<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-Q
---------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
COMMISSION FILE NUMBER 1-12912
---------------
CENTENNIAL TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 04-2978400
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
7 LOPEZ ROAD, WILMINGTON, MASSACHUSETTS 01887
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(508) 988-8848
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
---------------
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]
As of July 31, 1997, there were 18,624,962 shares of Common Stock, $.01 par
value per share (the "Common Stock"), of the registrant outstanding.
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<PAGE> 2
CENTENNIAL TECHNOLOGIES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION (UNAUDITED) PAGE NUMBER
-----------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997 and March 31, 1997
Consolidated Statements of Operations for three months ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows for three months ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. Financial Statements
<TABLE>
CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
June 30, March 31,
1997 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................................. $ 95 $ 57
Trade accounts receivable ................................................. 4,143 6,263
Less allowances ............................................... (511) (692)
-------- --------
3,632 5,571
Accounts receivable from affiliates ......................................... -- 676
Recoverable income taxes .................................................... 1,314 7,356
Inventories ................................................................. 5,459 7,794
Notes receivable from affiliate ............................................. -- 4,129
Other current assets ........................................................ 891 1,630
-------- --------
Total current assets ........................................................ 11,391 27,213
Equipment and leasehold improvements ........................................ 3,779 4,023
Less accumulated depreciation and amortization ............................ (1,053) (936)
-------- --------
2,726 3,087
Investments ................................................................. 4,941 5,089
Notes receivable from affiliate ............................................. 7,891 --
Other assets ................................................................ 636 566
Investment in affiliate ..................................................... 8,916 15,243
-------- --------
Total assets ................................................................ $ 36,501 $ 51,198
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit notes .................................................... $ 1,643 $ 10,090
Obligations under capital leases .......................................... 522 671
Accounts payable and accrued expenses ..................................... 9,318 11,883
-------- --------
Total current liabilities ................................................... 11,483 22,644
Contingencies (Note 10)
Stockholders' equity:
Preferred Stock, $.01 par value; 1,000,000 shares
authorized, none issued ................................................... -- --
Common Stock, $.01 par value; 50,000,000 shares authorized, 18,628,000
issued and outstanding at June 30, 1997, 17,745,000 issued and
outstanding at March 31, 1997 ............................................. 186 177
Additional paid-in capital .................................................. 84,168 82,240
Accumulated deficit ......................................................... (59,180) (53,630)
Foreign currency translation of equity investment ........................... (156) (233)
-------- --------
Total stockholders' equity .................................................. 25,018 28,554
-------- --------
Total liabilities and stockholders' equity .................................. $ 36,501 $ 51,198
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 4
CENTENNIAL TECHNOLOGIES, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
----------------------------
1997 1996
------- ----------
(RESTATED)
<S> <C> <C>
Sales ....................................... $ 6,573 $11,644
Costs and expenses:
Cost of goods sold ........................ 6,142 8,760
Engineering costs ......................... 356 308
Selling, general and
administrative expenses ................ 1,889 1,098
Loss on investment activities ............. 3,485 2,593
Special investigation costs ............... 597 --
Net interest (income)/expense ............. 78 (157)
------- -------
Total costs and expenses ............. 12,547 12,602
------- -------
Loss before equity in earnings of
affiliate ................................. (5,974) (958)
Equity in earnings of affiliate ............. (500) --
------- -------
Net loss ............................. $(5,474) $ (958)
======= =======
Net loss per share .......................... $ (.30) $ (.06)
Weighted average shares
outstanding ............................... 18,176 16,578
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
4
<PAGE> 5
CENTENNIAL TECHNOLOGIES, INC.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
---------------------------
1997 1996
-------- ----------
(RESTATED)
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................................... $(5,474) $ (958)
Adjustments to reconcile net loss to net cash from (used in)
operating activities:
Depreciation and amortization ............................................... 400 125
Equity in earnings of affiliate ............................................. (500) --
Provision for loss on accounts receivable ................................... 41 116
Provision for loss on investments ........................................... 2,180 1,290
Other non-cash items ........................................................ -- 68
Change in operating assets and liabilities:
Accounts receivable ....................................................... 1,898 (3,456)
Inventories ............................................................... 2,335 (1,067)
Notes receivable .......................................................... -- (634)
Notes receivable from affiliate ........................................... 4,129 --
Recoverable income taxes .................................................. 6,042 (2,532)
Other assets .............................................................. 945 (590)
Accounts payable and accrued expenses ..................................... (2,565) 1,096
------- -------
Net cash from (used in) operating activities ...................... 9,431 (6,542)
Cash flows from investing activities:
Capital expenditures ........................................................ (117) (183)
Disposal of capital equipment ............................................... 328 --
Purchase of available-for-sale securities ................................... -- (8,914)
Proceeds from sale of available-for-sale securities ......................... -- 3,981
Purchase of investments ..................................................... -- (1,510)
Investment in affiliates .................................................... (1,165) --
------- -------
Net cash used in investing activities ................................. (954) (6,626)
Cash flows from financing activities:
Net borrowings under line of credit ......................................... (8,447) 4,684
Payments on equipment lease financing ....................................... (149) (88)
Proceeds from exercise of stock options ..................................... 157 2
Proceeds from exercise of warrants .......................................... -- 115
Net proceeds from public offerings of Common Stock .......................... -- 1,221
Proceeds from certain related party transactions ............................ -- 1,135
------- -------
Net cash provided by (used in) financing activities ................... (8,439) 7,069
------- -------
Net increase (decrease) in cash and cash equivalents .......................... 38 (6,099)
Cash and cash equivalents at beginning of period .............................. 57 12,281
------- -------
Cash and cash equivalents at end of period .................................... $ 95 $ 6,182
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
5
<PAGE> 6
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND CHANGE IN FISCAL YEAR
Basis of Presentation
The consolidated financial statements of Centennial Technologies, Inc. (the
"Company") include the accounts of the Company and all wholly owned
subsidiaries. Investments in companies in which ownership interests range from
20 to 50 percent and the Company exercises significant influence over operating
and financial policies are accounted for using the equity method. Due to the
significance of the Company's investment in the investee's capitalization and on
the basis of the complementary nature of the Company's products and related
development plans, the Company is accounting for its 12% investment in ViA, Inc.
using the equity method. Other investments are accounted for using the cost
method. All significant intercompany balances and transactions have been
eliminated. Certain reclassifications have been made to prior years'
consolidated financial statements to conform to the fiscal 1998 presentation.
The accompanying financial statements have been prepared on the basis of a
going concern, which contemplates the realization of assets and settlement of
liabilities in the normal course. The Company has experienced significant losses
from operations and has taken measures to reduce those losses, including
reducing various expenses and implementing new cost controls. If cost savings
are not achieved or revenues are not increased, it would significantly impair
the ability of the Company to continue as a going concern.
The Company is a defendant in certain litigation, as more fully described
in Note 10 hereof. No assurance can be given that the settlement of litigation
will result in an outcome which would not significantly impair the ability of
the Company to continue as a going concern.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all financial information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, these financial statements
include all adjustments (consisting only of normal recurring accruals) necessary
for a fair presentation of the results of operations for the interim periods
reported and of the financial condition of the Company as of the date of the
interim balance sheet. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the Company's
unaudited consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the fiscal period ended March 31, 1997.
Change in Fiscal Year
On March 24, 1997, the Company's Board of Directors voted to change the
fiscal year end from June 30 to March 31. All references to fiscal 1997 in the
accompanying financial statements relate to the nine months ended March 31,
1997. References to fiscal 1996, 1995 and 1994 relate to the respective years
ended June 30.
2. RESTATEMENT OF FINANCIAL STATEMENTS
On February 11, 1997 the Company announced that it had commenced a special
investigation into certain apparent financial and management irregularities and
that its previously published financial statements and related financial
disclosures could no longer be relied upon. On June 12, 1997, the Company
announced the completion of the financial review associated with the special
investigation, including condensed restated financial information, as well as
the financial results for the periods ended March 31, 1997. The Company had
previously changed its fiscal year end to March 31, in order to accelerate the
receipt of certain tax refunds and in order to complete audited financial
statements for the entire periods under review as quickly as possible. The
accompanying financial statements for the three months ended June 30, 1996
give effect to adjustments arising from the financial review.
The following table sets forth the effects of these adjustments on the
Company's financial position at June 30, 1996 and results of operations for
the three months ended June 30, 1996 (in thousands except per share data):
<TABLE>
<S> <C>
Sales:
As previously reported............................ $12,427
As adjusted....................................... 11,644
Cost of goods sold:
As previously reported............................ 7,749
As adjusted....................................... 8,760
Net income (loss):
As previously reported............................ 1,868
As adjusted....................................... (959)
Net income (loss) per share:
As previously reported............................ .22
As adjusted....................................... (.06)
Total assets:
As previously reported............................ 55,782
As adjusted....................................... 41,132
Total stockholders' equity:
As previously reported............................ 46,045
As adjusted....................................... 31,909
</TABLE>
The following table sets forth the summary of restatement adjustments (in
thousands):
<TABLE>
<S> <C>
Reversal of invalid sales transactions.................... $ (91)
Reclassification of purchasing agency arrangement......... (585)
Additional accounts receivable adjustments................ (107)
-------
Total adjustments to sales................................ (783)
Corrections to inventory pricing and physical counts...... 56
Additional provisions for inventory obsolescence.......... (338)
Reversal of certain additions to capital equipment,
net of related depreciation, which were not bona fide... (1,441)
Provision for losses on investment activities............. (1,561)
Pre-acquisition advances to subsidiary.................... (1,101)
Other adjustments, net.................................... 1,004
Reversal of provisions for income taxes................... 1,337
-------
Total adjustments to net income (loss).................... $(2,827)
=======
</TABLE>
The Company's independent accountants, Coopers & Lybrand L.L.P.
("Coopers & Lybrand") is considering whether certain potential claims against
Coopers & Lybrand compromise its independence so as to render it unable to
deliver its opinion with respect to the Company's financial statements. The
Company is currently unable to determine when this concern will be resolved. If
Coopers & Lybrand determines that it cannot provide its opinion on the Company's
financial statements for the three years ended June 30, 1994, 1995, and 1996 and
the nine
6
<PAGE> 7
months ended March 31, 1997, the Company will be obliged to retain other
independent accountants, in which case its delivery of audited financial
statements may be delayed for a substantial period and, as a result of the
examination of such financial statements by successor independent accountants,
there may be material changes to such financial statements.
The consolidated balance sheet as of March 31, 1997 has been derived from
the financial statements included in the Company's Annual Report on Form 10-K
for the fiscal period ended March 31, 1997.
3. CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of trade receivables. If any
of the Company's major customers fail to pay the Company on a timely basis, it
could have a material adverse effect on the Company's business, financial
condition and results of operations.
For the three months ended June 30, 1997, two customers accounted for
approximately 40% of the Company's sales. At June 30, 1997, these customers
accounted for approximately $1.9 million, or 52% of the Company's net accounts
receivable balance.
For the three months ended June 30, 1996, two customers accounted for
approximately 47% of the Company's sales. At June 30, 1996, these two customers
accounted for approximately $4.7 million, or 42% of the Company's net accounts
receivable balance.
Approximately 11% and 5% of the Company's sales for the three months ended
June 30, 1997 and 1996, respectively, were outside the United States, primarily
in several Western European countries, Israel and Canada. No one area comprised
more than 10% of the Company's sales.
A substantial portion of the Company's assets are associated with Century
Electronics Manufacturing, Inc. ("Century"). See Note 6. Any material adverse
change in the business of Century could have a material adverse effect on the
Company's business, financial condition and results of operations.
4. EARNINGS PER SHARE
Primary earnings per share data are based on outstanding Common Stock and
Common Stock assumed to be outstanding to reflect the dilutive effects of stock
options and warrants using the treasury stock method. Since all periods
presented in these financial statements reflect losses, such common stock
equivalents have been excluded, as they are anti-dilutive.
5. INVENTORIES
Inventories consisted of (in thousands):
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1997 1997
---- ----
<S> <C> <C>
Raw material, primarily electronic components........ $3,023 $3,995
Work in process...................................... 354 1,387
Finished goods....................................... 2,082 2,412
------ ------
$5,459 $7,794
====== ======
</TABLE>
The Company maintains levels of inventories that it believes are necessary
based upon assumptions concerning its growth, mix of sales and availability of
raw materials. Changes in those underlying assumptions could affect management's
estimates of inventory valuation.
The Company has included in its inventory balances $1.8 million of costs
related to inventory specifically purchased and manufactured pursuant to a
customer's purchase order. The customer later attempted to cancel the purchase
order. The Company disputes the customer's claim that the purchase order
cancellation was effective, and anticipates seeking legal remedies related
thereto. The Company expects to recover fully its inventory costs.
6. INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.
During fiscal 1997, the Company completed three separate business
acquisitions of contract manufacturing activities. On July 10, 1996, the Company
acquired a majority equity position in Design Circuits, Inc. ("DCI") for
approximately $3.2 million in cash, 250,000 shares of the Company's Common Stock
and assumption of certain liabilities.
In October 1996, the Company and the minority shareholders in DCI exchanged
their DCI shares for shares of capital stock in a newly formed entity, Century
Electronics Manufacturing, Inc. ("Century").
Pursuant to a joint venture agreement executed in May 1996, the Company
invested $1.3 million during fiscal 1997 as its initial capital contribution
into its 51% owned contract manufacturing joint venture in Thailand. The
Company's joint venture partner's initial capital contribution was $3.7 million.
On November 5, 1996, Century purchased Triax Technology Group Limited
("Triax"), a provider of contract manufacturing services located in the United
Kingdom for approximately $4.2 million in cash and approximately 2.2 million
shares of common stock
7
<PAGE> 8
of Century. The Company also contributed 25,000 shares of Centennial Common
Stock as a finder's fee. At the conclusion of the Triax transaction, Triax and
DCI were wholly-owned subsidiaries of Century, and Centennial owned
approximately 67% of Century.
On March 14, 1997, Century entered into an agreement in principal with the
Company, whereby Century agreed to redeem a portion of its shares in exchange
for $1.3 million in cash and a $6.0 million subordinated debenture, reducing the
Company's equity ownership position to 45%. The debentures bear interest at a
rate of 6% and mature in ten years. Under certain conditions, the debentures
will be convertible into the capital stock of an entity with which Century may
merge. In addition, the Company agreed to contribute to Century its interest in
the Thailand joint venture. Century also agreed to repay an 8.5% note payable to
Centennial in the amount of $4.1 million and to take the necessary steps to
remove all outstanding guarantees of third-party indebtedness.
On June 30, 1997, the aforementioned transaction was completed. In order to
remove certain guarantees of equipment subleased to DCI, Centennial executed
lease buyouts amounting to $2.4 million and sold the underlying equipment to
Century for $0.5 million in cash and a $1.9 million 9% promissory note due
December 1998.
7. OTHER INVESTMENTS
During fiscal 1996, the Company began a strategy of making investments,
financed through a combination of cash and common stock, in technology companies
for the expressed purpose of market development for its PC card business as well
as investment gain. Management has decided to focus its financial resources on
its core business, and to suspend new investment activities. The Company has
written down its portfolio of investments based on an individual assessment of
their future viability.
On December 13, 1996, the Company completed merger agreements with
Intelligent Truck Project, Inc., Fleet.Net, Inc. and Smart Traveler Plazas, Inc.
(collectively, "ITP/Fleet.Net") agreeing to exchange 792,960 shares of Common
Stock of the Company for all of the outstanding common stock of the acquired
businesses. Subsequent to the Company's February announcement of financial
irregularities, the principal shareholder of ITP/Fleet.Net filed suit, alleging,
among other things, breach of representations and warranties as to the financial
statements of Centennial. On March 4, 1997, the Company and the principal
shareholder of ITP/Fleet.Net entered into a memorandum of understanding pursuant
to which the companies would unwind the merger agreements. The parties were
unable to reach mutually satisfactory terms to complete the unwinding and on May
15, 1997 agreed to complete the merger and exchange mutual releases of certain
claims. Based on the material uncertainties surrounding the value of
consideration on the original merger date, which uncertainties were not resolved
until the execution of a settlement and mutual release agreement, the Company
has recorded the merger and corresponding issuance of Common Stock as of May 15,
1997. Advances to ITP/Fleet.Net made during fiscal 1996 and fiscal 1997, certain
of which were previously characterized as advance payments for technology
license arrangements, have been included in loss on investment activities in the
periods the advances were made. The merger has been recorded using purchase
accounting, and the excess (approximately $3.2 million) of the purchase price
over the fair value of assets acquired has been written off as of the agreement
date (May 15, 1997) because of the uncertainties related to the future
operations of ITP/Fleet.Net.
8. DEBT
Note Payable
The Company has a revolving line of credit agreement with a bank that
limits borrowings to a percentage of receivables and inventories and contains
certain covenants relating to the Company's net worth and indebtedness, among
others. This credit agreement is collateralized by substantially all the assets
of the Company. On February 14, 1997, the Company received a notice of default
and on March 18, 1997 entered into a forbearance agreement whereby the bank
agreed to continue to extend credit under certain conditions. The forbearance
agreement has been subsequently extended to August 15, 1997.
On July 18, 1997, the Company received a commitment letter for a new credit
agreement with Congress Financial Corporation ("Congress Financial") for a
revolving credit facility and term loan facility of up to $4.1 million and $0.9
million, respectively, and a $2.0 million capital equipment acquisition
facility, based on certain limitations and covenants. Allowable borrowings are
based on available accounts receivable and the cost of equipment, and are
secured by all of the Company's assets. The Company expects to close on the new
credit agreement prior to the expiration of the forbearance agreement.
9. RELATED PARTY TRANSACTIONS
During fiscal 1997, 1996, 1995 and 1994, the Company rendered invoices
for non-existent products to certain businesses which appear to have been under
the control or influence of Centennial's former Chief Executive Officer. These
sale transactions have been reversed in connection with the restatement of the
Company's financial statements. See Note 2. In certain instances, these
invoices were paid with funds that appear to have originated from the former
Chief Executive Officer. The proceeds to the Company related to these
transactions, which proceeds amounted to $1,135,000 in the quarter ended June
30, 1996, have been reflected in the accompanying financial statements as
additional paid-in capital.
8
<PAGE> 9
10. CONTINGENCIES
Class Action Litigation. Since the Company's announcement on February 11,
1997 that it was undertaking an inquiry into the accuracy of its prior reported
financial results, and that preliminary information had raised questions as to
whether reported results contained material misstatements, approximately 35
purported class action lawsuits have been filed in or transferred to the United
States District Court for the District of Massachusetts. These complaints assert
claims against the Company under Section 10(b) of the Securities Exchange Act of
1934 (the "1934 Act") and Rule 10b-5 promulgated thereunder, and related state
law claims of fraud, deceit and negligent misrepresentation. The complaints also
assert claims against some or all of the Company's Board of Directors, and some
complaints assert claims against certain of the Company's nondirector officers,
under Section 20(a) of the 1934 Act, as well as the same state law claims
asserted against the Company. The Company's independent accountants, Coopers &
Lybrand, L.L.P. ("Coopers & Lybrand"), the Company's lead underwriter for its
March 1996 subsequent public offering, Needham & Company, Inc., and a financial
advisory subscription company, Cabot Heritage Corporation, have also been named
in some of the suits. These class action lawsuits were purportedly brought by
and on behalf of purchasers of the Company's Common Stock between the Company's
initial public offering on April 12, 1994 and February 10, 1997 (the "Centennial
Securities Litigation").
On February 20, 1997, the Company received a subpoena from the United
States Department of Justice ("DOJ") to produce documents in connection with a
grand jury investigation regarding various irregularities in the Company's
previous press releases and financial statements. The DOJ also requested certain
information regarding some of the Company's former officers, certain stock
transactions by the Company's former Chief Executive Officer, and correspondence
with the Company's auditors. The DOJ has subsequently subpoenaed additional
Company records and files. The Company has not been notified by the DOJ that
it is a target or subject of this investigation.
On and after February 26, 1997, four Complaints were filed in the United
States District Court for the District of Massachusetts by plaintiffs purporting
to represent classes of shareholders who purchased the Company's Common Stock on
February 25, 1997. The Complaint also names the Company's Interim Chief
Executive Officer, Lawrence J. Ramaekers, and alleges violations of Sections
10(b) and 20(a) of the 1934 Act (the "February 25 Securities Litigation").
In mid-February 1997, the Company was notified that the Boston District
Office of the Securities and Exchange Commission ("SEC") was conducting an
investigation of the Company. The SEC has requested that the Company provide
the SEC with certain documents concerning the Company's public reports and
financial statements. The SEC indicated that its inquiry should not be
construed as an indication by the SEC or its staff that any violations have
occurred, or as a reflection upon the merits of the securities involved or upon
any person who effected transactions in such securities. The Company is
cooperating with the SEC in connection with this investigation, the outcome of
which cannot yet be determined.
On and after March 26, 1997, several complaints were filed in the United
States District Court for the District of Massachusetts by plaintiffs purporting
to represent classes of shareholders who purchased stock of WebSecure, Inc.
("WebSecure") between December 5, 1996 and February 27, 1997 (the "WebSecure
Complaints"). The WebSecure Complaints assert claims against WebSecure, certain
officers, directors and underwriters of WebSecure, and the Company. Claims
against the Company include alleged violations of Sections 11 and 15 of the
Securities Act of 1933 (the "1933 Act") (the "WebSecure Securities Litigation").
In addition, several shareholder derivative lawsuits have been filed by
purported holders of the Company's common stock seeking recovery for certain
alleged breach of fiduciary duties, alleged gross negligence, alleged breach of
contract and alleged insider trading by members of the Company's Board of
Directors between August 21, 1996 and February 10, 1997 (the "Derivative
Litigation").
On June 18, 1997, the Company announced that it had reached an agreement in
principle to settle the Centennial Securities Litigation, the February 25
Securities Litigation and the Derivative Litigation. This agreement in principle
contemplates that the Company and certain of its officers and directors would be
released from liability arising from the allegations included in these suits. In
return, the Company would agree to pay to the plaintiffs in the Centennial
Securities Litigation and the February 25 Securities Litigation the proceeds, if
any, of any recovery from the Company's directors and officers liability
insurance policies, and an additional $1.45 million in cash. The Company would
also agree to issue to these plaintiffs 37% of the Company's Common Stock. The
Company also expects to adopt certain agreed upon corporate governance policies
and procedures. The plaintiffs would retain their claims against the Company's
former Chief Executive Officer, Emanuel Pinez, and the Company's former Chief
Financial Officer, James M. Murphy.
9
<PAGE> 10
The plaintiffs in the February 25 Securities Litigation have not yet
reached an agreement with the Company's Interim Chief Executive Officer,
Lawrence J. Ramaekers, regarding their alleged claims against him. These
plaintiffs have agreed in principle to release the Company from any direct
liability related to those alleged claims. In the agreement under which Mr.
Ramaekers is providing services to the Company, the Company agreed to provide
Mr. Ramaekers with the same indemnification as is applicable to other officers
of the Company pursuant to the Company's By-Laws. The Company has agreed to
indemnify, hold harmless, and defend Mr. Ramaekers from and against certain
claims arising out of his engagement with the Company.
On June 19, 1997, the Company announced that it had reached an agreement in
principle to settle the WebSecure Securities Litigation. The agreement in
principle contemplates that the Company and certain of its officers and
directors would be released from any and all liability arising from the
allegations included in the WebSecure Securities Litigation in return for the
issuance to the WebSecure Securities Litigation class of 345,000 shares of the
Company's Common Stock and the payment to the class of up to $50,000 for notice
and administrative costs.
As of fiscal 1997, the Company recorded a provision for the potential
settlement of the Centennial Securities Litigation of $20.0 million,
representing the cash portion of the potential settlement, together with an
amount equal to 37% of the estimated market capitalization of the Company. The
cash portion ($1,475,000) of the potential settlement is included in accounts
payable and accrued expenses and the Common Stock portion ($18,525,000) is
included in additional paid-in capital.
A number of material terms remain to be negotiated regarding the Centennial
Securities Litigation, the February 25 Securities Litigation, the Derivative
Litigation, and the WebSecure Securities Litigation. A binding commitment to the
terms described above, as well as resolution of other currently unresolved
material terms, must await the execution of final settlement agreements.
Furthermore, any settlement agreement must be submitted to the Court for review
and approval and, thereafter, presented to class members for consideration. If a
sufficiently large number of class members opt not to participate in the
settlement agreement, the agreement may be withdrawn. No assurance can be given
that the parties will be able to reach such final settlement agreements, that
any such agreements, if reached, will be approved by the Court, or that, if
such approval is obtained, that a material number of class members will not
decline to participate in the settlement.
Advent Technology Management, Inc. ("ATM") has purported to exercise an
alleged option to acquire one million shares of the Company's Common Stock in
exchange for certain shares of common stock of WebSecure, Inc. (the
"Securities") which were in the possession of the Company and which ATM asserts
to be the property of ATM. ATM has presented documents to the Company purporting
to show the acknowledgement of Emanuel Pinez as then Chairman and Chief
Executive Officer of the Company to an arrangement whereby the Company was
holding the Securities for the account of ATM and whereby ATM was given the
option to exchange the Securities for 409,600 shares of the Company's Common
Stock, and purporting to show the acknowledgement of James M. Murphy as then
Chief Financial Officer of the Company that the Securities were held for the
account of ATM. The records of the Company do not indicate that the alleged
arrangement was ever disclosed to the Company's Board of Directors or recorded
in its financial records. To the contrary, the Securities were at all times
reflected in the financial records of the Company as the property of the Company
and were in part sold by the Company. The Company does not believe that the
arrangement was valid or that the alleged option is enforceable.
10
<PAGE> 11
CENTENNIAL TECHNOLOGIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
CAUTIONARY STATEMENT
Except for historical information contained herein, the discussions
contained in this document include forward-looking statements. Such statements
involve a number of risks and uncertainties, including, but not limited to,
those (i) discussed below, (ii) discussed under the heading "Risk Factors", and
(iii) identified from time to time in the Company's filings with the Securities
and Exchange Commission including those set forth in the Company's Annual
Report on Form 10-K for the fiscal period ended March 31, 1997 under the
heading "Risk Factors." These risks and uncertainties could cause actual
results to differ materially from those projected. Readers are cautioned not to
place undue reliance on these forward-looking statements. The Company assumes no
obligation to update these forward-looking statements to reflect events or
circumstances after the date hereof.
The Company's independent accountants, Coopers & Lybrand, is considering
whether certain potential claims against Coopers & Lybrand compromise its
independence so as to render it unable to deliver its opinion with respect to
the Company's financial statements. The Company is currently unable to determine
when this concern will be resolved. If Coopers & Lybrand determines that it
cannot provide its opinion on the Company's financial statements for the three
years ended June 30, 1994, 1995, 1996 and nine months ended March 31, 1997, the
Company will be obliged to retain other independent accountants, in which case
its delivery of audited financial statements may be delayed for a substantial
period and, as a result of the examination of such financial statements by
successor independent accountants, there may be material changes to such
financial statements.
OVERVIEW
The Company designs, manufacturers and markets an extensive line of PC
cards used primarily by OEMs in industrial and commercial applications. The
Company's PC cards provide added functionality to devices containing
microprocessors by supplying increased storage capacity, communications
capabilities and programmed software for specialized applications.
The following discussion and analysis should be read in conjunction with
the unaudited Consolidated Financial Statements and Notes thereto.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996
Sales. Sales decreased 43.6% to approximately $6.6 million in the 1997
period compared to $11.6 million in the 1996 period, due to the impact of
adverse publicity surrounding the criminal indictment of the Company's former
Chief Executive Officer and the associated special investigation and
shareholder litigation matters. In addition, sales to a major customer
decreased from $2.7 million in the 1996 period to near zero in the 1997 period
due to the completion of the program under which the product was originally
shipped.
Another significant customer represented 28% of total sales in the 1997
period and 24% of total sales in the 1996 period. A third customer represented
12% of total sales in the 1997 period compared to an insignificant amount in the
1996 period. If these customers were to reduce significantly the amount of
business they conduct with the Company, it could have a material adverse
effect on the Company's business, financial condition and results of
operations. No other customer or group of related customers accounted for more
than 10% of the Company's sales.
Furthermore, sales for the current quarter were negatively impacted as
several continuing customers accelerated their orders in the previous quarter
shortly after the adverse publicity broke. This had the effect of improving
the Company's performance in March 1997 and reducing April and May shipments.
Sales outside of the United States represented 11% of sales in the 1997
period compared to 5% of sales in the 1996 period.
Costs of Goods Sold. Cost of goods sold decreased 30% to $6.1 million for
the 1997 period compared to $8.8 million for the 1996 period. Gross margins
were 6.6% for the 1997 period compared to 24.8% for the 1996 period. Costs of
goods sold include
11
<PAGE> 12
provisions for inventory obsolescence of $.4 million in the 1997 period and $.3
million in the 1996 period, representing 6.1% of sales in the 1997 period and
2.6% in the 1996 period. Cost of sales in the 1997 period was also negatively
impacted by inventory revaluation adjustments of $.9 million or 13.6% of sales
primarily due to declining electronic component prices and changes in overhead
absorption rates. No similar adjustments were recorded in the 1996 period. On
July 3, 1997, the Company carried out a reduction-in-force which resulted in
reducing the number of production employees by 24.
Engineering Costs. Engineering costs were $356,000 in the 1997 period
versus $308,000 in the 1996 period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $1.9 million in the 1997 period compared to
$1.1 million in the comparable 1996 period due to increased sales staffing and
travel, increased professional fees, key employee retention bonuses incurred in
1997, expenses associated with the facility move, and increased insurance
costs.
In addition, during the 1997 period, the Company revised its method of
allocating overhead costs to cost of goods sold, which revision reduced the
allocation from selling, general and administrative expenses for this period
by approximately $170,000.
Depreciation expense increased to $150,000 in the 1997 period compared to
$125,000 in the 1996 period, reflecting increased capital equipment
expenditures to increase production capacity and improve productivity.
Net Interest Expense. Net interest expense was $78,000 in the 1997 period
compared to interest income of $157,000 in the 1996 period. The increase in
interest expense was primarily due to increased borrowings.
Loss on Investment Activities. Loss on investment activities consists of
write-downs, valuation adjustments and accruals for losses associated with
certain investments. The following table describes the elements and the amounts
reflected in this category for the 1997 period (in thousands):
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Costs incurred in connection with
ITP/Fleet.Net (See Note 7)................. $3,235 $1,101
Loss on investment in ViA.................. 250 --
Losses on other investments................ -- 1,492
------ ------
TOTAL...................................... $3,485 $2,593
====== ======
</TABLE>
Equity Interest in Earnings of Affiliate. The equity interest in earnings
of affiliate of $.5 million reflects the Company's net interest in earnings of
Century.
Special Investigation Costs. Due to incremental costs it was necessary to
increase the accrual for Special Investigation Costs by $597,000 in the 1997
period.
12
<PAGE> 13
As of June 30, 1997, a total of $4.3 million has been provided for the
cost of the special investigation, certain refinancing activities, and the cost
of legal defense associated with shareholders' litigation.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operating activities
primarily from public and private offerings of equity securities and loans from
financial institutions and others.
Fiscal 1998 Liquidity Outlook
The Company has experienced significant losses from operations and has
taken measures to reduce those losses, including reducing various expenses and
implementing new cost controls. If cost savings are not achieved or revenues
are not increased, it would significantly impair the ability of the Company to
continue as a going concern. The Company believes that its present cash
balances, financing from Congress Financial, and anticipated future cash flows
will be sufficient to fund future operations. However, the Company can make no
assurances that measures taken to date or to be taken in the future will be
sufficient to stem losses or that future financing will be available to the
Company or, if available, on terms that will be satisfactory to the Company.
Operating Activities
At June 30, 1997, working capital decreased to approximately negative
$.1 million, compared to positive working capital of $4.6 million at March 31,
1997, due principally to operating losses. In the 1997 period the Company
experienced cash flow from operations of approximately $9.4 million, compared to
cash flow used in operations of $6.5 million for the comparable period last
year. Days of sales outstanding in accounts receivable amounted to 50 days at
June 30, 1997 compared to 46 days at March 31, 1997. The Company's inventories
represent approximately 12 weeks of manufacturing output at June 30, 1997,
compared to 12 weeks at March 31, 1997. Management has implemented new
procurement practices reflecting increased emphasis on reducing inventory
levels.
As a result of the adjustments made to the Company's financial statements
in connection with its financial review, previous provisions for income taxes
have been reversed and the associated payments of approximately $1.3 million are
classified as recoverable income taxes at June 30, 1997. Approximately $1.0
million of these tax refunds were received as of August 15, 1997. For the 1997
period $6 million of tax refunds were received and used to reduce borrowings.
