SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 29, 1996
Commission file number 0-21294
Aseco Corporation
(Exact name of registrant as specified in its charter)
Delaware 04-2816806
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
500 Donald Lynch Boulevard, Marlboro, Massachusetts 01752
(Address of principal executive offices)
(508)481-8896
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days .
Yes X No
---- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of December 29, 1996.
Common Stock, $.01 par value 3,641,300
(Title of each class) (Number of shares)
<PAGE>
ASECO CORPORATION
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets (unaudited)
at December 29, 1996 and March 31, 1996 3
Condensed Consolidated Statements of Income (unaudited)
for the three months and nine months ended
December 29, 1996 and December 31, 1995 4
Condensed Consolidated Statements of Cash Flows
(unaudited) for the nine months ended
December 29, 1996 and December 31, 1995 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ASECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
(in thousands, except share and per share data) December 29, March 31,
1996 1996
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 14,245 $ 14,083
Accounts receivable, less allowance for
doubtful accounts of $410 at December 29,
1996 and $397 at March 31, 1996 8,474 12,346
Inventories, net 8,999 7,059
Prepaid expenses and other current assets 1,549 864
--------- --------
Total current assets 33,267 34,352
Plant and equipment, at cost 4,825 4,187
Less accumulated depreciation and amortization 2,726 2,176
--------- --------
2,099 2,011
Other assets, net 396 318
--------- --------
$ 35,762 $ 36,681
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,595 $ 3,441
Accrued expenses 2,672 3,923
Income taxes payable 274 476
Current portion of capital lease obligations 13 13
--------- ---------
Total current liabilities 4,554 7,853
Deferred taxes payable 493 370
Long-term capital lease obligations 32 42
Stockholders' equity
Preferred stock, $.01 par value, 1,000,000
shares authorized, none issued and outstanding --- ---
Common stock, $.01 par value: Authorized
15,000,000 shares, issued and outstanding
3,641,300 and 3,611,501 shares at December 29,
1996 and March 31, 1996, respectively 36 36
Additional paid in capital 17,456 17,234
Retained earnings 13,191 11,146
-------- --------
Total stockholders' equity 30,683 28,416
-------- --------
$ 35,762 $ 36,681
========= ========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
ASECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------------ -------------------------------
December 29, December 31, December 29, December 31,
1996 1995 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 6,722 $ 10,998 $ 26,712 $ 29,875
Cost of sales 3,595 5,433 14,013 15,047
------- -------- -------- --------
Gross profit 3,127 5,565 12,699 14,828
Research and 1,287 1,228 3,798 3,453
development costs
Selling, general 1,713 2,640 6,381 6,807
and administrative ------- ------- ------- -------
expenses
Income from operations 127 1,697 2,520 4,568
Other income (expense):
Interest income 166 153 489 388
Interest expense (1) (1) (5) (12)
------- ------- ------- -------
165 152 484 376
------- ------- ------- -------
Income before income
taxes 292 1,849 3,004 4,944
Income tax expense 58 684 959 1,800
------- ------- ------- -------
Net income $ 234 $ 1,165 $ 2,045 $ 3,144
======= ======== ======== ========
Earnings per share $ .06 $ .31 $ .55 $ .83
======= ======== ======== ========
Weighted average common
shares and common
equivalent shares
outstanding 3,711,000 3,801,000 3,708,000 3,782,000
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
ASECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
December 29, December 31,
1996 1995
<S> <C> <C>
Operating activities
Net income $ 2,045 $ 3,144
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 679 545
Deferred income taxes (162) --
Changes in assets and liabilities:
Accounts receivable 3,872 (1,457)
Inventories, net (1,940) (452)
Prepaid expenses and other current assets (400) (32)
Accounts payable and accrued expenses (3,097) 1,618
Income taxes payable (137) 941
------- -------
Total adjustments (1,185) 1,163
------- -------
Cash provided by operating activities 860 4,307
Investing activities:
Acquisition of plant and equipment (638) (445)
Increase in software development costs and
other assets (207) (40)
------- -------
Cash used in investing activities (845) (485)
Financing activities:
Net proceeds from issuance of common stock 157 476
Reductions of long-term capital lease obligations (10) (8)
------- -------
Cash provided by financing activities 147 468
------- -------
Net increase (decrease) in cash and cash
equivalents 162 4,290
Cash and cash equivalents at the beginning
of period 14,083 9,301
------- -------
Cash and cash equivalents at the
end of period $ 14,245 $ 13,591
======== ========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
ASECO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED DECEMBER 29, 1996
1. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
and nine-month periods ended December 29, 1996 are not necessarily indicative
of the results that may be expected for the year ended March 30, 1997. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended March 31, 1996.
