SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED LEASE AGREEMENT
BY AND BETWEEN
ET LLC,
a Delaware limited liability company
d/b/a
ET QRS LLC
as LANDLORD
and
ETEC SYSTEMS, INC.
a Nevada corporation
as TENANT
Premises: Hayward, California
Dated as of May 8, 1998
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED LEASE
AGREEMENT made as of May 8, 1998 by and between ET LLC, a Delaware
limited liability company d/b/a ET QRS LLC ("Landlord") and ETEC SYSTEMS
INC., a Nevada corporation ("Tenant").
W I T N E S S E T H
WHEREAS Landlord and Tenant entered into a certain Second Amended
and Restated Lease Agreement, dated as of February 2, 1998, as amended
by a First Amendment to Second Amended and Restated Lease Agreement,
dated as of March 31, 1998 (said "Lease Agreement," as amended by said
First Amendment, the "Original Lease"); and
WHEREAS Landlord and Tenant now desire to amend the Original Lease
as hereinafter set forth.
IN CONSIDERATION OF the rents and provisions herein stipulated to
be paid and performed, Landlord and Tenant hereby covenant and agree as
follows:
1. Paragraph 2. Certain Definitions is hereby amended (a)
by adding the phrase "as amended from time to time" to the definitions
of Completion Agreement and Construction Agency Agreement and (b) by
deleting the definitions of "Project I Final Completion Date," "Project
II Final Completion Date" and "Project II Substantial Completion Date"
in their entirety and inserting the following in lieu thereof:
(a) "Project I Final Completion Date" shall mean
the Final Completion Date as defined in the Completion
Agreement.
(b) "Project II Final Completion Date" shall mean
Building 4 Final Completion Date as defined in the
Construction Agency Agreement.
(c) "Project II Substantial Completion Date"
shall mean Building 4 Substantial Completion Date as
defined in the Construction Agency Agreement.
1. Paragraph 5 Term subsection (a) is hereby amended by
deleting the date "May 31, 2014" and inserting in lieu thereof the date
"September 1, 2014."
2. The following is hereby added as subparagraph (e) to
Paragraph 20. Procedures Upon Purchase of the Lease:
"(e) Any offer by Tenant under paragraph 18(b), 21(d),
23(a)(iii), 33(c) or 38(b) shall include an
acknowledgment by Tenant of the methodology to be
applied for purposes of determining the Prepayment
Premium.
3. The following is hereby added to the last sentence of
subparagraph (a) of Paragraph 31 ", and shall include all such costs and
expenses incurred by Landlord in connection with the issuance of
Landlord's Series B 7.11% Senior Secured Notes Due September 1, 2014."
4. Exhibit E Financial Covenants is hereby deleted in its
entirety and Exhibit E attached hereto is inserted in lieu thereof.
5. Except as is specifically amended hereby, the terms and
conditions of the Original Lease shall remain in full force and effect
and from and after the date hereof the term "Lease" shall refer to the
Original Lease as amended by the Second Amendment to Second Amended and
Restated Lease Agreement.
6. Without limiting in any way the obligations of Tenant to
Landlord under the Lease, the Construction Agency Agreement and the
Completion Agreement or to Lender under the Tenant's Certificate and
Agreement (under and as defined in the Note Purchase Agreement dated as
of May 8, 1998 ("Note Purchase Agreement") by and between Landlord and
Teachers Insurance and Annuity Association of America), Landlord
acknowledges that Tenant is not obligated to cause the occurrence of the
conditions to the Second Closing (as defined in the Note Purchase
Agreement) and that, provided that Tenant is not in default under the
Lease, the Construction Agency Agreement, the Completion Agreement or
the Tenant's Certificate and Agreement, Landlord shall have no claims
against Tenant if the Second Closing does not occur.
7. This Second Amendment shall be binding upon the parties
thereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Second Amendment to Second Amended and Restated Lease
Agreement as of the date first above written.
LANDLORD:
ET LLC, a Delaware limited
liability company, d/b/a ET QRS
LLC
By: Corporate Property
Associates
12 Incorporated, Member
By:
Title: Senior Vice
President
By: Corporate Property
Associates
14 Incorporated, Member
By:
Title: Senior Vice
President
TENANT:
ETEC SYSTEMS, INC.,
a Nevada corporation
By:
Title: Treasurer
EXHIBIT E
FINANCIAL COVENANTS
1. Corporate Existence; Control; Mergers, Etc.
(a) Tenant shall maintain its corporate existence, rights and
franchises in full force and effect in its jurisdiction of
incorporation. Tenant shall, and shall cause each of its Subsidiaries
to, qualify and remain qualified as a foreign corporation in each
jurisdiction in which failure to receive or retain such qualification
would have an adverse effect on the business, operations or financial
condition of the enterprise comprised of the Tenant and its Subsidiaries
taken as a whole.
