LakeCenter Plaza., LLLP
By: /s/ William W. Reynolds
-------------------------
William W. Reynolds
TENANT: Granville-Phillips Company
By: /s/ Kristie K. Skiles, Treasurer
----------------------------------
Kristie K. Skiles, Treasurer
<PAGE>
Exhibit "A"
Site Plan Depicting Area (Drawing)
<PAGE>
Exhibit "B"
Interior Space Plan (Drawing)
<PAGE>
Exhibit "C"
Landlord and Tenant Construction Obligations
1. LANDORD
A. Landlord shall complete the Leased Premises per Exhibit "B" and per the
attached set of "Standard Lease Space Specifications" for Office Buildings.
B. Landlord agrees to install approximately 4,000 square feet of VPI Conductile
in the leased premises as depicted in Exhibit "B". Any additional conductive
tile installed in the lease premises will be at the sole cost and expense of the
Tenant.
C. Landlord agrees to install all electrical systems in the amount of $3.25 per
square feet in the leased premises. Any additional electrical installation in
excess of $3.25 per square foot will be at the sole cost and expense of the
Tenant.
D. Landlord agrees to install electronic ballast for all florescent fixtures
installed in the Lease Premises. Said electronic ballasts are not standard
fixtures installed by Landlord and may increase electrical systems cost to
exceed the $3.25 per square feet as described in paragraph C of this Exhibit
"C". Any additional electrical installation in excess of $3.25 per square foot
will be at the sole cost and expense of the Tenant.
E. Landlord agrees to install 3/4 inch conduits conduit for computer/telephone
outlets installed in the Lease Premises. Said 3/4 inch conduits are not standard
installations by Landlord and may increase electrical systems cost to exceed the
$3.25 per square feet as described in paragraph C of this Exhibit "C". Any
additional electrical installation in excess of $3.25 per square foot will be at
the sole cost and expense of the Tenant.
F. The leased premises is currently independently serviced by two (2) twelve and
one half (12.5) ton HVAC units. If additional HVAC service is deemed necessary,
additional service can be provided from a shared HVAC unit or Tenant may elect
to install an additional HVAC unit at its sole cost and expense.
2 . TENANT
Tenant shall be responsible for the cost of any change order which increases the
cost of the work shown on Exhibit "B" or which increases the cost of the
Landlords Standard Lease Space Specifications. If Tenant should make any changes
which increase such cost it shall pay to the Landlord such sum within 15 days of
occupancy of the Leased Premises. Landlord shall have the obligation to notify
Tenant in writing of any changes which will obligate the Tenant to any such
additional costs prior to any changes being made and Tenant being obligated to
any such costs.
<PAGE>
STANDARD LEASE SPACE SPECIFICATIONS
OFFICE/INDUSTRIAL BUILDINGS
The following are standard specifications for the Leased Premises herein
defined.
GENERAL
A. The leased space design/layout will conform to the Architectural drawings.
B. All work performed to complete the Leased Premises will be in accordance with
all applicable codes and regulations as well as currant A.D.A requirements.
C. Demising, corridor and partition walls separating offices from warehouse
space to be 3-5/8" metal studs at 24" o.c. with 5/8" gypsum wallboard on each
side. Partitions to extend from floor to underside of structure above.
Partitions to have acoustical sealant at joints and sound attenuation batting
between studs from floor to structure above. Partitions to receive typical
partition finish.
D. 1) Building interior space may be divided into fire containment areas. It is
the responsibility of the Tenant to conform to all applicable regulations and
fire codes, including, but not limited to, maintaining egress requirements
during the term of occupancy.
2) Fire containment walls to be 3-5/8" metal studs at 24" o.c. with 5/8" gypsum
wallboard on each side. Walls to extend from floor to underside of structure
above. Doors in fire containment walls to be twenty minute fire rated, solid
core oak veneer with closer and metal jams.
E. Tenant will be responsible for identifying any equipment or areas requiring
additional or special ventilation, lighting or electrical service prior to space
planning.
OFFICE AREAS
A. INTERIOR PARTITIONS
1. 3-5/8" metal studs at 24" o.c. from floor to underside of ceiling with 5/8"
gypsum wallboard on each side.
2. All concrete block walls in Leased Premises to be furred and sheathed as
interior partitions above unless otherwise noted on Architectural drawings.
B. PARTITION FINISH
All interior partitions, not prefinished, will receive paint. Paint to be
Landlord's standard. Two finish coats over one primer coat. Color to be selected
by Tenant from among choices preselected by Landlord.
C. CEILING
To be suspended acoustical 2X4 ceiling tile. Tile and metal grid to be white.
<PAGE>
D. FLOOR COVERING
1. Carpet to be Landlord's standard (Cambridge--Oxford 28 oz. nylon textured
loop and/or Cambridge---Park Lane 30 oz. nylon cut pile). Installation to be
glue down. Color to be selected by Tenant from among choices pre-selected by
Landlord. Base at carpet to be 2-1/2" high solid oak finish to match doors.
2. Resilient flooring to be Landlord's standard. 12"x12"xl/8". Color to be
selected by Tenant from among choices pre-selected by Landlord. Base at
resilient flooring to be Roppe 2-1/2" rubber cove.
E. INTERIOR DOORS
All interior doors to be solid core flush panel oak veneer with 3 coats natural
color lacquer finish. Frames to be Timely Metal Frames. Door sizes to be 3'-0" x
7'-0" x 1-3/4" unless otherwise noted on architectural drawings.
F. DOOR HARDWARE
To be sargent 6 line Orbital series, 26D brushed chrome or equal. All entry
doors to have keyed cylinder lock sets. All office, conference, and storage room
doors to have passage lock set. Restrooms to have privacy lock. All doors to
have 1-1/2 pair 4" hinges and 1 Ives concave wall stop #407 1/2, or equal,
stainless steel finish.
G. LIGHTING
To be 2'x4' 4 lamp, recessed, fluorescent with prismatic lens light fixtures.
H. ELECTRICAL/PHONE
Outlet locations as shown or Architectural drawings. All outlets, outlet covers,
switches and switch plate covers to be white.
I. COMPUTER/TELEPHONE OUTLETS
Outlets to consist of empty junction box with 1/2" conduit stubbed above
ceiling.
J. TELEPHONE/COMPUTER LINES AND CABLING
Wiring and installation to be provided by Tenant. 3/4" plywood phone board to be
provided and Installed by Landlord for telephone installation.
RESTROOMS/ IF INSIDE THE TENANT 'S SPACE
A. CONSTRUCTION AND FINISHES
To be as per office area specifications except as follows:
1) Partitions and ceiling to receive 5/8" water resistant gypsum wallboard.
2) Walls to have 2 coats of epoxy paint from floor to 4'-0" above floor.
Remaining wall surface and ceiling to have 2 finish coats of semi-gloss acrylic
over one primer coat. Color to be white.
<PAGE>
3) Ceiling structure to be metal stud joists bearing on partition wall. Ceiling
structure to support unit water heater for restroom. Ceiling height to be
maximum allowable.
4) Counter tops to have plastic laminate finish with color to be selected by
Tenant from among choices pre-selected by Landlord.
B. PLUMBING FIXTURES
1) Toilet -- Armitage Shanks, white, model #109 or equal.
2) Lavatory -- Armitage Shanks model #308, white, 19" self rimming china
lavatory with Price Pfister #H43-121 faucet or equal.
3) Lavatory -- American Standard wall hung Royalyn Vitreous China 3 hole
#1024.131 (20" x 18") with Delta handle faucet #2520 or equal.
4) Urinal -- Kohler model #402, white with Zorn flush valve or equal.
C. ACCESSORIES
1) Mirror -- Full HGT and with mirror with metal edge trim as shown on
Architectural Drawings.
2) Mirror -- Bobrick stainless steel channel frame mirror #B-165-1830 (18" x
30") or equal.
3) Paper Towel Dispenser/Disposal -- Bobrick B-369 recessed, stainless steel
satin finish or equal.
4) Toilet Tissue Dispenser -- Bobrick B-388 recessed, stainless steel satin
finish or equal.
5) Utility Hook -- Bobrick #B-670 polished stainless steel or equal mounted
interior side of toilet and shower stall doors (if applicable) 66" above
finished floor.
6) Grab Bars -- Bobrick #b-490, stainless steel satin finish or equal.
D. LIGHTING
One surface mounted 2 tube fluorescent fixture with acrylic lens in drywall
light valance over lavatory. Ceiling fixture, if called for in Architectural
drawings, to be 2 tube fluorescent with acrylic wrap lens.
E. ELECTRICAL
One GFI electric Outlet adjacent to lavatory. One exhaust fan in any toilet
room.
MECHANICAL/ELECTRICAL
A. HEATING AND COOLING
The interior premises are heated and cooled by one or more roof-mounted
mechanical units. The sizing of the mechanical units are designed to provide one
(1) ton of cooling for every four hundred (400) square feet of floor area;
provided that the internal load does not exceed three (3) watts per square foot.
Individual thermostat control shall be centrally controlled allowing for
automatic setback capabilities with external dial-in monitoring provided for the
interior premises, with control areas not to exceed two thousand (2,000) square
<PAGE>
feet in size. Based upon the above, the system shall maintain a minimum
temperature of 65 degrees Fahrenheit and a maximum temperature of 75 degrees
Fahrenheit in the separate rooms within the Leased Premises, so long as the
minimum exterior temperature shall not be below zero degrees Fahrenheit and the
maximum exterior temperature shall not be in excess of 100 degrees Fahrenheit.
B. ELECTRICAL
Standard electrical advice provided to the building to be 120/208 volt, three
phase, four wire. No additional service to be provided for Tenant equipment
unless otherwise noted. One (1) light switch per office is provided. Circuitry
design is normally laid out to allocate 6 to 8 duplex outlets per 20 amp
circuit.
C. ELECTRICAL OUTLETS
Restrooms to have one duplex electrical outlet. See Architectural drawings for
outlet locations in other areas.
D. LIGHTING
Finished rooms, other than restrooms and storage areas will be lighted with
2'x4' recessed, 4 lamp, fluorescent fixtures.
All fixtures to be provided initially with lamps. Lights and switch locations
will be as shown on Architectural drawings.
SUPPLEMENTAL ITEMS
See Architectural drawings for additional notes and locations if the items below
are included in the tenant finish
A. COFFEE BAR
1) Base and upper cabinets to be Merrillat brand with style to be chosen by
Landlord.
2) Countertop and splash to be plastic laminate finish with color to be selected
by Tenant from among choices pre-selected by Landlord.
3) Kitchen sink, Dayton Kingsford #K-11515 single compartment sink with Delta
#2171 faucet or equal.
4) Dishwasher
5) Garbage disposal in sink
<PAGE>
Exhibit "D"
Sign Code Obligations
Current sign code specifications for the property depicted in Exhibit "A" do not
allow Tenant to erect any signage on or about their Leased Premises. Only
tenants occupying an entire building are permitted any building signage. Tenant
may install any signage on windows, doors and/or interior of space that is
permissible under City of Boulder sign code regulations.