2. The computations of earnings per share are based on the weighted
average number of outstanding shares of common stock and common equivalent
shares (using the treasury stock method). Fully diluted earnings per share
have not been separately presented as the amount does not differ significantly
from primary earnings per share.
3. Inventories:
Inventories consisted of:
(in thousands)
December 29, March 31,
1996 1996
Raw Material $ 4,958 $ 3,491
Work in Process 1,409 2,218
Finished Goods 2,632 1,350
-------- --------
$ 8,999 $ 7,059
======== ========
4. On April 1, 1996, the Company adopted Financial Accounting Standard
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" which establishes criteria for the recognition and
measurement of impairment loss associated with long-lived assets. Adoption of
this standard did not have a material impact on the Company's financial
position or results of operations.
5. On April 15, 1996, the Company loaned an executive officer of the
Company $140,000. The loan bears interest at the rate of 5.33% per annum,
compounded annually, and is due and payable in full on the earlier of the
termination of the executive officer's employment with the Company or April
15, 1999. The loan is secured by shares of the Company's common stock owned
by the executive officer.
<PAGE>
6. On August 15, 1996, the Board of Directors adopted a Stockholder Rights
Plan. Pursuant to the Stockholder Rights Plan, each share of common stock has
an associated right. Under certain circumstances, each right entitles the
holder to purchase from the Company one one-thousandth of a share of junior
preferred stock at an exercise price of $55.00 per one one-thousandth of a
share, subject to adjustment.
The rights are not exercisable and cannot be transferred separately from the
common stock until ten days after a person acquires or obtains the right to
acquire 15% or more or makes a tender offer for 30% or more of the Company's
common stock. Upon exercise, each right will entitle the holder to purchase,
at the right exercise price, common stock having a value of two times the
exercise price of the right. In addition, if the Company is either (i)
acquired in a merger or other business combination in which the Company is not
the surviving entity, or (ii) sells or transfers 50% or more of its assets or
earning power to another party, each right will entitle its holder to
purchase, upon exercise, common stock of the acquiring Company having a value
equal to two times the exercise price of the right.
The rights have certain anti-takeover effects, in that they would cause
substantial dilution to a person or group that attempts to acquire a
significant interest in the Company on terms not approved by the Board of
Directors. The rights expire on August 15, 2006 but may be redeemed by the
Company for $.01 per right at any time prior to the tenth day following a
person's acquisition of 15% or more of the Company's common stock. So long as
the rights are not separately transferable, the Company will issue one right
with each new share of common stock issued.
<PAGE>
Item 2
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Three and Nine months ended December 29, 1996
RESULTS OF OPERATION
Net sales for the first nine months of fiscal 1997 decreased 11% to $26.7
million compared to $29.9 million for the first nine months of fiscal 1996.
Net sales for the third quarter of fiscal 1997 decreased 39% to approximately
$6.7 million versus $11 million for the same quarter last year. The decrease
in net sales between the two third quarter periods resulted from a decline in
the number of units shipped during the third quarter of fiscal 1997 as a
result of an industry wide market downturn. The impact of the unit decrease
was partially offset by higher average selling prices across most models which
was attributable to added automation features and other product enhancements.
International sales represented approximately 50% of net sales for the first
nine months of fiscal 1997 versus 40% in the first nine months of fiscal 1996.
International sales represented approximately 36% of net sales in the third
quarter of fiscal 1997 versus 42% in the third quarter of fiscal 1996.
