<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
___________________
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 25, 2000
--------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 0-22646
-------
Applied Science and Technology, Inc.
(Name of Issuer in its Charter)
__________________________________
Delaware 04-2962110
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
35 Cabot Road, Woburn, Massachusetts 01801-1053
(Address of Principal Executive Offices) (Zip Code)
__________________________________
(781) 933-5560
(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 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 of each of the issuer"s classes of common stock,
as of the latest practicable date:
COMMON STOCK, $0.01 PAR VALUE 14,310,742
- ----------------------------- ----------
Class Outstanding as of 4/28/00
================================================================================
<PAGE>
Applied Science and Technology, Inc. and Subsidiaries
Index
<TABLE>
<CAPTION>
Title Page
----- ----
<S> <C> <C>
Part I. Financial Information
Item 1 Financial Statements
Consolidated Statements of Operations for the Three Months and
Nine Months Ended March 25, 2000 and March 27, 1999 2
Consolidated Balance Sheets -
March 25, 2000, and June 26, 1999 3
Consolidated Statements of Cash Flows for the Nine Months Ended
March 25, 2000 and March 27, 1999 4
Notes to Consolidated Financial Statements 5
Item 2 Management's Discussion and Analysis of Results of Operations
and Financial Condition 9
Item 3 Quantitative and Qualitative Disclosure about Market Risk 13
Part II. Other Information
Items 1 - 5 Not Applicable 13
Item 6 Exhibits 13
Signatures 14
Appendix 15
</TABLE>
1
<PAGE>
Item 1. Financial Statements
Applied Science and Technology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- -------------------------------
March 25, March 27, March 25, March 27,
2000 1999 2000 1999
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Product sales, net $ 31,127 $ 19,333 $ 88,426 $ 45,906
Other revenue 3,007 1,609 7,375 3,990
-------------- -------------- -------------- --------------
Total revenue 34,134 20,942 95,801 49,896
Cost of sales and revenue:
Product sales and other revenue 20,300 13,867 57,808 37,147
-------------- -------------- -------------- --------------
Gross profit 13,834 7,075 37,993 12,749
-------------- -------------- -------------- --------------
Operating expenses:
Research and development expenses 3,769 2,477 9,861 7,045
Selling expenses 2,115 1,329 6,279 3,704
General and administrative expenses 2,952 1,831 8,563 5,503
Restructuring expenses 0 0 0 1,497
-------------- -------------- -------------- --------------
Total operating expenses 8,836 5,637 24,703 17,749
-------------- -------------- -------------- --------------
Earnings (loss) from operations 4,998 1,438 13,290 (5,000)
-------------- -------------- -------------- --------------
Other income (expense):
Interest expense 0 (5) 0 (33)
Interest income 409 97 1,258 284
Other income (expense) 60 (9) (48) 60
-------------- -------------- -------------- --------------
Total other income 469 83 1,210 311
-------------- -------------- -------------- --------------
Earnings (loss) before income taxes 5,467 1,521 14,500 (4,689)
Income tax expense (benefit) 1,947 737 5,189 (1,549)
-------------- -------------- -------------- --------------
Net earnings (loss) $ 3,520 $ 784 $ 9,311 $ (3,140)
============== ============== ============== ==============
Earnings (loss) per share:
Basic $ 0.30 $ 0.09 $ 0.80 $ (0.36)
============== ============== ============== ==============
Diluted $ 0.28 $ 0.08 $ 0.76 $ (0.36)
============== ============== ============== ==============
Weighted average common shares:
Basic 11,710 9,065 11,582 8,760
============== ============== ============== ==============
Diluted 12,540 9,690 12,284 8,760
============== ============== ============== ==============
</TABLE>
See accompanying notes to Consolidated Financial Statements.
2
<PAGE>
Applied Science and Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands except per share data)
<TABLE>
<CAPTION>
Assets March 25, June 26,
2000 1999
-------------------------------
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,661 $ 31,775
Investments, short term 9,051 -
Trade receivables, net 28,716 18,093
Other receivables 933 906
Inventories 18,520 12,419
Prepaid expenses and other assets 599 386
Deferred income taxes 453 1,514
-------------- --------------
Total current assets 68,933 65,093
-------------- --------------
Property, plant and equipment:
Land 2,259 473
Building and improvements 10,889 1,652
Equipment 14,548 11,181
Furniture and fixtures 1,288 1,043
Leasehold improvements 2,620 2,193
-------------- --------------
31,604 16,542
Less accumulated depreciation and amortization (10,321) (8,394)
-------------- --------------
Net property, plant and equipment 21,283 8,148
-------------- --------------
Other assets:
Patents, net 1,014 992
Long-term investments 4,031 -
Goodwill, net of accumulated amortization 7,934 3,967
Deferred income taxes 2,600 1,936
Notes receivable, less current maturities 362 394
Other, net 212 5
-------------- --------------
Total other assets 16,153 7,294
-------------- --------------
$ 106,369 $ 80,535
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable 1,428 -
Accounts payable 6,850 5,496
Accrued expenses 4,719 3,471
Accrued compensation expense and related costs 3,197 2,624
Accrued income taxes 1,226 607
Commissions payable and customer advances 797 616
-------------- --------------
Total current liabilities 18,217 12,814
-------------- --------------
Long term debt 8,572 -
-------------- --------------
Total liabilities: 26,789 12,814
-------------- --------------
Stockholders' equity:
Common stock 118 114
Additional paid-in capital 72,657 70,045
Retained earnings (accumulated deficit) 7,187 (2,124)
Less: Notes receivable for common stock purchases - (148)
Accumulated other comprehensive income (loss) (382) (166)
-------------- --------------
Total stockholders' equity 79,580 67,721
-------------- --------------
$ 106,369 $ 80,535
============== ==============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
Applied Science and Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------------
March 25, March 27,
2000 1999
-----------------------------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 9,311 $ (3,140)
Adjustments to reconcile net earnings to net cash
provided by (used for) operating activities:
Depreciation 2,456 1,901
Amortization 820 462
Deferred income taxes 397 (1,893)
Loss on disposal of assets 463 625
Changes in operating assets and liabilities:
Trade receivables (10,623) (1,350)
Other receivables (357) -
Inventories (5,455) 1,824
Prepaid expenses and other assets (420) 211
Notes receivable 32 (65)
Accounts payable 1,354 293
Accrued expenses 2,335 (236)
Commissions payable and customer advances 181 277
--------------- ---------------
Net cash provided by (used for)
operating activities 494 (1,091)
--------------- ---------------
Cash flows from investing activities:
Acquisition of subsidiaries, less cash acquired (6,245) (23)
Additions to property, plant and equipment (14,676) (1,239)
Purchase of short term cash investments (9,051) -
Investments in other assets - 44
Acquisition-related receivable - (806)
Advances to subsidiary prior to acquisition - (800)
Patent costs (153) (31)
Purchase of long term cash investments (4,031) -
--------------- ---------------
Net cash provided used for
investing activities (34,156) (2,855)
--------------- ---------------
Cash flows from financing activities:
Net borrowing under notes payable to bank 10,000 -
Repayments of notes payable - (686)
Net proceeds from issuance of common stock 2,764 21,214
--------------- ---------------
Net cash provided by
financing activities 12,764 20,528
--------------- ---------------
Effect of exchange rate changes on cash (216) (4)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (21,114) 16,578
Cash and cash equivalents at beginning of period 31,775 7,687
--------------- ---------------
Cash and cash equivalents at end of period $ 10,661 $ 24,265
=============== ===============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ - $ 34
=============== ===============
Income taxes $ 4,119 $ 269
=============== ===============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
Applied Science and Technology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
1) Basis of Presentation
The unaudited financial statements as of March 25, 2000 and March 27, 1999,
and for the three-month and nine-month periods then ended, have been
prepared in accordance with generally accepted accounting principles and
include all adjustments which, in the opinion of management, are necessary
to present fairly the results of operations for the periods then ended. All
such adjustments are of a normal recurring nature. These financial
statements should be read in conjunction with the financial statements for
the year ended June 26, 1999 and the notes thereto included in our
Form 10-K filed with the Securities and Exchange Commission.
The results of our operations for any interim period are not necessarily
indicative of the results of our operations for a full fiscal year.
2) Earnings (Loss) Per Share
The weighted average number of shares used to compute diluted earnings
(loss) per share consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(in thousands) (in thousands)
---------------------------------- ------------------------------------
March 25, March 27, March 25, March 27,
2000 1999 2000 1999
---------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
Weighted average common
shares outstanding 11,710 9,065 11,582 8,760
Weighted average common
equivalent shares due to stock options 830 625 702 -
-------------------------------- ------------------------------------
12,540 9,690 12,284 8,760
================================== ====================================
</TABLE>
Weighted average common equivalent shares relating to stock options were
not included in the weighted average shares used to compute diluted loss
per share for the nine months ended March 27, 1999, as they had an
antidilutive effect.
3) Accounts Receivable
<TABLE>
<CAPTION>
(in thousands)
March 25, June 26,
2000 1999
----------------------------------------------
<S> <C> <C>
Accounts Receivable, trade $ 28,642 $ 17,653
Notes receivable, current portion 771 1,175
Allowance for doubtful accounts (697) (735)
-------------------- -------------------
$ 28,716 $ 18,093
==================== ===================
</TABLE>
5
<PAGE>
4) Inventories
<TABLE>
<CAPTION>
(in thousands)
March 25, June 26,
2000 1999
-------------------------------------------------
<S> <C> <C>
Raw Material $ 12,678 $ 7,906
Work in process 3,644 3,458
Finished goods 2,198 1,055
-------------------- -------------------
$ 18,520 $ 12,419
</TABLE>
5) Research and Development Costs
All research and development costs are expensed as incurred. Research and
development expenses attributable to research contracts are included in
costs of sales and revenue.
6) Short and Long Term Debt
We may borrow up to $8,000,000 from a bank under an unsecured demand line
of credit with interest at the LIBOR rate (8.4% at March 25, 2000).
Borrowings under the line are limited to 100% of our cash balance plus 80%
of domestic accounts receivable under 90 days outstanding. As of March 25,
2000, there were no borrowings against the line of credit.
In connection with the acquisition of our new Wilmington facility, we
entered into a $10 million, secured, seven year, bank term loan. Under the
loan agreement, the loan principle is repaid ratably over the seven year
term and interest is variable based on either a LIBOR or Domestic based
rate. Currently, the interest rate is LIBOR based and is 7.4%.
7) Stockholders' Equity
Capital stock consists of the following:
<TABLE>
<CAPTION>
(in thousands)
------------------------------------------------------------
Number of Shares
------------------------------------------------------------
Authorized Issued and Outstanding
March 25 June 26,
2000 1999
-------------------------------------
(unaudited) (audited)
<S> <C> <C> <C>
Preferred stock:
Preferred stock, $.01 par value 1,000 - -
------------------------------------------------------------
Total preferred stock 1,000 - -
------------------------------------------------------------
Common Stock:
Common stock, $.01 par value 30,000 11,767 11,417
------------------------------------------------------------
Total common stock 30,000 11,767 11,417
------------------------------------------------------------
------------------------------------------------------------
Total capital stock 31,000 11,767 11,417
============================================================
</TABLE>
8) Comprehensive Income
Accumulated other comprehensive income, a component of stockholders'
equity, consists solely of foreign currency translation. The components of
total comprehensive income (loss) were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(in thousands) (in thousands)
----------------------------------- ----------------------------------
March 25, March 27, March 25, March 27,
2000 1999 2000 1999
----------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Net income (loss) $ 3,520 $ 784 $ 9,311 $ (3,140)
Foreign currency translation (136) (145) (216) (4)
----------------------------------- ----------------------------------
Comprehensive income (loss) $ 3,384 $ 639 $ 9,095 $ (3,144)
=================================== ==================================
</TABLE>
6
<PAGE>
9) Acquisitions
On August 24, 1999, we completed the acquisition of the Shamrock product
line from Sputtered Films, Inc. for a total purchase price of $6,245,316.
The purchase price was paid in cash. Unaudited proforma results of
operations that give affect to the acquisition as if it happened at the
beginning of the fiscal year were not disclosed as the effect of the
Shamrock acquisition is insignificant.
10) Business Segments
We have four reportable segments, Semiconductor, Medical and Industrial,
Systems and Corporate, that have separate financial results that are
reviewed by our chief operating decision-maker. Identifiable assets and
capital expenditures data are presented geographically as they are managed
on that basis.
<TABLE>
<CAPTION>
Three Months Ended
(in thousands)
----------------------------------------------------------------------
Semi- Medical and
Conductor Industrial Systems Corporate Total
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 25, 2000
Total revenue $ 26,915 5,186 2,033 - $ 34,134
Inter-segment net sales 685 - 3 - 688
Profit (loss) from operations 8,145 611 (1,347) (2,411) 4,998
Depreciation 425 104 123 293 945
March 27, 1999
Total revenue $ 14,591 5,050 1,301 - $ 20,942
Inter-segment net sales - - - - -
Profit (loss) from operations 2,851 65 8 (1,486) 1,438
Depreciation 308 107 34 39 488
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
(in thousands)
----------------------------------------------------------------------
Semi- Medical and
Conductor Industrial Systems Corporate Total
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 25, 2000
Total revenue $ 72,679 14,829 8,293 - $ 95,801
Inter-segment net sales 2,051 12 3 - 2,066
Profit (loss) from operations 18,021 3,405 (1,593) (6,543) 13,290
Depreciation 1,106 270 319 761 2,456
March 27, 1999
Total revenue $ 29,673 17,666 2,557 - $ 49,896
Inter-segment net sales 1,068 1,033 - - 2,101
Profit (loss) from operations (281) (894) (329) (3,496) (5,000)
Depreciation 1,198 418 133 152 1,901
</TABLE>
7
<PAGE>
11) Investments
Short-term and long-term investments consist of U.S. treasury notes and
government backed debt. The Company uses an investment firm to manage its
investment portfolio.
The Company classifies its securities as held-to-maturity. Held-to-maturity
securities are those investments in which the Company has the ability and
intent to hold the security until maturity. Held-to-maturity securities are
recorded at amortized cost, which approximates market value.
Dividend and interest income is recognized in the period earned. Realized
gains and losses for held-to-maturity securities are included in earnings
and are derived using the specific identification method for determining
the cost of securities sold.
12) Restructuring Charges
During the first quarter of fiscal 1999, the Company consolidated its
Modesto, California operations into its Woburn, Massachusetts and Colorado
Springs, Colorado sites. The Company also consolidated its Beverly,
Massachusetts operation into Woburn. These consolidations resulted in a
restructuring charge of $1,497. The restructuring charge consisted of
severance relating to the termination of 70 employees, abandonment of
leasehold improvements and fixed assets, and facility costs (primarily
future lease payments relating to abandoned facilities). As of March 25,
2000 all 70 employees have been terminated.
Also, during the fourth quarter of fiscal 1999, the Company announced the
consolidation of PlasmaQuest operations based in Dallas, Texas into its
newly leased space in Wilmington, Massachusetts. This consolidation has
resulted in a restructuring charge of approximately $763, primarily
consisting of severance relating to the termination of 16 employees,
abandonment of leasehold improvements and fixed assets, and facility costs
(primarily future lease payments relating to the abandoned facility). As of
March 25, 2000 all 16 employees have been terminated.
<TABLE>
<CAPTION>
Asset Severance Exit
Impairments Benefits Costs Total
--------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
First Quarter Restructuring
Total charges $ 606 $ 579 $ 312 $ 1,497
Cash payments 8 546 140 694
Non-cash items 598 - - 598
Adjustments of accrual - (33) 2 (31)
-------------- -------------- ------------ ------------
Accrual balance, as of March 25, 2000 - - 174 174
Fourth Quarter Restructuring
Total charges 183 196 384 763
Non-cash items 183 - - 183
-------------- -------------- ------------ ------------
Accrual balance, as of March 25, 2000 - 196 384 580
-------------- -------------- ------------ ------------
Total accrual balance as of March 25, 2000 $ - $ 196 $ 558 $ 754
============== ============== ============ ============
</TABLE>
8
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
General
ASTeX provides precision reactive gas solutions to the OEM semiconductor,
medical and industrial markets, and complete process systems for advanced
packaging and magnetic sensor applications. ASTeX's broad product line is based
on a decade of leadership in core technologies including precision reactive gas
processing, specialized power sources and systems integration. Depending on
customers' needs, ASTeX provides varying levels of integration, from components
to subsystems to complete process solutions. ASTeX helps customers maximize
their competitive advantage by improving time to market while reducing costs and
complexity.
