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 June 28, 1998
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 June 28, 1998.
Common Stock, $.01 par value 3,731,718
(Title of each class) (Number of shares)
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ASECO CORPORATION
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets (unaudited)
at June 28, 1998 and March 29, 1998 3
Condensed Consolidated Statements of Operations
(unaudited) for the three months ended June 28,
1998 and June 29, 1997 4
Condensed Consolidated Statements of Cash Flows
(unaudited) for the three months ended June 28,
1998 and June 29, 1997 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11-12
Signatures 13
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<PAGE
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
ASECO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share data)
June 28, 1998 March 29, 1998
ASSETS
Current assets
Cash and cash equivalents $ 1,451 $ 4,431
Accounts receivable, less allowance for
doubtful accounts of $777 at June 28, 1998
and $781 at March 29, 1998 7,255 9,140
Inventories, net 12,918 11,875
Prepaid expenses and other current assets 3,198 2,761
------ ------
Total current assets 24,822 28,207
Plant and equipment, at cost 8,612 8,796
Less accumulated depreciation and amortization 4,564 4,755
------ ------
4,048 4,041
Other assets, net 1,328 1,443
------ ------
$ 30,198 $ 33,691
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit $ 300 $ --
Accounts payable 3,055 4,591
Accrued expenses 3,773 4,886
Current portion of capital lease obligations 13 13
------ ------
Total current liabilities 7,141 9,490
Deferred taxes payable 594 594
Long-term capital lease obligations 11 25
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 3,731,718 shares at
June 28,1998 and March 29, 1998, respectively 38 38
Additional paid in capital 18,203 18,203
Retained earnings 4,172 5,291
Foreign currency translation adjustment 39 50
------ ------
Total stockholders' equity 22,452 23,582
------ ------
$ 30,198 $ 33,691
======== ========
See notes to condensed consolidated financial statements
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ASECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per Three months ended
share data) June 28, 1998 June 29,1997
Net sales $ 6,630 $ 8,865
Cost of sales 4,060 4,820
------ ------
Gross profit 2,570 4,045
Research and development costs 1,661 1,356
Selling, general and administrative expenses 2,384 2,473
Acquired in-process research and development
costs -- 4,900
------ ------
Loss from operations (1,475) (4,684)
Other income (expense):
Interest income 27 169
Interest expense (5) (6)
Other, net (9) --
------ ------
13 163
------ ------
Loss before income taxes (1,462) (4,521)
Income tax (benefit) expense (343) 219
------ ------
Net loss $ (1,119) $ (4,740)
======== =========
Loss per share, diluted ($ .30) ($ 1.29)
======== ==========
Shares used to compute loss per share, 3,732,000 3,667,000
diluted
See notes to condensed consolidated financial statements
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ASECO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended
(in thousands) June 28, June 29,
1998 1997
Operating activities:
Net loss $ (1,119) $ (4,740)
Adjustments to reconcile net loss to net
cash provided by/used in operating activities:
Depreciation and amortization 508 269
Acquired in-process research and development -- 4,900
Loss on sale of plant and equipment 5 --
Changes in assets and liabilities:
Accounts receivable 1,848 64
Inventories, net (1,318) (1,990)
Prepaid expenses and other current assets (304) (327)
Accounts payable and accrued expenses (2,586) 2,255
------- ------
Total adjustments (1,847) 5,171
------ ------
Cash provided by/used in operating
activities (2,966) 431
Investing activities:
Acquisitions net of cash acquired -- (6,079)
Proceeds from sale of plant and equipment 7 ---
Acquisition of plant and equipment (218) (457)
Increase in software development costs and
other assets (86) (50)
------ ------
Cash used in investing activities (297) (6,586)
Financing activities:
Net proceeds from issuance of common stock -- 3
Borrowings/(payments) on working capital line
of credit 300 (395)
Payments of long-term capital lease obligations (14) (4)
------ ------
Cash provided by/used in financing
activities 286 (396)
Effect of exchange rate changes on cash (3) 1
------ ------
Net decrease in cash and cash equivalents (2,980) (6,550)
Cash and cash equivalents at the beginning of period 4,431 14,082
------ ------
Cash and cash equivalents at the end of period $ 1,451 $ 7,532
======= =======
See notes to condensed consolidated financial statements
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ASECO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 28, 1998
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-month period ended June 28, 1998 are not
necessarily indicative of the results that may be expected for the year
ended March 28, 1999. 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 29, 1998.
2. In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" which the Company
adopted in the third quarter of fiscal 1998. Statement 128 replaced the
previously reported primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants, and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully diluted earnings per share which includes the dilutive effect
of options, warrants and convertible securities. All earnings per share amounts
for all periods have been presented, and where necessary, restated to conform to
the Statement 128 requirements.