Approximately 75% of all international sales were to customers located in the
Pacific Rim region.
Gross margin for the first nine months of fiscal 1997 was 48% compared to 50%
in the same period last year. Gross margin in the third quarter of fiscal
1997 was 47% compared to 51% in the third quarter of fiscal 1996. The lower
margin percentages were the result of manufacturing overhead spending
declining at a slower rate than sales reflecting the Company's view that
investments in manufacturing capacity should be based on a long term plan
rather than the operating results of individual quarters.
Research and development expenses increased 10% to $3.8 million in the first
nine months of fiscal 1997 from $3.5 million in the first nine months of
fiscal 1996. Research and development expenses increased 5% in the third
quarter of fiscal 1997 to $1.3 million from $1.2 million in the third quarter
of fiscal 1996. Research and development expenses also increased as a
percentage of sales to 19% in the third quarter of fiscal 1997 from 11% in the
third quarter of fiscal 1996 reflecting the Company's commitment to a long
range research and development program notwithstanding fluctuations in net
sales.
Selling, general and administrative expenses for the first nine months of
fiscal 1997 were $6.4 million, down 6%, versus $6.8 million in the first nine
months of fiscal 1996. Selling, general and administrative expenses for the
third quarter of fiscal 1997 were $1.7 million, down 35% from $2.6 million in
the same quarter last year. The quarterly spending decrease was primarily the
result of a decrease in sales commissions earned during the third quarter of
fiscal 1997 resulting from lower net sales and, to a lesser extent, a decrease
in commission rates resulting from the higher percentage of domestic sales
which earned lower commission rates. The quarterly spending decrease was also
due to a reduction in personnel related expenses undertaken by the Company in
light of the industry-wide market downturn.
Operating income in the first nine months of fiscal 1997 was $2.5 million
compared to $4.6 million in the first nine months of fiscal 1996, a decrease
of approximately 45%. Operating income in the third quarter of fiscal 1997
decreased approximately 93% to $127,000 from $1.7 million in the third
quarter of fiscal 1996.
<PAGE>
The tax rate for the first nine months of fiscal 1997 was 32% versus 36% in
the same period last year. The tax rate for the third quarter of fiscal 1997
was 20% versus 37% in the same quarter last year. The decrease in the third
quarter tax rate is primarily due to increased international sales which are
taxed at a lower tax rate coupled with the anticipated benefit to be realized
from research and development tax credits as the Company accelerated spending
on qualified development projects.
As a result of the foregoing, net income for the first nine months of fiscal
1997 was $2.0 million, or $.55 per share, as compared to $3.1 million, or $.83
per share, for the first nine months of fiscal 1996. Net income for the
third quarter of fiscal 1997 was $234,000, or $.06 per share, versus $1.2
million, or $.31 per share, for the third quarter of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the third quarter of fiscal 1997 with a cash position of
approximately $14.2 million. Additionally, the Company has an unsecured line
of credit with a bank in the amount of $5.0 million against which there were
no borrowings at the end of the third quarter of fiscal 1997.
The Company generated approximately $860,000 of cash from operations during
the first nine months of fiscal 1997. Accounts receivable decreased
approximately $3.9 million in the first nine months of fiscal 1997 due to the
decrease in net sales. Inventory increased approximately $1.9 million during
the first nine months of fiscal 1997 and remained relatively consistent
with the prior quarter. The year to date inventory increase is due to the
Company's strategic decision to build machines beyond forecasted demand in
order to be in a position to take advantage of late quarter changes in
customer demand and product mix.
The Company used $638,000 in cash during the first nine months of fiscal 1997
to fund the acquisition of capital equipment and $207,000 to fund internal
software development costs. The Company expects that its investment in
capital equipment in fiscal 1997 will be greater than in fiscal 1996.
The Company generated cash from financing activities in the first nine months
of fiscal 1997 of $147,000, primarily from employee stock purchases under the
Company's employee stock plans.
The Company believes that funds generated from operations, existing cash
balances and available borrowing capacity will be sufficient to meet the
Company's cash requirements for at least the next twelve months.
CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
The Company's future results are difficult to predict and may be affected by a
number of important risk factors including, but not limited to, the factors
listed in the Company's Annual Report on Form 10K for the fiscal year ended
March 31, 1996. The Company wishes to caution readers that those important
factors, in some cases, have affected, and in the future could affect, the
Company's actual consolidated quarterly or annual operating results and could
cause those actual consolidated quarterly or annual operating results to
differ materially from those expressed in any forward looking statements made
by, or on behalf of, the Company.
<PAGE>
ASECO CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
Effective as of January 2, 1997, the Company appointed American
Stock Transfer & Trust Company to replace State Street Bank and Trust Company
as its Transfer Agent and as the Rights Agent under its shareholder rights
plan. In connection with such appointment, the Company and American Stock
Transfer & Trust Company amended the Rights Agreement dated as of August 15,
1996 to lower the level of capital required for the Rights Agent from $50
million to $10 million.
Item 3. Defaults upon Senior Securities:
None.
Item 4. Submissions of Matters to a Vote of Security Holders:
Item 5. Other Information:
None.
Item 6. Exhibits and reports on Form 8-K:
a. See Exhibit Index
b. There were no reports on Form 8-K filed for the three months
ended December 29, 1996.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
4.2 Rights Agreement dated August 15, 1996 between the Company
and State Street Bank & Trust Company as Rights Agent as
filed on the Company's Registration Statement on Form 8-A
with the Commission on August 28, 1996 and incorporated
herein by reference.
4.3 Amendment Number One to Rights Agreement dated January 2,
1997 between the Company and American Stock Transfer
& Trust Company.
10.14 Promissory Note between the Company and Sebastian J.
Sicari dated April 15, 1996.
10.15 Pledge Agreement between the Company and Sebastian J.
Sicari dated April 15, 1996.
<PAGE>
ASECO CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Signature Title Date
/s/ Carl S. Archer, Jr. President and Chief Executive February 12, 1997
- ----------------------- Officer (principal executive
Carl S. Archer, Jr. officer)
/s/ Sebastian J. Sicari Vice President, Finance and February 12, 1997
- ----------------------- Administration, Chief Financial
Sebastian J. Sicari Officer, Treasurer (principal
financial and accounting officer)
Exhibit 4.3
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This Amendment is made as of January 2, 1997 by and between Aseco
Corporation, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company ("AST").
WITNESSETH:
WHEREAS, a Rights Agreement dated as of August 15, 1996 was entered into
by and between the Company and State Street Bank & Trust Company (the "Rights
Agreement"); and
WHEREAS, AST has succeeded to all of the covenants, agreements,
obligations, rights and benefits of State Street Bank and Trust Company, as
Rights Agent, under the Rights Agreement; and
WHEREAS, Section 27 of the Rights Agreement provides that, prior to the
Distribution Date (as therein defined), the Company and the Rights Agent, if
the Company so directs, shall supplement or amend any provision of the Rights
Agreement without the approval of any holders of Rights (as therein defined);
NOW THEREFORE, the parties hereto agree as follows:
Section 1. The Company hereby directs that the Rights Agreement be
amended as provided in Section 2 below.
Section 2. The fifth sentence of Section 21 of the Rights Agreement is
hereby amended so as to read as follows: Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any state of the
United States, in good standing, having an office in the State of New York,
which is authorized under such laws to exercise stockholder services or
corporate trust powers and is subject to supervision or examination by federal
or state authorities and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $10,000,000.
Section 3. Except as specifically provided in this Amendment, the Rights
Agreement shall remain in full force and effect without change. This
Amendment shall be deemed part of, and construed in accordance with, the
Rights Agreement. This Amendment may be executed in any number of
counterparts, and with counterpart signature pages, but all such counterparts
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the day and year first above written.