Results of Operations for the Three Months and the Nine Months Ended March 25,
2000 and March 27, 1999
The following table compares the consolidated statements of operations for the
three-month and the nine-month periods ended March 25, 2000 and March 27, 1999,
expressed as a percentage of total revenue.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------------------------------------------------
March 25, March 27, March 25, March 27,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Product sales, net 91.2% 92.3% 92.3% 92.0%
Other revenue 8.8% 7.7% 7.7% 8.0%
------------------------------------ ------------------------------------
Total revenue 100.0% 100.0% 100.0% 100.0%
Cost of sales and revenue:
Product sales and other revenue 59.5% 66.2% 60.3% 74.4%
------------------------------------ ------------------------------------
Gross profit 40.5% 33.8% 39.7% 25.6%
------------------------------------ ------------------------------------
Operating expenses:
Selling expenses 6.2% 6.4% 6.6% 7.5%
General and administrative expenses 8.7% 8.7% 8.9% 11.0%
Research and development 11.0% 11.8% 10.3% 14.1%
Restructuring charge 0.0% 0.0% 0.0% 3.0%
------------------------------------ ------------------------------------
Total operating expenses 25.9% 26.9% 25.8% 35.6%
==================================== ====================================
Earnings (loss) from operations 14.6% 6.9% 13.9% (10.0%)
------------------------------------ ------------------------------------
Other income (expense):
Interest expense 0.0% 0.0% 0.0% (0.1%)
Interest income 1.2% 0.4% 1.3% 0.6%
Other income (expense) 0.2% 0.0% (0.1%) 0.1%
------------------------------------ ------------------------------------
Total other income 1.4% 0.4% 1.2% 0.6%
==================================== ====================================
Earnings (loss) before income taxes 16.0% 7.3% 15.1% (9.4%)
Income tax expense (benefit) 5.7% 3.5% 5.4% (3.1%)
------------------------------------ ------------------------------------
Net earnings (loss) 10.3% 3.8% 9.7% (6.3%)
==================================== ====================================
</TABLE>
9
<PAGE>
Revenue
Total revenue increased by 63% to a record $34.1 million in the third quarter of
fiscal 2000 and increased by 92% to a record $95.8 million for the nine months
of fiscal 2000 compared to revenue of $20.9 million and $49.9 million in the
respective three and nine-month periods of fiscal 1999. The increase is
primarily due to an increase in the semiconductor capital equipment business
that grew by 84% to $26.9 million in the third quarter of fiscal 2000 and grew
by 145% to $72.7 million for the nine months of fiscal 2000 compared to fiscal
1999. This growth is driven by the recovery of the semiconductor capital
equipment business, the success of our new products, and by the strength of
ozone and microwave products. Systems group revenue increased by 56% to $2.0
million for the third quarter of fiscal 2000 and increased by 224% to $8.3
million for the nine months of fiscal 2000 compared to comparable periods in
fiscal 1999. The medical and industrial segments of the business increased by 3%
to $5.2 million for the third quarter of fiscal 2000 and decreased by 16% to
$14.8 million for the nine months of fiscal 2000 compared to comparable periods
in fiscal 1999 primarily due to the slow down of the medical business.
Gross Profit
Gross profit increased by $6.8 million to $13.8 million or 41% of total revenue
in the third quarter of fiscal 2000 and increased by $25.2 million to $38.0
million or 40% of total revenue for the nine months of fiscal 2000 compared to
$7.1 million or 34% of total revenue for the third quarter of fiscal 1999 and
$12.8 million or 26% of total revenue for the nine months of fiscal 1999. Gross
margin improved due to increased volume, favorable product mix with higher gross
margin and a lower fixed cost structure due to plant consolidations undertaken
in fiscal 1999. Gross margins for the first nine months of fiscal 1999 were also
adversely impacted by a $1.1 million inventory write-down.
Research and Development Expenses
Net research and development expense increased by 52% to $3.8 million or 11% of
total revenue in the third quarter of fiscal 2000 and increased by 40% to $9.9
million or 10% of total revenue in the nine months of fiscal 2000 compared to
$2.5 million or 12% of total revenues in the third quarter of fiscal 1999 and
$7.0 million or 14% of total revenue for the nine months of fiscal 1999. As a
percentage of revenue, R&D expenses are lower in the first nine months of fiscal
2000 because of higher sales compared to comparable periods in fiscal 1999. On
an absolute dollar basis, research and development expenses rose primarily as a
result of expenditures in connection with support for new modular products and
development of products for the systems group.
Selling, General and Administrative Expenses
Selling expenses increased by 59% to $2.1 million or 6% of total revenue in the
third quarter of fiscal 2000 and increased by 70% to $6.3 million or 7% of total
revenue for the nine months of fiscal 2000 compared to $1.3 million or 6% of
total revenue in the third quarter of fiscal 1999 and $3.7 million or 7% of
total revenue for the nine months of fiscal 1999. The increase is due to the
creation of Global Customer Operations (GCO) during the second half of fiscal
1999 and increased staffing of marketing, sales, service, and product management
in the second half of fiscal 1999 as well as in the first nine months of fiscal
2000 in order to better serve and meet customer needs on a global basis. General
and administrative expenses increased to $3.0 million or 9% of total revenue in
the third quarter of fiscal 2000 and increased to $8.6 million or 9% of total
revenue for the nine months of fiscal 2000 compared to $1.8 million or 9% of
total revenue in the third quarter of fiscal 1999 and $5.5 million or 11% of
total revenue for the nine months of fiscal 1999. These increases
10
<PAGE>
are due to higher goodwill amortization due to acquisitions and higher
employment levels in fiscal 2000.
As a result of consolidation of two facilities, we incurred a restructuring
charge of $1.5 million in the first quarter of fiscal 1999 for the costs of
severance, abandonment of leasehold improvements and fixed assets, and for
facility costs, primarily future lease payments. There was no comparable cost in
the first nine months of fiscal 2000.
Operating Income (Loss)
We had operating income of $5.0 million or 15% of total revenues in the third
quarter of fiscal 2000 and $13.3 million or 14% of total revenues for the nine
months of fiscal 2000 compared to $1.4 million or 7% of total revenue in the
third quarter of fiscal 1999 and a loss of $5.0 million or 10% of total revenue
for the nine months of fiscal 1999. The increase in operating income is due to
higher revenues, gross margin and lower expenses as a percentage of sales,
compared to the third quarter and the first nine months of fiscal 1999.
Other Income and Income Taxes
Total other income increased to $469,000 in the third quarter of fiscal 2000 and
to $1,210,000 for the nine months of fiscal 2000 primarily due to interest
income earned on short and long term cash investments primarily from proceeds of
our March 1999 public stock offering. We had income tax expense of $1.9 million
in the third quarter and $5.2 million for the nine months of fiscal 2000
compared to an income tax expense of $737 thousand in the third quarter of
fiscal 1999 and an income tax benefit of $1.6 million for the first nine months
of fiscal 1999. Earnings for fiscal year 2000 to date were enhanced by a reduced
effective tax rate due to the retroactive reinstatement of the research and
experimentation tax credit.
Liquidity and Capital Resources.
At March 25, 2000 we had cash and cash equivalents of $10.7 million, short term
investments of $9.0 million and long term investments of $4.0 million for a
total of $23.7 million. Working capital is $50.7 million at March 25, 2000. At
June 26, 1999 we had cash and cash equivalents of $31.8 million and working
capital of $52.3 million.
During the nine months ended March 25, 2000 our cash and cash equivalent
position decreased by $21.1 million as we purchased short term investments of
$9.0 million and long term investments of $4.0 million. Cash provided by
operating activities was $494,000, and was comprised of $9.3 million of net
income and non-cash depreciation and amortization of $3.3 million offset by
$12.1 million used for changes in working capital (including changes in deferred
incomes taxes). Cash provided by financing activities was $12.8 million,
consisting primarily of $10.0 million in net borrowing under notes payable and
$2.8 million due to the exercise of stock options. Cash used for investing
activities was $34.2 million, consisting primarily of $6.2 million for the
August 1999 acquisition of the Shamrock product line from Sputtered Films, Inc.,
$14.8 million for additions to property, plant and equipment, and $13.1 million
for the purchase of short and long term investments. The Company acquired a
production facility in Wilmington, MA, during the third quarter of fiscal 2000
for a total price of approximately $11.0 million financed by new bank borrowing
of $10.0 million, with the remainder of the acquisition costs paid by our cash
reserves. We expect to invest an additional $8.0 million in the fourth quarter
to refurbish the building for production and office space.
11
<PAGE>
We also have a credit facility with a bank which consists of an $8 million
unsecured demand line of credit as previously discussed. There were no
borrowings in connection with this line during the current year and $8 million
is currently available.
Subsequent to the end of the third quarter of fiscal 2000, we completed a common
stock offering that raised approximately $73.2 million, before expenses, on the
sale of 2.5 million shares through an offering underwritten by FleetBoston
Robertson Stephens Inc., CIBC World Markets, Needham & Company, Inc. and Adams,
Harkness & Hill Inc. We intend to use the proceeds for general corporate
purposes.
We will continue to use our cash resources for developing new products,
expanding sales and marketing, performing collaborative product development
projects, capital expenditures in connection with the planned facility and for
general working capital. We shall also seek new ventures and/or acquisitions
that can enhance our position in our markets with potential to increase revenue
and profitability.
Effects of Inflation
We believe that inflation has not had a significant impact on our revenues or
operating results.
Year 2000 Disclosure
Computer systems and software used by many companies needed to be upgraded to
comply with Year 2000 requirements. We have updated our financial reporting and
ERP systems with SAP R/3. We are currently using SAP R/3 in our facility in
Woburn, MA, and our facility in Colorado Springs, Colorado. We conducted a
review of our manufacturing equipment and facilities to ensure Year 2000
compliance. We addressed the Year 2000 preparedness of our critical suppliers
and our major customers and related electronic data interfaces with these third
parties. We completed a systematic review of our products in operation at
customer locations and had identified noncompliant products and offered all
necessary modifications to make them compliant. Our total costs to upgrade
systems to ensure Year 2000 compliance were immaterial.
As of March 25, 2000 we have not experienced any Year 2000 problems with our
software, facilities, critical suppliers or our products.
Forward-Looking Statements
This report contains certain forward-looking statements regarding anticipated
results of operations, the cyclical nature of the semiconductor equipment
industry, liquidity and other matters. These statements, in addition to
statements made in conjunction with the words "anticipate," "expect," "believe,"
"intend," "seek," "estimate" and similar expressions, are forward-looking
statements that are based on management's current expectations and are subject
to a number of factors and uncertainties that could cause actual results to
differ materially from those described in the forward-looking statements. Such
risks and uncertainties include, but are not limited to the following: business
conditions and growth in certain market segments and the general economy;
fluctuating operating results; new product development; the cyclical nature of
the semiconductor equipment industry; uncertainties concerning Asian and
European markets and currencies; the impact of competitive products and pricing;
increased or continued market acceptance of our products and proposed products;
availability of materials; the loss of the services of one or more of our key
employees, dependence on significant customers; the availability of additional
capital to fund expansion on acceptable terms, if at all; and other risks and
uncertainties indicated from time to time in our filings with the Securities and
Exchange Commission.
12
<PAGE>
Item 3. Quantitative and Qualitative Disclosure about Market Risk
Market risk represents the risk of change in value of short-term investments and
financial instruments caused by fluctuations in investment prices, interest
rates and foreign currency exchange rates.
We address market risks in accordance with established policies. Our risk
management activities involve risk and uncertainties and accordingly, results
could differ materially from those projected.
Interest Rate Risk. Due to the fact that long-term notes receivable mature
within 4 years, management has determined that the fair value does not differ
materially from the carrying amount. Long term instruments, which are held to
maturity, will mature on or before July, 2001. We do not believe interest rate
risk is material.
Foreign Exchange Risk. We do not obtain a significant amount of sales
denominated in other than U.S. currency.
Investment Risk. Our investment securities are United States government or
government backed instruments and are considered low risk.
Part II. Other Information
-----------------
Items 1 - 5 Not Applicable
Item 6 a) Exhibits:
--------
Exhibit 10.4 Loan Agreement with Citizens Savings Bank
Exhibit 10.5 Exhibit A to Loan Agreement
Exhibit 10.6 First Amendment to Unsecured Committed Revolver
Loan Agreement
Exhibit 10.7 Exhibit A to First Amendment to Unsecured
Committed Revolver Loan Agreement
13
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 9, 2000
Applied Science and Technology, Inc.
(Registrant)
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Richard S. Post Chairman of the Board, Chief May 9, 2000
- ---------------------------
Richard S. Post Executive Officer and President
(principal executive officer)
/s/ William S. Hurley Chief Financial Officer, May 9, 2000
- ---------------------------
William S. Hurley Senior Vice President of Finance
(principal financial and accounting
officer)
</TABLE>
14
<PAGE>
Appendix A to Item 601(c) of Regulation S-K
(Article 5 of Registration S-X
Commercial and Industrial Companies)
(in thousands)
<TABLE>
<CAPTION>
Item No. Item Description
- ------- -----------------
<S> <C> <C>
5-02(1) Cash and cash items 10,661
5-02(2) Marketable securities 9,051
5-02(3)(a)(1) Notes and accounts receivable - trade 28,716
5-02(4) Allowances for doubtful accounts (697)
5-02(6) Inventory 18,520
5-02(9) Total current assets 68,933
5-02(13) Property, plant and equipment 31,604
5-02(14) Accumulated depreciation (10,321)
5-02(18) Total assets 106,369
5-02(21) Total current liabilities 18,217
5-02(22) Bonds, mortgages and similar debt -
5-02(28) Preferred stock-mandatory redemption -
5-02(29) Preferred stock-no mandatory redemption -
5-02(30) Common stock 118
5-02(31) Other stockholders' equity 79,462
5-02(32) Total liabilities and stockholders' equity 106,369
5-03(b)1(a) Net sales of tangible products 95,801
5-03(b)1 Total revenues 95,801
5-03(b)2(a) Cost of tangible goods sold 57,808
5-03(b)2 Total costs and expenses applicable to sales and revenues 57,808
5-03(b)3 Other costs and expenses 24,703
5-03(b)5 Provision for doubtful accounts and notes 38
5-03(b)(8) Interest and amortization of debt discount -
5-03(b)(10) Income before taxes and other items 14,500
5-03(b)(11) Income tax expense 5,189
5-03(b)(14) Income/loss continuing operations 9,311
5-03(b)(15) Discontinued operations -
5-03(b)(17) Extraordinary items -
5-03(b)(18) Cumulative effect-changes in accounting principles -
5-03(b)(19) Net income or loss 9,311
5-03(b)(20) Earnings per share-basic 0.80
5-03(b)(20) Earnings per share- diluted 0.76
</TABLE>
15
<PAGE>
Exhibit 10.4
________________________________________________________________
________________________________________________________________
LOAN AGREEMENT
between
ASTeX REALTY CORP.