The Company's access to trade credit from its vendors has been subject to
increased scrutiny by its vendors and more limited terms since its announcement
of financial irregularities in February 1997. While certain suppliers have
imposed "collection on delivery" terms, the Company's principal suppliers have
continued to extend credit. If such suppliers were to discontinue or limit
materially existing credit terms, the Company could be placed in the position
where it would be unable to continue operations.
Investing Transactions
Net capital expenditures amounted to $118,000 in the 1997 period and
$183,000 in the 1996 period. As of June 30, 1997, the Company had remaining
obligations of $522,000 on equipment financing leases, which are in default due
to cross-default provisions between a master lease agreement and a revolving
credit agreement to which the Company is a party, both of which are with the
same bank lender. The Company intends to repay these leases using proceeds
from its new term loan facility.
13
<PAGE> 14
The Company has commitments for future capital equipment expenditures in
fiscal year 1998 of $325,000. In addition, included in accounts payable and
accrued expenses are invoices for capital equipment amounting to $363,000.
The Company expects to finance these expenditures, in part, through a new term
loan and a new capital acquisition facility.
Financing Transactions
In November 1996, the Company renewed and amended its revolving line of
credit with a bank, pursuant to which the Company could borrow up to specified
limits based on the Company's eligible receivables and inventory, including
eligible receivables and inventory of Design Circuits, Inc. ("DCI"). See " --
Investment in Century Electronics Manufacturing, Inc." Borrowings on the DCI
borrowing base were made by the Company and subject to a DCI guarantee. All
borrowings were collateralized by substantially all of the assets of the
Company. The agreement required the Company to comply with certain covenants
relating to the Company's net worth and indebtedness, among other things. On
February 14, 1997, the Company received a notice of default, and on March 18,
1997, entered into a forbearance agreement whereby the bank agreed to continue
to extend credit under certain conditions. The forbearance agreement has been
subsequently extended to August 15, 1997.
On July 18, 1997, the Company received a commitment letter for a new credit
agreement with Congress Financial Corporation ("Congress Financial") for a
revolving credit facility and term loan facility of up to $4.1 million and $0.9
million, respectively, and a $2.0 million capital equipment acquisition
facility, based on certain limitations and covenants. Allowable borrowings are
based on available accounts receivable and the cost of equipment, and are
secured by all of the Company's assets. The Company expects to close on the new
credit agreement prior to the expiration of the forbearance period.
Investment in Century Electronics Manufacturing, Inc.
During fiscal 1997, the Company completed three separate business
acquisitions of contract manufacturing activities. On July 10, 1996, the Company
acquired a majority equity position in Design Circuits, Inc. ("DCI") for
approximately $3.2 million in cash, 250,000 shares of the Company's Common Stock
and assumption of certain liabilities.
In October 1996, the Company and the minority shareholders in DCI exchanged
their DCI shares for shares of capital stock in a newly formed entity, Century
Electronics Manufacturing, Inc. ("Century").
Pursuant to a joint venture agreement executed in May 1996, the Company
invested $1.3 million during fiscal 1997 as its initial capital contribution
into its 51% owned contract manufacturing joint venture in Thailand. The
Company's joint venture partner's initial capital contribution was $3.7 million.
On November 5, 1996, Century purchased Triax Technology Group Limited
("Triax"), a provider of contract manufacturing services located in the United
Kingdom for approximately $4.2 million in cash, and approximately 2.2 million
shares of common stock of Century. The Company also contributed 25,000 shares of
Centennial Common Stock as a finder's fee. At the conclusion of the Triax
transaction, Triax and DCI were wholly-owned subsidiaries of Century, and
Centennial owned approximately 67% of Century.
On March 14, 1997, Century entered into an agreement in principal with the
Company, whereby Century agreed to redeem a portion of its shares in exchange
for $1.3 million in cash and a $6.0 million subordinated debenture, reducing the
Company's equity ownership position to 45%. The debentures bear interest at a
rate of 6% and mature in ten years. Under certain conditions, the debentures
will be convertible into the capital stock of an entity with which Century may
merge. In addition, the Company agreed to contribute to Century its interest in
the Thailand joint venture. Century also agreed to repay an 8.5% note payable to
Centennial in the amount of $4.1 million and to take the necessary steps to
remove all outstanding guarantees of third-party indebtedness.
On June 30, 1997, the aforementioned transaction was completed. In order to
remove certain guarantees of equipment subleased to DCI, Centennial executed
lease buyouts amounting to $2.4 million and sold the underlying equipment to
Century for $0.5 million in cash and a $1.9 million 9% promissory note due
December 1998.
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<PAGE> 15
Contingencies
The Company is a defendant in numerous lawsuits alleging violations of
securities and other laws in connection with the Company's prior reported
financial results and certain other related matters. See Note 10 of Notes to
Unaudited Consolidated Financial Statements. The Company is currently
negotiating the settlement of these suits, and believes that such lawsuits will
be settled substantially in accordance with the description contained in Note
10 of Notes to Unaudited Consolidated Financial Statements. The Company
believes that such settlements will not have a material adverse impact on its
liquidity. As of fiscal 1997, the Company has recorded a provision for the
potential settlement of the Centennial Securities Litigation of $20.0 million,
representing the cash portion of the potential settlement, together with an
amount equal to 37% of the estimated market capitalization of the Company. The
cash portion ($1,475,000) of the potential settlement is included in accounts
payable and accrued expenses and the Common Stock portion ($18,525,000) is
included in additional paid-in capital. However, there can be no assurance that
the Company will be successful in negotiating the settlements described in Note
10, or that the claims against Lawrence J. Ramaekers, the Company's interim
Chief Executive Officer, in connection with the February 25 Securities
Litigation, as to which the Company may have indemnification obligations will
be settled, and such inability to settle pending litigation could have a
material adverse affect on the Company's liquidity, business, financial
condition and results of operations.
Advent Technology Management, Inc. ("ATM") has purported to exercise an
alleged option to acquire one million shares of the Company's Common Stock in
exchange for certain shares of common stock of WebSecure, Inc. (the
"Securities") which were in the possession of the Company and which ATM asserts
to be the property of ATM. ATM has presented documents to the Company purporting
to show the acknowledgement of Emanuel Pinez as then Chairman and Chief
Executive Officer of the Company to an arrangement whereby the Company was
holding the Securities for the account of ATM and whereby ATM was given the
option to exchange the Securities for 409,600 shares of the Company's Common
Stock, and purporting to show the acknowledgement of James M. Murphy as then
Chief Financial Officer of the Company that the Securities were held for the
account of ATM. The records of the Company do not indicate that the alleged
arrangement was ever disclosed to the Company's Board of Directors or recorded
in its financial records. To the contrary, the Securities were at all times
reflected in the financial records of the Company as the property of the Company
and were in part sold by the Company. The Company does not believe that the
arrangement was valid or that the alleged option is enforceable.
The Company has received information that on August 11, 1997, a lawsuit
was filed in the Seventeenth Judicial Circuit in and for Broward County,
Florida by Osvaldo Franco, Sheldon Leader, C. Michael Renuart and Frank
Schmidt, all former employees (the "Employees") of Intelligent Truck Project,
Inc. ("ITP") against, the Company, its present and former directors and its
Treasurer alleging that the Company misrepresented its financial prospects in
order to persuade the Employees to exchange their ITP shares for the Company's
shares. The Company has not been served with the complaint.
15
<PAGE> 16
RISK FACTORS
From time to time, information provided by the Company or statements made
by its employees may contain forward-looking information. The Company's actual
future results may differ materially from those projections or suggestions made
in such forward-looking information as a result of various potential risks and
uncertainties including, but not limited to, the factors discussed below.
Losses in Prior Periods; Liquidity and Financing Risks. The Company has
experienced significant losses from operations during fiscal 1994, fiscal 1995,
fiscal 1996 and fiscal 1997 and the first quarter of fiscal 1998. The Company
has taken measures since the firing of its former Chief Executive Officer in
February 1997 to reduce those losses, including appointing a turnaround
specialist, reducing various expenses and implementing new cost controls. If
cost savings are not achieved or revenues are not increased, the operating plan
for the Company could include further cost reductions. If cost savings are not
achieved, or revenues are not increased, it would significantly impair the
ability of the Company to continue as a going concern. The Company believes that
its present cash balances, anticipated financing from Congress Financial, and
anticipated future cash flows will be sufficient to fund future operations.
Although the Company has received a commitment letter from Congress Financial
regarding the proposed refinancing, and believes that the refinancing with
Congress Financial will be consummated, the refinancing is subject to certain
conditions. The Company can make no assurances that measures taken to date or to
be taken in the future will be sufficient to stem losses or that future
financing will be available to the Company or, if available, on terms that will
be satisfactory to the Company.
Dependence on Major Customers; Concentration of Credit Risk. Bay Networks,
Inc. and Navionics, Inc. accounted for approximately 28% and 12%, respectively,
of the Company's sales for the 1997 period. Bay Networks and a subsidiary of
Philips Electronics, N.V. accounted for 24% and 23%, respectively, of the
Company's sales for the 1996 period. The loss of, or a significant curtailment
of purchases by these customers, or any other significant customer of the
Company, could have a material adverse effect on the Company's business,
financial condition and results of operations. Substantially all of the
Company's sales to Philips have been in connection with Philips' sales of screen
phones to a single customer. Except for certain orders presently in dispute, the
Company has fulfilled all purchase orders with Philips, and the Company believes
that it will not receive additional orders from Philips pursuant to the screen
phone program. The industries served by the Company are characterized by
frequent mergers, consolidations, acquisitions, corporate restructuring and
changes in management, and the Company has from time to time experienced
reductions in purchase orders from customers as a result of such events. There
can be no assurance that such events involving customers of the Company will not
result in a significant reduction in the level of sales by the Company to such
customers or the termination of the Company's relationship with such customers.
In addition, the percentage of the Company's sales to individual customers may
fluctuate from period to period. Customer orders can be canceled and volume
levels can be changed or delayed. The timely replacement of canceled, delayed,
or reduced orders with new customers cannot be assured. These risks are
exacerbated because a majority of the Company's sales are to customers in the
electronics industry, which is subject to rapid technological change and product
obsolescence. The electronics industry is also subject to economic cycles and
has in the past experienced, and is likely in the future to experience,
fluctuations in demand. The Company anticipates that a significant portion of
its sales will continue for the foreseeable future to be concentrated in a small
number of customers in the electronics industry.
Fluctuations in Quarterly Results. The Company's results of operations may
be subject to quarterly fluctuations due to a number of factors, including the
timing of receipt and delivery of significant orders for the Company's products,
competitive pricing pressures, increases in raw material costs, costs associated
with the expansion of operations, changes in customer and product mix,
production difficulties, quality of the Company's products, write-downs or
writeoffs of investments in other companies, exchange rate fluctuations and
market acceptance of new or enhanced versions of the Company's products, as well
as other factors, some of which are beyond the Company's control. Additionally,
as is the case with many high technology companies, a significant portion of the
Company's orders and shipments typically occurs in the last few weeks of a
quarter. As a result, revenues for a quarter are not predictable, and the
Company's revenues may shift from one quarter to the next, having a significant
effect on reported results.
The trading price of the Company's Common Stock may fluctuate widely in
response to, among other things, quarter-to-quarter operating results, industry
conditions, awards of orders to the Company or its competitors, new product or
product development announcements by the Company or its competitors and changes
in earnings estimates by analysts. There can be no assurance that the Company's
future performance will meet the expectations of analysts or investors. In
addition, the volatility of the stock markets may cause wide fluctuations in
trading prices of securities of high technology companies.
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<PAGE> 17
Dependence on Key Personnel. The Company's success depends to a significant
degree upon the efforts and abilities of members of its senior management and
other key personnel, including technical personnel. The loss of any of these
individuals could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's business also
depends upon its ability to continue to attract and retain senior managers and
skilled technical employees. The Company is currently conducting an executive
search for a permanent Chief Executive Officer and Chief Financial Officer.
Failure to attract and retain such senior personnel could materially and
adversely affect the Company's business, financial condition and results of
operations.
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Class Action Litigation. Since the Company's announcement on February 11,
1997 that it was undertaking an inquiry into the accuracy of its prior reported
financial results, and that preliminary information had raised questions as to
whether reported results contained material misstatements, approximately 35
purported class action lawsuits have been filed in or transferred to the United
States District Court for the District of Massachusetts. These complaints assert
claims against the Company under Section 10(b) of the Securities Exchange Act of
1934 (the "1934 Act") and Rule 10b-5 promulgated thereunder, and related state
law claims of fraud, deceit and negligent misrepresentation. The complaints also
assert claims against some or all of the Company's Board of Directors, and some
complaints assert claims against certain of the Company's nondirector officers,
under Section 20(a) of the 1934 Act, as well as the same state law claims
asserted against the Company. The Company's independent accountants, Coopers &
Lybrand, L.L.P. ("Coopers & Lybrand"), the Company's lead underwriter for its
March 1996 subsequent public offering, Needham & Company, Inc., and a financial
advisory subscription company, Cabot Heritage Corporation, have also been named
in some of the suits. These class action lawsuits were purportedly brought by
and on behalf of purchasers of the Company's Common Stock between the Company's
initial public offering on April 12, 1994 and February 10, 1997 (the "Centennial
Securities Litigation").
On February 20, 1997, the Company received a subpoena from the United
States Department of Justice ("DOJ") to produce documents in connection with a
grand jury investigation regarding various irregularities in the Company's
previous press releases and financial statements. The DOJ also requested certain
information regarding some of the Company's former officers, certain stock
transactions by the Company's former Chief Executive Officer, and correspondence
with the Company's auditors. The DOJ has subsequently subpoenaed additional
Company records and files. The Company has not been notified by the DOJ that
it is a target or subject of this investigation.
On and after February 26, 1997, four Complaints were filed in the United
States District Court for the District of Massachusetts by plaintiffs purporting
to represent classes of shareholders who purchased the Company's Common Stock on
February 25, 1997. The Complaint also names the Company's Interim Chief
Executive Officer, Lawrence J. Ramaekers, and alleges violations of Sections
10(b) and 20(a) of the 1934 Act (the "February 25 Securities Litigation").
In mid-February 1997, the Company was notified that the Boston District
Office of the Securities and Exchange Commission ("SEC") was conducting an
investigation of the Company. The SEC has requested that the Company provide
the SEC with certain documents concerning the Company's public reports and
financial statements. The SEC indicated that its inquiry should not be
construed as an indication by the SEC or its staff that any violations have
occurred, or as a reflection upon the merits of the securities involved or upon
any person who effected transactions in such securities. The Company is
cooperating with the SEC in connection with this investigation, the outcome of
which cannot yet be determined.
On and after March 26, 1997, several complaints were filed in the United
States District Court for the District of Massachusetts by plaintiffs purporting
to represent classes of shareholders who purchased stock of WebSecure, Inc.
("WebSecure") between December 5, 1996 and February 27, 1997 (the "WebSecure
Complaints"). The WebSecure Complaints assert claims against WebSecure, certain
officers, directors and underwriters of WebSecure, and the Company. Claims
against the Company include alleged violations of Sections 11 and 15 of the
Securities Act of 1933 (the "1933 Act") (the "WebSecure Securities Litigation").
In addition, several shareholder derivative lawsuits have been filed by
purported holders of the Company's common stock seeking recovery for certain
alleged breach of fiduciary duties, alleged gross negligence, alleged breach of
contract and alleged insider trading by members of the Company's Board of
Directors between August 21, 1996 and February 10, 1997 (the "Derivative
Litigation").
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<PAGE> 18
On June 18, 1997, the Company announced that it had reached an agreement in
principle to settle the Centennial Securities Litigation, the February 25
Securities Litigation and the Derivative Litigation. This agreement in principle
contemplates that the Company and certain of its officers and directors would be
released from liability arising from the allegations included in these suits. In
return, the Company would agree to pay to the plaintiffs in the Centennial
Securities Litigation and the February 25 Securities Litigation the proceeds, if
any, of any recovery from the Company's directors and officers liability
insurance policies, and an additional $1.45 million in cash. The Company would
also agree to issue to these plaintiffs 37% of the Company's Common Stock. The
Company also expects to adopt certain agreed upon corporate governance policies
and procedures. The plaintiffs would retain their claims against the Company's
former Chief Executive Officer, Emanuel Pinez, and the Company's former Chief
Financial Officer, James M. Murphy.
The plaintiffs in the February 25 Securities Litigation have not yet
reached an agreement with the Company's Interim Chief Executive Officer,
Lawrence J. Ramaekers, regarding their alleged claims against him. These
plaintiffs have agreed in principle to release the Company from any direct
liability related to those alleged claims. In the agreement under which Mr.
Ramaekers is providing services to the Company, the Company agreed to provide
Mr. Ramaekers with the same indemnification as is applicable to other officers
of the Company pursuant to the Company's By-Laws. The Company has agreed to
indemnify, hold harmless, and defend Mr. Ramaekers from and against certain
claims arising out of his engagement with the Company.
On June 19, 1997, the Company announced that it had reached an agreement in
principle to settle the WebSecure Securities Litigation. The agreement in
principle contemplates that the Company and certain of its officers and
directors would be released from any and all liability arising from the
allegations included in the WebSecure Securities Litigation in return for the
issuance to the WebSecure Securities Litigation class of 345,000 shares of the
Company's Common Stock and the payment to the class of up to $50,000 for notice
and administrative costs.
As of fiscal 1997, the Company recorded a provision for the potential
settlement of the Centennial Securities Litigation of $20.0 million,
representing the cash portion of the potential settlement, together with an
amount equal to 37% of the estimated market capitalization of the Company. The
cash portion ($1,475,000) of the potential settlement is included in accounts
payable and accrued expenses and the Common Stock portion ($18,525,000) is
included in additional paid-in capital.
A number of material terms remain to be negotiated regarding the Centennial
Securities Litigation, the February 25 Securities Litigation, the Derivative
Litigation, and the WebSecure Securities Litigation. A binding commitment to the
terms described above, as well as resolution of other currently unresolved
material terms, must await the execution of final settlement agreements.
Furthermore, any settlement agreement must be submitted to the Court for review
and approval and, thereafter, presented to class members for consideration. If a
sufficiently large number of class members opt not to participate in the
settlement agreement, the agreement may be withdrawn. No assurance can be given
that the parties will be able to reach such final settlement agreements, that
any such agreements, if reached, will be approved by the Court, or that, if
such approval is obtained, that a material number of class members will not
decline to participate in the settlement.
ITEM 2. CHANGES IN SECURITIES Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable.
ITEM 5. OTHER INFORMATION Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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<TABLE>
<CAPTION>
ITEM
NO. DESCRIPTION LOCATION
----- ----------- --------
SEE NOTE:
<S> <C> <C>
3.1 -- Certificate of Amendment to the Certificate of Incorporation........................ (3)
3.2 -- By-Laws............................................................................. (7)
3.3 -- Shareholder Voting Agreement between Centennial Technologies, Inc. and
the Shareholders who are a party thereto, dated November 27, 1996.................... (1)
Filed
4.1 -- Specimen Stock Certificate.......................................................... herewith
4.2 -- Form of Warrant Agreement between the Company and American Securities
Transfer, Incorporated (includes Specimen Warrant Certificate)...................... (7)
10.1 -- Revolving Credit and Security Agreement between the Company and The
First National Bank of Boston, dated September 14, 1994............................. (5)
10.2 -- $3,000,000 Revolving Credit Note, dated September 14, 1994, by NCT in
favor of The First National Bank of Boston for the benefit of the
Company............................................................................. (5)
10.3 -- Unlimited Guaranty, dated September 14, 1994, by NCT in favor of The
First National Bank of Boston for the benefit of the Company........................ (5)
10.4 -- Affiliate Subordination Agreement, dated September 14, 1994, executed
in favor of The First National Bank of Boston by the Company, NCT and
Emanuel Pinez....................................................................... (5)
10.5 -- Amendment No. 1 dated as of November 8, 1995 to the Revolving Credit
and Security Agreement between the Company and The First National Bank
of Boston........................................................................... (2)
10.6 -- Forbearance Agreement and Amendment by and between The First National
Bank of Boston, BancBoston Leasing Inc., Centennial Technologies, Inc.,
NCT, Inc., Century Electronics Manufacturing, Inc. and Design Circuits,
Inc., dated as of March 18, 1997.................................................... (1)
10.7 -- Lease Agreement between the Company and 37 Manning Road Limited
Partnership, dated November 6, 1992 and amended on November 29, 1992................ (7)
10.8 -- Lease Agreement between the Company and 4 Point Interiors, dated June
28, 1993 ("California Lease")....................................................... (7)
10.9 -- Amendment to the California Lease, dated June 25, 1993.............................. (7)
10.10 -- Form of the Company's Domestic Distributor Agreement between the
Company and its domestic distributors............................................... (7)
10.11 -- Form of the Company's Agreement with its Manufacturer's
Representatives..................................................................... (7)
10.12 -- Purchase Agreement between Triple I Corporation and Centennial
Technologies, Inc., dated March 31, 1996............................................ (1)
10.13 -- Investment and Stockholders Agreement by and between Centennial
Technologies, Inc. and ViA, Inc., dated November 27, 1996........................... (1)
10.14 -- 1994 Stock Option Plan, as amended.................................................. (3)
10.15 -- 1994 Formula Stock Option Plan, as amended.......................................... (3)
10.16 -- Indemnification Agreement dated April 11, 1994 between Emanuel Pinez
and the Company..................................................................... (7)
10.17 -- Employment Agreement between the Company and John J. McDonald, dated
October 20, 1995.................................................................... (2)
10.18 -- Key Employee Agreement between Centennial Technologies, Inc. and Donald
R. Peck, dated February 1, 1997..................................................... (1)
10.19 -- Agreement to Provide Interim Management and Consulting Services between
Centennial Technologies, Inc. and Jay Alix & Associates, dated February
17, 1997............................................................................ (1)
10.20 -- Key Employee Agreement between Centennial Technologies, Inc. and John J. Filed
McDonald dated April 1, 1997........................................................ herewith
10.21 -- Key Employee Agreement between Centennial Technologies, Inc. and David E. Filed
Merry, Jr. dated April 1, 1997...................................................... herewith
10.22 -- First Amendment to Forbearance Agreement by and between The First National
Bank of Boston, BancBoston Leasing Inc., Centennial Technologies, Inc., NCT, Inc.,
Century Electronics Manufacturing, Inc. and Design Circuits, Inc., dated as of Filed
April 18, 1997...................................................................... herewith
10.23 -- Second Amendment to Forbearance Agreement and Amendment by and between
The First National Bank of Boston, BancBoston Leasing Inc., Centennial
Technologies, Inc., NCT, Inc., Century Electronics Manufacturing, Inc. and Filed
Design Circuits, Inc., dated as of June 4, 1997..................................... herewith
10.24 -- Third Amendment to Forbearance Agreement and Amendment by and between
The First National Bank of Boston, BancBoston Leasing Inc., Centennial
Technologies, Inc., NCT, Inc., Century Electronics Manufacturing, Inc. and Filed
Design Circuits, Inc., dated as of June 26, 1997.................................... herewith
10.25 -- Consulting Agreement by and between Centennial Technologies, Inc. and William M. Filed
Kinch dated as of March 1, 1997..................................................... herewith
10.26 -- Agreement for Consulting Services between The Boston Agent and Centennial Filed
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C> <C>
Technologies, Inc., dated January 20, 1997.......................................... herewith
10.27 -- Lease Agreement by and between Centennial Technologies, Inc. and Michael A. Filed
Howland, as Trustee of the Hownat Trust, dated April 17, 1997....................... herewith
10.28 -- Settlement Agreement by and among Centennial Technologies, Inc., H. Hamby Filed
Hutcheson and Mary Low Hutcheson, dated as of May 15, 1997.......................... herewith
Filed
27 -- Financial Data Schedule............................................................. herewith
</TABLE>
(1) Incorporated by reference to the similarly numbered exhibit to the
Company's Company's Annual Report on Form 10-K filed with the Commission on July
22, 1997.
(2) Incorporated by reference to the similarly numbered exhibit to the
Company's Form S-3 Registration Statement (No. 33-1008) declared effective by
the Securities and Exchange Commission (the "Commission") on March 19, 1996.
(3) Incorporated by reference to the similarly numbered exhibit to the
Company's Annual Report on Form 10-KSB filed with the Commission on October 13,
1995.
(4) Incorporated by reference to the similarly numbered exhibit to the
Company's Post-Effective Amendment No. 2 to its Form SB-2 Registration Statement
(No. 33-74862-NY) filed with the Commission on February 1, 1995.
(5) Incorporated by reference to the similarly numbered exhibit to the
Company's Post-Effective Amendment No. 1 to its Form SB-2 Registration Statement
(No. 33-74862-NY) originally filed with the Commission on December 22, 1994.
(6) Incorporated by reference to the similarly numbered exhibit to the
Company's Annual Report on Form 10-KSB filed with the Commission on September
25, 1994.
(7) Incorporated by reference to the similarly numbered exhibit to the
Company's Form SB-2 Registration Statement (No. 33-74862-NY) declared effective
by the Commission on April 12, 1994.
(b) Reports on Form 8-K. None.
20
<PAGE> 21
SIGNATURES
IN ACCORDANCE WITH SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, THE REGISTRANT CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
CENTENNIAL TECHNOLOGIES, INC.
Dated: August 14, 1997 By: /s/ LAWRENCE J. RAMAEKERS
--------------- ---------------------------------
Lawrence J. Ramaekers
Interim Chief Executive Officer
Dated: August 14, 1997 By: /s/ EUGENE M. BULLIS
--------------- ---------------------------------
Eugene M. Bullis
Interim Chief Financial Officer
21
<PAGE> 1
[LOGO] CENTENNIAL
CENTENNIAL TECHNOLOGIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK, NEW YORK, OR DENVER, COLORADO
NUMBER SHARES
DEN
COMMON STOCK SEE REVERSE SIDE
FOR CERTAIN DEFINITIONS
This Certifies That CUSIP 151392 10 7
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK,
PAR VALUE $.01 PER SHARE OF
CENTENNIAL TECHNOLOGIES, INC.
(herein called the "Corporation"), transferable on the books of the Corporation
by the holder hereof in person or by duly authorized attorney upon surrender of
this Certificate properly endorsed. This Certificate and the shares represented
hereby are subject to the laws of the State of Delaware and to the Certificate
of Incorporation and the By-laws of the Corporation as from time to time
amended.
This Certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
/s/ Donald R. Peck /s/ John J. McDonald
TREASURER PRESIDENT
CENTENNIAL TECHNOLOGIES, INC.
CORPORATE
SEAL
1994
DELAWARE
****
COUNTERSIGNED AND REGISTERED
AMERICAN SECURITIES TRANSFER & TRUST, INC.
P.O. Box 1596
Denver, Colorado 80201
By ______________________________________________________
Transfer Agent and Registrar Authorized Signature
<PAGE> 2
CENTENNIAL TECHNOLOGIES, INC.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT TEN -as joint tenants with right of
survivorship and not as tenants
in common
UNIT GIFT MIN ACT- ----------Custodian-----------
(Cust) (Minor)
under Uniform Gifts to Minors
Act_____________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED______________________________________hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________Shares
of the common stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
______________________________________________________________________Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated___________________________ X_________________________________________
NOTICE: The Signature to this assignment
must correspond with the name as written
upon the face of the Certificate in every
particular, without alteration or
enlargement, or any change whatever.
THE CORPORATION IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR SERIES OF STOCK.
A COPY OF THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF EACH CLASS AND
SERIES WILL BE FURNISHED BY THE CORPORATION UPON WRITTEN REQUEST AND WITHOUT
CHARGE.
Signature(s) Guaranteed:
____________________________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
_______________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE> 1
EXHIBIT 10.20
----------------------
KEY EMPLOYEE AGREEMENT
----------------------
To: John J. McDonald As of April 1, 1997
17 Smith Farm Trail
Lynnfield, MA 01940
The undersigned, Centennial Technologies, Inc., a Delaware corporation
(the "Company"), hereby agrees with you as follows:
1. POSITION AND RESPONSIBILITIES.
1.1 You shall serve as the President or Executive Vice
President of Sales of the Company, or in a comparable position with similar
responsibilities, as designated by the Company's Board of Directors, and shall
perform such functions as are customarily associated with such capacity from
time to time at the Company's headquarters or such place or places as are
appropriate and necessary in connection with such employment. It is expressly
agreed that any change in your title between President and Executive Vice
President of Sales shall not provide cause for this agreement to be terminated
by either party.
1.2 You will, to the best of your ability, devote your full
time and best efforts to the performance of your duties hereunder and the
business and affairs of the Company. You agree to perform such duties consistent
with your position as may be lawfully and reasonably assigned to you by the
Company's Board of Directors from time to time. Such duties may include similar
responsibilities with companies in which the Company has a majority ownership
interest. If assuming such responsibilities would require you to move outside of
the Greater Boston area, such responsibilties will only be required of you on
terms mutually agreeable by you and the Company.
1.3 You will duly, punctually and faithfully perform and
observe any and all lawful rules and regulations which the Company may now or
shall hereafter establish governing the conduct of its business.
- 1 -
<PAGE> 2
2. TERM OF EMPLOYMENT.
2.1 The initial term of this Agreement shall be for one year,
subject to earlier termination in accordance with Section 2.2 hereof.
Thereafter, this Agreement may be renewed upon the written agreement of you and
the Company.
2.2 The Company shall have the right to terminate your
employment at any time either (a) immediately without prior written notice for
"cause" (as defined herein), or (b) upon at least ten (10) days' written notice
without cause. If the Company terminates your employment for cause, the Company
shall be obligated to pay you an amount equal to your salary and vacation pay
which is accrued and unpaid up to the date of such termination. If the Company
terminates your employment without cause, the Company shall be obligated to pay
you your Base Salary (as defined in EXHIBIT A attached hereto) for a period of
time equal to the greater of (i) six months, or (ii) that period of time which
commences on the date of such termination and ends with the expiration in the
initial term of employment set forth in Section 2.1 (the "Severance Period").
The Company shall also continue in full force and effect for the Severance
Period all health and insurance benefits that you enjoyed at the time of your
termination without cause, and all other benefits which applicable law requires
to be continued. Should you continue to be employed by the Company beyond the
term of this Agreement without a mutually agreed upon renewal or modification of
this Agreement, a six month severance provision for termination without cause as
described above shall apply.
2.3 For purposes of Section 2.2 hereof, the term "cause" shall
mean the following: (i) your involvement in any felony crime, material
arrestable criminal offense (excluding road traffic offenses for which a fine or
non-custodial penalty is imposed), or any crime in connection with your
employment with the Company (including theft of Company assets); or (ii)
material insubordination or your knowing or intentional failure to take actions
permitted by law and necessary to implement strategies or policies of the
Company and which are consistent with your positions and duties, following
written warning of such material insubordination or unreasonable failure; or
(iii) drunkenness or use of any drug or narcotic which adversely affects your
job performance; or (iv) any knowing or intentional misrepresentation of
significant information important to the operating condition of the Company; or
(v) acting in material breach or contravention of any non-competition,
non-disclosure or non-solicitation covenants hereof.
3. COMPENSATION. You shall receive the compensation and benefits
set forth on Exhibit A hereto ("Compensation") for all services to be rendered
by you hereunder and for your transfer of property rights, if any, pursuant to
an agreement relating to proprietary information and inventions of even date
herewith attached hereto and made a part hereof as EXHIBIT C between you and the
Company (the "Proprietary Information and Inventions Agreement"). If you remain
as a full-time employee of the Company until at least August 31, 1997, the
Company
- 2 -
<PAGE> 3
will pay you, in a lump-sum payment within two (2) weeks following such date, a
"stay bonus" equal to six (6) months' Base Salary. In the event you are
terminated involuntarily and not for "cause" as described in Section 2.3 above
prior to August 31, 1997, you will receive within two (2) weeks of such
termination a pro-rated share of such "stay bonus" for that period between
February 11, 1997 and August 31, 1997 that you remain employed by the Company.
Furthermore, if you remain as a full-time employee of the Company until at least
August 31, 1997, the Company will forgive in full those advances made to you
during calendar year 1995 which remain outstanding as of the date of this
agreement, which advances total $31,500 (the "Advances"). You understand and
agree that the Company will make all necessary and appropriate payroll
withholdings from all payments to be made to you under this paragraph,
including, but not limited to, such withholdings from your "stay bonus"
necessary to reflect the forgiveness the Advances as taxable compensation to you
in calendar year 1997.
4. OTHER ACTIVITIES DURING EMPLOYMENT.
4.1 Except for any outside employments and directorships
currently held by you as listed on EXHIBIT B hereto, if any, and except with the
prior written consent of the Company's Board of Directors (which approval shall
not be unreasonably withheld), you will not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise
other than one in which you are an inactive investor.