ASECO CORPORATION
By:_______________________
Name:_____________________
Title:____________________
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:_______________________
Name:_____________________
Title:____________________
ds1/314389
Exhibit 10.14
PROMISSORY NOTE
$140,000.00 Marlboro, Massachusetts
April 15, 1996
SEBASTIAN J. SICARI ("Sicari"), for value received, hereby promises to
pay to the order of ASECO CORPORATION, a Delaware corporation (the "Company"),
the principal amount of One Hundred Forty Thousand Dollars ($140,000.00), with
interest accruing on the unpaid principal amount hereof at the rate of 5.33%
per annum, compounded annually. All outstanding principal and interest
accrued thereon shall be due and payable in full on the earlier to occur of
(a) the termination of Sicari's employment with the Company (for any reason)
and (b) April 15, 1999. Sicari may at any time and from time to time prepay
all or any portion of said principal and interest, without premium or penalty.
The holder of this Note is entitled to the benefits of a Pledge Agreement
of even date herewith by and between Sicari and the Company (the "Pledge
Agreement"). Neither reference herein to the Pledge Agreement nor any
provision thereof shall affect or impair the absolute and unconditional
obligation of Sicari to pay the principal of and interest, if any, on this
Note as provided herein. No delay or omission on the part of the holder of
this Note in exercising any right hereunder or under the Pledge Agreement
shall operate as a waiver of such right or of any other right of such holder,
nor shall any delay, omission or waiver on any one occasion be deemed a bar to
or waiver of the same or any other right on any future occasion. All payments
of principal of and interest, if any, on this Note shall be payable in
immediately available funds at the address of the Company set forth in the
Pledge Agreement. Sicari and all endorsers or guarantors of this Note,
regardless of the time, order or place of signing, hereby waive presentment,
demand, notice, protest and all other demands and notices in connection with
the delivery, acceptance, performance or enforcement of this Note.
All rights and obligations hereunder shall be governed by the laws of The
Commonwealth of Massachusetts and this Note shall be deemed to be under seal.
______________________________________
Sebastian J. Sicari
DS1-255612
Exhibit 10.15
PLEDGE AGREEMENT
THIS AGREEMENT, dated as of the 15th day of April, 1996, by and between
SEBASTIAN J. SICARI (the "Pledgor") and ASECO CORPORATION, a Delaware
corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Company has agreed to make a loan as of the date hereof in
the principal amount of $140,000 to the Pledgor (the "Loan"), such Loan to be
evidenced by the Pledgor's Promissory Note, payable to the order of the
Company (the "Note"); and
WHEREAS, the obligation of the Company to make the Loan is subject to the
conditions, among others, that the Pledgor shall execute and deliver this
Agreement and grant the security interest hereinafter described;
NOW, THEREFORE, in consideration of the willingness of the Company to
make the Loan to the Pledgor, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
1. Security Interest. The Pledgor hereby deposits with and pledges to
the Company 15,000 shares of the Common Stock, $.01 par value, of the Company
(the "Pledged Stock"), and the Pledgor hereby grants to the Company a security
interest in the Pledged Stock as security for the due and punctual payment and
performance of the Secured Obligation described in section 2 hereof.
2. Secured Obligation. The security interest hereby granted shall
secure the due and punctual payment of the principal of and interest, if any,
on the Note (the "Secured Obligation").
3. Special Warranties and Covenants of the Pledgor. The Pledgor hereby
warrants and covenants to the Company that:
(a) The Pledged Stock is duly and validly pledged with the Company
in accordance with law and the Pledgor warrants and will defend the Company's
right, title and security interest in and to the Pledged Stock against the
claims and demands of all persons whomsoever.
(b) The Pledgor has good title to the Pledged Stock, free and clear
of all claims, mortgages, pledges, liens, security interests and other
encumbrances of every nature whatsoever.
(c) All of the Pledged Stock has been duly and validly issued and
is fully paid and nonassessable.
(d) The Pledgor will not sell, convey or otherwise dispose of any
of the Pledged Stock, nor will the Pledgor create, incur or permit to exist
any pledge, mortgage, lien, charge, encumbrance or any security interest
whatsoever with respect to any of the Pledged Stock or the proceeds thereof,
other than liens on and security interests in the Pledged Stock created
hereby.