3. In 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" which establishes standards for the
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements. Under this standard, certain
revenues, expenses, gains, and losses recognized during the period are
included in comprehensive income, regardless of whether they are considered
to be results of operations of the period. During the first quarter of 1998
and 1997, total comprehensive loss amounted to $1,130,000 and $4,752,000
respectively. The difference between total comprehensive loss and net loss
as reported on the Consolidated Statements of Operations is attributable to
the foreign currency translation adjustment.
4. Inventories consisted of:
(in thousands) June 28, 1998 March 29, 1998
Raw Material $ 5,521 $ 5,612
Work in Process 5,661 4,712
Finished Goods 1,736 1,551
------ ------
$ 12,918 $ 11,875
======== ========
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5. On May 23, 1997, the Company acquired 100% of the outstanding stock of
Western Equipment Developments (Holdings) Ltd. ("WED") for approximately
$6,100,000 in cash. WED designs, manufactures and markets integrated circuit
wafer handling robot and inspection systems used to load, sort, transport and
inspect wafers during the semiconductor manufacturing process. The
acquisition was accounted for as a purchase and accordingly, the results of
operations of the acquired business have been included in the Company's
consolidated financial statements commencing May 23, 1997. The Company's
initial allocation of the purchase price at the date of acquisition resulted in
an estimate of acquired in-process research and development of $4,900,000
recorded in the first quarter of fiscal 1998. During fiscal 1998, the
Company determined that certain acquired technology was not as developed as
originally expected, and certain in-process technology would require more time
to develop than originally anticipated. At the end of fiscal 1998, the
Company completed the allocation of the purchase price which resulted in an
additional in-process research and development charge of $1,200,000 resulting
in an aggregate fiscal 1998 charge of $6,100,000. The following table
summarizes the unaudited pro-forma consolidated results of operations as
if the acquisition had been made as of January 1, 1997, including the
aggregate acquired in-process research and development charge of $6,100,000 as
if expensed on that date:
(in thousands, except per share data) Quarter ended
June 29, 1997
Net sales $9,894
Net loss (7,329)
Loss per share $(2.00)
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Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Three months ended June 28, 1998
RESULTS OF OPERATIONS
Net sales for the first quarter of fiscal 1999 decreased 25% to $6.6 million
compared to $8.9 million for the first quarter of fiscal 1998. The decrease in
net sales resulted from fewer unit shipments during the first quarter of fiscal
1999 compared to the first quarter of fiscal 1998 as a result of an industry
wide market downturn.
International sales represented approximately 32% of net
sales for the first quarter of fiscal 1999 versus 35% in the first quarter of
fiscal 1998. Approximately 83% of all international sales were to customers
located in the Pacific Rim region.
Gross margin for the first quarter of fiscal 1999 was 39% compared to 46% in
the same quarter last year. The decline resulted from a higher mix of lower
margin product sales during the first quarter of 1999 compared to the same
quarter last year and excess manufacturing capacity resulting from lower
sales and production levels.
Research and development expenses increased 22% to $1.7 million in the first
quarter of fiscal 1999 from $1.4 million in the first quarter of fiscal 1998.
Research and development expenses also increased as a percentage of sales to 25%
in the first quarter of fiscal 1999 from 15% in the first quarter of fiscal 1998
due to increased research and development spending and the decline in net
sales. The increase in research and development spending resulted from the
inclusion of a complete quarter of WED expenses in the first quarter fiscal
1999 results and from the Company's expenditures associated with the continued
development of its newest test handler product.
During the first quarter of fiscal 1998, the Company recorded a special charge
to earnings of $4.9 million for acquired in-process research and development
related to the initial allocation of the purchase price of the Company's
acquisition of Western Equipment Developments Holdings ("WED") (See Note 5 to
the Condensed Consolidated Financial Statements included herein).
Selling, general and administrative expenses for the first quarter of fiscal
1999 were $2.4 million versus $2.5 million for the first quarter of fiscal 1998.
The decrease in selling, general and administrative expenses was primarily the
result of lower commissions earned during the quarter due to the lower sales
level and to a higher percentage of sales originating from the Company's direct
sales force which earn lower commission rates than independent sales
representatives, along with the savings realized from the first quarter
workforce reduction. These and other expense controls were partially offset
by the inclusion of a full quarter of WED's operating results in the first
quarter of fiscal 1999.
Operating loss in the first quarter of fiscal 1999 was $1.5 million versus an
operating loss of $4.7 million in the first quarter of fiscal 1998.