4.2 You hereby agree that, except as disclosed on EXHIBIT B
hereto, during your employment hereunder, you will not, directly or indirectly,
engage (a) individually, (b) as an officer, (c) as a director, (d) as an
employee, (e) as a consultant, (f) as an advisor, (g) as an agent (whether a
salesperson or otherwise), (h) as a broker, or (i) as a partner, coventurer,
stockholder or other proprietor owning directly or indirectly more than one
percent (1%) interest, in any firm, corporation, partnership, trust,
association, or other organization which is engaged in any line of business
engaged in or under demonstrable development by the Company (such firm,
corporation, partnership, trust, association, or other organization being
hereinafter referred to as a "Prohibited Enterprise"). You hereby represent that
you are not presently engaged in any of the foregoing capacities described in
(a) through (i) in any Prohibited Enterprise.
5. FORMER EMPLOYERS.
5.1 You represent and warrant that your employment by the
Company will not conflict with and will not be constrained by any prior or
current employment, consulting agreement or relationship whether oral or
written. You represent and warrant that you do not possess confidential
information arising out of any such employment, consulting agreement or
relationship which, in your best judgment, would be utilized in connection with
your employment by the Company.
- 3 -
<PAGE> 4
5.2 If, in spite of the second sentence of Section 5.1, you
should find that confidential information belonging to any other person or
entity might be usable in connection with the Company's business, you will not
intentionally disclose to the Company or use on behalf of the Company any
confidential information belonging to any of your former employers; but during
your employment by the Company you will use in the performance of your duties
all information which is generally known and used by persons with training and
experience comparable to your own, all information which is common knowledge in
the industry or otherwise legally in the public domain.
6. PROPRIETARY INFORMATION AND INVENTIONS. You agree to execute,
deliver and be bound by the provisions of the Proprietary Information and
Inventions Agreement attached hereto as EXHIBIT C and incorporated herein.
7. POST-EMPLOYMENT ACTIVITIES.
7.1 You shall not, for a period of one (1) year after the
termination of your employment with the Company (for whatever reason), without
the prior written consent of the Company, directly or indirectly do any business
with or have any dealings whatsoever with any person, firm or company who was a
client, customer, supplier, agent or distributor of the Company during the
period of one (1) year prior to the end of your employment with the Company and
with whom you have contact during the period of one (1) year prior to the end of
your employment with the Company, nor shall you render services similar or
reasonably related to those which you shall have rendered hereunder during such
one (1) year period, to any person or entity whether now existing or hereafter
established which directly competes with (or proposes or plans to directly
compete with) the Company (a "Direct Competitor") in any line of business
engaged in or under development by the Company. Nor shall you entice, induce or
encourage any of the Company's other employees to engage in any activity which,
were it done by you, would violate any provision of the Proprietary Information
and Inventions Agreement which you have executed or this Section 7. As used in
this Section 7.1, the phrase "any line of business engaged in or under
development by the Company" shall be applied as at the date of termination of
your employment with the Company.
7.2 For a period of one (1) year after the termination of your
employment with the Company, the provisions of Section 4.2 hereof shall be
applicable to you and you shall comply therewith. As applied to such one (1)
year post-employment period, the term "any other line of business engaged in or
under demonstrable development by the Company," as used in Section 4.2, shall be
applied as at the date of termination of your employment with the Company.
7.3 No provision of this Agreement shall be construed to
preclude you from performing the same services which the Company hereby retains
you to perform for any person or entity which is not a Direct Competitor of the
Company upon the expiration or termination of
- 4 -
<PAGE> 5
your employment (or any post-employment consulting arrangement) so long as you
do not thereby violate any term of this Agreement or the Proprietary Information
and Inventions Agreement.
7.4 After your employment with the Company ends, you are
required to notify the Company promptly in writing if you receive any offer of
employment that you wish to accept, if the employment might commence during the
period of restriction described in Section 7.1 above. This notice should
contain: (a) a complete description of the terms of the offer, including the
position and the compensation provided and the responsibilities contemplated
thereunder, and (b) confirmation of your intention to accept the offer if the
Company so permits. After you have so notified the Company, the Company shall
have fifteen (15) days to notify you of its election:
7.4.1. To release you from Section 7.1 hereof, but only as it
applies to the employment position offered to you, as disclosed in your notice
to the Company; or
7.4.2. To insist upon full compliance with Section 7.1;
provided, however, that if you have reported to the Company an offer of
employment that would commence more than six months after the termination of
your employment but within the period of restriction described in Section 7.1,
and the Company elects to insist upon full compliance with Section 7.1 for that
period, the Company shall provide you with the following "Special Benefit" over
such period: the Base Salary provided under this Contract for the period between
the date upon which you would have commenced such employment and the end of the
period described in Section 7.1.
During such time as the Company is paying you such "Special
Benefit," you are required to pursue with diligence other employment
opportunities consistent with your general skills and interests. This Special
Benefit is available only if the requirements of this Section 7.4.2 are met,
only during the period of the second six months of the period of restriction
described in Section 7.1, and only so long as you are unable to obtain suitable
employment in compliance with Section 7.1. Any election by the Company to
release you from Section 7.1 with respect to one offer of employment shall not
release you from Section 7.1 with respect to any subsequent offers of
employment, including transfers, reassignments or a change in duties or
responsibilities by the same or different employers.
8. REMEDIES. Your obligations under the Proprietary Information
and Inventions Agreement and the provisions of Sections 4.2, 7, 9, 10 and 11 of
this Agreement (as modified by Section 12, if applicable) shall survive the
expiration or termination of your employment (whether through your resignation
or otherwise) with the Company. You acknowledge that a remedy at law for any
breach or threatened breach by you of the provisions of this Agreement or the
Proprietary Information and Inventions Agreement would be inadequate and you
therefore
- 5 -
<PAGE> 6
agree that the Company shall be entitled to injunctive relief in case of any
such breach or threatened breach.
9. ASSIGNMENT. This Agreement and the rights and obligations of
the parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by reorganization, merger or consolidation and any
assignee of all or substantially all of its business and properties, but, except
as to any such successor or assignee of the Company, neither this Agreement nor
any rights or benefits hereunder may be assigned by the Company or by you,
except by operation of law or by a further written agreement by the parties
hereto.
10. CONFIDENTIALITY. You agree to keep confidential, except as the
Company may otherwise consent in writing, and, except for the Company's benefit,
not to disclose or make any use of at any time either during or subsequent to
your employment, any trade secrets, confidential information, knowledge, data or
other information of the Company relating to products, processes, know-how,
techniques, methods, designs, formulas, test data, customer lists, business
plans, marketing plans and strategies, pricing strategies, or other subject
matter pertaining to any business of the Company or any of its affiliates, which
you may produce, obtain, or otherwise acquire during the course of your
employment, except as herein provided. You further agree not to deliver,
reproduce or in any way allow any such trade secrets, confidential information,
knowledge, data or other information, or any documentation relating thereto, to
be delivered to or used by any third parties without specific direction or
consent of a duly authorized representative of the Company.
11. ARBITRATION. Any dispute concerning this Agreement including,
but not limited to, its existence, validity, interpretation, performance or
non-performance, arising before or after termination or expiration of this
Agreement, shall be settled by a single arbitrator in Boston, Massachusetts, in
accordance with the expedited procedures of the commercial rules then in effect
of the American Arbitration Association. Judgment upon any award may be entered
in the highest court, state or federal, having jurisdiction.
12. INTERPRETATION. IT IS THE INTENT OF THE PARTIES THAT in case
any one or more of the provisions contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. MOREOVER, IT
IS THE INTENT OF THE PARTIES THAT if any one or more of the provisions contained
in this Agreement is or becomes or is deemed invalid, illegal or unenforceable
or in case any provision shall for any reason be held to be excessively broad as
to duration, geographical scope, activity or subject, such provision shall be
construed by amending, limiting and/or reducing it to conform to applicable laws
so as to be valid and enforceable or, if it cannot be so amended without
- 6 -
<PAGE> 7
materially altering the intention of the parties, it shall be stricken and the
remainder of this Agreement shall remain in full force and effect.
13. NOTICES. Any notice which the Company is required to or may
desire to give you shall be given by personal delivery or registered or
certified mail, return receipt requested, addressed to you at your address of
record with the Company, or at such other place as you may from time to time
designate in writing. Any notice which you are required or may desire to give to
the Company hereunder shall be given by personal delivery or by registered or
certified mail, return receipt requested, addressed to the Company at its
principal office, or at such other office as the Company may from time to time
designate in writing with a copy to Peter J. Macdonald, Hale & Dorr, LLP, 60
State Street, Boston, MA 02109. The date of personal delivery or the date of
mailing of any notice under this Section 13 shall be deemed to be the date of
delivery thereof.
14. WAIVERS. No waiver of any right under this Agreement shall be
deemed effective unless contained in a writing signed by the party charged with
such waiver, and no waiver of any right arising from any breach or failure to
perform shall be deemed to be a waiver of any future such right or of any other
right arising under this Agreement. If either party should waive any breach of
any provision of this Agreement, such party shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.
15. COMPLETE AGREEMENT; AMENDMENTS. The foregoing, including
Exhibits A, B and C hereto, is the entire agreement of the parties with respect
to the subject matter hereof, superseding any previous oral or written
communications, representations, understandings, or agreements with the Company
or any officer or representative thereof. Any amendment to this Agreement shall
be effective only if evidenced by a written instrument executed by the parties
hereto, upon authorization of the Company's Board of Directors.
16. HEADINGS. The headings of the Sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning of this Agreement.
17. COUNTERPARTS. This Agreement may be signed in two
counterparts, each of which shall be deemed an original and both of which shall
together constitute one agreement.
18. GOVERNING LAW. This Agreement shall be governed by and
construed under Massachusetts law, without regard to its conflict of laws
principles.
If you are in agreement with the foregoing, please sign your name below
and also at the bottom of the Proprietary Information and Inventions Agreement,
whereupon this Agreement shall become binding in accordance with its terms.
Please then return this Agreement to the
- 7 -
<PAGE> 8
Company. (You may retain for your records the accompanying counterpart of this
Agreement enclosed herewith).
Very truly yours,
CENTENNIAL TECHNOLOGIES, INC.
BY: /s/ Lawrence J. Ramaekers
-------------------------------
Lawrence J. Ramaekers
Interim Chief Executive Officer
Accepted and Agreed:
/s/ John J. McDonald
- ---------------------------------
John J. McDonald
- 8 -
<PAGE> 9
EXHIBIT A
---------
EMPLOYMENT TERM, COMPENSATION AND BENEFITS
OF
JOHN J. MCDONALD
1. TERM. The term of the Agreement to which this Exhibit A is annexed and
incorporated shall be until March 31, 1998.
2. COMPENSATION. Your Base Salary shall be $168,750 per annum, payable in
accordance with the payroll policies established by the Company.
3. BONUS. You shall be entitled to such bonuses as may be determined by
the Company's Board of Directors or Compensation Committee.
4. STOCK OPTIONS. Upon acceptance of this Agreement, you shall be granted
an incentive stock option to purchase 217,500 shares of the common
stock of the Company pursuant to the Company's 1994 Stock Option Plan
at the fair market value determined by the Company's Board of
Directors. These incentive stock options shall vest one-third on
October 1, 1997, one-third on October 1, 1998, and one-third on October
1, 1999. These stock options will replace your existing 217,500 options
granted on October 1, 1996 at an exercise price of $20.53, and you
agree to execute all documents reasonably necessary to effect this
cancellation of your prior options. In the event of a sale or
acquisition of substantially all of the stock or assets of the Company,
the Company shall give you thirty (30) days notice of such an event and
advise you that any of your then outstanding options shall be
immediately exercisable before the event takes place, whether or not by
their terms the stock options are then vested. In the event you are
terminated involuntarily for any reason other than for "cause" as
defined in section 2.3 of this Agreement after a change in the majority
of the Board of Directors of the Company, fifty percent (50%) of any
options which on such date have not vested shall be and become fully
vested.
5. VACATION. You shall be entitled to four (4) weeks paid vacation per
year. You will be allowed to carry over unused vacation entitlement to
future periods or at your option receive compensation equivalent to the
unused vacation entitlement at your then current salary.
A-1
<PAGE> 10
6. AUTOMOBILE ALLOWANCE. You shall forthwith receive a monthly automobile
allowance in the amount of $700.
7. OTHER BENEFITS. You shall be eligible for participation in any health,
group insurance plan, or pension insurance and benefits plan that may
be established by the Company or which the Company is required to
maintain by law. You shall also be eligible to receive other benefits
that are provided to the executive officers of the Company from time to
time.
A-2
<PAGE> 11
EXHIBIT B
---------
OUTSIDE EMPLOYMENTS AND DIRECTORSHIPS OF
JOHN J. MCDONALD
B-1
<PAGE> 12
EXHIBIT C
---------
- --------------------------------------------------------------------------------
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
- --------------------------------------------------------------------------------
To: Centennial Technologies, Inc. As of April 1, 1997
37 Manning Road
Billerica, Massachusetts 01821
The undersigned, in consideration of and as a condition of my services
to you and/or to companies which you own, control, or are affiliated with or
their successors in business (collectively, the "Company"), hereby agrees as
follows:
1. CONFIDENTIALITY. I agree to keep confidential, except as the Company
may otherwise consent in writing, and, except for the Company's benefit, not to
disclose or make any use of at any time either during or subsequent to my
employment with the Company, any Inventions (as hereinafter defined), trade
secrets, confidential information, knowledge, data or other information of the
Company relating to products, processes, know-how, designs, formulas, test data,
customer lists, business plans, marketing plans and strategies, pricing
strategies, or other subject matter pertaining to any business of the Company or
any of its affiliates, which I may produce, obtain, or otherwise acquire during
the course of my employment, except as herein provided. I further agree not to
deliver, reproduce or in any way allow any such trade secrets, confidential
information, knowledge, data or other information, or any documentation relating
thereto, to be delivered to or used by any third parties without specific
direction or consent of a duly authorized representative of the Company.
2. CONFLICTING EMPLOYMENT; RETURN OF CONFIDENTIAL MATERIAL. I agree
that during my employment with the Company I will not engage in any other
employment, occupation, consulting or other activity relating to the business in
which the Company is now or may hereafter become engaged, or which would
otherwise conflict with my obligations to the Company. In the event my
employment with the Company terminates for any reason whatsoever, I agree to
promptly surrender and deliver to the Company all records, materials, equipment,
drawings, documents and data which I may obtain or produce during the course of
my employment, and I will not take with me any description containing or
pertaining to any confidential information, knowledge or data of the Company
which I may produce or obtain during the course of my employment.
C-1
<PAGE> 13
3. ASSIGNMENT OF INVENTIONS.
3.1 I hereby acknowledge and agree that the Company is the
owner of all Inventions. In order to protect the Company's rights to such
Inventions, by executing this Agreement I hereby irrevocably assign to the
Company all my right, title and interest in and to all Inventions.
3.2 For purposes of this Agreement, "Inventions" shall mean
all discoveries, processes, designs, technologies, devices, or improvements in
any of the foregoing or other ideas, whether or not patentable and whether or
not reduced to practice, made or conceived by me (whether solely or jointly with
others) during the period of my employment with the Company, which relate in any
manner to the actual or demonstrably anticipated business, work, or research and
development of the Company or its affiliates, or result from or are suggested by
any task assigned to me or any work performed by me for or on behalf of the
Company or its affiliates.
3.3 Any discovery, process, design, technology, device, or
improvement in any of the foregoing or other ideas, whether or not patentable
and whether or not reduced to practice, made or conceived by me (whether solely
or jointly with others) which I develop entirely on my own time during the term
of this Agreement not using any of the Company's equipment, supplies,
facilities, or trade secret information ("Personal Invention") is excluded from
this Agreement provided such Personal Invention (a) does not relate to the
actual or demonstrably anticipated business, research and development of the
Company, and (b) does not result, directly or indirectly, from any work
performed by me for the Company.
4. DISCLOSURE OF INVENTIONS. I agree that in connection with any
Invention, I will promptly disclose such Invention to the Company in order to
permit the Company to enforce its property rights to such Invention in
accordance with this Agreement. My disclosure shall be received in confidence by
the Company.
5. PATENTS AND COPYRIGHTS; EXECUTION OF DOCUMENTS.
5.1 Upon request, I agree to assist the Company or its nominee
(at its expense) during and at any time subsequent to my employment with the
Company in every reasonable way to obtain for its own benefit patents and
copyrights for Inventions in any and all countries. Such patents and copyrights
shall be and remain the sole and exclusive property of the Company or its
nominee. I agree to perform such lawful acts as the Company deems to be
necessary to allow it to exercise all right, title and interest in and to such
patents and copyrights.
5.2 In connection with this Agreement, I agree to execute,
acknowledge and deliver to the Company or its nominee upon request and at its
expense all documents, including assignments of title, patent or copyright
applications, assignments of such applications, assignments of patents or
copyrights upon issuance, as the Company may determine necessary or desirable to
protect the Company's or its nominee's interest in Inventions, and/or to use in
C-2
<PAGE> 14
obtaining patents or copyrights in any and all countries and to vest title
thereto in the Company or its nominee to any of the foregoing.
6. MAINTENANCE OF RECORDS. I agree to keep and maintain adequate
and current written records of all Inventions made by me (in the form of notes,
sketches, drawings, flowcharts and other records as may be specified by the
Company), which records shall be available to and remain the sole property of
the Company at all times.
7. PRIOR INVENTIONS. It is understood that all Personal
Inventions, if any, whether patented or unpatented, which I made prior to my
association with the Company, are excluded from this Agreement. To preclude any
possible uncertainty, I have set forth on Schedule A attached hereto a complete
list of all of my prior Personal Inventions, including numbers of all patents
and patent applications and a brief description of all unpatented Personal
Inventions which are not the property of a previous employer. I represent and
covenant that the list is complete and that, if no items are on the list, I have
no such prior Personal Inventions. I agree to notify the Company in writing
before I make any disclosure or perform any work on behalf of the Company which
appears to threaten or conflict with proprietary rights I claim in any Personal
Invention. In the event of my failure to give such notice, I agree that I will
make no claim against the Company with respect to any such Personal Invention.
8. OTHER OBLIGATIONS. I acknowledge that the Company from time to
time may have agreements with other persons or with the U.S. Government or
agencies thereof, which impose obligations or restrictions on the Company
regarding Inventions made during the course of work thereunder or regarding the
confidential nature of such work. I agree to be bound by all such obligations
and restrictions and to take all action necessary to discharge the Company's
obligations.
9. TRADE SECRETS OF OTHERS. I represent that my performance of
all the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement to keep confidential proprietary information,
knowledge or data acquired by me in confidence or in trust prior to my services
to the Company, and I will not disclose to the Company, or induce the Company to
use, any confidential or proprietary information or material belonging to any
previous client, employer or others. I agree not to enter into any agreement
either written or oral in conflict herewith.
10. MODIFICATION. I agree that any subsequent change or changes in
my duties, salary or compensation or in any Employment Agreement between the
Company and me, shall not affect the validity or scope of this Agreement.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
my heirs, executors, administrators or other legal representatives and is for
the benefit of the Company, its successors and assigns.
C-3
<PAGE> 15
12. INTERPRETATION. IT IS THE INTENT OF THE PARTIES THAT in case
any one or more of the provisions contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. MOREOVER, IT
IS THE INTENT OF THE PARTIES THAT in case any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, such provision shall be
construed by limiting and reducing it in accordance with a judgment of a court
of competent jurisdiction, so as to be enforceable to the extent compatible with
applicable law.
13. WAIVERS. If either party should waive any breach of any
provision of this Agreement, he or it shall not thereby be deemed to have waived
any preceding or succeeding breach of the same or any other provision of this
Agreement.
14. COMPLETE AGREEMENT, AMENDMENTS. I acknowledge receipt of this
Agreement, and agree that with respect to the subject matter thereof it is my
entire agreement with the Company, superseding any previous oral or written
communications, representations, understandings, or agreements with the Company
or any officer or representative thereof. Any amendment to this Agreement or
waiver by either party of any right hereunder shall be effective only if
evidenced by a written instrument executed by the parties hereto, and, in the
case of the Company, upon written authorization of the Company's Board of
Directors.
15. HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning hereof.
16. COUNTERPARTS. This Agreement may be signed in two
counterparts, each of which shall be deemed an original and both of which shall
together constitute one agreement.
17. GOVERNING LAW. This Agreement shall be governed by and
construed under Massachusetts law, excluding its conflict of law principles.
JOHN J. MCDONALD
/s/ JOHN J. MCDONALD
-----------------------------------
Accepted and Agreed:
CENTENNIAL TECHNOLOGIES, INC.
By: /s/ Lawrence J. Ramaekers
----------------------------------
Lawrence J. Ramaekers, Interim Chief Executive Officer
C-4
<PAGE> 16
SCHEDULE A
----------
(to Exhibit C)
PERSONAL INVENTIONS
OF
JOHN J. MCDONALD
C-5
<PAGE> 1
EXHIBIT 10.21
----------------------
KEY EMPLOYEE AGREEMENT
----------------------
To: David E. Merry, Jr. As of April 1, 1997
37 Moriarty Road
Ware, Massachusetts 01082
The undersigned, Centennial Technologies, Inc., a Delaware
corporation (the "Company"), hereby agrees with you as follows:
1. POSITION AND RESPONSIBILITIES.
1.1 You shall serve as the Vice President - Engineering of
the Company or in a comparable position with similar responsibilities, as
designated by the Company's Board of Directors, and shall perform such functions
as are customarily associated with such capacity from time to time at the
Company's headquarters or such place or places as are appropriate and necessary
in connection with such employment. It is expressly agreed that any change in
your shall not provide cause for this agreement to be terminated by either
party.
1.2 You will, to the best of your ability, devote your full
time and best efforts to the performance of your duties hereunder and the
business and affairs of the Company. You agree to perform such duties consistent
with your position as may be lawfully and reasonably assigned to you by the
Company's Board of Directors from time to time. Such duties may include similar
responsibilities with companies in which the Company has a majority ownership
interest. If assuming such responsibilities would require you to move outside of
the Greater Boston area, such responsibilities will only be required of you on
terms mutually agreeable by you and the Company.
1.3 You will duly, punctually and faithfully perform and
observe any and all lawful rules and regulations which the Company may now or
shall hereafter establish governing the conduct of its business.
2. TERM OF EMPLOYMENT.
- 1 -
<PAGE> 2
2.1 The initial term of this Agreement shall be for one
year, subject to earlier termination in accordance with Section 2.2 hereof.
Thereafter, this Agreement may be renewed upon the written agreement of you and
the Company.
2.2 The Company shall have the right to terminate your
employment at any time either (a) immediately without prior written notice for
"cause" (as defined herein), or (b) upon at least ten (10) days' written notice
without cause. If the Company terminates your employment for cause, the Company
shall be obligated to pay you an amount equal to your salary and vacation pay
which is accrued and unpaid up to the date of such termination. If the Company
terminates your employment without cause, the Company shall be obligated to pay
you your Base Salary (as defined in EXHIBIT A attached hereto) for a period of
time equal to the greater of (i) six months, or (ii) that period of time which
commences on the date of such termination and ends with the expiration in the
initial term of employment set forth in Section 2.1 (the "Severance Period").
The Company shall also continue in full force and effect for the Severance
Period all health and insurance benefits that you enjoyed at the time of your
termination without cause, and all other benefits which applicable law requires
to be continued. Should you continue to be employed by the Company beyond the
term of this Agreement without a mutually agreed upon renewal or modification of
this Agreement, a six month severance provision for termination without cause as
described above shall apply.
2.3 For purposes of Section 2.2 hereof, the term "cause"
shall mean the following: (i) your involvement in any felony crime, material
arrestable criminal offense (excluding road traffic offenses for which a fine or
non-custodial penalty is imposed), or any crime in connection with your
employment with the Company (including theft of Company assets); or (ii)
material insubordination or your knowing or intentional failure to take actions
permitted by law and necessary to implement strategies or policies of the
Company and which are consistent with your positions and duties, following
written warning of such material insubordination or unreasonable failure; or
(iii) drunkenness or use of any drug or narcotic which adversely affects your
job performance; or (iv) any knowing or intentional misrepresentation of
significant information important to the operating condition of the Company; or
(v) acting in material breach or contravention of any non-competition,
non-disclosure or non-solicitation covenants hereof.
3. COMPENSATION. You shall receive the compensation and
benefits set forth on Exhibit A hereto ("Compensation") for all services to be
rendered by you hereunder and for your transfer of property rights, if any,
pursuant to an agreement relating to proprietary information and inventions of
even date herewith attached hereto and made a part hereof as EXHIBIT C between
you and the Company (the "Proprietary Information and Inventions Agreement"). If
you remain as a full-time employee of the Company until the later of six months
from the date of the execution of this Agreement or November 30, 1997 (the
"Bonus Date"), the Company will pay you, in a lump-sum payment within two (2)
weeks following the Bonus Date, a "stay bonus"
- 2 -
<PAGE> 3
equal to the sum of $20,000. In the event you are terminated involuntarily and
not for "cause" as described in Section 2.3 above prior to the Bonus Date, you
will receive within two (2) weeks of such termination a pro-rated share of such
"stay bonus" for that period between the date of execution of this Agreement and
the Bonus Date that you remain employed by the Company.
4. OTHER ACTIVITIES DURING EMPLOYMENT.
4.1 Except for any outside employments and directorships
currently held by you as listed on EXHIBIT B hereto, if any, and except with the
prior written consent of the Company's Board of Directors (which approval shall
not be unreasonably withheld), you will not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise
other than one in which you are an inactive investor.
4.2 You hereby agree that, except as disclosed on EXHIBIT B
hereto, during your employment hereunder, you will not, directly or indirectly,
engage (a) individually, (b) as an officer, (c) as a director, (d) as an
employee, (e) as a consultant, (f) as an advisor, (g) as an agent (whether a
salesperson or otherwise), (h) as a broker, or (i) as a partner, coventurer,
stockholder or other proprietor owning directly or indirectly more than one
percent (1%) interest, in any firm, corporation, partnership, trust,
association, or other organization which is engaged in any line of business
engaged in or under demonstrable development by the Company (such firm,
corporation, partnership, trust, association, or other organization being
hereinafter referred to as a "Prohibited Enterprise"). You hereby represent that
you are not presently engaged in any of the foregoing capacities described in
(a) through (i) in any Prohibited Enterprise.
5. FORMER EMPLOYERS.
5.1 You represent and warrant that your employment by the
Company will not conflict with and will not be constrained by any prior or
current employment, consulting agreement or relationship whether oral or
written. You represent and warrant that you do not possess confidential
information arising out of any such employment, consulting agreement or
relationship which, in your best judgment, would be utilized in connection with
your employment by the Company.
5.2 If, in spite of the second sentence of Section 5.1, you
should find that confidential information belonging to any other person or
entity might be usable in connection with the Company's business, you will not
intentionally disclose to the Company or use on behalf of the Company any
confidential information belonging to any of your former employers; but during
your employment by the Company you will use in the performance of your duties
all information which is generally known and used by persons with training and
experience comparable to your own, all information which is common knowledge in
the industry or otherwise legally in the public domain.
- 3 -
<PAGE> 4
6. PROPRIETARY INFORMATION AND INVENTIONS. You agree to
execute, deliver and be bound by the provisions of the Proprietary Information
and Inventions Agreement attached hereto as EXHIBIT C and incorporated herein.
7. POST-EMPLOYMENT ACTIVITIES.
7.1 You shall not, for a period of one (1) year after the
termination of your employment with the Company (for whatever reason), without
the prior written consent of the Company, directly or indirectly do any business
with or have any dealings whatsoever with any person, firm or company who was a
client, customer, supplier, agent or distributor of the Company during the
period of one (1) year prior to the end of your employment with the Company and
with whom you have contact during the period of one (1) year prior to the end of
your employment with the Company, nor shall you render services similar or
reasonably related to those which you shall have rendered hereunder during such
one (1) year period, to any person or entity whether now existing or hereafter
established which directly competes with (or proposes or plans to directly
compete with) the Company (a "Direct Competitor") in any line of business
engaged in or under development by the Company. Nor shall you entice, induce or
encourage any of the Company's other employees to engage in any activity which,
were it done by you, would violate any provision of the Proprietary Information
and Inventions Agreement which you have executed or this Section 7. As used in
this Section 7.1, the phrase "any line of business engaged in or under
development by the Company" shall be applied as at the date of termination of
your employment with the Company.
7.2 For a period of one (1) year after the termination of
your employment with the Company, the provisions of Section 4.2 hereof shall be
applicable to you and you shall comply therewith. As applied to such one (1)
year post-employment period, the term "any other line of business engaged in or
under demonstrable development by the Company," as used in Section 4.2, shall be
applied as at the date of termination of your employment with the Company.
7.3 No provision of this Agreement shall be construed to
preclude you from performing the same services which the Company hereby retains
you to perform for any person or entity which is not a Direct Competitor of the
Company upon the expiration or termination of your employment (or any
post-employment consulting arrangement) so long as you do not thereby violate
any term of this Agreement or the Proprietary Information and Inventions
Agreement.
7.4 After your employment with the Company ends, you are
required to notify the Company promptly in writing if you receive any offer of
employment that you wish to accept, if the employment might commence during the
period of restriction described in Section 7.1 above. This notice should
contain: (a) a complete description of the terms of the
- 4 -
<PAGE> 5
offer, including the position and the compensation provided and the
responsibilities contemplated thereunder, and (b) confirmation of your intention
to accept the offer if the Company so permits. After you have so notified the
Company, the Company shall have fifteen (15) days to notify you of its election:
7.4.1. To release you from Section 7.1 hereof, but only as
it applies to the employment position offered to you, as disclosed in your
notice to the Company; or
7.4.2. To insist upon full compliance with Section 7.1;
provided, however, that if you have reported to the Company an offer of
employment that would commence more than six months after the termination of
your employment but within the period of restriction described in Section 7.1,
and the Company elects to insist upon full compliance with Section 7.1 for that
period, the Company shall provide you with the following "Special Benefit" over
such period: the Base Salary provided under this Contract for the period between
the date upon which you would have commenced such employment and the end of the
period described in Section 7.1.
During such time as the Company is paying you such "Special
Benefit," you are required to pursue with diligence
other employment opportunities consistent with your general skills and
interests. This Special Benefit is available only if the requirements of this
Section 7.4.2 are met, only during the period of the second six months of the
period of restriction described in Section 7.1, and only so long as you are
unable to obtain suitable employment in compliance with Section 7.1. Any
election by the Company to release you from Section 7.1 with respect to one
offer of employment shall not release you from Section 7.1 with respect to any
subsequent offers of employment, including transfers, reassignments or a change
in duties or responsibilities by the same or different employers.
8. REMEDIES. Your obligations under the Proprietary
Information and Inventions Agreement and the provisions of Sections 4.2, 7, 9,
10 and 11 of this Agreement (as modified by Section 12, if applicable) shall
survive the expiration or termination of your employment (whether through your
resignation or otherwise) with the Company. You acknowledge that a remedy at law
for any breach or threatened breach by you of the provisions of this Agreement
or the Proprietary Information and Inventions Agreement would be inadequate and
you therefore agree that the Company shall be entitled to injunctive relief in
case of any such breach or threatened breach.
9. ASSIGNMENT. This Agreement and the rights and obligations
of the parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by reorganization, merger or consolidation and any
assignee of all or substantially all of its business and properties, but, except
as to any such successor or assignee of the Company, neither this Agreement nor
any rights or benefits hereunder may be assigned by the Company or by you,
except by operation of law or by a further written agreement by the parties
hereto.
- 5 -
<PAGE> 6
10. CONFIDENTIALITY. You agree to keep confidential, except
as the Company may otherwise consent in writing, and, except for the Company's
benefit, not to disclose or make any use of at any time either during or
subsequent to your employment, any trade secrets, confidential information,
knowledge, data or other information of the Company relating to products,
processes, know-how, techniques, methods, designs, formulas, test data, customer
lists, business plans, marketing plans and strategies, pricing strategies, or
other subject matter pertaining to any business of the Company or any of its
affiliates, which you may produce, obtain, or otherwise acquire during the
course of your employment, except as herein provided. You further agree not to
deliver, reproduce or in any way allow any such trade secrets, confidential
information, knowledge, data or other information, or any documentation relating
thereto, to be delivered to or used by any third parties without specific
direction or consent of a duly authorized representative of the Company.
11. ARBITRATION. Any dispute concerning this Agreement
including, but not limited to, its existence, validity, interpretation,
performance or non-performance, arising before or after termination or
expiration of this Agreement, shall be settled by a single arbitrator in Boston,
Massachusetts, in accordance with the expedited procedures of the commercial
rules then in effect of the American Arbitration Association. Judgment upon any
award may be entered in the highest court, state or federal, having
jurisdiction.