(b) At no time during the Term shall any Person acquire directly
or indirectly more than 50% of any class of Tenant's Voting Interests.
(c) Tenant shall not consolidate with or merge with any other
Person, or make any Investment, unless an Event of Default does not then
exist and, immediately following such consolidation, merger, or
Investment (i) the surviving corporation with respect to a merger or
consolidation or Tenant with respect to an Investment shall have, on a
proforma basis, an Adjusted Consolidated Net Worth of not less than the
sum of (A) Fifty-three Million Dollars ($53,000,000) and (B) an amount
equal to sixty percent (60%) of the Consolidated Net Income of Tenant
for each fiscal quarter in which Consolidated Net Income is positive,
but with no adjustment for each fiscal quarter in which Consolidated Net
Income is negative, on a cumulative basis (calculated at the end of each
fiscal quarter), commencing with the fiscal quarter of Tenant that
commenced August 1, 1996 and continuing for each quarter to and
including the end of the fiscal quarter immediately prior to the fiscal
quarter in which such merger, consolidation or Investment occurs, (ii)
the Board of Directors of Tenant immediately prior to such merger,
consolidation or Investment remains in control following such merger,
consolidation or Investment, (iii) the senior management of the
surviving corporation with respect to a merger or consolidation or of
Tenant with respect to an Investment does not substantially change
immediately following such merger, consolidation or Investment and
(iv) after giving effect to such merger, consolidation or Investment, an
Event of Default does not then exist. This Section 1(c) shall not apply
(x) to a merger with a Person that is a Subsidiary of Tenant as of
December 31, 1994 nor a wholly-owned Subsidiary of Tenant if, in each
case, Tenant is the surviving entity, or (y) to any Investment in a
Subsidiary that is consolidated with Tenant for financial reporting
purposes, provided that, immediately following the Investment and having
given effect thereto, Tenant is otherwise in compliance with all
provisions of this Exhibit E.
(d) The Tenant shall not, except as specifically permitted
under, and in accordance with the terms of Paragraph 21 of this Lease,
in a single transaction or series of related transactions, sell or
convey, transfer, abandon or lease all or substantially all of its
assets to any Person.
(e) The Tenant shall not make any substantial change in the
nature of its business.
2. Debt and Restricted Payments.
(a) Tenant will not, directly or indirectly make, or cause or
permit any Subsidiary of the Tenant to make, any Restricted Payment,
unless at the time thereof, and after giving effect thereto:
(i) the Tenant's Adjusted Consolidated Net Worth
equals or exceeds $53,000,000 as of the end of the month
preceding the date of such Restricted Payment; and
(ii) such Restricted Payment, together with all other
Restricted Payments made from the commencement date of the
Term to the date of such Restricted Payment does not exceed
the sum of 40% of the Tenant's Consolidated Net Income on a
cumulative basis beginning with and including the fiscal
year in which the Term commenced to the month immediately
preceding the date of such Restricted Payment.
(b) The Tenant will not become or be a guarantor or surety of,
or otherwise incur any Contingent Obligation or become or be responsible
in any manner (whether by agreement to purchase any obligations, stock,
assets, goods or services, or to supply or advance any funds, assets,
goods or services, or otherwise) with respect to, any undertaking of any
other Person (except as to any Subsidiary), other than Contingent
Obligations which meet any one of the following criteria:
(i) a Contingent Obligation which, when added to
other Contingent Obligations then outstanding, does not
exceed Fifteen Million Dollars ($15,000,000), less the
amount of Funded Debt outstanding at such time under clause
(iii) of paragraph (c) below, or
(ii) a Contingent Obligation which, when added to the
aggregate amount of all other Contingent Obligations then
outstanding, does not exceed an amount equal to (A) three
(3) times Consolidated EBIDTA for the most recent four (4)
fiscal quarters ending immediately prior to the date of
creation of such new Contingent Obligation, minus (B) the
amount of Funded Debt outstanding under clause (iv) of
paragraph (c) below as of the same date.