and
CITIZENS BANK OF MASSACHUSETTS
March 6, 2000
________________________________________________________________
________________________________________________________________
-1-
<PAGE>
TABLE OF CONTENTS
Section
-------
1. DEFINITIONS AND RULES OF INTERPRETATION ...................... 6
1.1 Definitions .................................................. 6
1.2 Rules of Interpretation ...................................... 11
2. AGREEMENT TO MAKE LOAN ....................................... 12
2.1 Agreement to Make Loan ....................................... 12
2.2 Purpose of Loan .............................................. 12
2.3 Advances Do Not Constitute a Waiver .......................... 12
3. THE NOTE, INTEREST RATE OPTIONS, REPAYMENT OF LOAN ........... 12
3.1 The Note ..................................................... 12
3.2 The Record ................................................... 12
3.3 Interest on the Loan ......................................... 13
3.4 Interest Rate Selection; Conversion .......................... 13
3.5 Default Interest/Late Charge ................................. 13
3.6 Prepayment ................................................... 13
3.7 Maturity ..................................................... 13
3.8 Payments of Principal of Loan ................................ 13
4. PAYMENTS AND COMPUTATIONS .................................... 14
4.1 Payments ..................................................... 14
4.2 Additional Costs, Etc ........................................ 14
4.3 Capital Adequacy ............................................. 15
4.4 Certificate .................................................. 16
5. COLLATERAL SECURITY .......................................... 16
6. REPRESENTATIONS, WARRANTIES AND COVENANTS .................... 16
6.1 Organization; Authority, Etc ................................. 16
6.2 Availability of Utilities .................................... 17
6.3 Condition of Project ......................................... 17
6.4 Compliance with Requirements ................................. 17
6.5 Project Approvals ............................................ 17
6.6 Violations ................................................... 18
7. AFFIRMATIVE COVENANTS OF THE BORROWER ........................ 18
-2-
<PAGE>
7.1 Records and Accounts ......................................... 18
7.2 Maintenance of Properties .................................... 18
7.3 Insurance .................................................... 18
7.4 Compliance with law .......................................... 18
7.5 Inspection ................................................... 18
7.6 Liens and Other Charges ...................................... 18
7.7 Reporting Information ........................................ 19
7.8 Compliance with Covenants .................................... 19
7.9 Maintenance of Corporate Existence ........................... 19
7.10 Compliance with other obligations ............................ 19
7.11 Compliance with Obligations .................................. 19
7.12 Use of Proceeds .............................................. 20
7.13 Further Assurance of Title ................................... 20
7.14 Notices ...................................................... 20
8. NEGATIVE COVENANTS OF THE BORROWER ........................... 20
8.1 Borrower's Assets ............................................ 20
8.2 Restrictions on Easements, Covenants and Restrictions ........ 20
8.3 Liens ........................................................ 20
8.4 Mergers ...................................................... 21
8.5 Leases ....................................................... 21
8.6 Additional Indebtedness ...................................... 22
8.7 Loans, Advances .............................................. 22
9. FINANCIAL COVENANTS .......................................... 22
10. CONDITIONS TO CLOSING AND ADVANCE OF LOAN PROCEEDS .... ...... 22
10.1 Loan Documents ............................................... 22
10.2 Certified Copies of Organization Documents ................... 22
10.3 Resolutions .................................................. 22
10.4 Incumbency Certificate; Authorized Signers ................... 22
10.5 Validity of Liens ............................................ 23
10.6 Deliveries ................................................... 23
10.7 Legal and Other Opinions ..................................... 24
10.8 Lien Search .................................................. 24
10.9 Performance; No Default ...................................... 24
10.10 Representations and Warranties ............................... 24
10.11 Proceedings and Documents .................................... 24
10.12 Waiver ....................................................... 25
11. EVENTS OF DEFAULT AND REMEDIES ............................... 25
11.1 Events of Default ............................................ 25
11.2 Termination of Advances and Acceleration ..................... 28
11.3 Remedies ..................................................... 28
11.4 Distribution of Collateral Proceeds .......................... 28
-3-
<PAGE>
11.5 Power of Attorney ............................................ 29
11.6 Waivers ...................................................... 29
12. SETOFF ....................................................... 29
13. EXPENSES ..................................................... 30
14. INDEMNIFICATION .............................................. 30
15. LIABILITY OF THE LENDER ...................................... 31
16. RIGHTS OF THIRD PARTIES ...................................... 31
17. SURVIVAL OF COVENANTS, ETC. .................................. 32
18. ASSIGNMENT AND PARTICIPATION ................................. 32
18.1 Conditions to Assignment by Lender ........................... 32
18.2 New Notes, Agreement ......................................... 32
18.3 Participations ............................................... 33
18.4 Pledge by the Lender ......................................... 33
18.5 No Assignment by the Borrower ................................ 33
19. RELATIONSHIP ................................................. 33
20. NOTICES ...................................................... 33
21. GOVERNING LAW ................................................ 35
22. CONSENT TO JURISDICTION; WAIVERS ............................. 35
23. HEADINGS ..................................................... 35
24. COUNTERPARTS ................................................. 35
25. ENTIRE AGREEMENT, ETC. ....................................... 35
26. CONSENTS, AMENDMENTS, WAIVERS, ETC. .......................... 36
27. TIME OF THE ESSENCE .......................................... 36
28. SEVERABILITY ................................................. 36
-4-
<PAGE>
EXHIBITS
--------
A - Interest Terms and Provisions
-5-
<PAGE>
LOAN AGREEMENT
--------------
This LOAN AGREEMENT is made as of the 6th day of March, 2000, by and
among ASTeX REALTY CORP. (the "Borrower"), a corporation organized under the
laws of the Commonwealth of Massachusetts, having its principal place of
business at 35 Cabot Road, Woburn, Massachusetts 01801 and CITIZENS BANK OF
MASSACHUSETTS (the "Lender"), a Massachusetts bank, having its principal
executive offices at 28 State Street, Boston, Massachusetts 02109.
1. DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------
1.1 Definitions. The following terms as used in this Agreement, any
Exhibit hereto, or in any other Loan Document (unless otherwise defined therein)
shall have the meanings set forth in this (S)1. Further, any and all terms
which are defined in Exhibit A, annexed hereto, shall when used herein have the
meaning as set forth in such Exhibit A.
Advance. Any disbursement of the proceeds of the Loan made or to be made
by the Lender pursuant to the terms of this Agree ment.
Agreement. This Loan Agreement, including the Schedules and Exhibits
hereto.
Balance Sheet Date. December 25, 1999.
Business Day. Any day on which the Lender is open for the transaction of
banking business in Boston, Massachusetts.
Closing Date. The first date on which the conditions set forth in (S)10
have been satisfied.
Code. The Internal Revenue Code of 1986 and the regulations thereunder,
all as amended and in effect from time to time.
Collateral. All of the property, rights and interests of the Borrower that
are or are intended to be subject to the security interests, assignments, and
mortgage liens created by the Security Documents.
Consolidated or consolidated. With reference to any term defined herein,
that term as applied to the Guarantor and its Subsidiaries, consolidated in
accordance with generally accepted accounting principles. At the option of the
Lender, any financial reports required hereunder shall be submitted, and any
financial covenants established hereunder shall be calculated, on a Consolidated
basis by the Guarantor.
-6-
<PAGE>
Default. A condition or event which would, with either the giving of
notice or lapse of time or both, constitute an Event of Default.
Default Rate. See (S)35.
Distribution. The (i) declaration or payment of any dividend, (ii)
distribution of cash or other property, (iii) purchase, redemption, or other
retirement (directly or indirectly), or (iv) other distribution, in each case,
of, on or in respect of any shares of any class of capital stock, partnership
interests, or other beneficial or ownership interests of the Borrower; provided
however, a stock split shall not be deemed a distribution hereunder.
Environmental Laws. As specifically defined in the Security Deed.
Environmental Report. That certain Phase I Environmental Site Assessment
and Report dated as of February 1, 2000 as prepared by Vertex Engineering
Services, Inc. with respect to the Project.
Event of Default. See (S)111.
Financing Statements. Uniform Commercial Code Form 1 Financing
Statement(s) from the Borrower in favor of the Lender.
Generally accepted accounting principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time
and (b) consistently applied with past financial statements of the Borrower
adopting the same principles; provided that a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
Governmental Authority. The United States of America, the State in which
the Land is located, the city or town in which the Land is located, and any
political subdivision, agency, authority, department, commission, board, bureau,
or instrumentality of any of them.
Guarantor. Applied Science and Technology, Inc., a Delaware corporation
having a usual place of business at 35 Cabot Road, Woburn, Massachusetts 01801.
Guaranty. The Unconditional Guaranty of Payment and Per formance, dated
or to be dated on or prior to the Closing Date, made by the Guarantor in favor
of the Lender.
-7-
<PAGE>
Improvements. That certain building contain approximately 118,000 square
feet of space located on the Land.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabil ities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indi rect; (b) all liabilities secured by any mortgage, pledge, security
interest, lien, charge, or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; (c) all liabilities under capitalized leases; and (d) all
guaranties, endorsements and other contingent obligations whether direct or
indirect in respect of indebtedness of others, including the obligations to
reimburse the issuer in respect of any letters of credit.
Indemnity Agreement. The Indemnity Agreement Regarding Hazardous
Materials, dated or to be dated on or prior to the Closing Date, made by the
Borrower and the Guarantor in favor of the Lender.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect to any guaranties (or other commitments as described under
Indebtedness), or obliga tions of, any Person.
Land. The real property located in Wilmington, Middlesex (Northern
District) County, Massachusetts, and described in Exhibit A to the Security
Deed.
Loan. The loan or any portion thereof which is the subject of this
Agreement.
Loan Amount. $10,000,000.
Loan Documents. This Agreement, the Note, the Indemnity Agreement, the
Guaranty, and the Security Documents, and all other agreements, documents and
instruments now or hereafter evidencing, securing or otherwise relating to the
Loan.
Maturity Date. March 6, 2007.
Note. The Note in the principal face amount of the Loan Amount dated as of
the date hereof, made by the Borrower to the order of the Lender, together with
any extension, renewal, replacement, substitution, or modification thereof.
-8-
<PAGE>
Obligations. All indebtedness, obligations and liabilities of the Borrower
to the Lender, existing on the date of this Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, including, without limitation, the
Project Obligations.
Obligor(s). The Borrower and the Guarantor.
Organizational Documents. For any corporation, partnership, trust, limited
liability company, limited liability partnership, unincorporated association,
business or other legal entity, the documents pursuant to which such entity has
been established or organized, as such documents may be amended from time to
time.
Outstanding. With respect to the Advances or the Loan, the aggregate
unpaid principal thereof as of any date of determina tion.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivi sion thereof.
Personal Property. All materials, furnishings, fixtures, furniture,
machinery, equipment and all items of tangible or intangible personal property
now or hereafter owned or acquired by the Borrower, in which the Lender has
been, or will be granted an interest to secure the Project Obligations.
Project. The Land, Improvements and Personal Property.
Project Approvals. All approvals, consents, waivers, orders, agreements,
acknowledgments, authorizations, permits and licenses required under applicable
Requirements or under the terms of any restriction, covenant or easement
affecting the Project, or otherwise necessary and obtainable, for the ownership,
acquisition, use, occupancy and operation of the Project and the Improvements,
whether obtained from a Governmental Authority or any other Person.
Project Obligations. All indebtedness, obligations and liabilities of the
Borrower to the Lender existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Agreement or any of the other Loan Documents or in respect of any of the
Advances or the Note.
-9-
<PAGE>
Record. Any record, including computer records, maintained by the Lender
with respect to the balance due under the Loan.
Requirements. Any law, ordinance, code, order, rule or regulation of any
Governmental Authority relating in any way to the acquisition, ownership, use,
occupancy and operation of the Project and the Improvements.
Revolving Loan Arrangement. That certain loan arrangment by and between
the Lender and the Guarantor evidenced by, amongst other documents, instruments
and agreements that certain Unsecured Committed Revolver Loan Agreement dated as
of May 1, 1997, as amended by that certain First Amendment to Unsecured
Committed Revolver Loan Agreement dated as of March 6, 2000 and that certain
Unsecured Committed Revolver Promissory Note dated as of May 1, 1997, as amended
by that certain First Amendment to Unsecured Committed Revolver Promissory Note
dated March 6, 2000.
Security Deed. The Mortgage and Security Agreement, dated or to be dated
as of the date hereof made by the Borrower in favor of the Lender.
Security Documents. The Security Deed, the Assignment of Leases and Rents
dated as of the date hereof, the Financing Statements and the Guaranty, and any
other agreement, document or instrument now or hereafter securing the Project
Obligations.
Subsidiary. Any corporation, partnership, association, trust, or other
business entity of which the designated parent shall at any time own directly,
or indirectly through a Subsidiary or Subsidiaries at least a majority (by
number of votes) of the outstanding voting interests therein.
Survey. An instrument survey of the Land and the Improve ments prepared in
accordance with the Lender's survey require ments, such survey to be
satisfactory to the Lender in form and substance.
Surveyor Certificate. With respect to any Survey, a cer tificate executed
by the surveyor who prepares such Survey dated as of a recent date and
containing such information relating to the Project as the Lender or the Title
Insurance Company may require, such certificate to be satisfactory to the Lender
in form and substance.
Taking. Any condemnation for public use of, or damage by reason of, the
action of any Governmental Authority, or any transfer by private sale in lieu
thereof, either temporarily or permanently.
Title Insurance Company. First American Title Insurance Company.
-10-
<PAGE>
Title Policy. An ALTA standard form title insurance policy issued by the
Title Insurance Company in an amount not less than the Loan Amount insuring the
priority of the Security Deed and that the Borrower holds marketable fee simple
title to the Project, subject only to such exceptions as the Lender may approve,
and shall contain such endorsements and affirmative insurance as the Lender in
its discretion may require.
Type; Type of Loan. Any type of Loan available to the Borrower as set forth
in Exhibit A, attached hereto.
1.2 Rules of Interpretation.
(a) A reference to any Loan Document, agreement, budget, document or
schedule shall include such agreement, budget, document or schedule as
revised, amended, modified or supplemented from time to time in accordance
with its terms and the terms of this Agreement.
(b) A reference to any Exhibit hereto shall be deemed to specifically
incorporate the terms and provisions of such Exhibit herein.
(c) The singular includes the plural and the plural includes the
singular.
(d) A reference to any law includes any amendment or modification to
such law.
(e) A reference to any Person includes its permitted successors and
permitted assigns.
(f) Accounting terms not otherwise defined herein have the meaning
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(g) The words "approval" and "approved", as the context so determines,
means an approval in writing given to the party seeking approval after full
and fair disclosure to the party giving approval of all material facts
necessary in order to determine whether approval should be granted.
(h) Reference to a particular "(S)" refers to that section of this
Agreement unless otherwise indicated.
2. AGREEMENT TO MAKE LOAN.
-11-
<PAGE>
2.1 Agreement to Make Loan. Subject to the terms and conditions of this
Agreement, the Lender agrees to lend to the Borrower and the Borrower agrees to
borrow from the Lender, on the Closing Date, a maximum aggregate principal
amount equal to the Loan Amount.
2.2 Purpose of Loan. The proceeds of the Loan shall be used to acquire
the Project.
2.3 Advances Do Not Constitute a Waiver. No Advance made by the Lender
shall constitute a waiver of any of the terms and conditions of this Agreement,
nor, in the event the Borrower fails to satisfy any such condition, shall any
such Advance have the effect of precluding the Lender from thereafter declaring
such failure to satisfy a condition to be an Event of Default.
3. THE NOTE, INTEREST RATE OPTIONS, REPAYMENT OF LOAN.
3.1 The Note. The obligation of the Borrower to pay the Loan Amount or,
if less, the aggregate unpaid principal amount of all Advances made by the
Lender hereunder plus accrued interest thereon, shall be evidenced by the Note.
In the event the Note is lost, destroyed or mutilated at any time prior to
payment in full of the indebtedness evidenced thereby, the Borrower shall
execute a new note substantially in the form of the Note. The Note shall not be
necessary to establish the indebtedness of the Borrower to the Lender on account
of Advances made under this Agreement.
3.2 The Record. The Borrower irrevocably authorizes the Lender to make or
cause to be made, at or about the time of any Advance or at the time of receipt
of any payment of the principal of the Note, an appropriate notation on the
Lender's Record reflecting the making of such Advance or (as the case may be)
the receipt of such payment. The outstanding amount of the Loan set forth on
the Lender's Record shall be prima facie evidence in the absence of manifest
error of the principal amount thereof owing and unpaid to the Lender, but the
failure to record, or any error in so recording, any such amount on the Lender's
Record shall not limit or otherwise affect the obligations of the Borrower here
under or under the Note to make payments of principal or interest on the Note
when due. Further, the outstanding amount of the Loan as reflected on the
Record from time to time shall be considered correct and binding on the Borrower
unless within ten (10) Business Days after receipt of any notice by the Borrower
of such outstanding amount, the Borrower shall notify the Lender to the
contrary.
3.3 Interest on the Loan. The Loan shall bear interest at the interest
rates, and such interest shall be payable, as set forth in Exhibit A.
-12-
<PAGE>
3.4 Interest Rate Selection; Conversion. The Borrower shall have such
rights as are set forth in Exhibit A to select and, as applicable, Convert Loans
from one Type of Loan to another Type of Loan.
3.5 Default Interest/Late Charge.
(1) Upon the occurrence of an Event of Default, at the Lender's
option, the Loan and all other amounts payable hereunder or under any of
the other Loan Documents shall bear interest payable on demand at a rate
per annum equal to four percent (4%) above the then applicable highest rate
of interest under the Note until such amount shall be paid in full (after
as well as before judgment) (the "Default Rate").
(2) In addition to other charges described in the Loan Documents, and
without derogating from the right of the Lender to accelerate the
Obligations upon the occurrence of an Event of Default, the Borrower shall
pay to the Lender a late charge equal to one (1%) percent of any payment
due under the Note which is not paid within ten (10) days of the due date
thereof.
3.6 Prepayment. The Borrower shall not have the right at any time to
prepay the Note on or before the Maturity Date, as a whole, or in part, except
as set forth in Exhibit A.
3.7 Maturity. The Borrower promises to pay on the Matu rity Date, and
there shall become absolutely due and payable on the Maturity Date, all
principal of the Loan outstanding on such date, together with any and all
accrued and unpaid interest thereon.
3.8 Payments of Principal of Loan. The Borrower promises to pay to the
Lender the principal amount of the Loan in eighty-four (84) consecutive monthly
installments of $119,848, such installments to be due and payable on the first
day of each calendar month, commencing on April 1, 2000, with a final payment
on the Initial Maturity Date in an amount equal to the unpaid balance of the
Loan.
4. PAYMENTS AND COMPUTATIONS.
4.1 Payments.
-13-
<PAGE>
(1) All payments of principal, interest, fees and any other amounts
due under the Note or under any of the other Loan Documents shall be sent
to the Lender at Citizens Bank of Massachusetts, 28 State Street, Boston,
Massachusetts, or at such other location in the Boston, Massachusetts area
that the Lender may from time to time designate, in the billing invoice or
otherwise, in immediately available funds in lawful money of the United
States. Prior to the occurrence of an Event of Default, the Lender will
provide the Borrower with an invoice of the principal, interest and fees
due under the Note at least five (5) days prior to the due date.
(2) All payments by the Borrower under the Note and under any of the
other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such
deduction or withholding.