12. INTERPRETATION. IT IS THE INTENT OF THE PARTIES THAT in
case any one or more of the provisions contained in this Agreement shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. MOREOVER, IT
IS THE INTENT OF THE PARTIES THAT if any one or more of the provisions contained
in this Agreement is or becomes or is deemed invalid, illegal or unenforceable
or in case any provision shall for any reason be held to be excessively broad as
to duration, geographical scope, activity or subject, such provision shall be
construed by amending, limiting and/or reducing it to conform to applicable laws
so as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it shall be stricken and the
remainder of this Agreement shall remain in full force and effect.
13. NOTICES. Any notice which the Company is required to or
may desire to give you shall be given by personal delivery or registered or
certified mail, return receipt requested, addressed to you at your address of
record with the Company, or at such other place as you may from time to time
designate in writing. Any notice which you are required or may desire to give to
the Company hereunder shall be given by personal delivery or by registered or
certified mail, return receipt requested, addressed to the Company at its
principal office, or at such other office as the Company may from time to time
designate in writing with a copy to Peter J. Macdonald,
- 6 -
<PAGE> 7
Hale & Dorr, LLP, 60 State Street, Boston, MA 02109. The date of personal
delivery or the date of mailing of any notice under this Section 13 shall be
deemed to be the date of delivery thereof.
14. WAIVERS. No waiver of any right under this Agreement
shall be deemed effective unless contained in a writing signed by the party
charged with such waiver, and no waiver of any right arising from any breach or
failure to perform shall be deemed to be a waiver of any future such right or of
any other right arising under this Agreement. If either party should waive any
breach of any provision of this Agreement, such party shall not thereby be
deemed to have waived any preceding or succeeding breach of the same or any
other provision of this Agreement.
15. COMPLETE AGREEMENT; AMENDMENTS. The foregoing, including
Exhibits A, B and C hereto, is the entire agreement of the parties with respect
to the subject matter hereof, superseding any previous oral or written
communications, representations, understandings, or agreements with the Company
or any officer or representative thereof. Any amendment to this Agreement shall
be effective only if evidenced by a written instrument executed by the parties
hereto, upon authorization of the Company's Board of Directors.
16. HEADINGS. The headings of the Sections hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning of this Agreement.
17. COUNTERPARTS. This Agreement may be signed in two
counterparts, and changes in market opportunities or customer requirements,
each of whichshall be deemed an original and both of which shall together
constitute one agreement.
18. GOVERNING LAW. This Agreement shall be governed by and
construed under Massachusetts law, without regard to its conflict of laws
principles.
- 7 -
<PAGE> 8
If you are in agreement with the foregoing, please sign your name
below and also at the bottom of the Proprietary Information and Inventions
Agreement, whereupon this Agreement shall become binding in accordance with its
terms. Please then return this Agreement to the Company. (You may retain for
your records the accompanying counterpart of this Agreement enclosed herewith).
Very truly yours,
CENTENNIAL TECHNOLOGIES, INC.
Date: June 30, 1997 BY: /s/ Lawrence J. Ramaekers
------------------ --------------------------------------
Lawrence J. Ramaekers
Interim Chief Executive Officer
Accepted and Agreed:
/s/ David E. Merry, Jr.
- ----------------------------------
David E. Merry, Jr.
- 8 -
<PAGE> 9
EXHIBIT A
---------
EMPLOYMENT TERM, COMPENSATION AND BENEFITS
OF
DAVID E. MERRY, JR.
1. TERM. The term of the Agreement to which this Exhibit A is annexed
and incorporated shall be until March 31, 1998.
2. COMPENSATION. Your Base Salary shall be $80,500 per annum, payable in
accordance with the payroll policies established by the Company.
3. STOCK OPTIONS. Upon acceptance of this Agreement, you shall be
granted an incentive stock option to purchase 10,000 shares of the
common stock of the Company pursuant to the Company's 1994 Stock
Option Plan at the fair market value determined by the Company's
Board of Directors. These incentive stock options shall vest
one-third on April 1, 1998, one-third on April 1, 1999, and one-third
on April 1, 2000.
4. VACATION. You shall be entitled to 2 weeks paid vacation per year.
5. OTHER BENEFITS. You shall be eligible for participation in any
health, group insurance plan, or pension insurance and benefits plan
that may be established by the Company or which the Company is
required to maintain by law. You shall also be eligible to receive
other benefits that are provided to the executive officers of the
Company from time to time.
A-1
<PAGE> 10
OUTSIDE EMPLOYMENTS AND DIRECTORSHIPS OF
DAVID E. MERRY, JR.
B-1
<PAGE> 11
EXHIBIT C
---------
- --------------------------------------------------------------------------------
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
- --------------------------------------------------------------------------------
To: Centennial Technologies, Inc. As of April 1, 1997
37 Manning Road
Billerica, Massachusetts 01821
The undersigned, in consideration of and as a condition of my
services to you and/or to companies which you own, control, or are affiliated
with or their successors in business (collectively, the "Company"), hereby
agrees as follows:
1. CONFIDENTIALITY. I agree to keep confidential, except as the
Company may otherwise consent in writing, and, except for the Company's benefit,
not to disclose or make any use of at any time either during or subsequent to my
employment with the Company, any Inventions (as hereinafter defined), trade
secrets, confidential information, knowledge, data or other information of the
Company relating to products, processes, know-how, designs, formulas, test data,
customer lists, business plans, marketing plans and strategies, pricing
strategies, or other subject matter pertaining to any business of the Company or
any of its affiliates, which I may produce, obtain, or otherwise acquire during
the course of my employment, except as herein provided. I further agree not to
deliver, reproduce or in any way allow any such trade secrets, confidential
information, knowledge, data or other information, or any documentation relating
thereto, to be delivered to or used by any third parties without specific
direction or consent of a duly authorized representative of the Company.
2. CONFLICTING EMPLOYMENT; RETURN OF CONFIDENTIAL MATERIAL. I agree
that during my employment with the Company I will not engage in any other
employment, occupation, consulting or other activity relating to the business in
which the Company is now or may hereafter become engaged, or which would
otherwise conflict with my obligations to the Company. In the event my
employment with the Company terminates for any reason whatsoever, I agree to
promptly surrender and deliver to the Company all records, materials, equipment,
drawings, documents and data which I may obtain or produce during the course of
my employment, and I will not take with me any description containing or
pertaining to any confidential information, knowledge or data of the Company
which I may produce or obtain during the course of my employment.
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<PAGE> 12
3. ASSIGNMENT OF INVENTIONS.
3.1 I hereby acknowledge and agree that the Company is the
owner of all Inventions. In order to protect the Company's rights to such
Inventions, by executing this Agreement I hereby irrevocably assign to the
Company all my right, title and interest in and to all Inventions.
3.2 For purposes of this Agreement, "Inventions" shall mean
all discoveries, processes, designs, technologies, devices, or improvements in
any of the foregoing or other ideas, whether or not patentable and whether or
not reduced to practice, made or conceived by me (whether solely or jointly with
others) during the period of my employment with the Company, which relate in any
manner to the actual or demonstrably anticipated business, work, or research and
development of the Company or its affiliates, or result from or are suggested by
any task assigned to me or any work performed by me for or on behalf of the
Company or its affiliates.
3.3 Any discovery, process, design, technology, device, or
improvement in any of the foregoing or other ideas, whether or not patentable
and whether or not reduced to practice, made or conceived by me (whether solely
or jointly with others) which I develop entirely on my own time during the term
of this Agreement not using any of the Company's equipment, supplies,
facilities, or trade secret information ("Personal Invention") is excluded from
this Agreement provided such Personal Invention (a) does not relate to the
actual or demonstrably anticipated business, research and development of the
Company, and (b) does not result, directly or indirectly, from any work
performed by me for the Company.
4. DISCLOSURE OF INVENTIONS. I agree that in connection with
any Invention, I will promptly disclose such Invention to the Company in order
to permit the Company to enforce its property rights to such Invention in
accordance with this Agreement. My disclosure shall be received in confidence by
the Company.
5. PATENTS AND COPYRIGHTS; EXECUTION OF DOCUMENTS.
5.1 Upon request, I agree to assist the Company or its
nominee (at its expense) during and at any time subsequent to my employment with
the Company in every reasonable way to obtain for its own benefit patents and
copyrights for Inventions in any and all countries. Such patents and copyrights
shall be and remain the sole and exclusive property of the Company or its
nominee. I agree to perform such lawful acts as the Company deems to be
necessary to allow it to exercise all right, title and interest in and to such
patents and copyrights.
5.2 In connection with this Agreement, I agree to execute,
acknowledge and deliver to the Company or its nominee upon request and at its
expense all documents, including assignments of title, patent or copyright
applications, assignments of such applications, assignments of patents or
copyrights upon issuance, as the Company may determine necessary or desirable to
protect the Company's or its nominee's interest in Inventions, and/or to use in
C-2
<PAGE> 13
obtaining patents or copyrights in any and all countries and to vest title
thereto in the Company or its nominee to any of the foregoing.
6. MAINTENANCE OF RECORDS. I agree to keep and maintain
adequate and current written records of all Inventions made by me (in the form
of notes, sketches, drawings, flowcharts and other records as may be specified
by the Company), which records shall be available to and remain the sole
property of the Company at all times.
7. PRIOR INVENTIONS. It is understood that all Personal
Inventions, if any, whether patented or unpatented, which I made prior to my
association with the Company, are excluded from this Agreement. To preclude any
possible uncertainty, I have set forth on Schedule A attached hereto a complete
list of all of my prior Personal Inventions, including numbers of all patents
and patent applications and a brief description of all unpatented Personal
Inventions which are not the property of a previous employer. I represent and
covenant that the list is complete and that, if no items are on the list, I have
no such prior Personal Inventions. I agree to notify the Company in writing
before I make any disclosure or perform any work on behalf of the Company which
appears to threaten or conflict with proprietary rights I claim in any Personal
Invention. In the event of my failure to give such notice, I agree that I will
make no claim against the Company with respect to any such Personal Invention.
8. OTHER OBLIGATIONS. I acknowledge that the Company from time
to time may have agreements with other persons or with the U.S. Government or
agencies thereof, which impose obligations or restrictions on the Company
regarding Inventions made during the course of work thereunder or regarding the
confidential nature of such work. I agree to be bound by all such obligations
and restrictions and to take all action necessary to discharge the Company's
obligations.
9. TRADE SECRETS OF OTHERS. I represent that my performance of
all the terms of this Agreement and as an employee of the Company does not and
will not breach any agreement to keep confidential proprietary information,
knowledge or data acquired by me in confidence or in trust prior to my services
to the Company, and I will not disclose to the Company, or induce the Company to
use, any confidential or proprietary information or material belonging to any
previous client, employer or others. I agree not to enter into any agreement
either written or oral in conflict herewith.
10. MODIFICATION. I agree that any subsequent change or changes
in my duties, salary or compensation or in any Employment Agreement between the
Company and me, shall not affect the validity or scope of this Agreement.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon my heirs, executors, administrators or other legal representatives and is
for the benefit of the Company, its successors and assigns.
C-3
<PAGE> 14
12. INTERPRETATION. IT IS THE INTENT OF THE PARTIES THAT in
case any one or more of the provisions contained in this Agreement shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. MOREOVER, IT
IS THE INTENT OF THE PARTIES THAT in case any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, such provision shall be
construed by limiting and reducing it in accordance with a judgment of a court
of competent jurisdiction, so as to be enforceable to the extent compatible with
applicable law.
13. WAIVERS. If either party should waive any breach of any
provision of this Agreement, he or it shall not thereby be deemed to have waived
any preceding or succeeding breach of the same or any other provision of this
Agreement.
14. COMPLETE AGREEMENT, AMENDMENTS. I acknowledge receipt of
this Agreement, and agree that with respect to the subject matter thereof it is
my entire agreement with the Company, superseding any previous oral or written
communications, representations, understandings, or agreements with the Company
or any officer or representative thereof. Any amendment to this Agreement or
waiver by either party of any right hereunder shall be effective only if
evidenced by a written instrument executed by the parties hereto, and, in the
case of the Company, upon written authorization of the Company's Board of
Directors.
15. HEADINGS. The headings of the sections hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning hereof.
16. COUNTERPARTS. This Agreement may be signed in two
counterparts, each of which shall be deemed an original and both of which shall
together constitute one agreement.
17. GOVERNING LAW. This Agreement shall be governed by and
construed under Massachusetts law, excluding its conflict of law principles.
DAVID E. MERRY, JR.
Date: June 30, 1997 /s/ David E. Merry, Jr.
---------------- --------------------------------------
Accepted and Agreed:
CENTENNIAL TECHNOLOGIES, INC.
By: /s/ Lawrence J. Ramaekers
----------------------------------
Lawrence J. Ramaekers, Interim Chief Executive Officer
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<PAGE> 15
SCHEDULE A
----------
(to Exhibit C)
PERSONAL INVENTIONS
OF
DAVID E. MERRY, JR.
C-5
<PAGE> 1
FIRST AMENDMENT TO FORBEARANCE AGREEMENT
----------------------------------------
This First Amendment to Forbearance Agreement is entered as of April 18,
1997 by and between
The First National Bank of Boston (hereinafter, the "BANK"), a national
banking association, having a principal place business at 100 Federal
Street, Boston, Massachusetts;
BancBoston Leasing Inc. (hereinafter, "BBL"), a Massachusetts corporation
having a principal place of business at 100 Federal Street, Boston,
Massachusetts;
Centennial Technologies, Inc. (hereinafter, the "BORROWER"), a corporation
organized under the laws of the State of Delaware, having a principal place
of business at 37 Manning Road, Billerica, Massachusetts;
NCT, Inc. (hereinafter, "NCT"), a corporation organized under the laws of
the Commonwealth of Massachusetts, having a principal place of business at
37 Manning Road, Billerica, Massachusetts;
Century Electronics Manufacturing, Inc. (f/k/a Century Industries, Inc.)
(hereinafter, "CENTURY"), a corporation organized under the laws of the
State of Delaware, having a principal place of business at 37 Manning Road,
Billerica, Massachusetts; and
Design Circuits, Inc. (hereinafter "DCI"), a corporation organized under
the laws of the Commonwealth of Massachusetts, having a principal place of
business at 374 Turnpike Road, Southborough, Massachusetts
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH:
-----------
1. BACKGROUND. On March 18, 1997, the Bank, BBL, and the Obligors entered
into a certain Forbearance Agreement and Amendment (the "Original
Agreement") with respect to the Obligors' obligations under the Loan
Agreement, their respective Guaranties and the Master Lease Agreement.
The Forbearance Period has expired and the Bank, BBL and the Obligors
desire to extend same and otherwise modify the Original Agreement on
the terms set forth herein.
2. DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Original
Agreement.
<PAGE> 2
3. OUTSTANDING OBLIGATIONS.
-----------------------
(a) The Borrower and each of the Guarantors (individually, each an
"OBLIGOR" and collectively, the "OBLIGORS") acknowledge and agree
that they are jointly and severally obligated to the Bank to pay
the Obligations and that as of April 18, 1997, the Obligations
consist of:
Principal: $8,406,554.45
Interest through April 18, 1997: $ 37,831.89
plus interest hereafter accruing, costs, and expenses, including,
without limitation, attorneys' fees, consultants' fees, and commercial
finance examination fees.
(b) The Borrower acknowledges and agrees that SCHEDULE 1 hereto
accurately reflects the original cost of the property subject to
the Master Lease Agreement and schedules thereto, which is
presently owned by BBL.
(c) The Obligors further acknowledge and agree that none of them have
any offsets, defenses, or counterclaims (i) against the Bank with
respect to the Loan Agreement, the Guaranties, the other Loan
Documents, or otherwise, or (ii) against BBL with respect to the
Master Lease Agreement, or otherwise, and to the extent that any
such offsets, defenses or counterclaims may exist, the Obligors
each hereby WAIVE and RELEASE same. The Obligors shall execute
and deliver to the Bank and BBL such releases as the Bank or BBL
may request to confirm the foregoing.
(d) The Obligors each ratify and confirm that their respective
obligations to the Bank (as modified hereby), including, without
limitation, those under the Loan Agreement and the Guaranties,
are secured by the Collateral and the Guarantor Assets.
(e) The Borrower ratifies and confirms that its obligations to BBL
are secured by the Collateral.
4. FORBEARANCE BY BANK. The provisions of Section 4 of the Original
Agreement are hereby amended by deleting the date April 18, 1997
appearing in clause (i) and substituting the date June 30, 1997 in its
stead.
2
<PAGE> 3
5. AMENDMENTS TO LOAN DOCUMENTS. From and after the date hereof the Loan
Documents are hereby amended as follows (which amendment shall
survive the expiration of the Forbearance Period):
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Borrowing Base" in its entirety and
substituting the following in its stead:
BORROWING BASE. ON ANY DATE OF DETERMINATION THEREOF, THE LESSER
OF
(A) $10,000,000, MINUS THE AGGREGATE FACE AMOUNT OF ALL
OUTSTANDING LETTERS OF CREDIT, IN THE AMOUNTS ORIGINALLY ISSUED
OR AS REDUCED PURSUANT TO THEIR TERMS, WHICH ARE EITHER
OUTSTANDING OR WHICH HAVE BEEN DRAWN AND PAID BY THE BANK BUT NOT
REIMBURSED BY THE BORROWER, OR
(B) THE SUM OF (I) 80% OF ELIGIBLE ACCOUNTS AND (II) THE LESSER
OF (A) 35% OF ELIGIBLE INVENTORY AND (B) $5,500,000 (OR SUCH
LESSER PERCENTAGES OR AMOUNTS AS THE BANK MAY IN ITS REASONABLE
DISCRETION DETERMINE FROM TIME TO TIME UPON THIRTY DAYS WRITTEN
NOTICE TO THE BORROWER) AND (III) THE LESSER OF (A) $1,125,000.00
OR (B) THE UNPAID AND OUTSTANDING AMOUNT OF THE FEDERAL INCOME
TAX REFUND PAYABLE TO THE BORROWER FOR TAX YEARS ENDING PRIOR TO
FEBRUARY 28, 1997, MINUS THE SUM OF (I) $2,000,000 AND (II) THE
AGGREGATE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT, IN
THE AMOUNTS ORIGINALLY ISSUED OR AS REDUCED PURSUANT TO THEIR
TERMS, WHICH ARE EITHER OUTSTANDING OR WHICH HAVE BEEN DRAWN AND
PAID BY THE BANK BUT NOT REIMBURSED BY THE BORROWER.
(b) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Maximum Commitment" in its entirety and
substituting the following in its stead:
MAXIMUM COMMITMENT. $10,000,000 OR ANY LESSER AMOUNT, INCLUDING
ZERO, RESULTING FROM A TERMINATION OR REDUCTION OF SUCH AMOUNT IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(c) The provisions of Section V of the Loan Agreement are hereby
amended by adding the following new sections:
5.14. CONSOLIDATED TANGIBLE NET WORTH. THE BORROWER SHALL AT ALL
TIMES MAINTAIN A CONSOLIDATED TANGIBLE NET WORTH OF AT LEAST
$37,000,000.
5.15. CONSOLIDATED EBIT. THE BORROWER SHALL NOT PERMIT
CONSOLIDATED EBIT FOR ANY MONTH, DETERMINED AT THE END OF
3
<PAGE> 4
EACH FISCAL MONTH OF THE BORROWER, TO BE LESS THAN THE FOLLOWING:
MONTH EBIT
----- ----
APRIL, 1997 ($200,000)
MAY, 1997 $1,000, PLUS, IF EBIT AS REPORTED
IN APRIL, 1997 WAS NEGATIVE, AN
AMOUNT EQUAL TO THE DIFFERENCE
BETWEEN $1,000 AND THE ACTUAL EBIT
FOR APRIL, 1997
JUNE, 1997 AND EACH MONTH
END THEREAFTER $1,000
FOR PURPOSES OF CALCULATING CONSOLIDATED EBIT, THERE SHALL BE
EXCLUDED IN THE CALCULATION OF CONSOLIDATED NET INCOME OF THE
BORROWER ALL ATTORNEYS, AUDITORS, AND CONSULTANTS' FEES INCURRED
BY THE COMPANY IN CONNECTION WITH ITS PRESENT RESTRUCTURING.
6. AMENDMENTS TO SECTION 6. The provisions of Section 6 of the Original
Agreement are hereby amended as follows.
o The provisions of Section 6(b) are hereby amended by adding the
following sentence immediately after the second sentence of that
section:
ANY SUCH INCOME TAX REFUNDS OR PROCEEDS (INCLUDING, WITHOUT
LIMITATION, PROCEEDS FROM THE SALE OR OTHER DISPOSITION OF
CENTURY AND TRIAX) SHALL PERMANENTLY REDUCE THE MAXIMUM
COMMITMENT AND THE AMOUNT SET FORTH IN CLAUSE (a) OF THE
DEFINITION OF BORROWING BASE.
o The provisions of Section 6(h) of the Original Agreement are hereby
amended by deleting the date "April 11, 1997" appearing in clause (i)
thereof and substituting the date June 23, 1997 in its stead.
o The following new subsections are hereby added to Section 6 of the
Original Agreement:
n. THE OBLIGORS HAVE ADVISED THE BANK AND BBI THAT THE INTEND TO
SELL AND DISPOSE OF A PORTION OF THEIR INTERESTS IN CENTURY AND
TRIAX. THE OBLIGORS SHALL KEEP THE BANK REASONABLY INFORMED AS TO
THE STATUS OF ANY OFFERS, NEGOTIATIONS, OR AGREEMENTS FOR THE
SALE OR DISPOSITION OF A PORTION OF THEIR INTERESTS IN CENTURY
AND TRIAX. ANY SUCH SALE OR DISPOSITION SHALL BE SUBJECT TO THE
CONSENT OF THE BANK AND BBL, AND NOTHING CONTAINED HEREIN SHALL
CONSTITUTE THE
4
<PAGE> 5
AGREEMENT OF OR CONSENT BY THE BANK OR BBL TO ANY SUCH SALE OR
DISPOSITION.
o. IN CONSIDERATION OF THE BANK'S ENTERING INTO THE FIRST AMENDMENT
TO FORBEARANCE AGREEMENT AND EXTENDING THE FORBEARANCE PERIOD,
UPON THE EXECUTION HEREOF, THE BORROWER SHALL PAY THE BANK THE
SUM OF $21,000 AS AN ADDITIONAL FORBEARANCE FEE. SUCH FEE SHALL
BE FULLY EARNED UPON PAYMENT AND SHALL NOT BE SUBJECT TO REFUND
OR REBATE UNDER ANY CIRCUMSTANCES. THE FORBEARANCE FEE SHALL NOT
BE APPLIED IN REDUCTION TO THE PRINCIPAL, INTEREST OR OTHER
AMOUNTS DUE IN CONNECTION WITH THE LOAN ARRANGEMENT.
7. The provisions of Section 7 of the Original Agreement are hereby
amended as follows:
o By deleting the provisions of Section 7(f) and substituting the
following in its stead:
f. THE FAILURE OF THE OBLIGORS, ON OR BEFORE MAY 2, 1997, TO FURNISH
THE BANK WITH A VALID, BINDING AND ARMS-LENGTH PURCHASE AND SALE
AGREEMENT FOR THE SALE OF A PORTION OF THEIR INTERESTS IN EACH OF
CENTURY AND TRIAX.
o The provisions of Section 7 of the Original Agreement are hereby
amended by adding the following new Termination Events:
g. THE FAILURE OF THE OBLIGORS, ON OR BEFORE MAY 20, 1997, TO
FURNISH THE BANK WITH EVIDENCE SATISFACTORY TO THE BANK THAT THE
PURCHASERS UNDER THE PURCHASE AND SALE AGREEMENTS REFERRED TO IN
SECTION 7(f) HAVE OBTAINED FINANCING AND/OR OTHERWISE WILL BE
ABLE TO CONSUMMATE THE ACQUISITIONS CONTEMPLATED BY THE PURCHASE
AND SALE AGREEMENTS.
h. THE FAILURE OF THE OBLIGORS, ON OR BEFORE JUNE 15, 1997, TO HAVE
CONSUMMATED THE SALE OF A PORTION OF THEIR INTERESTS IN EACH OF
CENTURY AND TRIAX ON TERMS SATISFACTORY TO THE BANK.
8. GENERAL.
-------
(a) This Agreement shall be binding upon each Obligor and such
Obligor's successors, and assigns and shall enure to the benefit
of BBL, the Bank and BBL's and the Bank's successors and assigns.
In the event that BBL or the Bank assigns or transfers its rights
under this Agreement, the assignee shall thereupon succeed to and
become vested with all rights, powers, privileges, and duties of
BBL or the Bank hereunder and BBL or the Bank shall
5
<PAGE> 6
thereupon be discharged and relieved from its duties and
obligations hereunder.
(b) Any determination that any provision of this Agreement or any
application thereof is invalid, illegal, or unenforceable in any
respect in any instance shall not affect the validity, legality,
or enforceability of such provision in any other instance, or the
validity, legality, or enforceability of any other provision of
this Agreement.
(c) No delay or omission by BBL or the Bank in exercising or
enforcing any of BBL's or the Bank's rights and remedies shall
operate as, or constitute, a waiver thereof. No waiver by BBL or
the Bank of any of BBL's or the Bank's rights and remedies on any
one occasion shall be deemed a waiver on any subsequent occasion,
nor shall it be deemed a continuing waiver.
(d) This Agreement and all other documents, instruments, and
agreements executed in connection herewith incorporate all
discussions and negotiations between the Obligors, BBL and the
Bank, either express or implied, concerning the matters included
herein and in such other instruments, any custom, usage, or
course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings
shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of this
Agreement or of any provision of any other agreement between any
Obligor and BBL or the Bank shall be effective unless executed in
writing by the party to be charged with such modification,
amendment and waiver, and if such party be BBL or the Bank, then
by a duly authorized officer thereof.
(e) Except as modified hereby, all terms and conditions of the
Original Agreement, the Master Lease Agreement, Loan Agreement,
the Guaranties, and other Loan Documents remain in full force and
effect. The Bank and BBL are not hereby waiving any Defaults,
Events of Default or rights and remedies which exist under the
Master Lease Agreement or the Loan Documents and the Bank and BBL
reserve the right upon expiration of the Forbearance Period to
undertake such action as a result of such Defaults and Events of
Default as the Bank or BBL may determine. In particular,
6
<PAGE> 7
without limiting the generality of the foregoing the Bank and BBL
have not waived any Defaults or Events of Default, or the
respective rights and remedies of the Bank and/or BBL arising as
a result thereof, which may have occurred as a result of any
misrepresentation made by or on behalf of any one or more of the
Obligors.
(f) This Agreement and all rights and obligations hereunder,
including matters of construction, validity, and performance,
shall be governed by the laws of The Commonwealth of
Massachusetts. The Obligors each submit to the jurisdiction of
the Courts of said Commonwealth for all purposes with respect to
this Agreement and the Obligors' relationship with the Bank and
BBL.
(g) Each Obligor makes the following waiver knowingly, voluntarily,
and intentionally, and understands that the Bank and BBL, in
entering into the within Forbearance Agreement, is relying
thereon. EACH OBLIGOR, TO THE EXTENT OTHERWISE ENTITLED THERETO,
HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THAT
OBLIGOR TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN
WHICH THE BANK OR BBL IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE BANK OR BBL OR IN
WHICH THE BANK OR BBL IS JOINED AS A PARTY LITIGANT), WHICH CASE
OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY
RELATIONSHIP BETWEEN THE BORROWER OR ANY SUCH PERSON AND THE BANK
OR BBL.
(h) Each Obligor shall execute such instruments and documents as BBL
and the Bank may from time to time request in connection with the
Master Lease Agreement, Loan Agreement, the Guaranties, the Loan
Documents, the within Agreement and the arrangements contemplated
hereby.
It is intended that this Agreement take effect as a sealed instrument.
CENTENNIAL TECHNOLOGIES, INC. DESIGN CIRCUITS, INC.
By: /s/ Eugene M. Bullis By: /s/ Walter Conroy
---------------------------------- -------------------------------------
Print Name: Eugene M. Bullis Print Name: Walter Conroy
-------------------------- ----------------------------
Title: Chief Financial Officer Title: President
------------------------------- ----------------------------------
7
<PAGE> 8
CENTURY ELECTRONICS NCT, INC.
MANUFACTURING, INC.
By: /s/ Donald R. Peck By: /s/ Donald R. Peck
---------------------------------- --------------------------------------
Print Name: Donald R. Peck Print Name: Donald R. Peck
-------------------------- ----------------------------
Title: Secretary and Treasurer Title: President
------------------------------- ----------------------------------
AGREED AND ACCEPTED BY:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: Vice President
-------------------------------
BANCBOSTON LEASING INC.
By: /s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: Attorney In Fact
-------------------------------
8
<PAGE> 9
SCHEDULE TO FORBEARANCE AGREEMENT AND AMENDMENT
Equipment Schedule No. 9
Total Cost - $795,777.32
<PAGE> 1
SECOND AMENDMENT TO FORBEARANCE AGREEMENT AND AMENDMENT
-------------------------------------------------------
This Second Amendment to Forbearance Agreement and Amendment is entered
into as of June 4, 1997 by and between
BankBoston, N.A., formerly known as The First National Bank of Boston
(hereinafter, the "BANK"), a national banking association, having a
principal place of business at 100 Federal Street, Boston, Massachusetts;
BancBoston Leasing Inc. (hereinafter, "BBL"), a Massachusetts corporation
having a principal place of business at 100 Federal Street, Boston,
Massachusetts;
Centennial Technologies, Inc. (hereinafter, the "BORROWER"), a corporation
organized under the laws of the State of Delaware, having a principal place
of business at 37 Manning Road, Billerica, Massachusetts;
NCT, Inc. (hereinafter, "NCT"), a corporation organized under the laws of
the Commonwealth of Massachusetts, having a principal place of business at
37 Manning Road, Billerica, Massachusetts;
Century Electronics Manufacturing, Inc. (f/k/a Century Industries, Inc.)
(hereinafter, "CENTURY"), a corporation organized under the laws of the
State of Delaware, having a principal place of business at 37 Manning Road,
Billerica, Massachusetts; and
Design Circuits, Inc. (hereinafter "DCI"), a corporation organized under
the laws of the Commonwealth of Massachusetts, having a principal place of
business at 374 Turnpike Road, Southborough, Massachusetts
in consideration of the mutual covenants herein contained and
benefits to be derived herefrom.
WITNESSETH:
-----------
1. BACKGROUND. On March 18, 1997, the Bank, BBL, and the Obligors entered
into a certain Forbearance Agreement and Amendment with respect to the
Obligors' obligations under the Loan Agreement, their respective
Guaranties and the Master Lease Agreement, which Forbearance Agreement
and Amendment was amended by a First Amendment to Forbearance
Agreement dated as of April 18, 1997 (collectively, the "ORIGINAL
AGREEMENT"). The Bank, BBL and the Obligors desire to modify the
Original Agreement on the terms set forth herein.
<PAGE> 2
2. DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Original
Agreement.
3. OUTSTANDING OBLIGATIONS.
-----------------------
(a) The Borrower and each of the Guarantors (individually, each an
"OBLIGOR" and collectively, the "OBLIGORS") acknowledge and agree
that they are jointly and severally obligated to the Bank to pay
the Obligations and that as of June 4, 1997, the Obligations
consist of:
Principal: $6,002,415.27
Interest through June 4, 1997: $ 6,393.83
plus interest hereafter accruing, costs, and expenses, including,
without limitation, reasonable attorneys' fees, consultants' fees, and
commercial finance examination fees.
(b) The Borrower acknowledges and agrees that SCHEDULE 1 hereto
accurately reflects the original cost of the property subject to
the Master Lease Agreement and schedules thereto, which is
presently owned by BBL.
(c) The Obligors further acknowledge and agree that none of them have
any offsets, defenses, or counterclaims (i) against the Bank with
respect to the Loan Agreement, the Guaranties , the other Loan
Documents, or otherwise, or (ii) against BBL with respect to the
Master Lease Agreement, or otherwise, and to the extent that any
such offsets, defenses or counterclaims may exist, the Obligors
each hereby WAIVE and RELEASE same. The Obligors shall execute
and deliver to the Bank and BBL such releases as the Bank or BBL
may request to confirm the foregoing.
(d) The Obligors each ratify and confirm that their respective
obligations to the Bank (as modified hereby), including, without
limitation, those under the Loan Agreement and the Guaranties,
are secured by the Collateral and the Guarantor Assets.
(e) The Borrower ratifies and confirms that its obligations to BBL
are secured by the Collateral.