<PAGE>
Exhibit "E"
Additional Terms and Conditions
1. Tenant shall be given the right to cancel this Lease Agreement after three
years of occupancy with six (6) months written notification in addition to a
prepayment penalty equaling three (3) months rent. This right to early
termination will be applicable only after Tenant has been occupying the lease
premises for three (3) full years (36 months) of this lease term. After the
first three (3) years, the Tenant may give written notification to terminate the
lease after an additional six (6) months of occupancy from the date the written
request to terminate the Lease has been received by the landlord and Landlord
has received the above described payment of an additional sum equaling three (3)
months rent. Said right to terminate the Lease shall be valid only during the
initial base lease term. Any termination rights granted beyond the initial base
lease term must be mutually agreed upon by both Tenant and Landlord and must be
in writing.
<PAGE>
Exhibit "F"
Option to Extend
Tenant shall have the option to extend the Lease Agreement (as Amended above)
from 12:00 noon on August 1, 2001 to 12:00 noon on August 1, 2006 In the event
the Tenant desires to exercise said option, Tenant shall give written notice of
interest in such exercise to Landlord no later than October 1, 2000 in order
that the Landlord and Tenant may proceed with determination of the Fair Market
Value as provided herein. In the event the Tenant desires to exercise said
option, Tenant shall give written notice of such exercise to Landlord not later
than February 1, 2001. See below for Option Term Rent. In the event of such
exercise, the Lease Agreement, including all amendments, shall be automatically
extended for the additional term. Notwithstanding the foregoing, this option
shall be void and of no force or effect if the Tenant is in default hereunder
either as of the date of the Tenant's exercise of said option or as of the date
of the commencement of the option or additional term.
Option Term Rent: Tenant shall pay the following rent for the Leased Premises:
Landlord and Tenant will attempt to agree upon a Fair Market Rental Value of the
Leased Premises satisfactory to both parties not later than November 1, 2000. If
no agreement can be reached by the parties during that period, then the Base
Monthly Rental for the Option Term shall he determined by the Fair Market Rental
Value of the Leased Premises as determined by comparison to premises of similar
size located in or near the City of Boulder, Colorado, having comparable
development, use and density capability and such other characteristics as may be
deemed relevant by a subject appraiser whose selection is outlined herein.
Not Later than November 10, 2000, Landlord shall select an independent MAI real
estate appraiser with at least ten (10) years experience in appraising
commercial real property in the City of Boulder, Colorado (a "Qualified
Appraiser"). The Qualified Appraiser selected by the Landlord shall be referred
to as the "Landlord's Appraiser". Not later than December 10, 2000, the
Landlord's Appraiser shall determine the Fair Market Rental Value of the Leased
Premises in accordance with the appraisal standards set forth above and shall
immediately give the Landlord and the Tenant written notification of his
determination.
If the Tenant agrees with the Landlord's Appraiser's determination of the Fair
Market Rental Value, the new Base Monthly Rental shall become effective
beginning with the first month of the Option Term. If the Tenant does not agree
with the Landlord's Appraiser's determination of Fair Market Rental Value, the
Tenant shall have the right to select its own Qualified Appraiser to determine
the Fair Market Rental Value. If the Tenant does elect to appoint a Qualified
Appraiser (the "Tenant's Appraiser"), the Tenant shall select the Tenant's
Appraiser not later than December 20, 2000. The Tenant's Appraiser shall make
his own determination of the Fair Market Rental Value in accordance with the
provisions set forth above, Not later than January 20, 2001 and shall
immediately give the Landlord and the Tenant written notice of his
determination.
On or before January 30, 2001, the Landlord and Tenant shall again attempt to
agree upon a Fair Market Rental Value of the Lease Premises. In the event the
Tenant desires to exercise said option, the Tenant will give written notice of
such exercise to the Landlord not later than February 1, 2000.
All appraisal fees required hereunder shall be shared equally by the Landlord
and the Tenant.
LEASE AGREEMENT
This AGREEMENT, made and entered into this 7th day of August, 1998 by and
between: Mitsubishi Jisho Co., Ltd., a company incorporated and existing under
the laws of Japan, having its principle place of business at 2-7-3, Marunouchi,
Chiyoda-ku, Tokyo, Japan (hereinafter called the "Lessor"), and:
Helix Technology, K.K., a company incorporated and existing under the laws of
Japan, having its principle place of business at 2-2-1, Minatomirai, Nishi-ku,
Yokohama-shi, Kanagawa-pref., Japan (hereinafter called the "Lessee"),
WITNESSETH THAT
WHEREAS, the Lessor is desirous of renting the room defined in Article 1 hereof
to the Lessee through Mitsubishi Jisho Building Management Yokohama, Co., Ltd.
as the agent of the Lessor.
and
WHEREAS, the Lessee is willing to take a lease of the room of the Lessor through
Mitsubishi Jisho Building Management Yokohama, Co., Ltd.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
Article 1 (Room to let and its area)
The room to let is defined as follows:
Building: Queens Tower A, 14th floor; Rooms: 1403 and 1404; Total area: 401.13m2
(As shown in the drawing attached hereto); OA-compatible double floors, carpet
tiles, lights and electric appliances, air conditioning and ventilation
equipment provided.
Building structure: 36 floors above the ground, 5 floors under the ground, 2
penthouse floors, S and SRC structures
Location: 2-3-1 Minatomirai, Nishi-ku, Yokohama-shi, Kanagawa-pref.
Article 2 (Term)
The Agreement shall be effective from the 1st day of September, 1989 to the 31st
day of August, 2000.
Article 3 (Rent and Other Charges)
3.1 The rent shall be 2,669,500.- Yen per month (inclusive of common
service fee). The Lessee shall pay the rent of the following month by a bank
account transfer as provided separately on the 25th of every month (or on the
following weekday if the 25th day hits a Bank holiday.) The Lessor shall not be
precluded from demanding a direct payment from the Lessee, however. Both the
Lessor and the Lessee shall not request the increase or decrease of the rent to
the other party hereof during the term as provided in Article 2 hereof
(inclusive of the extended term pursuant to Article 12.)
3.2 The Lessee shall pay the electricity rates of the room to let and the
air conditioning fees outside of the business hours. The Lessee shall pay the
public utilities charges such as water and gas rates if these utilities are
supplied to the room to let. Payment of the above-mentioned rates and charges
for the previous month shall be made in the manner of payment of rent.
<PAGE>
Article 4 (Digital PBX)
4.1 The Lessee shall use the digital PBX system installed by the Lessor and
shall pay the charge for using the digital PBX system as provided separately by
the Lessor.
4.2 The Lessee shall conform to the "Digital PBX Utilization Agreement" as
provided separately by the Lessor for the use of digital PBX system.
Article 5 (Consumption Tax and Other Taxes)
The Lessee shall pay the consumption and other taxes to be levied on the rent
and other charges as a result of conclusion of the Agreement. The taxes shall be
paid in the manner of payment of rent.
Article 6 (Purpose of Using the Room to Let)
The room to let shall be used exclusively as the office of the Lessee.
Article 7 (Prohibition of Transfer of Right of Lease and of Sublease, Limitation
of Room Sharing and of Indication of Lessee's Title)
7.1 The Lessee shall not transfer, sell or purchase the right of lease,
sublet or loan the use of the room to let.
7.2 The Lessee shall not allow the others to stay in the room to let or
display the lessee's title other than The lessee without obtaining the written
consent of the Lessor.
Article 8 (Furnishings and Facility Construction)
8.1 If the Lessee wishes to modify the original state of the room to let
for the purpose of repair, remodel, or establishment of new furnishings, the
Lessee shall obtain an approval of the Lessor prior to the start of construction
even if the Lessee bears the expenses. The Lessor shall not reject the Lessee's
request of modification apart from cases such that the modification can cause
the problems related to building structure, building base facilities, legal
issues, or construction period and methods.
8.2 The Lessee shall bear the taxes and other public charges including, but
not limited to, fixed property tax, urban planning tax, and real estate
acquisition tax, to be imposed on the newly established or altered furnishings
and facilities pursuant to Article 8 hereof irrespective of the holder of a
title deed.
Article 9 (Repair)
9.1 If there is a need for repair, the Lessee shall request the Lessor for
repair as soon as possible and the Lessor shall promptly coordinate the repair
work as soon as possible.
9.2 In case the Lessor has properly implemented repair, improvement, or
maintenance work as the Lessor admits necessary (inclusive of power failure and
suspension of water supply), the Lessor shall not be liable for any
inconvenience and damages of the Lessee as a result of repair, improvement, or
maintenance or remodeling. If the period of repair or improvement continues for
a long time, the Lessor and the Lessee shall mutually discuss the matter.
<PAGE>
Article 10 (Compensation for Damage)
The Lessee shall bear all the compensation for damage to the room to let,
facility, furnishings of the Lessor or to the common space caused by an
accidental or intentional fault of the Lessee or its agent, employee, or
contractor.
Article 11 (Indemnification)
The Lessor shall be held harmless for the damages of the Lessee caused as a
result of natural disasters by an Act of God including, but not limited to,
earthquake, fire, and damage from a storm and flood, or robbery and loss which
is not attributed to the fault of the Lessor.
Article 12 (Renewal of Lease Agreement)
The Agreement shall be renewed for two more years from the following day of the
maturity if either the Lessor or the Lessee does not provide any instance in
writing six months prior to the maturity of the Agreement at the latest.
Provided however that, the Lessor may revise the rent as provided in Article 3,
Item 3.1 hereof after consultation with the Lessee at the time of renewal of the
Agreement.
Article 13 (Cancellation Before the Maturity)
If cancellation of the Agreement is required before the maturity as provided in
Article 2 hereof, either the Lessor or the Lessee shall give an advance notice
to the other party six months prior to the cancellation date at the latest. Even
if the period from the advance notice to the cancellation is less than six
months, the Lessee may cancel the Agreement by paying the rent that covers the
period from the next day of the advance notice to the cancellation date and
other fees as provided in Article 3, and the immediate cancellation penalty
which consists of the balance to the rent for six months.
Article 14 (Deposit and Guaranty Money)
14.1 To secure a payment for the liability under the Agreement, the Lessee
shall deposit the amount of 16,017,000.-Yen which is equivalent to the rent for
six months to the Lessor at the time of conclusion of this Agreement and the
amount of 16,017,000.-Yen to the Lessor as a guaranty money no later than the
previous day of the start of lease. If the rent is increased, the Lessee shall
deposit the balance separately in addition to the initial deposit and guaranty
money. Provided however that, the Lessor shall not pay the interests for the
deposit and guaranty money.
14.2 The deposit and guaranty money may be used as a mortgage for other
lease agreement between the Lessor and the Lessee if any and also for the
liability against the Lessor and Mitsubishi Jisho Building Management Yokohama
Co., Ltd. in accordance with the contract of furnishings and repair work of the
room and other rooms to let.
14.3 If the Lessee is liable for the rent in arrears, the compensation for
damage, the payment in accordance with the Agreement or other agreements, or the
payment based on the contract with the Lessor and Mitsubishi Jisho Building
Management Yokohama Co., Ltd. for the furnishings and repair work, the Lessor
shall be able to apply the above-mentioned deposit or guaranty money for the
above-mentioned purposes without any notification.
<PAGE>
14.4 If the case as provided in Item 14.3 arises, the Lessee shall fill the
deposition and guaranty money within 10 days after the receipt of the notice.
14.5 The Lessee shall not claim the offset to the total liabilities with
the deposit and guaranty money.
