ELECTRO SCIENTIFIC INDUSTRIES, INC. (NASDAQ:ESIO) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
|
Entry into a Material Definitive Agreement.
|
On January 9, 2017, ESI Leasing, LLC (ESI Leasing), a wholly
owned subsidiary of Electro Scientific Industries, Inc. (the
Company), entered into a loan agreement (the Loan Agreement) with
First Technology Federal Credit Union (the Lender). The Loan
Agreement provides for a term loan from the Lender to ESI Leasing
in the principal amount of $14,000,000 (the Loan).
owned subsidiary of Electro Scientific Industries, Inc. (the
Company), entered into a loan agreement (the Loan Agreement) with
First Technology Federal Credit Union (the Lender). The Loan
Agreement provides for a term loan from the Lender to ESI Leasing
in the principal amount of $14,000,000 (the Loan).
In connection with the Loan, the Company contributed to ESI
Leasing the real property, improvements and related property
located at 13900 and 14000 NW Science Park Drive, Portland,
Oregon 97229 (the Property), which is where the Companys
headquarters and principal executive offices are located. ESI
Leasing executed a Deed of Trust, Assignment of Leases and Rents,
Security Agreement, and Fixture Filing (the Deed of Trust) to
which ESI Leasing granted to WFG National Title Insurance
Company, as trustee, for the benefit of the Lender, a security
interest in all or substantially all of ESI Leasings assets,
including the Property; buildings, other improvements, and
fixtures located on the Property; and related real and personal
property, including the Lease and other leases and accounts
related to the Property.
Leasing the real property, improvements and related property
located at 13900 and 14000 NW Science Park Drive, Portland,
Oregon 97229 (the Property), which is where the Companys
headquarters and principal executive offices are located. ESI
Leasing executed a Deed of Trust, Assignment of Leases and Rents,
Security Agreement, and Fixture Filing (the Deed of Trust) to
which ESI Leasing granted to WFG National Title Insurance
Company, as trustee, for the benefit of the Lender, a security
interest in all or substantially all of ESI Leasings assets,
including the Property; buildings, other improvements, and
fixtures located on the Property; and related real and personal
property, including the Lease and other leases and accounts
related to the Property.
In addition, in connection with the Loan, on January 9, 2017, ESI
Leasing and the Company entered into a Lease (the Lease) to which
ESI Leasing leased the Property to the Company. The lease is a
net lease and provides, among other things, that the Company
shall (i) pay monthly base rent (ii) pay real property taxes and
assessments, liability and property insurance premiums, and
utility expenses with respect to the Property, and (iii) keep the
Property in good working repair, operating condition, working
order and appearance, and make all necessary repairs and
replacements necessary to that end, at the Companys expense.
Leasing and the Company entered into a Lease (the Lease) to which
ESI Leasing leased the Property to the Company. The lease is a
net lease and provides, among other things, that the Company
shall (i) pay monthly base rent (ii) pay real property taxes and
assessments, liability and property insurance premiums, and
utility expenses with respect to the Property, and (iii) keep the
Property in good working repair, operating condition, working
order and appearance, and make all necessary repairs and
replacements necessary to that end, at the Companys expense.
The interest rate of the Loan is fixed at 4.75% per annum, except
that it may be increased if certain covenants under the Loan
Agreement are not satisfied and after and during the continuation
of an Event of Default as defined in the Loan Agreement. The loan
amortizes over a period of approximately 20 years, but the
maturity date of the loan is January 1, 2027, meaning that, if
ESI Leasing does not prepay or refinance the Loan, a significant
portion of the principal of the Loan will become due on January
1, 2027. ESI Leasing will pay monthly principle and interest
payments on the Loan totaling annual amount $1,085,802.
that it may be increased if certain covenants under the Loan
Agreement are not satisfied and after and during the continuation
of an Event of Default as defined in the Loan Agreement. The loan
amortizes over a period of approximately 20 years, but the
maturity date of the loan is January 1, 2027, meaning that, if
ESI Leasing does not prepay or refinance the Loan, a significant
portion of the principal of the Loan will become due on January
1, 2027. ESI Leasing will pay monthly principle and interest
payments on the Loan totaling annual amount $1,085,802.