4. AMENDMENTS TO LOAN DOCUMENTS. From and after the date hereof, the Loan
Documents are hereby amended as
2
<PAGE> 3
follows (which amendment shall survive the expiration of the
Forbearance Period):
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Borrowing Base" in its entirety and
substituting the following in its stead:
BORROWING BASE. ON ANY DATE OF DETERMINATION THEREOF, THE LESSER
OF
(a) $6,800,000, MINUS THE AGGREGATE FACE AMOUNT OF ALL
OUTSTANDING LETTERS OF CREDIT, IN THE AMOUNTS ORIGINALLY ISSUED
OR AS REDUCED PURSUANT TO THEIR TERMS, WHICH ARE EITHER
OUTSTANDING OR WHICH HAVE BEEN DRAWN AND PAID BY THE BANK BUT NOT
REIMBURSED BY THE BORROWER, OR
(b) THE SUM OF (I) 80% OF ELIGIBLE ACCOUNTS AND (II) THE LESSER
OF (A) 35% OF ELIGIBLE INVENTORY AND (B) $5,500,000 (OR SUCH
LESSER PERCENTAGES OR AMOUNTS AS THE BANK MAY IN ITS REASONABLE
DISCRETION, DETERMINE FROM TIME TO TIME UPON THIRTY DAYS WRITTEN
NOTICE TO THE BORROWER), MINUS THE SUM OF (I) $2,000,000 AND (II)
THE AGGREGATE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT,
IN THE AMOUNTS ORIGINALLY ISSUED OR AS REDUCED PURSUANT TO THEIR
TERMS, WHICH ARE EITHER OUTSTANDING OR WHICH HAVE BEEN DRAWN AND
PAID BY THE BANK BUT NOT REIMBURSED BY THE BORROWER.
(b) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Maximum Commitment" in its entirety and
substituting the following in its stead:
MAXIMUM COMMITMENT. $6,800,000 OR ANY LESSER AMOUNT, INCLUDING
ZERO, RESULTING FROM A TERMINATION OR REDUCTION OF SUCH AMOUNT IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
5. CONSENT TO INTERCOMPANY INDEBTEDNESS. The Borrower has loaned the sum
of approximately $673,000 to its subsidiary, ITP, Inc. in connection
with the settlement of a suit commenced by Hamby Hutcheson. The making
of such loan without the consent of the Bank would constitute an
additional Event of Default and Termination Event. The Bank hereby
consents to such intercompany loan and waives any Event of Default
and/or Termination Event arising therefrom.
6. GENERAL.
--------
(a) This Agreement shall be binding upon each Obligor and such
Obligor's successors, and assigns and shall enure to the benefit
of BBL, the Bank and
3
<PAGE> 4
BBL's and the Bank's successors and assigns. In the event that
BBL or the Bank assigns or transfers its rights under this
Agreement, the assignee shall thereupon succeed to and become
vested with all rights, powers, privileges, and duties of BBL or
the Bank hereunder and BBL or the Bank shall thereupon be
discharged and relieved from its duties and obligations
hereunder.
Any determination that any provision of this Agreement or any
application thereof is invalid, illegal, or unenforceable in any
respect in any instance shall not affect the validity, legality,
or enforceability of such provision in any other instance, or the
validity, legality, or enforceability of any other provision of
this Agreement.
(c) No delay or omission by BBL or the Bank in exercising or
enforcing any of BBL's or the Bank's rights and remedies shall
operate as, or constitute, a waiver thereof. No waiver by BBL or
the Bank of any of BBL's or the Bank's rights and remedies on any
one occasion shall be deemed a waiver on any subsequent occasion,
nor shall it be deemed a continuing waiver.
(d) This Agreement and all other documents, instruments, and
agreements executed in connection herewith incorporate all
discussions and negotiations between the Obligors, BBL and the
Bank, either express or implied, concerning the matters included
herein and in such other instruments, any custom, usage, or
course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings
shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of this
Agreement or of any provision of any other agreement between any
Obligor and BBL or the Bank shall be effective unless executed in
writing by the party to be charged with such modification,
amendment and waiver, and if such party be BBL or the Bank, then
by a duly authorized officer thereof.
(e) Except as modified hereby, all terms and conditions of the
Original Agreement, the Master Lease Agreement, Loan Agreement,
the Guaranties, and other Loan Documents remain in full force and
effect. Without limiting the foregoing, the parties acknowledge
that the Forbearance Period
4
<PAGE> 5
will expire, unless sooner terminated, on June 30, 1997. Except
as specifically provided in Paragraph 5 hereof, the Bank and BBL
are not hereby waiving any Defaults, Events of Default or rights
and remedies which exist under the Master Lease Agreement or the
Loan Documents and the Bank and BBL reserve the right upon
expiration of the Forbearance Period to undertake such action as
a result of such Defaults and Events of Default as the Bank or
BBL may determine. In particular, without limiting the generality
of the foregoing, the Bank and BBL have not waived any Defaults
or Events of Default, or the respective rights and remedies of
the Bank and/or BBL arising as a result thereof, which may have
occurred as a result of any misrepresentation made by or on
behalf of any one or more of the Obligors.
(f) This Agreement and all rights and obligations hereunder,
including matters of construction, validity, and performance,
shall be governed by the laws of The Commonwealth of
Massachusetts. The Obligors each submit to the jurisdiction of
the Courts of said Commonwealth for all purposes with respect to
this Agreement and the Obligors' relationship with the Bank and
BBL.
(g) Each Obligor makes the following waiver knowingly, voluntarily,
and intentionally, and understands that the Bank and BBL, in
entering into the within Forbearance Agreement, is relying
thereon. EACH OBLIGOR, TO THE EXTENT OTHERWISE ENTITLED THERETO,
HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THAT
OBLIGOR TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN
WHICH THE BANK OR BBL IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE BANK OR BBL OR IN
WHICH THE BANK OR BBL IS JOINED AS A PARTY LITIGANT), WHICH CASE
OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY
RELATIONSHIP BETWEEN THE BORROWER OR ANY SUCH PERSON AND THE BANK
OR BBL.
(h) Each Obligor shall execute such instruments and documents as BBL
and the Bank may from time to time request in connection with the
Master Lease Agreement, Loan Agreement, the Guaranties, the Loan
Documents, the within Agreement and the arrangements contemplated
hereby.
5
<PAGE> 6
It is intended that this Agreement take effect as a sealed instrument.
CENTENNIAL TECHNOLOGIES, INC. DESIGN CIRCUITS, INC.
By: /s/ Eugene M. Bullis By: /s/ Donald R. Peck
---------------------------------- -------------------------------------
Print Name: Eugene M. Bullis Print Name: Donald R. Peck
-------------------------- ----------------------------
Title: Chief Financial Officer Title: Treasurer and Clerk
------------------------------- ----------------------------------
CENTURY ELECTRONICS NCT, INC.
MANUFACTURING, INC.
By: /s/ Donald R. Peck By: /s/ Donald R. Peck
---------------------------------- --------------------------------------
Print Name: Donald R. Peck Print Name: Donald R. Peck
-------------------------- ----------------------------
Title: Secretary and Treasurer Title: President
------------------------------- ----------------------------------
AGREED AND ACCEPTED BY:
BANKBOSTON, N.a. f/k/a
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: Vice President
-------------------------------
BANCBOSTON LEASING INC.
By: /s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: Vice President
-------------------------------
6
<PAGE> 7
SCHEDULE 1 TO FORBEARANCE AGREEMENT AND AMENDMENT
-------------------------------------------------
Equipment Schedule No. 9
Total Cost - $795,777.32
<PAGE> 1
THIRD AMENDMENT TO FORBEARANCE AGREEMENT AND AMENDMENT
------------------------------------------------------
This Third Amendment to Forbearance Agreement and Amendment is entered into
as of June 26, 1997 by and between
BankBoston, N.A., formerly known as The First National Bank of Boston
(hereinafter, the "BANK"), a national banking association, having a
principal place of business at 100 Federal Street, Boston, Massachusetts;
BancBoston Leasing Inc. (hereinafter, "BBL"), a Massachusetts corporation
having a principal place of business at 100 Federal Street, Boston,
Massachusetts;
Centennial Technologies, Inc. (hereinafter, the "Borrower") a corporation
organized under the laws of the State of Delaware, having a principal place
of business at 7 Lopez Road, Wilmington, Massachusetts;
NCT, Inc. (hereinafter, "NCT"), a corporation organized under the laws of
the Commonwealth of Massachusetts, having a principal place of business at
7 Lopez Road, Wilmington, Massachusetts;
Century Electronics Manufacturing, inc. (f/k/a Century Industries, Inc.)
(hereinafter, "CENTURY") , a corporation organized under the laws of the
State of Delaware, having a principal place of business at 7 Lopez Road,
Wilmington, Massachusetts; and
Design Circuits, Inc. (hereinafter "DCI"), a corporation organized under
the laws of the Commonwealth of Massachusetts, having a principal place of
business at 374 Turnpike Road, Southborough, Massachusetts
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH:
-----------
1. BACKGROUND. On March 18, 1997, the Bank, BBL, and the Obligors entered
into a certain Forbearance Agreement and Amendment with respect to the
obligors' obligations under the Loan Agreement, their respective
Guaranties and the Master Lease Agreement, which Forbearance Agreement
and Amendment was amended by a First Amendment to Forbearance
Agreement dated as of April 18, 1997 and a Second Amendment to
Forbearance Agreement dated June 4, t997 (collectively, the "ORIGINAL
AGREEMENT"). The Bank, BBL and the Obligors desire to modify the
Original Agreement on the terms set forth herein.
<PAGE> 2
2. DEFINITIONS. All capitalized terms used herein and not otherwise
defined shall have the same meaning herein as in the Original
Agreement.
3. OUTSTANDING OBLIGATIONS.
-----------------------
(a) The Borrower and each of the Guarantors (individually, each an
"OBLIGOR" and collectively, the "OBLIGORS") acknowledge and agree
that they are jointly and severally obligated to the Bank to pay
the Obligations and that as of June , 1997, the Obligations
consist of:
Principal: $4,748,796.27
Interest through June 26, 1997: $ 36,072.33
plus interest hereafter accruing, costs, and expenses, including,
without limitation, reasonable attorneys' fees, consultants' fees, and
commercial finance examination fees.
(b) The Borrower acknowledges and agrees that Schedule 1 hereto
accurately reflects the original cost of the property subject to
the Master Lease Agreement and schedules thereto, which is
presently owned by BBL.
(c) The Obligors further acknowledge and agree that none of them have
any offsets, defenses, or counterclaims (i) against the Bank with
respect to the Loan Agreement, the Guaranties, the other Loan
Documents, or otherwise, or (ii) against BBL with respect to the
Master Lease Agreement, or otherwise, and to the extent that any
such offsets, defenses or counterclaims may exist, the Obligors
each hereby WAIVE and RELEASE same. The Obligors shall execute
and deliver to the Bank and BBL suck releases as the Bank or BBL
may request tO confirm the foregoing.
(d) The Obligers each ratify and confirm that their respective
obligations to the Bank (as modified hereby), including, without
limitation, those under the Loan Agreement and the Guaranties,
are secured by the Collateral and the Guarantor Assets.
(e) The Borrower ratifies and confirms that its obligations to BBL
are secured by the Collateral.
2
<PAGE> 3
4. FORBEARANCE BY BANK. The provisions of Section 4 of the Original
Agreement are hereby amended by deleting the date June 30, 1997
appearing in clause (i) and substituting the date July 31, 1997 in its
stead.
5. AMENDMENTS TO LOAN DOCUMENTS. From and after the date hereof, the Loan
Documents are hereby amended as follows (which amendment shall survive
the expiration of the Forbearance Period):
(a) Section 1.i of the Loan Agreement is hereby amended by deleting
the definition of "Borrowing Base" in its entirety and
substituting the following in its stead:
BORROWING BASE. ON ANY DATE OF DETERMINATION THEREOF, THE LESSER
OF
(a) $2,000,000, MINUS THE AGGREGATE FACE AMOUNT OF ALL
OUTSTANDING LETTERS OF CREDIT, IN THE AMOUNTS ORIGINALLY ISSUED
OR AS REDUCED PURSUANT TO THEIR TERMS, WHICH ARE EITHER
OUTSTANDING OR WHICH HAVE BEEN DRAWN AND PAID BY THE BANK BUT NOT
REIMBURSED BY THE BORROWER, OR
(b) THE SUM OF (i) 80% OF ELIGIBLE ACCOUNTS AND (ii) THE LESSER
OF (A) 35% OF ELIGIBLE INVENTORY AND (B) $2,000,000 (OR SUCH
LESSER PERCENTAGES OR AMOUNTS AS THE BANK MAY IN ITS REASONABLE
DISCRETION, DETERMINE FROM TIME TO TIME UPON THIRTY DAYS WRITTEN
NOTICE TO THE BORROWER), MINUS THE SUM OF (i) $2,000,000 AND (ii)
THE AGGREGATE FACE AMOUNT OF ALL OUTSTANDING LETTERS OF CREDIT,
IN THE AMOUNTS ORIGINALLY ISSUED OR AS REDUCED PURSUANT TO THEIR
TERMS, WHICH ARE EITHER OUTSTANDING OR WHICH HAVE BEEN DRAWN AND
PAID BY THE BANK BUT NOT REIMBURSED BY THE BORROWER.
(b) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Maximum Commitment" in its entirety and
substituting the following in its stead:
MAXIMUM COMMITMENT. $2,000,000 OR ANY LESSER AMOUNT, INCLUDING
ZERO, RESULTING FROM A TERMINATION OR REDUCTION OF SUCH AMOUT IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
(c) Section 1.1 of the Loan Agreement is hereby amended by deleting
clauses (ii) and (iii) of the definition of "Subsidiary
Guarantees" in their entirety.
(d) Section 1.1 of :he Loan Agreement is hereby amended by deleting
clauses (ii) and (iii) of the
3
<PAGE> 4
definition of "Subsidiary Security Agreements" in their entirety.
(e) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "Subsidiary Stock Pledge Agreement" in its
entirety.
(f) Section 1.1 of the Loan Agreement is hereby amended by deleting
the definition of "U.K. Security Documents" in its entirety.
(g) The Loan Agreement is hereby amended by deleting Section 2.7 in
its entirety and substituting the following in its stead:
52.7 INTEREST RATE AND PAYMENT OF INTEREST . SO LONG AS EVENT OF
DEFAULT IS CONTINUING, EACH BASE RATE LOAN SHALL BEAR INTEREST
FOR THE PERIOD COMMENCING WITH THE DRAWDOWN DATE THEREOF AND
ENDING ON THE LAST DAY OF THE INTEREST PERIOD WITH RESPECT
THERETO AT A RATE PER ANNUM EQUAL TO THE AGGREGATE OF THE BASE
RATE AND THREE PERCENT (3%). AT THE OPTION OF THE BANK, AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT, AMOUNTS PAYABLE UNDER ANY OF
THE LOAN DOCUMENTS SHALL BEAR INTEREST (COMPOUNDED MONTHLY AND
PAYABLE ON DEMAND IN RESPECT OF OVERDUE AMOUNTS) AT A RATE PER
ANNUM WHICH IS EQUAL THE AGGREGATE OF THE BASE RATE AND FIVE
PERCENT (5%) UNTIL SUCH AMOUNT IS PAID IN FULL OR (AS THE CASE
MAY BE) SUCH EVENT OF DEFAULT HAS BEEN CURED OR WAIVED IN WRITING
BY THE BANK (AFTER AS WELL AS BEFORE JUDGMENT).
The Bank agrees that the foregoing default rate is not presently in
effect and shall not be charged until the earlier of (i) the
occurrence of any Termination Event, or (ii) the expiration of The
Forbearance Period, for periods following such event.
(h) Section 6.9 of the Loan Agreement is hereby amended by adding the
following clause at the end of clause (iii) thereof:
AND (IV) INVESTMENTS CONSISTING OF LOANS TO ITS SUBSIDIARY, ITP,
IN AN AMOUNT NOT TO EXCEED $673,000, PLUS THE LESSER OF (A)
$50,000 PER WEEK, COMMENCING WITH THE WEEK ENDING JUNE 27, 1997,
OR (B) $200,000 IN THE AGGREGATE.
6. RELEASE OF CERTAIN GUARANTOR'S ASSETS.
--------------------------------------
Contemporaneously herewith, DCI is entering into a financing
arrangement with Congress Financial, the proceeds of which shall be
utilized, in part, to repay indebtedness due from DCI to the Borrower
and to purchase certain of the equipment leased by BBL to the Borrower
and utilized by DCI. A portion of the
4
<PAGE> 5
proceeds received by the Borrower shall be paid to the Bank and BBL to
reduce the Borrower's Obligations to each of them. In connection with
such financing, DCI and Century have requested that the Bank release
its security interest in the assets of DCI and Century and release DCI
and Century from their Guaranties and that BBL transfer title to the
agreed upon equipment to the Borrower. Upon the receipt of the
following amounts by the Bank and BBL, tke Bank shall release its
security interest in the assets of DCI and Century and the Guaranties
of DCI and Century and BBL shall transfer title to such equipment to
the Borrower.
To Be Applied to the Borrower's Obligations to Bank:
$3,298,624.15 (plus such additional amounts, if any, as may be
necessary to reduce the Borrower's Obligations to $1,900,000.00)
To Be Applied to BBL Lease Obligations: $1,042,682.85
Upon receipt of the amounts set forth above, the Bank will (a)
execute and deliver all necessary discharges, releases and other
documents that may be necessary to release (i) any security interest
held by the Bank in and to the Guarantors' assets, and (ii) the
Guaranties, and (b) release the original stock certificates of DCI and
3,928,000 of the shares of Century which have been pledged to the
Bank, and BBL shall execute such documentation as may be necessary to
transfer title to the agreed upon equipment to the Borrower.
7. AMENDMENT TO CONDITIONS TO FORBEARANCE.
---------------------------------------
The Conditions to Forbearance set forth in the Original Agreement are
hereby amended as follows:
(a) The provisions of Paragraph 6(h) of the Original Agreement are
hereby deleted in their entirety.
(b) The existing Intercompany Note from DCI payable to the Borrower
shall be replaced by a new Intercompany Note in the principal sum
of $2,891,125.00 on terms reasonably acceptable to the Bank. The
new Intercompany Note shall continue to be collaterally assigned
to the Bank and BBL as further security for the Obligations and
the Master Lease Agreement.
(c) In consideration of the Bank's entering into this Third
Amendment, upon the execution hereof, the
5
<PAGE> 6
Borrower shall pay the Bank the sum of Two Thousand Five Hundred
and no/100 Dollars ($2,500.00) as a forbearance fee. Such fee
shall be fully earned upon payment and shall not be subject to
refund or rebate under any circumstances. The forbearance fee
shall not be applied in reduction of the principal, interest or
other amounts due in connection with the loan arrangement.
(d) Upon the execution hereof, the Borrower shall pay all reasonable
costs and expenses, including, without limitation, reasonable
attorneys' fees, consultants' fees, and commercial finance
examination fees, which have been incurred by the Bank and BBL in
connection with its loan and lease arrangements with the
Borrower.
(e) During the Forbearance Period, the Borrower (a) shall not permit
its tangible net worth (determined in accordance with generally
accepted accounting principles) to be less than $29,000,000 at
any time, and (b) shall not incur a loss (determined in
accordance with generally accepted accounting principles) during
any calendar month in excess of $250,000.00.
(f) All other Conditions to Forbearance set forth in the Original
Agreement remain in full force and effect.
8. GENERAL.
--------
(a) This Agreement shall be binding upon each Obligor and such
Obligor's successors, and assigns and shall enure to the benefit
of BBL, the Bank and BBL's and the Bank's successors and assigns.
In the event that BBL or the Bank assigns or transfers its
rights under this Agreement, the assignee shall thereupon succeed
to and become vested with all rights, powers, privileges, and
duties of BBL or the Bank hereunder and BBL or the Bank shall
thereupon be discharged and relieved from its duties and
obligations hereunder.
(b) Any determination that any provision of this Agreement or any
application thereof is invalid, illegal, or unenforceable in any
respect in any instance shall not affect the validity, legality,
or enforceability of such provision in any other
6
<PAGE> 7
instance, or the validity, legality, or enforceability of any
other provision of this Agreement.
(c) No delay or omission by BBL or the Bank in exercising or
enforcing any of BBL's or the Bank's rights and remedies shall
operate as, or constitute, a waiver thereof. No waiver by BBL or
the Bank of any of BBL's or the Bank's rights and remedies on any
one occasion shall be deemed a waiver on any subsequent occasion,
nor shall it be deemed a continuing waiver.
(d) This Agreement and all other documents, instruments, and
agreements executed in connection herewith incorporate all
discussions and negotiations between the Obligors, BBL and the
Bank, either express or implied, concerning the matters included
herein and in such other instruments, any custom, usage, or
course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings
shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of this
Agreement or of any provision of any other agreement between any
Obligor and BBL or the Bank shall be effective unless executed in
writing by the party to be charged with such modification,
amendment and waiver, and if such party be BBL or the Bank, then
by a duly authorized officer thereof.
(e) Except as modified hereby, all terms and conditions of the
Original Agreement, the Master Lease Agreement, Loan Agreement,
the Guaranties, and other Loan Documents remain in full force and
effect. Without limiting the foregoing, the parties acknowledge
that the Forbearance Period will expire, unless sooner
terminated, on July 31, 1997. The Bank and BBL are not hereby
waiving any Defaults, Events of Default or rights and remedies
which exist under the Master Lease Agreement or the Loan
Documents and the Bank and BBL reserve the right upon expiration
of the Forbearance Period to undertake such action as a result of
such Defaults and Events of Default as the Bank or BBL may
determine. In particular, without limiting the generality of the
foregoing, the Bank and BBL have not waived any Defaults or
Events of Default, or the respective rights and remedies of the
Bank and/or BBL arising as a result thereof, which may have
occurred as a resu1t of any
7
<PAGE> 8
misrepresentation made by or on behalf of any one or more of the
Obligors.
(f) This Agreement and all rights and obligations hereunder,
including matters of construction, validity, and performance,
shall be governed by the laws of The Commonwealth of
Massachusetts. The Obligors each submit to the jurisdiction of
the Courts of said Commonwealth for all purposes with respect to
this Agreement and the Obligors' relationship with the Bank and
BBL.
(g) Each Obligor makes the following waiver knowingly, voluntarily,
and intentionally, and understands that the Bank and BBL, in
entering into the within Forbearance Agreement, is relying
thereon. EACH OBLIGOR, TO THE EXTENT OTHERWISE ENTITLED THERETO,
HEREBY IRREVOCABLY WAIVES PRESENT OR FUTURE RIGHT OF THAT OBLIGOR
TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE
BANK OR BBL IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST THE BANK OR BBL OR IN
WHICH THE BANK OR BBL IS JOINED AS A PARTY LITIGANT), WHICH CASE
OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY
RELATIONSHIP BETWEEN THE BORROWER OR ANY SUCH PERSON AND THE BANK
OR BBL.
(h) Each Obligor shall execute such instruments and documents as BBL
and the Bank may from time to time request in connection with the
Master Lease Agreement, Loan Agreement, the Guaranties, the Loan
Documents, the within Agreement and the arrangements contemplated
hereby.
8
<PAGE> 9
It is intended that this Agreement take effect as a sealed instrument.
CENTENNIAL TECHNOLOGIES, INC. DESIGN CIRCUITS, INC.
By: /s/ Eugene M. Bullis By: /s/ Donald R. Peck
---------------------------------- -------------------------------------
Print Name: Eugene M. Bullis Print Name: Donald R. Peck
-------------------------- ----------------------------
Title: Chief Financial Officer Title: Treasurer and Clerk
------------------------------- ----------------------------------
CENTURY ELECTRONICS NCT, INC.
MANUFACTURING, INC.
By: /s/ Donald R. Peck By: /s/ Donald R. Peck
---------------------------------- --------------------------------------
Print Name: Donald R. Peck Print Name: Donald R. Peck
-------------------------- ----------------------------
Title: Secretary and Treasurer Title: President
------------------------------- ----------------------------------
AGREED AND ACCEPTED BY:
BANKBOSTON, N.A. f/k/a
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: Vice President
-------------------------------
BANCBOSTON LEASING INC.
By:/s/ Ron R. Ferguson
----------------------------------
Print Name: Ron R. Ferguson
--------------------------
Title: V. P.
-------------------------------
<PAGE> 1
EXHIBIT 10.25
CONSULTING AGREEMENT
THIS AGREEMENT, made as of March 1, 1997, by and between CENTENNIAL
TECHNOLOGIES, INC., a Delaware corporation with its principal offices at 37
Manning Road, Billerica, Massachusetts 01821 (the "Company"), and William M.
Kinch, an individual with a business address of 48 Oak Ledge Lane, Wilton,
Connecticut 06897 (the "Consultant").
W I T N E S S E T H:
- - - - - - - - - -
In consideration of the premises and covenants herein contained, the
parties hereto agree as follows:
1. RETENTION AND DESCRIPTION OF SERVICES. During the term of this
Agreement, Consultant will furnish consulting services and advice as
specifically requested by senior management of the Company. The services and
advice will relate to work being done or planned by the Company and described in
SCHEDULE A.
2. TERM OF AGREEMENT. Consultant shall provide services for the
period described in SCHEDULE A. This Agreement may be terminated by either party
without further notice.
3. LOCATION OF SERVICES. Consultant's services will be performed at
the location set forth in SCHEDULE A.
4. COMPENSATION. Consultant shall be compensated for services
rendered in connection as outlined on SCHEDULE A. The parties agree that, to the
extent time is expended by the Consultant in learning the business of the
Company and in becoming generally familiar in the areas where consultation will
be required, the Consultant shall not be compensated except as previously
approved in writing by an officer of the Company.
5. REIMBURSEMENT OF TRAVEL EXPENSES. The Company will reimburse
Consultant for all reasonable expenses incurred by Consultant for travel
required in connection with the furnishing of services hereunder, as long as
such expenses were authorized by the Company's Sales Travel and Expense
Guidelines.
6. CONSULTANT AS INDEPENDENT CONTRACTOR. Consultant will furnish
services as an independent contractor and not as an employee of the Company.
Consultant has no power of authority to act for, represent, or bind the Company
or any affiliate of the Company in any manner. Consultant is not entitled to any
medical coverage, life insurance, unemployment coverage or any other benefits
afforded to the Company's employees. If the Company is required to pay or
withhold any taxes or make any other payment with respect to fees payable to
Consultant, Consultant will reimburse the Company in full for the amounts paid,
and permit the Company to make deductions for taxes required to be withheld from
any sum due Consultant. Consultant hereby represents to the Company that as an
independent contractor, Consultant carries such worker's compensation,
comprehensive automobile insurance, and other necessary
<PAGE> 2
and appropriate business insurance as well as individual insurance with
reasonable coverage and in reasonable amounts sufficient to insure against the
anticipated risks in connection with its services in this Agreement.
7. NO CONFLICTING EMPLOYMENT. During the term of this Agreement,
Consultant agrees not to enter into any activity, employment, or business
arrangement which conflicts with the Company's interests or Consultant's
obligations under this Agreement without the Company's express prior written
consent. This restriction shall not be construed to prohibit Consultant from
contracting with any client listed on SCHEDULE B, attached hereto, with whom he
already has or may have a relationship to provide services.
8. TRADE SECRETS AND DOCUMENTATION. Consultant will treat as
proprietary any information, including but not limited to client lists,
drawings, marketing and business plans, and other materials belonging to the
Company (collectively, the "Confidential Information"). Consultant acknowledges
that the Confidential Information, as it may exist from time to time, is a
valuable, proprietary and unique asset of the Company's business. The Consultant
shall not disclose, both during and after the term of his retention hereunder,
any Confidential Information to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever or make any use thereof except
for use in the Company's interest and with its express prior written
authorization.
Consultant acknowledges that information of customers of the Company
disclosed to Consultant in the course of Consultant's services is proprietary to
that customer and will be treated as confidential.
Consultant assigns and agrees to assign to the Company or its nominee
all rights to any materials produced or information conceived or obtained by
Consultant during the term of this Agreement with respect to any work which
Consultant performs under this Agreement. Further, Consultant agrees to provide
the Company with such forms and reports as requested by the Company's senior
management.
The Company shall have access at all reasonable times to all
documentation produced regarding services rendered by Consultant pursuant to
this Agreement and such documentation shall be the property of the Company at
all times. Consultant shall provide to the Company all such documentation
regarding services rendered upon request of the Company at any time during the
progress of the services or at the expiration or termination of this Agreement.
9. TERMINATION. The Company shall have the right to terminate this
Agreement at any time by giving written notice thereof to Consultant if the
Company becomes dissatisfied for any reason with the services provided by the
Consultant.
The Company shall have the option of terminating this Agreement at
any time if, in its sole judgment, a conflict of interest exists or is imminent.
Consultant will advise the Company
-2-
<PAGE> 3
of his position with respect to any activity, employment, or business
arrangement contemplated by Consultant which may be relevant to this Paragraph.
For this purpose, Consultant agrees to disclose any such plans to the Company
prior to implementation. No termination of this Agreement shall affect the
rights or obligations of either party hereto with respect to the services
performed prior to the termination.
If this Agreement terminates for any reason whatsoever, Consultant
shall promptly surrender and deliver to the Company all records, materials,
documents and data and copies thereof which he may obtain or produce during the
course of his consulting relationship with the Company, and he will not take
with him any description containing or pertaining to any confidential
information, knowledge or data of the Company which he may produce or obtain
during the term of the Agreement.
10. REMEDIES. The Consultant's obligations under Sections 7, 8, and 9
of this Agreement shall survive the expiration or termination of this Agreement.
The parties hereto recognize and acknowledge that the provisions of Sections 7
and 8 herein are of critical importance to the business of the Company, that in
the event of a breach of said sections the Company would be severely damaged and
that upon such breach monetary damages would be impossible to calculate with
precision and would be insufficient to compensate the Company. Therefore, in
addition to and without limiting any other remedies available at law or
hereunder, in the event that Consultant shall breach or threaten to breach any
of his obligations under Sections 7 and 8 herein, the Company shall be entitled
to obtain equitable remedies, including injunctive relief, without the necessity
of posting a bond, and to recover any and all costs and expenses, including
reasonable counsel fees, in enforcing this Agreement against the Consultant.
The Consultant and the Company consider the restrictions contained in
paragraphs 7, 8 and 9 herein to be reasonable as to the covenants of, and the
duties and restrictions imposed on the Consultant therein, whether in terms of
extent, time, or geographic area. If any such covenants, duties or restrictions
are found by any court having competent jurisdiction to be unreasonable on the
grounds that they are (or any one of them is, as the case may be) too broad to
permit enforcement of such provision to its full extent, with respect to scope,
period of time or otherwise, the Consultant and the Company agree that such
provision shall be enforced to the maximum extent permitted by law, and that
such provision may be judicially modified in whatever manner is considered
reasonable by such court, and if so amended, shall be enforced.
11. MISCELLANEOUS. (a) The headings of the Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning of this Agreement.
(b) This Agreement shall be governed by and construed under
Massachusetts law.
(c) All notices, demands and communications provided for herein or
made hereunder shall be delivered, or placed in the United States mail, first
class, postage prepaid, addressed in
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<PAGE> 4
each case to the address set forth above, until some other address shall have
been designated in a written notice to the other parties hereto.
(d) If either party should waive any breach of any other provision of
this Agreement, such party shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of the
Agreement. This Agreement is the entire agreement between the parties relating
to the subject matter hereof and supersedes all prior agreements, written or
oral, concerning the subject matter hereof. This Agreement may not be altered,
modified, or discharged and no provision hereof may be waived except in writing
signed by the Company and the Consultant.
(e) This Agreement and the rights and obligations of the parties
hereto shall bind and inure to the benefit of any successor or successors of the
Company. Neither this Agreement nor any rights or benefits hereunder may be
assigned by the Consultant.
IN WITNESS WHEREOF, the parties hereto have caused these presents to
be executed the day and year first above written.
ATTEST: CENTENNIAL TECHNOLOGIES, INC.
/s/ Donald R. Peck BY: /s/ Lawrence J. Ramaekers
- --------------------------------- -------------------------------------
/s/ Donald R. Peck /s/ William M. Kinch
- --------------------------------- -----------------------------------------
Witness Consultant
-4-
<PAGE> 5
SCHEDULE A
Services to be Performed:
Assist Senior Management in operations of Company
Assist the Company in Developing marketing programs for subsidiaries
Perform other assignments as directed by the Board of Directors, the
Special Committee of the Board of Directors, or the management of the
Company
Term of Consulting Services:
One (1) Year
Location of Services:
Worldwide
Consultant Compensation:
$1,000 per day, to be paid monthly.
-5-
<PAGE> 6
SCHEDULE B
Other Permitted Employment: Consultant is presently not contracting with any
company which conflicts with the Company's interests.