<PAGE>
4. Distributions. In case, upon the dissolution, winding up,
liquidation or reorganization of the Company, whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit
of creditors or any other marshalling of the assets and liabilities of the
Company or otherwise, any sum shall be paid or any property shall be
distributed upon or with respect to any of the Pledged Stock, such sum shall
be paid over to the Company to be held as collateral security for the Secured
Obligation. In case any stock dividend shall be declared on the Pledged
Stock, or any share of stock or fraction thereof shall be issued pursuant to
any stock split involving the Pledged Stock, or any distribution of capital
(excluding ordinary cash dividends) shall be made on the Pledged Stock, or any
property shall be distributed upon or with respect to the Pledged Stock
pursuant to recapitalization or reclassification of the capital of the
Company, the shares or other property so distributed shall be delivered to the
Company to be held as collateral security for the Secured Obligation.
5. Events of Default. There shall exist a default under this Agreement
upon the default in the due and punctual payment of any principal of or
interest on the Secured Obligation as and when the same becomes due and
payable (herein called an "Event of Default").
6. Rights and Remedies of Company. Upon the occurrence of an Event of
Default, such default not having previously been remedied or cured, the
Company shall have all rights and remedies provided by law, including, without
limitation, those provided by the Uniform Commercial Code, and all rights and
remedies provided in this Agreement and the Note.
7. Right to Transfer into Name of Company, etc. In case there shall
exist an Event of Default, but subject to the provisions of the Uniform
Commercial Code or other applicable law, the Company may cause all or any of
the Pledged Stock to be transferred into its name or into the name of its
nominee or nominees. So long as no Event of Default shall exist, the Pledgor
shall be entitled to exercise as the Pledgor shall deem fit, but in a manner
not inconsistent with the terms hereof or of the Secured Obligation, the
voting power with respect to the Pledged Stock.
8. Right of Company to Exercise Voting Power, etc. In case there shall
exist an Event of Default, the Company shall be entitled to exercise the
voting power with respect to the Pledged Stock, to receive and retain, as
collateral security for the Secured Obligation, any and all dividends or other
distributions at any time and from time to time declared or made upon the
Pledged Stock, and to exercise any and all rights of payment, conversion,
exchange, subscription or any other rights, privileges or options pertaining
to the Pledged Stock as if it were the absolute owner thereof, including
without limitation, the right to exchange, at its discretion, any and all of
the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the Company or, upon the exercise of
any such right, privilege or option pertaining to the Pledged Stock, and in
connection therewith, to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Company may determine, all
without liability except to account for property actually received, but the
Company shall have no duty to exercise any of the aforesaid rights, privileges
or options and shall not be responsible for any failure to do so or delay in
so doing.
<PAGE>
9. Right of Company to Dispose of Pledged Stock, etc. Upon the
occurrence of an Event of Default, such default not having previously been
remedied or cured, the Company shall have the right at any time or times
thereafter to sell, resell, assign and deliver all or any of the Pledged Stock
in one or more parcels at any exchange or broker's board or at public or
private sale. The Company will give the Pledgor at least ten (10) days' prior
written notice at the address of the Pledgor specified in section 16 hereof of
the date on which and manner in which any private or any other intended
disposition thereof is to be made. Any such notice shall be deemed to meet
any requirement hereunder or under any applicable law (including the Uniform
Commercial Code) that reasonable notification be given of the time and place
of such sale or other disposition. Such notice may be given without any
demand of performance or other demand, all such demands being hereby expressly
waived by the Pledgor. All such sales shall be at such commercially
reasonable price or prices as the Company shall deem best. Upon any such sale
or sales the Pledged Stock so purchased shall be held by the purchaser
absolutely free from any claims or rights of whatsoever kind or nature,
including any equity of redemption and any similar rights, all such equity of
redemption and any similar rights being hereby expressly waived and released
by the Pledgor. The proceeds of any such sale or sales, together with any
other additional collateral security at the time received and held hereunder,
shall be received and applied: first, to the payment of all costs and
expenses of such sale, including reasonable attorneys' fees; second, to the
payment of the Secured Obligation, and any surplus thereafter remaining shall
be paid to the Pledgor or to whomever may be legally entitled thereto
(including, if applicable, any subordinated creditor of the Pledgor).