4.2 Additional Costs, Etc. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to the Lender
by any central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:
(a) subject the Lender to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Agreement, the
other Loan Documents, or the Loans (other than taxes based upon or measured
by the income or profits of the Lender), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to the Lender of the principal of
or the interest on any Loans or any other amounts payable to the Lender
under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Agreement) any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
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by, or deposits in or for the account of, or loans by, or commitments of an
office of the Lender, or
(d) impose on the Lender any other conditions or re quirements with
respect to this Agreement, the other Loan Documents, the Loan, or any class
of loans or commitments of which any Loan forms a part;
and the result of any of the foregoing is
(i) to increase the cost to the Lender of making, funding, issuing,
renewing, extending or maintaining any of the Loans, or
(ii) to reduce the amount of principal, interest or other amount
payable to the Lender hereunder on account of any of the Loans, or
(iii) to require the Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross
amount of any sum receivable or deemed received by the Lender from the
Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by the Lender
at any time and from time to time and as often as the occasion therefor may
arise, pay to the Lender such additional amounts as will be sufficient to
compensate the Lender for such additional cost, reduction, payment or foregone
interest or other sum.
4.3 Capital Adequacy. If the Lender shall have determined that the
adoption of any applicable law, rule, regulation, guideline, directive or
request (whether or not having force of law) regarding capital requirements, or
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender with any of the foregoing
imposes or increases a requirement by the Lender to allocate capital resources
to the Loans made, or to be made, hereunder, which has or would have the effect
of reducing the return on the Lender's capital to a level below that which the
Lender could have achieved (taking into consideration the Lender's then existing
policies with respect to capital adequacy and assuming full utilization of the
Lender's capital) but for such adoption, change or compliance, by any amount
deemed by the Lender to be material: (i) the Lender shall promptly after its
determination of such occurrence give notice thereof to the Borrower; and (ii)
the Borrower shall pay to the Lender as an additional fee from time-to-time on
demand such amount as the Lender certifies to be the amount that will
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compensate it for such reduction. In determining such amounts, the Lender may
use any reasonable averaging and attribution methods.
4.4 Certificate. A certificate setting forth any addi tional amounts
payable pursuant to (S)42 or (S)43 and a brief explanation of such amounts which
are due, submitted by the Lender to the Borrower, shall be prima facie evidence
that such amounts are due and owing.
5. COLLATERAL SECURITY. The Obligations shall be secured by a perfected
first priority mortgage lien and security in the Collateral pursuant to the
terms of the Security Documents to which the Borrower is a party.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower represents,
warrants, and covenants to the Lender as follows:
6.1 Organization; Authority, Etc.
(1) Organization; Good Standing. The Borrower is a corporation duly
organized under the laws of the Commonwealth pursuant to the Borrower's
Organizational Documents, and is, and will at all times be, validly
existing and in good standing under the laws of such State. The Borrower
is, and will at all times be, duly organized and is, and will at all times
be, validly existing, in good standing, and qualified to do business in
each jurisdiction where required. The Borrower has, and will at all times
have, all requisite power to own its property and conduct its business as
now conducted and as presently contemplated.
(2) Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents to which the Borrower is or is to
become a party and the transactions contemplated hereby and thereby (i) are
within the authority of the Borrower, (ii) have been duly authorized by all
necessary proceedings on the part of the Borrower, (iii) to the best of the
Borrower's knowledge, do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which
Borrower is subject or any judgment, order, writ, injunction, license or
permit applicable to Borrower, (iv) do not conflict with any provision of
the Organizational Documents of the Borrower, and (v) do not require the
approval or consent of, or filing with, any governmental agency or
authority other than those already obtained and the filing of the Security
Documents and the Financing Statements in the appropriate public records
with respect thereto.
(3) Enforceability. The execution and delivery of
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this Agreement and the other Loan Documents to which each Obligor is or
is to become a party will result in valid and legally binding
obligations of such Obligor enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding
therefor may be brought.
6.2 Availability of Utilities. All utility services necessary and
sufficient for the use and operation of the Project are presently, and will at
all times be, available to the boundaries of the Land through dedicated public
rights of way or through perpetual private easements, approved by the Lender,
with respect to which the Security Deed creates a valid and enforceable first
lien.
6.3 Condition of Project. Except as otherwise disclosed in the
Environmental Report, neither the Project nor any part thereof is now damaged or
injured as result of any fire, explosion, accident, flood or other casualty or
has been the subject of any Taking, and to the knowledge of the Borrower, no
Taking is pending or contemplated.
6.4 Compliance with Requirements. To the best of the Borrower's knowledge
and except as otherwise disclosed in the Environmental Report, the use and
occupancy of the Project complies with, and will at times comply with, all
Requirements. The Borrower will give all such notices to, and take all such
other actions with respect to, such Governmental Authority as may be required
under applicable Requirements to use, occupy and operate the Project.
6.5 Project Approvals.
(1) To the best of the Borrower's knowledge, all necessary and
required Project Approvals have been obtain by the Borrower or its
predecessors in title to the Project, and such Project Approvals have been
validly issued and are in full force and effect. To the best of the
Borrower's knowledge, no Project Approvals will terminate, or become void
or voidable or terminable, upon any sale, transfer or other disposition of
the Project, including any transfer pursuant to foreclosure sale under the
Security Deed.
(2) The Borrower will duly perform and comply with all of the terms
and conditions of all Project Approvals obtained at any time.
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6.6 Violations. The Borrower has received no notices of, or has any
knowledge of, any violations of any applicable Re quirements or Project
Approvals.
7. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants and
agrees to, so long as the Loan is outstanding:
7.1 Records and Accounts. Keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP consistently
applied, subject to year end adjustments, reflecting all financial transactions
of the Borrower, including complete records of all accounts of Borrower, as
defined in the Massachusetts Uniform Commercial Code.
7.2 Maintenance of Properties. Maintain, keep and preserve the Project
(tangible and intangible) necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
Borrower shall use its best efforts to maintain in full force and effect all
rights, patents, privileges necessary for the proper conduct of its business at
the Project.
7.3 Insurance. Maintain insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
the Lender shall reasonably require and as are usually carried by companies
engaged in the same or a similar business and similarly situated, which
insurance may provide for reasonable deductibility from coverage thereof.
7.4 Compliance with law. Comply in all material respects with applicable
laws, rules, regulations, and orders, such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments, and
governmental charges imposed upon it or upon its property, noncompliance with
which would have a material and adverse effect on the business and operations of
the Borrower.
7.5 Inspection. At any reasonable time during business hours and from
time to time, permit the Lender or any agent or representative thereof to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of the Borrower and to discuss the affairs,
finances, and accounts of the Borrower with any of their respective officers and
directors and the Borrower's independent accountants. Such visits will be
conducted in a manner which does not interfere with the normal operations of the
Borrower.
7.6 Liens and Other Charges. The Borrower will duly pay and discharge, or
cause to be paid and discharged, before the same shall become overdue all claims
for labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property.
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7.7 Reporting Information. The Borrower hereby agrees to deliver, or cause
to be delivered, to Lender as soon as practicable and in any event within ninety
(90) days after the end of each fiscal year of Borrower, the balance sheet of
Borrower as of the end of such year (accompanied by supplementary schedules
indicating the total debt on any assets shown on a net investment basis), and
the related statements of income, retained earnings, changes in capital and cash
flows for such year, each setting forth in comparative form the figures for the
previous fiscal year and all such statements to be in reasonable detail,
prepared in accordance with generally accepted accounting principles, and
certified without qualification by Borrower's independent certified public
accountants (who shall be satisfactory to Lender) as fairly presenting
Borrower's financial condition as of the end of such year.
7.8 Compliance with Covenants. Conform, adhere to, and observe all
covenants and warranties contained in any other agreement between the Lender and
the Borrower, or instrument furnished by the Borrower to the Lender.
7.9 Maintenance of Corporate Existence. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation,
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is required.
7.10 Compliance with other obligations. The Borrower will punctually and
promptly make all payments and perform all other obligations which may be
required of it with respect to any indebtedness (whether for money borrowed,
goods purchased, services rendered or however such indebtedness may otherwise
arise) owing to persons, firms or corporations other than the Lender, including,
without limitation, indebtedness which may be secured by a security interest in
assets of the Borrower or property of the Borrower, and all obligations under
the terms of any lease in which the Borrower is the lessee. The provisions of
this section shall not preclude the Borrower from contesting in good faith and
diligently defending against any such indebtedness or obligation.
7.11 Compliance with Obligations. Pay and/or perform promptly when due all
of the Obligations and liabilities of Borrower including, without limitation,
the payment of all sales, use, excise, personal property, income, withholding,
corporate, franchise, and other taxes, assessments, and governmental charges
upon or relating to its ownership or use of any of its assets or its income, or
the operation of its business or otherwise for which Borrower is or may be
liable except to the extent the same are being diligently contested in good
faith and adequate
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provision has been made for payment and upon such request shall submit to Lender
proof satisfactory to Lender that such payments and/or deposits have been made.
7.12 Use of Proceeds. The Borrower will use the proceeds of the Loan
solely for the purposes of the acquisition of and the paying for the purchase of
the Project.
7.13 Further Assurance of Title. If at any time the Lender or the Lender's
counsel has reason to believe that any Advance is not secured or will or may not
be secured by the Security Deed as a first lien or security interest on the
Project, then the Borrower shall, within ten (10) days after written notice from
the Lender, do all things and matters necessary, to assure to the satisfaction
of the Lender and the Lender's counsel that any Advance previously made
hereunder or to be made hereunder is secured or will be secured by the Security
Deed as a first lien or security interest on the Project, and the Lender, at its
option, may decline to make Advances hereunder until the Lender has received
such assurance, but nothing in this Section shall limit the Lender's right to
require endorsements extending the effective date of the Title Policy as herein
set forth.
7.14 Notices. The Borrower will promptly notify the Lender in writing of
(i) the occurrence of any Default or Event of Default; (ii) the occurrence of
any other event which may have an adverse effect on the Project or the business
or financial condition of any Obligor; or (iii) the receipt by the Borrower of
any notice of default or notice of termination with respect to any contract or
agreement relating to the ownership, operation, or use of the Project.
8. NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants and agrees
not to, so long as the Loan is outstanding:
8.1 Borrower's Assets. Sell or convey all or substantially all of the
Borrower's assets.
8.2 Restrictions on Easements, Covenants and Restric tions. The Borrower
will not create or suffer to be created or to exist any easement, right of way,
restriction, covenant, condition, license or other right in favor of any person
which affects or might affect title to the Project or the use and occupancy of
the Project or any part thereof without obtaining the prior approval of the
Lender.
8.3 Liens. Create, incur, assume, or suffer to exist, or permit any
Subsidiary to create, incur, assume, or suffer to exist, any lien upon or with
respect to the Project, now owned or hereafter acquired, except:
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(1) Liens in favor of the Lender;
(2) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or, if due and payable, if they are being
contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(3) Judgment and other similar liens arising in connection with court
proceedings, provided the execution or other enforcement of such liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings, provided they do
not adversely affect the Borrower in a material way;
(4) Purchase-money liens on any property hereafter acquired or the
assumption of any lien on property existing at the time of such
acquisition, or a lien incurred in connection with any conditional sale or
other title retention agreement of a capital lease;
(5) Permitted encumbrances, as identified on the Title Policy;
(6) Any lien existing on any asset of any corporation at the time such
corporation becomes a consolidated subsidiary of Borrower;
(7) Any lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into the Borrower or a
consolidated Subsidiary;
(8) Any lien existing on any asset prior to the acquisition thereof by
the Borrower or a consolidated subsidiary and not created in contemplation
of such acquisition;
8.4 Mergers. Redeem any shares of the Borrower, merge or consolidate with
(unless it is the survivor corporation) or sell, assign, lease, or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether, now owned or hereafter acquired) to
any person.
8.5 Leases. Except for the lease by and between the Borrower and
Guarantor dated as of March 6, 2000, the Borrower will not, without the
Lender's consent, which consent shall not be unreasonably withheld, create,
incur, assume, or suffer to exist, or permit any Subsidiary to create, incur,
assume or suffer to exist, any obligation as lessee for the rental or hire of
any real or personal property, except: (1) leases existing on the date of this
Agreement and any extensions or renewals
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thereof; (2) leases, of which the total annual obligation under any such lease
is not more than $600,000.
8.6 Additional Indebtedness. Except as otherwise provided above, issue
evidence of indebtedness or create, assume, become contingently liable for, or
suffer to exist Lender debt in addition to Obligations to the Lender; provided,
however, that the Borrower may incur liabilities which are incurred or arise in
the ordinary course of Borrower's business other than indebtedness arising with
respect to money borrowed or the issuance of standby letters of credit for the
account of the Borrower both of which shall be prohibited.
8.7 Loans, Advances. Make any loan, advance, pay any bonus, or grant any
extension of credit to any corporation, partnership, person or other entity,
except extensions of credit to customers or otherwise in the ordinary course of
business.
9. FINANCIAL COVENANTS.
9.1 The Guarantor will comply with all of the financial covenants set
forth in the Guaranty.
10. CONDITIONS TO CLOSING AND ADVANCE OF LOAN PROCEEDS. The obligation of
the Lender to make any Advance shall be subject to the satisfaction of the
following conditions precedent:
10.1 Loan Documents. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to the Lender.
10.2 Certified Copies of Organization Documents. The Lender shall have
received from each of the Parties a certified copy of its Organization Documents
as in effect on such date of certification, such Organizational Documents to be
in form and substance satisfactory to the Lender.
10.3 Resolutions. All action necessary for the valid execution, delivery
and performance by the Borrower of this Agreement and the other Loan Documents
to which it is or is to become a party shall have been duly and effectively
taken, and evidence thereof satisfactory to the Lender shall have been provided
to the Lender. The Lender shall have received from each such Person true copies
of the resolutions authorizing the transactions described herein, each certified
as of a recent date to be true and complete.
10.4 Incumbency Certificate; Authorized Signers. The Lender shall have
received from the Borrower an incumbency certificate, dated as of the Closing
Date, giving the name and bearing a specimen signature of each individual who
shall be
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authorized: (a) to sign, in the name and on behalf of such Person each of the
Loan Documents to which such Person is or is to become a party; (b) in the case
of the Borrower, to make Draw Requests; and (c) to give notices and to take
other action on its behalf under the Loan Documents.
10.5 Validity of Liens. The Security Documents shall be effective to
create in favor of the Lender a legal, valid and enforceable first lien and
security interest in the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of the
Lender to protect and preserve such lien and security interest shall have been
duly effected. The Lender shall have received evidence thereof in form and
substance satisfactory to the Lender.
10.6 Deliveries. The following items or documents shall have been
delivered to the Lender by the Borrower and shall be in form and substance
satisfactory to the Lender:
(1) Title Policy. The Title Policy, together with proof of payment of
all fees and premiums for such policy and true and accurate copies of all
documents listed as exceptions under such policy.
(2) Other Insurance. Duplicate originals or certified copies of all
policies of insurance required by the Security Deed or hereunder to be
obtained and maintained.
(3) Evidence of Access, Availability of Utilities, Project Approvals.
Evidence as to:
(1) the methods of access to and egress from the Project, and
nearby or adjoining public ways, meeting the reasonable requirements
of the Project;
(2) the availability of water supply and storm and sanitary
sewer facilities meeting the reasonable requirements of the Project;
(3) the availability of all other required utilities, in
location and capacity sufficient to meet the reasonable needs of the
Project; and
(4) the obtaining of all Project Approvals which are required,
necessary or desirable for the use and operation of the Improvements
and the access thereto, together with copies of all such Project
Approvals.
(4) Environmental Report. An environmental site assessment report or
reports of one or more qualified environmental engineering or similar
inspection firms
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approved by the Lender, which report or reports shall indicate a
condition of the Land and any existing improve ments thereon in
compliance with all Requirements and in all respects satisfactory to the
Lender in its sole discretion and upon which report or reports the
Lender is expressly entitled to rely.
(5) Soils Report. A soils report for the Land pre pared by a soils
engineer approved by the Lender, which report shall indicate that, based
upon actual surface and subsurface examinations of the Land, the soils
conditions are fully satisfactory for the use and operation of the
Improvements.
(6) Survey and Taxes. A Survey of the Land (and any existing
improvements thereon) and Surveyor's Certificate, and evidence of payment
of all real estate taxes and munic ipal charges on the Land (and any
existing improvements thereon) which were due and payable prior to the
Closing Date.
10.7 Legal and Other Opinions. The Lender shall have received favorable
opinions in form and substance satisfactory to the Lender and the Lender's
counsel, addressed to the Lender and dated as of the Closing Date, from counsel
to the Borrower and the Guarantor acceptable to the Lender.
10.8 Lien Search. The Lender shall have received a certification from
Title Insurance Company or counsel satisfac tory to the Lender (which shall be
updated from time to time at the Borrower's expense upon request by the Lender)
that a search of the public records disclosed no conditional sales contracts,
security agreements, chattel mortgages, leases of personalty, financing
statements or title retention agreements which affect the Collateral.
10.9 Performance; No Default. The Borrower shall have performed and
complied with all terms and conditions herein required to be performed or
complied with by it on or prior to the Advance of the proceeds of the Loan, and
there shall exist no Default or Event of Default.