The operating loss in the first quarter of fiscal 1999 was the result of the
decline in sales and lower gross margins attributable to the shift in product
mix. The operating loss of $4.7 million in the first quarter of fiscal
1998 was the result of a special charge to earnings of $4.9 million relating
to the acquired in-process research and development associated with the initial
allocation of the purchase price of the acquisition of WED.
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The Company recorded a tax benefit of $343,000 in the first quarter of fiscal
1999 versus income tax expense of $219,000 in the first quarter of fiscal 1998.
Tax rates in both quarters were affected by the inability to offset losses
incurred by WED against income earned and taxes paid in previous years in the
United States.
As a result of the foregoing, net loss for the first quarter of
fiscal 1999 was $1.1 million, or $.30 per diluted share, as compared to net loss
of $4.7 million, or $1.29 per diluted share, for the first quarter of fiscal
1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the first quarter of fiscal 1999 with a cash position of
approximately $1.5 million. Additionally, the Company had an unsecured line of
credit with a bank in the amount of $5.0 million against which there were
borrowings at the end of the first quarter of fiscal 1999 of approximately
$300,000. During the quarter, the Company elected to utilize its working
capital line of credit to cover its short-term cash needs rather than
liquidate its investment holdings.
The Company's line of credit is conditioned upon meeting certain financial
covenants, including maintaining specified levels of quarterly and annual
earnings, tangible net worth and restrictions on dividend payments. As of
June 30, 1998, the Company was not in compliance with certain covenants and
consequently has requested a waiver.
The Company used approximately $3.0 million of cash from operations during
the first quarter of fiscal 1999. Accounts receivable decreased approximately
$1.9 million in the first quarter of fiscal 1999 because of a decrease in net
sales from the fourth quarter of fiscal 1998. Inventory increased
approximately $1 million during the first quarter of fiscal 1999 as the
Company was not able to reduce its build plan early enough in the first
quarter to facilitate the timely rescheduling of purchase commitments. Accounts
payable and accrued expenses decreased approximately $2.6 million as a result of
timing of payments and lower sales volume experienced during the quarter.
The Company used $297,000 in cash for investing activities during the first
quarter of fiscal 1999 The Company spent $218,000 on capital equipment
purchases and $86,000 to fund internal software development costs.
The Company generated cash from financing activities in the first quarter of
fiscal 1999 of $286,000, primarily as a result of the Company utilizing it
working capital line of credit.
The Company expects to continue to experience a slowdown in the volume of
business due to adverse market conditions in the semiconductor industry.
As a result, the Company intends to monitor and further reduce if necessary, its
expenses if projected lower net sales levels continue. Although the Company
anticipates that it will incur losses in future quarters which will
negatively impact its liquidity position, the Company believes that funds
generated from operations, existing cash balances, available borrowing
capacity, and if necessary additional financing, will be sufficient to meet the
Company's cash requirements for at least the next twelve months.
YEAR 2000 COMPLIANCE
Historically, certain computer programs have been written using two digits
rather than four to define the applicable year, which could result in a computer
recognizing a date using "00" as the year 1900 rather than the year 2000. This,
in turn, could result in major system failures or miscalculations, and is
generally referred to as the "Year 2000 Problem".
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The Company is in the process of implementing a new enterprise-wide management
information system that the vendor has represented is Year 2000 compliant. In
addition, the Company has completed an initial assessment of other software used
by the Company for Year 2000 compliance. The Company also reviews each of its
new hardware and software purchases to ensure that they are Year 2000 compliant.
Based on the foregoing, the Company believes that the computer systems used
by it are Year 2000 compliant or will become Year 2000 compliant without
materially and adversely affecting the Company's financial position or
results of operations. However, there can be no assurance that the Company will
not be materially and adversely affected by the failure of its significant
vendors or customers to successfully and timely achieve Year 2000 compliance
with respect to their own computer systems.
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 29, 1998. 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.
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ASECO CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
None.
Item 3. Defaults upon Senior Securities:
None
Item 4. Submissions of Matters to a Vote of Security Holders:
None
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 June 28, 1998.
