<PAGE>
As filed with the Securities and Exchange Commission on August 30, 1996
REGISTRATION NO. 333-09539
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
ROFIN-SINAR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 3699
(State or other 38-3306461
jurisdiction of
incorporation or
organization)
(Primary standard industrial classification code number)
(I.R.S. employer
identification number)
---------------------
ROFIN-SINAR TECHNOLOGIES INC.
45701 MAST STREET
PLYMOUTH, MI 48170
(313) 455-5400
(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
DEREK HEINS
ROFIN-SINAR TECHNOLOGIES INC.
45701 MAST STREET
PLYMOUTH, MI 48170
(313) 455-5400
(Name, address, including zip code, and telephone number, including area code,
or agent for service for the registrant)
---------------------
Copies to:
FAITH D. GROSSNICKLE PATRICK KENADJIAN
SHEARMAN & STERLING DAVIS POLK & WARDWELL
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022 MESSE TURM
(212) 848-4000 D-60308 FRANKFURT AM MAIN
FEDERAL REPUBLIC OF
GERMANY
(49)(69)975-7030
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 30, 1996
[ROFIN-SINAR LOGO]
- --------------------------------------------------------------------------------
10,000,000 SHARES
COMMON STOCK
- --------------------------------------------------------------------------------
Of the 10,000,000 shares of Common Stock, par value $0.01, offered hereby,
[ ] shares are being offered initially in the United States and Canada (the
"U.S. Offering") by the U.S. Underwriters (the "U.S. Underwriters") and [ ]
shares are being offered initially outside the United States and Canada (the
"International Offering" and together with the U.S. Offering, the
"Offerings") by the International Underwriters (together with the U.S.
Underwriters, the "Underwriters"). See "Underwriting." All of the shares
offered hereby are being sold by Rofin-Sinar Technologies Inc. ("Rofin-Sinar"
or the "Company").
Prior to the Offerings, there has been no public market for the Common Stock.
It is currently anticipated that the initial public offering price will be
between [ ] and [ ] per share. See "Underwriting" for information
relating to the factors considered in determining the initial public offering
price.
The Company will use $ million of the net proceeds of the Offerings to
purchase its assets from Siemens Aktiengesellschaft ("Siemens") and its
indirect wholly owned U.S. subsidiary, Siemens Power Corporation ("SPC"). The
Company will retain $19.2 million of the net proceeds of the Offerings,
together with any net proceeds received by the Company from the sale of
shares pursuant to the Underwriters' over-allotment option, to use for
general corporate purposes, including the repayment of $7 million of
indebtedness owed to Siemens and Siemens Corporation, a wholly owned
subsidiary of Siemens ("SC"), and future acquisitions, if any. Application
has been made to have the Common Stock approved for quotation on the Nasdaq
National Market under the symbol "[RSTI]."
FOR CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE
"RISK FACTORS" COMMENCING ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share $ $ $
Total(3) $ $ $
</TABLE>
(1) The Company and Siemens Corporation ("SC") have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company
estimated at $[ ].
(3) The Company has granted the Underwriters a 30-day option to purchase up
to an additional 1,500,000 shares of Common Stock solely to cover over-
allotments. If all such shares are purchased, the total Price to Public,
Underwriting Discounts and Commissions, and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
Global Coordinator
DEUTSCHE MORGAN GRENFELL
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and
subject to the approval of certain legal matters by counsel and certain other
conditions. It is expected that delivery of the shares of Common Stock will
be made in New York, New York against payment therefor on or about , 1996.
DEUTSCHE MORGAN GRENFELL
ALEX. BROWN & SONS
INCORPORATED
LEHMAN BROTHERS
The date of this Prospectus is , 1996.
<PAGE>
[PRODUCT PHOTOS]
----------------
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements
appearing elsewhere in this Prospectus. Unless the context otherwise requires,
the terms "Company" or "Rofin-Sinar" mean Rofin-Sinar Technologies Inc. and its
combined subsidiaries after giving effect to the restructuring described below
under "Background of the Offerings" and "Certain Transactions -- Transfer
Agreements." Unless otherwise indicated, the information in this Prospectus
assumes that there will be no exercise of the Underwriters' over-allotment
option. All references to "$" or "dollars" are to United States dollars. All
financial information presented in this Prospectus has been prepared in
accordance with U.S. generally accepted accounting principles.
THE COMPANY
Rofin-Sinar is a leader in the design, development, engineering, manufacture
and marketing of laser products for cutting, welding and marking a wide range
of industrial materials (collectively, "material processing applications").
Lasers are a non-contact technology for material processing which have several
advantages that are desirable in industrial applications. The Company's lasers
all deliver a high-quality beam at guaranteed power outputs and feature compact
design, high processing speed, flexibility, low operating and maintenance costs
and easy integration into the customer's production process. As a technological
leader in both CO/2/ and Nd:YAG lasers, the Company is able to meet a broad
range of its customers' material processing requirements. The Company believes
it has a worldwide market share (based on sales volume) of approximately 20%
for laser products used for cutting and welding applications and that it is
among the largest suppliers of laser products used for marking applications in
Europe and the Asia/Pacific region (other than Japan). Over 80% of the
Company's sales in fiscal 1995 were made to existing customers. The Company has
sold more than 4,000 laser sources since 1975 and currently has over 1,500
active customers (including multinational companies with multiple facilities
purchasing from the Company). During the 1995 fiscal year and the first nine
months of fiscal 1996, respectively, approximately 73% and 69% of the Company's
revenues were from sales and servicing of laser products for cutting and
welding applications and approximately 27% and 31% were from sales and
servicing of laser products for marking applications.
Through its global manufacturing, distribution and service network, the
Company provides a comprehensive range of laser solutions to three principal
target markets for material processing lasers: the Machine Tool, Automotive and
Semiconductor & Electronics industries. The Company sells directly to
industrial end-users, to original equipment manufacturers ("OEMs"), principally
in the Machine Tool industry, who integrate Rofin-Sinar's laser sources with
other system components and to distributors. Many of Rofin-Sinar's customers
are among the largest global participants in their respective industries, and
include Aerospatiale, ASM, BMW, Boeing, Bosch, Chrysler, Ford, General Motors,
Mercedes-Benz, Philips, SGS Thomson, Siemens, Thyssen, TRW, Volkswagen and
Volvo. During fiscal 1995 and the first nine months of fiscal 1996, 34% and 33%
of the Company's sales were in North America, 52% and 46% were in Europe and
14% and 21% were in the Asia/Pacific region, respectively.
In developing its laser solutions, the Company offers customers its
expertise in: (i) product development and manufacturing (i.e., state-of-the-art
product development and manufacturing services based on over 20 years of laser
technology experience and applications know-how); (ii) application and process
development (i.e., developing new laser-based applications for manufacturing
customers and assisting them in successfully integrating lasers into their
production processes); (iii) system engineering (i.e., advising customers on
machine design, including tooling, automation and controls, for customers in
need of "turn-key" solutions); and (iv) extensive after-sales support for its
laser products (including technical support, field service, maintenance and
training programs and rapid spare parts delivery).
3
<PAGE>
COMPETITIVE ADVANTAGES
The Company attributes its strong market position and its long-standing
customer relationships to several competitive advantages: (i) its technological
leadership and product innovation; (ii) its sophisticated application
development; (iii) its broad product range; (iv) its product quality; (v) its
comprehensive customer service; (vi) and its global presence.
BUSINESS STRATEGY
The Company's business strategy is to maximize shareholder value by (i)
strengthening its position as a leading supplier to the global market for
cutting and welding applications and (ii) capitalizing on its leadership
position in cutting and welding, its strength in the European and Asian marking
markets and its other significant competitive advantages to build its share of
the U.S. market for marking applications. The Company believes that the major
sources of its growth over the next three years will be the following:
. Developing new laser products through technological innovation in
response to evolving customer needs for increased output power, greater
penetration and higher processing speeds.
. Focusing on cross-selling to existing customers in target markets, in
particular to the Machine Tool, Automotive and Semiconductor &
Electronics industries.
. Capitalizing on its global presence to attract new customers in the
three principal geographic markets in which its customers operate
(North America, Europe and the Asia/Pacific region).
. Offering customized solutions based on standard laser sources.
BACKGROUND OF THE OFFERINGS
Prior to the Offerings, the business of the Company was conducted by
subsidiaries of Siemens, a company organized under the laws of the Federal
Republic of Germany whose principal business is the design, development,
manufacture and marketing of a wide range of electrical and electronics
products and systems. Siemens originally acquired the laser businesses of
Rofin-Sinar in 1987 to obtain access to laser technologies for application in a
number of industrial areas. Since being acquired, however, the Company has
pursued and developed broader goals and capabilities independent of Siemens.
Siemens and the Company have concluded that Rofin-Sinar will have a better
opportunity to achieve its full potential as an independent entity rather than
as part of Siemens.
Siemens has conducted the laser business through its directly and indirectly
wholly owned subsidiaries Rofin-Sinar Inc. ("RSI") and Rofin-Sinar Laser GmbH
("RSL"), which in turn owns Rofin-Sinar France S.A., Rofin-Sinar Italiana
S.r.l. (90.65% owned) and 51% of Rofin-Marubeni Laser Corporation
(collectively, the "Rofin-Sinar Subsidiaries"). On July 19, 1996, Rofin-Sinar
Technologies Inc. was incorporated under the laws of Delaware to be a holding
company for RSI and RSL upon completion of the Offerings as described below.
The Company will use $ million of the net proceeds of the Offerings
(excluding any proceeds received from the exercise by the Underwriters of their
over-allotment option) to purchase the stock of RSL from Siemens and the stock
of RSI from SPC, a wholly owned subsidiary of SC. Because the purchase price
for RSL and RSI is derived from the offering price of the shares of Common
Stock of the Company being sold in the Offerings, it reflects the factors
considered in determining such offering price. Such offering price was
determined through discussions and negotiations among the Company, Siemens, SPC
and the Underwriters. See "Risk Factors -- Proceeds of Offerings Payable to
Siemens; Purchase Price and Terms of Transfer of RSL and RSI Stock," "Certain
Transactions -- Transfer Agreements" and "Underwriting."
4
<PAGE>
The Company maintains executive offices and manufacturing facilities at
45701 Mast Street, Plymouth, Michigan 48170, where its telephone number is
(313) 455-5400. The principal executive offices of RSL and its manufacturing
facilities for lasers for cutting and welding applications are located at
Berzeliusstrasse 83, D-22113 Hamburg in the Federal Republic of Germany, where
its telephone number is 49-40-733-630. RSL's manufacturing facilities for
lasers for marking applications are located at Neufeldstrasse 16/ Gunding, D-
85232 Bergkirchen in the Federal Republic of Germany, where its telephone
number is 49-8131-7040.
THE OFFERINGS
<TABLE>
<C> <S>
Common Stock Offered(1):
U.S. Offering.................................... [ ] shares
International Offering........................... [ ] shares
Total Offerings(1).................................. 10,000,000 shares
Common Stock Outstanding after the Offerings(1)(2).. 10,000,000 shares
Use of Proceeds..................................... Assuming the Underwriters
do not exercise their
over-allotment option,
$ million of the net
proceeds of the Offerings
will be paid by the
Company to Siemens and
SPC as consideration for
the Company's acquisition
of RSL and RSI. The
Company will retain $19.2
million of the net
proceeds, together with
any net proceeds received
by the Company from the
exercise of the
Underwriters' over-
allotment option, to use
for general corporate
purposes, including
repayment of $7 million
of indebtedness owed to
Siemens and SC and future
acquisitions, if any. See
"Use of Proceeds."
Proposed Nasdaq National Market Symbol.............. "[RSTI]"
Dividend Policy..................................... The Company intends to
retain its earnings to
fund development of its
business and does not
anticipate paying cash
dividends in the
foreseeable future. See
"Dividend Policy."
</TABLE>
- --------
(1) Assumes the Underwriters' over-allotment option for up to 1,500,000 shares
of Common Stock is not exercised. See "Underwriting."
(2) Excludes 400,000 shares issuable at the initial public offering price upon
exercise of options to be granted to certain officers and key employees of
the Company and 4,500 shares of restricted stock to be issued at the
initial public offering price to non-employee directors of the Company
pursuant to employee benefit plans at the time of the Offerings. Such
options are exercisable, subject to vesting requirements, commencing on the
first anniversary of the closing of the Offerings and such shares of
restricted stock are transferable, subject to vesting and forfeiture
requirements, commencing on , 199 . See "Management--Equity Incentive
Plan" and "--Director Compensation."