14.6 In case the Agreement is concluded, resolved, or canceled, and the
Lessee completely clears out of the room to let, the deposit and guaranty money
shall be returned to the Lessee promptly after taking away the amount payable to
the Lessor if any balance is remained.
Article 15 (Prohibition of Transfer or Loan of the Right of Claim of Deposit and
Guaranty Money)
The Lessee shall not transfer or place a mortgage of the claim of deposit and
guaranty money to others.
Article 16 (Cancellation Before the Start of Lease)
16.1 If the Lessee cancels the Agreement for certain reasons after the
conclusion of the Agreement and before the start of lease, the Lessee shall pay
the amount equivalent to the deposit of 16,017,000.-Yen to the Lessor as a
cancellation penalty. In addition, if the Lessor has built the partition walls
and entrances/exits for the Rooms 1402 and 1403 to prepare for the lease to the
Lessee (including the case that the purchase order has already made to the
subcontractor), the Lessee shall pay the construction expenses.
16.2 If the case as provided in Item 16.3 occurs, the Lessor may
appropriate the deposit money received from the Lessee at the time of conclusion
of this Agreement for the cancellation penalty and shall not return the deposit
to the Lessee.
Article 17 (Liability Arrears Damages)
If the Lessee is in arrears for the payment of liability such as rent and other
charges pursuant to the Agreement, the Lessor may claim damages for delayed
payment at the annual rate of 18.25% to the Lessee. Even if the Lessee has paid
the liability in arrears to the Lessor, the Lessor shall not be precluded from
executing the right to cancel the Agreement pursuant to Article 19 hereof.
Article 18 (Conformance to Detailed Building Facility Rules)
The Lessee shall conform to the Queens Tower Building A Detailed Facility Rules
attached herewith (inclusive of the rules modified by the Lessor.)
Article 19 (Rescission of Lease Agreement)
19.1 If either the Lessor or the Lessee acts contrary to the Agreement, the
other party may rescind the Agreement after giving a certain period of
peremptory notice.
19.2 If the Lessor rescinds the Agreement for the reason of the Lessee's
infringement hereof, the Lessee shall pay a penalty equivalent to the rent for
six months to the Lessor. Provided however that, the Lessor shall not be
precluded from claiming the damage caused by rescission of the Agreement or
delayed vacation of the room to let.
<PAGE>
Article 20 (Force Majeure)
If all or part of the building is lost or destroyed due to an event of force
majeure or any other cause beyond the control of the party affected, either
party may terminate the Agreement by notifying the other party in writing.
Article 21 (Vacation of the Room to Let)
21.1 If the Lessee does not vacate the room to let at the same time with
the maturity of the Agreement, the Lessee shall pay to the Lessor the
compensation for damages which is double the rent for the period from the
following day of the maturity of the Agreement until the completion of vacation,
plus utilities charges including, but not limited to, electricity and water
rates. The Lessee shall compensate for damage if the delay of surrender has
caused the Lessor a damage.
21.2 The Lessee shall remove furnishings and equipment which the Lessee has
newly established or added by the expense of the Lessee and repair any
modification, corruption, and damage to the room to let, furnishings, and
facility, perform coating and replacement of walls, ceilings, and floor
finishing materials, returning the state of the room to let to its original
state before evacuating them to the Lessor. The Lessee shall submit the
restitution memoranda on the issue to the Lessor.
21.3 The construction for restitution as provided in Article 20, Item 20.2
shall be conducted by the Lessor, and the expenses for the construction shall be
paid by The lessee. Provided however that, The lessee may arrange the
subcontractor by its own discretion by obtaining the consent of the Lessor in
writing.
21.4 If the Lessee does not remove the articles in the room to let after
the maturity of the Agreement, the Lessor may dispose the articles at its own
discretion. The Lessor may claim the expenses needed for the disposal of the
articles to the Lessee.
21.5 Whatever the conditions or pretexts may be, the Lessee shall not claim
the repayment of the expenses paid for the room to let, furnishings, and
facility or the compensation for removal, eviction, and premium. The Lessee
shall not ask the Lessor to purchase the furnishings and facility which the
Lessee has newly installed or added.
Article22 (Agent)
The Lessor shall entrust the agent as designated herein with full powers in
relation to the Agreement, and the Lessee shall execute any actions to the
Lessor through the designated agent. Provided however that, the Lessor shall not
be precluded from directly exercising the rights to the Lessee.
Article 23 (Confidentiality)
The parties shall take sufficient measures to keep in strict confidence all of
the contents rendered hereunder and shall not disclose any of them to any third
party, Provided however that, this obligation of confidentiality shall not apply
to the legal obligation of disclosure of information.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in duplicate, by its duly authorized officer or representative as of
the date first above written.
Lessor: Mitsubishi Jisho Co., Ltd.
2-7-3 Marunouchi, Chiyoda-ku, Tokyo
Takeshi Fukuzawa, President and CEO
/s/Takeshi Fukuzawa
-----------------------------------
Takeshi Fukuzawa, President and CEO
Agent: Mitsubishi Jisho Building Management Yokohama, Co., Ltd.
2-2-1 Minato Mirai, Nishi-ku, Yokohama-shi, Kanagawa-pref.
Takeyuki Ohnishi, President and CEO
Authorized Land and Building Dealer
(Tokyo) No.66783
Hajime Kumakura
Lessee: Helix Technology, K.K.
2-1-1 Minato Mirai, Nishi-ku, Yokohama-shi,
Yoshiko Nishio, President and CEO
/s/Keiko Nishio
-----------------------------------
Keiko Nishio, President
<PAGE>
QUEENS TOWER - A
DETAILED FACILITIES RULES
I. General Information
1. Building Opening/Closing Time
Opening Closing Gateway used during closure
----------- ----------- -----------------------------------
Entrances/exits 8:00 a.m. 10:00 p.m. 1F Tower-A gate way
1F Landmark tower side exit
(22:00 p.m. to midnight)
The opening/closing time may be changed due to building management
circumstances.
2. Air Conditioning Service
Weekdays Saturdays, Sundays, Holidays
------------- ------------------------------------
8:30 a.m. to 7:00 p.m. Closed
Air conditioning service will be provided during the time shown above. The time
for service may be shortened to save energy.
3. Elevators
Weekdays Saturdays, Sundays, Holidays
------------- ------------------------------------
Passengers Operated all day
Cargoes 8:00 a.m. to 22:00 p.m. Stopped
Elevators will be operated as shown in the table above. Elevator operations time
and system may be changed due to building management circumstances.
4. Hot Water Supply
Weekdays Saturdays, Sundays, Holidays
------------- ------------------------------------
8:00 a.m. to 7:00 p.m. Closed
Hot water will be supplied to the hot water station located on every floor as
shown above.
5. Window Cleaning
The Building Management Office (Mitsubishi Jisho Building Management Yokohama)
will clean the windows on the outside once a month.
<PAGE>
6. Mail Delivery
Normal mail will be delivered to the mailbox located on the 1st floor.
7. No Power Supply Day (Building Closure Day)
A Sunday during the period from February 20th to 26th every year, 9 a.m. to 6
p.m. The "No Power Supply Day" is established for legal inspection of electric
facilities. Power cut may occur at a certain occasion for the construction of
electric facility. A notice will be delivered in advance when the construction
is to be implemented.
II. Detailed Rules
1. Preservation and Maintenance of Building
1) Take good care to keep the building and its facilities in good
condition.
2) Contact the Building Management Office as soon as any damage or failure
is found.
3) The floor loading limit is 500kg/m2. Contact the Building Management
Office for consultation in advance when executing the installation and moving of
heavy objects such as a safe and movable racks.
4) Obtain a prior approval from the Building Management Office when
modification of the building layout is planned including repair or rearrangement
of furnishings, or installation of new furniture. The Building Management Office
will perform all construction work which can affect the building structure,
power/water supply, drainage, and air conditioning works.
5) It is stipulated by law that all electric facilities are under the
supervision and maintenance of the Queen's Square Yokohama chief electrical
engineers. The lessee shall designate the personnel in charge of handling
electric appliances at all times and implement periodical inspection and
maintenance for special electric appliances. The inspection results shall be
submitted to the Building Management Office in writing.
6) As the capacity for electric appliances is limited, contact the Building
Management Office in advance when using large electric appliances.
7) It is unavoidable to perform constructions which may cause inconvenience
to the lessee. Your cooperation is highly appreciated during construction.
2. General Rules
1) Obtain a prior approval from the Building Management Office when showing
the Company name or other information on the door of the room to let.
2) No posting of bills and writing on the windows, space, and walls of
common use.
3) When leaving the articles on the space of common use such as a corridor,
DO NOT cause a nuisance to the surrounding area including, but not limited to,
the generation of noise, odor, or oscillation.
4) Do NOT install the telephone under disguised ownership.
5) Delivery of baggage shall be made from the baggage delivery station
located on the 2nd basement. The height of the delivery truck must be less than
3m, and the use of the baggage delivery station must be completed within 30
minutes. Do NOT use the main entrance, other entrances and exits, and the
elevators for visitors for baggage delivery. Please be sure to tell these rules
to all suppliers concerned.
<PAGE>
6) Parking is NOT allowed in the surrounding area of the building. Do NOT
park on the road.
7) When the ambulance is called, contact the Tower - A Operation Center
(ext.#5000) about the call, too.
3. Hygiene and Cleaning
1) The cleaning of the room to let shall be conducted either by the lessee
themselves or the authorized vendor.
2) To keep the floor carpets of the inner office and corridors clean,
contact the cleaning vendor mentioned above immediately after finding any stains
or damages. Telecommunication cables and power lines are wired under the floor.
Contact the Building Management Office immediately when the damage by water is
concerned.
3) Dump used tea leaves and cigarette buds in the container equipped in the
hot water station.
4) Dusts and waste paper must be disposed of separately into the dedicated
container.
5) Insect and rat poisoning will be performed by the authorized vendor on a
regular basis.
6) Bulky waste must be disposed of by the lessee themselves.
4. Prevention of Crimes and Guarding
1) Always take good care for prevention of theft, burglary, or robbery.
Contact both the police (Dial #0110) and the Tower - A Operation Center
immediately after finding the theft, burglary, or robbery.
2) Consult the Building Management Office in advance when hiring the
guard(s).
3) Take good care when handling the key. Before you leave the office, make
sure that the office is locked. Be sure to keep the key in the key deposit
system and do not carry the key outside of the building. if the key is lost,
contact the Building Management Office immediately.
4) The IC card is as important as a key. If you have lost the IC card,
contact the Building Management Office immediately. Conform to the IC Card
Guideline for the use of the card.
5) Please refrain from staying overnight in the building. If overnight stay
is necessary, consult the matter with the Building Management Office in advance.
6) If you find someone or something suspicious, contact the Tower - A
Operation Center immediately.
5. Fire Prevention
1) Designate the fire prevention manager, fire prevention specialist, and
fire prevention inspector, and always take good care for the prevention of fire.
If a fire is detected, call the fire department (Dial #0119), and contact the
Tower - A Operation Center. The appointment and alteration of the fire
prevention specialist, fire prevention manager, and fire prevention inspector
must be reported to the Building Management Office.