10.10 Representations and Warranties. The representations of warranties
made by the Obligors in the Loan Documents or otherwise made by or on behalf of
the Obligors in connection therewith shall have been true and correct in all
respects when made and shall be true and correct in all respects on the date of
any Advances.
10.11 Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be satisfactory to the Lender
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and the Lender's counsel in form and substance, and the Lender shall have
received all information and such counterpart origi nals or certified copies of
such documents and such other cer tificates, opinions or documents as the Lender
and the Lender's counsel may reasonably require.
10.12 Waiver. Any waiver by the Lender of any of the conditions precedent
contained herein for the Closing and any Advance shall not be deemed to be a
waiver by the Lender of such conditions precedent for any subsequent Advance, if
any, or any other obligation of the Lender hereunder.
11. EVENTS OF DEFAULT AND REMEDIES.
11.1 Events of Default. The occurrence of any one or more of the following
conditions or events shall constitute an "Event of Default":
(1) any failure by the Borrower to pay, within ten (10) Business Days
of the due date, any interest on or principal of or other sum payable under
the Note; or
(2) any failure by the Borrower to pay as and when due and payable any
other sums to be paid by the Borrower to the Lender under this Agreement
and the continuance of such failure for a period of ten(10) Business Days
after notice thereof from the Lender; or
(3) title to the Collateral becomes unsatisfactory to the Lender by
reason of any lien, charge, encumbrance, title condition or exception
(including without limitation, any mechanic's, materialman's or similar
statutory or common law lien), and such matter causing title to be or
become unsatisfactory is not cured or removed (including by bonding) within
twenty (20) days after notice thereof from the Lender to the Borrower; or
(4) any refusal by the Title Insurance Company to insure any Advance
as being secured by the Security Deed as a valid first lien and security
interest on the Project and continuance of such refusal for a period of
twenty (20) days after notice thereof by the Lender to the Borrower; or
(5) the Project or any material part thereof is injured by fire,
explosion, accident, flood or other casualty as to which is not covered by
insurance; or
(6) the Project or any material part thereof is subject to a Taking
such that subsequent to the Taking, the Project can no longer be used and
operated in its intended manner; or
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(7) any failure by the Guarantor to duly observe or perform any term,
covenant, condition or agreement contained in the Guaranty; or
(8) any representation or warranty made or deemed to be made by or on
behalf of Borrower in this Agreement or in any of the other Loan Documents,
or in any report, certificate, financial statement, document or other
instrument delivered pursuant to or in connection with this Agreement, any
Advance or any of the other Loan Documents, shall prove to have been false
or incorrect in any material respect upon the date when made or deemed to
be made or repeated; or
(9) any suit or proceeding shall be filed against any Obligor or the
Project which, if adversely determined, would have a materially adverse
affect on the ability of any Obligor to perform each and every one of their
respective obligations under and by virtue of the Loan Documents; or
(10) any failure by the Borrower to obtain any Project Approvals, or
the revocation or other invalidation of any Project Approvals previously
obtained; or
(11) any failure by the Guarantor to maintain ownership of less than
fifty one (51%) percent of the Borrower; or
(l2) any Obligor or Subsidiary thereof shall file a voluntary petition
in bankruptcy under Title 11 of the United States Code, or an order for
relief shall be issued against any such Person in any involuntary petition
in bankruptcy under Title 11 of the United States Code, or any such Person
shall file any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present or future
federal, state or other law or regulation relating to bankruptcy,
insolvency or other relief of debtors, or such Person shall seek or consent
to or acquiesce in the appointment of any custodian, trustee, receiver,
conservator or liquidator of such Person, or of all or any substantial part
of its respective property, or such Person shall make an assignment for the
benefit of creditors, or such Person shall give notice to any governmental
authority or body of insolvency or pending insolvency or suspension of
operation; or
(13) an involuntary petition in bankruptcy under Title 11 of the
United States Code shall be filed against any Obligor or Subsidiary thereof
and such petition shall not be dismissed within sixty (60) days of the
filing thereof; or
(14) a court of competent jurisdiction shall enter any
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order, judgment or decree approving a petition filed against any Obligor or
any Subsidiary thereof seeking any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any present
or future federal, state or other law or regulation relating to bankruptcy,
insolvency or other relief for debtors, or appointing any custodian,
trustee, receiver, conservator or liquidator of all or any substantial part
of its property and such order, judgment or decress shall not be vacated
within thirty (30) days thereof; or
(15) any uninsured final judgment shall be rendered against any
Obligor or any Subsidiary in excess of an aggregate of One Million
($1,000,000.00) Dollars and shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty (30) days, whether or not
consecutive, unless such judgement is being contested or appealed in good
faith in appropriate proceedings; or
(16) The service of process on the Lender attaching by trustee process
any assets of any Obligor held by the Bank in an amount greater than Two
Hundred and Fifty Thousand ($250,000.00) Dollars; or
(17) any of the Loan Documents shall be cancelled, terminated, revoked
or rescinded otherwise than in accor dance with the terms thereof or with
the express prior approval of the Lender, or any action at law, suit in
equity or other legal proceeding to cancel, revoke or rescind any of the
Loan Documents shall be commenced by or on behalf of the Borrower or any
Obligor which is a party thereto or any of their respective stockholders,
partners or beneficiaries, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof; or
(18) any Obligor or any Subsidiary thereof shall be indicted for a
federal crime, a punishment for which could include the forfeiture of any
of its assets; or
(19) any failure by the Borrower to duly observe or perform any other
term, covenant, condition or agreement under this Agreement (including
without limitation, the requirements of Section 8.2 herein) and continuance
of such failure for a period of thirty (30) days after notice thereof from
the Lender; provided however if the Borrower diligently pursues to cure
such failure, such period shall be extended for a period not to exceed an
additional sixty (60) days; or
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(20) The occurrence of any "Event of Default" under the Revolving Loan
Arrangement.
(21) any "Event of Default", as defined or otherwise set forth in any
of the other Loan Documents, shall occur, or any failure by the Borrower to
duly observe or perform any other term, covenant, condition or agreement
under the other Loan Documents.
11.2 Termination of Advances and Acceleration. If any one or more of the
Events of Default shall occur, the Lender may by notice to the Borrower declare
its obligations to make Advances hereunder to be terminated, whereupon the same
shall terminate and the Lender shall be relieved of all obligations to make
Advances to the Borrower, and/or declare all unpaid principal of and accrued
interest on the Note, together with all other amounts owing under the Loan
Documents, to be immediately due and payable, whereupon same shall become and be
immediately due and payable, anything in the Loan Documents to the contrary
notwith standing, and without presentment, protest, demand or other notice of
any kind, all of which are hereby expressly waived by the Borrower.
11.3 Remedies. If any one or more of the Events of Default shall have
occurred, and whether or not the Lender shall have terminated its obligations to
make Advances or accelerated the maturity of the Loan pursuant to (S)112, the
Lender may proceed to protect and enforce its rights and remedies under this
Agreement, the Note or any of the other Loan Documents by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement con tained in this Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if any amount owed to the Lender shall have
become due, by declaration or otherwise, proceed to enforce the payment thereof
or any other legal or equitable right of the Lender. No remedy conferred upon
the Lender or the holder of the Note in this Agreement or in any of the other
Loan Documents is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or thereunder or now or hereafter existing at law or in equity
or by statute or any other provision of law.
11.4 Distribution of Collateral Proceeds. In the event that, following the
occurrence or during the continuance of any Default or Event of Default, the
Lender receives any monies in connection with the enforcement of any the
Security Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:
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(1) First, to the payment of, or (as the case may be) the
reimbursement of the Lender for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Lender in connection with the collection of such monies by
the Lender, for the exercise, protection or enforcement by the Lender of
all or any of the rights, remedies, powers and privileges of the Lender
under this Agreement or any of the other Loan Documents or in respect of
the Collateral or in support of any provision of adequate indemnity to the
Lender against any taxes or liens which by law shall have, or may have,
priority over the rights of the Lender to such monies;
(2) Second, to all other Obligations in such order or preference as
the Lender may determine; provided, however, that the Lender may in its
discretion make proper allowance to take into account any Obligations not
then due and payable;
(3) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Lender of all of the Obligations,
to the payment of any obligations required to be paid pursuant to (S)9-
504(1)(c) of the Uniform Commercial Code of the Commonwealth of Massa
chusetts; and
(4) Fourth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
11.5 Power of Attorney. For the purposes of carrying out the provisions
and exercising the rights, remedies, powers and privileges granted by or
referred to in this Article, the Borrower hereby irrevocably constitutes and
appoints the Lender its true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any instruments and do and
perform any acts which are referred to in this Article, in the name and on
behalf of the Borrower. The power vested in such attorney-in-fact is, and shall
be deemed to be, coupled with an interest and irrevocable.
11.6 Waivers. The Borrower hereby waives to the extent not prohibited by
applicable law (a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by the provisions hereof or of any
of the other Loan Documents), protests and notices of dishonor, (b) any
requirement of diligence or promptness on the Lender's part in the enforce ment
of its rights (but not fulfillment of its obligations) under the provisions of
this Agreement or any of the other Loan Docu ments, and (c) any and all notices
of every kind and description
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which may be required to be given by any statute or rule of law and any defense
of any kind which the Borrower may now or here after have with respect to its
liability under this Agreement or under any of the other Loan Documents.
12. SETOFF. Regardless of the adequacy of any collateral, during the
continuance of any Event of Default, any deposits (general or specific, time or
demand, provisional or final, regardless of currency, maturity, or the branch of
the Lender where such deposits are held) or other sums credited by or due from
the Lender to the Borrower and any securities or other property of the Borrower
in the possession of the Lender may be applied to or set off against the payment
of the Project Obligations and any and all other Obligations.
13. EXPENSES. The Borrower agrees to pay (a) the reason able costs of
producing and reproducing this Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other than
taxes based upon the Lender's net income), including any recording, mortgage or
intangibles taxes in connection with the Security Deed, or other taxes payable
on or with respect to the transactions contemplated by this Agreement, including
any taxes payable by the Lender after the Closing Date (the Borrower hereby
agreeing to indemnify the Lender with respect thereto), (c) all title insurance
premiums, and the reasonable fees, expenses and dis bursements of the Lender's
counsel or any local counsel to the Lender incurred in connection with the
preparation, administra tion or interpretation of the Loan and the Loan
Documents and other instruments mentioned herein, the making of each Advance
hereunder, and amendments, modifications, approvals, consents or waivers hereto
or hereunder, (d) the fees, expenses and disbursements of the Lender incurred in
connection with the preparation, administration or interpretation of the Loan
and the Loan Documents and other instruments mentioned herein, and the making of
each Advance hereunder (including all fees paid to the Appraisal fees, and
surveyor fees) (e) all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and costs, which attorneys may be employees of the Lender) and
the reasonable fees and costs of consultants, accountants, auctioneers,
receivers, brokers, property managers, appraisers, investment bankers or other
experts retained by the Lender in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any Obligor or the administration thereof after the occurrence of a Default or
Event of Default and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to the Lender's relationship with the
Borrower, and (f) all reasonable fees, expenses and disbursements of the Lender
in curred in connection with UCC searches, UCC filings, title rundowns, title
searches or mortgage recordings. The covenants
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of this Section shall survive payment or satisfaction of payment of all amounts
owing with respect to the Note. All references to fees and expenses as set forth
in this section shall mean those out-of-pocket fees and expenses incurred by the
Lender.
14. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless
the Lender from and against any and all claims, actions and suits, whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Agreement
or any of the other Loan Documents or the transactions contemplated hereby and
thereby including, without limitations, (a) any brokerage, leasing, finders or
similar fees, (b) any disbursement of the proceeds of any of the Advances, (c)
any condition of the Project whether related to the quality of construction or
other wise, (d) any actual or proposed use by the Borrower of the proceeds of
any of the Advances, (e) any actual or alleged violation of any Requirements or
Project Approvals, or (f) the Borrower entering into or performing this
Agreement or any of the other Loan Documents, in each case including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding. In
litigation, or the preparation therefor, the Lender shall be entitled to select
its own counsel and, in addition to the foregoing indemnity, the Borrower agrees
to pay promptly the reasonable fees and expenses of such counsel. The
obligations of the Borrower under this Section shall survive the repayment of
the Loan and shall continue in full force and effect so long as the possibility
of such claim, action or suit exists. If, and to the extent that the obligations
of the Borrower under this Section are unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment in
satisfaction of such obligations which is permissible under applicable law.
15. LIABILITY OF THE LENDER. The liability of the Lender to the Borrower
for any breach of the terms of this Agreement by the Lender shall not exceed a
sum equal to the amount which the Lender shall be determined to have failed to
advance in consequence of a breach by the Lender of its obligations under this
Agreement, together with interest thereon at the rate payable by the Borrower
under the terms of the Note for Advances which the Borrower is to receive
hereunder, computed from the date when the Advance should have been made by the
Lender to the date when the Advance is, in fact, made by the Lender, and, upon
the making of any such payment by the Lender to the Borrower, the same shall be
treated as an Advance under this Agreement, in the same fashion as any other
Advance under the terms of this Agreement. In no event shall the Lender be
liable to the Borrower, or anyone claiming by, under or through the Borrower,
for any special, exemplary, punitive or consequential damages, whatever the
nature of the breach of the terms of this Agreement
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by the Lender, such damages and claims therefor being expressly WAIVED by the
Borrower.
16. RIGHTS OF THIRD PARTIES. All conditions to the per formance of the
obligations of the Lender under this Agreement, including the obligation to make
Advances, are imposed solely and exclusively for the benefit of the Lender and
no other Person shall have standing to require satisfaction of such conditions
in accordance with their terms or be entitled to assume that the Lender will
refuse to make Advances in the absence of strict compliance with any or all
thereof and no other Person shall, under any circumstances, be deemed to be a
beneficiary of such conditions, any and all of which may be freely waived in
whole or in part by the Lender at any time if in its sole discretion it deems it
desirable to do so. In particular, the Lender makes no representations and
assumes no obligations as to third parties concerning the quality of the
construction by the Borrower of the Improvements or the absence therefrom of
defects.
17. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Note, in any of the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrower pursuant hereto and thereto shall be deemed to have been relied
upon by the Lender, notwithstanding any investigation heretofore or hereafter
made by it, and shall survive the making by the Lender of the Advances, as
herein contemplated, and shall continue in full force and effect either (i) so
long as any amount due under this Agreement or the Note or any of the other Loan
Documents remains outstanding or the Lender has any obligation to make any
Advances or (ii) for such longer period as may be provided for herein or in any
other Loan Document. All statements contained in any certificate or other paper
delivered to the Lender at any time by or on behalf of the Borrower or any
Subsidiary thereof pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by such
Person.
18. ASSIGNMENT AND PARTICIPATION.
18.1 Conditions to Assignment by Lender. Except as provided herein, the
Lender may assign to one or more banks or other entities all or a portion of its
interests, rights and obligations under this Agreement. From and after the
effective date of any such assignment, (i) the assignee thereunder shall be
deemed to be a party hereto and, to the extent agreed to by the Lender, have the
rights and obligations of a Lender hereunder, and (ii) the Lender shall, to the
extent of its interest assigned as provided herein, be released from its
obligations under this Agreement.
18.2 New Notes, Agreement. Upon any such assignment by the Lender, the
Borrower, at its own expense, shall execute and
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deliver to the Lender (a) in exchange for the Note, a new Note to the order of
such assignee in an amount equal to the amount assumed by such assignee and, if
the Lender has retained some portion of its obligations hereunder, a new Note to
the order of the Lender in an amount equal to the amount retained by it
hereunder and (b) an amendment to this Agreement and any other Loan Documents,
as may be reasonably requested by the Lender, to evidence the assignment,
provide for the rights and interest of the assignee, and establish the rights,
responsibilities and obligations of the Lender as agent for itself and any such
assignee. Such new Notes shall provide that they are replacements for the
surrendered Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such assignment and shall otherwise be in substantially the
form of the assigned Notes. Within five (5) days of issuance of any new Notes
pursuant to this (S)182, the Borrower shall deliver an opinion of counsel,
addressed to the Banks and the Agent, relating to the due authorization,
execution and delivery of such new Notes and the legality, validity and binding
effect thereof, in form and substance satisfactory to the Banks. The surrendered
Notes shall be cancelled and returned to the Borrower.
18.3 Participations. The Lender may sell participations to one or more
banks or other entities in all or a portion of the Lender's rights and
obligations under this Agreement and the other Loan Documents; provided that (a)
any such sale of partic ipations shall not affect the rights and duties of the
Lender hereunder to the Borrower and (b) the only rights granted to the
participant pursuant to such participation arrangements with respect to waivers,
amendments or modifications of the Loan Documents shall be the right to approve
waivers, amendments or modifications that would reduce the principal of or the
interest rate on the Loan, extend the term or increase the amount of the Loan or
extend any regularly scheduled payment date for principal or interest.