5
<PAGE>
SUMMARY COMBINED FINANCIAL INFORMATION
The Statement of Operations Data for each of the years in the three-year
period ended September 30, 1995 and the nine-month period ended June 30, 1996
and the Balance Sheet Data as of September 30, 1994 and 1995 and June 30, 1996
set forth below have been derived from the Company's combined financial
statements included elsewhere in this Prospectus, which have been audited by
KPMG Peat Marwick LLP, the Company's independent auditors. Net sales for the
fiscal years ended September 30, 1991 and 1992 and Balance Sheet Data as of
September 30, 1993 are unaudited and have been derived from the Company's
historical financial records. The Statement of Operations Data for the nine-
month period ended June 30, 1995 and the Balance Sheet Data as of September 30,
1993 are unaudited but, in the opinion of management, such information reflects
all adjustments consisting of only normal recurring adjustments necessary for a
fair presentation of the financial data for the interim periods. The results
for the interim periods presented are not necessarily indicative of the results
for a full year. These data should be read in conjunction with "Management's
Discussion and Analysis of Financial Conditions and Results of Operations," the
Company's Combined Financial Statements and other financial information
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
---------------------------- ----------------
1993 1994 1995 1995 1996
-------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales(1)................. $ 60,034 $ 69,217 $ 92,466 $65,460 $83,372
Cost of goods sold........... 47,745 46,993 57,162 40,475 51,466
Gross profit................. 12,289 22,224 35,304 24,985 31,906
Selling, general, and admin-
istrative expenses.......... 21,951 17,059 20,673 14,534 15,221
Research and development ex-
penses...................... 10,276 6,834 6,719 5,903 5,850
Income (loss) from opera-
tions....................... (19,938) (1,669) 7,912 4,548 10,835
Net interest expense......... 1,654 1,308 1,272 947 790
Income (loss) before income
taxes....................... (21,386) (3,116) 6,265 3,489 10,092
Income tax expense (bene-
fit)........................ (1,565) (1,422) 3,052 1,725 4,354
Net income (loss)............ (19,821) (1,694) 3,213 1,764 5,738
Pro forma net income per com-
mon share................... [ ] [ ]
Shares used in computing pro
forma net income per common
share(2).................... [ ] [ ]
OPERATING DATA:
As percentage of sales:
Gross profit................. 20.5% 32.1% 38.2% 38.2% 38.3%
Selling, general and adminis-
trative expenses............ 36.6 24.6 22.4 22.2 18.3
Research and development ex-
penses...................... 17.1 9.9 7.3 9.0 7.0
Income (loss) from opera-
tions....................... (33.2) (2.4) 8.6 6.9 13.0
Income (loss) before income
taxes....................... (35.6) (4.5) 6.8 5.3 12.1
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
----------------------- AT JUNE 30,
1993 1994 1995 1996
------- ------- ------- ----------- ---
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(4).................... $ 7,672 $ 4,927 $14,530 $ 18,981
Total assets.......................... 84,580 76,667 90,995 104,509
Line of credit and loans.............. 22,196 22,380 21,805 25,587
Stockholders' equity.................. 35,837 30,583 39,673 41,798
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
-------------------------- ---------------
1993 1994 1995 1995 1996
-------- -------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation and amortization...... 2,803 2,527 2,364 1,773 1,830
Backlog............................ 12,500 17,000 26,500 26,900 35,900
Sales per employee................. 135 184 227 166 188
</TABLE>
- -------
(1) Net sales for the years ended September 30, 1991 and 1992 were $72,900 and
$73,300, respectively. Other financial data for fiscal years 1991 and 1992
have not been provided as comparable information during these periods is
not available due to changes in accounting software, overhead and expense
allocation policies of the Company's parent and lack of historical US GAAP
financial information for certain foreign locations.
(2) Pro forma net income per share has been calculated for the year ended
September 30, 1995 and the nine months ended June 30, 1996 assuming that
shares have been outstanding for such periods. Such shares represent
the number of shares to be issued pursuant to the Offerings, a portion of
the proceeds from which will be used to purchase the shares of RSL and RSI
and to repay $7 million of indebtedness owed to Siemens and SC.
(3)Working capital is defined as total current assets less total current
liabilities.
6
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully by prospective investors in evaluating
the Company and its business before purchasing shares of Common Stock offered
hereby.
NO PRIOR OPERATING HISTORY AS A STAND-ALONE COMPANY. Prior to the
Offerings, the business of the Company has been conducted by subsidiaries of
Siemens and SPC. Since the acquisition of Rofin-Sinar by Siemens in 1987,
Rofin-Sinar's management has operated the Company's business with a
substantial degree of autonomy from Siemens. Siemens has made available to the
Company working capital financing (which at June 30, 1996 was $25.9 million)
and certain other operational support such as participation in group insurance
coverage. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources." Thus, there has been
no financial history of the Company as an independent entity available for a
potential investor to evaluate. In addition, following the Offerings, the
Company will no longer benefit from such working capital financing that has in
the past been made available by Siemens. As a result of certain administrative
costs that it will have as an independent publicly held company, the Company
expects initially to reflect approximately $700,000 per year of additional
operating expenses in the aggregate. See "Certain Transactions." The Company's
ability to operate successfully as a stand-alone publicly held company will
require the Company to continue to improve and integrate the operational,
management and financial systems and controls of its U.S. and European
operations and to train, motivate and manage its employees effectively.
PROCEEDS OF OFFERINGS PAYABLE TO SIEMENS; PURCHASE PRICE AND TERMS OF
TRANSFER OF RSL AND RSI STOCK. The Company will use $ million of the net
proceeds of the Offerings (other than proceeds received by the Company from
the sale of shares of Common Stock pursuant to the Underwriters' over-
allotment option) to pay the purchase price for the purchase of the capital
stock of RSL and RSI from Siemens and SPC, respectively. See "Use of
Proceeds."
Immediately prior to the closing of the Offerings, Siemens will, and will
cause certain of its subsidiaries to, sell to the Company all of the
outstanding capital stock of RSL and RSI for a purchase price of $ million.
Because the purchase price for RSL and RSI is based on the offering price of
the shares of Common Stock of the Company being sold in the Offerings, it
reflects the factors considered in determining such offering price. Among the
factors considered in determining the offering price of the Common Stock were
the market values and price/earnings multiples of publicly traded common stock
of certain other companies of comparable size in the material processing and
electro-optical laser industries and the machine tool industry, the experience
of the Company's management and the position of the Company in its industry
and its prospects, the general status of the securities markets, the market
conditions for new offerings of securities and the demand for common stock and
for similar securities of comparable companies. The offering price of the
Common Stock was not based upon the net tangible book value of the assets
being acquired by the Company from Siemens. Such offering price was determined
through discussions and negotiations among the Company, Siemens, SPC and the
Underwriters. In the sale and transfer agreements relating to the purchase by
the Company of RSL and RSI, while Siemens and SPC represent and warrant as to
the ownership of the stock of RSL and RSI, respectively, neither Siemens nor
SPC has made any representations, warranties or indemnities with respect to
the Company's business, its ownership of its assets or its financial condition
or results of operations. Accordingly, the Company will have no contractual
recourse against Siemens or SPC, except with respect to income and certain
other tax liabilities, for periods prior to the closing of the Offerings. See
"--Dilution," "Certain Transactions--Transfer Agreements," "--Tax Allocation
and Indemnification Agreement" and "Underwriting."
INDUSTRY CONCENTRATION AND CYCLICALITY; DEPENDENCE ON SALES BY THIRD
PARTIES. The Company's business is significantly dependent on capital
expenditures by manufacturers in the Machine Tool, Automotive and
Semiconductor & Electronics industries. These industries are cyclical
7
<PAGE>
and have historically experienced periods of oversupply, resulting in
significantly reduced demand for capital equipment, including the products
manufactured and marketed by the Company. For the foreseeable future, the
Company's operations will continue to be dependent on capital expenditures in
these industries which, in turn, are largely dependent on the market demand
for their products. The Company's net sales and results of operations may be
materially adversely affected if downturns or slowdowns in the Machine Tool,
Automotive and Semiconductor & Electronics industries occur in the future.
The Company's net sales are dependent in part upon the ability of its OEM
customers to develop and sell systems that incorporate the Company's laser
products. Adverse economic conditions, large inventory positions, limited
marketing resources and other factors affecting these OEM customers could have
a substantial impact upon the Company's financial results. No assurances can
be given that the Company's OEM customers will not experience financial or
other difficulties that could adversely affect their operations and, in turn,
the financial condition or results of operations of the Company.
VARIABILITY AND UNCERTAINTY OF QUARTERLY OPERATING RESULTS. The Company has
experienced and expects to continue to experience some fluctuations in its
quarterly results. The Company believes that fluctuations in quarterly results
may cause the market price of its Common Stock to fluctuate, perhaps
substantially. Factors which may have an influence on the Company's operating
results in a particular quarter include the timing of the receipt of orders
from major customers, product mix, competitive pricing pressures, the relative
proportions of domestic and international sales, the Company's ability to
design, manufacture and introduce new products on a cost-effective and timely
basis, the delay between incurrence of expenses to further develop marketing
and service capabilities and realization of benefits from such improved
capabilities, and the introduction of new products by the Company and its
competitors. In addition, the Company's backlog at any given time is not
necessarily indicative of actual sales for any succeeding period. The
Company's sales will often reflect orders shipped in the same quarter that
they are received. Moreover, customers may cancel or reschedule shipments, and
production difficulties could delay shipments. Accordingly, the Company's
results of operations are subject to significant variability from quarter to
quarter. See "Business--Order Backlog." The Company's sales of its laser
marking systems may also result in substantial fluctuations in quarterly
results. The Company typically builds its laser marking systems to customer
order and, with respect to special order systems, can incur significant costs
in advance of sales of such special order systems due to the long sales cycle
associated with these systems. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quarterly Results of
Operations" and "Business--The Company's Laser Products."
CURRENCY RISK. Although the Company reports its results in U.S. dollars,
approximately two-thirds of its sales are denominated in other currencies,
including primarily German marks, as well as French francs, Italian lire and
Japanese yen. Although a predominant portion of the Company's cost of goods
sold, selling, general and administrative expenses and research development
expenses are incurred in German marks, net sales and costs and related assets
and liabilities are generally denominated in the functional currencies of the
operations, thereby serving to reduce the Company's exposure to exchange gains
and losses. Exchange differences upon translation from each operation's
functional currency to U.S. dollars are accumulated as a separate component of
equity. The currency translation adjustment component of shareholders' equity
changed from a $169,000 debit at September 30, 1993 to a $1.5 million credit
at September 30, 1994, from the $1.5 million credit at September 30, 1994 to a
$5.4 million credit at September 30, 1995 and from the $5.4 million credit at
September 30, 1995 to a $2.8 million credit at June 30, 1996. These changes
arose primarily from the strengthening of the German mark against the U.S.
dollar during the fiscal 1994-1995 period and the strengthening of the U.S.
dollar against such foreign currencies in the first nine months of fiscal
1996, and reflect the fact that a high proportion of the Company's capital is
invested in its German operations, whose functional currency is the German
mark. The strengthening and weakening of the
8
<PAGE>
German mark and certain other functional currencies against the U.S. dollar
has had the effect of increasing and decreasing (as applicable) reported net
sales as well as cost of goods sold and selling, general and administrative
expenses denominated in such foreign currencies when translated into U.S.
dollars as compared to prior periods. See "Risk Factors--Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Overview--Currency Exchange Rates." Although historically the Company's
subsidiaries have not paid dividends, a further area of currency exposure may
in the future be represented by the payment of dividends, if any, by the
Company's operating subsidiaries in their respective functional currencies.
While the Company has not in the past engaged in hedging transactions,
following the closing of the Offerings, it intends to implement a policy to
hedge up to 50% of its net foreign currency exposure utilizing forward
exchange contracts, forward exchange options and currency swap contracts. The
Company also intends to continue to borrow in each operating subsidiary's
functional currency to reduce exposure to exchange gains and losses. While the
German mark has increased in value against the U.S. dollar in the period
September 30, 1994 to September 30, 1995, this trend has in part reversed
itself during the nine-month period ended June 30, 1996, and there can be no
assurance that changes in currency exchange rates will not have a material
adverse effect on the Company's business, financial condition and results of
operations.
COMPETITION. The laser industry is characterized by significant price
competition. The Company's current and proposed laser products and laser
marking products compete with those of several well-established companies,
some of which are larger and have substantially greater financial, managerial
and technical resources, more extensive distribution and service networks and
larger installed customer bases than the Company. The Company believes that
this competition will be particularly intense in the Nd:YAG solid state laser
markets, as many companies have committed significant research and development
resources to pursue opportunities in these markets. There can be no assurance
that the Company will successfully differentiate its current and proposed
products from the products of its competitors or that the marketplace will
consider the Company's products to be superior to competing products. With
respect to the Company's laser marking products, because many of the
components required to develop and produce a laser-based marking system are
commercially available, barriers to entry into this market are relatively low,
and the Company expects new competitive product entry in this market. To
maintain its competitive position in this market, the Company believes that it
will be required to continue a high level of investment in engineering,
research and development, marketing and customer service and support. There
can be no assurance that the Company will have sufficient resources to
continue to make such investments, that the Company will be able to make the
technological advances necessary to maintain its competitive position, or that
its products will receive market acceptance. See "Business--Competition."