The Loan Agreement provides that ESI Leasing and the Company must
comply with certain financial covenants, including (among others)
that: (i) ESI Leasing must maintain a Debt Service Coverage Ratio
(as defined in the Loan Agreement) and (ii) ESI Leasing and the
Company shall, on a combined basis, maintain Liquid Assets (as
defined in the Loan Agreement) in the amount of $15,000,000,
calculated on a quarterly basis.
comply with certain financial covenants, including (among others)
that: (i) ESI Leasing must maintain a Debt Service Coverage Ratio
(as defined in the Loan Agreement) and (ii) ESI Leasing and the
Company shall, on a combined basis, maintain Liquid Assets (as
defined in the Loan Agreement) in the amount of $15,000,000,
calculated on a quarterly basis.
Events of Default under the Loan Agreement and the Deed of Trust
include, among others, the following (with capitalized terms
having the meanings ascribed to them in the Loan Agreement):
include, among others, the following (with capitalized terms
having the meanings ascribed to them in the Loan Agreement):
1.if the financial covenants described above are breached and ESI
Leasing is unable to cure the breach within any applicable notice
and cure periods provided for in the Loan Agreement;
Leasing is unable to cure the breach within any applicable notice
and cure periods provided for in the Loan Agreement;
2.if any monthly Debt Service or monthly deposit of Reserve Funds
is not paid when due and the failure continues for three Business
Days or the payment due on the Maturity Date is not paid when
due;
is not paid when due and the failure continues for three Business
Days or the payment due on the Maturity Date is not paid when
due;
3.if any Taxes or Other Charges are not paid when due and the
failure continues for ten Business Days after the earlier of
knowledge of ESI Leasing or written notice from the Lender;
failure continues for ten Business Days after the earlier of
knowledge of ESI Leasing or written notice from the Lender;
4.if the insurance policies required under the Loan Agreement are
not kept in full force and effect;
not kept in full force and effect;
5.if ESI Leasing commits, permits or suffers a Transfer (which
includes, among other things, (i) any sale, transfer, lease or
conveyance of any interest of ESI Leasing, legal or equitable, of
ESI Leasing of
includes, among other things, (i) any sale, transfer, lease or
conveyance of any interest of ESI Leasing, legal or equitable, of
ESI Leasing of
fixtures outside of ESI Leasings ordinary course of business and
(ii) any change in the ownership in ESI Leasing or in the Company
(except for, so long as the Company remains a publicly traded
company with shares traded on a nationally recognized stock
exchange, sales, transfers and other conveyances of direct and
indirect interests in the Company);
(ii) any change in the ownership in ESI Leasing or in the Company
(except for, so long as the Company remains a publicly traded
company with shares traded on a nationally recognized stock
exchange, sales, transfers and other conveyances of direct and
indirect interests in the Company);
6.if ESI Leasing is in default beyond any applicable cure periods
under any agreement (other than the Loan Documents) creating a
Lien on the Property or any part thereof and the holder of the
Lien commences enforcement proceedings in respect thereof;
under any agreement (other than the Loan Documents) creating a
Lien on the Property or any part thereof and the holder of the
Lien commences enforcement proceedings in respect thereof;
7.if there occurs a payment default or other event of default
under the Loan and Security Agreement, dated March 15, 2015,
between Silicon Valley Bank, as lender, and the Company, as the
same may be amended, restated or replaced, and, after the
expiration of any notice or cure periods provided for thereunder,
Silicon Valley Bank accelerates the repayment of the Companys
indebtedness and terminates its commitments to lend to the
Company thereunder; and
under the Loan and Security Agreement, dated March 15, 2015,
between Silicon Valley Bank, as lender, and the Company, as the
same may be amended, restated or replaced, and, after the
expiration of any notice or cure periods provided for thereunder,
Silicon Valley Bank accelerates the repayment of the Companys
indebtedness and terminates its commitments to lend to the
Company thereunder; and
8.if ESI Leasing or the Company is in material default under the
Lease or the Lease is terminated or modified without the Lenders
prior written consent.
Lease or the Lease is terminated or modified without the Lenders
prior written consent.
In addition, in connection with the Loan, the Company executed an
Unconditional Guaranty of Payment with Lender (the Guaranty) to
which the Company guaranteed all of ESI Leasings obligations
under the Loan Agreement, including ESI Leasings obligations to
repay the Loan. The Companys obligations under the Guaranty are
unsecured.
Unconditional Guaranty of Payment with Lender (the Guaranty) to
which the Company guaranteed all of ESI Leasings obligations
under the Loan Agreement, including ESI Leasings obligations to
repay the Loan. The Companys obligations under the Guaranty are
unsecured.