18.4 Pledge by the Lender. The Lender may at any time pledge all or any
portion of its interest and rights under this Agreement (including all or any
portion of the Note) to any of the twelve Federal Reserve Banks organized under
(S)4 of the Federal Reserve Act, 12 U.S.C. (S)341. No such pledge or the
enforcement thereof shall release the Lender from its obligations hereunder or
under any of the other Loan Documents.
18.5 No Assignment by the Borrower. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior approval of the Lender.
19. RELATIONSHIP. The relationship between the Lender and the Borrower is
solely that of a lender and borrower, and nothing contained herein or in any of
the other Loan Documents shall in
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any manner be construed as making the parties hereto partners, joint venturers
or any other relationship other than lender and borrower.
20. NOTICES. Except as otherwise provided herein or in any other Loan
Document, each notice, demand, election or request provided for or permitted to
be given pursuant to this Agreement or any other Loan Document (hereinafter in
this Section referred to as "Notice") must be in writing and shall be deemed to
have been properly given or served by personal delivery or by sending same by
overnight courier or by depositing same in the United States Mail, postpaid and
registered or certified, return receipt requested, and addressed as follows:
If to the Lender;
Citizens Bank of Massachusetts
28 State Street
Boston, Massachusetts 02109
Attn: Ms. Suzanne Dwyer, Vice President
With a copy to:
Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attn: Jonathan D. Yellin, Esquire
If to the Borrower:
ASTeX Realty Corp.
35 Cabot Road
Woburn, Massachusetts 01801
Attn: William S. Hurley
With a copy to:
Mintz Levin Cohn Ferris Glovsky & Popeo, PC
1 Financial Center
Boston, Massachusetts 02111
Attn: Stephen T. Langer, Esquire
Each Notice shall be effective upon being personally delivered or upon being
sent by recognized overnight courier or upon being deposited in the United
States Mail as aforesaid. The time period in which a response to such Notice
must be given or any action taken with respect thereto (if any), however, shall
commence to run from the date of receipt if personally delivered or sent by
overnight courier, or if so deposited in the United States Mail, the earlier of
three (3) Business Days following such deposit or the date of receipt as
disclosed on the return receipt. Rejection or other refusal to accept or the
inability
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to deliver because of changed address for which no Notice was given
shall be deemed to be receipt of the Notice sent. By giving at least thirty
(30) days' prior Notice thereof, the Borrower or the Lender shall have the right
from time to time and at any time during the term of this Agreement to change
their respective addresses and each shall have the right to specify as its
address any other address within the United States of America.
21. GOVERNING LAW. This Agreement and each of the other Loan Documents,
except as otherwise specifically provided there in, are contracts under the
laws of The Commonwealth of Massa chusetts and shall for all purposes be
construed in accordance with and governed by the laws of said Commonwealth
(excluding the laws applicable to conflicts or choice of law).
22. CONSENT TO JURISDICTION; WAIVERS. THE BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY (A) SUBMITS TO PERSONAL JURIS DICTION IN THE COMMONWEALTH OF
MASSACHUSETTS OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND (B) WAIVES ANY AND ALL
PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO THE RIGHT, IF ANY, TO TRIAL
BY JURY, WHICH RIGHT IS ALSO WAIVED BY THE LENDER (II) TO OBJECT TO JURISDICTION
WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY PARTICULAR FORUM WITHIN
THE COMMONWEALTH OF MASSACHUSETTS, AND (III) TO THE RIGHT, IF ANY, TO CLAIM OR
RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN ACTUAL DAMAGES. THE BORROWER AGREES THAT, IN ADDITION TO ANY METHODS
OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED DIRECTED TO THE BORROWER AT THE ADDRESS SET FORTH
IN (S)20 ABOVE, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE
SAME SHALL BE SO MAILED. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE
LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS
AGAINST ANY COLLATERAL AND AGAINST THE BORROWER, AND AGAINST ANY PROPERTY OF THE
BORROWER, IN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR
TAKING SUCH ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE
AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE BORROWER, AND THE LENDER
HEREUNDER OR THE SUBMISSION HEREIN BY THE BORROWER TO PERSONAL JURISDICTION
WITHIN THE COMMONWEALTH OF MASSACHUSETTS.
23. HEADINGS. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
24. COUNTERPARTS. This Agreement and any amendment hereof may be executed
in several counterparts and by each party on a
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separate counterpart, each of which when so executed and deliv ered shall be an
original, and all of which together shall constitute one instrument. In proving
this Agreement it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated,
except as provided in Article 26.
26. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as other wise expressly
set forth in any particular provision of this Agreement, any consent or approval
required or permitted by this Agreement to be given by the Lender may be given,
and any term of this Agreement or of any other instrument related hereto or
mentioned herein may be amended, and the performance or obser vance by the
Borrower of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Lender. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No Advance made by the lender hereunder during the
continuance of any Default or Event of Default shall constitute a waiver there
of. No notice to or demand upon the Borrower shall entitle the Borrower to
other or further notice or demand in similar or other circumstances.
27. TIME OF THE ESSENCE. Time is of the essence with respect to each and
every covenant, agreement and obligation of the Borrower under this Agreement
and the other Loan Documents.
28. SEVERABILITY. The provisions of this Agreement are severable, and if
any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any juris diction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such juris
diction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
29. COLLATERALIZATION. Notwithstanding anything else stated in this
Agreement or in any other Loan Document, the Lender hereby acknowledges and
agrees that the liens granted to the Lender pursuant to the Security Deed and
the Assignment of
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Leases and Rents have been granted solely to secure the Obligations. The Lender
further agrees and acknowledges that the liens granted to the Lender pursuant to
the Security Deed and the Assignment of Leases and Rents shall not secure, nor
are intended to secure, either the Revolving Loan Arrangement or the Guaranty;
provided however, nothing stated within this paragraph shall in any manner be
deemed to constitute a waiver or limitation of any other rights or remedies of
the Lender available under applicable law against the Borrower or the Guarantor.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first set forth above.
ASTeX REALTY CORP.
By: /s/ William S. Hurley
------------------------------
Name: William S. Hurley
Title: Treasurer and Clerk
Citizens Bank of Massachusetts
By: /s/ Suzanne Dwyer
-------------------------------
Name: Suzanne Dwyer
Title: Vice President
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Exhibit A
---------
Interest Terms and Provisions
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Exhibit 10.5
EXHIBIT A
This Exhibit A provides for certain of the substantive terms and provisions
regarding, among other things, the interest rate, interest repayment, and
selection and conversion of optional interest rates for the Loan established
pursuant to the Loan Agreement to which this document is attached as an Exhibit
(the "Loan Agreement"). The terms and provisions of this Exhibit A are
specifically incorporated by reference into the Loan Agreement.
1. The following terms as used in this Exhibit A and the Loan Agreement shall
have the meanings set forth below:
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by the Lender at its head office in Boston, Massachusetts as its
"base rate" and (b) one half of one percent ( 1/2%) above the overnight federal
funds effective rate as published by the Board of Governors of the Federal
Reserve System, as in effect from time to time.
Business Day. Any day on which the Lender is open for the transaction of
banking business in Boston, Massachusetts and, in case of LIBOR Rate Loans, also
a day which is a LIBOR Business Day.
Conversion Request. A notice given by the Borrower to the Lender of (i)
its initial selection of an interest rate option for an Advance in accordance
with Paragraph 5, herein, or (ii) its election to convert or continue an
interest rate option for a Loan in accordance with Paragraph 6, herein.
Convert, Conversion and Converted. The conversion of a Loan from one Type
to Loans of another Type.
Domestic Rate. For any Interest Period with respect to each Domestic Rate
Loan, floating at the per annum rate equal to the Base Rate. The Domestic Rate
shall be adjusted automatically on any change in the Base Rate, such that any
change in the Domestic Rate resulting therefrom shall become effective as of the
opening of business on the day on which such change in the Base Rate became
effective.
Domestic Rate Loan. All or any portion of any Advance or the Loan which
bears interest at the Domestic Rate.
Eurocurrency Reserve Rate. For any day with respect to a LIBOR Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such
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<PAGE>
liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate.
Fixed Rate. For any Interest Period with respect to a Fixed Rate Loan, an
interest rate per annum equal at all times during such Interest Period to the
sum of (i) One and Three-Eighths percent (1.375%) and (ii) the Lender's cost of
funds (as determined by the Lender) for a period equal to the Interest Period
(plus any internal incremental increase, as determined and established by the
Lender's treasury department, as a cost of the availability of such funds).
Fixed Rate Loan. All or any portion of an Advance or the Loan bearing
interest at the Fixed Rate.
Interest Payment Date. (a) As to any Loan, the first day of each calendar
month commencing with the calendar month following the calendar month which
includes the date of the Advance of such Loan; and (b) as to any LIBOR Rate
Loan, the last day of each Interest Period.
Interest Period. With respect to each Loan, (a) initially, the period
commencing on the date of the Advance of such Loan and ending on the last day of
one of the periods set forth below (i) for any Domestic Rate Loan, the last day
of the calendar month; (ii) as selected by the Borrower in a Conversion Request,
for any LIBOR Rate Loan, 1, 2, 3, or 6 months; and (iii) for any Fixed Rate
Loan, the then applicable Maturity Date, and (b) thereafter, for any Domestic
Rate Loan or LIBOR Rate Loan, each period commencing on the last day of the next
preceding Interest Period applicable to such Loan and ending on the last day of
one of the periods set forth above, as selected by the Borrower in a Conversion
Request; provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(A) if any Interest Period with respect to a LIBOR Rate Loan would
otherwise end on a day that is not a LIBOR Business Day, that Interest
Period shall be extended to the next succeeding LIBOR Business Day unless
the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding LIBOR Business Day;
(B) if any Interest Period with respect to a Domestic Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end on
the next succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided in Paragraph
6, herein, the Borrower shall be deemed to have requested a conversion of
the affected LIBOR
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Rate Loan to a Domestic Rate Loan on the last day of the then current
Interest Period with respect thereto;
(D) any Interest Period relating to any LIBOR Rate Loan that begins on
the last LIBOR Business Day of a calendar month (or on a day for which
there is no numeri cally corresponding day in the calendar month at the
end of such Interest Period) shall end on the last LIBOR Business Day of a
calendar month; and
(E) any Interest Period relating to any LIBOR Rate Loan that would
otherwise extend beyond the Maturity Date shall end on the Maturity Date.
LIBO Rate. For any Interest Period with respect to a LIBOR Rate Loan, the
interest rate per annum (rounded upwards to the next highest 1/16 of 1%)
determined by the Lender pursuant to the following formula:
Euro Rate = LIBO Bid Rate
-------------
1.00 - Eurocurrency Reserve Rate
LIBO Bid Rate. For any Interest Period with respect to a LIBOR Rate Loan,
the annual rate of interest determined by the Lender on the second Business Day
prior to the first day of such Interest Period to be the rate at which deposits
in U.S. dollars are offered to the Lender by prime banks in whatever Eurodollar
interbank market may be selected by the Lender in its sole discretion, acting in
good faith, at the time of determination and in accordance with the usual
practice in such market for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount equal (as nearly as
may be) to the principal amount of such LIBOR Rate Loan.
LIBOR Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Lender in its sole
discretion acting in good faith.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate Loan, an
interest rate per annum equal at all times during such Interest Period to the
(i) LIBO Rate plus (ii) One and Three-Eighths percent (1.375%).
LIBOR Rate Loan. All or any portion of an Advance or the Loan bearing
interest calculated by reference to the LIBOR Rate.
Type of Loan. A Domestic Rate Loan or a LIBOR Rate Loan, as the case may
be.
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2. Any and all terms which are defined in the Loan Agreement shall when used
herein have the meaning set forth in the Loan Agreement, unless otherwise
defined herein.
3. The Loan shall bear interest as follows:
1. For each Interest Period:
i. To the extent that all or any portion of the Loan is a Domestic
Rate Loan, such portion shall bear interest during such Interest
Period at the floating rate equal to the Domestic Rate.
ii. To the extent that all or any portion of the Loan is a LIBOR Rate
Loan, such portion shall bear interest during such Interest
Period at the LIBOR Rate determined for such Interest Period.
iii To the extent that all or any portion of the Loan is a Fixed Rate
Loan, such portion shall bear interest during such Interest
Period at the Fixed Rate determined for such Interest Period.
4. The Borrower promises to pay interest on the Loan in arrears on each
Interest Payment Date applicable to such Interest Period.
5. The Borrower agrees that each request submitted to the Lender requesting an
Advance shall be accompanied by a written notice of Borrower (the
"Conversion Request") specifying (i) the requested Type of Loan comprising
such Advance, (ii) in the case of an Advance comprised of any LIBOR Rate
Loan, the initial Interest Period; and (iii) the amount of each Type of
Loan; provided, however, that each LIBOR Rate Loan and Fixed Rate Loan
shall be in an amount of $100,000.00 or integral multiple thereof. A
Conversion Request with respect to a LIBOR Rate Loan or a Fixed Rate Loan
shall be irrevocable and binding on Borrower. If no Conversion Request is
given by Borrower to the Lender with respect to any request for an Advance,
the Borrower shall be deemed to have selected a Domestic Rate Loan.
6. Upon notice given by Borrower to the Lender not later than 12:00 noon
(Boston time) in the case of Conversions into LIBOR Rate Loans or a Fixed
Rate Loan, on the third Business Day prior to the date of the proposed
Conversion, the Borrower may Convert, on any Business Day, Loans of one
Type made to the Borrower into Loans of another Type, provided, however,
that (a) any Conversion of LIBOR Rate Loans may be made only on the last
day of the respective Interest Period for such Loans, (b) any Loan
Converted to a LIBOR Rate Loan shall be in an amount of at least
$100,000.00 or integral
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<PAGE>
multiple thereof, (c) any Loan Converted to a Fixed Rate Loan shall be in
an amount of the outstanding principal balance of the Note, (d) a Fixed
Rate Loan shall not be Converted by the Borrower to a Loan of any other
Type, (e) any Loan Converted to a Fixed Rate Loan shall be for the balance
of the then applicable term of the Loan, and (f) no Advance may be
Converted to a LIBOR Rate Loan or a Fixed Rate Loan when any Default or
Event of Default has occurred and is continuing. Each such Conversion
Request shall be by telephone, telecopy, telex or cable, in each case
confirmed immediately in writing in the manner specified for notices
herein, and shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the Loans to be Converted, and (iii) if such
Conversion is to LIBOR Rate Loan the duration of the initial Interest
Period for such Loans. Each Conversion Request with respect to LIBOR Rate
Loans or a Fixed Rate Loan shall be irrevocable and binding on the
Borrower. Notwithstanding anything stated herein, the Borrower may not
submit a Converstion Request to Convert any Loan into a Domestic Rate Loan.
The Domestic Rate shall only be applicable if the LIBOR Rate or the Fixed
Rate is not available, or except as otherwise provided herein.
7. If after giving a Conversion Request, the Borrower fails to borrow or
Convert any LIBOR Rate Loan or any Fixed Rate Loan, the Borrower shall
indemnify the Lender against any loss or expense incurred by the Lender as
a result of such failure including, without limitation, any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by the Lender to fund or maintain an Advance to be made by
the Lender and the compensation as provided for in Paragraph 13, herein.
8. Any Loans of any Type (other than a Fixed Rate Loan) may be continued as
such upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in
Paragraph 6, above; provided that no LIBOR Rate Loan may be continued as
such when any Default or Event of Default has occurred and is continuing,
but shall be automatically converted to a Domestic Rate Loan on the last
day of the first Interest Period relating thereto ending during the
continuance of any Default or Event of Default of which the officers of the
Lender active upon the Borrower's account have actual knowledge.
9. In the event that the Borrower does not notify the Lender of its election
under Paragraph 6, herein, in a timely manner with respect to any Loan upon
the expiration of the applicable Interest Period, such Loan shall be
automatically converted to a Domestic Rate Loan at the end of the
applicable Interest Period.
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10. Upon the expiration of any Interest Period for a Fixed Rate Loan, such Loan
shall be automatically converted to a Domestic Rate Loan.
11. Notwithstanding anything to the contrary contained herein, in no event may
the Borrower select more than three (3) Interest Periods to be in effect at
any one time for any particular Type of Loan.
12. Each determination of an interest rate by the Lender pursuant hereto shall
be conclusive and binding upon the Borrower in the absence of manifest
error.