-6-
<PAGE> 1
THE BOSTON AGENT
- --------------------------------------------------------------------------------
AGREEMENT FOR CONSULTING SERVICES
This agreement is between The Boston Agent, 278 Wethersfield Street, Rowley MA,
hereinafter referred to as the Consultant and Centennial Technologies Inc., 37
Manning Road, Billerica, MA, hereinafter referred to as the Company on this day
of January 20, 1997.
The Company desires to retain the Consultant to manage the investment activities
of Centennial Capital Corporation, its private investments subsidiary.
The Company agrees to pay the Consultant US$10,500 a month for three days of
service per week. The Company agrees that it and any entity of which it is a
principal, agent, subsidiary or division or shall pay the Consultant the same
fee as stated above.
Consulting fees will be paid semi-monthly, US$5,250 on the 15th and 30th of each
month. The Company will reimburse the Consultant for agreed to expenses related
to investment management activities including but not limited to travel expenses
(air fare, hotels, meals, car mileage), toll calls. facsimiles, couriers, data
base searches, other professional services, etc. Incurred expenses will be
billed semi-monthly and will be due upon receipt.
All statistical, financial, and personnel data relating to the Company's
business and those of its investee companies, which are confidential and which
are designated as such, will be kept in the strictest of confidence by the
Consultant and its employees. However, the foregoing obligation does not apply
to any data that have become publicly available or that are rightfully obtained
from third parties.
The Consultant agrees that it will not use directly or through third parties any
information provided by the Company for the purpose of establishing a business
which would compete with the business for which the Company is seeking
financing.
The Consultant and the Company acknowledge that this agreement cannot be altered
without the written consent of both parties. The Company agrees to this contract
as an individual and/or on behalf of any entity or individuals it represents.
The Company agrees that the Consultant shall be held harmless for conditions
beyond its control.
The Company and/or the Consultant may terminate the Consultant's services with
thirty days notice. The Company has read this agreement, understands it and
acknowledges that it has received an exact copy of it.
The Consultant The Company
/s/ J.P. Luc Beaubien /s/ Emanuel Pinez
- ------------------------------------ --------------------------------------
J.P. Luc Beaubien, Principal Emanuel Pinez, Chairman & CEO
The Boston Agent Centennial Technologies, Inc.
- --------------------------------------------------------------------------------
278 Wethersfield Street, Rowlcy, MA 01969 o (800) 948-2777 Fax (508) 948-2779
<PAGE> 1
THIS LEASE AGREEMENT made this 17th day of April, 1997, by and between
Michael A. Howland, as Trustee of the Hownat Trust, u/d/t dated March 31st, 1993
recorded in the Middlesex North Registry of Deeds, in Book 6398, Page 342,
having an address care of Howland Development Corporation, 155 West Street,
Wilmington, Massachusetts 01887 (hereinafter with their successors and assigns
called the "Lessor") and Centennial Technologies, Inc. a Delaware Corporation,
having a principal place of business at 37 Manning Road, Billerica,
Massachusetts 01821 (hereinafter with its successors and permitted assigns
called the "Lessee")
ARTICLE I
PREMISES
Section I. In consideration of the rents and covenants herein contained on
the part of the Lessee to be paid, performed and observed, the Lessor hereby
leases to the Lessee and the Lessee hereby leases from the Lessor, subject to
the terms and provisions hereinafter set forth, certain premises (hereinafter
called the "demised premises") consisting of approximately 34,084 square feet of
floor area, in the building commonly known as 7 Lopez Road (the "Building")
thereon and situated at 7 Lopez Road, Wilmington, Massachusetts, on the Land
described in Exhibit A attached hereto (the "Land"), a copy of a plan of the
demised premises being attached hereto as Exhibit B; together with the
non-exclusive right to use, in common with others from time to time lawfully
entitled thereto, the common areas of the Building, one hundred and fifty (150)
parking spaces located in the parking areas on the Land, as same may exist from
time to time, for parking purposes only, and the driveways and walkways on the
Land, as same may exist from time to time, for roadway and walkway purposes
only.
Section 2. The demised premises are leased subject to the reservation to
the Lessor of the roof and exterior walls of the demised premises and of the
Building, and subject to the Lessor's reservation of the right (without thereby
assuming the obligation) to install, maintain, use, repair and replace (in such
manner as to reduce to a minimum to the extent reasonably practicable the
interference with Lessee's use of the demised premises) all pipes, ducts, wires,
meters, utility lines and the like which are in the reasonable judgement of the
Lessor, required to be in the demised premises. The Lessor reserves the right to
alter, increase and relocate such parking areas, driveways and walkways from
time to time and any common facilities with the Building. The Lessor reserves
the right to make additions to the Building and to erect additional buildings
and structures on the Land.
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<PAGE> 2
ARTICLE II
Term and Commencement
Section 1. TO HAVE TO HOLD the demised premises for an original term (the
"Original Term") of sixty (60) months from the Commencement Date (as said term
is hereinafter defined) unless sooner terminated as herein provided. The
Commencement Date shall be May 1, 1997 (the "Commencement Date").
Section 2. Intentionally Deleted
ARTICLE III
RENT
Section 1. YIELDING AND PAYING an annual base rent during the Original Term
hereof in the mount of One Million One Hundred Thousand Seven Hundred Thirty and
00/100ths (S1,107,730.00) Dollars per annum (the "Annual BASE RENT").
ANNUAL BASE RENT SCHEDULE
PERIOD $/PER SF ANNUAL BASE RENT MONTHLY RENT
------ -------- ---------------- ------------
Year 1 $ 6.00 $ 204,504 $17,042.00
Year 2 $ 6.25 $ 213,025 $17,752.08
Year 3 $ 6.50 S 221,546 $18,462.16
Year 4 $ 6.75 $ 230,067 $19,172.25
Year 5 $ 7.00 $ 238,588 $19,882.33
---------
TOTAL .............................$1,107,730
Section 2. All such rent including said Annual Base Rent as it may be
adjusted together with any such sum or amount hereunder designated as
Additional Rent (as defined hereinafter) shall be paid as and when the same
shall become due without offset, deduction or demand. All such rent shall be
payable in advance on the first day of each calendar month during the term
hereof commencing on the Commencement Date. If the Commencement Date is other
than the first day of a calendar month, Annual Base Rent for the first
incomplete month, pro-rated at the rate set forth above, shall be paid on the
Commencement
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<PAGE> 3
Date. During the Original Term, the Annual Base Rent shall be paid in sixty (60)
monthly installments, per the above listed schedule. All references in this
Lease to the ",Annual Base Rent" shall, with respect to the Original Term, mean
an amount equal to a particular period's monthly base rent multiplied by twelve
(12).
Section 3. Lessee covenants and agrees to pay as follows:
(a) In addition to any charges pursuant to Article XVII, Section 4, if any
installment of Annual Base Rent or Additional Rent payable hereunder is not paid
after ten (10) days of when due, Lessee shall pay Lessor, on demand, a late
charge equal to five (5%) percent of the amount of any such Annual Base Rent or
Additional Rent payment as Additional Rent hereunder.
(b) If Lessor shall pay any monies or incur any reasonable expenses,
including without limitation reasonable attorney's fees, in connection with any
failure by Lessee to pay Annual Base Rent or Additional Rent as and when same
shall become due and payable, the amounts so paid or incurred by Lessor shall be
considered Additional Rent, payable by Lessee within ten (10) days of written
demand for payment and may be collected or enforced in the same manner as Annual
Base Rent and Additional Rent.
Section 4. The Lessee shall pay, as Additional Rent hereunder, during the
Original Term hereof and any extension or renewal thereof, the greater of
either: (i) Lessee's Pro Rata Share (as defined in Article XX hereof) of any and
all real estate taxes and betterments and other assessments (ordinary and
extraordinary), water rents, sewer and other charges which shall be imposed,
assessed or levied upon the Building and the Land or (ii) $1.00 per square foot
(i.e. $34,084) per annum. In addition, the Lessee shall pay one hundred (100%)
percent of real estate taxes, betterments and other assessments due to any
alterations or improvements made by the Lessee to the demised premises. All such
rent shall be payable in advance on the first day of each calendar month during
the Original Term hereof, and any extension or renewal thereof, commencing on
the Commencement Date in equal monthly installments in the amount of Two
Thousand Eight Hundred Forty and 33/100ths Dollars ($2,840.33). Lessor reserves
the right, during the Original Term and any extension or renewal thereof, to
adjust such monthly installment, from time to time, if the actual costs for such
expense increases.
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<PAGE> 4
If this Lease shall commence on a date other than the first day of a tax
year, or terminate on a date other than the last day of a tax year, the Lessee
for that tax year shall pay to the Lessor only such portion of such Additional
Rent for the whole tax year as shall be proportionate to the portion of the tax
year contained within the term of this Lease.
Section 5. The term "real estate taxes" shall mean all taxes and special
assessments of every kind and nature assessed by a governmental authority, on
the Land or the Building which the Lessor shall become obligated to pay because
of or in connection with the ownership, leasing and operation of the Land or
Building. The foregoing provisions are predicated upon the present system of
taxation in the Commonwealth of Massachusetts. If taxes upon rentals or
otherwise pertaining to the demised premises shall be substituted, in whole or
in part, for the present ad valorem real estate taxes or assessed in addition
thereto, then Lessee's obligation to pay such taxes shall be based upon such
substituted taxes, to the extent to which the same shall be a substitute for
present ad valorem real estate taxes, together with such additional taxes, and
such substitute or additional taxes shall be deemed to be included within the
term "real estate taxes". Except as hereinabove provided: nothing herein
contained shall otherwise require or be construed to require Lessee to reimburse
Lessor for any inheritance, estate, succession, transfer, gift, franchise,
income or earnings, profit, excess profit tax, capital stock, capital levy or
corporate or other similar tax which is or may be imposed upon Lessor or upon
Lessor's business.
Section 6. During the Original Term and any extensions or renewals
thereof, Lessee shall pay to Lessor, as Additional Rent, the greater of either:
(i) Lessee's Pro Rata Share (as defined in Article XX hereof) of the costs paid
or incurred by Lessor in connection with maintaining and repairing the Building,
and any additions to the Building and in maintaining and repairing the Land (the
"common area maintenance expenses" or the "CAM" expenses) or (ii) $.30 per
square foot (i.e. $10,225.20) per annum. All such Additional Rent shall be
payable in advance on the first day of each calendar month during the Original
Term hereof, and any extension or renewal thereof, commencing on the
Commencement Date in equal monthly installments in the amount of Eight Hundred
Fifty Two and 10/100ths Dollars ($852.10). Lessor reserves the right, during the
Original Term and any extension or renewal thereof, to adjust such monthly
installment, from time to time, if the actual costs for such CAM expenses
increase.
4
<PAGE> 5
Section 7. For the purposes of this Lease, CAM expenses are defined as
those direct expenses necessary to operate, repair and maintain the Building and
the Land in a manner deemed reasonable and for the best interests of the tenants
in the Building, including but not limited to, the costs for the following
items:
(A) operating and cleaning the common areas and for removing snow, ice and
debris from the parking areas and the roof;
(B) replacing paving, striping, curbs, walkways, landscaping, common and
public lighting facilities in the Building and the area immediately
adjacent thereto;
(c) electricity for lighting the common and public areas;
(D) maintenance, repair and upkeep of the roofing system; mechanical,
electrical, plumbing and gas systems; fire alarm and sprinkler
equipment;
(E) maintaining and repairing all drainage, sewage and / or septic system
and utility facilities and equipment on the land whether above or
underground;
(F) maintenance, repair and upkeep of the lobbies, hallways and other
common and public areas of the Building and the Land.
Section 8. For the purposes of this Lease, CAM expenses shall not include
costs for replacement of foundations, beams, girders, mullions, and exterior
walls of the demised premises or Building, except where such repairs are
required by reason of or any act or negligence of the Lessee, its employees,
agents, licensees, suppliers, contractors, invitees or guests (the "Structural
Repairs"); expenses for which Lessor is reimbursed or indemnified (either by an
insurer, condemnor, tenant or otherwise); expenses incurred in leasing or
procuring tenants (including, without limitation, lease commissions, advertising
expenses and expenses of renovating space for tenants); legal expenses arising
out of the construction, operation, use, occupation or maintenance of the
Building or the enforcement of the provisions of any agreements affecting the
Building; interest or amortization payments on any mortgage or mortgages; the
cost of any work or services performed for or facilities furnished to a lessee
at the lessee's cost; the cost of correcting defects (latent or otherwise) in
the construction of the Building or the costs associated with any environmental
contamination remediation incurred as a result of any such contamination proven
to be on the Land prior to the Lease Commencement Date ("Pre-existing
Environmental Conditions"). Nothing contained in this provision shall operate
to reduce either the Lessee's or the Lessor's obligations with respect to
so-called 'environmental matters' as such obligations are further delineated in
Article XXIV herein.
5
<PAGE> 6
Section 9. During the Original Term and any extensions or renewals thereof,
Lessee shall pay Lessor, as Additional Rent hereunder, the greater of either:
(i) Lessee's Pro Rata Share (as defined in Article XX hereof) of Lessor's cost
of the following insurance on the Building and the Land: fire and extended
coverage insurance and such other insurance covering all hazards included within
customary "all risk" coverage, including without limitation insurance covering
fire, lightning, vandalism, malicious mischief, and sprinkler leakage, said
insurance to be on a full value, repair, or replacement bases, as determined by
Lessor's mortgagee and Lessors costs, for comprehensive liability insurance
indemnifying the Lessor against all claims and demands for any injury to persons
or property which may be claimed to have occurred in or upon the Building or the
Land in such amounts as Lessor shall from time to time determine or (ii) $. 10
per square foot (i.e. $3,408.40) per annum. All such Additional Rent shall be
payable in advance on the first day of each calendar month during the Original
Term hereof, and any extension or renewal thereof, commencing on the
Commencement Date in equal monthly installments in the amount of Two Hundred
Eighty Four and 03/100ths Dollars ($284.03). Lessor reserves the right, during
the Original Term and any extension or renewal thereof, to adjust such monthly
installment, from time to time, if the actual costs for such CAM expenses
increase. In addition, notwithstanding the foregoing, Lessee shall pay as
Additional Rent, one hundred (100%) percent of Lessor's cost of any insurance
with respect to the Building or the Land which is attributable solely to
Lessee's particular use of the demised premises.
Section 10. This is, and is intended to be. a TRIPLE NET LEASE, and
accordingly, except as expressly otherwise provided for herein, all charges,
assessments and impositions made upon the Land and the Building and all costs,
expenses and other obligations paid or incurred by Lessor of any kind or nature
whatsoever in insuring, maintaining and / or repairing the demised premises or
the Building or the Land or any additions to the Building, (other than the costs
of maintaining or repairing the interior of space leased to others or available
for lease to others and other than the Structural Repairs set forth in Section 8
hereof) shall be included in Lessor's costs of which Lessee is obligated to pay
a pro rata share or the entirety, as the case may be, as provided hereinabove.
Section 11. All payments of Base Rent and Additional Rent hereunder shall
be mailed without offset or deduction and without previous demand therefore and
if other than cash payable to the order of Lessor at 155 West Street,
Wilmington, Massachusetts 01887, or otherwise as Lessor may notify Lessee from
time to time.
6
<PAGE> 7
Section 12. Lessee hereby acknowledges and agrees that it will take
possession of the demised space in "as is" condition with all faults, except for
any such Pre-existing Environmental Conditions.
Section 13. Lessor acknowledges receipt from Lessee of One Hundred Forty
Thousand Three Hundred Twelve 47/100ths ($140,312.47) Dollars paid concurrently
with the execution hereof. The same represents the following:
(a) first months Base Rent and Additional Rent: $21,018.47
(b) three months security deposit: $71,576.40
(c) last two months Base Rent and Additional Rent: $47,717.60
Said [$71,576.40] security deposit shall be held by Lessor without interest
during the Original Term hereof, and any extensions or renewals thereof, and for
so long thereafter as Lessee is in possession of the demised premises or has
unsatisfied obligations hereunder to Lessor which deposit the Lessor may apply
from time to time against delinquent outstanding obligations of Lessee
hereunder. Lessee shall have no right to require the Lessor to apply said
security deposit, nor shall Lessee be entitled to credit the same against rents
or other sums payable hereunder. If and to the extent that the Lessor makes use
of all or any portion of said security deposit in accordance with the terms
hereof, the sum so applied by Lessor shall be restored to the security deposit
by Lessee upon notice from Lessor, and failure to pay to Lessor the amount to be
so restored shall be a default hereunder giving rise to all of the Lessor's
rights and remedies applicable to a default in the payment of rent.
Section 14. If, at the appropriate time period for the application of its
Rent Credit, as hereinafter defined, the Lessee is not in default of any of the
terms or provisions of this Lease, then the Lessee shall be entitled to apply
said Rent Credit as described below. The total Rent Credit available to Lessee
to be used as credit against its monthly Base and Additional Rent is Thirty Nine
Thousand Two Hundred Seventy and 00/100ths ($39,270.00) Dollars (the "Rent
Credit"). Said Rent Credit shall be applied as follows: Nineteen Thousand Six
Hundred Thirty Five and 00/100ths Dollars shall be credited towards the then due
and payable monthly Base and Additional Rent for each of the months of May 1998
and June 1998, respectively.
ARTICLE IV
COVENANTS
Lessee covenants and agrees as follows:
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<PAGE> 8
(a) To pay when due the said Annual Base Rent and Additional Rent at the
times and in the manner set forth herein;
(b) To procure any and all licenses and permits required for any use to
be made of the demised premises by Lessee; to keep the demised premises equipped
with all safety appliances required by law or ordinances because of any
use of the demised premises by Lessee and to make any alterations or changes
which may be necessary to meet the obligations and standards promulgated
under the Occupational Safety and Health Act of 1970 which are related to
Lessee's use and occupation of the demised premises;
(c) To pay promptly when due the entire cost of any work to the demised
premises undertaken by Lessee so that said premises shall at all times be free
of liens for labor and materials, to procure all necessary permits before
undertaking such work, to do all of such work in a good and workmanlike manner
employing new materials of good quality and complying with all governmental and
insurance requirements and to save Lessor harmless and indemnified from any and
all injury, loss, claims or damage to any person or property occasioned by or
growing out of such work including, without limitation, reasonable attorneys'
fees if so requested by Lessor. Lessee shall take over Lessor's defense in any
action related to work undertaken by Lessee on the demised premises;
(d) To permit Lessor and anyone claiming under Lessor at reasonable times
and upon reasonable notice to enter into and examine the demised premises and to
show the demised premises to prospective purchasers or tenants provided that
Lessor shall not thereby unreasonably interfere with the conduct of Lessee's
business, to permit Lessor to enter said premises to make such repairs,
improvements, alterations or additions thereto as may be required in order to
comply with the requirements of any public authority having jurisdiction over
the demised premises, or as may be required of Lessor under the terms of this
Lease, provided that such entry shall not unreasonably interfere with the
conduct of Lessee's business; and to permit the affixing to any suitable part of
the demised premises a reasonable notice for letting or selling the demised
premises or the Building; to permit Lessor to enter the demised premises at any
time to make emergency repairs;
(e) To pay when due any and all State, Federal or local taxes based
upon Lessee's use or occupation of the demised premises or pertaining to
Lessee's personal property or resulting from any permitted alteration,
additions or improvements made by Lessee to the demised premises;
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<PAGE> 9
(f) To comply with any rules, regulations or recommendations of the
National Board of Fire Underwriters, any rating bureau, or any similar
association performing such function, and any insurance company insuring the
demised premises with respect to the demised premises and/or Lessee's use and
occupation thereof;
(g) To keep the demised premises adequately heated for the protection of
the plumbing therein;
(h) To permit no waste with respect to the demised premises;
(i) To permit no storage of materials outside of the demised premises,
except for such temporary storage as may be required for reasonable periods of
time due to unforeseen circumstances or emergencies;
(j) To comply with such reasonable rules and regulations now or hereafter
made by Lessor for and with respect to the care and use of the Building, the
Land and their facilities and approaches, it being understood that Lessor shall
not be liable to Lessee for the failure of any other tenants of the Building to
conform to such rules and regulations; and
(k) Not to do or suffer to be done, or to keep, or to suffer to be kept, or
admit to do anything in, upon or about the demised premises which may prevent
the obtaining of any insurance on the Building, the Land or the demised premises
or which may make void or voidable any insurance on the Building, the Land or
the demised premises.
ARTICLE
USE OF DEMISED PREMISES
Section 1. The Lessee shall have the right to use the demised premises for
office use, manufacturing, research and development and for equipment storage
and handling and for no other purposes whatsoever, but in no event shall Lessee
conduct at the demised premises any use or do anything which is offensive,
constitutes a nuisance or violates any provisions of any zoning, building or
other applicable laws, ordinances or regulations.
Section 2. Lessee further agrees to conform to the following provisions
during the entire term of this Lease or any extensions thereof.
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<PAGE> 10
(a) Lessee shall not permit any auction, fire, going-out-of business, or
bankruptcy sales or any retail sales whatsoever to be conducted with the demised
premises, without the prior written consent of the Lessor, which shall not be
unreasonably witheld;
(b) Lessee shall not use the sidewalks, parking areas or other outside
areas for advertising or business purposes or otherwise obstruct the same,
without the prior written consent of the Lessor, which shall not be unreasonably
witheld;
(c) Lessee shall be responsible for maintaining its own exterior trash
receptacle and for all trash removal. The location of said receptacle shall be
subject to Lessor's approval which shall not be unreasonably withheld; Lessee
shall keep the area around said trash receptacle neat, clean and free of all
refuse and the like;
(d) Lessee shall take whatever measures are necessary to insure that
floor load limitations are not exceeded in the demised premises;
(e) Lessee shall not cause any offensive odors or loud noise (including,
but without limitation, the use of loudspeakers), nor take nor permit any action
which constitutes a nuisance or menace to any other occupant of other premises
in the Building and in no event shall any loud noises or offensive odors be
emitted from the demised premises; and
(f) No merchandise or advertising materials shall be placed in windows nor
be visible from the demised premises.
ARTICLE VI
REPAIRS AND ALTERATIONS
Section 1. The Lessee shall keep the demised premises in a neat, clean,
sanitary condition and in good order and repair and in good working condition,
including all electrical, plumbing, gas, sprinkler, alarm and or other equipment
within or serving the demised premises (including without limitation the
maintenance, repair and/or replacement of the HVAC system serving the demised
premises), loading doors, entrance doors, all fixtures, interior walls, floors,
ceilings, signs (including exterior signs where permitted), interior bulb and
ballast replacements, and all interior building appliances and similar equipment
and the exterior and the interior portions of all windows, window frames, doors,
door frames, overhead doors and all other glass or plate glass thereon. In
connection
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therewith, and without limiting Lessee's obligations hereunder, Lessee shall
perform the maintenance as set forth on the HVAC maintenance schedule attached
hereto as Exhibit D and made a part hereof.
Section 2. The Lessor shall, at its expense, promptly after receipt of
written notice from the Lessee, make any necessary Structural Repairs to the
Building or the demised premises, except where such repairs are required by
reason of any act or negligence or omission on the part of the Lessee, its
employees, agents, licensees, suppliers, contractors, guests or invitees. The
Lessor shall commence repairs to be made by it as promptly as practical after
the receipt of such notice provided, however, that the Lessor (without limiting
Section 14 of Article XXII hereof), shall not be liable for a delay in
commencement of the making of such repairs or for a delay or failure to complete
such repairs where such delay or failure is attributable to strikes or other
labor conditions, inability or difficulty in obtaining materials or services,
wars, delays due to the weather, other cause beyond the reasonable control of
the Lessor.
Section 3. The Lessor shall be responsible for the maintenance of the grass
and shrubs on the Land and shall be responsible for maintaining, repairing and
lighting of common areas of the building and maintaining, repairing, lighting
and removing snow, ice and debris from the parking areas and driveways on the
Land. The Lessee shall be responsible for the removal of snow and ice from the
walkways, steps and loading door areas adjacent to its demised space and shall
pay 100% of the costs associated with the same. The Lessee shall pay 100% of the
costs for the items listed m this Section if the necessity to repair the same is
due to the willful or negligent acts of the Lessee
Section 4. All costs paid or incurred by Lessor in performing any of its
obligations under this Article VI (except for Structural Repairs or exceptions
set forth in Section 2 hereof and Article III, Section 8) shall be included in
Lessee's CAM charge as set forth in Article III, Sections 6,7, and 8.
Section 5. The Lessee shall at the expiration or earlier termination of
this Lease remove its goods and effects and peaceably yield up the demised
premises, clean and in the same order, repair and condition as at the
Commencement Date of the term hereof, reasonable wear and tear excepted
(provided good maintenance practices are employed), except for repairs which the
Lessor agrees to make as herein provided and except for damage by fire or
insured casualty, and Lessee shall promptly repair any injury done to the
demised premises, the Building or the Land by the installation or removal of the
Lessee's fixtures or other property
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Section 6. The Lessee shall have the right at its expense to make
alterations, improvements or additions to the interior of the demised premises,
provided that:
(a) No such alteration. addition or improvement shall lessen the fair
market value of the demised premises or the Building and any such alteration,
addition or improvement shall be done in accordance with all applicable law, in
a good and workmanlike manner with good quality materials and shall not impair
the safety of the structure of the Building;
(b) Any such alteration, addition, or improvement shall be made in
accordance with previously prepared plans and specifications, and such plans and
specifications, and such plans and specifications must have the written approval
of the Lessor before any work thereon shall be commenced. Lessor's consent shall
not be unreasonably withheld:
(c) Prior to the commencement of work on any such alteration, addition, or
improvement, the plans and specification covering the same shall have been
submitted to and approved by:
1. All municipal or other governmental departments or agencies having
jurisdiction over the subject matter thereof, and
2. Any mortgagee having an interest in or lien upon the Building or
the Land, if required by the terms of the mortgage, it being understood that
the Lessor will join in any application to any such mortgagee to obtain such
approval with respect to any alteration, addition, or improvement which the
Lessor shall have approved under subparagraph (b) above; and
(d) The Lessee shall pay the increased premium, if any, for the insurance
coverage of the demised premises or the Building resulting from any additional
risk during the course of construction or installation of any such alteration,
addition or improvement or resulting from such alteration, addition or
improvement;
All additions, improvements and fixtures (other than the usual trade
fixtures, furniture and equipment installed by the Lessee which may be removed
from the demised premises without injury thereto) which may be made or
installed by either the Lessor or the Lessee and which are attached to a floor,
wall or ceiling, including any linoleum or other floor covering of similar
character, shall remain upon the demised premises, and at the expiration or
earlier termination of this Lease shall be surrendered with the demised premises
as a part thereof.
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Any trade fixtures furniture and equipment owned by the Lessee which may
be removed from the demised premises without injury thereto shall remain the
property of the Lessee and shall be removed by the Lessee from the demised
premises without injury thereto prior to the expiration or earlier termination
of this Lease. In the event Lessee fails to remove said fixtures, furniture
and/or equipment prior to the expiration or earlier termination of this Lease,
they shall be deemed abandoned and may be disposed of by lessor in any way it
sees fit, and Lessor shall not be liable for disposal;
(e) Not withstanding anything contained in the foregoing to the contrary,
Lessee shall not, without the prior written consent of Lessor, make any
alteration to the demised premises which would (i) increase the amount of
electrical, HVAC or other utility consumption by Lessee; (ii) delay completion
of the demised premises or any other part of the Building; or (iii) affect any
mechanical, electrical, HVAC, sewer, septic or other utility system serving
the demised premises or the Building or the capacity thereof to serve other
occupants or lessees in the Building; and
(f) Lessor shall have the right to match any offer of any other qualified
and duly licensed party for such work and if it matches any such offer, to
perform such work based on the offer which it matches.
Section 7. Without limiting Lessee's obligations in this Lease or
elsewhere, Lessee shall promptly, after notice from the Lessor, repair at its
sole expense, any damage to the exterior of the demised premises, the Building
or to the utilities serving the demised premises (including the HVAC system), or
to the Land (including, without limitation, the paring areas, driveways,
walkways, and grass and shrubs located on the Land) caused by any act or the
negligence of the Lessee, its agents, licensees, suppliers, contractors or
guests.
Section 8. It is understood that Lessor's obligations under this Article
are subject to the provisions and limitations set forth in Articles XV and XVI.
ARTICLE VII
UTILITIES
The Lessee shall pay when due all charges for utility services provided to
the demised premises including, without limitation, electricity, gas, water,
sewer, telephone, and the cost of fuel to heat or air condition said demised
premises. If
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any of the utilities consumed by the demised premises are not metered separately
from that consumed by the remainder of the Building, or any portion thereof,
then the Lessee shall pay to Lessor, upon being billed therefor by Lessor,
Lessee's Pro-Rata Share of the aforesaid. The aforementioned share is based on
the assumption that utilities serving the demised premises will be used only for
ordinary office use. If any of the utilities consumed in the demised premises
are for other purposes or in excessive quantities or if Lessee's heating and/or
cooling requirements are materially greater than that of other tenants or
prospective tenants, then Lessee shall pay to Lessor, on demand from time to
time, charges for said additional utility use, as reasonably estimated by
lessor. If not installed at the Commencement Date, Lessor reserves the right to
install separate utility meters to measure utility consumption in the demised
premises. The cost of such meters and the cost of installation, repair,
maintenance and replacement of all meters serving the demised premises shall be
borne by Lessee. Lessee shall not overload the electrical wiring or electrical
panels within or serving the demised premises and will install at its own
expense, but only after obtaining Lessor's prior written approval, any
additional electrical wiring or panels which may be required in connection with
Lessee's Apparatus. Except for Lessor's negligence, the Lessor shall not be
liable for any interruption of electricity, gas, water, telephone, sewage and/or
septic system or other utility service supplied to the demised premises and
Lessor reserves the right to stop any service or utility to the demised
premises, when in Lessor's judgement it is deemed necessary by reason of
accident, emergency, repair work, or otherwise. No such interruption or stoppage
of utility service shall be deemed to be an eviction of the Lessee or relieve
Lessee from any of the Lessee's obligations under this Lease.
ARTICLE VIII
INDEMNITY AND PUBLIC LIABILITY INSURANCE
Section 1. From and after the Commencement date and until this Lease shall
be terminated, the Lessee shall assume exclusive control of the demised
premises, and all tort liabilities arising out of the control or occupancy
thereof and shall save the Lessor harmless and indemnified from all injury,
loss, claims or damage of whatever nature to any person or property in or about
the demised premises, the Building and/or the Land arising from any act,
omission or negligence of the Lessee or Lessee's subtenants or concessionaires
or the employees, agents, contractors, suppliers, licensees, invitees, or
customers of any of the foregoing or other wise resulting from Lessee's use,
maintenance and occupancy of the demised premises or anything or facility kept
or used thereon provided such injury, loss, claims or damage are not caused by
the negligent acts
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or omissions of Lessor or Lessor's other tenants, employees, agents,
contractors, suppliers, licensees, invitees or customers. Upon request of
Lessor, the Lessee shall take over Lessor's defense in any action related to
such matter for which Lessee has agreed to indemnify Lessor. The provisions
hereof shalt survive expiration or termination of this Lease.
Section 2. Lessee agrees to maintain in full force during the term hereof
and any extensions thereof a policy of comprehensive general liability and
property damage insurance under which the Lessor is named as additional
insured. Lessee will also name as additional insureds under each policy each
person or entity in privity of estate with the Lessor (including, without
limitation, each mortgagee with respect to the Land and Improvements) as Lessor
may require from time to time by written notice. Each such policy shall be
non-cancelable with respect to the Lessor and Lessor's designees without ten
(10) days prior written notice to Lessor and a duplicate original or certificate
thereof shall be delivered to Lessor. The limits of liability of such insurance
shall be not less than One Million and No/100ths ($1,000.000.00) Dollars for
injury (or death) to any one person and Five Hundred Thousand and No/100ths
($500,000.00) Dollars with respect to damage to property.
Section 3. Neither the Lessor nor any agent or employee of the Lessor shall
be liable for any loss or damage to the person or property of the Lessee or of
any subtenant or concessionaire, or of any employee, customer, licensee,
invitee, contractor or supplier, or guest of any of the foregoing, except where
such damage is attributable to the negligent acts or omissions of the Lessor,
its agents or employees. Without in any way limiting the generality of the
foregoing and except where any such damage is caused by the negligent acts or
omissions of the Lessor, its agents, contractors, suppliers or employees, the
Lessor, its agents or employees shall not be liable in any event, for any such
damage resulting:
(a) from the interruption to business resulting from theft, fire,
explosion, falling plaster, steam, gas, electricity, water, rain or snow or
leaks from any part of said demised premises or from the pipes, appliances or
plumbing or from dampness or any other cause;
(b) from any hidden defect in, under or upon the demised premises, the
building or the Land, except any such Pre-existing Environmental Condition;
and/or
(c) from acts or omissions of persons occupying adjacent premises or
otherwise entitled to use the Building and/or Land.