RISKS RELATING TO SALES GROWTH IN CO/2/ AND ND:YAG LASERS. In recent years,
the Company has experienced a period of rapid growth, attributable in large
part to the demand for its laser marking products. If the Company is to
maintain or increase the rate of growth of its laser sales in the near term,
such sales will have to come through increases in market share for the
Company's existing products, through the development of new products or
through the Company's acquisition of its competitors or their products. To
date, a substantial portion of the Company's revenue has been derived from
sales of high-powered CO/2/ laser sources and, more recently, solid state
flash lamp-pumped laser sources. The Company intends to devote substantial
resources to increasing the output power of its diffusion-cooled CO/2/ Slab
laser sources and to developing diode-pumped Nd:YAG solid state laser products
in accordance with market demand. The Company is currently focused on reducing
the manufacturing costs of its diffusion-cooled CO/2/ Slab lasers to achieve
more attractive pricing. The Company's diode-pumped lasers, however, are in an
early stage of development and are not expected to result in marketable
products prior to 1998. A large part of the Company's growth strategy depends
upon being able to increase substantially its market share for laser marking
products, particularly in the United States. If the Company is unable to
implement its strategy of increasing its
9
<PAGE>
market share for laser marking products and of expanding its product range to
include higher output power diffusion-cooled CO/2/ Slab lasers and diode-
pumped Nd:YAG solid state lasers at attractive prices, it may not be able to
achieve its anticipated rate of growth, as a result of which its business,
operating results and financial condition could be adversely affected. No
assurance can be given that the Company will successfully expand its marking
products' market share, increase the output power of its diffusion-cooled
CO/2/ Slab laser sources or develop diode-pumped Nd:YAG solid state laser
products, or that any such products will achieve market acceptance or not be
rendered obsolete or uncompetitive by products of other companies. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Company Strategy" and "--The Company's Laser
Products."
While there are currently no commitments with respect to any future
acquisitions, the Company's business strategy includes the expansion of its
products and services, which may be effected through acquisitions. The Company
from time to time reviews various opportunities to acquire businesses,
technologies or products complementary to the Company's present business.
Although management expects to analyze any such opportunity carefully before
committing the Company's resources, there can be no assurance that the Company
will be able to integrate any acquired business effectively or that any
acquisition will result in long-term benefits to the Company. See "Business--
Business Strategy."
DEPENDENCE ON KEY EMPLOYEES. The future success of the Company is
dependent, in part, on its ability to attract and retain certain key
personnel. In particular, the Company's investment in high-power CO/2/ and
Nd:YAG solid state laser products is dependent on a limited number of advanced
research and development engineers, many of whom have several years of service
with the Company. The Company may need to hire additional skilled personnel to
commercialize these products and expand all areas of its business to continue
to grow. While the Company believes that its salary and incentive compensation
is competitive, there can be no assurance that the Company will be able to
retain its existing personnel or attract additional qualified employees in the
future. See "Business--Research and Development."
FORWARD-LOOKING STATEMENTS. This Prospectus contains certain forward-
looking statements concerning the Company's operations, economic performance
and financial condition, including, among other things, the Company's growth
strategies for its cutting and welding laser business and laser marking
business. These statements are based on the Company's expectations and are
currently subject to various risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors,
including those identified under this "Risk Factors" section and elsewhere in
this Prospectus.
CONFLICTING PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES; POTENTIAL INFRINGEMENT CLAIMS. The Company from time to time receives
notices from third parties alleging infringement of such parties' patent or
other intellectual property rights by the Company's products. While such
notices are common in the Company's industry and the Company has in the past
been able to develop non-infringing technology or license necessary patents or
technology on commercially reasonable terms, there can be no assurance that
the Company would in the future prevail in any litigation seeking damages or
expenses from the Company or to enjoin the Company from selling its products
on the basis of such alleged infringement, or that the Company would be able
to develop any non-infringing technology or license any valid and infringed
patents on commercially reasonable terms. In the event any third party made a
valid claim against the Company or its customers and a license were not made
available to the Company on commercially reasonable terms, the Company would
be adversely affected.
In July 1996, the Company received notice of an opposition filed by a
competitor in the European Patent Office ("EPO") which challenges on a number
of grounds one of the two third-party patents licensed by the Company covering
certain aspects of its diffusion-cooled CO/2/ Slab laser. The
10
<PAGE>
U.S.-issued counterpart of this patent was previously the subject of a
reexamination proceeding in the U.S. Patent and Trademark Office ("PTO") at
the conclusion of which the patent was upheld. While the decision of the PTO
is not binding on the EPO, based on the outcome of the U.S. reexamination
proceeding and management's review of the arguments made in the notice of
opposition, the Company believes that such notice of opposition is without
substantial merit. The Company intends to defend the EPO opposition proceeding
vigorously.
In July 1996, the Company received a letter from a manufacturer of sealed-
off, RF-excited CO/2/ lasers for military and commercial avionics applications
offering a license of its U.S. patents covering such technology in exchange
for a cross-license of the Company's CO/2/ Slab laser technology. Based on its
review of the patents held by such manufacturer, the Company does not believe
that its products infringe such patents, and it intends to defend vigorously
any infringement action which such party may commence against the Company.
From time to time, the Company files notices of opposition to certain
patents on laser technologies held by others, including academic institutions
and competitors of the Company, which the Company believes could inhibit its
ability to develop products in this area. In particular, the Company has a
pending notice of opposition against a patent held by a competitor which it
believes conflicts with a third-party patent licensed by the Company covering
certain aspects of its diffusion-cooled CO/2/ Slab laser. No assurance can be
given that the Company will be able to avoid an action by such competitor or
others or not be forced to initiate its own actions to protect its proprietary
position.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY. The Company's future success
depends in part upon its intellectual property, including trade secrets, know-
how and continuing technological innovation. There can be no assurance that
the steps taken by the Company to protect its intellectual property will be
adequate to prevent misappropriation or that others will not develop
competitive technologies or products. The Company currently holds 32 United
States and foreign patents on its laser sources. There can be no assurance
that other companies are not investigating or developing other technologies
that are similar to the Company's, that any patents will issue from any
application filed by the Company or that, if patents do issue, the claims
allowed will be sufficiently broad to deter or prohibit others from marketing
similar products. In addition, there can be no assurance that any patents
issued to the Company will not be challenged, invalidated or circumvented, or
that the rights thereunder will provide a competitive advantage to the
Company. See "Business--Intellectual Property."
FUTURE CAPITAL REQUIREMENTS. The Company is devoting substantial resources
to the development of new products for the high-power CO/2/ and solid state
laser markets and the semiconductor equipment market. Although the Company
believes that the existing cash balances, cash flow from operations, available
lines of credit, proceeds retained from the Offerings and any proceeds
received by the Company from the exercise of the U.S. Underwriters' over-
allotment option will be sufficient to meet its capital requirements at least
through fiscal 1997, the Company may be required to seek additional equity or
debt financing to compete in these markets. The timing and amount of such
capital requirements cannot be precisely determined at this time and will
depend on several factors, including demand for the Company's products and
products under development and changes in the Company's three principal
markets. There can be no assurance that such additional financing will be
available when needed, or, if available, will be on satisfactory terms. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
HOLDING COMPANY STRUCTURE RISKS. The Company conducts all of its operations
through subsidiaries. Accordingly, the primary internal source of the
Company's cash is dividends and other distributions from its subsidiaries, as
well as intercompany advances. Each of these subsidiaries (other than RSI) was
formed under the laws of, and has its operations in, a country other than the
United States, the jurisdiction of the Company's organization. The
subsidiaries' ability to make distributions to
11
<PAGE>
the Company are subject to their having sufficient funds from their operations
legally available for the payment thereof which are not needed to fund their
operations, obligations or other business plans. The laws under which the
Company's subsidiaries in France and Italy are organized provide generally
that dividends may be declared out of yearly profits subject to the
maintenance of registered capital and required reserves and after the recovery
of accumulated losses. If the Company's subsidiaries are unable to make
distributions to the Company, the Company's growth may be inhibited unless the
Company is able to obtain additional debt or equity financing. The Company may
not be able to obtain debt financing if it cannot compel its subsidiaries to
make distributions to service the debt financing or obtain upstream guarantees
from its subsidiaries with respect to such debt financing. Because the Company
is a stockholder of each of its subsidiaries, the Company's claims as such
will generally rank junior to all other creditors of and claimants against its
subsidiaries. In the event of a subsidiary's liquidation, there may not be
assets sufficient for the Company to recoup its investment therein.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. The Company's products are
currently marketed in approximately 25 countries, with Germany, the rest of
Europe, the United States and the Asia/Pacific region being the Company's
principal markets. Sales in the Company's principal markets are subject to
risks inherent in international business activities, including, in particular,
general economic conditions in each such country, overlap of differing tax
structures, management of an organization spread over various jurisdictions,
unexpected changes in regulatory requirements and compliance with a variety of
foreign laws and regulations. Other general risks associated with
international operations include import and export licensing requirements,
trade restrictions and changes in tariff and freight rates. The business and
operations of the Company's principal subsidiary, RSL, are primarily subject
to the changing economic and political conditions prevailing from time to time
in Germany. Although productivity in Germany is generally high, labor costs,
corporate taxes and employee benefit expenses are high and weekly working
hours are shorter in Germany compared to the rest of the European Union, the
United States and Japan.
NO PRIOR PUBLIC MARKET; POTENTIAL VOLATILITY OF COMMON STOCK PRICE. Prior
to this offering, there has been no public market for the Company's Common
Stock, and there can be no assurance that an active trading market will
develop or be sustained. The initial public offering price of the Common Stock
was negotiated between the Company and the Representatives of the
Underwriters, and may not be indicative of the market price for the Common
Stock after the offering. See "Underwriting" for information relating to the
several factors used in determining the initial public offering price of the
Common Stock. The Company believes that factors such as quarterly fluctuations
in results of operations, announcements of new products, technologies or
customers by the Company or its competitors and developments with respect to
intellectual property, shortfalls in the Company's operations relative to
analysts' expectations, and other matters may cause the market price of its
Common Stock to fluctuate, perhaps substantially. In addition, in recent
years, the stock market in general, and the shares of technology companies in
particular, have experienced wide price fluctuations. These broad market and
industry fluctuations, particularly in the Semiconductor & Electronics
industry, may adversely affect the market price of the Company's Common Stock.
DILUTION. Purchasers of the shares of Common Stock offered hereby will
experience immediate dilution in the net tangible book value per share from
the initial offering price. See "Dilution."
POTENTIAL ANTI-TAKEOVER EFFECTS OF DELAWARE LAW; POSSIBLE ISSUANCES OF
PREFERRED STOCK. The Company is subject to the provisions of Section 203 of
the Delaware General Corporation Law ("DGCL") prohibiting publicly held
Delaware corporations from engaging in business combinations with certain
stockholders for a specified period of time without the approval of
substantially all of its outstanding voting stock. Such provisions could delay
or impede the removal of incumbent directors and could make more difficult a
merger, tender offer or proxy contest involving the Company, even if such
events could be beneficial, in the short term, to the interests of the
stockholders. The Company's
12
<PAGE>
Certificate of Incorporation (as defined herein) and By-laws contain
provisions relating to the limitations of liability and indemnification of its
directors and officers, dividing its Board of Directors into three classes of
directors serving three-year terms and providing that its stockholders can
take action only at a duly called annual or special meeting of stockholders.
These provisions also may have the effect of deterring hostile takeovers or
delaying changes in control or management of the Company. Additionally, the
Company's Board of Directors intends to adopt a stockholder rights plan prior
to the closing of the Offerings and to issue rights under such plan to all
purchasers of the Common Stock of the Company. In certain circumstances, the
fact that certain corporate devices are in place which inhibit or discourage
takeover attempts could reduce the market value of the Company's Common Stock.
See "Description of Capital Stock--Certain Provisions of the Company's
Certificate of Incorporation and By-Laws"; "--Section 203 of the Delaware
General Corporation Law"; and "--Rights Agreement."
The Board of Directors may issue shares of preferred stock without
stockholder approval on such terms as the Board may determine. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock that may be issued in the
future. Moreover, although the ability to issue preferred stock may provide
flexibility in connection with possible acquisitions and other corporate
purposes, such issuance may make it more difficult for a third party to
acquire, or may discourage a third party from acquiring, a majority of the
voting stock of the Company. The Company has no current plans to issue any
shares of preferred stock. See "Description of Capital Stock--Preferred
Stock."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock offered
hereby are estimated to be approximately $ ($ if the Underwriters'
overallotment option is exercised in full). Of such net proceeds received by
the Company, $ will be paid to Siemens and SPC as consideration for the
acquisition of all the outstanding stock of RSL and RSI. The cost of the
assets to be acquired from Siemens and SPC was determined based on the
offering price of the Common Stock. The offering price was determined through
discussions and negotiations among the Company, Siemens, SPC and the
Underwriters. Among the factors considered in determining the offering price
of the Common Stock were the market values and price/earnings multiples of
publicly traded common stock of certain other companies of comparable size in
the material processing and electro-optical laser industries and the machine
tool industry, the experience of the Company's management and the position of
the Company in its industry and its prospects, the general status of the
securities markets, the market conditions for new offerings of securities and
the demand for common stock and for similar securities of comparable
companies. See "Prospectus Summary--The Company--Background of the Offerings"
and "Certain Transactions."