The Pledgor recognizes that the Company may be unable to effect a
public sale of all or a part of the Pledged Stock by reason of certain
prohibitions contained in the Securities Act of 1933, but may be compelled to
resort to one or more private sales to a restricted group of purchasers, each
of whom will be obligated to agree, among other things, to acquire such
Pledged Stock for its own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that private sales
so made may be at prices and upon other terms less favorable to the seller
than if such Pledged Stock were sold at public sales, and that the Company has
no obligation to delay sale of any such Pledged Stock for the period of time
necessary to permit such Pledged Stock to be registered for public sale under
the Securities Act of 1933. The Pledgor agrees that any such private sales
shall not be deemed to have been made in a commercially unreasonable manner
solely because they shall have been made under the foregoing circumstances.
10. Collection of Amounts Payable on Account of Pledged Stock, etc.
Upon the occurrence of any Event of Default, the Company may, but without
obligation to do so, demand, sue for and/or collect any money or property at
any time due, payable or receivable, to which it may be entitled hereunder, on
account of or in exchange for any of the Pledged Stock and shall have the
right, for and in the name, place and stead of the Pledgor, to execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to all or any of the Pledged Stock.
11. Care of Pledged Stock in Company's Possession. Beyond the exercise
of reasonable care to assure the safe custody of the Pledged Stock while held
hereunder, the Company shall have no duty or liability to collect any sums due
in respect thereof or to protect or preserve rights pertaining thereto, and
shall be relieved of all responsibility for the Pledged Stock upon
surrendering the same to the Pledgor.
<PAGE>
12. Waivers, etc. The Pledgor hereby waives presentment, demand,
notice, protest and, except as is otherwise provided herein, all other demands
and notices in connection with this Agreement or the enforcement of the
Company's rights hereunder or in connection with the Secured Obligation or any
Pledged Stock; consents to and waives notice of the granting of renewals,
extensions of time for payment or other indulgences to the Company or the
Pledgor or to any third party, or substitution, release or surrender of any
collateral security for the Secured Obligation, the addition or release of
persons primarily or secondarily liable on the Secured Obligation or on any
collateral security for the Secured Obligation, the acceptance of partial
payments on the Secured Obligation or on any collateral security for the
Secured Obligation and/or the settlement or compromise thereof. No delay or
omission on the part of the Company in exercising any right hereunder shall
operate as a waiver of such right or of any other right hereunder. Any waiver
of any such right on any one occasion shall not be construed as a bar to or
waiver of any such right on any future occasion. The Pledgor further waives
any right he may have under the constitution of The Commonwealth of
Massachusetts or under the Constitution of the United States of America, to
notice (other than any requirement of notice provided herein) or to a judicial
hearing prior to the exercise of any right or remedy provided by this
Agreement to the Company and waives his rights, if any, to set aside or
invalidate any sale duly consummated in accordance with the foregoing
provisions hereof on the grounds (if such be the case) that the sale was
consummated without a prior judicial hearing. The Pledgor's waivers under
this section have been made voluntarily, intelligently and knowingly and after
the Pledgor has been apprised and counseled by his attorneys as to the nature
thereof and his possible alternative rights.
13. Termination; Assignment, etc. This Agreement and the security
interest in the Pledged Stock created hereby shall terminate when the Secured
Obligation has been paid and finally discharged in full. No waiver by the
Company or by any other holder of the Secured Obligation of any default shall
be effective unless in writing nor operate as a waiver of any other default or
of the same default on a future occasion. In the event of a sale or
assignment by the Company of all or any of the Secured Obligation held by it,
the Company may assign or transfer its rights and interest under this
Agreement in whole or in part to the purchaser or purchasers thereof,
whereupon such purchaser or purchasers shall become vested with all of the
powers and rights of the Company hereunder, and the Company shall thereafter
be forever released and fully discharged from any liability or responsibility
hereunder with respect to the rights and interest so assigned.
14. Reinstatement. Notwithstanding the provisions of section 13, this
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any amount received by the Company in respect of the Secured
Obligation is rescinded or must otherwise be restored or returned by the
Company upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or the Pledgor or upon the appointment of any
intervenor or conservator of, or trustee or similar official for, the Company
or the Pledgor or any substantial part of their respective properties, or
otherwise, all as though such payments had not been made.