2) Ensure that everyone is aware of the location and usage of the
communication equipment (e.g. emergency phone), fire extinguishing equipment
(e.g. fire extinguisher, fire sprinkler), and evacuation facility (e.g. stairs,
emergency exits). Do NOT leave the articles near the fire prevention equipment
such as water sprinklers, emergency exits, and fire doors as those can hinder
the fire fighting activities.
3) A required number of fire extinguishers are equipped in the room to let.
<PAGE>
4) Throw cigarette buds in the dedicated container equipped in the hot
water station.
5) Do NOT bring hazardous objects into the building. Do NOT use the
equipment which can catch afire.
6) Leave the office after confirming the safety of the room.
III. Emergency
Fill in the form of emergency list of where to make contact and submit it to the
Tower-A Operation Center. All modifications must be notified without fall.
IV. Room Visiting by Staff Members
The building management staff may enter into the room as required from the
management point of view. A notice will be given later on.
V. IC Cards
Conform to the IC Card Guideline for the use of IC cards.
VI. Information Terminals
Conform to the Information Terminal Guideline to be separately provided for the
use of the information terminal on lease.
The contents of the Detailed Facility Rules may be changed due to building
management circumstances. Please be sure to observe the updated rules as well.
Everyone must be aware of the above-mentioned rules.
Mitsubishi Jisho Building Management Yokohama Co., Ltd.
Basic Plan Document # 05
Plan # 002
IRS Letter Serial No.: D363689a
PRISM PROTOTYPE RETIREMENT PLAN & TRUST
Section 401(k) Profit Sharing Plan
(Nonstandardized)
Adoption Agreement <F1>
The Employer <F2>, designated below, hereby establishes a profit-sharing plan
(optionally including a cash or deferred arrangement (as defined in Section
401(k) of the Internal Revenue Code)) for all Eligible Employees as defined in
this Adoption Agreement pursuant to the terms of the PRISM Prototype Retirement
Plan & Trust Basic Plan Document # 05.
A. Employer Information:
1. Name: Helix Technology Corporation
2. Address: Nine Hampshire Street
3. Address: Mansfield, MA 02048
4. Attention: Joseph Giorgio Telephone: 508-337-5664
5. Employer Taxpayer Identification Number <F3>: 04-2423640
B. Basic Plan Provisions:
1. Plan Name (select one):
a. ___ This plan is established effective , 19, (the "Effective Date")
as a profit sharing plan and trust (optionally with a "cash or deferred
arrangement" as defined in Code Section 401(k)) to be known as Plan and Trust
(the "Plan") in the form of the PRISM Prototype Retirement Plan & Trust.
(PRISM is a registered trademark.)
<PAGE>
b. X This plan is an amendment and restatement in the form of the
PRISM Prototype Retirement Plan & Trust, effective April 1, 1998, (the
"Effective Date") of the Helix Technology Corporation Employee Savings Plan and
Trust (the "Plan"), originally effective as of January 1, 1979 (the "Original
Effective Date").
2. Employer's Three Digit Plan Number: 001
3. Committee Members <F4>: Michael El-Hillow, Chairman; Michael
Eacobacci, Gregory Knox, Charles Chappell, and Joseph Giorgio, Members
4. Definitions:
a. Compensation for allocation purposes:
i Will be determined over the following applicable period
(select only one):
(a) X the Plan Year
(b) ___ the period of Plan participation
during the Plan Year
(c) ___ a consecutive 12 month period
commencing on and ending with, or within, the Plan Year.
ii X If selected, Compensation will include Employer
contributions made pursuant to a Salary Reduction Agreement, or other
arrangement, which are not includible in the gross income of the Employee under
Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Internal Revenue Code.
iii Shall not include (select as many as desired):
(a) ___ Bonuses
(b) ___ Commissions
(c) ___ Taxable fringe benefits identified below:
(d) ___ Other items of remuneration identified
below:
iv Shall be limited to $ , which shall be the maximum
amount of compensation considered for plan allocation purposes (but not for
testing purposes), and may not be an amount in excess of the Internal Revenue
Code Section 401(a)(17) limit in effect for the Plan Year <F5>. If no amount is
<PAGE>
specified, Compensation shall be limited to the Internal Revenue Code Section
401(a)(17) amount, as adjusted by the Secretary of the Treasury from time to
time.
b. Early Retirement Date:
i ___ is not applicable to this Plan
ii X is the latter of the date on which the
Participant attains age 55 (not less than 55) and the date on which the
Participant completes 10 Years of Service.
c. Hour of Service shall be determined on the basis of the
method selected below. Only one method may be selected. The method shall be
applied to all Employees covered under the Plan as follows (select only one):
i X On the basis of actual hours for which an
Employee is paid, or entitled to be paid.
ii ___ On the basis of days worked. An Employee shall
be credited with ten (10) Hours of Service if under Section 1.1(U) of the Plan
such Employee would be credited with at least one (1) Hour of Service during the
day.
iii ___ On the basis of weeks worked. An
Employee shall be credited with forty-five (45) Hours of Service if under
Section 1.1(U) of the Plan such Employee would be credited with at least one (1)
Hour of Service during the week.
iv ___ On the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five (95) Hours of Service if under
Section 1.1(U) of the Plan such Employee would be credited with at least one (1)
Hour of Service during the semi-monthly payroll period.
v ___ On the basis of months worked. An Employee shall
be credited with one hundred ninety (190) Hours of Service if under Section
1.1(U) of the Plan such Employee would be credited with at least one (1) Hour of
Service during the month.
d. Limitation Year shall mean the 12 month period commencing on
January 1 and ending on December 31.
<PAGE>
e. Normal Retirement Date for each Participant shall mean (select
one):
i X the date the Participant attains age: 65 (not to
exceed 65)
ii ___ the latter of the date the Participant attains
age (not to exceed 65) or the (not to exceed 5th) anniversary of the
participation commencement date. If for the Plan Years beginning before January
1, 1988, Normal Retirement Date was determined with reference to the anniversary
of the participation commencement date (more than 5 but not to exceed 10 years),
the anniversary date for Participants who first commenced participation under
the Plan before the first Plan Year beginning on or after January 1, 1988 shall
be the earlier of (A) the tenth anniversary of the date the Participant
commenced participation in the Plan (or such anniversary as had been elected by
the employer, if less than 10) or (B) the fifth anniversary of the first day of
the first Plan Year beginning on or after January 1, 1988. Notwithstanding any
other provisions of the Plan, the participant commencement date is the first day
of the first Plan Year in which the Participant commenced participation in the
Plan.
f. Permitted Disparity Level, for purposes of allocating
Employer Contributions, shall mean (select only one):
i X Not applicable - the Plan does not use permitted
disparity.
ii ___ The Taxable Wage Base, which is the contribution
and benefit base under section 230 of the Social Security Act at the beginning
of the year.
iii ___ % (not greater than 100%) of the Taxable
Wage Base as defined in B(4)(f)(ii) above.
iv ___ $ , provided that the amount does not exceed the
Taxable Wage Base as defined in B(4)(f)(ii) above.
g. Plan Year shall mean (select and complete only one of the
following):
i ___ the 12-consecutive month period which coincides
with the Limitation Year. The first Plan Year shall be the period commencing on
the Effective Date and ending on the last day of the Limitation Year.
ii ___ the 12-consecutive month period commencing on,
19, and each annual anniversary thereof.
iii X the calendar year (January 1 through
December 31).
h. Qualified Distribution Date, for purposes of making
distributions under the provisions of a Qualified Domestic Relations Order (as
defined in Internal Revenue Code Section 414(p)), X shall ___ shall not be the
date the order is determined to be qualified. If shall is selected, the
<PAGE>
Alternate Payee will be entitled to an immediate distribution of benefits as
directed by the Qualified Domestic Relations Order. If shall not is selected,
the Alternate Payee may only take a distribution on the earliest date that the
Participant is entitled to a distribution.
i. Spouse:
___ If selected, Spouse shall mean only that person who
has actually been the Participant's spouse for at least one year.
j. Year of Service shall mean:
i For eligibility purposes (select one of the following):
(a) ___ the 12 consecutive months during
which an Employee is credited with (not more than 1000) Hours of Service.
(b) X a Period of Service (using the elapsed
time method of counting Service, as described in Section 1.1(N)(3) of the Plan).
ii For allocation accrual purposes (select one of the
following):
(a) ___ the 12 consecutive months during
which an
Employee is credited with (not more than
1000) Hours of Service.
(b) X a Period of Service (using the elapsed
time method of counting Service, as described in Section 1.1(N)(3) of the Plan).
iii For vesting service purposes (select one of the
following):
(a) ___ the 12 consecutive months during
which an Employee is credited with (not more than 1000) Hours of Service.
(b) X a Period of Service (using the elapsed time
method of counting Service, as described in Section 1.1(N)(3) of the Plan).
iv For purpose of computing Years of Service in plans
where Year of Service is defined in terms of Hours of Service), the consecutive
12 month period shall be:
(a) For eligibility purposes, the first Year of
Service shall be computed using the 12 month period commencing on the Employee's
date of hire and ending on the first annual anniversary of the Employee's date
of hire (the "Initial Computation Period"). In the event an employee does not
<PAGE>
complete an eligibility Year of Service during this initial computation period,
the computation period shall be (select only one):
(1) X the period commencing on each annual
anniversary of the Employee's date of hire and ending on the next annual
anniversary of the Employee's date of hire.
(2) ___ the Plan Year, commencing with the
Plan Year in which the Initial Computation Period ends.
(b) For vesting purposes, Years of Service shall be
computed on the basis of:
(1) X the period commencing on each annual
anniversary of the Employee's date of hire and ending on the next annual
anniversary of the Employee's date of hire.
(2) ___ the Plan Year, commencing with the
first Plan Year an Employee completes an Hour of Service.
(c) For allocation accrual purposes, Year of Service
shall be computed on the basis of the Plan Year.
v ___ For eligibility purposes, Years of Service with
the following Predecessor Employers shall count in fulfilling the eligibility
requirements for this Plan:
vi ___ For vesting purposes, Years of Service with
the following Predecessor Employers shall count for purposes of determining the
nonforfeitable amount of a Participant's account:
5. Coverage:
This Plan is extended by the Employer to the following Employees
who have met the eligibility requirements (select as many as appropriate):
i ___ All Employees
ii ___ Salaried Employees
iii ___ Sales Employees
iv ___ Hourly Employees
v ___ Leased Employees
vi ___ All Employees except (select as applicable):
(a) X those who are members of a unit
of Employees covered by a collective bargaining agreement between the Employer
and Employee representatives, if retirement benefits were the subject of good
faith bargaining and if two percent or less of the Employees who are covered
pursuant to that agreement are professionals as defined in Section 1.410(b)-9 of
the Regulations. For this purpose, the term "Employee representative" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer.