The remainder of the net proceeds of the Offerings ($19.2 million, together
with any net proceeds received by the Company from the exercise of the
Underwriters' over-allotment option) will be used for general corporate
purposes, including repayment of $7 million of indebtedness owed to Siemens
and SC and future acquisitions, if any. Pending such use, such proceeds will
be used to reduce short-term indebtedness or invested in short-term
investments. See "Management's Discussion and Analysis of Financial Condition
and Results of Operation--Liquidity and Capital Resources" and "Certain
Transactions."
DIVIDEND POLICY
The Company currently intends to retain all of its net earnings after
consummation of the Offerings to fund the development of its business and does
not anticipate paying dividends in the foreseeable future. The declaration and
payment of future dividends by the Company, if any, will be at the sole
discretion of its Board of Directors, and will depend upon, among other
things, the Company's profitability, financial condition, cash requirements,
future prospects, general business conditions, the terms of any of the
Company's debt agreements and other factors the Company's Board of Directors
may in the future consider to be relevant.
13
<PAGE>
DILUTION
At June 30, 1996, the net tangible book value per share of Common Stock, on
a pro forma basis after giving effect to the use of the proceeds of the
Offerings to purchase the stock of RSL and RSI from Siemens and SPC and
assuming that 10,000,000 shares of Common Stock were issued and outstanding as
of June 30, 1996, was $ per share. "Net tangible book value per share"
represents total tangible assets minus total liabilities divided by the total
number of shares outstanding on that date. After giving effect to the sale of
shares of Common Stock pursuant to the Offerings at the initial offering price
of $ per share and the receipt and application of the proceeds therefrom
(net of underwriting discounts and commissions and estimated offering
expenses) as set forth under "Use of Proceeds," net tangible book value per
share at June 30, 1996 would have been $ , representing an immediate increase
of $ per share to SPC, the current sole stockholder of the Company, and an
immediate dilution of $ per share to new investors purchasing at the initial
offering price. Dilution per share represents the difference between the
amount per share paid by new investors purchasing shares of Common Stock in
the Offerings and the net tangible book value per share of Common Stock
immediately after completion of the Offerings. The following table illustrates
such per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share(1)............................ $
Net tangible book value per share at June 30, 1996.................. $
Net increase in net tangible book value per share attributable
to the Offerings...................................................
----
Pro forma net tangible book value per share after the Offerings.....
----
Dilution per share to new investors in the Offerings(2)............. $
====
</TABLE>
- --------
(1) Before deduction of underwriting discounts.
(2) Dilution is determined by subtracting pro forma net tangible book value
per share after the Offerings from the amount of cash paid by an investor
for one share of Common Stock.
The following table summarizes, on a pro forma basis as of June 30, 1996,
the difference between (i) the number of shares of Common Stock which the
existing stockholder acquired during the past five years or which it has a
right to acquire within 60 days after the date of this Prospectus; (ii) the
number of shares of Common Stock purchased from the Company by new investors
in the Offerings; (iii) the total cash consideration paid by the existing
stockholder and the new investors; and (iv) the average purchase price per
share paid by the existing stockholder and the new investors (before deducting
the underwriting discounts and commissions and expenses of the Offerings):
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
-------- -------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholder....
New stockholders........ $ % $
-------- -------- --------- ---------
Total................. % $ 100.0%
======== ======== ========= =========
</TABLE>
14
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company (i) as of June 30, 1996, and (ii) as adjusted to reflect the
Offerings and the use of the net proceeds to repay $7 million of indebtedness
owed to Siemens and SPC. See "Use of Proceeds." The information in the table
below is qualified in its entirety by, and should be read in conjunction with,
the Company's Combined Financial Statements included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Advances from Parent....................................... $ 7,000 $ 0
Short-term debt (including lines of credit and bank
loans).................................................... 25,587 25,587
======= ======
Long-term debt............................................. $ 0 $ 0
Stockholders' equity:
Parent's capital......................................... 39,021 0
Preferred Stock, par value $0.01 per share, 5 million
shares authorized; no shares issued or outstanding...... -- --
Common Stock, par value $0.01 per share, 30 million
shares authorized; no shares issued and outstanding as
of June 30, 1996; and 10 million shares issued and out-
standing, as adjusted................................... -- 100
Paid-in capital.......................................... 0
Cumulative foreign currency translation adjustment....... 2,777 2,777
------- ------
Total stockholders' equity............................. 41,798
------- ------
Total capitalization................................. $74,385 $
======= ======
</TABLE>
15
<PAGE>
SELECTED COMBINED FINANCIAL INFORMATION AND OPERATING DATA
The Statement of Operations Data for each of the years in the three-year
period ended September 30, 1995 and the nine-month period ended June 30, 1996
and the Balance Sheet Data as of September 30, 1994 and 1995 and June 30, 1996
set forth below have been derived from the Company's combined financial
statements included elsewhere in this Prospectus which have been audited by
KPMG Peat Marwick LLP, the Company's independent auditors. Net sales for the
fiscal years ended September 30, 1991 and 1992 and Balance Sheet Data as of
September 30, 1993 are unaudited and have been derived from the Company's
historical financial records. The Statement of Operations Data for the nine-
month periods ended June 30, 1995 and the Balance Sheet Data as of September
30, 1993 are unaudited but, in the opinion of management, such information
reflects all adjustments, consisting of only normal recurring adjustments
necessary for a fair presentation of the financial data for the interim
periods. The results for the interim periods presented are not necessarily
indicative of the results for the full year. These data should be read in
conjunction with "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Company's Combined
Financial Statements and other financial information appearing elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
---------------------------- ----------------
1993 1994 1995 1995 1996
-------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales(1)................. $ 60,034 $ 69,217 $ 92,466 $65,460 $83,372
Cost of goods sold........... 47,745 46,993 57,162 40,475 51,466
Gross profit................. 12,289 22,224 35,304 24,985 31,906
Selling, general, and admin-
istrative expenses.......... 21,951 17,059 20,673 14,534 15,221
Research and development ex-
penses...................... 10,276 6,834 6,719 5,903 5,850
Income (loss) from opera-
tions....................... (19,938) (1,669) 7,912 4,548 10,835
Net interest expense......... 1,654 1,308 1,272 947 790
Income (loss) before income
taxes....................... (21,386) (3,116) 6,265 3,489 10,092
Income tax expense (bene-
fit)........................ (1,565) (1,422) 3,052 1,725 4,354
Net income (loss)............ (19,821) (1,694) 3,213 1,764 5,738
Pro forma net income per com-
mon share................... [ ] [ ]
Shares used in computing pro
forma net income per
shares(2)................... [ ] [ ]
OPERATING DATA:
As percentage of sales:
Gross profit................. 20.5% 32.1% 38.2% 38.2% 38.3%
Selling, general and adminis-
trative expenses............ 36.6 24.6 22.4 22.2 18.3
Research and development ex-
penses...................... 17.1 9.9 7.3 9.0 7.0
Income (loss) from opera-
tions....................... (33.2) (2.4) 8.6 6.9 13.0
Income (loss) before income
taxes....................... (35.6) (4.5) 6.8 5.3 12.1
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-----------------------
AT JUNE 30,
1993 1994 1995 1996
------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(4)........................ $ 7,672 $ 4,927 $14,530 $ 18,981
Total assets.............................. 84,580 76,667 90,995 104,509
Line of credit and loans.................. 22,196 22,380 21,805 25,587
Stockholders' equity...................... 35,837 30,583 39,673 41,798
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
-------------------------- ---------------
1993 1994 1995 1995 1996
-------- -------- -------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Depreciation and amortization...... 2,803 2,527 2,364 1,773 1,830
Backlog............................ 12,500 17,000 26,500 26,900 35,900
Sales per employee................. 135 184 227 166 188
</TABLE>
- -------
(1) Net sales for the years ended September 30, 1991 and 1992 were $72,900 and
$73,300, respectively. Other financial data for fiscal years 1991 and 1992
have not been provided as comparable information during these periods is
not available due to changes in accounting software, overhead and expense
allocation policies of the Company's parent and lack of historical US GAAP
financial information for certain foreign locations.
(2) Pro forma net income per share has been calculated for the year ended
September 30, 1995 and the nine months ended June 30, 1996 assuming that
shares have been outstanding for such periods. Such shares represent
the number of shares to be issued pursuant to the Offerings, a portion of
the proceeds from which will be used to purchase the shares of RSL and RSI
and to repay $7 million of indebtedness owed to Siemens and SC.
(3) Working capital is defined as total current assets less total current
liabilities.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with the Company's
Combined Financial Statements thereto included elsewhere in this Prospectus.
OVERVIEW
Rofin-Sinar is a leader in the design, development, engineering,
manufacture and marketing of laser-based products used for cutting, welding
and marking a wide range of industrial materials. During the 1995 fiscal year
and the first nine months of fiscal 1996, respectively, approximately 73% and
69% of the Company's revenues were from sales and servicing of laser products
for cutting and welding applications and approximately 27% and 31% were from
sales and servicing of laser products for marking applications.
Restructuring
Through the late 1980's, in anticipation of continued growth in the Machine
Tool industry, the Company added capacity and pursued a strategy of vertical
integration to support projected growth in its business. The Machine Tool
industry experienced a significant downturn during the global recession in the
early 1990's as end-users, particularly in the heavy manufacturing industries,
reduced their investment in new technologies and postponed modernizing their
production facilities in the face of adverse business conditions. In Germany,
for example, the downturn in the Machine Tool industry resulted in an almost
40% drop in demand. Purchases of lasers by machine tool manufacturers began to
drop significantly and, in 1992, laser manufacturers, including the Company,
reduced their prices in response to reduced market demand. In light of this
change in market conditions, in 1993 the Company undertook a major
restructuring program to reduce its manufacturing costs, fixed costs and
overhead and better position the Company to benefit from improving business
conditions.
The Restructuring occurred over a three-year period. In 1993, the Company
reduced its workforce in both the United States and Germany by approximately
125 employees, closed operations in San Jose, California, consolidated its
U.S. research and development, manufacturing and marketing activities,
reengineered its manufacturing processes and streamlined its product offering.
In addition, the Company refocused its research and development activities on
marketable new products, commenced a program to outsource non-strategic
components, subleased office space to third parties in Hamburg and broadened
the range of laser applications offered by the Company. In 1994, the Company
continued to outsource non-strategic components and increased use of sub-
assembled systems. In 1995, the Company disposed of its in-house machine shop.
With the improvement of economic conditions in the United States in 1994
and in Europe in 1995, manufacturers of lasers for material processing have
experienced rapid growth, driven primarily by pent-up demand as industrial
end-users worldwide modernize their manufacturing facilities to reduce
production costs and increase efficiency. The Company experienced significant
financial improvement during the 1994 and 1995 fiscal years and the first nine
months of fiscal 1996, primarily reflecting improving economic conditions, the
benefits of the Restructuring undertaken in 1993 and 1994 and the
implementation of the Company's current business strategy. Rofin-Sinar's
worldwide sales increased from $60 million for the fiscal year ended September
30, 1993 to $92.5 million for the fiscal year ended September 30, 1995,
representing a compounded annual growth rate of approximately 24.1% per annum.
This increase was due principally to growth in sales across the Company's
entire product range and in all three principal geographic markets, with the
strongest growth in sales of the Company's laser marking products, which
increased from $10.1 million to $22.8 million over such three-year period.
Total net sales increased to $83.4 million in the first nine months of fiscal
1996 (compared to $65.5 million in the comparable prior period), representing
an increase of 27.4% over the prior period. The growth in the Company's net
sales since fiscal 1993 has allowed the
17
<PAGE>
Company to realize improved operating leverage by producing larger unit
volumes over relatively lower costs and by negotiating more favorable terms
for purchases of components and subassemblies. While the Company expects to
continue to see growth in fiscal 1997 and 1998, with the strongest long-term
gains in the Asia/Pacific region principally in laser cutting and marking
applications, there can be no assurance that the Company's recent rate of
growth will be maintained.
The laser industry continues to be characterized by significant price
competition. As part of its ongoing strategy, the Company is continuing its
efforts to contain costs in order to improve its cost structure.
Currency Exchange Rates
The Company's Combined Financial Statements are prepared in U.S. dollars.