13. The Borrower agrees to indemnify the Lender and to hold the Lender harmless
from and against any loss, cost or expense (including loss of anticipated
profits) that the Lender may sustain or incur as a consequence of (a) an
Event of Default by the Borrower in payment of the principal amount of or
any interest on any LIBOR Rate Loans or Fixed Rate Loans as and when due
and payable, including any such loss or expense arising from interest or
fees payable by the Lender to lenders of funds obtained by it in order to
maintain its LIBOR Rate Loans or Fixed Rate Loans, (b) an Event of Default
by the Borrower in making a borrowing or conversion after the Borrower has
given (or is deemed to have given) a Conversion Request, or (c) the making
of any payment of any LIBOR Rate Loan or Fixed Rate Loan or the making of
any conversion of any such Loan to a Domestic Rate Loan on a day that is
not the last day of the applicable Interest Period with respect thereto,
whether due to voluntary prepayment, payment realized from the Collateral
or any Guarantor after the occurrence of an Event of Default, or otherwise,
including interest or fees payable by the Lender to lenders of funds
obtained by it in order to maintain any such Loans. Such loss shall
include, without limitation, an amount calculated as follows:
1. First, the Lender shall determine the amount by which (i) the total
amount of interest which would have otherwise accrued hereunder on
each installment of principal so paid or not borrowed, during the
period beginning on the date of such payment or failure to borrow and
ending on the date such installment would have been due (the
"Reemployment Period"), exceeds (ii) the total amount of interest
which would accrue, during the Reemployment Period, on any readily
marketable bond or other obligation of the United States of America
designated by the Lender in its sole discretion at or about the time
of such payment, such bond or other obligation of the United States of
America to be in an amount equal (as nearly as may be) to the amount
of principal so paid or not borrowed and to have a
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<PAGE>
maturity comparable to the Reemployment Period, and the interest to
accrue thereon to take account of amortization of any discount from
par or accretion of premium above par at which the same is selling at
the time of designation. Each sum amount is hereafter referred to as
an "Installment Amount".
2. Second, each Installment Amount shall be treated as payable as of the
date on which the related principal installment would have been
payable by the Borrower had such principal installment not been
prepaid or not borrowed.
3. Third, the amount to be paid on each such date shall be the present
value of the Installment Amount determined by discounting the amount
thereof from the date on which such Installment Amount is to be
treated as payable, at the same annual interest rate as that payable
upon the bond or other obligation of the United States of America
designated as aforesaid by the Lender.
14. In the event, prior to the commencement of any Interest Period relating to
any LIBOR Rate Loan, the Lender shall determine that adequate and
reasonable methods do not exist for ascertaining the LIBO Rate that would
otherwise determine the rate of interest to be applicable to any LIBOR Rate
Loan during any Interest Period, the Lender shall forthwith give notice of
such determination (which shall be conclusive and binding on the Borrower)
to the Borrower. In such event (a) any Conversion Request with respect to
LIBOR Rate Loans shall be automatically withdrawn and shall be deemed a
request for Domestic Rate Loans, (b) each LIBOR Rate Loan will
automatically, on the last day of the then current Interest Period thereof,
become a Domestic Rate Loan, and (c) the obligations of the Lender to make
LIBOR Rate Loans shall be suspended until the Lender determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Lender shall so notify the Borrower.
15. Notwithstanding any other provisions herein, if any present or future law,
regulation, treaty or directive or in the interpretation or application
thereof shall make it unlawful for the Lender to make or maintain LIBOR
Rate Loans, the Lender shall forthwith give notice of such circumstances to
the Borrower and thereupon (a) the commitment of the Lender to make LIBOR
Rate Loans or convert Loans of another type to LIBOR Rate Loans shall
forthwith be suspended and (b) the LIBOR Rate Loans then outstanding shall
be converted auto matically to Domestic Rate Loans on the last day of each
Interest Period applicable to such LIBOR Rate Loans or
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<PAGE>
within such earlier period as may be required by law. The Borrower hereby
agrees promptly to pay the Lender, upon demand, any additional amounts
necessary to compensate the Lender for any costs incurred by the Lender in
making any conversion in accordance with this section, including any
interest or fees payable by the Lender to lenders of funds obtained by it
in order to make or maintain its LIBOR Rate Loans hereunder and any amount
payable as provided in Paragraph 13, herein.
16. The Borrower shall have the right at any time to prepay the Note on or
before the Maturity Date, as a whole, or in part, subject to the following
limitations:
1. For any Domestic Rate Loan, without premium or penalty, provided that
any amount prepaid shall be accompanied by accrued interest on the
principal repaid to the date of payment;
2. For any LIBOR Rate Loan, upon not less than three (3) Business Days'
prior written notice to the Lender, without penalty, provided that (1)
each partial prepayment shall be in the principal amount of
$100,000.00 or an integral multiple thereof, (2) if such prepayment is
on any day other than the last day of the Interest Period relating
thereto, such amount prepaid shall be accompanied by any additional
amounts necessary to compensate the Lender for any costs incurred by
the Lender in accordance with Paragraph 13, herein, including any
interest or fees payable by the Lender to lenders of funds obtained by
it in order to make or maintain its LIBOR Rate Loans hereunder and (3)
any amount prepaid shall be accompanied by accrued interest on the
principal repaid to the date of payment.
3. For any Fixed Rate Loan upon not less than thirty (30) Business Days'
prior written notice to the Lender, without penalty, provided that
such amount prepaid shall be accompanied by any additional amount
equal to the amounts necessary to compensate the Lender for any costs
incurred by the Lender in accordance with Paragraph 13, herein,
including any interest or fees payable by the Lender to lenders of
funds obtained by it in order to make or maintain its Fixed Rate Loans
hereunder and any amount prepaid shall be accompanied by accrued
interest on the principal repaid to the date of payment.
4. If the Loan Documents provide at the time of prepayment for periodic
principal payments on the Loan, any prepayment of principal shall be
applied against the
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<PAGE>
scheduled installments of principal due on the Loan in the inverse
order of maturity. No amount repaid with respect to the Loan may be
reborrowed.
5. In the event that at the time of any such prepayment Loans are
outstanding of more than one Type, the amount prepaid shall be applied
first to any Domestic Rate Loan prior to application to any LIBOR Rate
Loans or Fixed Rate Loans.
6. Any premium due hereunder upon such prepayment shall be due and
payable upon any prepayment whatsoever, whether voluntary or
involuntary, to the extent permitted by law, and after acceleration of
the unpaid principal balance of the Loan after the occurrence of an
Event of Default.
17. All computations of interest on the Loans and of other fees to the extent
applicable shall be based on a 360-day year and paid for the actual number
of days elapsed. Except as otherwise provided in the definition of the
term "Interest Period" with respect to LIBOR Rate Loans, whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended
to the next succeeding Business Day, and interest shall accrue during such
extension.
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<PAGE>
FIRST AMENDMENT TO UNSECURED COMMITTED REVOLVER LOAN AGREEMENT
This FIRST AMENDMENT TO UNSECURED COMMITTED REVOLVER LOAN AGREEMENT is
dated as of March 6, 2000 by and between:
CITIZENS BANK OF MASSACHUSETTS (as successor in interest to State Street
Bank and Trust Company), with an address of 28 State Street, Boston,
Massachusetts 02109 (hereinafter, the "BANK"); and
APPLIED SCIENCE AND TECHNOLOGY, INC., a Delaware corporation, with a
principal place of business at 35 Cabot Road, Woburn, Massachusetts 01801
(hereinafter, the "BORROWER").
BACKGROUND
WHEREAS, the Borrower and the Bank entered into a certain loan arrangement
(hereinafter, the "LOAN ARRANGEMENT") evidenced by, among other documents,
instruments, and agreements, a certain Unsecured Committed Revolver Loan
Agreement dated as of May 1, 1997 (hereinafter, the "REVOLVER AGREEMENT") and a
certain Unsecured Committed Revolver Promissory Note dated as of May 1, 1997
(hereinafter, the "NOTE") in the original principal amount of $8,000,000.00 made
payable by the Borrower to the order of the Bank; and
WHEREAS, the Borrower has requested and the Bank has agreed to restructure
the terms and provisions of the Loan Arrangement, including, without limitation,
(i) an extension of the Expiration (as defined in the Revolver Agreement) from
May 31, 2000 through April 1, 2003; (ii) a change in the interest rate options
available to the Borrower from the Prime Rate (as defined in the Revolver
Agreement) and the Market Rate (as defined in the Revolver Agreement) to the
Domestic Rate (as defined hereunder) and the LIBOR Rate (as defined hereunder)
and (iii) a change in the applicable financial covenants, as set forth herein;
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and among
the Bank and the Borrower as follows:
1. All references to the "Note" in the Revolver Agreement shall mean
the Note, as amended by that certain First Amendment to Unsecured
Committed Revolver Promissory Note dated March 6, 2000.
2. The term "Loans" as set forth in Section 1.0 of Article I of the
Revolver Agreement is hereby deleted in its entirety and replaced
with the following:
<PAGE>
" "Loans" shall mean Domestic Rate Loans, LIBOR Rate Loans and
Standby Letters of Credit issued by the Bank from time to time
hereunder".
3. The terms "Domestic Rate Loan" and "LIBOR Rate Loan" shall have the
meanings ascribed to such terms within Exhibit A, attached to and
made a part hereof. All other terms so defined within Exhibit A are
hereby incorporated by reference.
4. The terms "Market Rate", "Market Rate Loan", "Prime Rate", and
"Prime Rate Loan" as set forth in the Revolver Agreement are hereby
deleted in their entirety.
5. The last sentence of Section 2.1 of Article II of the Revolver
Agreement is hereby deleted in its entirety and replaced with the
following:
" The principal amount of the Revolver shall be payable upon the
earlier of either (a) the expiration of this Agreement on April 1,
2003 (the "Expiration") or (b) upon the occurrence of an Event of
Default (subject to and as provided herein)."
6. Section 2.2 and 2.5 of Article II of the Revolver Agreement and
Subsections (1), and (2) of Section 2.3 of Article II of the
Revolver Agreement are hereby deleted in their entirety. All terms
and conditions relating to the advances of Loans under the Revolver
Agreement, the applicable rate of interest accruing on outstanding
loans, and the repayment of such Loans shall be governed by the
terms and provisions set forth within Exhibit A, attached hereto and
made a part hereof.
7. Subsection (4) of Section 2.3 of Article II of the Revolver
Agreement is hereby deleted in its entirety and replaced with the
following:
"Default Rate. Any principal amount not paid immediately upon
acceleration by reason of an Event of Default shall bear interest
thereafter, until paid, at a rate equal to the aggregate of the
Domestic Rate plus four (4%) percent per annum (the "Default
Rate")."
8. Section 3.0 of Article III of the Revolver Agreement is hereby
deleted in its entirety and replaced with the following:
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<PAGE>
"The proceeds of the Loans hereunder shall be used only for the
purpose of supporting acquisition financing, letters of credit, and
working capital requirements."
9. The date of the consolidated balance sheet set forth in Section 5.4
of Article V of the Revolver Agreement shall be changed from "June
29, 1996" to "June 26, 1999" and the date of the Borrower's Form
10-K shall be changed from "1996" to "1999".
10. The date of the Borrower's Form 10-K set forth in Article V, Section
5.7 of the Revolver shall be changed from "1996" to "1999".
11. All references to the "Acquisition Transaction" shall hereby be
deleted in the entirety.
12. Section 8.0 of Article VIII of the Revolver is hereby deleted in its
entirety and replaced with the following:
"So long as the Note shall remain unpaid or the Bank shall have any
commitment under this Agreement:
1. The Borrower will maintain Minimum Working Capital of not less
than $18,000,000.00 at the end of each of Borrower's fiscal
quarter.
2. The Borrower will maintain at all times a Maximum Debt to
Tangible Net Worth ratio of no more than: 1.50:1 from and
after December 31, 1999.
3. As of March 31, 1999, the Borrower will maintain a Tangible
Net Worth of not less than $30,000,000.00. Thereafter, the
Borrower's Tangible Net Worth will increase (as of the end of
each of the Borrower's quarters) by a minimum of an aggregate
of 40% of the prior quarter's Net Income.
4. The Borrower will maintain Minimum Debt Service Coverage
defined as the ratio of aggregate Net Income of the Borrower
plus aggregate depreciation, plus aggregate amortization, less
aggregate Capital Expenditures not financed on a
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<PAGE>
long-term basis to Current Maturities of Long Term Debt of the
Borrower of 1.75:1. This covenant shall be tested on a rolling
quarterly basis for a four fiscal quarter period.
5. The Borrower will not suffer a negative Net Income for two
fiscal quarters during any fiscal year.
All of the foregoing covenants shall be tested as of the last
day o f each of the Borrower's fiscal quarters commencing with
the Borrower's fiscal quarter first ending on March __, 2000.
Capitalized terms otherwise not defined herein shall be
defined in accordance with GAAP."
13. Subsection (5) of Section 9.0 of Article IX of the Revolver
Agreement is hereby deleted in its entirety and replaced with the
following:
"There exists any Event of Default as defined under that certain
loan arrangement by and between ASTeX Realty Corp. and the Bank
evidenced by, among other documents, instruments and agreements,
that certain Loan Agreement dated as of March 6, 2000, and that
certain Note dated as of March 6, 2000 in the original principal
amount of $10,000,000.00."
14. Section 11.1 of Article XI of the Revolver Agreement is hereby
deleted in its entirety and replaced with the following:
"Each notice, demand, election or request provided for or permitted
to be given pursuant to this Agreement or any other Loan Document
(hereinafter in this Section referred to as "Notice") must be in
writing and shall be deemed to have been properly given or served by
personal delivery or by sending same by overnight courier or by
depositing same in the United States Mail, postpaid and registered
or certified, return receipt requested, and addressed as follows:
If to the Bank;
Citizens Bank of Massachusetts
28 State Street
Boston, Massachusetts 02109
Attn: Ms. Suzanne Dwyer, Vice President
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<PAGE>
With a copy to:
Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attn: Jonathan D. Yellin, Esquire
If to the Borrower:
Applied Science and Technology, Inc.
35 Cabot Road
Woburn, Massachusetts 01801
Attn: William S. Hurley, Senior Vice President and
Chief Financial Officer
With a copy to:
Mintz Levin Cohn Ferris Glovsky & Popeo, PC
1 Financial Center
Boston, Massachusetts 02111
Attn: Stephen T. Langer, Esquire
Each Notice shall be effective upon being personally delivered or
upon being sent by overnight courier or upon being deposited in the
United States Mail as aforesaid. The time period in which a response
to such Notice must be given or any action taken with respect
thereto (if any), however, shall commence to run from the date of
receipt if personally delivered or sent by overnight courier, or if
so deposited in the United States Mail, the earlier of three (3)
Business Days following such deposit or the date of receipt as
disclosed on the return receipt. Rejection or other refusal to
accept or the inability to deliver because of changed address for
which no Notice was given shall be deemed to be receipt of the
Notice sent. By giving at least thirty (30) days' prior Notice
thereof, the Borrower or the Bank shall have the right from time to
time and at any time during the term of this Agreement to change
their respective addresses and each shall have the right to specify
as its address any other address within the United States of
America."
15. The Borrower hereby ratifies, confirms, and reaffirms all of the
terms and conditions of the Revolver Agreement, and all of the other
documents, instruments, and agreements evidencing the Loan
Arrangement including, without limitation, the Note. In addition,
the Borrower acknowledges and agrees that the Bank is not agreeing
by this First Amendment to Unsecured Committed Revolver Loan
Agreement to amend, modify, or alter any of the terms and conditions
of the Loan Arrangement except to the extent provided herein.
16. Any determination that any provision of this First Amendment to
Unsecured Committed Revolver Loan Agreement or any application
hereof is invalid, illegal or unenforceable in any respect and in
any instance
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<PAGE>
shall not effect the validity, legality, or enforceability of such
provision in any other instance, or the validity, legality or
enforceability of any other provisions of this First Amendment to
Unsecured Committed Revolver Loan Agreement.
17. The Borrower shall pay on demand all costs and expenses of the Bank,
including, without limitation, reasonable attorneys' fees in
connection with the preparation, negotiation, execution and delivery
of this First Amendment to Unsecured Committed Revolver Loan
Agreement.
18. The Borrower warrants and represents that the Borrower has consulted
with independent legal counsel of the Borrower's selection in
connection with this First Amendment to Unsecured Committed Revolver
Loan Agreement and is not relying on any representations or
warranties of the Bank or its counsel in entering into this First
Amendment to Unsecured Committed Revolver Loan Agreement.
19. The Borrower acknowledges, confirms and agrees that it has no
offsets, defenses, claims or counterclaims against the Bank with
respect to any of the Borrower's liabilities and obligations to the
Bank under the Loan Arrangement, and to the extent that the Borrower
has any such claims under the Loan Arrangement, the Borrower
affirmatively WAIVES and RENOUNCES such claims as of the date
hereof.
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<PAGE>
IN WITNESS WHEREOF, this First Amendment to Unsecured Committed Revolver
Loan Agreement has been executed as a sealed instrument as of the date first set
forth above.
WITNESS: BORROWER
/s/ C. L. Glynn APPLIED SCIENCE AND TECHNOLOGY, INC.
- ------------------
By: /s/ William S. Hurley
---------------------------------
Name: William S. Hurley
Title: Senior Vice President and
Chief Financial Officer
Acknowledged and Agreed to:
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Suzanne L. Dwyer
---------------------------------
Name: Suzanne L. Dwyer
-------------------------------
Title: Vice President
------------------------------
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<PAGE>
EXHIBIT A
This Exhibit A provides for certain of the substantive terms and
provisions regarding, among other things, the interest rate, interest repayment,
and selection and conversion of optional interest rates for the Loans
established pursuant to the First Amendment To Unsecured Revolver Loan Agreement
to which this document is attached as an Exhibit (the "Loan Agreement"). The
terms and provisions of this Exhibit A are specifically incorporated by
reference into the Loan Agreement.