<PAGE>
(b) ___ those who are nonresident
aliens (within the meaning of Internal Revenue Code Section 7701(b)(1)(B)) and
who receive no earned income (within the meaning of Internal Revenue Code
Section 911(d)(2)) from the Employer which constitutes income from sources
within the United States (within the meaning of Internal Revenue Code Section
861(a)(3)).
vii ___ Union Employees (who are members of the
following unions or union affiliates:
viii ___ Other Employees, described as follows:
6. Eligibility:
An Employee covered by the Plan may become a Participant upon
completion of the following eligibility requirements:
a. Service <F6>:
i ___ There shall be no minimum service requirement for
an Employee to become a Participant.
ii X The Employee must complete 1 Year of Service
(not more than 2 years) to be a Participant for purposes of receiving
allocations of Employer Profit Sharing Contributions.
b. Age:
i X There shall be no minimum age requirement for an
Employee to become a Participant.
ii ___ The Employee must attain age (not more than
21) to be a Participant in the Plan.
<PAGE>
c. Waiver of Age and Service Requirements:
i ___ Notwithstanding the provisions of Items B(6)(a)
and (b), Employees who have not satisfied the age and service requirements, but
would otherwise be eligible to participate in the plan, shall be eligible to
participate on the Effective Date.
ii ___ For new Plans, notwithstanding the provisions
of Items B(6)(a) and (b), Employees who have not satisfied the age and service
requirements, but would otherwise be eligible to participate in the plan, shall
be eligible to participate on the Effective Date.
d. Entry Dates:
Upon completion of the eligibility requirements, an
Employee shall commence participation in the Plan (select only one):
i X As soon as practicable under the payroll practices
utilized by the Employer, and consistently applied to all Employees, or if
earlier, the first day of the Plan Year <F7>.
ii ___ As of the first day of the month following the
completion of the eligibility requirements.
iii ___ As of the earliest of the first day of the
Plan Year, fourth, seventh or tenth month of the Plan Year next following
completion of the eligibility requirements.
iv ___ As of the earliest of the first day of the Plan
Year or seventh month of the Plan Year next following completion of the
eligibility requirements.
v ___ As of the first day of the Plan Year next
following completion of the eligibility requirements (may only be selected if
the eligibility year of service requirement is 6 months or less).
7. Vesting:
a. The percentage of a Participant's Employer Contribution
Account (attributable to Employer Profit Sharing Contributions) to be vested in
<PAGE>
him or her upon termination of employment prior to attainment of the Plan's
Normal Retirement Date shall be <F8>:
Completed Years of Service
1 2 3 4 5 6 7
i ___ 100%
ii ___ 100%
iii ___ 20% 40% 60% 80% 100%
iv ___ 20% 40% 60% 80% 100%
v ___ 10% 20% 30% 40% 60% 80% 100%
vi X 0% 50% 75% 100% 100%
vii ___ 100%
vii ___Full and immediate vesting upon entry into the
Plan <F9>
Notwithstanding anything to the contrary in the Plan, the amount inserted in the
blanks above shall not exceed the limits specified in Code Section 411(a)(2).
b. For purposes of computing a Participant's vested account
balance, Years of Service for vesting purposes X shall ___ shall not include
Years of Service before the Employer maintained this Plan or any predecessor
plan, and X shall ___ shall not include Years of Service before the Employee
attained age 18.
c. Notwithstanding the provisions of this Item B(7)(c) of
the Adoption Agreement, a Participant shall become fully vested in his
Participant's Employer Contribution if: <F10>
i ___ the Participant's job is eliminated without the
Participant being offered a comparable position elsewhere with the Employer.
ii ___ for such reason as is described below:
8. Employer Profit Sharing Contributions:
a. Contributions:
i X In its discretion, the Employer may contribute
Employer Profit Sharing Contributions to the Plan.
<PAGE>
ii ___ The Employer shall contribute Employer Profit
Sharing Contributions to the Plan in the amount of % of the Compensation of all
Eligible Participants under the Plan.
iii X If selected, the Employer may make
Employer Profit Sharing Contributions without regard to current or accumulated
Net Profits of the Employer for the taxable year ending with, or within the Plan
Year.
iv X If selected, the Employer may designate all or
any part of the Employer Profit Sharing Contributions as Qualified Nonelective
Contributions, provided, however, that contributions so designated will be
subject to the same vesting, distribution, and withdrawal restrictions as Before
Tax Contributions <F11>.
b. Allocations:
Employer Profit Sharing Contributions shall be allocated to
the accounts of eligible Participants according to the following selected
allocation formula:
i X The Employer Profit Sharing Contributions shall
be allocated to each eligible Participant's account in the ratio which the
Participant's Compensation bears to the Compensation of all eligible
Participants. Employer Profit Sharing Plan Contributions, shall be allocated to
the accounts of Participants who have completed a Year of Service <F12> (select
one):
(a) ___ as of the last day of the month
preceding the month in which the contribution was made.
(b) ___ as of the last day of the Plan
quarter preceding the quarter in which the contribution was made.
(c) X as of the last day of the Plan
Year.
ii ___ The Employer Profit Sharing Contributions shall
be allocated in accordance with the following formula:
(a) If the Plan is Top-Heavy, the contribution
shall be first credited to each eligible Participant's Account in the ratio
which the Participant's Compensation bears to the total Compensation of all
eligible Participants, up to 3% of each Participant's Compensation.
<PAGE>
(b) If the Plan is Top-Heavy, any Employer
Profit Sharing Contribution remaining after the allocation in (a) above shall be
credited to each eligible Participant's account in the ratio which the
Participant's Excess Compensation <F13> bears to the total Excess Compensation
of all eligible Participants, up to 3% of each eligible Participant's Excess
Compensation.
(c) Any contributions remaining after the
allocation in (b) above shall be credited to each eligible Participant's account
in the ratio which the sum of the Participant's total Compensation and Excess
Compensation bears to the sum of the total Compensation and Excess Compensation
of all eligible Participants, up to an amount equal to the maximum Excess
Percentage times the sum of the Participant's Compensation and Excess
Compensation. If the Plan is Top-Heavy, the maximum Excess Percentage is N/A%
(insert percentage). If the Plan is not Top-Heavy, the maximum Excess Percentage
is N/A% (insert percentage, which shall not exceed the prior Excess Percentage
limitation specified by more than 3).
Note: If the Permitted Disparity Level defined at
Item B(4)(f) is the Taxable Wage Base (which is the contribution and benefit
base under section 230 of the Social Security Act at the beginning of the year),
then the maximum Excess Percentage should be 2.7% if the Plan is Top-Heavy and
5.7% if the Plan is not Top-Heavy.
If the Permitted Disparity Level defined at
Item B(4)(f) is greater than 80% but less than 100% of the Taxable Wage Base,
then the maximum Excess Percentage should be 2.4% if the Plan is Top-Heavy and
5.4% if the Plan is not Top-Heavy.
If the Permitted Disparity Level defined at
Item B(4)(f) is greater than the greater of $10,000 or 20% of the Taxable Wage
Base, but not more than 80%, then the maximum Excess Percentage should be 1.3%
if the Plan is Top-Heavy and 4.3% if the Plan is not Top-Heavy.
<PAGE>
(d) Any remaining Employer Profit Sharing
Contribution shall be allocated among eligible Participants' accounts in the
ratio which the Participant's Compensation bears to the total Compensation of
all Participants.
iii ___ If selected, and the Employer has elected
to allocate Employer Profit Sharing Plan Contributions as of the last day of the
Plan Year, a Participant must be employed by the Employer on the last day of the
Plan Year in order to receive an allocation <F14>.
iv ___ A Participant who terminates before the end of
the period for which contributions are allocated shall share in the allocation
of Employer Profit Sharing Contributions if termination of employment was the
result of (select all that apply):
(a) ___ retirement
(b) ___ disability
(c) ___ death
(d) ___ other, as specified below:
9. Rollover & Transfer Contributions (select one):
a. ___ Subject to policies, applied in a consistent and
nondiscriminatory manner, adopted by the Committee, each Employee, who would
otherwise be eligible to participate in the Plan except that such Employee has
not yet met the eligibility requirements, and each Participant may make a
Rollover Contribution as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4) or 408(d)(3).
b. X Subject to policies, applied in a consistent and
nondiscriminatory manner, adopted by the Committee, each Participant may make a
Rollover Contribution as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4) or 408(d)(3).
c. ___ No Employee shall make Rollover Contributions to the
Plan.
10. Distributions:
a. Distributions Upon Separation from Service:
The Normal Form of Benefit under the Plan shall be a
single lump sum distribution, made X (if selected) as soon as administratively
practical after receipt of a distribution request from a Participant entitled to
a distribution or ___ (if selected) upon the Participant's attainment of the
Plan's Early Retirement Date or the Plan's Normal Retirement Date, whichever is
earlier. See Attached Addendum
<PAGE>
In addition to the Normal Form of Benefit, the
Participant shall be entitled to select from among the following optional forms
of benefit specified by the employer (select as many as apply):
i X Installment payments
ii ___ Such other forms as may be specified below:
b. In-Service Distributions (select as may be appropriate):
i X There shall be no in-service distribution of
Participant account balances derived from Employer Profit Sharing Contributions.
ii ___ Participants may request an in-service
distribution of their account balance attributable to Employer Profit Sharing
Contributions, for the following reasons:
(a) ___ For purposes of satisfying
a financial hardship, as determined in accordance with the uniform
nondiscriminatory policy of the Committee;
(b) ___ Attainment of age 59 1/2 by the
Participant; or
(c) ___ Attainment of the Plan's Normal
Retirement Date by the Participant.
11. Forfeitures:
a. Forfeitures of amounts attributable to Employer Profit
Sharing Contributions shall be reallocated as of:
i X the last day of the Plan Year in which the
Forfeiture occurred.
ii ___ the last day of the Plan Year following the
Plan Year in which the Forfeiture occurred.
iii ___ the last day of the Plan Year in which the
Participant suffering the Forfeiture has incurred five consecutive One Year
Breaks in Service.
b. Forfeitures of Employer Profit Sharing Contributions shall be
reallocated as follows:
i ___ Not applicable as Employer Profit Sharing
Contributions are always 100% vested and nonforfeitable.
<PAGE>
ii ___ Used first to pay the expenses of administering
the Plan, and then allocated pursuant to one of the following two options <F15>:
iii ___ Forfeitures shall be allocated to
Participant's accounts in the same manner as Employer Profit Sharing
Contributions, Employer Matching Contributions, Qualified Nonelective
Contributions or Qualified Matching Contributions, in the discretion of the
Employer, for the year in which the Forfeiture arose.
iv X Forfeitures shall be applied to reduce the
Employer Profit Sharing Contributions, Employer Matching Contributions,
Qualified Nonelective Contributions or Qualified Matching Contributions, in the
discretion of the Employer, for the Plan Year following the Plan Year in which
the Forfeiture arose.
12. Limitations on Allocations:
If the Employer maintains or ever maintained another qualified
retirement plan in which any Participant in this Plan is (or was) a participant,
or could possibly become a participant, the Employer must complete the
following:
a. If the Participant is covered under another
qualified defined contribution plan maintained by the Employer other than a
Master or Prototype Plan:
i ___ The provisions of this Plan shall apply as if
the other plan were a Master or Prototype plan; or,
ii ___ The following provisions will be effective to
limit the total Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that precludes Employer
discretion:
b. If the Participant is or ever has been a
participant in a qualified defined benefit plan maintained by the Employer, the
following provisions will be effective to satisfy the 1.0 limitation of Internal
Revenue Code Section 415(e), in a manner that precludes Employer discretion:
Contributions to this plan will be reduced first, in the following order: First,
Participant Before Tax Contributions; Second, any Qualified Matching
Contributions; Third, any qualified nonelective contributions; Fourth, any
Employer Matching Contributions; and Finally, any Profit Sharing Contributions.