Although the Company reports its results in U.S. dollars, approximately two-
thirds of its sales are denominated in other currencies, including primarily
German marks, as well as French francs, Italian lire and Japanese yen. Net
sales and costs and related assets and liabilities are generally denominated
in the functional currencies of the operations, thereby serving to reduce the
Company's exposure to exchange gains and losses. Exchange differences upon
translation from each operation's functional currency to United States dollars
are accumulated as a separate component of equity. The currency translation
adjustment component of shareholders' equity changed from a $169,000 debit at
September 30, 1993 to a $1.5 million credit at September 30, 1994, from the
$1.5 million credit at September 30, 1994 to a $5.4 million credit at
September 30, 1995 and from the $5.4 million credit at September 30, 1995 to a
$2.8 million credit at June 30, 1996. These changes arose primarily from the
strengthening of the German mark and such other functional currencies against
the U.S. dollar during the fiscal 1994-1995 period and the strengthening of
the U.S. dollar against such foreign currencies during the first nine months
of fiscal 1996, and reflect the fact that a high proportion of the Company's
capital is invested in its German operations, whose functional currency is the
German mark.
The fluctuation of the German mark and the other relevant functional
currencies against the U.S. dollar has had the effect of increasing or
decreasing (as applicable) reported net sales, as well as cost of goods sold
and gross margin and selling, general and administrative expenses, denominated
in such foreign currencies when translated into U.S. dollars as compared to
prior periods. See "Risk Factors -- Currency Risk."
While the Company has not in the past engaged in hedging transactions,
following the closing of the Offerings, it intends to implement a policy to
hedge up to 50% of its net foreign currency exposure utilizing forward
exchange contracts, forward exchange options and currency swap contracts. The
Company also intends to continue to borrow in each operating subsidiary's
functional currency to reduce its exposure to foreign currency gains and
losses. There can be no assurance, however, that changes in currency exchange
rates will not have a material adverse effect on the Company's business,
financial condition and results of operations.
The following table illustrates the effect of the changes in exchange rates
on the Company's fiscal 1994 and 1995 net sales, gross profit and income from
operations, which have been recalculated to show what such amounts would have
been applying 1993 average exchange rates to 1994 amounts and 1994 average
exchange rates to 1995 amounts.
<TABLE>
<CAPTION>
FISCAL
1993 FISCAL 1994 FISCAL 1995
------ ---------------- ---------------
IN 1993 IN 1994
EXCHANGE EXCHANGE
ACTUAL ACTUAL RATES ACTUAL RATES
------ ------ -------- ------ --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales.............................. $ 60.0 $69.2 $69.8 $92.5 $85.4
Gross profit........................... 12.3 22.2 22.5 35.3 32.2
Income (loss) from operations.......... (19.8) (1.7) (1.7) 7.9 7.2
</TABLE>
18
<PAGE>
Between fiscal 1993 and 1994, the German mark weakened against the U.S.
dollar by approximately 1.9%. The impact of this weakening of the German mark
was to decrease net sales and gross profit by $600,000 and $300,000,
respectively, with no impact on loss from operations. Between fiscal 1994 and
1995, the German mark strengthened against the U.S. dollar by approximately
14%. The impact of this strengthening of the German mark was to increase net
sales, gross profit and income from operations by $7.1 million, $3.1 million
and $700,000, respectively. The other factors affecting these results are
discussed below under "--Results of Operations."
Taxes
Although prior to the Offerings RSI and RSL have filed consolidated income
tax returns with SC and Siemens, respectively, the Company's subsidiaries pay
taxes in many jurisdictions and the provisions for income taxes in the
Company's Combined Financial Statements are based on separate local tax
computations. On a combined basis, this practice may result in the Company
incurring income tax expense even though it may not have combined pre-tax
income or in paying taxes in excess of pre-tax income if some of its
subsidiaries are not profitable while others are. See Note 9 of the Notes to
the Combined Financial Statements. In particular, because of the Company's
substantial operations in Germany, the Company historically has had a higher
effective tax rate than many of its competitors who do not have operations in
Germany.
The Company currently generates taxable income, principally in Germany and
the United States. German corporate tax law applies the imputation system with
regard to the taxation of the income of a corporation (such as RSL). In
general, retained corporate income is subject to a municipal trade tax (which
for Hamburg and Gunding on a combined basis is 16.7%), which is deductible for
federal corporate income tax purposes, a federal corporate income tax rate of
45% (50% prior to January 1, 1994) and, effective January 1, 1995, a surcharge
of 7.5% on the federal corporate income tax amount.
Profits which are distributed by a German corporate taxpayer (such as RSL)
in the form of a dividend are subject to a reduced federal corporate income
tax rate of 30% (36% prior to January 1, 1994) plus the 7.5% surcharge on the
federal corporate income tax amount calculated at the reduced rate. Dividends
paid by RSL to Rofin-Sinar Technologies Inc. will be subject to withholding
tax at a rate of 5% pursuant to the income tax treaty currently in effect
between the United States and Germany.
Although the Company intends to identify and implement strategies to reduce
its effective tax rate, the Company does not expect its effective tax rates in
the future to decrease significantly below its effective tax rate for the nine
months ended June 30, 1996.
ACQUISITIONS
Since its inception in 1975, Rofin-Sinar has made a series of significant
acquisitions and entered into strategic relationships in order to expand its
product offering, enter into new geographic markets and broaden the range of
industrial applications offered to its customer base.
The Company's first significant acquisition was in 1988 when it acquired
Spectra-Physics Corporation's Industrial Laser Division (which at that time
was the U.S. licensee of Rofin-Sinar's fast axial-flow CO/2/ laser
technology). This acquisition enabled Rofin-Sinar to gain a more rapid entry
into the U.S. market for industrial CO/2/ lasers. Later that year the Company
established a presence in the French market through its acquisition of Optilas
Laser Industriel.
The Company's second significant acquisition occurred in 1989 when the
Company acquired Laser-Optronic GmbH, a manufacturer of laser marking
products, from Coherent General Inc. Through this acquisition, the Company
expanded its product offering to include laser marking. In that same
19
<PAGE>
year, the Company took over responsibility for the manufacture and marketing
of Siemens' "Silamatik" line of laser marking products.
While there are currently no commitments with respect to any future
acquisitions, the Company's business strategy includes the expansion of its
products and services, which may be effected through acquisitions. The Company
from time to time reviews various opportunities to acquire businesses,
technologies or products complementary to the Company's present business.
RESULTS OF OPERATIONS
For the periods indicated, the following table sets forth the percentage of
net sales represented by the respective line items in the Company's combined
statements of operations and the percentage increase (decrease) from the
previous period's results.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
---------------------------------
NINE MONTHS
FISCAL YEAR ENDED ENDED
SEPTEMBER 30, JUNE 30,
------------------- ------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales.................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold......................... 79.5 67.9 61.8 61.8 61.7
Gross profit............................... 20.5 32.1 38.2 38.2 38.3
Selling, general and administrative ex-
penses.................................... 36.6 24.6 22.4 22.2 18.3
Research and development expenses.......... 17.1 9.9 7.3 9.0 7.0
Income (loss) from operations.............. (33.2) (2.4) 8.6 6.9 13.0
Income (loss) before income taxes.......... (35.6) (4.5) 6.8 5.3 12.1
Net income (loss).......................... (33.0) (2.4) 3.5 2.7 6.9
</TABLE>
NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO NINE MONTHS ENDED JUNE 30, 1995
Net Sales. Net sales of $83.4 million for the first nine months of fiscal
1996 increased by $17.9 million, or 27.4%, over the comparable prior period.
The improvement resulted from net sales increases of $11.8 million, or 26.6%,
in Europe and the Asia/Pacific region and $6.1 million, or 28.9%, in the
United States. The growth in Europe and the Asia/Pacific region resulted from
continuing increases in sales volume of the Company's integrated circuit laser
marking application in the Asia/Pacific region, the introduction of the
Company's Slab-Series laser product and the recovery of the Machine Tool
market in Japan. The increase in net sales in the United States was due
principally to increased shipments to the Machine Tool and Automotive markets,
with the largest portion of growth attributable to increased sales volume of
CO/2/ lasers for cutting applications and spare parts and the introduction of
the Company's laser marking products in the United States. The effect of
currency translation on net sales was immaterial.
Cost of Goods Sold. Cost of goods sold of $51.5 million in the first nine
months of fiscal 1996 increased by $11 million, or 27.2%, over the comparable
prior period, and reflected the increase in net sales. As a percentage of
sales, cost of goods sold was unchanged, and reflected the Company's
continuing effort to control manufacturing costs.
Gross Profit. The Company's gross profit of $31.9 million for the first
nine months of fiscal 1996 increased by $6.9 million, or 27.7%, over the
comparable prior period as a result of the increase in net sales in the first
nine months of fiscal 1996 as compared to the comparable prior period. As a
percentage of net sales, gross profit was unchanged from the comparable prior
period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses (which include the cost of application development) of
$15.2 million for the first nine months of fiscal
20
<PAGE>
1996 increased by 4.7% over the comparable prior period due to the increase in
net sales. However, as a percentage of net sales, selling, general and
administrative expenses declined from 22.2% in the first nine months of fiscal
1995 to 18.3% in the comparable period in fiscal 1996, reflecting the
Company's continuing control of these expenses, notwithstanding the opening of
a sales and marketing office in Phoenix, Arizona to develop the Company's
laser marking business in the U.S. market and the establishment of a service
office in Hong Kong to support all product lines in the Asia/Pacific region.
Research and Development Expenses. Research and development expenses of
$5.9 million (which are incurred primarily in German marks and are net of
government grants) remained virtually unchanged from the first nine months of
fiscal 1995 to the comparable period in fiscal 1996. Research and development
expenses declined as a percentage of sales from 9% in the first nine months of
fiscal 1995 to 7% in the comparable period in fiscal 1996 due to the increase
in sales between the two periods.
Income from Operations. The Company's income from operations of $10.8
million for the first nine months of fiscal 1996 increased by $6.3 million, or
138.2%, over the comparable prior period. As a percentage of sales, income
from operations was 13% in the first nine months of fiscal 1996 as compared to
6.9% in the prior period, as a result of continued reductions in selling,
general and administrative expenses and research and development expenses as a
percentage of net sales. The effect of currency translation on income from
operations was immaterial.
Income Before Income Taxes. The Company's income before income taxes of
$10.1 million in the first nine months of fiscal 1996 increased by $6.6
million over the prior period. As a percentage of net sales, income before
income taxes was 12.1% in the first nine months of fiscal 1996, as compared to
5.3% in the prior period, as a result of the increase in income from
operations and the decrease in interest expense accrued under the Company's
intercompany lines of credit with Siemens and SC and borrowing facilities
utilized by its joint venture subsidiary in Japan due to lower interest rates.
Income Tax Expense. Income tax expense was $4.4 million in the first nine
months of fiscal 1996 compared to an income tax expense of $1.7 million in the
prior period. The effective tax rates for the first nine months of fiscal 1996
and the comparable prior period were 43.1% and 49.4%, respectively. The
effective tax rates were higher than the U.S. statutory rate of 35%
principally as a result of earnings taxed at higher foreign statutory rates
and foreign operating losses for which no benefit was recognized in the first
nine months of fiscal 1995.
Net Income. As a result of the foregoing factors, the Company's net income
of $5.7 million in the first nine months of fiscal 1996 increased by $4.0
million over the comparable prior period.
FISCAL 1995 COMPARED TO FISCAL 1994
Net Sales. Net sales of $92.5 million for fiscal 1994 increased by $23.2
million, or 33.6%, over the prior year. The improvement resulted from net
sales increases of $20.6 million, or 51.2%, in Europe and the Asia/Pacific
region and $2.6 million, or 9%, in the United States. The growth in Europe and
the Asia/Pacific region resulted primarily from the substantial increase in
the sales volume of the Company's laser marking products in the Asia/Pacific
region, as well as the strong recovery in Europe of the Machine Tool and
Automotive markets due to pent-up demand, which resulted in higher volume as
well as a shift in product mix toward higher-margin high-power products. In
addition, approximately $7.5 million, or 36.4% of the increase in Europe and
the Asia/Pacific region resulted from currency translation as the German mark
strengthened against the U.S. dollar. The increase in the United States was
due principally to the increased volume of shipments to the improving Machine
Tool and Automotive markets, with the largest portion of growth in sales of
CO/2/ lasers for cutting applications and related service and spare parts.
Because the recovery in both these markets began in 1994, the percentage
increase in the United States was lower in 1995 compared to 1994.
21
<PAGE>
Cost of Goods Sold. Cost of goods sold of $57.2 million for fiscal 1995
increased by $10.2 million, or 21.6%, over the prior year, but as a percentage
of net sales declined from 67.9% in fiscal 1994 to 61.8% in fiscal 1995. The
decrease in the cost of goods sold as a percentage of net sales reflected
higher capacity utilization in Germany during the period, as the Company
recognized the benefits of the Restructuring undertaken in Germany in fiscal
1993 and 1994, as well as the outsourcing of the German subsidiary's machine
shop operation. Net sales per employee increased from $184,000 in fiscal 1994
to $227,000 in fiscal 1995, a productivity increase of 23%.