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<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
10.2 1993 Non-Employee Director Stock Option Plan (as amended
and restated as of May 12, 1998)
10.3 1993 Employee Stock Purchase Plan (as amended and restated
as of June 18, 1998)
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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/ Sebastian J. Sicari President and Chief Executive August 12,1998
- ----------------------- Officer (principal executive
Sebastian J. Sicari officer)
/s/ Mary R. Barletta Vice President, Chief August 12,1998
- ----------------------- Financial Officer,
Mary R. Barletta Treasurer (principal financial
and accounting officer)
13
<PAGE>
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ASECO CORPORATION CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE
QUARTER ENDED JUNE 28, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1999
<PERIOD-START> MAR-30-1998
<PERIOD-END> JUN-28-1998
<CASH> 1,451
<SECURITIES> 0
<RECEIVABLES> 8,032
<ALLOWANCES> 777
<INVENTORY> 12,918
<CURRENT-ASSETS> 24,822
<PP&E> 8,612
<DEPRECIATION> 4,564
<TOTAL-ASSETS> 30,198
<CURRENT-LIABILITIES> 7,141
<BONDS> 0
0
0
<COMMON> 38
<OTHER-SE> 22,414
<TOTAL-LIABILITY-AND-EQUITY> 30,198
<SALES> 6,630
<TOTAL-REVENUES> 6,630
<CGS> 4,060
<TOTAL-COSTS> 4,060
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> (1,462)
<INCOME-TAX> (343)
<INCOME-CONTINUING> (1,119)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,119)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
EXHIBIT 10.2
ASECO CORPORATION
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(Amended and Restated Effective as of May 12, 1998)
1. PURPOSE. This Non-Qualified Stock Option Plan, to be known as the
1993 Non-Employee Director Stock Option Plan (hereinafter, this "Plan") is
intended to promote the interests of Aseco Corporation (hereinafter, the
"Company") by providing an inducement to obtain and retain the services of
qualified persons who are not employees or officers of the Company to serve as
members of its Board of Directors (the "Board").
2. AVAILABLE SHARES. The total number of shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"), for which options
may be granted under this Plan shall not exceed 165,000 shares, subject to
adjustment in accordance with paragraph 10 of this Plan. Shares subject to
this Plan are authorized but unissued shares or shares that were once issued
and subsequently reacquired by the Company. If any options granted under this
Plan are surrendered before exercise or lapse without exercise, in whole or in
part, the shares reserved therefor shall continue to be available under this
Plan.
3. Administration. This Plan shall be administered by the Board or by
a committee appointed by the Board (the "Committee"). In the event the Board
fails to appoint or refrains from appointing a Committee, the Board shall have
all power and authority to administer this Plan. In such event, the word
"Committee" wherever used herein shall be deemed to mean the Board. The
Committee shall, subject to the provisions of the Plan, have the power to
construe this Plan, to determine all questions hereunder, and to adopt and
amend such rules and regulations for the administration of this Plan as it may
deem desirable.
4. Granting of Options.
(a) Initial Grant. On the effective date of a registration
statement on Form S-1 covering the initial public offering of the Company's
Common Stock (the "Effective Date"), each person who is then a member of the
Board, and who is not a current or former employee or officer of the Company,
shall be automatically granted, without further action by the Board, an option
to purchase 3,000 shares of the Common Stock.
(b) Initial Grant to New Directors. Subject to the availability of
shares under this Plan, each person who is first elected as a member of the
Board after May 15, 1996 and during the term of this Plan, and who is not on
the date of such election a current or former employee or officer of the
Company, shall be automatically granted an option to purchase 15,000 shares of
the Common Stock on the date of his or her first election as a member of the
Board.
(c) Automatic Grants. On April 30 of each year commencing April
30, 1999 and during the term of this Plan, each person who is then serving on
the Board, and who is not a current or former employee or officer of the
Company, shall automatically be granted an option to purchase 3,500 shares of
the Common Stock, subject to the availability of shares under this Plan.
(d) Initial Option Adjuster. On May 15, 1996, each person who is
serving on the Board as of such date, who is not a current or former employee
or officer of the Company and who is to serve on the Board following the 1996
Annual Meeting of Stockholders of the Company shall automatically be granted
an option to purchase an additional 10,000 shares of Common Stock.
Except for the specific options referred to above, no other options shall
be granted under this Plan.
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<PAGE>
5. Option Price. The purchase price of the stock covered by an option
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of paragraph 10 of this Plan.
For purposes of this Plan, if, at the time an option is granted under the
Plan, the Company's Common Stock is publicly traded, "fair market value" shall
be determined as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such option is
granted and shall mean (i) the average (on that date) of the high and low
prices of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market System, if the Common
Stock is not then traded on a national securities exchange; or (iii) the
closing bid price (or average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter National Market System.
If, at the time an option is granted under the Plan, the Company's stock is
not publicly traded, "fair market value" shall be the fair market value on the
date the option is granted as determined by the Board in good faith.
6. Period of Option. Unless sooner terminated in accordance with the
provisions of paragraph 8 of this Plan, an option granted hereunder shall
expire on the date which is ten (10) years after the date of grant of the
option.