Contributions will only be reduced to the extent necessary to satisfy the
requirements of Section 415(e) of the Code, and to the extent allowable,amounts
which may be distributed to the Participant to satisfy those requirements will
be refunded.
<PAGE>
13. Internal Revenue Code 411(d)(6) Protected Benefits:
X If selected, the Plan has Internal Revenue Code Section
411(d)(6) Protected Benefits from a prior plan that this Plan amends, that must
be protected. (Attached addendum)
14. Top-Heavy Plan Provisions:
For each Plan Year in which the Plan is a Top-Heavy Plan
the following provisions will apply:
a. The percentage of a Participant's Employer Contribution
Account to be vested in him upon termination of employment prior to retirement
shall be:
i ___ a percentage determined in accordance with
the following schedule:
Years of Service Percentage
Less than two 0
Two but less than three 20
Three but less than four 40
Four but less than five 60
Five but less than six 80
Six or more 100;
ii ___ 100% vesting after (not to exceed 3) Years
of Service; provided, however, that Years of Service may not exceed two (2) if
the service requirement for eligibility exceeds 1 year; or
iii X computed in accordance with the vesting
schedule selected by the Employer in Items B(7)(a) or C(4)(d), as long as the
benefits under the vesting schedule in Items B(7)(a) or C(4)(d) vest at least as
rapidly as the two options specified in this Item B(14)(a), above.
If the vesting schedule under the Plan shifts in or out of
the schedules above for any Plan Year because of the Plan's Top-Heavy status,
such shift is an amendment to the vesting schedule and the election in 2.2 of
the Basic Plan Document applies.
b. For purposes of minimum Top-Heavy allocations,
contributions and forfeitures equal to 3% (not less than 3%) of each Non-key
Employee's Compensation will be allocated to each Participant's Contribution
Account when the Plan is a Top-Heavy Plan, except as otherwise provided in the
Basic Plan Document. This Item 14 will not apply to any Participant to the
extent the Participant is covered under any other plan or plans of the Employer
and the Employer completes the following: (Insert the name of the plan or plans
which will meet the minimum allocation or benefit requirement applicable to
Top-Heavy plans.) Helix Technology Corporation Employees' Pension Plan
<PAGE>
c. The Valuation Date as of which account balances or accrued
benefits are valued for purposes of computing the Top-Heavy Ratio shall be the
last day of each Plan Year.
d. If the Employer maintains or has ever maintained one or
more defined benefit plans which have covered or could cover a Participant in
this Plan, complete the following:
Present Value: For purposes of establishing Present Value to
compute the Top-Heavy Ratio, any benefit shall be discounted only for mortality
and interest based on the following:
Interest rate % Mortality table
15. Investments:
a. Investments made pursuant to the investment direction
provisions of the Basic Plan Document shall be made into any appropriate
Investment Fund as selected by the Employer. In addition, investment of Plan
assets is expressly authorized, as required by Revenue Ruling 81-100, in each of
the following common or collective funds sponsored by the Trustee, or an
affiliate of the Trustee <F16>:
Key Trust EB Managed Guaranteed Income Contract Fund, Key
Trust Multiple Investment Trust for Employee Benefit Trusts, and other
collective trusts exempt from tax under IRC 501 and as described in Rev. Rul.
81-100.
b. X If selected, an Employer Stock Fund shall be
available as an Investment Fund pursuant to the terms of the Basic Plan
Document.
___ If selected, and an Employer Stock Fund is
available as an Investment Fund, Participants will have the right,
notwithstanding any other provisions of the Plan, to direct that a portion of
the Plan assets held for their benefit and invested in the Employer Stock Fund
be diversified pursuant to the provisions of Section 10.7(F) of the Basic Plan
Document.
<PAGE>
c. Participants may make changes of existing account balances
and future contributions from among the Investment Funds offered:
i ___ Once during each business day that the Trustee
and the New York Stock Exchange are open.
ii ___ Once during each calendar month.
iii X Once during each quarter of the Plan Year.
iv ___ Once during each rolling ____ day period.
d. X If selected, the Participant shall be restricted
in making changes of existing account balances from any Investment Fund, as
specified in the terms or conditions of such Investment Fund, and the Employer
shall attach an addendum specifying such restriction.
e. The Participant will designate into which Investment
Funds all contributions to their accounts are made, except the following:
i ___ Employer Profit Sharing Contributions
ii ___ Employer Mandatory Matching Contributions
i X Employer Discretionary Matching Contributions
iv ___ Qualified Matching Contributions
v ___ Qualified Nonelective Contributions
f. X If selected, and to the extent a selection is made
above, the Employer shall attach an Investment Direction Addendum specifying how
the contributions so specified shall be invested among the Investment Fund.
g. X If selected, the Participant shall be restricted in
the use of the Employer Stock Fund as an Investment Fund for designating the
investment of contributions in the Participant's account, as follows:
i X The Participant may not direct the
investment of Plan assets held in their account into the Employer Stock Fund.
ii ___ The Participant may direct % of the
following contributions into the Employer Stock Fund:
(a) ___ Employer Profit Sharing
Contributions
(b) ___ Employer Mandatory Matching
Contributions
(c) ___ Employer Discretionary Matching
Contributions
(d) ___ Qualified Matching Contributions
(e) ___ Qualified Nonelective
Contributions
<PAGE>
iii ___ ____ % of the following contributions
will be invested into the Employer Stock Fund, with the balance invested among:
(a) ___ the other Investment Funds,
including the Employer Stock Fund
(b) ___ the other Investment Funds, not
including the Employer Stock Fund
16. Loans (select one):
a. X Loans may be made from the Plan in accordance with the
Basic Plan Document and such policies and procedures as the Committee may adopt
and apply on a consistent and nondiscriminatory basis <F17>.
b. ___ No loans shall be made from the Plan.
17. Trustee:
The Trustee of this Plan shall be Key Trust Company of Ohio, N.A. (a bank
or trust company affiliated with KeyCorp within the meaning of Internal Revenue
Code 1504).
18. Effective Date Addendum:
___ If selected, the following provisions shall have
the specified effective dates (which are different from the date specified in
Item B(1)):
<PAGE>
C. Section 401(k) Plan Provisions:
1. Service:
An Eligible Employee shall be required to fulfill the following
eligibility service requirements in order to participate in the Plan through a
salary reduction agreement and for purposes of receiving an allocation of
Employer Matching Contributions:
a. X The Employee must complete 1 Year of Service
(not more than 1 year) to be a Participant for purposes of receiving allocations
of Employer Matching Contributions.
b. X The Employee must complete 1 Year of Service
(not more than 1 year) to be a Participant for purposes of entering into a
Salary Reduction Agreement and having Employee Before Tax Contributions or
Employee After Tax Contributions contributed to the Plan on the Employee's
behalf.
2. Employee Salary Deferrals:
a. X Participants shall be entitled to enter into a Salary
Reduction Agreement providing for Before Tax Contributions to be made to the
Plan.
i The minimum Before Tax Contribution shall be
1% of the Participant's Compensation.
ii The maximum Before Tax Contribution shall be
15% of the Participant's Compensation.
b. X Participants shall be entitled to enter into a Salary
Reduction Agreement providing for After Tax Contributions to be made to the
Plan.
i The minimum After Tax Contribution shall be
1% of the Participant's Compensation.
ii The maximum After Tax Contribution shall be
15% of the Participant's Compensation.
iii ___ If selected, notwithstanding the
above, a Participant shall not be able to enter into a Salary Reduction
Agreement providing for After Tax Contributions to be made to the Plan unless
the Participant has entered into a Salary Reduction Agreement that provides for
Before Tax Contributions to be made to the Plan in an amount of at least % of
the Participant's Compensation.
<PAGE>
c. X If selected, a Participant shall be entitled to enter
into a Salary Reduction Agreement providing that any extraordinary item of
compensation, not yet payable (including bonuses), be withheld from the
Participant's Compensation and contributed to the Plan as either a Before Tax
Contribution, or After Tax Contribution (provided such contributions are
authorized above, and to the extent that such contribution, when aggregated with
either the Participants other Before Tax Contributions or After Tax
Contributions do not exceed the limitations specified above, on an annual
basis).
3. Contribution Changes:
a. Participants may increase or decrease the amount of
contributions made to the Plan pursuant to a Salary Reduction Agreement once
each:
i ___ Plan Year
ii ___ Semi-annual period, based on the Plan Year
iii X Quarter, based on the Plan Year
iv ___ Month
v ___ Other, as specified below (provided that it
is at least once per year):
b. Claims for returns of Excess Before Tax Contributions
for the Participant's preceding taxable year must be made in writing, and
submitted to the Committee by April 15 (specify a date between March 1 and April
15).
<F18>
4. Employer Matching Contributions <F19>:
a. Mandatory Matching Contributions:
The Employer shall make contributions to the Plan, in an
amount as specified below:
i X An amount, equal to 50% of each Participant's
Before Tax Contributions, however, no match shall be made on Participant's
Before Tax Contributions in excess of 3% (or $ ) of the Participant's
Compensation.
ii ___ An amount, equal to % of each Participant's
After Tax Contributions, but not to exceed % of the Participant's Compensation,
or $ .
<PAGE>
iii ___ An amount, equal to % of each
Participant's contributions made pursuant to a Salary Reduction Agreement
(including both Before Tax Contributions and After Tax Contributions), but only
if the Participant has entered into a Salary Reduction Agreement providing for
Before Tax Contributions of at least % of the Participant's Compensation, but
not to exceed % of the Participant's Compensation, or $ .
iv ___ An amount equal to the sum of the following:
(a) % of the first % of the
Participant's Compensation deferred pursuant to a Salary Reduction Agreement;
plus,
(b) % of the next % of the
Participant's Compensation deferred pursuant to a Salary Reduction Agreement;
plus,
(c) % of the next % of the
Participant's Compensation deferred pursuant to a Salary Reduction Agreement,
but not to exceed % of the Participant's Compensation, or $ .
v ___ An amount equal to $ , for each Participant who
enters into a Salary Reduction Agreement providing for ___ Before Tax
Contributions, ___ After Tax Contributions, or ___ either Before Tax
Contributions or After Tax Contributions (or a combination of both) equal to or
exceeding % of the Participant's Compensation. Such contributions shall be made
and allocated:
(a) ___ only during the first Plan Year
the Plan is in effect, or if a restatement, for the first Plan Year beginning
with, or containing the restatement Effective Date.
(b) ___ each Plan Year that a
Participant has in force a Salary Reduction Agreement meeting the criteria
specified above.
(c) ___ during the first Plan Year
that the Participant participates through a Salary Reduction Agreement meeting
the criteria specified above.
b. Discretionary Matching Contributions:
X The Employer shall make contributions to the Plan,
in an amount determined by resolution of the Board of Directors on an annual
basis. The Board resolution shall provide for the percentage and/or amount of
Before Tax Contributions and/or After Tax Contributions to be matched and the
maximum percentage and/or amount of Before Tax Contributions and/or After Tax
Contributions eligible for matching.