Gross Profit. The Company's gross profit of $35.3 million for fiscal 1995
increased by $13.1 million, or 58.9%, over the prior year, as a result of the
increase in net sales in fiscal 1995 as compared to fiscal 1994 and the
decrease in cost of goods sold as a percentage of net sales. As a percentage
of net sales, gross profit increased from 32.1% in fiscal 1994 to 38.2% in
fiscal 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses (which include the costs of application development)
of $20.7 million for fiscal 1995 increased by $3.6 million, or 21.2%, over
fiscal 1994. However, as a percentage of net sales, selling, general and
administrative expenses declined from 24.6% in fiscal 1994 to 22.4% in fiscal
1995 as the Company continued to control these expenses despite a significant
increase in marketing activity in the Asia/Pacific region related to the
Company's laser marking products and the launch of the Company's HF cross-flow
laser in the United States.
Research and Development Expenses. Research and development expenses of
$6.7 million (which are incurred principally in German marks and are net of
government grants) remained essentially unchanged from fiscal 1994 to fiscal
1995, decreasing by only $115,000, or 1.7%. Although research and development
expenses declined as a percentage of sales from 9.9% in fiscal 1994 to 7.3% in
fiscal 1995 due to the increase in sales in fiscal 1995, total research and
development spending rose due to an increase in government grants in fiscal
1995.
Income (Loss) from Operations. The Company's income from operations of $7.9
million for fiscal 1995 increased by $9.6 million over fiscal 1994. As a
percentage of net sales, income from operations was 8.6% in fiscal 1995 as
compared to (2.4%) in fiscal 1994, as a result of higher gross margins and the
continued reductions in selling, general and administrative expenses and
research and development expenses as a percentage of net sales. Approximately
$700,000, or 7.3%, of the increase in income from operations resulted from
currency translation as the German mark and other relevant functional
currencies strengthened against the U.S. dollar.
Income (Loss) Before Income Taxes. The Company's income before income taxes
of $6.3 million in fiscal 1995 increased by $9.4 million over fiscal 1994. As
a percentage of net sales, income before income taxes was 6.8% in fiscal 1995,
as compared to (4.5%) in fiscal 1994, as a result of the increase in income
from operations, which was offset by a slight increase in other expense of
$200,000 over fiscal 1994.
Income Tax Expense (Benefit). Income tax expense was $3 million in fiscal
1995 compared to an income tax benefit of ($1.4 million) in fiscal 1994. As a
percentage of income (loss) before income taxes, income tax expense was 48% in
fiscal 1995 and income tax benefit was (45%) in fiscal 1994, respectively, and
reflected the fact that in fiscal 1995 all of the Company's operations except
its Japanese joint venture reported pre-tax income. The effective tax rate in
fiscal 1995 of 48% was higher than the U.S. statutory rate of 35% principally
as a result of earnings taxed at higher foreign statutory rates and foreign
operating losses for which no tax benefit was recognized.
Net Income (Loss). As a result of the foregoing factors, the Company
recorded net income of $3.2 million in fiscal 1995 as compared to a net loss
of ($1.7 million) in fiscal 1994.
22
<PAGE>
FISCAL 1994 COMPARED TO FISCAL 1993
Net Sales. Net sales of $69.2 million for fiscal 1994 increased by $9.2
million, or 15.3%, over the prior year. The improvement resulted from net
sales increases of $3 million, or 8%, in Europe and the Asia/Pacific region
and $6.3 million, or 27.4% percent, in the United States. The growth in Europe
and the Asia/Pacific region resulted primarily from the introduction of the
Company's integrated circuit laser marker in the Asia/Pacific region and the
shift in product mix toward higher-margin high-power SM-Series lasers. The
increase in net sales in the United States was due principally to the recovery
of the Machine Tool and Automotive markets leading to greater shipments and a
shift in the product mix toward higher margin high-power CO/2/ lasers and
spare parts as compared to fiscal 1993 in which the Company received lower
margins on deliveries of lasers to a major OEM customer. The effect of
currency translation on net sales between fiscal 1993 and 1994 was immaterial.
Cost of Goods Sold. Cost of goods sold of $46.9 million for fiscal 1994
decreased slightly by $752,000, or 1.6%, from fiscal 1993 and declined
significantly as a percentage of net sales from 79.5% in fiscal 1993 to 67.9%
in fiscal 1994. The substantial decrease in cost of goods sold was the result
of the implementation of the Restructuring in Germany during the period, which
included the reduction of head count by 38 employees, the consolidation of the
Company's facilities in Hamburg, the reorganization of the Company's customer
support operation, the sublease of space in the Hamburg facility to others, as
well as the outsourcing of nonstrategic components and the realization of
discounts on volume purchases. As a result of the foregoing, productivity per
employee increased by 36% (net sales per employee increased from $135,000 in
fiscal 1993 to $184,000 in fiscal 1994).
Gross Profit. As a result of the increase in net sales in fiscal 1994
compared to fiscal 1993 and the decrease in cost of goods sold as a percentage
of net sales, gross profit of the Company of $22.2 million for fiscal 1994
increased by $9.9 million, or 80.8%, over fiscal 1993. As a percentage of net
sales, gross profit increased from 20.5% in fiscal 1993 to 32.1% in fiscal
1994. An increase of $5.5 million in the gross profit recorded in the United
States accounted for approximately 57.3% of the Company's gross profit
increase.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses of $17.1 million (which include the costs of
application development) in fiscal 1994 decreased by $4.9 million, or 22.3%,
from fiscal 1993 and as a percentage of net sales declined from 36.6% in
fiscal 1993 to 24.6% in fiscal 1994. The substantial decrease in selling,
general and administrative costs both in dollars and as a percentage of net
sales was primarily the result of the reduction in administrative personnel of
12 people in Germany pursuant to the Restructuring, as well as the
consolidation of the Company's facilities in Hamburg and ongoing cost-cutting
measures.
Research and Development Expenses. Research and development expenses of
$6.8 million (which are incurred primarily in German marks and are net of
government grants) for fiscal 1994 decreased by $3.4 million, or 33.5%, from
fiscal 1993. As a percentage of net sales, research and development expenses
declined from 17.1% in fiscal 1993 to 9.9% in fiscal 1994. The significant
decrease in research and development expenses was primarily attributable to
the reduction in research and development personnel of 16 people in Germany,
the slowing of development efforts with respect to higher-power CO/2/ lasers
and the receipt of German governmental research grants.
Loss from Operations. The Company's loss from operations of ($1.7 million)
for fiscal 1994 decreased by $18.2 million from ($19.9 million) in fiscal
1993. The improvement resulted principally from the significant increase in
gross profit and the reductions in selling, general and administrative
expenses and research and development expenses. The Company's loss from
operations in fiscal 1993 was due to the oversized fixed cost structure
growing out of the Company's strategy of vertical integration in the late
1980's, which led to overcapacity in manufacturing and multiple research and
development projects, as well as the relocation of the Company's operations in
San Jose, California to Plymouth, Michigan.
23
<PAGE>
Loss Before Income Taxes. The Company's loss before income taxes of ($3.1
million) in fiscal 1994 decreased by $18.3 million from a loss before income
taxes of ($21.4 million) in fiscal 1993. As a percentage of net sales, the
loss before income taxes decreased from (35.6%) to (4.5%).
Income Tax Benefit. Income tax benefit was ($1.4 million) in fiscal 1994
compared to an income tax benefit of ($1.6 million) in fiscal 1993. As a
percentage of loss before income taxes, income tax benefit for fiscal 1994 and
1993 was (45.6%) and (7.3%), respectively. The income tax benefit in fiscal
1994 was higher than it would have been applying the U.S. statutory rate of
35%, principally as a result of losses incurred in foreign tax jurisdictions
and a change in foreign tax rate. The income tax benefit in fiscal 1993 was
lower than it would have been applying the U.S. statutory rate, primarily as a
result of foreign operating losses for which no benefit was recognized.
Net Income (Loss). As a result of the foregoing factors, the Company's net
loss of ($1.7 million) in fiscal 1994 decreased by $18.1 million from a net
loss of ($19.8 million) in fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its cash requirements through cash flow
from operations, capital contributions and advances from Siemens and its
affiliates pursuant to intercompany lines of credit, as well as through
borrowings under credit facilities guaranteed by a Siemens affiliate. At June
30, 1996, the amount outstanding under such intercompany lines of credit from
Siemens and SC was $25.9 million. At such date, the Company also had
borrowings of $6.7 million under an intercompany loan from a Siemens affiliate
in Japan.
Net cash provided (used) by operating activities was ($1.1 million) and
$2.6 million in the nine months ended June 30, 1996 and 1995 and ($159,000)
and $5.9 million for fiscal 1995 and 1994, respectively. Cash flow from
operations in the nine months ended June 30, 1996 decreased by $3.7 million
compared to the comparable prior period despite increased net income,
primarily due to increased receivables and inventories and a reduction in
deferred income taxes, offset by increases in trade payables and accrued
liabilities and pension obligation. Cash flow from operations in fiscal 1995
decreased $6 million compared to the prior year despite the improvement in the
Company's results of operations, principally as a result of increased
receivables and inventories, offset by increases in trade payables, deferred
income taxes, accrued liabilities and pension obligation. Cash provided by
operations in fiscal 1994 increased $2.3 million in fiscal 1994 compared to
the prior year, primarily due to the reduction in the Company's net loss and
improved management of working capital.
Trade accounts receivable, net of allowances, increased $10.4 million to
$35.6 million at June 30, 1996 from September 30, 1995 and $7.3 million to
$25.1 million at September 30, 1995 from September 30, 1994. Inventories
increased $6 million to $34.1 million at June 30, 1996 from September 30, 1995
and $7.5 million to $28.2 million at September 30, 1995 from September 30,
1994. The increase in receivables was due primarily to growth in net sales. A
portion of the increase in receivables was attributable to the increased
proportion of sales to customers in Japan, where payment terms are normally
longer. Inventories increased primarily to support the growth in net sales,
and also included increases in inventory levels related to the introduction of
new products such as the Slab-Series laser (including units held by the
Company in its applications centers and for demonstration to customers), as
well as rescheduling of delivery dates on sales of laser markers.
Cash used in investing activities was $1.4 million in each of the nine-
month periods ended June 30, 1996 and 1995 and fiscal 1995 and $251,000 and
$806,000 in fiscal 1994 and 1993, respectively. The increase in cash used for
investing activities in periods subsequent to fiscal 1994 was primarily
attributable to increased capital expenditures, offset by sales of equipment.
Capital expenditures were $1.4 million in each of the nine-month periods ended
June 30, 1996 and 1995 and $1.9 million, $452,000 and $1.1 million in fiscal
1995, 1994 and 1993, respectively. These increases reflect the
24
<PAGE>
acquisition of additional manufacturing and research and development
equipment, as well as investment in computers and telecommunications
equipment.
Cash used in financing activities primarily reflects payments made to
Siemens by RSL and funds provided by Siemens to RSL under the Siemens
centralized cash management system. The Company will cease to participate in
such arrangement approximately one week after the completion of the Offerings.
As of June 30, 1996, the Company had borrowings of $6.7 million under an
intercompany loan from a Siemens affiliate in Japan. The Company intends to
refinance such borrowings utilizing the Credit Facility (as defined below)
approximately one week after the consummation of the Offerings.
The Company is currently negotiating a commitment letter for a one-year $25
million revolving loan facility with Deutsche Bank AG, an affiliate of
Deutsche Morgan Grenfell/C. J. Lawrence Inc. ("Deutsche Bank") to support its
working capital needs (the "Credit Facility"). Borrowings under such facility
will be made at market rates of interest at the time of each such borrowing.
As is customary for German banks in their commercial lending practices, the
Credit Facility will be governed by the General Business Conditions of
Deutsche Bank (the "General Business Conditions"). Although the terms of the
commitment letter relating to the Credit Facility do not require that any
security be granted by the Company to Deutsche Bank initially, the General
Business Conditions provide that Deutsche Bank may nonetheless make such a
demand at a later time in the event that the economic status of the Company
has changed or threatens to change in a negative manner. The Company intends
to repay the amounts outstanding under its intercompany lines of credit from
Siemens and SC through borrowings under the Credit Facility approximately one
week after the consummation of the Offerings.
The Company intends to use the net proceeds to it from the Offerings (after
repayment of $7 million of indebtedness owed to Siemens and SPC) and the
Credit Facility, together with cash from operations, to finance its future
operations. The Company believes that its existing cash flow from operations,
together with the Credit Facility, the proceeds realized from the sale of the
shares offered hereby by the Company, will be sufficient to meet its liquidity
and capital requirements at least through the end of fiscal 1997.
RECENTLY ISSUED ACCOUNTING STANDARDS
During October 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock-Based Compensation." Effective for
fiscal years beginning after December 15, 1995, Statement No. 123 encourages
companies to include the fair value of any stock awards issued as compensation
expense within their income statements. Companies that choose to remain with
Accounting Principles Board Opinion No. 25 (which uses the intrinsic value
method to account for stock awards) must disclose pro forma net income and
earnings per share as if the fair value of the award had been included as
compensation expense. The Company anticipates remaining with the intrinsic
value method.