1. The following terms as used in this Exhibit A and the Loan Agreement shall
have the meanings set forth below:
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by the Lender at its head office in Boston, Massachusetts as its
"base rate" and (b) one half of one percent (1/2%) above the overnight federal
funds effective rate as published by the Board of Governors of the Federal
Reserve System, as in effect from time to time.
Business Day. Any day on which the Lender is open for the transaction of
banking business in Boston, Massachusetts and, in case of LIBOR Rate Loans, also
a day which is a LIBOR Business Day.
Conversion Request. A notice given by the Borrower to the Lender of (i)
its initial selection of an interest rate option for an Advance in accordance
with Paragraph 5, herein, or (ii) its election to convert or continue an
interest rate option for a Loan in accordance with Paragraph 6, herein.
Convert, Conversion and Converted. The conversion of a Loan from one Type
to Loans of another Type.
Domestic Rate. For any Interest Period with respect to each Domestic Rate
Loan, floating at the per annum rate equal to the Base Rate. The Domestic Rate
shall be adjusted automatically on any change in the Base Rate, such that any
change in the Domestic Rate resulting therefrom shall become effective as of the
opening of business on the day on which such change in the Base Rate became
effective.
Domestic Rate Loan. All or any portion of any Advance or the Loan which
bears interest at the Domestic Rate.
Eurocurrency Reserve Rate. For any day with respect to a LIBOR Rate Loan,
the maximum rate (expressed as a decimal) at which any lender subject thereto
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulations
relating to such reserve requirements) against "Eurocurrency
1
<PAGE>
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Interest Payment Date. (a) As to any Loan, the first day of each calendar
month commencing with the calendar month following the calendar month which
includes the date of the Advance of such Loan; and (b) as to any LIBOR Rate
Loan, the last day of each Interest Period.
Interest Period. With respect to each Loan, (a) initially, the period
commencing on the date of the Advance of such Loan and ending on the last day of
one of the periods set forth below (i) for any Domestic Rate Loan, the last day
of the calendar month; and (ii) as selected by the Borrower in a Conversion
Request, for any LIBOR Rate Loan, 1, 2, 3, or 6 months; and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in a Conversion Request; provided that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
(A) if any Interest Period with respect to a LIBOR Rate Loan would
otherwise end on a day that is not a LIBOR Business Day, that Interest
Period shall be extended to the next succeeding LIBOR Business Day unless
the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding LIBOR Business Day;
(B) if any Interest Period with respect to a Domestic Rate Loan
would end on a day that is not a Business Day, that Interest Period shall
end on the next succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided in
Paragraph 6, herein, the Borrower shall be deemed to have requested a
conversion of the affected LIBOR Rate Loan to a Domestic Rate Loan on the
last day of the then current Interest Period with respect thereto;
(D) any Interest Period relating to any LIBOR Rate Loan that begins
on the last LIBOR Business Day of a calendar month (or on a day for which
there is no numeri cally corresponding day in the calendar month at the
end of such Interest Period) shall end on the last LIBOR Business Day of a
calendar month; and
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<PAGE>
(E) any Interest Period relating to any LIBOR Rate Loan that would
otherwise extend beyond the Maturity Date shall end on the Maturity Date.
LIBO Rate. For any Interest Period with respect to a LIBOR Rate Loan, the
interest rate per annum (rounded upwards to the next highest 1/16 of 1%)
determined by the Lender pursuant to the following formula:
Euro Rate = LIBO Bid Rate
--------------------------------
1.00 - Eurocurrency Reserve Rate
LIBO Bid Rate. For any Interest Period with respect to a LIBOR Rate Loan,
the annual rate of interest determined by the Lender on the second Business Day
prior to the first day of such Interest Period to be the rate at which deposits
in U.S. dollars are offered to the Lender by prime banks in whatever Eurodollar
interbank market may be selected by the Lender in its sole discretion, acting in
good faith, at the time of determination and in accordance with the usual
practice in such market for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount equal (as nearly as
may be) to the principal amount of such LIBOR Rate Loan.
LIBOR Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Lender in its sole
discretion acting in good faith.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate Loan, an
interest rate per annum equal at all times during such Interest Period to the
(i) LIBO Rate plus (ii) One percent (1.00%).
LIBOR Rate Loan. All or any portion of an Advance or the Loan bearing
interest calculated by reference to the LIBOR Rate.
Type of Loan. A Domestic Rate Loan or a LIBOR Rate Loan, as the case may
be.
2. Any and all terms which are defined in the Loan Agreement shall when used
herein have the meaning set forth in the Loan Agreement, unless otherwise
defined herein.
3. The Loan shall bear interest as follows:
a. For each Interest Period:
i. To the extent that all or any portion of the Loan is a
Domestic Rate Loan, such portion shall bear
3
<PAGE>
interest during such Interest Period at the floating rate
equal to the Domestic Rate.
ii. To the extent that all or any portion of the Loan is a LIBOR
Rate Loan, such portion shall bear interest during such
Interest Period at the LIBOR Rate determined for such Interest
Period.
4. The Borrower promises to pay interest on the Loan in arrears on each
Interest Payment Date applicable to such Interest Period.
5. The Borrower agrees that each request submitted to the Lender requesting
an Advance shall be accompanied by a written notice of Borrower (the
"Conversion Request") specifying (i) the requested Type of Loan comprising
such Advance, (ii) in the case of an Advance comprised of any LIBOR Rate
Loan, the initial Interest Period; and (iii) the amount of each Type of
Loan; provided, however, that each LIBOR Rate Loan shall be in an amount
-------- -------
of $100,000.00 or integral multiple thereof. A Conversion Request with
respect to a LIBOR Rate Loan shall be irrevocable and binding on Borrower.
If no Conversion Request is given by Borrower to the Lender with respect
to any request for an Advance, the Borrower shall be deemed to have
selected a Domestic Rate Loan.
6. Upon notice given by Borrower to the Lender not later than 12:00 noon
(Boston time) (1) in the case of Conversions into Domestic Rate Loans, on
the date of the proposed Conversion, and (2) in the case of Conversions
into LIBOR Rate Loans on the third Business Day prior to the date of the
proposed Conversion, the Borrower may Convert, on any Business Day, Loans
of one Type made to the Borrower into Loans of another Type,
provided, however, that (a) any Conversion of LIBOR Rate Loans may be made
-------- -------
only on the last day of the respective Interest Period for such Loans, (b)
any Loan Converted to a LIBOR Rate Loan shall be in an amount of
$100,000.00 or integral multiple thereof, and (c) no Advance may be
Converted to a LIBOR Rate Loan when any Default or Event of Default has
occurred and is continuing. Each such Conversion Request shall be by
telephone, telecopy, telex or cable, in each case confirmed immediately in
writing in the manner specified for notices herein, and shall, within the
restrictions specified above, specify (i) the date of such Conversion,
(ii) the Loans to be Converted, and (iii) if such Conversion is to LIBOR
Rate Loan the duration of the initial Interest Period for such Loans. Each
Conversion Request with respect to LIBOR Rate Loans shall be irrev ocable
and binding on the Borrower.
4
<PAGE>
7. If after giving a Conversion Request, the Borrower fails to borrow or
Convert any LIBOR Rate Loan, the Borrower shall indemnify the Lender
against any loss or expense incurred by the Lender as a result of such
failure including, without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by the Lender to fund or maintain an Advance to be made by the
Lender and the compensation as provided for in Paragraph 12, herein.
8. Any Loans of any Type may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Borrower with
the notice provisions contained in Paragraph 6, above; provided that no
--------
LIBOR Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically
converted to a Domestic Rate Loan on the last day of the first Interest
Period relating thereto ending during the continuance of any Default or
Event of Default of which the officers of the Lender active upon the
Borrower's account have actual knowledge.
9. In the event that the Borrower does not notify the Lender of its election
under Paragraph 6, herein, in a timely manner with respect to any Loan
upon the expiration of the applicable Interest Period, such Loan shall be
automatically converted to a Domestic Rate Loan at the end of the
applicable Interest Period.
10. Notwithstanding anything to the contrary contained herein, in no event may
the Borrower select more than five (5) Interest Periods to be in effect at
any one time for any particular Type of Loan.
11. Each determination of an interest rate by the Lender pursuant hereto shall
be conclusive and binding upon the Borrower in the absence of manifest
error.
12. The Borrower agrees to indemnify the Lender and to hold the Lender
harmless from and against any loss, cost or expense (including loss of
anticipated profits) that the Lender may sustain or incur as a consequence
of (a) an Event of Default by the Borrower in payment of the principal
amount of or any interest on any LIBOR Rate Loans as and when due and
payable, including any such loss or expense arising from interest or fees
payable by the Lender to lenders of funds obtained by it in order to
maintain its LIBOR Rate Loans, (b) an Event of Default by the Borrower in
making a borrowing or conversion after the Borrower has given (or is
deemed to have given) a Conversion Request, or (c) the making of any
payment of any LIBOR Rate Loan or the making of any conversion of any such
Loan to a Domestic Rate Loan
5
<PAGE>
on a day that is not the last day of the applicable Interest Period with
respect thereto, whether due to voluntary prepayment, payment realized
from the Collateral or any Guarantor after the occurrence of an Event of
Default, or otherwise, including interest or fees payable by the Lender to
lenders of funds obtained by it in order to maintain any such Loans. Such
loss shall include, without limitation, an amount calculated as follows:
a. First, the Lender shall determine the amount by which (i) the total
amount of interest which would have otherwise accrued hereunder on
each installment of principal so paid or not borrowed, during the
period beginning on the date of such payment or failure to borrow
and ending on the date such installment would have been due (the
"Reemployment Period"), exceeds (ii) the total amount of interest
which would accrue, during the Reemployment Period, on any readily
marketable bond or other obligation of the United States of America
designated by the Lender in its sole discretion at or about the time
of such payment, such bond or other obligation of the United States
of America to be in an amount equal (as nearly as may be) to the
amount of principal so paid or not borrowed and to have a maturity
comparable to the Reemployment Period, and the interest to accrue
thereon to take account of amortization of any discount from par or
accretion of premium above par at which the same is selling at the
time of designation. Each sum amount is hereafter referred to as an
"Installment Amount".
b. Second, each Installment Amount shall be treated as payable as of
the date on which the related principal installment would have been
payable by the Borrower had such principal installment not been
prepaid or not borrowed.
c. Third, the amount to be paid on each such date shall be the present
value of the Installment Amount determined by discounting the amount
thereof from the date on which such Installment Amount is to be
treated as payable, at the same annual interest rate as that payable
upon the bond or other obligation of the United States of America
designated as aforesaid by the Lender.
13. In the event, prior to the commencement of any Interest Period relating to
any LIBOR Rate Loan, the Lender shall determine that adequate and
reasonable methods do not exist for ascertaining the Euro Rate that would
otherwise determine the rate of interest to be applicable to any LIBOR
Rate Loan during any Interest Period, the Lender shall
6
<PAGE>
forthwith give notice of such determination (which shall be conclusive and
binding on the Borrower) to the Borrower. In such event (a) any Conversion
Request with respect to LIBOR Rate Loans shall be automatically withdrawn
and shall be deemed a request for Domestic Rate Loans, (b) each LIBOR Rate
Loan will automatically, on the last day of the then current Interest
Period thereof, become a Domestic Rate Loan, and (c) the obligations of
the Lender to make LIBOR Rate Loans shall be suspended until the Lender
determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Lender shall so notify the Borrower.
14. Notwithstanding any other provisions herein, if any present or future law,
regulation, treaty or directive or in the interpretation or application
thereof shall make it unlawful for the Lender to make or maintain LIBOR
Rate Loans, the Lender shall forthwith give notice of such circumstances
to the Borrower and thereupon (a) the commitment of the Lender to make
LIBOR Rate Loans or convert Loans of another type to LIBOR Rate Loans
shall forthwith be suspended and (b) the LIBOR Rate Loans then outstanding
shall be converted auto matically to Domestic Rate Loans on the last day
of each Interest Period applicable to such LIBOR Rate Loans or within such
earlier period as may be required by law. The Borrower hereby agrees
promptly to pay the Lender, upon demand, any additional amounts necessary
to compensate the Lender for any costs incurred by the Lender in making
any conversion in accordance with this section, including any interest or
fees payable by the Lender to lenders of funds obtained by it in order to
make or maintain its LIBOR Rate Loans hereunder and any amount payable as
provided in Paragraph 12, herein.
15. The Borrower shall have the right at any time to prepay the Note on or
before the Maturity Date, as a whole, or in part, subject to the following
limitations:
a. For any Domestic Rate Loan, without premium or penalty, provided
--------
that any amount prepaid shall be accompanied by accrued interest on
the principal repaid to the date of payment;
b. For any LIBOR Rate Loan, upon not less than three (3) Business Days'
prior written notice to the Lender, without penalty, provided that
--------
(1) each partial prepayment shall be in the principal amount of
$100,000.00 or an integral multiple thereof, (2) if such prepayment
is on any day other than the last day of the Interest Period
relating thereto, such amount prepaid shall be accompanied by any
additional amounts necessary to compensate the Lender for any costs
7
<PAGE>
incurred by the Lender in accordance with Paragraph 12, herein,
including any interest or fees payable by the Lender to lenders of
funds obtained by it in order to make or maintain its LIBOR Rate
Loans hereunder and (3) any amount prepaid shall be accompanied by
accrued interest on the principal repaid to the date of payment.
c. If the Loan Documents provide at the time of prepayment for periodic
principal payments on the Loan, any prepayment of principal shall be
applied against the scheduled installments of principal due on the
Loan in the inverse order of maturity. No amount repaid with respect
to the Loan may be reborrowed.
d. In the event that at the time of any such prepayment Loans are
outstanding of more than one Type, the amount prepaid shall be
applied first to any Domestic Rate Loan prior to application to any
LIBOR Rate Loans.
e. Any premium due hereunder upon such prepayment shall be due and
payable upon any prepayment whatsoever, whether voluntary or
involuntary, to the extent permitted by law, and after acceleration
of the unpaid principal balance of the Loan after the occurrence of
an Event of Default.
16. If any present or future applicable law, which expression, as used herein,
includes statutes, rules and regulations thereunder and interpretations
thereof by any competent court or by any governmental or other regulatory
body or official charged with the administration or the interpretation
thereof and requests, directives, instructions and notices at any time or
from time to time hereafter made upon or otherwise issued to the Lender by
any central bank or other fiscal, monetary or other authority (whether or
not having the force of law), shall:
(a) subject the Lender to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Agreement, the
other Loan Documents, or the Loans (other than taxes based upon or
measured by the income or profits of the Lender), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to the Lender of the principal of
or the interest on any Loans or any other amounts payable to the Lender
under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in
8
<PAGE>
this Agreement) any special deposit, reserve, assessment, liquidity,
capital adequacy or other similar requirements (whether or not having the
force of law) against assets held by, or deposits in or for the account
of, or loans by, or commitments of an office of the Lender, or
(d) impose on the Lender any other conditions or re quirements with
respect to this Agreement, the other Loan Documents, the Loan, or any
class of loans or commitments of which any Loan forms a part;
and the result of any of the foregoing is
(i) to increase the cost to the Lender of making, funding, issuing,
renewing, extending or maintaining any of the Loans, or
(ii) to reduce the amount of principal, interest or other amount
payable to the Lender hereunder on account of any of the Loans, or
(iii) to require the Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross
amount of any sum receivable or deemed received by the Lender from the
Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by the Lender
at any time and from time to time and as often as the occasion therefor may
arise, pay to the Lender such additional amounts as will be sufficient to
compensate the Lender for such additional cost, reduction, payment or foregone
interest or other sum.
17. Capital Adequacy. If the Lender shall have determined that the adoption of
any applicable law, rule, regulation, guideline, directive or request
(whether or not having force of law) regarding capital requirements, or
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender with
any of the foregoing imposes or increases a requirement by the Lender to
allocate capital resources to the Loans made, or to be made, hereunder,
which has or would have the effect of reducing the return on the Lender's
capital to a level below that which the Lender could have achieved (taking
into consideration the Lender's then existing policies with respect to
capital adequacy and assuming full utilization of the Lender's capital)
but for such adoption, change or compliance, by any amount deemed by the
Lender to be material: (i) the Lender shall promptly
9
<PAGE>
after its determination of such occurrence give notice thereof to the
Borrower; and (ii) the Borrower shall pay to the Lender as an additional
fee from time-to-time on demand such amount as the Lender certifies to be
the amount that will compensate it for such reduction. In determining such
amounts, the Lender may use any reasonable averaging and attribution
methods.
18. All computations of interest on the Loans and of other fees to the extent
applicable shall be based on a 360-day year and paid for the actual number
of days elapsed. Except as otherwise provided in the definition of the
term "Interest Period" with respect to LIBOR Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on
a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue
during such extension.
10
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<PERIOD-START> JUN-27-1999
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