7. Vesting of Shares and Non-Transferability of Options.
(a) Vesting. Options granted under this Plan shall not be
exercisable until they become vested. Options granted pursuant to Sections
4(b), 4(c) and 4(d) of this Plan shall vest in the optionee and thus become
exercisable immediately by the optionee in two annual installments of 50% each
on the first and second anniversary of the date of grant. Options granted
pursuant to Section 4(a) of the Plan shall be 100% vested on the date of grant
and thus be fully exercisable at any time prior to their expiration.
(b) Legend on Certificates. The certificates representing such
shares shall carry such appropriate legend, and such written instructions
shall be given to the Company's transfer agent, as may be deemed necessary or
advisable by counsel to the Company in order to comply with the requirements
of the Securities Act of 1933 or any state securities laws.
(c) Non-transferability. Any option granted pursuant to this Plan
shall not be assignable or transferable other than by will or the laws of
descent and distribution or pursuant to a domestic relations order and shall
be exercisable during the optionee's life time only by him or her.
8. Termination of Option Rights.
(a) In the event an optionee ceases to be a member of the Board for
any reason other than death or permanent disability, any then unexercised
portion of options granted to such optionee shall, to the extent not then
vested, immediately terminate and become void; any portion of an option which
is then vested but has not been exercised at the time the optionee so ceases
to be a member of the Board may be exercised, to the extent it is then vested,
by the optionee within two years of the date the optionee ceased to be a
member of the Board; and all options shall terminate after such two year
period has have expired.
(b) In the event that an optionee ceases to be a member of the
Board by reason of his or her death or permanent disability, any option
granted to such optionee shall be immediately, and automatically accelerated
and become fully vested and all unexercised options shall be exercisable by
the optionee (or by the optionee's personal representative, heir or legatee,
in the event of death) until the scheduled expiration date of the option.
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<PAGE>
9. Exercise of Option. Subject to the terms and conditions of this
Plan and the option agreements, an option granted hereunder shall, to the
extent then exercisable, be exercisable in whole or in part by giving written
notice to the Company by mail or in person addressed to Aseco Corporation, 500
Donald Lynch Boulevard, Marlboro, Massachusetts 01752, Attention: Chief
Financial Officer, stating the number of shares with respect to which the
option is being exercised, accompanied by payment in full for such shares.
Payment may be (a) in United States dollars in cash or by check, (b) in whole
or in part in shares of Common Stock of the Company already owned by the
person or persons exercising the option or shares subject to the option being
exercised (subject to such restrictions and guidelines as the Board may adopt
from time to time), valued at fair market value determined in accordance with
the provisions of paragraph 5 or (c) consistent with applicable law, through
the delivery of an assignment to the Company of a sufficient amount of the
proceeds from the sale of the Common Stock acquired upon exercise of the
option and an authorization to the broker or selling agent to pay that amount
to the Company, which sale shall be at the participant's direction at the time
of exercise. There shall be no such exercise at any one time as to fewer than
one hundred (100) shares or all of the remaining shares then purchasable by
the person or persons exercising the option, if fewer than one hundred (100)
shares. The Company's transfer agent shall, on behalf of the Company, prepare
a certificate or certificates representing such shares acquired pursuant to
exercise of the option, shall register the optionee as the owner of such
shares on the books of the Company and shall cause the fully executed
certificates(s) representing such shares to be delivered to the optionee as
soon as practicable after payment of the option price in full. The holder of
an option shall not have any rights of a stockholder with respect to the
shares covered by the option, except to the extent that one or more
certificates for such shares shall be delivered to him or her upon the due
exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Matters. Upon
the occurrence of any of the following events, an optionee's rights with
respect to options granted to him or her hereunder shall be adjusted as
hereinafter provided:
(a) If, after January 18, 1993, the shares of Common Stock shall be
subdivided or combined into a greater smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable
upon the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase
price per share to reflect such subdivision, combination or stock dividend.
No adjustment, however, shall be made for the 1-for-2.4 reverse split of the
Common Stock declared by the Board on January 18, 1993.