On March 31, 1995, the Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of." This Statement provides guidance for
recognition and measurement of impairment of long-lived assets, certain
identifiable intangibles and goodwill related both to assets to be held and
used and assets to be disposed of. The Company intends to adopt this Statement
as of the first quarter of its next fiscal year and anticipates that the
effect of such adoption will be immaterial.
PENSION PLAN LIABILITIES
The Company has defined benefit pension plans for substantially all of its
German and U.S. employees. As is the normal practice with German companies,
the German plan is unfunded. At June 30, 1996, the amount of the accrued
pension liability for both the German and U.S. plans was approximately $3.4
million. The German plan will, consistent with German practice, continue to be
unfunded after the consummation of the Offerings. See "Management--Executive
Compensation--Pension Plans--RSL Pension Plan" and "--Siemens Corporation
Retirement Plan."
25
<PAGE>
BUSINESS
COMPANY OVERVIEW
Rofin-Sinar is a leader in the design, development, engineering,
manufacture and marketing of laser products for cutting, welding and marking a
wide range of industrial materials. Lasers are a non-contact technology for
material processing which have several advantages that are desirable in
industrial applications. The Company's lasers all deliver a high-quality beam
at guaranteed power outputs and feature compact design, high processing speed,
flexibility, low operating and maintenance costs and easy integration into the
customer's production process. As a technological leader in both CO/2/ and
Nd:YAG lasers, the Company is able to meet a broad range of its customers'
material processing requirements. The Company believes it has a worldwide
market share (based on sales volume) of approximately 20% for laser products
used for cutting and welding applications and that it is among the largest
suppliers of laser products used for marking applications in Europe and the
Asia/Pacific region (other than Japan). Over 80% of the Company's sales in
fiscal 1995 were made to existing customers. The Company has sold more than
4,000 laser sources since 1975 and currently has over 1,500 active customers
(including multinational companies with multiple facilities purchasing from
the Company). During the 1995 fiscal year and the first nine months of fiscal
1996, respectively, approximately 73% and 69% of the Company's revenues were
from sales and servicing of laser products for cutting and welding
applications and approximately 27% and 31% were from sales and servicing of
laser products for marking applications.
Through its global manufacturing, distribution and service network, the
Company provides a comprehensive range of laser solutions to three principal
target markets for material processing lasers: the Machine Tool, Automotive
and Semiconductor & Electronics industries. The Company sells directly to
industrial end-users, to OEMs (principally in the Machine Tool industry) who
integrate Rofin-Sinar's laser sources with other system components and to
distributors. Many of Rofin-Sinar's customers are among the largest global
participants in their respective industries, and include Aerospatiale, ASM,
BMW, Boeing, Bosch, Chrysler, Ford, General Motors, Mercedes-Benz, Philips,
SGS Thomson, Siemens, Thyssen, TRW, Volkswagen and Volvo. During fiscal 1995
and the first nine months of fiscal 1996, 34% and 33% of the Company's sales
were in North America, 52% and 46% were in Europe and 14% and 21% were in the
Asia/Pacific region, respectively.
In developing its laser solutions, the Company offers customers its
expertise in: (i) product development and manufacturing (i.e., state-of-the-
art product development and manufacturing services based on over 20 years of
laser technology experience and applications know-how); (ii) application and
process development (i.e., developing new laser-based applications for
manufacturing customers and assisting them in successfully integrating lasers
into their production processes); (iii) system engineering (i.e., advising
customers on machine design, including tooling, automation and controls, for
customers in need of "turn-key" solutions); and (iv) extensive after-sales
support for its laser products (including technical support, field service,
maintenance and training programs and rapid spare parts delivery).
COMPETITIVE ADVANTAGES
The Company attributes its strong market position and its long-standing
customer relationships to several competitive advantages:
Technological Leadership and Product Innovation. Driven by its customers'
manufacturing needs, the Company has developed laser technology expertise
which keeps it at the leading edge of technological development and product
innovation. The Company's laser products feature compact design, high
processing speed, superior reliability and low maintenance requirements. In
the last three years, the Company has introduced five new CO/2/ and Nd:YAG
laser products, predominantly in the higher power range. The Company believes
that its advanced fiberoptic technology, including beam-switching and beam-
splitting techniques which permit the laser beam to be used alternately or
simultaneously at different workstations, is superior in the industry due to
its use of low power-loss fibers and adherence to safety standards.
26
<PAGE>
Sophisticated Application Development. Rofin-Sinar believes its long-
standing customer relationships are built upon the Company's sophisticated
application development. The Company has pioneered many important new laser
applications, including the welding of tailored blanks (a technique used in
car body welding), metal tubes and diamond-tipped saw blades. The Company has
approximately 40 engineers and technical personnel (including 25 Ph.D.'s)
specialized in the core competences of laser beam production, shaping,
delivery and application, as well as power supply, control interfaces,
software programming and systems integration, and it maintains a substantial
and continuously updated applications database. As a result, the Company is
able to offer customers a broad range of material processing applications
based on CO/2/ and Nd:YAG laser technology. During the initial sales process,
engineers and other technical experts from the Company's applications centers
work directly with the customer to develop and customize the optimal solution
for the customer's manufacturing requirements.
Broad Product Range. The Company distinguishes itself from the majority of
its competitors who are specialized in only one of the two principal laser
technologies for material processing by offering its customers both CO/2/ and
Nd:YAG laser sources and solutions in a variety of configurations and options.
As a technological leader in both CO/2/ lasers and Nd:YAG lasers, the Company
is able to meet a broad range of its customers' material processing
requirements, from cutting and welding of thick metal sheet to micro-cutting
and welding of electronic components to marking of integrated circuits.
Product Quality. Rofin Sinar has established itself as a quality supplier
to its customers. The Company offers "no nonsense" specifications,
guaranteeing such critical parameters as minimum output power at full power
settings under all circumstances. The Company also provides after-sale parts
and service for its products for a period of not less than 10 years. In
addition, the Company shares a common objective with its customers of pursuing
internationally recognized manufacturing and product quality standards.
Consistent with this commitment, the Company's facility in Hamburg, Germany
was certified as compliant with the quality management requirements of
International Standard ISO 9001 ("ISO 9001"), as promulgated by the
International Standards Organization ("ISO"). The Company anticipates that its
facilities in Gunding-Munich, Germany and Plymouth, Michigan will receive ISO
9001 certification during the 1997 fiscal year. The Company expects that its
U.S. operation will be qualified by Ford as a "Q-1" supplier under Ford's "Q-
1" quality management standards in fiscal 1997.
Comprehensive Customer Service. The Company is committed to a superior
level of customer service from initial discussions relating to applications,
through final system installation, to after-sale technical and product
support. Following installation, the Company frequently provides customized
training to its customers' personnel and supports its products with a
knowledgeable staff of over 70 field-based and in-house customer service
representatives worldwide. The Company believes that its customer service
support organization is one of the largest among manufacturers of lasers for
material processing applications.
Global Presence. Through its manufacturing capability in the United States,
Germany and Japan and its global distribution and service network, the Company
offers its laser sources and laser marking products in approximately 25
countries. The Company responds to the global nature of its customer base as
well as the important regional areas in which certain of its customers operate
by following its multinational customers into new geographic regions where it
provides local service and support.
BUSINESS STRATEGY
The Company's business strategy is to maximize shareholder value by (i)
strengthening its position as a leading supplier to the global market for
cutting and welding applications and (ii) capitalizing on its leadership
position in cutting and welding, its strength in the European and Asian
marking markets and its other significant competitive advantages to build its
share of the U.S. market for marking applications. The Company believes that
the major sources of its growth over the next three years will be the
following:
27
<PAGE>
. Developing New Laser Products through Technological Innovation: Product
innovation in response to evolving customer needs for increased output
power, greater penetration and higher processing speeds is a key
component of the Company's strategy. The Company is currently focusing
its research and development activity on increasing the output power of
its CO/2/ diffusion-cooled Slab lasers and on developing diode-pumped
solid state lasers. The Company intends to enhance its position in its
existing high-power CO/2/ laser market primarily in the Machine Tool
segment by increasing sales of its new Slab lasers which offer customers
significantly greater operating efficiencies and reduced maintenance
costs. The Company's current focus with respect to this product is on
reducing manufacturing costs to achieve more attractive pricing. The
Company is also actively engaged in the development of diode- pumped
solid state lasers through a joint research program with the Fraunhofer
Institute for Laser Technology, a leading laser research institute in
Germany. The Company's objective is to develop diode-pumped lasers
capable of performing heavy industrial material processing applications,
as well as marking applications, more rapidly than previously possible
and at reduced operating and maintenance costs.
. Focusing on Cross-Selling to Existing Customers in Target Markets: The
Company intends to continue to focus its sales and marketing activities
on the Machine Tool, Automotive and Semiconductor & Electronics
industries. The Company has targeted and will continue to target these
industries because of their utilization of advanced manufacturing
processes and continuing investments to improve production efficiency
and because of the Company's significant market presence in these
sectors. In particular, the Company's objectives are (a) cross-selling
marking systems to existing customers for cutting and welding
applications, and (b) selling new applications of existing laser
technologies to existing customers. To exploit its opportunities for
cross-selling, the Company intends to leverage its installed base of
CO/2/ and Nd:YAG lasers for cutting and welding applications to cross-
sell its marking products to these same customers. To exploit its
opportunities to develop new applications for existing laser
technologies, the Company intends, for example, to explore the potential
for use of high-power CO/2/ lasers in car body framing in response to
the interest shown by car manufacturers in reducing their reliance on
spot-welding guns. In addition, building on the success of its laser
marking of small integrated circuits, the Company intends to develop new
applications for wafer processing, micro-welding and micro-soldering.
The Company is also developing a more standardized version of its laser
marker to capture additional market share in Europe through sales to the
low-end marking market.
. Capitalizing on Global Presence to Attract New Customers: The Company
intends to capitalize on its customer base and the presence of its
manufacturing, sales and service operations in the three principal
geographic markets in which its customers operate (North America, Europe
and the Asia/Pacific region) to increase market share in its existing
industrial and geographic markets. The Company believes its global
manufacturing, distribution and service network allows it to be more
responsive to customers' needs and positions it to expand into
additional promising markets which offer high long-term potential for
growth. The Company believes it can benefit from increasing capital
expenditures in the industrial sectors of such economies. In particular,
the Company has entered into a license and supply agreement with Nanjing
Electric Laser Center ("NELC") for the manufacture and sale in China of
conventional CO/2/ lasers.
. Offering Customized Solutions Based on Standard Platform. While the
Company offers a wide range of laser applications and develops
customized solutions for its customers, these applications and solutions
are built on a focused number of product families comprised of
standardized laser sources. For example, for its OEM customers in the
Machine Tool industry, the Company customizes packaging of the laser
source's power supply. For its marking customers, the Company combines
its standard laser marker with customized parts handling
28
<PAGE>
and software. The Company believes that this product strategy has
contributed to its return to profitability since fiscal 1993 and intends
to continue its initiatives to standardize its core products and lower
its production costs so as to continue to improve its profitability.
THE INDUSTRIAL LASER MARKET FOR MATERIAL PROCESSING
The industrial laser market is generally considered to be made up of laser
sources sold for industrial applications including material processing, medical
therapeutic, instrumentation, research, telecommunications, optical storage,
entertainment, image recording, inspection, measurement and control, bar-code
scanning and other end-uses. According to Laser Report, the global industrial
laser market had total revenues in 1995 of approximately $1.2 billion.
Based on Laser Report, in 1995 the material processing segment of the
industrial laser market, which is the single largest segment of that market,
had total revenues of approximately $450 million. Over the past 25 years,
lasers have revolutionized industrial manufacturing and have been used
increasingly to provide reliable, flexible, non-contact compact and high-speed
alternatives to conventional technologies for processing various kinds of metal
and non-metal materials in a broad range of advanced manufacturing
applications.
CURRENT INDUSTRY APPLICATIONS
The industrial laser market for material processing generally encompasses
the use of CO/2/ and Nd:YAG laser sources in highly automated manufacturing or
production processes. For further discussion of the principal laser
technologies used for material processing, see "-- Laser Technology." The laser
source is typically integrated into a laser system which includes a power
supply, fixed optic (in the case of a CO/2/ laser-based system) or flexible
fiberoptic (in the case of a Nd:YAG laser-based system) beam delivery system,
control software, robotics, machine vision, motion control and parts handling,
and typically comprises 20-50% of a total system's cost. To date, the three
principal categories of industrial users of lasers for material processing have
been the Machine Tool, Automotive (including both automobile manufacturers and
automotive suppliers) and Semiconductor & Electronics industries. Customers in
these markets typically demand high-speed, compact, highly durable laser
sources which have a reliable power output, can be easily and flexibly
integrated into the customer's production process, are easy to maintain, and
are able to withstand the rigors of industrial use, such as wide extremes of
temperature and humidity, dirt, dust, shock and vibration.