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Section 4. Lessor shall not be liable to Lessee for any compensation or
reduction of rent by reason of inconvenience or annoyance or for loss of
business arising from power losses or shortages or from the necessity of
Lessor's entering the demised premises for any of the purposes in this Lease
authorized, or for repairing the demised premises or any portions of the
Building or Land in accordance herewith, nor shall any such entry, interruption
or similar event give rise to a claim in Lessee's favor that such event
constitutes actual or constructive, total or partial, eviction from the demised
premises. Nothing contained herein shall be deemed to exonerate Lessor from its
own negligent acts or omissions.
ARTICLE IX
FIRE AND EXTENDED COVERAGE INSURANCE
Section 1. The Lessee shall not be named as insured under any fire or
extended coverage insurance on the demised premises or the Building nor have
any right to participate in the adjustment of loss or to receive insurance
proceeds.
Section 2. The Lessee shall, at its own expense, maintain fire and
comprehensive casualty insurance of adequate amounts with respect to its own
fixtures, merchandise, equipment and other property contained in the demised
premises, it being understood that all merchandise, furniture, fixtures, effects
and property of every kind of the Lessee which may be in the demised premises,
or the Building or on the Land shall be at the sole risk and hazard of the
Lessee.
ARTICLE X
SIGNS
All Lessee's signs shall conform to the rules and regulations of the Town
of Wilmington and any applicable law, rule, ordinance or code governing the
area in which the Building is located and shall be simple and dignified in
appearance and constructed of durable materials and shall be installed at
Lessee's sole expense. Lessee shall maintain and keep in good repair any signs
erected by it. Lessee shall be responsible for any repairs to the demised
premises or the Building related to the erection of said signs. Any signs which
Lessee may desire to erect shall first be approved in writing by Lessor which
consent shall not be unreasonably withheld or delayed. Lessee shall remove all
of its signs upon expiration of the term or earlier termination and shall
promptly repair any damage related to the erection or removal of said signs.
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ARTICLE XI
ASSIGNMENT OR SUBLETTING
The Lessee shall not assign nor permit any assignment by mortgage,
operation of law or otherwise of this Lease nor underlet any portion of the
demised premises nor permit the occupation of the whole or any part thereof by
another by license or otherwise without the prior written consent of the
Lessor, which consent shall not be ureasonably witheld. No consent by the
Lessor to an assignment, sublease or other indulgence or favor at any time
granted by the Lessor to Lessee or to anyone claiming under the Lessee, nor
acceptance of rent from or otherwise dealing with, anyone claiming under the
Lessee, shall be deemed to constitute any consent to any further assignment,
sublease or otherwise or relieve the Lessee from its obligations under this
Lease and Lessee hereby guarantees the prompt and timely payment of all rent,
additional rent and other charges hereunder. It shall be a condition of the
validity of any such assignment or underletting that the assignee or sublessee
agrees directly with Lessor by written instrument in form satisfactory to
Lessor to be bound by all the obligations of the Lessee hereunder, including
without limitation the obligation to pay rent and other amounts provided for
under this Lease and the covenant against further assignment and subletting.
Any transfer or assignment of any of the stock or other equity interest in
Lessee shall be deemed to constitute an assignment barred by this Article XI
(except that the provisions of this sentence shall not apply to the original
Lessee hereunder, namely Centennial Technologies, Inc.).
In any case where Lessor consents to an assignment of this Lease, Lessor
shall be entitled to receive One Hundred percent (100%) of all amounts received
by Lessee in connection with such assignment (unless such assignment is made in
connection with a sale of all or substantially all of the assets of Lessee's, in
which case Lessor shall not be entitled participate in such proceeds). Further,
in the event of any subletting of the demised premises, Lessor shall be entitled
to receive One Hundred percent (100%) of all Subleasing Overages (as said term
is hereinafter defined). As used herein, the term "Subleasing Overages" shall
mean, for each period in question, all amounts received by Lessee in excess of
Annual Base Rent and Additional Rent reserved under this Lease attributable to
the space sublet (including, without limitation, all lump sum payments made in
connection therewith). Subleasing Overages shall not include the price paid to
Lessee for equipment or personal property transferred to the assignee or
subtenant in connection with such transaction. In computing Subleasing Overages
or the amount due Lessor under this Paragraph upon as assignment of this Lease,
Lessee shall be entitled to deduct (a) leasing commissions paid by Lessee in
connection with any such sublease or assignment and (b) actual out of pocket
costs paid by
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Lessee for improvements required to be made to the demised premises by, and at
the expense of, Lessee in order to initially prepare the demised premises for
use by any such sublessee or assignee pursuant to the terms of such sublease or
assignment.
ARTICLE XII
SUBORDINATION
Section 1. The Lessee shall from time to time, within ten (10) days written
demand of Lessor, either (as demanded by Lessor) subordinate this Lease or make
this Lease superior to any existing and/or future Mortgage heretofore or
hereafter placed upon the Land and to any renewal modification, replacement or
extension of such Mortgage, and to any and all advances made or to be made
thereunder, provided that said Mortgagee enter into an agreement with Lessee by
the terms of which the Mortgagee under said Mortgage will agree that in the
event of foreclosure thereof, said Mortgagee will not disturb the possession of
the Lessee under the lease so long as the Lessee is not in default hereunder and
the Lessee will agree to recognize the holder of such Mortgage as the Lessor in
such event, which agreement shall be made expressly binding upon the successors
and assigns of the Lessee, and the Mortgagee and upon anyone purchasing said
demised premises or Building at any foreclosure sale. Notwithstanding the
foregoing, if requested by Lessor or a Mortgagee of the demised premises, Lessee
agrees to promptly execute a Subordination and Attornment Agreement
substantially in the form attached hereto as Exhibit E and failure to execute
such an agreement promptly upon request shall be a default under this Lease. The
Lessee and the Lessor agree to execute and deliver any instruments necessary, to
carry out the agreements in this Section contained. Any such Mortgage to which
this Lease shall be subordinated or be made superior may contain such other
terms, provisions and conditions as the Mortgagee deems usual or customary. The
Lessee hereby irrevocably appoints the Lessor and any successor or assign its
attorney-in-fact (which appointment is coupled with an interest) to execute and
deliver any such instrument of subordination for and on behalf of the Lessee and
its successors and assigns
Section 2. If any Mortgagee elects, by written notice given to the Lessee,
to have this lease and the interest of the Lessee hereunder superior to any such
Mortgage then this lease and the interest of the Lessee hereunder shall be
deemed superior to any such Mortgage whether this lease was executed before or
after such Mortgage.
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Section 3. Lessee will upon request by Lessor or any Mortgagee, from time
to time, execute and deliver to such party (a) an "Estoppel Letter", so-called
in form satisfactory to each party and/or (b) a copy of every notice of default
delivered by Lessee to Lessor at the same time and in the same manner as to
Lessor and/or (c) an agreement consenting to an assignment of this lease to such
party and acknowledging such assignment.
Section 4. For purposes hereof the term "Mortgage" shall mean any real
estate mortgages, ground leases, deeds of trust, security agreements or
indentures affecting the Land or Building, the term "Mortgagee" shall include
the holder of any such real estate mortgage, any ground lessor or any trustees
or holders of any such security agreements or indentures.
ARTICLE XIII
SELF HELP
If the Lessee shall default in the performance or observance of any
agreement or condition in this Lease contained on its part to be performed or
observed, and shall not cure such default with thirty (30) days after written
notice from Lessor specifying the default (or, if said default cannot
reasonably be expected to be cured within such thirty (30) day period, shall
not within said period commence to cure such default and thereafter prosecute
the curing of such default to completion with due diligence, Lessor may, at its
option, without waiving any claim for breach of agreement, at any time
thereafter cure such default for the account of Lessee, and make all necessary
payments in connection therewith, including but not limiting the same to
reasonable counsel fees, costs or charges of or in connection with any legal
action which may have been brought, and any amount paid by Lessor in so doing
shall be deemed paid for the account of Lessee and Lessee agrees to reimburse
Lessor therefor with interest thereon at Twelve percent (12%) per annum, such
sums payable by Lessee to Lessor to be deemed per additional rent provided that
Lessor may cure any such default as aforesaid prior to the expiration of any
waiting or cure period but after Lessor has exerted best efforts to give actual
notice (by telephone or otherwise) if the curing of such default prior to the
expiration of said waiting or cure period is reasonably necessary to protect the
real estate or Lessor's interest therein, or to prevent injury or damage to
persons or property.
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ARTICLE XIV
WAIVER OF SUBROGATION
Lessor and Lessee each hereby release the other from any and all liability
or responsibility to the other (or anyone claiming through or under them by way
of subrogation or otherwise) for any loss or damage to the demised premises or
property thereon against which the waiving party is protected by insurance (but
only to the extent that the waiving party is actually indemnified to such
insurance), even if such loss or damage shall have been caused by the fault or
negligence of the other party, or anyone for whom such party may be responsible,
provided, however, that this release shall be applicable and in force and effect
only with respect to loss or damage occurring during such time as the releasor's
policies shall contain a clause or endorsement to the effect that any such
release shall not adversely affect or impair said policies or prejudice the
right of the releasor to recover thereunder. Lessor and Lessee each hereby agree
that it shall cause such a clause or endorsement to be included in its insurance
policies with respect to the demised premises, if available, and, if necessary,
pay an additional premium that may be charged therefore.
ARTICLE XV
DAMAGE BY FIRE, ETC.
Section 1. If the demised premises or the Building shall be damaged or
destroyed by fire, windstorm or any other insured casualty, the Lessee shall
immediately give notice, thereof to the Lessor and unless this Lease is
terminated as hereinafter provided, the Lessor, at his own expense, shall repair
or rebuild the same so as to restore the demised premises to substantially the
same condition they were in immediately prior to such damage or destruction,
subject, however, to zoning and building laws then in existence, provided that
the Lessor shall not be responsible for any delay in such repair or
reconstruction which may result from any cause beyond its reasonable control,
and provided further that Lessor shall not be required to expend more than the
net amount of insurance proceeds, if any received, by Lessor for such purposes
it being understood that the application of insurance proceeds is subject to the
right of any first mortgagee of the demised premises. Notwithstanding the
foregoing, if Lessor does not repair or rebuild the demised premises so as to
restore the demised premises to substantially the same condition they were in
immediately prior to the destruction, within One Hundred Eighty days (180)
following the date of such damage or destruction, then Lessee may elect to
cancel this Lease upon notice to Lessor.
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Section 2. If either the demised premises or the Building shall be damaged
or destroyed to the extent of twenty-five percent (25%) or more on a square
footage basis by any cause (whether insured against by the Lessor or not), the
Lessor may elect by written notice to Lessee either to terminate this Lease
or to repair or rebuild on the conditions set forth in Section 1.
Section 3. If the demised premises or the Building shall, within the last
year of the original term of this lease or the last year of the extended term
hereof, be damaged or destroyed by any cause to such an extent that the same
cannot reasonably be expected to be restored to substantially the same condition
as prior to such damage or destruction within ninety (90) days from the time
that such repair or restoration would be commenced, then shall have the right to
terminate this Lease by notice to given within sixty (60) days after the
occurrence of such damage or destruction.
Section 4. In the event that the demised premises or Building is damaged or
destroyed by any cause, then, unless this Lease is terminated as provided above,
the Lessee at its own expense and proceeding with all reasonable dispatch, shall
repair or replace its trade fixtures, equipment, signs or other property
installed by or belonging to Lessee which shall be damaged or destroyed.
Section 5. If this Lease is not terminated as above provided, then, from
and after such damage which is material and until demised premises are restored
as above provided, the rent reserved hereunder shall abate either wholly or
proportionately according to the nature and extent of the injury.
ARTICLE XVI
EMINENT DOMAIN
Section 1. If, as a result of any taking by eminent domain, which shall be
deemed to include a voluntary conveyance in lieu of a taking, the total floor
area remaining in the demised premises shall be reduced to less than
seventy-five percent (75%) of the total floor area in the demised premises at
the commencement of the term hereof, then at the election of either party,
exercisable by written notice given to the other within ninety (90) days after
the date of the filing of the notice of such taking, this lease may be
terminated as of the date when the Lessee is required to vacate the demised
premises or the portion thereof so taken notwithstanding that the entire
interest of the Lessor may have been divested by such taking, and if following
any such taking either party does not terminate the
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lease, then the Lessor, at the Lessor's expense, but only to the extent of the
award actually received by the Lessor for any such taking (subject to the rights
of any first mortgagee of the demise premises) and proceeding with all
reasonable dispatch (but not later than three (3) months) shall do such work as
may be required to put what may remain of the demised premises in proper
condition for the conduct of the Lessee's business and the Lessee, at the
Lessee's expense (but only to the extent of the award actually received by the
Lessee for any such taking) and proceeding with all reasonable dispatch, shall
make such alterations, repairs and replacements of the trade fixtures,
equipment, signs or other property installed by or belonging to the Lessee as
may be necessary to put the remainder of the demised premises in proper
condition for the Lessee's business. From and after the date on which the Lessee
is required to vacate the portion of the demised premises so taken, a just
proportion of the rent reserved herein according to the nature and extent of the
taking of the demised premises shall be abated until the demised premises are
restored to such condition that the Lessee can commence business therein and
provided such restoration is completed with three (3) months of the date of such
taking, and from and after the date on which the Lessor shall restore the
demised premises in the manner above provided the rent shall be reduced in the
proportion that the floor area of the portion of the demised premises so taken
bears to the floor area of the demised premises at the commencement of the term
hereof.
Section 2. In the event of a taking as defined herein, of twenty-five
percent (25%) or more of the Land or the Building and even though such taking
leaves at least fifty percent (50%) or more of the floor area of the demised
premises remaining, either party shall nonetheless have the right to terminate
this Lease by notifying the other party of their election to terminate within
ninety (90) days after the final determination of the amount of the award or to
permit Lessor to restore any part of the demised premises so remaining and in
the case of such restoration the rent shall be abated to the extent provided
above.
Section 3. The Lessor reserves and excepts all rights to damages to the
Land, the Building, the demised premises and the leasehold hereby created, or
awards with respect thereto, then or thereafter accruing by reason of any taking
by eminent domain or by reason of anything lawfully done or required by any
public authority, and the Lessee grants to the Lessor all the Lessee's rights,
if any, to such damages except with respect to the value of its personal
property and its relocation expenses, which may be compensable by a separate
award and shall execute and deliver to the Lessor such further instruments of
assignment thereof as the Lessor may from time to time request.
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ARTICLE XVI
DEFAULT
Section l. This Lease is made on the condition that if the Lessee shall
fail to perform an any obligation hereunder and such failure shall continue for
ten (10) days after written notice of such default in the case of payment of
Annual Base Rent, Additional Rent, or in payment of any other sums due under
this Lease or for thirty (30) days after written notice of default (which
said notice shall specify the nature of said default) in the case of any other
obligation (or, if said default cannot reasonably be expected to be cured
within such thirty (30) day period, Lessee shall not within such thirty (30) day
period promptly commence to cure such default and thereafter prosecute the
curing of such default to completion with due diligence) or if the estate hereby
created shall be taken on execution or other process of law, or if the Lessee
shall be declared bankrupt or insolvent according to law, or if the Lessee shall
make or offer to make, in or out of bankruptcy, a composition with the Lessee's
creditors, or if the Lessee shall make an assignment for the benefit of its
creditors, as if the Lessee shall commit any act of bankruptcy, or if a
receiver, trustee or other officer shall be appointed to take charge of all or
any substantial part of the Lessee's property by a court, or if a petition
shall be filed by or an "arrangement" under the Bankruptcy Code or under any
other provisions of the Bankruptcy Code or any successor or similar State or
Federal statute or regulation not or hereafter in effect, and the same, if filed
against but not by Lessee, shall not be dismissed within thirty (30) days after
the date on which it is filed, then and in any' of the said cases,
notwithstanding any prior waivers or consent, the Lessor lawfully may, in
addition to and not in derogation of any remedies for any preceding breach of
covenant, immediately or at any time thereafter and without prior demand or
prior notice (i) terminate this lease by notice in writing forthwith, or on a
date stated in said notice, (2) with or without process of law (forcibly, if
necessary) enter into and upon the demised premises or any part thereof in the
name of the whole and repossess the same as of the Lessor's former estate, and
(3) expel the Lessee and those claiming through or under the Lessee and remove
its and their effects, without being deemed guilty of any manner of trespass
and without prejudice to any remedies which might otherwise be used for arrears
of rent or preceding breach of covenant, and upon entry as aforesaid this Lease
shall terminate, the Lessee hereby waiving all statutory rights, and in such
case of such termination or termination by reason of default on the part of the
Lessee, the Lessee shall at the election of the Lessor, which election may be
changed at any time:
(a) pay to the Lessor in equal monthly installments, in advance, sums equal
to the aggregate rent herein provided for or, if the demised premises have
23
<PAGE> 24
been relet, sums equal to the excess of the aggregate rent herein provided for
over the sums actually received by the Lessor from such reletting as well as any
reasonable expenses incurred by the Lessor as a consequence of such default or
in such reletting including, but not limited to, reasonable attorneys' fees,
brokers' fees, and expenses of repairing and putting the demised premises in
good order and condition and preparing the same for re-rental. Such sums being
payable as liquidated damages for the unexpired term hereof; or
(b) pay to the Lessor as damages a sum which at the time of such
determination or at the time to which installments of liquidated damages shall
have been paid represents the amount by which the then rental value of the
demised premises is less than the aggregate rent herein provided for the residue
of the term and pay from time to time to the Lessor, upon demand, such
additional sums as are equal to the excess, if any, of the aforesaid rental
value of the demised premises over the rent actually received by Lessor for the
premises for the period from such termination, or from the time to which
installments of liquidated damages shall have been paid; or from the time to
which these additional sums may have been paid by Lessee under this paragraph
whichever the case may be, to the time for which the Lessor may specify in its
demand hereunder (but in no event to the time later than the expiration of the
term hereof), plus, in any case, reasonable expenses of the Lessor by way of
reasonable attorneys' fees or otherwise, in connection with such default; or
(c) indemnify the Lessor against loss of the aggregate rent herein provided
for from the time of such termination or from the time to which installments of
liquidated damages shall have been paid to the expiration of this term hereof as
above set forth, plus, in any case, reasonable expenses of the Lessor by way of
attorneys fees, or otherwise, in connection with such default.
For the purposes of this Article, the phrase "aggregate rent" as used
herein, shall include the Annual Base Rent as adjusted from time to time, and
all Additional Rent payable hereunder.
In the event of a default by the Lessee as above provided, if the Lessor
shall elect not to terminate this Lease, it may relet the demised premises or
any part or parts thereof in the name of either the Lessor or the Lessee, for a
term or terms which may, at the Lessor's option, extend beyond the balance of
the term of this Lease and may remove and store the Lessee's effects at the
Lessee's expense, and the Lessee agrees that in the event of such reletting the
Lessee shall pay Lessor any deficiency between the aggregate rent to be paid
hereunder and the net amount of the rents collected during such reletting as
well as any expenses reasonably incurred by the Lessor as a consequence of such
default or in such reletting,
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<PAGE> 25
including but not limited to, reasonable attorneys' fees, brokers' fees and
expenses of repairing and putting the demised premises in good order and
preparing the same for re-rental. Such deficiency shall be paid in monthly
installments upon statements rendered by the Lessor to the Lessee.
Section 2. All rights and remedies which the Lessor may have under this
Lease shall be cumulative and shall not be deemed inconsistent with each other,
and any two or more of such rights and remedies may be exercised at the same
time insofar as permitted by law.
Section 3. The Lessor shall not be deemed to be in default hereunder unless
its default shall continue for thirty (30) days or such additional time as is
reasonably required to correct its default, after written notice thereof has
been given by the Lessee to the Lessor specifying the nature of the alleged
default. In no event shall Lessor be liable for consequential or incidental
damages, nor shall damages exceed the reasonable costs of performing the
obligations of Lessor hereunder.
Section 4. Any payment of Annual Base Rent or Additional Rent payable
hereunder not paid after ten (10) days of when due shall, at the option of
Lessor, bear interest at a rate equal to three (3%) percent over the prime rate
in effect from time to time at the First National Bank of Boston (but in no
event higher than the maximum rate permitted pursuant to Law) from the due date
thereof forthwith upon demand by Lessor.
Section 5. All costs or expenses incurred by or on behalf of Lessor
(including without limitation attorney's fees and expenses) in enforcing
Lessor's rights hereunder shall be considered additional rent and be payable to
Lessor upon Lessor's demand thereon.
ARTICLE XVIII
NOTICES
Any notice, request, demand or other communication required or permitted by
this Lease shall, until either party notifies the other in writing of a
different address in accordance herewith, be deemed to be duly given if in
writing and sent by registered or certified first class mail, postage prepaid,
return receipt requested addressed as follows:
25
<PAGE> 26
If to LESSOR:
Howland Development Company
c/o David P. Spada, Esq.
155 West Street
Wilmington, MA 01887
If to Lessee:
Centennial Technologies, Inc.
37 Manning Road,
Billerica, Massachusetts 01821
ARTICLE XIX
BROKERAGE
Lessor and Lessee each warrants and represents to the other that it has not
dealt with any broker in connection with this Lease or the demised premises,
except only Cushman & Wakefield of 101 Arch Street, Boston, Massachusetts and
The Stubblebine Company of 45 Walden Street, Concord, Massachusetts (the
"Brokers"). Lessee hereby agrees to pay the Brokers Thirty Nine Thousand Two
Hundred Seventy and 00/100ths Dollars as the full Lease brokerage commission
(the "Commission"). Said Commission shall be split between the Brokers on a
fifty percent (50%) basis to each, respectively. Said Commission shall be paid
upon Lease execution by both parties hereto. Lessor and Lessee each agrees to
defend, indemnify and hold the other harmless from and against any and all
claims for brokerage fees and commissions (except with respect to the
above-named Brokers) by any broker claiming to have dealt with it in connection
with this Lease.
ARTICLE XX
TERM "LESSEE'S PRO-RATA SHARE"
Lessee and Lessor hereby agree that the total leasable square footage for
the demised premises is 34,084 square feet and the total leasable square footage
of the Building at the Commencement Date is 68,168 square feet. As used in this
Lease the term "Lessee's Pro-Rata Share" shall mean Fifty percent (50%) of the
respective item, so long as there are no additions to the Building. If any
additions
26
<PAGE> 27
are made to the Building, then such term shall mean a fraction of the respective
item, the numerator of which fraction shall be the then total leasable square
footage of the demised premises and the denominator of which shall be the then
total leasable square footage of floor area of the Building.
Section 1. Intentionally Deleted
Section 2. Intentionally Deleted
ARTICLE XXII
MISCELLANEOUS PROVISIONS
Section 1. No consent or waiver, express or implied, by the Lessor to or of
any breach in the performance by the Lessee of its agreements hereunder shall
be construed as a consent or waiver to or of any other breach in the
performance by the Lessee of the same or any other covenant or agreement. No
acceptance by the Lessor of any rent or other payment hereunder, even with
the knowledge of any such breach, shall be deemed a waiver thereof nor shall any
acceptance of rent or other such payment in a lesser amount than is herein
required to be paid by the Lessee regardless of any endorsement on any check or
any statement in any letter accompanying the payment of the same be construed as
an accord and satisfaction or in any manner other than as a payment on account
by the Lessee. No reference in this Lease to any sublessee, licensee or
concessionaire, or acceptance by the Lessor from other than the Lessee of any
payment due hereunder shall be construed a consent by the Lessor to any
assignment or subletting by the Lessee, or give the Lessee any right to permit
another to occupy any portion of the demised premises, except as herein
expressly provided. No waiver by the Lessor in respect to any other tenant shall
constitute a waiver with respect to any other tenant. Failure on the part of the
Lessor to complain of any action or non-action on the part of the Lessee or to
declare the Lessee in default, no matter how long such failure may continue
shall not be deemed to be a waiver by the Lessor of any of its rights hereunder.
Section 2. In no case shall mention of specific instances under a more
general provision be construed to limit the generality of said provisions.
Section 3. The delivery of keys to Lessor or any employees of Lessor or the
Lessor's agent or any employee thereof shall not operate at a termination of
this Lease or a surrender of the demised premises.
27
<PAGE> 28
Section 4. If the Lessee continues to occupy the demised premises after the
termination hereof, it shall have no more rights than a tenant by sufferance,
but shall be liable for one hundred and fifty (150%) percent of the aggregate
rental as above determined during such occupancy, and shall be liable for any
loss or expense due to such holding over. Nothing in this section shall be
construed to permit such holding over.
Section 5. If any provision of this Lease or the application thereof to any
person or circumstance shall be to any extent invalid or unenforceable the
remainder of this Lease and the application to persons or circumstances other
than those as to which it is invalid or unenforceable shall not be affected
thereby and each term and provision of this Lease shall be valid and be enforced
to the fullest extent permitted by law.
Section 6. Lessor agrees that upon Lessee's paying the rent and performing
and observing the agreements conditions and other provisions on its part to be
performed and observed, Lessee shall and may peaceably and quietly have, hold
and enjoy the demised premises during the term of this Lease and any extension
thereof without any manner of hindrance or molestation from Lessor or anyone
claiming under Lessor, subject, however, to the terms and provisions of this
Lease.
Section 7. The conditions and agreements in this Lease contained to be kept
and performed by the parties hereto shall be binding upon and inure to the
benefit of said respective parties, their legal representatives, successors and
assigns, and the same shall be construed as covenants running with the land.
Wherever in this Lease reference is made to either of the parties, it shall be
held to include and apply to the successors and assigns of such party as if
in each so expressed, unless the context requires otherwise and regardless of
the number or gender of such party, provided however, that the term "Lessor" as
used in this Lease means only the owner for the time being of the Land, so that
in the event of any sale or sales of the Land and demised premises or of this
Lease, the Lessor shall be and hereby is entirely released of all covenants and
obligations of the Lessor hereunder, except for those defaults or for the
negligent acts or omissions of Lessor, its agents, employees or contractors,
occurring at the time of Lessor's ownership of the demised premises.
Section 8. This Lease shall constitute the only agreement between the
parties relative to the demised premises and no oral statements and no prior
written matter no specifically incorporated herein shall be of any force or
effect. In entering into this Lease, the Lessee relies solely upon the
representations and
28
<PAGE> 29
agreements contained herein. This agreement shall not be modified, except by
writing executed by both parties.
Section 9. All provisions in this Lease dealing with indemnity and the
like by the Lessee of the Lessor shall be deemed to be modified in each case by
the insertion in the appropriate place of the language "except as otherwise
provided in Massachusetts General Laws Ter.Ed.C. 186, Section 15.
Section 10. The section and article headings throughout this instrument are
for convenience and reference only and shall in no way be held to limit,
define or describe the scope or intent of this Lease or in any way affect this
Lease.
Section 11. If the Lessor shall at any time be an individual, joint
venture, tenancy in common, joint tenancy, firm or partnership (general or
limited), or a trust or trustees of a trust, it is specifically understood and
agreed that there shall be no personal liability of any individual or any joint
venture, tenant, partner (general or limited), trustee, shareholder, beneficiary
or holder of a beneficial interest under any of the provisions hereof or arising
out of the use or occupation of the demised premises by Lessee. The obligations
of Lessor shall in all events be binding upon Lessor's equity in the Building
and Land only, all in accordance herewith, it is further understood and agreed
that the liability of any party who is a Lessor (whether the original lessor or
any successor Lessor) shall be limited to defaults occurring or arising during
the period for which such party shall have been a Lessor, and such party shall
not be liable for default occurring or arising at any time before such party
obtained its interest as Lessor or after such party disposed of its interest as
Lessor. Lessee agrees that it shall look solely to the Lessor's interest in the
Land and Building for satisfaction of any liability of Lessor in respect of this
lease and will not seek recourse against any other assets of Lessor for such
satisfaction, it being understood that each agreement, obligation and liability
of Lessor under this lease or otherwise is made, entered into and incurred on
the express condition that Lessee's only recourse under this lease or otherwise
or in the event of a default by Lessor under any such agreement or obligation or
in the event of any liability of Lessor hereunder or otherwise, shall be
limited solely to Lessor's interest in the Land and Building.
Section 12. In the event that prior to the Commencement Date any actual or
proposed holder of a first mortgage on the Building or Land shall demand that
this lease be modified or amended in any respect (other than those provisions
relating to rental, term, size or location of the demised premises and provided
that such modification shall in no event increase any of the Lessee's costs or
liabilities or obligations) and if Lessee shall fail to so modify or amend this
lease within fifteen (15) days after such demand, Lessee shall be deemed in
default under this
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<PAGE> 30
Lease. Lessee agrees to give within ten (10) days of written request such
reasonable statements and certificates as may be requested by Lessor in
connection with a mortgage closing or the sale of the Building or Land, or any
portion thereof.
Section 13. This Lease shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts.
Section 14. In any case where either party hereto is required to do any
act, delays caused by or resulting from Acts of God, war, civil commotion, fire
flood or other casualty, labor difficulties, shortages of labor, materials or
equipment, government regulations, unusually severe weather, or other causes
beyond such party's reasonable control shall not be counted in determining the
time during which work shall be completed, whether such time be designated by a
fixed date, a fixed time, "promptly" or "a reasonable time", and such time shall
be deemed to be extended by the period of such delay. For the purpose hereof,
inability to pay normal charges incurred in connection with performance of an
obligation hereunder (including, without limitation, payment of annual base rent
or additional rent hereunder) does not constitute a cause beyond such party's
reasonable control.
Section 15. Lessee shall provide Lessor with annual certified financial
statements within sixty (60) days after the close of Lessee's fiscal year.
Section 16. Lessee shall not record this Lease, but upon request of either
party, both parties shall execute and deliver a notice of Lease, in form
satisfactory to Lessor and appropriate for recording, the costs of such notice
shall be born by the requesting party.
ARTICLE XXIII
PROHIBITION OF LESSEE ABANDONMENT
At all times during the Original Term, and any extension or renewal
thereof, Lessee agrees (i) to keep the demised premises adequately heated to the
extent necessary to prevent the pipes from freezing and to prevent
deterioration of the demised premises; (ii) to keep the demised premises
adequately secure as to prevent the entry of unauthorized persons; and (iii) to
fully and completely occupy the demised premises.
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ARTICLE XXIV
COMPLIANCE WITH ENVIRONMENTAL LAWS
Section 1. (a) Lessee shall not generate, store, dispose of, release, emit,
or otherwise handle or use any Hazardous Substances (as hereafter defined) in,
upon, under, within, on or from the demised premises, the building or the Land
except in compliance with an applicable Environmental Laws (as hereafter
defined).
(b) Lessee shall provide directly to Lessor copies of all
notices and documents filed with any Governmental Authority pursuant to the
Legal Requirements (including, without limitation, the Environmental Laws) with
regard to a release or threat of release of Hazardous Substances, provided,
however, that any confidential information provided to a Governmental Authority
which may be provided to Lessor shall be maintained as confidential by Lessor.
A copy of any notice or document from a Governmental Authority received by
Lessee alleging non-compliance with, or liability under a matter covered by
any of the Environmental Laws and involving the demised premises, the Building
or the Land shall be forwarded promptly to Lessor by Lessee. It is agreed and
understood that wherever used in this Lease, the term "Legal Requirements" shall
be deemed to include, without limitation, the Environmental Laws.
(c) Lessee shall at all times, at its own expense, maintain and
preserve secondary containment incidental to the storage of Hazardous
Substances on the demised premises, the Building or the Land to the extent
required by Environmental Laws and all Legal Requirements.
(d) Lessee shall maintain full, complete and current files of
all Material Safety Data Sheets ("MSDS") materials to the extent required by
Environmental Laws.
(e) Lessee will promptly inform Lessor of any release or threat
of release of Hazardous Substances. Except as required by law, Lessee shall not
submit to the Massachusetts Department of Environmental Protection ("DEP") or
any Governmental Authority any report or other information related to the
demised premises, the Building or the Land without furnishing a copy to the
Lessor at least 48 hours in advance of such submission, except in the case of
emergency or other direction by DEP or any Governmental Authority in which case
Lessee shall use reasonable efforts to furnish such copy to the Lessor in
advance as promptly as practicable and in any event within 48 hours after the
submission to DEP or any Governmental Authority.