<PAGE>
c. Allocation of Matching Contributions:
Employer Matching Contributions shall be allocated pursuant
to the terms of the Basic Plan Document, notwithstanding the foregoing:
i ___ A Participant who terminates before the end of
the period for which contributions are allocated shall share in the allocation
of Employer Matching Contributions if termination of employment was the result
of (select all that apply):
(a) ___ retirement
(b) ___ disability
(c) ___ death
(d) ___ other, as specified below:
ii X Employer Matching Contributions shall be
allocated to the accounts of Participants (select one):
(a) X as of each pay period for
which a contribution was made pursuant to a Salary Reduction Agreement.
(b) ___ semi-monthly.
(c) ___ as of the last day of the month
preceding the month in which the contribution was made.
(d) ___ as of the last day of the
Plan quarter preceding the quarter in which the contribution was made.
(e) ___ as of the last day of the Plan
year.
<PAGE>
iii X If selected, the Employer may make Employer
Matching Contributions without regard to current or accumulated Net Profits of
the Employer for the taxable year ending with, or within the Plan Year <F20>.
d. The percentage of a Participant's Employer Matching
Contribution Account <F21> (attributable to Employer Matching Contributions) to
be vested in him or her upon termination of employment prior to attainment of
the Plan's Normal Retirement Date shall be <F22>:
Completed Years of Service
1 2 3 4 5 6 7
i ___ 100%
ii ___ 100%
iii ___ 20% 40% 60% 80% 100%
iv ___ 20% 40% 60% 80% 100%
v ___ 10% 20% 30% 40% 60% 80% 100%
vi X 0% 50% 75% 100% 100%
vii ___ 100%
vii ___ Full and immediate vesting upon entry into the Plan
Notwithstanding anything to the contrary in the Plan,
the amount inserted in the blanks above shall not exceed the limits specified in
Code 411(a)(2).
e. Notwithstanding the provisions of this Item C(4)(e) of
the Adoption Agreement, a Participant shall become fully vested in his
Participant's Employer Matching Contribution Account if <F23>:
i ___ the Participant's job is eliminated without the
Participant being offered a comparable position elsewhere with the Employer.
ii ___ for such reason as is described below:
f. Corrective Contributions:
i X If selected, the Employer shall be
authorized to make Qualified Matching Contributions, subject to the terms of the
Basic Plan Document, in an amount determined by resolution of the Board of
Directors on an annual basis.
<PAGE>
ii X If selected, the Employer shall be authorized
to make Qualified Nonelective Contributions, subject to the terms of the Basic
Plan Document, in an amount determined by resolution of the Board of Directors
on an annual basis.
5. Gap Earnings:
___ If selected, Gap Earnings, as defined in Section 3.2(G)
(1) of the Basic Plan Document, will be calculated for Excess Elective
Deferrals, Excess Contributions and Excess Aggregate Contributions, and refunded
to the Participant as provided for in Article III of the Basic Plan Document.
6. Forfeitures:
a. Forfeitures of amounts attributable to Employer Matching
Contributions shall be reallocated as of:
i X the last day of the Plan Year in which the
Forfeiture occurred.
ii ___ the last day of the Plan Year following the
Plan Year in which the Forfeiture occurred.
iii___ the last day of the Plan Year in which the
Participant suffering the Forfeiture has incurred the fifth consecutive One Year
Break in Service.
b. Forfeitures of Employer Matching Contributions shall be
reallocated as follows:
i ___ Not applicable as Employer Matching Contributions
are always 100% vested and nonforfeitable.
ii ___ Used first to pay the expenses of administering
the Plan, and then allocated pursuant to one of the following two options:
iii ___ Forfeitures shall be allocated to
Participant's accounts in the same manner as Employer Profit Sharing
Contributions, Employer Matching Contributions, Qualified Nonelective
Contributions or Qualified Matching Contributions, in the discretion of the
Employer, for the year in which the Forfeiture arose.
iv X Forfeitures shall be applied to reduce the
Employer Profit Sharing Contributions, Employer Matching Contributions,
Qualified Nonelective Contributions or Qualified Matching Contributions, in the
discretion of the Employer, for the Plan Year following the Plan Year in which
the Forfeiture arose.
<PAGE>
c. Forfeitures of Excess Aggregate Contributions shall be:
i ___ Applied to reduce Employer contributions for the
Plan Year in which the excess arose, but allocated as below, to the extent the
excess exceeds Employer contributions for the Plan Year, or the Employer has
already contributed for such Plan Year.
ii X Allocated after all other forfeitures under the
Plan:
(a) ___ to the Matching Contribution
account of each Non-highly Compensated Participant who made Before Tax
Contributions or After Tax Contributions in the ratio which each such
Participant's Compensation for the Plan Year bears to the total Compensation of
all such Participants for the Plan Year; or,
(b) X to the Matching Contribution
account of each Non-highly Compensated Eligible Participant in the ratio which
each Eligible Participant's Compensation for the Plan Year bears to the total
Compensation of all Eligible Participants for the Plan Year.
7. In-Service Distributions (select as may be appropriate):
a. ___ There shall be no in-service distribution of
Participant account balances derived from Before Tax Contributions (including
Qualified Nonelective Contributions and Qualified Matching Contributions treated
as Before Tax Contributions under the terms of the Basic Plan Document), or
Employer Matching Contributions.
b. X Participants may request an in-service distribution
of their account balance attributable to Employer Matching Contributions, for
the following reasons: See Attached Addendum
i X For purposes of satisfying a financial
hardship, as determined in accordance with the uniform nondiscriminatory policy
of the Committee;
ii ___ Attainment of age 59 1/2 by the
Participant; or
iii ___ Attainment of the Plan's Normal Retirement
Date by the Participant.
c. X Participants may request an in-service distribution
of their account balance attributable to Employee Before Tax Contributions, for
the following reasons:
<PAGE>
i ___ For purposes of satisfying a financial
hardship, as determined by the facts and circumstances of an Employee's
situation, in accordance with the provisions of Section 3.9 of the Basic Plan
Document;
ii X For purposes of satisfying a financial
hardship, using the "safe harbor" provisions of Section 3.9 of the Basic Plan
Document.
iii X Attainment of age 59 1/2 by the Participant;
or
iv ___ Attainment of the Plan's Normal Retirement
Date by the Participant.
<PAGE>
NOTICE: The adopting Employer may not rely on an opinion letter issued by the
National Office of the Internal Revenue Service as evidence that the Plan is
qualified under the provisions of Section 401 of the Internal Revenue Code. In
order to obtain reliance with respect to the Plan's qualification, the Employer
must apply to the Key District Office of the Internal Revenue Service for a
determination letter.
This Adoption Agreement may only be used in conjunction with Basic Plan Document
# 05.
This Plan document may only be used under the express authority of KeyCorp, its
subsidiaries and affiliates, and is not effective as completed until executed by
a duly authorized officer of KeyCorp, one of its subsidiaries or affiliates, and
approved by KeyCorp's counsel.
KeyCorp, as sponsor, may amend or discontinue this prototype plan document upon
proper notification to all adopting Employers pursuant to Revenue Ruling 89-13.
Failure to properly fill out an Adoption Agreement may result in
disqualification of the Plan, and adverse tax consequences to the Employer and
Plan Participants.
This Plan is sponsored by:
KeyCorp, on behalf of its operating subsidiaries, banking and trust company
affiliates
127 Public Square
Cleveland, Ohio 44114
(800) 982-3811
<PAGE>
In Witness Whereof, the Employer and the Trustee, by their respective duly
authorized officers, have caused this Adoption Agreement to be executed on this
7th day of April, 1998.
Employer: Helix Technology Corporation
By: /s/ Michael El-Hillow
---------------------
Michael El-Hillow
Title: Senior Vice President and CFO
Trustee: Key Trust Company of Ohio, NA
By: /s/Michael Olah
---------------------
Michael Olah
Title: V.P.
and
By: /s/Anthony Feora
----------------------
Anthony Feora
Approved on Behalf of Trustee:
Initials: /s/M.O. Date: 4/7/98
-------
M.O.
Investment Fund Designation
<PAGE>
Helix Technology Corporation (the "Named Fiduciary"), as an independent
fiduciary with respect to the Helix Technology Corporation Employee Savings Plan
& Trust (the "Plan"), an employee pension benefit plan covered by the applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and its employees who participate therein (the "Participants"), hereby
designates the following investment funds from among the investment fund options
available for adopting employers of the PRISM Prototype Retirement Plan & Trust
(as defined in Section 10.7 of the Plan), available for selection by
Participants for the investment of Plan assets held for their benefit:
(a) EB MaGIC Fund
(b) Fidelity ContraFund
(c) Fidelity Magellan Fund
(d) The American Funds Group: American Balanced Fund
(e) The Victory International Growth Fund: Class A
(f) Helix Technology Corporation
(g)
(h)
(i)
(j)
(k)
(l)
(m)
The plan assets are currently invested in the funds more fully described below
(Existing Funds). The Named Fiduciary further designates that assets held in
each of the Existing Funds by the Plan prior to liquidation and transfer to the
Trustee shall be reinvested in the PRISM Fund(s) as specified below:
Existing Funds: PRISM Funds:
(a) (a) EB MaGIC Fund
(b) (b) Fidelity ContraFund
(c) (c) Fidelity Magellan Fund
(d) (d) The American Funds Group: American
Balanced Fund
(e) (e) The Victory International Growth Fund:
Class A
(f) (f) Helix Technology Corporation
(g) (g)
(h) (h)
(i) (i)
(j) (j)
(k) (k)
(l) (l)
(m) (m)
X In addition, if selected, an Employer Stock Fund will also be available.
(EBMaGIC, Fidelity Magellan and The American Funds Group are registered
trademarks.)
<PAGE>
In making the selection of Investment Funds, and in designating the PRISM Funds
into which the liquidated assets from each of the Existing Funds will be
invested in, the Named Fiduciary hereby confirms and acknowledges that:
The Named Fiduciary has had made available to it copies of the prospectuses (to
the extent required under applicable federal securities law and regulation) for
each investment fund available for selection by adopting employers of the PRISM
Prototype Retirement Plan & Trust, and has received copies of each such
prospectus for the Investment Funds selected; The Named Fiduciary acknowledges
that the Trustee of the Plan may receive certain fees for services provide to,
or on behalf of an Investment Fund, or the sponsors or distributors thereof,
pursuant to plans of distribution adopted by the fund under the provisions of
Rule 12b-1 of the Investment Company Act of 1940, and further acknowledges that
(i) such fee, if paid, is appropriate for services rendered to the fund, and
when aggregated with other fees for service payable to the Trustee constitutes
reasonable compensation for the Trustee's services to the Plan; and (ii) the
Plan will be able to redeem its interest in any such Investment Fund on
reasonably short notice without penalty;
The Named Fiduciary further acknowledges that it has selected the Investment
Funds on its determination, after due inquiry, that the Investment Funds are
appropriate vehicles for the investment of Plan assets pursuant to the terms of
the Plan, considering all relevant facts and circumstances, including but not
limited to (i) the investment policy and philosophy of the Named Fiduciary
developed pursuant to ERISA 404; (ii) the ability of Participants, using an
appropriate mix of Investment Funds, to diversify the investment of Plan assets
held for their benefit; and, (iii) the ability of Participants to, utilizing an
appropriate mix of Investment Funds, to structure an investment portfolio within
their account in the Plan with risk and return characteristics within the normal
range of risk and return characteristics for individuals with similar investment
backgrounds, experience and expectations; and,
The Named Fiduciary acknowledges that it has not relied on any representations
or recommendations from the Trustee or any of its employees in selecting the
Investment Funds, or in specifying which of the selected PRISM Funds into which
the liquidated assets from each of the Existing Funds will be invested.