(b) Merger; Consolidation; Liquidation; Sale of Assets. In the
event the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
the Company is liquidated or sells or otherwise disposes of all or
substantially all of its assets to another corporation while unexercised
options remain outstanding under the Plan, (i) subject to the provisions of
clauses (iii), (iv) and (v) below, after the effective date of such merger,
consolidation or sale, as the case may be, each holder of an outstanding
option shall be entitled, upon exercise of such option, to receive in lieu of
shares of Common Stock, shares of such stock or other securities as the
holders of shares of Common Stock received pursuant to the terms of the
merger, consolidation or sale; or (ii) the Board may waive any discretionary
limitations imposed with respect to the exercise of the option so that all
options from and after a date prior to the effective date of such merger,
consolidation, liquidation or sale, as the case may be, specified by the
Board, shall be exercisable in full; or (iii) all outstanding options may be
cancelled by the Board as of the effective date of any such merger,
consolidation, liquidation or sale, provided that notice of such cancellation
shall be given to each holder of an option, and each such holder thereof shall
have the right to exercise such option in full (without regard to any
discretionary limitations imposed with respect to the option) during a 30-day
period preceding the effective date of such merger, consolidation, liquidation
or sale; or (iv) all outstanding
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<PAGE>
options may be cancelled by the Board as of the date of any such merger,
consolidation, liquidation or sale, provided that notice of such cancellation
shall be given to each holder of an option and each such holder thereof shall
have the right to exercise such option but only to the extent exercisable in
accordance with any discretionary limitations imposed with respect to the
option prior to the effective date of such merger, consolidation, liquidation
or sale; or (v) the Board may provide for the cancellation of all outstanding
options and for the payment to the holders thereof of some part or all of the
amount by which the value thereof exceeds the payment, if any, which the
holder would have been required to make to exercise such option.
(c) Issuance of Securities. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash
or in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing
events, the class and aggregate number of shares set forth in paragraph 2 of
this Plan that are subject to options which previously have been or
subsequently may be granted under this Plan shall also be appropriately
adjusted to reflect such events. The Board shall determine the specific
adjustments to be made under this paragraph 10 and its determination shall be
conclusive.
11. Restrictions on Issuance of Shares. Notwithstanding the provisions
of paragraphs 4 and 9 of this Plan, the Company shall have no obligation to
deliver any certificate or certificates upon exercise of an option until one
of the following conditions shall be satisfied:
(i) The shares with respect to which the option has been exercised are
at the time of the issue of such shares effectively registered under
applicable Federal and state securities laws as now in force or hereafter
amended; or
(ii) Counsel for the Company shall have given an opinion that such shares
are exempt from registration under Federal and state securities laws as now in
force or hereafter amended; and the Company has complied with all applicable
laws and regulations with respect thereto, including without limitation all
regulations required by any stock exchange upon which the Company's
outstanding Common Stock is then listed.
12. Representation of Optionee. If requested by the Company, the
optionee shall deliver to the Company written representations and warranties
upon exercise of the option that are necessary to show compliance with Federal
and state securities laws, including representations and warranties to the
effect that a purchase of shares under the option is made for investment and
not with a view to their distribution (as that term is used in Securities Act
of 1933).
13. Option Agreement. Each option granted under the provisions of this
Plan shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf for the Company and by the optionee to whom
such option is granted. The option agreement shall contain such terms,
provisions and conditions not inconsistent with this Plan as may be determined
by the officer executing it.
14. Termination and Amendment of Plan. Options may no longer be granted
under this Plan after January 18, 2003, and this Plan shall terminate when all
options granted or to be granted hereunder are no longer outstanding. The
Board may at any time terminate this Plan or make such modification or
amendment thereof as it deems advisable; provided, however, that the Board may
not, without approval by the affirmative vote of the holders of a majority of
the shares of Common Stock present in person or by proxy and entitled to vote
at the meeting, (a) increase the maximum number of shares for which options
may be granted under this Plan (except by adjustment pursuant to Section 10),
(b) materially modify the requirements as to eligibility to participate in
this Plan, (c) materially increase benefits accruing to option holders under
this Plan, or (d) amend this Plan in any manner which would cause Rule 16b-3
to become inapplicable to this Plan; and provided further that the provisions
of this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any
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<PAGE>
successor or amended provision thereof) under the Securities Exchange Act of
1934 (including without limitation, provisions as to eligibility, amount,
price and timing of awards) may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder. Termination
or any modification or amendment of this Plan shall not, without consent of a
participant, affect his or her rights under an option previously granted to
him or her.
15. Withholding of Income Taxes. Upon the exercise of an option, the
Company, in accordance with Section 3402(a) of the Internal Revenue Code, may
require the optionee to pay withholding taxes in respect of amounts considered
to be compensation includible in the optionee's gross income.
16. Compliance with Regulations. It is the Company's intent that the
Plan comply with all respects with Rule 16b-3 under the Securities Exchange
Act of 1934 (or any successor or amended version thereof) and any applicable
Securities and Exchange Commission interpretations thereof. If any provision
of this Plan is deemed not to be in compliance with Rule 16b-3, the provision
shall be null and void.
17. Governing Law. The validity and construction of this Plan and the
instruments evidencing options shall be governed by the laws of The
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of law thereof.