(c) Tenant will not, and will not permit any Subsidiary directly
or indirectly to, incur, create, assume any Indebtedness other than
Indebtedness which meets any one of the following criteria
(i) Funded Debt outstanding on the Closing Date and
reflected in the audited financial statements described in
Paragraph 28(b),
(ii) Funded Debt that replaces or refinances the Funded
Debt described in (i) above and is repayable on the basis of an
amortization schedule substantially similar to, or having lower
scheduled payments than, the amortization schedule for the Funded
Debt outstanding on the Closing Date,
(iii) Funded Debt up to a maximum principal amount of
Fifteen Million Dollars ($15,000,000) at any time outstanding,
less the amount of Contingent Obligations outstanding at such time
under clause (i) of paragraph (b) above,
(iv) Funded Debt (not including for this purpose Funded
Debt permitted under clause (iii) above or Qualified Subordinated
Debt) up to three (3) times Consolidated EBIDTA for the most
recent four (4) fiscal quarters ending immediately prior to such
date of determination on a proforma basis, reduced by the amount
of Contingent Obligations outstanding at such time under clause
(ii) of paragraph (b) above, or
(v) Qualified Subordinated Debt.
3. Consolidated Net Worth. Consolidated Net Worth shall not as
of the end of each fiscal quarter of Tenant that ends on and after
January 31, 1997 be less than an amount equal to the sum of
(a) $53,000,000 and (b) 60% of Consolidated Net Income for each fiscal
quarter in which Consolidated Net Income is positive, with no adjustment
for each fiscal quarter in which Consolidated Net Income is negative, on
a cumulative basis (calculated at the end of each fiscal quarter
commencing with the fiscal quarter of Tenant that commenced August 1,
1996).
4. Definitions. For the purpose of this Exhibit "E" the
following terms shall have the following meanings:
(a) "Adjusted Consolidated Net Worth" shall mean, at any date,
the net worth of Tenant and its consolidated Subsidiaries on a
consolidated basis, determined in accordance with GAAP, except that any
Qualified Subordinated Debt of Tenant shall be computed as equity.
(b) "Affiliate" shall mean as to any Person, any other Person
controlled by, under common control with, or controlling, such Person.
(c) "Closing Date" shall mean February 2, 1998.
(d) "Consolidated EBIDTA" for any period, with respect to Tenant
and its consolidated Subsidiaries, shall mean earnings from continuing
operations, exclusive of extraordinary items, if any, before interest
expense, depreciation, taxes, amortization expense (including
amortization of debt issuance costs) and less capital expenditures.
(e) "Consolidated Net Income" shall mean, for any period, the
aggregate net income (or loss) of Tenant, and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP.
(f) "Consolidated Net Worth" shall mean, at any date, the net
worth of Tenant and its consolidated Subsidiaries on a consolidated
basis, determined in accordance with GAAP.
(g) "Contingent Obligation" as to any Person shall mean the
undrawn face amount of any letters of credit issued for the account of
such Person and shall also mean any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends, letters of credit or other obligations ("primary
obligations") of any other Person other than a Subsidiary (the "primary
obligor") in any manner, whether directly or indirectly including,
without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the financial condition or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the obligee under any
such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold
harmless the obligee under such primary obligation against loss in
respect thereof; provided, however, that the term Contingent Obligation
shall not include (x) endorsements of instruments for deposit or
collection in the ordinary course of business or (y) usual and customary
representations and warranties contained in loan and other financing
agreements. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation or, where such Contingent Obligation is specifically limited
to a portion of any such primary obligation, that portion to which it is
limited.
(h) "Funded Debt" of any Person shall mean all Indebtedness of
such Person which in accordance with GAAP would be classified on a
balance sheet as long term debt, and shall in any event include (without
duplication) all Indebtedness, whether secured or unsecured, having a
final maturity (or which, pursuant to the terms of a revolving credit
agreement or otherwise is renewable or extendible at the option of the
obligor for a period ending) more than one year after the date of the
creation thereof (including, without limitation, any portion of such
Funded Debt maturing in less than one year) and money borrowed for
working capital purposes unless for a period of not less than sixty (60)
consecutive days in any period of twelve (12) consecutive months such
obligations are reduced to zero.
(i) "GAAP" shall mean generally accepted accounting principles
as in effect from time to time in the United States of America, applied
on a consistent basis.