<PAGE>
The Trustee agrees to follow the Named Fiduciary's direction with respect to
offering the Investment Funds available for selection by the Participants in the
Plan for the investment of Plan assets held for their benefit:
In Witness Whereof, the Employer, by its duly authorized representative, has
executed this document in connection with adoption of the Plan utilizing the
PRISM Prototype Retirement Plan & Trust documents, as provided by the Trustee.
Named Fiduciary: Helix Technology Corporation
By: /s/Michael El-Hillow
--------------------
Michael El-Hillow
Title: Senior Vice President and CFO
<PAGE>
<F1> Footnotes in this Adoption Agreement are not to be construed
as part of the Plan provisions but are explanatory only. To the extent a
footnote is inconsistent with the provisions of the Basic Plan Document or
applicable law, the provisions of the Plan shall be construed in conformity with
the Basic Plan Document or law.
<F2> Terms that are capitalized are defined in the PRISM Prototype
Retirement Plan & Trust Basic Plan Document.
<F3> The Plan will have an individual TIN, distinct from the Employer
TIN.
<F4> Committee members direct the day to day operation of the
Plan. Committee members serve at the pleasure of the Employer. See Section 11.4
for changes in Committee membership. If no Committee members are specified, the
Employer shall assume responsibility for the operations of the Plan.
<F5> If no amount is specified, the maximum amount of Compensation
allowed under Code Section 401(a)(17)(the "$150,000 limit" ("$200,000 limit"
prior to the Plan Year beginning before January 1, 1994)), as adjusted from time
to time, shall be used.
<F6> If a fractional year is elected, the elapsed time method of
computing service shall be used for the fractional year. Eligibility provisions
for optional cash or deferred arrangements are contained in Item C of this
Adoption Agreement.
<F7> Notwithstanding the foregoing, an Employee who has met the
eligibility requirements may not enter the Plan later than six months following
the date on which the Employee first completes the eligibility requirements.
<F8> Notwithstanding the selection made in this Item B(7)(a), a
participant shall be fully vested in his or her Employer Contribution Accounts
if the Participant dies or becomes Disabled while in the employ of the Employer.
<F9> If more than one Year of Service is an eligibility requirement,
Item viii must be selected.
<F10> The provisions of this section will be administered by the
Employer on a consistent and nondiscriminatory basis.
<F11> Amounts designated as Qualified Nonelective Contributions will
be allocated pursuant to Section 3.1(A)(14) of the Basic Plan Document.
<F12> In the event contributions are allocated on a basis other than
a full plan year, the Year of Service shall be based on the elapsed time method
of calculation, and a Participant shall be deemed to have completed an
appropriate Period of Service for allocation purposes if the Participant has
completed a pro-rata Period of Service corresponding to the interval on which
contributions are allocated.
<PAGE>
<F13> Excess Compensation means a Participant's Compensation in
excess of the Permitted Disparity Level specified in the Definitions section of
this Adoption Agreement.
<F14> Even if this Item is selected, the provisions of Section 4.8
of the Basic Plan Document may supersede this requirement if necessary to
satisfy Code Sections 401(a)(26) and 410(b).
<F15> If this option is selected, iii or iv must be selected to
reallocate Forfeitures of Employer Profit Sharing Contributions remaining after
expenses of administering the Plan have been paid.
<F16> This Item is for use in identifying collective trust funds,
which, pursuant to Revenue Ruling 81-100 must be specifically referenced in the
Plan. Actual Investment Funds are referenced on the Investment Fund Designation
form attached to this Adoption Agreement.
<F17> If this option is selected, the Employer must establish
appropriate procedures for implementation of the Plan's loan program.
<F18> The date specified is for the refund of amount deferred in
excess of the Code Section 402(g) limit (the $7,000 limit) for the Participant's
taxable year.
<F19> The Employer shall have the right to designate all, or any
portion of Employer Matching Contributions as Qualified Matching Contributions,
which shall then be subject to the same vesting, distribution, and withdrawal
restrictions as Before Tax Contributions.
<F20> Net Profits will never be required for the contribution of
Before Tax Contributions, After Tax Contributions, Qualified Nonelective
Contributions or Qualified Matching Contributions.
<F21> Notwithstanding anything in the Adoption Agreement to the
contrary, amounts in a Participant's account attributable to Before Tax
Contributions, Qualified Nonelective Contributions, and Qualified Matching
Contributions shall be 100% vested and nonforfeitable at all time.
<F22> Notwithstanding the selection made in this item B(7)(b), a
Participant shall be fully vested in his or her Employer Contribution Accounts
if the Participant dies or becomes Disabled while in the employ of the Employer.
<F23> The provisions of this section will be administered by the
Employer on a consistent and nondiscriminatory basis.
<PAGE>
Helix Technology Corporation
Employee Savings Plan & Trust
Addendum
The following items are in explanation or expansion of certain items contained
on the Adoption Agreement or in the Basic Plan Document:
Item B(13): 411(d)(6) Protected Benefits:
Notwithstanding anything in the Plan to the contrary, pursuant to 7.8 of the
Plan, the following are 411(d)(6) protected benefits which shall be preserved in
the Plan and be available as options to the Participants:
Optional Form of Benefit Distribution
In addition to a lump sum payment, Participants' benefit distributions shall be
payable by the purchase of a non-transferable fixed or variable annuity contract
that provides fixed income or fixed period payments.
Withdrawal of Amounts Attributable to After-Tax Contributions and Company
Matching Contributions
A Participant may elect to withdraw all or a portion of the then value of his
Participant Account attributable to his After-Tax Contributions and his vest
Company Matching Contributions as of the Valuation Date coincident with or next
following the date such written request is received by the Benefits Committee;
provided, however, that:
(a) No withdrawal will be permitted unless the amount to be withdrawn
is at least $350 or 100% of the then value of his After-Tax Contributions and
vested Company Matching Contributions if less than $350;
(b) Any withdrawal under this addendum will require a
suspension of the Participant's Before-Tax and After-Tax Contributions for a
period of three months following the effective date of the withdrawal;
(c) In no event will a Participant be permitted to withdraw After-Tax
Contributions or vested Company Matching Contributions held less than two years
except in the event of a hardship (such as an accident, sickness, disability,
education of himself or immediate family, purchase or capital improvement to a
primary residence) approved by the Benefits Committee;
(d) Such request is received 30 days prior to the Valuation Date
unless such advance notice is waived by the Benefits Committee. The amount so
withdrawn shall be paid to the Participant as soon as practicable thereafter;
and
(e) Notwithstanding anything herein to the contrary, any withdrawals
made from a Participant's Account attributable to his After-Tax Contributions
shall be made first from that portion of his Account attributable to his
After-Tax Contributions made prior to January 1, 1987, until all such
contributions have been withdrawn, and then from the portion of his Account
attributable to such contributions made after December 31, 1986. In any event,
withdrawals from a Participant's Account attributable to After-Tax Contributions
and earnings thereon shall be made in a manner in which corresponds with the tax
treatment of the withdrawal under the Code.
<PAGE>
For purposes of this section, the Benefits Committee shall determine in its
sole discretion whether a financial hardship exists to warrant a withdrawal,
and, if such hardship exists, the amount of the withdrawal necessary to meet the
hardship.
All other provisions of the Plan shall be unaffected by this addendum, which
shall be given force and effect only to the extent necessary to preserve
411(d)(6) protected benefits consistent with the provisions of the Code and
regulations issued thereunder.
Item B(15)(b)(i) - Investments Employer Stock Fund:
A Participant will have the right , notwithstanding any other provisions of
the Plan, to direct that all or any portion of the Plan assets held for their
benefit and invested in the Employer Stock Fund be diversified upon attainment
of age 58.
Item B(15)(d) - Investments:
Participants shall be restricted in making changes of existing account balances
attributable to assets held for their benefit and invested in the Employer Stock
Fund.
Item B(15)(f) - Investments:
Employer Discretionary Matching Contributions made on behalf of Plan
Participants will be invested in Employer Stock Fund.
Item C(7)(b) - In - Service Distributions:
Participants will be restricted from receiving an in - service distribution of
their account balance attributable to Employer Discretionary Matching
Contributions.
Exhibit 21. Subsidiaries of the Registrant
Percentage of Voting
Subsidiary Place Organized Securities Owned
Helix Securities
Corporation Massachusetts Wholly owned
CTI-Cryogenics, Inc. Barbados Wholly owned
CTI-Cryogenics Ltd. England Wholly owned
CTI-Cryogenics SA France Wholly owned
CTI-Cryogenics GmbH Germany Wholly owned
Helix Technology KK Japan Wholly owned
Granville-Phillips Company Washington Wholly owned
Exhibit 23. Consent of Experts and Counsel
CONSENT OF INDEPENDENT ACCOUNTANTS
To The Board Of Directors and Stockholders
of Helix Technology Corporation:
We consent to the incorporation by reference in the registration statement
of Helix Technology Corporation on Form S-8 (File No. 2-83974) of our reports
dated January 29, 1999, on our audits of the consolidated financial statements
and financial statement schedules of Helix Technology Corporation as of December
31, 1998 and 1997, and for the years ended December 31, 1998, 1997 and 1996,
which reports are included in this Annual Report on Form 10-K.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 17, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 8,843
<SECURITIES> 18,152
<RECEIVABLES> 10,011
<ALLOWANCES> (228)
<INVENTORY> 14,811
<CURRENT-ASSETS> 57,852
<PP&E> 36,691
<DEPRECIATION> (25,990)
<TOTAL-ASSETS> 75,652
<CURRENT-LIABILITIES> 12,284
<BONDS> 0
0
0
<COMMON> 22,319
<OTHER-SE> 41,049
<TOTAL-LIABILITY-AND-EQUITY> 75,652
<SALES> 95,345
<TOTAL-REVENUES> 95,345
<CGS> 57,373
<TOTAL-COSTS> 42,733
<OTHER-EXPENSES> (2,191)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,570)
<INCOME-TAX> (650)
<INCOME-CONTINUING> (1,920)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,920)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 34,717
<SECURITIES> 3,675
<RECEIVABLES> 18,425
<ALLOWANCES> (240)
<INVENTORY> 15,371
<CURRENT-ASSETS> 77,301
<PP&E> 34,252
<DEPRECIATION> (22,109)
<TOTAL-ASSETS> 96,219
<CURRENT-LIABILITIES> 16,524
<BONDS> 0
0
0
<COMMON> 22,213
<OTHER-SE> 57,482
<TOTAL-LIABILITY-AND-EQUITY> 96,219
<SALES> 157,076
<TOTAL-REVENUES> 157,076
<CGS> 81,325
<TOTAL-COSTS> 42,431
<OTHER-EXPENSES> (3,498)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 36,818
<INCOME-TAX> 11,274
<INCOME-CONTINUING> 25,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,544
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 1.14
</TABLE>