Date Approved by Board of
Directors of the Company: May 12, 1998
Date Approved by Stockholders
of the Company: August 11, 1998
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DS1-195651.1
EXHIBIT 10.3
ASECO CORPORATION
1993 EMPLOYEE STOCK PURCHASE PLAN
(Amended and Restated Effective as of June 18, 1998)
l. PURPOSE. The purpose of this Employee Stock Purchase Plan (the "Plan")
is to provide employees of Aseco Corporation (the "Company"), and its
subsidiaries, who wish to become stockholders of the Company an opportunity to
purchase Common Stock of the Company (the "Shares"). The Plan is intended to
qualify as an "employee stock purchase plan" within the meaning of Section 423
of the Internal Revenue Code of 1986, as amended (the "Code").
2. ELIGIBLE EMPLOYEES. Subject to provisions of Sections 8, 9 and 10 below,
any individual who is in the full-time employment (as defined below) of the
Company, or any of its subsidiaries (as defined in Section 424(f) of the Code)
the employees of which are designated by the Board of Directors of the Company
(the "Board") or the Administrator (as defined in Section 3 below) as eligible
to participate in the Plan, is eligible to participate in any Offering of
Shares (as defined in Section 4 below) made by the Company hereunder. Full-
time employment shall include all employees whose customary employment is:
(a) in excess of 20 hours per week; and
(b) more than five months in the relevant calendar year.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board
or by a committee or person appointed by the Board (the "Administrator"). The
Board shall have the right to delegate to the Administrator full power to
administer, interpret and apply all provisions of the Plan including, without
limitation, the right to determine the frequency and duration of Offering
Periods (as defined in Section 7 below) hereunder. In the event the Board
fails to appoint or refrains from appointing an Administrator, the Board shall
have all power and authority to administer the Plan. In such event, the word
"Administrator" wherever used herein shall be deemed to mean the Board. The
Administrator may waive such provisions of the Plan as it deems necessary to
meet special circumstances not anticipated or covered expressly by the Plan.
Nothing contained in this Section shall be deemed to authorize the
Administrator to alter or administer the provisions of the Plan in a manner
inconsistent with the provisions of Section 423 of the Code.
4. OFFERING DATES. From time to time the Company, by action of the
Administrator, will grant rights to purchase Shares to employees eligible to
participate in the Plan pursuant to one or more offerings (each of which is an
"Offering") on a date or series of dates (each of which is an "Offering Date")
designated for this purpose by the Administrator.
5. PRICES. The price per Share for each grant of rights hereunder shall be
the lesser of:
(a) eighty-five percent (85%) of the fair market value of a Share on the
Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a Share on the
date such right is exercised.
At its discretion, the Administrator may determine a higher price for a grant
of rights.
For purposes of this Plan, the term "fair market value" on any date means (i)
the average (on that date) of the high and low prices of the Company's Common
Stock on the principal national securities exchange on which the Common Stock
is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the NASDAQ National Market System, if the Common Stock is not then
traded on a national securities exchange; or (iii) closing bid price or (the
average of bid prices) last quoted (on that date) by an established quotation
service for over-the-counter securities, if the Common Stock is not reported
on the NASDAQ National Market System or on a national securities exchange. If
the Company's Common Stock is not publicly traded at the time a right is
granted under this Plan, "fair market value" shall mean the fair market value
of the Common Stock as determined by the Administrator after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
6. EXERCISE OF RIGHTS AND METHOD OF PAYMENT.
(a) Rights granted under the Plan will be exercisable periodically on
specified dates as determined by the Administrator.
(b) The method of payment for Shares purchased upon exercise of rights
granted hereunder shall be through regular payroll deductions or
by lump sum cash payment, or both, as determined by the
Administrator. No interest shall be paid upon payroll deductions
unless specifically provided for by the Administrator.
(c) Any payments received by the Company from a participating employee
and not utilized for the purchase of Shares upon exercise of a
right granted hereunder shall be promptly returned to such employee by
the Company after termination of the right to which the payment
relates.
7. TERM OF RIGHTS. Rights granted on any Offering Date shall be exercisable
upon the expiration of such period ("Offering Period") as shall be determined
by the Administrator when it authorizes the Offering, provided that no
Offering Period shall be longer than twenty-seven (27) months.