The Loan Agreement and the Deed of Trust provide that upon the
occurrence of an Event of Default, unless it is subsequently
waived in writing by the Lender, the Lender may, among other
remedies, declare the entire outstanding principal balance of the
Loans to be immediately due and payable.
occurrence of an Event of Default, unless it is subsequently
waived in writing by the Lender, the Lender may, among other
remedies, declare the entire outstanding principal balance of the
Loans to be immediately due and payable.
The foregoing descriptions of or references to the Loan
Agreement, the Lease, the Deed of Trust and the Guaranty are
qualified in their entirety by reference to the full text of the
Loan Agreement, the Lease, the Deed of Trust, and the Guaranty,
which are filed as Exhibits 10.1, 10.3, 10.4, and 10.5,
respectively, to this Current Report on Form 8-K and incorporated
by reference herein. A copy of the promissory note evidencing the
Loan is filed as Exhibit 10.2 to this Current Report on Form 8-K
and incorporated by reference herein.
Agreement, the Lease, the Deed of Trust and the Guaranty are
qualified in their entirety by reference to the full text of the
Loan Agreement, the Lease, the Deed of Trust, and the Guaranty,
which are filed as Exhibits 10.1, 10.3, 10.4, and 10.5,
respectively, to this Current Report on Form 8-K and incorporated
by reference herein. A copy of the promissory note evidencing the
Loan is filed as Exhibit 10.2 to this Current Report on Form 8-K
and incorporated by reference herein.
Item 2.02 Results of Operations and Financial Condition
On January 10, 2017, Electro Scientific Industries, Inc. (the
Company) announced its preliminary orders and cash position for
the third quarter of 2017. The Companys press release announcing
this event is attached hereto as Exhibit 99.1 and incorporated
herein by reference.
Company) announced its preliminary orders and cash position for
the third quarter of 2017. The Companys press release announcing
this event is attached hereto as Exhibit 99.1 and incorporated
herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
(a) The information provided under Item 1.01 of this Current
Report on Form 8-K is incorporated herein by reference to the
extent applicable.
Report on Form 8-K is incorporated herein by reference to the
extent applicable.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following materials are filed as exhibits to this Current
Report on Form 8-K:
Report on Form 8-K:
|
10.1
|
Loan Agreement, dated January 9, 2017, between ESI
Leasing, LLC and First Technology Federal Credit Union |
|
|
10.2
|
Promissory Note, dated January 9, 2017, by ESI Leasing,
LLC in favor of First Technology Federal Credit Union |
|
|
10.3
|
Lease, dated January 9, 2017, between ESI Leasing, LLC
and Electro Scientific Industries, Inc. |
|
|
10.4
|
Deed of Trust, Assignment of Leases and Rents, Security
Agreement, and Fixture Filing, dated January 9, 2017, by ESI Leasing, LLC in favor of WFG National Title Insurance Company, as trustee, for the benefit of First Technology Federal Credit Union |
|
|
10.5
|
Unconditional Guaranty of Payment, dated January 9,
2017, by Electro Scientific Industries, Inc. in favor of First Technology Federal Credit Union |
|
|
99.1
|
Press release dated January 10, 2017
|
About ELECTRO SCIENTIFIC INDUSTRIES, INC. (NASDAQ:ESIO)
Electro Scientific Industries, Inc. and its subsidiaries supply laser-based manufacturing solutions for industries reliant on microtechnologies. The Company operates through two segments: Component Processing and Micromachining. The Component Processing segment includes interconnect products, semiconductor products and component products. The interconnect, semiconductor and component products are sold to manufacturers of electronic components and are used to drill, cut, trim, ablate and test and mark features for the functionality of the component. The Micromachining segment includes products that are sold to manufacturers of end devices across various industries and are used to drill, cut or mark features on a range of materials, generally on the casing or external surface of the end device. Its integrated solutions allow industrial designers and process engineers to control the power of laser light to transform materials. It has operations in Asia, Europe and North America. ELECTRO SCIENTIFIC INDUSTRIES, INC. (NASDAQ:ESIO) Recent Trading Information
ELECTRO SCIENTIFIC INDUSTRIES, INC. (NASDAQ:ESIO) closed its last trading session down -0.07 at 6.03 with 64,799 shares trading hands.