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<PAGE> 32
(f) Lessee shall, at its own expense, remove, clean up, remedy
and dispose of (in compliance with all applicable Legal Requirements) all
Hazardous Substances generated or released by Lessee or its officers,
directors, employees, contractors, servants, invitees or agents during the Term
of this Lease (or during such term as Lessee is in occupancy or possession of
any part of the demised premises, Building or Land) at or from the demised
premises, the Building and the Land in compliance with all Environmental Laws
and further, shall remove, clean up, remedy and dispose of all Hazardous
Substances located at, upon, under, within or in the demised premises, the
Building or the Land generated by or resulting from its operations, activities
or processes during the Term of this Lease (or such other periods of time as
Lessee may be in occupancy or in possession of the demised premises or any
portion of the Land or building), in compliance with all Environmental Laws. In
performing its obligations hereunder, Lessee shall use best efforts to avoid
interference with the use and enjoyment of the Building and the Land by other
tenants and occupants thereof. The provisions hereof shall survive expiration or
termination of this Lease.
Section 2. Lessee shall indemnify, defend and save harmless Lessor, its
officers, directors, employees, contractors, servants, invitees and agents from
and against all loss, costs, damages, claims, proceedings, demands, liabilities,
penalties, fines and expenses, including without limitation, reasonable fees and
costs for attorneys' fees, consultants fees, litigation costs and clean-up
costs (hereinafter collectively referred to as "Liability") asserted against or
incurred by Lessor, its officers, directors, employees, contractors, servants or
agents at any time by reason of or arising out of any (i) release or threat of
release of any Hazardous Substance at, in, upon, under, or from the demised
premises, the Building or the Land where such release or threat of release is
the result of or alleged to result from the acts or omissions of Lessee or its
agents, servants, employees, independent contractors or invitees, or (ii) any
violation or alleged violation of any Environmental Laws governing Hazardous
Substances, provided that any act, omission, event or circumstance giving rise
to such Liability or cleanup obligations occurred during the Lease Term (or any
such other periods of time as Lessee shall be in occupancy or in possession of
any portion of the demised premises, the Land or the Building). The indemnities
set forth in this Section shall survive expiration or termination of this Lease.
Section 3. In addition to the requirements set forth above, Lessee shall,
within ten (10) days of receipt, provide to Lessor copies of any inspection or
other reports, correspondence, documentation, orders, citations, notices,
directives, or suits from or by any Governmental Authority or insurer regarding
non-compliance with or potential or actual violation of Environmental Laws.
Lessor hereby
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expressly reserves the right to enter the demised premises and all other
portions of the Building and the Land in order to perform inspections and
testing of the air, soil and groundwater for the presence or existence of
Hazardous Substances.
Section 4. To the best of Lessor's knowledge, the Land and the Building are
free of any Hazardous Substances. Lessor hereby agrees to indemnify and hold
Lessee harmless from and against any and all "Remediation Costs" (as hereafter
defined) sustained or incurred by Lessee in the event that Lessee is required by
any state or federal agency to effect a remediation of any Hazardous Substances
(a) which may be located on the Land and the Building as of the date of this
Lease or (b) which Lessor its agents, employees, contractors or its invitees
(but not other tenants in the Building or the Land) may discharge onto the Land
or Building subsequent to the date hereof, unless such Hazardous Substances are
present or released as the result of the acts or omissions of Lessee or any of
Lessee's agents, servants, employees, contractors or invitees. As used herein,
the term "Remediation Costs" shall mean the cost of remediation and clean-up of
the Hazardous Substances which Lessee may incur as the result of any order of
the DEP, the U.S. Environmental Protection Agency or any State or Federal
Court of competent jurisdiction requiring that Lessee effect a remediation of
any Hazardous Substances.
Section 5. As used herein, the term "Hazardous Substances" shall mean and
include, without limitation, any material or substance which is (I) petroleum;
(ii) asbestos, (iii) designated as "hazardous substance" pursuant to Section 311
of the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq. (33 U.S.C.
1321) or listed in 307 of the Federal Water Pollution Control Act (33 U.S.C.
1317); (iv) defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903);
(v) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601 et seq. (42 U.S.C. 9601), as amended and regulations promulgated
thereunder; or (vi) defined as "oil" or a "hazardous waste," a "hazardous
substance", a "hazardous material" or a "toxic material" under any other law,
rule or regulation applicable to the Property, including, without limitation,
Chapter 21E of the Massachusetts General Laws, as amended and the regulations
promulgated thereunder. As used herein, the term "Environmental Laws" shall
mean, without limitation, each and every law, rule, order, statute or regulation
described above in Section 5, together with (I) any amendments thereto, or
regulations promulgated thereunder, and (ii) any other laws pertaining to the
protection of the environment or governing the use, release, storage or
generation of Hazardous Substances, whether now existing or hereafter enacted or
promulgated.
33
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ARTICLE XXV
COMMENCEMENT CONSTRUCTION
Section 1. The parties have signed an outline plan, together with detailed
written specifications, identified as Exhibit C, a copy of which is attached
hereto, describing the improvements to be provided and installed in the demised
premises by Lessor at its sole expense.
Section 2. Intentionally Deleted.
Section 3. Intentionally Deleted.
Section 4. If Lessor shall be unable to give possession of the demised
premises on the scheduled Commencement Date because the demised premises are not
completed and/or ready for occupancy, or if repairs, improvements or decorations
of the demised premises or of the Building are not completed, Lessor shall not
be subject to any liability for such failure nor will such failure affect the
validity of this Lease or (except as provided in Section 3 of this Article
XXV), Lessee's obligation to pay rent beginning on the Commencement Date.
ARTICLE XXVI
ADA COMPLIANCE
Lessor shall be responsible for compliance with Title III of the Americans
with Disabilities Act and the regulations thereunder (hereinafter collectively
called the "ADA") insofar as it relates to Lessor's work as described in Exhibit
C (the "Lessor's Work"). Lessor shall be solely responsible for any failure of
the Lessor's Work to comply with the ADA and shall be solely responsible for
costs (including judgements), fines, penalties and reasonable attorneys' fees
relating to any failure of Lessor's Work to comply with the ADA.
Lessee shall be responsible for compliance with the ADA as to all matters
which relate to the conduct of Lessee's particular business, Lessee's particular
manner of use of the demised premises and Land and any alterations or additions
to or with respect to the demised Premises or Land made by Lessee.
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ARTICLE XXVII
OPTION TO EXTEND
Lessee shall have the right and option, which said option and right shall
not be severed from this Lease or separately assigned, mortgage or transferred,
to extend the Original Term for five (5) additional years (the "Extension
Period") provided that (a) Lessee shall give Lessor notice of Lessee's exercise
of such option at least nine (9) full calendar months prior to the expiration of
the Original Term, and (b) no default of Lessee (after expiration of applicable
notice and cure periods, if any) shall exist at the time of giving each
applicable notice and (c) the original Lessee named herein is occupying the
entire demised premises both at the time of giving the applicable notice and at
the time of commencement of such Extension Period. Except for the amount of
Annual Base Rent (which is to be determined as hereinafter provided), all the
terms, covenants, conditions, provisions and agreements in the Lease contained
shall be applicable to the additional period through which the Term of this
Lease shall be extended as aforesaid, except that there shall be no further
options to extend the Term nor shall Lessor be obligated to make or pay for any
improvements to the demised premises nor pay any inducement payments of any kind
or nature. Nothing contained in this paragraph shall be deemed or construed to
limit Lessor's obligation to maintain and repair the Building and the Land as
provided in this Lease. If Lessee shall give notice of its exercise of each such
option to extend in the manner and within the time period provided aforesaid,
the Term of this Lease shall be extended upon the giving of such notice without
the requirement of any further attention on the part of either Lessor or Lessee.
Lessor thereby reserves the right, exercisable by Lessor in its sole
discretion, to waive (in writing) any condition precedent set forth in clauses
(a), (b) or (c) above.
If Lessee shall fail to give timely notice of the exercise of such option
as aforesaid or if any of the conditions set forth above are not satisfied as
and when specified herein, Lessee shall have no right to extend the Term of this
Lease, time being of the essence of the foregoing provisions. Any termination of
this Lease Agreement shall terminate the rights hereby granted Lessee.
35
<PAGE> 36
The monthly installment of Annual Base Rent payable for each twelve (12)
month period during the Extension Period shall be determined as follows:
<TABLE>
<CAPTION>
PERIOD $/PER SF ANNUAL BASE RENT MONTHLY RENT
------ -------- ---------------- ------------
<S> <C> <C> <C>
Year 6 $ 7.30 $ 248,813 $ 20,734.43
Year 7 $ 7.60 $ 259,038 $ 21,586.53
Year 8 $ 7.90 $ 269,263 $ 22,438.63
Year 9 $ 8.20 $ 279,488 $ 23,290.73
Year 10 $ 8.50 $ 289,714 $ 24,142.83
---------
TOTAL ...........................$1,346,316
</TABLE>
ARTICLE XXVIII
ADDITIONAL PROVISIONS
Section 1: Exhibit A - Land
Exhibit B - Plan of Demised Premises
Exhibit C - Lessee's Plans and Specifications and
Description of Lessor's Work
Exhibit D - INTENTIONALLY DELETED
Exhibit E - Subordination and Attornment Agreement
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<PAGE> 37
EXECUTED under seal as of the day and year first above written.
LESSOR:
/s/ William R. Yettman
-------------------------------------------
Michael A. Howland, as Trustee of
the Hownat Trust, but not individually.
LESSEE:
/s/ Eugene Bullis
------------------------------------
Title: Chief Financial Officer
------------------------------
Its duly authorized representative
------------------------------------
Witness
37
<PAGE> 1
SETTLEMENT AGREEMENT
--------------------
This Settlement Agreement (the "Agreement") is entered into as of May
15, 1997, by and among Centennial Technologies, Inc., a Delaware corporation
("Centennial") and H. Hamby Hutcheson and Mary Lou Hutcheson (the "Hutchesons").
Centennial and the Hutchesons are referred to collectively herein as the
"Parties" and individually as a "Party".
Effective December 18, 1996, Centennial acquired the outstanding common
stock of each of Intelligent Truck Project, Inc., a Florida corporation ("ITP"),
Fleet.Net, Inc., a Florida corporation ("Fleet.Net"), and Smart Traveler Plazas,
Inc., a Florida corporation ("STP") (collectively, the "Shares") from the
Hutchesons and certain other shareholders, and the Hutchesons acquired shares of
Centennial common stock, in tax-free mergers (collectively, the "Mergers")
effected pursuant to merger agreements between each of ITP, Fleet.Net and STP
and Centennial (the "Merger Agreements"). On March 4, 1997, the Parties entered
into a Letter Agreement (the "Term Sheet") to effect the unwinding of the
Mergers.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, there is pending in the United States District Court for the
Southern District of Florida, West Palm Beach Division, in connection with Case
No. 97-8114 CIV HURLEY entitled H. HAMBY HUTCHESON V. CENTENNIAL TECHNOLOGIES,
INC., ET AL. (the "Civil Action");
WHEREAS, this Agreement contemplates a cash payment by Centennial to the
Hutchesons of $205,000, the making of certain representations, warranties and
covenants by the Hutchesons, the termination of the Term Sheet, the settlement
of all outstanding claims and disputes between the Parties relating to the
Mergers, and a mutual release by the Parties;
NOW, THEREFORE, in consideration of the foregoing and the mutual
exchanges herein contained, the Parties agree as follows.
1. Upon and subject to the terms and conditions of this Agreement,
Centennial shall transfer to the Hutchesons a cash payment of $205,000.
2. In addition, Centennial agrees: (a) within a reasonable period
of time, to satisfy the obligations of ITP, Fleet.Net and STP to the individuals
and entities as reflected in EXHIBIT A; and (b) to make additional payments
simultaneous herewith to (i) Steven McMahon in the amount of $30,000, and (ii)
the law firm of Buchanan Ingersoll P.C. in the amount of $170,000, to satisfy
the obligations of the Hutchesons, ITP, Fleet.Net or STP thereto. Simultaneous
herewith, Steven McMahon and Buchanan Ingersoll P.C. shall acknowledge in
writing to Centennial that such amounts represent full payment of all sums due
from the Hutchesons, Centennial,
<PAGE> 2
ITP, Fleet.Net or STP.
3. Simultaneous with the execution hereof, the Term Sheet and all
rights and obligations thereunder are hereby terminated in their entirety and of
no further force and effect.
4. Simultaneous with the execution hereof, Centennial, the
Hutchesons, ITP, Fleet.Net and STP shall execute and deliver a General Release
in the form attached hereto as EXHIBIT B.
5. Simultaneous with the execution hereof, the Hutchesons shall
execute and deliver, as of the date hereof, a Stipulation of Dismissal of the
Civil Action in the form attached hereto as EXHIBIT C. The fully executed
Stipulation of Dismissal shall be filed not later than the first business day
following the date hereof, in the United States District Court for the Southern
District of Florida, West Palm Beach Division, by counsel for the Hutchesons.
6. Simultaneous with the filing of the Stipulation of Dismissal in
accordance with Section 5, Centennial shall direct the escrow agent named in the
Merger Agreements to release to the Hutchesons their pro rata share of the
shares of Centennial common stock held by such escrow agent pursuant to the
Merger Agreements.
7. (a) Centennial shall use all reasonable efforts to file, as soon
as practicable after Centennial files restated financial statements with the
Securities and Exchange Commission for its fiscal years ending on or after June
30, 1994, a registration statement to register the resale of shares of
Centennial common stock received by the Hutchesons in the Mergers (the
"Shares"). The Hutchesons acknowledge that such registration statement may cover
the sale or resale of other Centennial securities. Centennial shall use all
reasonable efforts to have the registration statement registering the resale of
the Shares to be declared effective no later than the effectiveness of any other
registration statement filed hereafter by Centennial (other than such
registration statements on Form S-8). Centennial will use reasonable efforts to
keep such registration statement effective for a period of time not to exceed
the earlier of (i) twelve months or (ii) the date on which the Hutchesons would
be entitled to sell all of the Shares they continue to hold under Rule 144
within a three-month period. The expenses of such registration shall be borne by
Centennial, with the exception of underwriting or selling discounts and
commissions and any fees and disbursements of counsel to the Hutchesons. The
Hutchesons shall be entitled to specific enforcement of any breach of
Centennial's obligations under this Section 7.
(b) Notwithstanding the foregoing, (i) Centennial's obligation
to register any such shares pursuant to this Section 7 is subject to its right
to effect a "black out"
-2-
<PAGE> 3
on any resale, the terms of which right are set forth in Section 8 below.
(c) Centennial will take all commercially reasonable action
which may be required in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as reasonably are requested by the
Hutchesons, provided that Centennial shall not be obligated to register the
Shares in any state or execute or file any general consent to service of process
or to qualify as a foreign corporation to do business under the laws of any such
jurisdiction.
(d) Centennial's obligation under this Section 7 shall be
conditioned upon a timely receipt by Centennial in writing of information as
Centennial may reasonably require from the Hutchesons, or any underwriter for
any of them, in connection with the preparation of a registration statement
filed pursuant to this Section 7, including any post-effective amendment to such
registration statement, and the sale of the Shares by the Hutchesons.
(e) Centennial shall furnish the Hutchesons such number of
prospectuses as shall reasonably be requested.
8. Centennial shall be entitled to (a) postpone the effectiveness
of a registration statement, or (b) elect that the registration statement not be
usable and require the Hutchesons to suspend sales pursuant to the prospectus
contained therein, for a reasonable period of time, but not in excess of 60 days
(a "Blackout Period"), if Centennial determines in good faith that the
registration and distribution of registrable securities (or the use of the
registration statement or related prospectus) would interfere with any pending
material acquisition, material corporate reorganization or any other material
corporate development involving Centennial or any of its subsidiaries or would
require premature disclosure thereof. Centennial shall promptly give the
Hutchesons written notice of such determination, containing a general statement
of the reasons for such postponement or restriction on use and an approximation
of the anticipated delay; PROVIDED, HOWEVER, that the aggregate number of days
included in all Blackout Periods during any consecutive 12 months during the
period within which Centennial is obligated to keep such registration statement
effective shall not exceed 120 days, and that the Blackout Periods shall not
count against the period of time for which Centennial is bound to keep such
registration statement effective pursuant to Section 7(a).
9. The Hutchesons jointly and severally represent and warrant to
Centennial as follows:
(a) Except as may result from any failure of Centennial to meet its
obligations under Section 2(a), (i) all technology and intellectual property
(defined herein as software programs and interfaces, including all related
human-readable source code form and machine-readable object code form, and all
documentation and
-3-
<PAGE> 4
hardware relating thereto, together with prototypes, models, user manuals,
handbooks, written reports or on-line materials relating to the programs and
interfaces) (the "Intellectual Property") relating to the operation of the
respective businesses of ITP, Fleet.Net and STP developed and/or owned by the
Hutchesons has been transferred by the Hutchesons to ITP, Fleet.Net and STP;
(ii) all Intellectual Property developed by or on behalf of ITP, Fleet.Net and
STP dating from their inception to the date hereof has been developed by
employees of, or consultants having written agreements assigning ownership
thereof to, ITP, Fleet.Net and STP and ITP, Fleet.Net and STP own or otherwise
possess legally enforceable rights to use, the Intellectual Property; (iii) to
the knowledge of the Hutchesons, the Intellectual Property and the planned use
thereof does not infringe the intellectual property rights of any third party
and none of the Hutchesons, ITP, Fleet.Net or STP, has received notice of any
claim, demand or other assertion of such infringement; (iv) neither the
Hutchesons nor ITP, Fleet.Net nor STP has taken any action, or refrained from
taking any action, that would impair the ownership and/or use rights of ITP,
Fleet.Net and STP relating to the Intellectual Property; and (v) neither the
Hutchesons and, to the Hutchesons' knowledge, no other officer or employee of
ITP. Fleet.Net or STP has authorized the transfer or the right to use the
Intellectual Property to any person PROVIDED, HOWEVER, that nothing herein shall
be construed as a representation by the Hutchesons as to the value, suitability
or functionality of such Intellectual Property.
(b) Since March 4, 1997, the Hutchesons have not obligated or caused
ITP, Fleet.Net or STP to (i) incur any obligation or liability (absolute or
contingent), except current liabilities incurred and obligations under contracts
entered into in the ordinary course of business; (ii) mortgage, pledge, or
subject to any lien, charge or other encumbrance any of the assets owned by ITP,
Fleet.Net and STP from their inception to the date hereof, including the
Intellectual Property (collectively, the "Assets"); (iii) sell, assign or
transfer any of the Assets, except for inventory sold in the ordinary course of
business; (iv) cancel any debts or claims, except in the ordinary course of
business; (v) waive any rights of material value; (vi) modify, amend, alter or
terminate any of its executory contracts; (vii) take or permit any act or
omission constituting a breach or default under any contract, indenture or
agreement by which its properties are bound; or (viii) commit or agree to do any
of the foregoing in the future;
(c) The Hutchesons have returned to ITP, Fleet.Net and STP, and have
retained no copies (in whatever medium) of any (i) files, letters, memoranda,
reports, records, data, sketches, drawings, program notebooks, program listings,
computer programs, diskettes or other written, photographic, electronic or other
tangible material containing Intellectual Property or (ii) customer or supplier
lists, formulae, techniques, methods, processes, personnel data or plans of ITP,
Fleet.Net or STP or their respective businesses; and
-4-
<PAGE> 5
(d) As of the date hereof, H. Hamby Hutcheson is in compliance with
each provision contained in the employment agreements in effect between H. Hamby
Hutcheson and each of ITP, Fleet.Net and STP, each agreement dated March 1, 1996
(the "Employment Agreements").
10. The Hutchesons covenant and agree as follows:
(a) The Hutchesons hereby relinquish any and all right and claim to
all of the Assets and transfer to Centennial any such right and claim free and
clear of all counterclaims, liabilities, liens, pledges, security interests or
encumbrances of any kind, except to the extent provided herein;
(b) to execute and deliver any and all documents which may be
required for the purpose of effectuating the foregoing representations,
warranties and covenants;
(c) H. Hamby Hutcheson will to continue to be bound by the terms of
his Employment Agreements (other than the employment provisions) to the extent
provided therein; and
(d) the Hutchesons hereby indemnify Centennial against any and all
obligations of ITP, Fleet.Net and STP with respect to (i) current and former
employees or consultants which are not set forth on EXHIBIT A, and (ii) Steven
McMahon or Buchanan Ingersoll P.C. which are not set forth in Section 2 above.
11. The representations contained in Section 9(a)(i) and 9(a)(ii)
shall terminate and cease to be of force in effect on December 18, 1998; the
remainder of the representations contained in Section 9 shall terminate and
cease to be of force and in effect two years from the date hereof.
12. Simultaneous with the execution hereof, Centennial hereby
accepts the resignation of H. Hamby Hutcheson as President and CEO of ITP,
Fleet.Net and STP, dated May 9, 1997.
13. Centennial hereby indemnifies the Hutchesons for any claims
brought against them by the other former stockholders of ITP, Fleet.Net or STP
based upon alleged breaches of any representation, warranty, covenant or
agreement made to such former stockholders by Centennial in the Merger
Agreements. The Hutchesons will give Centennial prompt notice of any such claims
and Centennial shall be entitled to control the defense thereof.
14. All prior agreements between the Parties are hereby merged into
this Agreement, which together with all transactions contemplated hereby and all
agreements, instruments and other documents delivered herewith (collectively,
the
-5-
<PAGE> 6
"Settlement Documents") constitute the complete and exclusive agreement among
the Parties with respect to the subject matter thereof, and supersede all prior
and contemporaneous agreements and understandings, oral or written, between the
Parties, with respect to such subject matter. Except as provided herein and in
the Settlement Documents, no representation, promise, proposal, warranty,
covenant, condition, inducement, statement or intention, or other statement or
communication, express or implied, has been made by any Party, and no Party
shall be bound by any purported representation, promise, proposal, warranty,
covenant, condition, inducement, statement of intention, or other statement or
communication, express or implied, with respect to such subject matter that is
not set forth in the Agreement and/or the Settlement Documents. Further, no
Party is relying on any representation, promise, proposal, warranty, covenant,
condition, inducement, statement of intention, or other statement or
communication, express or implied, made by or any other Party except as
expressly set forth in the Settlement Documents.
15. The Parties state that they have been represented by counsel of
their choice throughout the negotiation of this Agreement, that they fully
discussed its terms and conditions with counsel, and that they fully understood
its terms and conditions.
16. This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors in interest, transferees, heirs and
assigns.
17. The Parties agree that the terms and conditions of this
Agreement are valid and enforceable under the laws of the State of Delaware and
that the Agreement shall be governed by and construed in accordance with the
substantive law of the State of Delaware.
18. Any notice rendered necessary as a result of this Agreement
shall be in writing, and shall be deemed duly delivered two business days after
it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent via a reputable nationwide
overnight courier service, in each case to the intended recipient as set forth
below:
If to Centennial: Copy to:
----------------- --------
Centennial Technologies, Inc. Hale and Dorr LLP
37 Manning Road 60 State Street
Billerica, Massachusetts 01821 Boston, Massachusetts 02109
Attn: President Attn: Jay E. Bothwick, Esq.
cc: Donald R. Peck, Esq.,
General Counsel
-6-
<PAGE> 7
If to the Hutchesons: Copy to:
--------------------- --------
20071 N.W. Fifth Street Buchanan Ingersoll P.C.
Pembroke Pines, FL 33029 301 Grant St., 20th Floor
Pittsburgh, Pennsylvania 15219
Attn: Bruce Bowden, Esq.
19. This Agreement may be executed in one or more counterparts, each
of which, when so executed, shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
[REST OF PAGE LEFT INTENTIONALLY BLANK.]
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized officers or agents as of the date set forth
immediately below their respective signatures.
CENTENNIAL TECHNOLOGIES, INC.
By:
---------------------------------
Title:
-------------------------------
H. HAMBY HUTCHESON
-------------------------------------
MARY LOU HUTCHESON
-------------------------------------
-8-
<PAGE> 9
OUTSTANDING PAYROLL OBLIGATIONS-5/15/97 EXHIBIT A
ITP/FLEET.NET
<TABLE>
<CAPTION>
4/15/97 4/30/97 5/15/97 TOTAL ACC.VAC. TOTAL
(GROSS)
ITP:
<S> <C> <C> <C> <C> <C>
Ashfaque, Ashan 1,045.15 1,045.15
DeBauce, Bradley 2,200.43 2,200.43 4,400.86 1,427.07 5,827.93
Dillard, Donald 415.07 415.07
Ellis, Michael 2,126.78 2,126.77 4,253.55 661.16 4,914.71
Forney, Jan 971.22 971.22
Franco, Ozvaldo 3,329.73 3,329.73 6,659.46 1,487.39 8,146.85
Leader, Sheldon 2,385.41 2,644.23 5,029.64 1,000.13 6,029.77
Miller, Douglas 807.84 782.76 782.76
Mon, Jorge 2,126.30 2,126.30 1,743.12 3,869.42
Muller, Joseph 1,659.08 1,659.07 1,659.07 4,977.22 1,524.75 6,501.97
Newton-John, Peter 5,176.21 5,176.21 10,352.42 3,786.39 14,138.81
Otto, Marc 2,258.15 2,258.15 182.38 2,440.53
Raglin, Steven 663.90 663.90
Renuart, Michael 3,705.89 3,705.89 7,411.78 595.07 8,006.85
Robinson, Richard 2,336.55 2,336.55 174.80 2,511.35
Skoog, James 2,569.47 2,596.48 5,192.95 1,419.01 6,611.96
Smith, Graham 2,794.42 2,794.41 5,588.83 1,377.72 6,966.55
Socarras, Rick 2,225.20 2,225.20 1,457.38 3,682.58
Whalen, Michael 1,315.24 1,315.23 1,315.23 3,945.70 618.62 4,564.32
Yin, Carol 1,616.38 1,616.38 1,228.56 2,844.94
Schmidt, Frank -- -- -- -- -- --
Taxes 21,716.12 13,117.65 4,633.50 39,467.27 39,467.27
</TABLE>
<PAGE> 10
OUTSTANDING PAYROLL OBLIGATIONS-5/15/97 EXHIBIT A
ITP/FLEET.NET
<TABLE>
<CAPTION>
4/15/97 4/30/97 5/15/97 TOTAL ACC.VAC. TOTAL
(GROSS)
FLEET.NET
<S> <C> <C> <C> <C> <C> <C>
Chen, Harriet 1,492.62 1,492.61 1,492.61 4,477.84 1,165.50 5,643.34
Clements, Kenneth 1,490.62 159.80 1,650.42 187.10 1,837.52
Ford, Philomenia 1,549.67 1,630.74 1,549.66 4,730.07 1,126.00 5,856.07
Fradin, Mildred 893.48 893.48 1,786.96 451.49 2,238.45
Quintana, Javier 1,314.60 1,314.60 1,314.60
Yin, John 2,436.76 2,436.76 2,436.76
Hutchenson, Hamby 6,877.41 3,812.32 3,812.32 14,502.05 15,111.28 29,613.33
Brisbane, Carol 192.92 192.92 1,048.97 1,241.89
Goni, Malvis 227.56 227.56 217.80 445.36
Quintana, Javier 159.80 159.80 709.46 869.26
Taxes -- 3,084.56 15,808.64 18,893.20 18,893.20
-----------------------------------------------------------------------
74,730.04 53,127.73 31,164.51 158,214.44 42,579.25 200,793.69
=======================================================================
</TABLE>
<PAGE> 11
EXHIBIT B
MUTUAL GENERAL RELEASE
For good and valuable consideration, the receipt of which is hereby
acknowledged, except for the transactions and understandings contained in that
certain Settlement Agreement, dated May 15, 1997 (the "Settlement Agreement"),
Centennial Technologies, Inc., a Delaware corporation, Intelligent Truck
Project, Inc., a Florida corporation ("ITP"), Fleet.Net, Inc., a Florida
corporation ("Fleet.Net") and Smart Traveler Plazas, Inc., a Florida corporation
("STP") hereby release H. Hamby Hutcheson and Mary Lou Hutcheson, and the
current and former partners, successors, heirs, assigns, servants, employees,
agents and attorneys of each of them (collectively, the "Hutchesons"), from any
and all debts, demands, causes of action, contracts, liabilities, agreements,
and any and all claims of any nature, in law or in equity, which Centennial,
ITP, Fleet.Net or STP now have, or ever have had, against the Hutchesons from
the beginning of the world to this date, and, particularly, but without
limitation, on account of the civil action now pending in the United States
District Court for the Southern District of Florida, West Palm Beach Division,
Case No. 97-8114-CIV-HURLEY entitled H. HAMBY HUTCHESON V. CENTENNIAL
TECHNOLOGIES, INC. ET AL., and further without limitation, the predecessor
action pending previously in the Circuit Court of the Fifteenth Judicial Circuit
in and for Palm Beach County, Florida (Case No. 97-1692 AO), including any
claims or causes of action which Centennial, ITP, Fleet.Net or STP could have
asserted therein.
FURTHER, for good and valuable consideration, including a cash payment
of $205,000 by Centennial to the Hutchesons and the other consideration recited
in the Settlement Agreement, the receipt of which is hereby acknowledged, except
for the transactions, understandings, representations, warranties and covenants
contained in the Settlement Agreement, the Hutchesons hereby release Centennial,
ITP, Fleet.Net and STP, and the current and former partners, successors,
assigns, servants, officers, directors, agents, employees and attorneys of each
of them (collectively, the "Centennial Parties") from any and all debts,
demands, causes of action, contracts, liabilities, agreements, and any and all
claims of any nature, in law or in equity, which the Hutchesons, whether jointly
or severally, now have, or ever have had, against the Centennial Parties from
the beginning of the world to this date, and, particularly, but without
limitation, on account of the civil action now pending in the United States
District Court for the Southern District of Florida, West Palm Beach Division,
Case No. 97-8114-CIV-HURLEY entitled H. HAMBY HUTCHESON V. CENTENNIAL
TECHNOLOGIES, INC. ET AL., and further without limitation, the predecessor
action pending previously in the Circuit Court of the Fifteenth Judicial Circuit
in and for Palm Beach County, Florida (Case No. 97-1692 AO), including any
claims or causes of action which the Hutchesons could have asserted therein.
Each party hereto is executing this mutual general release in its
corporate and/or individual capacity, as well as current or former shareholder,
officer and/or director of any of the entities named herein.
<PAGE> 12
This mutual general release may be executed in multiple copies, each of
which will be deemed to be a fully executed original document.
Signed as a sealed instrument:
CENTENNIAL TECHNOLOGIES, INC.
By:
----------------------------------------
Title:
-------------------------------------
-------------------------------------------
H. HAMBY HUTCHESON
-------------------------------------------
MARY LOU HUTCHESON
INTELLIGENT TRUCK PROJECT, INC.
By:
----------------------------------------
Title:
-------------------------------------
FLEET.NET, INC.
By:
----------------------------------------
Title:
-------------------------------------
SMART TRAVELER PLAZAS, INC.
By:
----------------------------------------
Title:
-------------------------------------
<PAGE> 13
EXHIBIT C
UNITED STATES DISTRICT COURT
FOR THE
SOUTHERN DISTRICT OF FLORIDA
H. HAMBY HUTCHESON )
)
Plaintiff, )
)
)
VS. ) No. 97-8114-CIV-HURLEY
)
)
CENTENNIAL TECHNOLOGIES, INC., ET AL. )
)
)
Defendants. )
- ------------------------------------------------
STIPULATION OF DISMISSAL
------------------------
Pursuant to Federal Rule of Civil Procedure 41(a)(1)(ii), it is agreed
between all parties that the within action, may be dismissed, with prejudice,
without costs and without the right of appeal.
SO MOVED JOINTLY:
H. HAMBY HUTCHESON CENTENNIAL TECHNOLOGIES, INC.
By his Attorney: By its Attorney:
- ------------------------------ ----------------------------------
Samuel W. Braver Jason M. Murray
Jeffrey Goodz Morgan, Lewis & Bockius LLP
Buchanan Ingersoll P.C. 5300 First Union Financial Center
19495 Biscayne Blvd., Suite 605 200 South Biscayne Blvd.
Aventura, FL 33180-5600 Miami, FL 33131-2399
(305) 933-5600 (305) 579-0424
FAX: (305) 933-2350 FAX: (305) 579-0321
Dated: May ___, 1997
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<NAME>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 95
<SECURITIES> 0
<RECEIVABLES> 4,143
<ALLOWANCES> 511
<INVENTORY> 5,459
<CURRENT-ASSETS> 11,391
<PP&E> 3,779
<DEPRECIATION> 1,053
<TOTAL-ASSETS> 36,051
<CURRENT-LIABILITIES> 11,483
<BONDS> 0
0
0
<COMMON> 186
<OTHER-SE> 24,832
<TOTAL-LIABILITY-AND-EQUITY> 36,501
<SALES> 6,573
<TOTAL-REVENUES> 6,573
<CGS> 6,142
<TOTAL-COSTS> 2,204
<OTHER-EXPENSES> 4,082
<LOSS-PROVISION> 41
<INTEREST-EXPENSE> 78
<INCOME-PRETAX> (5,474)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,474)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,474)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