8. SHARES SUBJECT TO THE PLAN. No more than 150,000 Shares may be sold
pursuant to rights granted under the Plan. Appropriate adjustments in the
above figure, in the number of shares covered by outstanding rights
granted hereunder, in the exercise price of the rights and in the maximum
number of Shares which an employee may purchase (pursuant to Section 10
below) shall be made to give effect to any mergers, consolidations,
reorganizations, recapitalizations, stock splits, stock dividends or other
relevant changes in the capitalization of the Company occurring after the
effective date of the Plan, provided that no fractional Shares shall be
subject to a right and each right shall be adjusted downward to the nearest
full Share. Any agreement of merger or consolidation will include
provisions for protection of the then existing rights of participating
employees under the Plan. Either authorized and unissued Shares or issued
Shares heretofore or hereafter reacquired by the Company may be made subject
to rights under the Plan. If for any reason any right under the Plan
terminates in whole or in part, Shares subject to such terminated right
may again be subjected to a right under the Plan.
9. LIMITATIONS ON GRANTS.
(a) No employee shall be granted a right hereunder if such employee,
immediately after the right is granted, would own stock or rights to
purchase stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company, or of any
subsidiary, computed in accordance with Sections 423(b)(3) and 424(d) of the
Code.
(b) No employee shall be granted a right which permits his right to purchase
shares under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) (or such other maximum as may be prescribed from time to time
by the Code) of the fair market value of such Shares (determined at the time
such right is granted) for each calendar year in which such right is
outstanding at any time in accordance with the provisions of Section 423(b)(8)
of the Code.
(c) No right granted to any participating employee under a single Offering
shall cover more shares than may be purchased at an exercise price equal to
6% of the total base (i.e., excluding bonuses and commissions) compensation
payable to the employee during the Offering Period not taking into
consideration any changes in the employee's rate of compensation after the
date the employee elects to participate in the Offering, or such other
percentage as determined by the Administrator from time to time.
10. LIMIT ON PARTICIPATION. Participation in an Offering shall be limited to
eligible employees who elect to participate in such Offering in the manner,
and within the time limitation, established by the Administrator when it
authorizes the Offering.
11. CANCELLATION OF ELECTION TO PARTICIPATE. An employee who has elected to
participate in an Offering may, unless the employee has waived this
cancellation right at the time of such election in a manner established by
the Administrator, cancel such election as to all (but not part) of the
rights granted under such Offering by giving written notice of such
cancellation to the Company before the expiration of the Offering Period. Any
amounts paid by the employee for the Shares or withheld for the purchase of
Shares from the employee's compensation through payroll deductions shall be
paid to the employee, without interest, upon such cancellation.
12. TERMINATION OF EMPLOYMENT. Upon termination of employment for any
reason, including the death of the employee, before the date on which any
rights granted under the Plan are exercisable, all such rights shall
immediately terminate and amounts paid by the employee for the Shares or
withheld for the purchase of Shares from the employee's compensation
through payroll deductions shall be paid to the employee or to the
employee's estate, without interest.
13. EMPLOYEE'S RIGHTS AS STOCKHOLDER. No participating employee shall have
any rights as a stockholder in the Shares covered by a right granted
hereunder until such rights has been exercised, full payment has been made
for the corresponding Shares and the Share certificate is actually issued.
14. RIGHTS NOT TRANSFERABLE. Rights under the Plan are not assignable or
transferable by a participating employee and are exercisable only by the
employee.
15. LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN. The Plan is intended
to provide shares of Common Stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any employee in
the conduct of his/her own affairs. An employee may, therefore, sell stock
purchased under the Plan at any time the employee chooses, subject to
compliance with any applicable Federal or state securities laws; provided,
however, that because of certain Federal tax requirements, each employee
agrees by entering the Plan, promptly to give the Company notice of any
such stock disposed of within two years after the date of grant of the
applicable right showing the number of such shares disposed of. THE
EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE
STOCK.
16. AMENDMENTS TO OR DISCONTINUANCE OF THE PLAN. The Board of Directors may
at any time terminate or amend this Plan without notice and without further
action on the part of stockholders of the Company, provided:
(a) that no such termination or amendment shall adversely affect the
then existing rights of any participating employee;
(b) that any such amendment which:
(i) increases the number of Shares subject to the Plan (subject to
the provisions of Section 8);
(ii) changes the class of persons eligible to participate under the
Plan; or
(iii) materially increases the benefits accruing to participants
under the Plan
shall be subject to approval of the stockholders of the Company.
17. EFFECTIVE DATE AND APPROVALS. The Plan was initially adopted by the
Board and stockholders of the Company on January 18, 1993 and become
effective as of said date. The Plan was subsequently amended by the Board
on June 18, 1998, subject to the approval of the Company's stockholders by
no later than June 18, 1999.
18. TERM OF PLAN. No rights shall be granted under the Plan after January
18, 2003.
Date approved by the Board
of Directors of the Company: June 18, 1998
Date approved by the
Stockholders of the Company: August 11, 1998
DS1-4519