15. Restrictions on Transfer, etc. To the extent that any restrictions
imposed by the charter or by-laws of the Company or any other document or
instrument would in any way affect or impair the pledge of the Pledged Stock
hereunder or the exercise by the Company of any right granted hereunder,
including, without limitation, the right of the Company to dispose of the
Pledged Stock upon the occurrence of an Event of Default, the Pledgor hereby
waives such restrictions and the Pledgor hereby agrees that he will take any
further action which the Company may reasonably request in order that the
Company may obtain and enjoy the full rights and benefits granted to the
Company by this Agreement free of any such restrictions.
<PAGE>
16. Notices. Except as otherwise provided herein, all notices to the
Pledgor or to the Company shall be in writing and shall be deemed to have been
sufficiently given or served for all purposes hereof if personally delivered
or mailed by first class mail, postage prepaid, as follows:
(a) if to the Pledgor:
Sebastian J. Sicari
c/o Aseco Corporation
500 Donald Lynch Boulevard
Marlboro, MA 01752
Tel: (508) 481-8896
Fax: (508) 481-0369
(b) if to the Company:
Aseco Corporation
500 Donald Lynch Boulevard
Marlboro, MA 01752
Attn: Carl S. Archer, Jr.
Tel: (508) 481-8896
Fax: (508) 481-0369
with a copy to:
Robert V. Jahrling, Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Tel: (617) 248-5000
Fax: (617) 248-4000
or at such other address as the party to whom such notice is directed may have
designated in writing to the other party hereto. A notice shall be deemed to
have been given upon the earlier to occur of (i) three (3) days after the date
on which it is deposited in the U.S. mails or (ii) receipt by the party to
whom such notice is directed.
17. Miscellaneous. This Agreement shall inure to the benefit of and be
binding upon the Company and the Pledgor and their respective successors and
assigns, and the term "Company" shall be deemed to include any other holder or
holders of the Secured Obligation. In case any provision in this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
<PAGE>
18. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement,
including the validity hereof and the rights and obligations of the parties
hereunder, shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts. The Pledgor, to the extent that he may
lawfully do so, hereby consents to service of process, and to be sued, in The
Commonwealth of Massachusetts and consents to the jurisdiction of the courts
of The Commonwealth of Massachusetts and the United States District Court for
the District of Massachusetts, as well as to the jurisdiction of all courts to
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of his obligations hereunder or
with respect to the transactions contemplated hereby, and expressly waives any
and all objections he may have as to venue in any such courts. The Pledgor
further agrees that a summons and complaint commencing an action or proceeding
in any of such courts shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to him at his address
provided in section 16 hereof or as otherwise provided under the laws of The
Commonwealth of Massachusetts. The Pledgor irrevocably waives all right to a
trial by jury in any suit, action or other proceeding instituted by or against
the Pledgor in respect of his obligations hereunder or the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date first above written.
By:_________________________________
Sebastian J. Sicari
ASECO CORPORATION
By:_________________________________
Carl S. Archer, Jr., President
DS1-255696
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ASECO
CORPORATION CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER
ENDED DECEMBER 29, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> DEC-29-1996
<CASH> 14,245
<SECURITIES> 0
<RECEIVABLES> 8,884
<ALLOWANCES> 410
<INVENTORY> 8,999
<CURRENT-ASSETS> 33,267
<PP&E> 4,825
<DEPRECIATION> 2,726
<TOTAL-ASSETS> 35,762
<CURRENT-LIABILITIES> 4,554
<BONDS> 0
0
0
<COMMON> 36
<OTHER-SE> 30,647
<TOTAL-LIABILITY-AND-EQUITY> 35,762
<SALES> 6,722
<TOTAL-REVENUES> 6,722
<CGS> 3,595
<TOTAL-COSTS> 3,595
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1)
<INCOME-PRETAX> 292
<INCOME-TAX> 58
<INCOME-CONTINUING> 234
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