(j) "Indebtedness" of any Person shall mean, as of any date, all
obligations which would in accordance with GAAP be classified as debt,
and shall include (a) all obligations of such Person for borrowed money,
(b) all obligations of such person in respect of letters of credit,
surety bonds or similar obligations issued for the account of such
Person, (c) all obligations of such Person as lessee, user or obligor
under any lease of real or personal property which, in accordance with
GAAP, are or should be capitalized on the books of the lessee, user or
obligor (excluding, in the case of Tenant, any lease classified in
accordance with GAAP as an operating lease), (d) all obligations of such
Person in respect of the deferred purchase price for goods, property or
services acquired by such Person, (e) all obligations of such Person to
purchase goods, property or services where payment therefor is required
regardless of whether delivery of such goods or property or the
performance of such services is ever made or tendered, (f) all
obligations of such Person in respect of any interest rate or currency
swap, rate cap or other similar transaction (valued in an amount equal
to the highest termination payment, if any, that would be payable by
such Person upon termination for any reason on the date of
determination), and (g) all obligations of others similar in character
to those described in clauses (a) through (f) of this definition to the
extent such person is liable, contingently or otherwise, as obligor,
guarantor or in any other capacity, or in respect of which obligations
such Person assures a creditor against loss or agrees to take any action
to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business),
including, without limitation, all obligations of such Person to advance
funds to, or to purchase property or services from, any other Person in
order to maintain the financial condition of such other Person and, in
the case of Tenant, all Indebtedness which is non-recourse to the credit
of Tenant but which is secured by the assets or property of Tenant (but
excluding any such non-recourse Indebtedness of Subsidiaries of Tenant
in which Tenant has no liability). Indebtedness shall not include money
borrowed for working capital purposes so long as for a period of not
less than sixty (60) consecutive days in any period of twelve (12)
consecutive months such obligations are reduced to zero. Any
Indebtedness which is extended or renewed (other than by an option
created with the original creation of such Indebtedness) will be deemed
to have been created when extended or renewed.
(k) "Investment" shall mean the acquisition of any equity
security issued by another Person or the making of any loan or advance
to another Person, other than in connection with the management of cash
or liquid assets.
(l) "Person" shall mean an individual, partnership, association,
corporation, limited liability company or other entity.
(m) "Qualified Subordinated Debt" means Indebtedness which
satisfies the criteria set forth on the attached Schedule 1.
(n) "Restricted Payment" shall mean and include (a) any direct
or indirect purchase, redemption or other acquisition or retirement for
value of any equity security of Tenant or any option, warrant or right
to acquire any such equity security, or any security convertible into or
exchangeable for any such equity security, (b) any dividend,
distribution, loan advance, guarantee, extension of credit or other
payment of transfer, whether in cash or property and whether direct or
indirect, to or for the benefit any Person holding an equity interest in
the Tenant, whether or not such interest is evidenced by a security, or
any Affiliate of any such Person, and (c) any direct or indirect
purchase, redemption, prepayment or other acquisition or retirement for
value, prior to its stated maturity, scheduled repayment or scheduled
sinking fund payment of any Qualified Subordinated Debt of the Tenant or
any Subsidiary held by any Person described in clause (b) above;
provided, however, that so long as an Event of Default shall not exist,
the term Restricted Payment shall not include (i) the repurchase by
Tenant of stock in Tenant for an amount not to exceed on a cumulative
basis the sum of $2,500,000 and the cash purchase price received by
Tenant from the sale of stock in Tenant to employees, consultants or
directors or prospective employees, consultants or directors, or (ii)
the repayment of Qualified Subordinated Debt (including any interest
thereof, whether current, "blocked" or accrued) from (A) the proceeds of
an initial public offering or (B) from cash balances of Tenant so long
as following such payment Tenant will have cash balances, on a proforma
basis, of not less than $10,000,000 and is otherwise in compliance with
the Covenants.
(o) "Subsidiary" of any Person (the "Parent") means another
Person a majority of the Voting Interest in which is owned, or the
management of which is otherwise controlled, directly or indirectly,
through one or intermediaries, or both, by the Parent.
(p) "Voting Interests" means shares of stock of a corporation or
other interests in other types of Person having ordinary voting power to
elect the board of directors of such corporation or similarly direct or
control the management of such other Person.
Schedule 1
PROVISIONS APPLICABLE TO
QUALIFIED SUBORDINATED DEBT
(a) Qualified Subordinated Debt shall at all times be
wholly subordinate and junior in right of payment to indebtedness of
Tenant which in all events must include payments of Rent under the Lease
(herein called "Superior Indebtedness"), upon substantially the
following terms and conditions or such other terms and conditions as may
be reasonably approved by Landlord and Lender (and Landlord in all
events must be defined to be a "holder" of Superior Indebtedness):
(1) In the event of any liquidation,
dissolution or winding up of Tenant, or of any execution,
sale, receivership, insolvency, bankruptcy, liquidation,
readjustment, reorganization or other similar proceeding
relative to Tenant or its property, all principal and
interest owing on, or payments of rent in respect of, all
Superior Indebtedness shall first be irrevocably paid in
full before any payment is made upon the indebtedness
evidenced by the subordinated notes; and in any such event
any payment or distribution of any kind or character,
whether in cash, property or securities (other than in
securities, including equity securities, or other evidences
of indebtedness, the payment of which is subordinated to the
payment of all Superior Indebtedness which may at the time
be outstanding) which shall be made upon or in respect of
the subordinated notes shall be paid over to the holders of
such Superior Indebtedness, pro rata, for application in
payment thereof unless and until such Superior Indebtedness
shall have been paid or satisfied in full;
(2) In the event that either (A) the maturity
of any Superior Indebtedness is accelerated or Landlord has
given notice to Tenant of its intention to terminate the
Lease or require Tenant to make an irrevocable offer to
terminate the Lease followng an Event of Default thereunder
or (B) the subordinated notes are declared or become due and
payable because of the occurrence of any event of default
thereunder (or under the agreement or indenture, as
appropriate) or otherwise than at the option of Tenant, in
either case, under circumstances when the foregoing
clause (1) shall not be applicable, the holders of the
subordinated notes shall be entitled to payments only after
there shall first have been paid in full all Superior
Indebtedness outstanding at the time of the occurrence of
the events specified in subclauses (A) or (B) above, or
payment shall have been provided for in a manner
satisfactory to the holders of such Superior Indebtedness;
and
(3) During the continuance of (A) any default with
respect to any Superior Indebtedness, or (B) any Event of
Default under the Lease, which would permit the holders
thereof to accelerate the maturity of such Superior
Indebtedness, no payment of principal, premium or interest
shall be made on the subordinated notes, if written notice
of such default (a "Default Notice") has been given to
Tenant by any holder or holders of any Superior
Indebtedness, for a period of not less than one hundred
eighty (180) days following receipt of any Default Notice.
Upon receipt of any Default Notice from the holders of
Superior Indebtedness pursuant to this clause (3), Tenant
shall forthwith send a copy thereof to each holder of the
subordinated notes at the time outstanding. Any payment or
distribution of any kind or character, whether in cash,
property or securities made with respect to any subordinated
note after receipt by Tenant of a Default Notice shall be
held by the holder of such subordinated note in trust for
the benefit of, and shall be paid over to, the holders of
such Superior Indebtedness for application on a pro rata
basis to the payment of such Superior Indebtedness unless
and until such Superior Indebtedness shall have been paid or
satisfied in full.
(b) No right of any holder of any Superior
Indebtedness to enforce subordination as herein provided
shall at any time or in any way be affected or impaired by
any failure to act on the part of Tenant or the holders of
Superior Indebtedness, or by any noncompliance by Tenant
with any of the terms, provisions and covenants of the
subordinated notes or the agreement under which they are
issued, regardless of any knowledge thereof that any such
holder of Superior Indebtedness may have or be otherwise
charged with.
(c) Tenant agrees, for the benefit of the holders of Superior
Indebtedness, that in the event that any subordinated note is declared
due and payable before its expressed maturity because of the occurrence
of a default hereunder, Tenant will give prompt notice in writing of
such happening to the holders of Superior Indebtedness.
(d) The foregoing provisions are solely for the purpose of
defining the relative rights of the holders of Superior Indebtedness on
the one hand, and the holders of the subordinated notes on the other
hand, and nothing herein shall impair, as between Tenant and the holders
of the subordinated notes, the obligation of Tenant which is
unconditional and absolute, to pay the principal, premium, if any, and
interest on the subordinated notes in accordance with their terms, nor
shall anything herein prevent the holders of the subordinated notes from
exercising all remedies otherwise permitted by applicable law or
hereunder upon default hereunder, subject to the rights of the holders
of Superior Indebtedness as herein provided for.