Currently, there are three main material processing applications for which
lasers are used: (i) cutting, (ii) welding and (iii) marking. Other
applications include surface treatment (cladding and alloying), drilling,
soldering, rapid prototyping and laser-assisted machining.
Cutting Applications. Industrial manufacturers have traditionally utilized
punch presses (nibbling), dye-cutting and stamping machines and other
conventional machine tools for cutting and shaping metal materials. Such
technologies tend to be economical only when large quantities of the same item
are produced, as their use involves lengthy set-up times. In addition, because
such machine tools come into contact with the material being worked on, the
material often requires additional machining after cutting has occurred to
achieve the desired finish to the cut edge or surface. Additionally, the
continuous contact of the machining head with the material subjects it to wear
and tear requiring ongoing maintenance and repair. Alternative cutting
technologies either result in a wide cut width and heat-affected zones or are
very slow processes despite achieving excellent edge quality.
By contrast, laser-based cutting technology has several advantages which are
desirable in industrial applications. Laser cutting is fast, flexible and high-
precision, as it can be used to cut complex contours on flat, tubular and
three-dimensional materials (which is difficult if not impossible to achieve
with alternative methods). The laser source can be easily programmed by a
computerized
29
<PAGE>
numerical controller ("CNC") and is able to process many different kinds of
materials (steel, aluminum, brass, copper, wood, glass, ceramics and plastics)
at various thicknesses. Additionally, laser cutting technology is a non-
contact, no-wear process which is easy to integrate into an automated
production line. The types of laser sources most suitable for cutting are
high-power CO/2/ lasers and Nd:YAG lasers in the power range from 150 W to 2
kW.
The adoption of just-in-time inventory and manufacturing techniques has
driven the growth of laser-based cutting among industrial manufacturers. Laser
cutting is the ideal tool for just-in-time production because parts can be cut
only when they are needed and then only in the desired quantities, thereby
reducing carrying costs and inventory obsolescence. Additionally, cutting
programs can be altered quickly with easy off-line programming. Principal
Rofin-Sinar customers for lasers used in cutting applications are OEM's in the
Machine Tool industry who integrate the laser source into their own cutting
systems for sale to industrial end-users. The continuing efforts of all
industrial manufacturers to streamline their production methods, decrease
inventory through the use of just-in-time manufacturing techniques and lower
overall costs are factors which lead the Company to believe that there will be
long-term future market growth for laser systems used for cutting
applications.
Welding Applications. Industrial manufacturers have traditionally utilized
plasma arc welding, resistance welding and other conventional joining
technologies for welding metal materials. Compared to laser welding, these
processes result in wider weld cross-sections with much more heat input into
the workpiece. Furthermore, arc welding is slower than laser welding, and
resistance welding requires access to each part from two sides, has limited
contouring capabilities and requires constant maintenance. Electron beam
welding has similar welding properties to lasers; however, the process
requires use of a vacuum environment.
Compared to conventional welding technologies, laser welding offers several
important advantages which are desirable in industrial applications. Laser
welding is non-contact, easy to automate, provides high process speed and
results in narrow-seamed, high quality welds which require little, if any,
post-processing machining. Because there is low heat input into the material
being processed and therefore minimal part damage or distortion, parts can be
accurately machined before welding. Additionally, because laser welding is
non-contact based, the process is not subject to tool wear. As with lasers
used for cutting applications, lasers can be used to weld a wide variety of
materials of different thicknesses. The types of laser sources most suitable
for welding are high-power CO/2/ lasers and Nd:YAG lasers (for welding of
steel and aluminum with relatively long weld seams) and low-power Nd:YAG
lasers (for spot-welding and short-seam welding).
To date, the principal applications for laser welding have been in the
Automotive industry. Automobile manufacturers and suppliers use lasers for
welding of transmissions, engine components (such as injection nozzles, valve
lifters and gasoline filters), airbags and other components. A laser welding
application which has significant potential for growth in the Automotive
market is the welding of tailored blanks (a technique pioneered by the Company
for welding dissimilar metals of different thicknesses into one sheet to
reduce material cost and car weight) and more generally car body framing and
production. The Company expects that the demand for improved fuel economy,
weight reduction, improved vehicle safety and increased production line
flexibility to permit rapid model changes will contribute to automotive
manufacturers' and suppliers' demand for lasers.
Marking Applications. With the increasing need for source traceability,
component identification and product tracking as a means to reduce product
liability and prevent falsification, industrial manufacturers increasingly are
demanding variable code marking systems capable of applying serialized
alphanumeric, graphic or bar code identifications directly onto their
manufactured components. Industrial manufacturers have traditionally utilized
acid-etching and ink-based technologies to mark manufactured parts. These
technologies require flat, clean surfaces, are maintenance-intensive and, most
importantly, are not appropriate for serialization. Moreover, their marking is
susceptible to damage by heat or light and is therefore not permanent.
30
<PAGE>
By contrast, laser marking offers several important advantages which are
desirable in industrial applications. Lasers can mark a wide variety of metal
and non-metal (wood, glass, plastics) surfaces at high speed without contact
by changing the surface structure of the material or by engraving. Laser
marking systems are reliable, flexible, high speed, leave permanent marks and,
because they are computer-controlled, can be easily integrated into the
customer's production process. Because laser marking is contact-free, it does
not subject the item being marked to any mechanical stress. In addition, these
systems enable the user to avoid the mechanical problems associated with ink-
based technology (e.g., clogging, drying time delay, ink-bottle replacement,
etc.) and the waste disposal issues related to acid-etching.
To date, the principal applications for laser marking have been in the
Automotive and Semiconductor & Electronics industries. In the Automotive
industry, the increasing trends toward component identification and the
production of multiple car models on a single assembly line have driven the
growth of laser marking. A substantial number of automobile components and
subcomponents are currently, or have the potential to be, marked by lasers.
Windshield wiper blades, gears, starter housings, safety belt buckles, head
lights and control buttons are typical examples of laser marking applications.
The Company believes that the potential for laser marking has not yet been
fully realized in the Automotive industry.
In the Semiconductor & Electronics industry, lasers are used to mark
electrical components such as contactors and relays, and assembled components
such as integrated circuits, printed circuit boards and keyboards. With the
increase in marking speed in the last few years, laser marking of integrated
circuits has decreased in cost, improving the price/performance
characteristics of this technology and therefore increasingly displacing ink-
based and laser mask marking installations. VLSI Research, Inc. estimates that
the market for semiconductors will grow from $138 billion in 1995 to $254
billion in the year 2000. Other industry analysts are forecasting growth to
annual sales levels as high as $300 billion by the year 2000. This growth is
being fueled by the demand for products such as computers, cellular phones and
multimedia communications products. It is expected that demand for such
products will continue to fuel growth in capital investment by semiconductor
and electronics manufacturers.
Outlook. Rofin-Sinar expects that industrial end users in each of its
target markets will continue to make capital investments to streamline their
production methods, increase their production line flexibility and lower their
overall costs. The Company believes that the continuation of this trend,
together with its continued focus on developing new applications for its laser
sources and laser marking products, will provide it with significant
opportunities for long-term growth in each of the Machine Tool, Automotive and
Semiconductor & Electronics industries, despite a recent softening in the
Semiconductor & Electronics industry. For example, the Company anticipates
continued demand for higher-power CO/2/ lasers and Nd:YAG solid state lasers
for cutting and welding applications in the Machine Tool and Automotive
industries and believes that its introduction of CO/2/ Slab laser technology
will enhance its position in the high-power CO/2/ laser market. In laser
marking and related micro-processing applications, the Company believes that
there is significant potential for additional penetration of the Automotive
and Semiconductor & Electronics industries worldwide, with a particular focus
in the United States. In addition, the Company believes that there is
significant demand for a lower priced, more standardized version of its
marking products in Europe.
THE COMPANY'S LASER PRODUCTS
The Company currently offers a comprehensive range of state-of-the-art
laser products and related services for three principal material processing
applications: (1) cutting; (2) welding; and (3) marking. Rather than offering
standardized laser systems, the Company works directly with the customer to
develop and customize the optimal solution for the customer's manufacturing
requirements. In developing its laser solutions, the Company offers customers
its expertise in: (i) product development and manufacturing (i.e., state-of-
the-art product development and manufacturing
31
<PAGE>
services based on over 20 years of laser technology experience and
applications know-how); (ii) application and process development (i.e.,
developing new laser-based applications for manufacturing customers and
assisting them in successfully integrating lasers into their production
processes); (iii) system engineering (i.e., advising customers on machine
design, including tooling, automation and controls, for customers in need of
"turn-key" solutions); and (iv) extensive after-sales support of its laser
products (including technical support, field service, maintenance and training
programs and rapid spare parts delivery). The Company has sold more than 4,000
laser sources since 1975 and currently has over 1,500 active customers
(including multinational companies with multiple facilities purchasing from
the Company).
The following table sets forth the Company's net sales of laser products
used for cutting and welding applications and of laser products used for
marking applications in fiscal year 1995 and the first nine months of fiscal
1996:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
PRODUCT CATEGORY* FISCAL 1995 JUNE 30, 1996
----------------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C>
Lasers for cutting and welding................... $69,442 $57,527
Laser marking products........................... 23,024 25,845
------- -------
$92,466 $83,372
</TABLE>
--------
* For each product category, net sales includes sales of services
(including training, maintenance and repair) and spare parts.
Laser Products for Cutting and Welding
The Company believes that it has a worldwide 20% market share for laser
products used for cutting and welding applications. The Company's addressable
market represents approximately 75% of the total market for industrial
material processing. The Company distinguishes itself from the majority of its
competitors who specialize in only one of the two principal laser technologies
for material processing by offering its customers both CO/2/ and Nd:YAG laser
sources and solutions in a variety of configurations and options. As a
technological leader in both CO/2/ lasers and Nd:YAG lasers, the Company is
able to meet a broad range of its customers' cutting and welding requirements.
The laser sources sold by the Company consist of a laser head (containing the
lasing medium, resonator, source of excitation, resonator mirrors and cooling
mechanism), a power supply and microcontroller (for control and monitoring).
For a more detailed discussion of the components of a laser source, see "--
Laser Technology." The Company's lasers all deliver a high-quality beam at
guaranteed power outputs and feature compact design, high processing speed,
flexibility, low operating and maintenance costs and easy integration into the
customer's production process. Products are offered in different
configurations and utilizing different design principles according to the
desired application. The Company's engineers and other technical experts work
directly with the customer in the Company's applications centers to develop
and customize the optimal solution for the customer's manufacturing
requirements.
The Company's business strategy for its cutting and welding laser business
is to develop this business at a rate of growth greater than that of the
overall cutting and welding laser market. The Company intends to implement
this strategy by: (i) increasing its market share in its existing high-power
CO/2/ laser market through increased sales of its diffusion-cooled CO/2/ Slab
lasers and (ii) developing a multi-kilowatt diode-pumped Nd:YAG solid state
laser capable of performing heavy industrial material processing applications
(e.g. car body welding), as well as marking applications, more rapidly than
previously possible and at reduced operating and maintenance costs. The
Company believes that diffusion-cooled CO/2/ Slab lasers and diode-pumped
Nd:YAG solid state lasers will replace existing CO/2/ and flash-lamp pumped
solid state laser technologies, respectively, and it intends to remain at the
forefront of technological development and product innovation in order to
capture market share in the cutting and welding laser market.
32
<PAGE>
The Company's family of CO/2/ laser products for cutting and welding and
their principal markets and representative applications are shown in the
following table and such products' competitive advantages are discussed below:
<TABLE>
<CAPTION>
MODE OF PRICE RANGE PRINCIPAL
LASER SERIES POWER RANGE EXCITATION (PER UNIT) MARKETS APPLICATIONS
- ------------ ------------- -------------- ----------- ------------- ----------------------------
<S> <C> <C> <C> <C> <C>
RS DC 1.5 kW-2.5 kW High frequency $130,000- Machine Tool; Cutting; welding
Slab Series $200,000 Automotive
RS HF 4 kW-6 kW High frequency $280,000- Automotive Welding of transmissions,
Series $357,000 tailored blanks, car bodies;
surface treatment
RS SM 700 W-2 kW Direct current $100,000- Machine Tool Flat sheet and
Series $145,000 three-dimensional cutting
</TABLE>
Rofin Sinar introduced its diffusion-cooled RS DC Slab Series laser in mid-
1995 and has shipped over 80 units since that date. The Company believes that
it is the only laser manufacturer of diffusion-cooled slab-based lasers in the
high-power range. In this laser design, a high frequency (HF) excited gas
discharge occurs between two water-cooled electrodes which have a large
surface area that permits maximum heat dissipation. The core diffusion-cooled
technology is protected by two patents and the Company has exclusive license
rights to this technology on a worldwide basis for the range above 500 W for
material processing applications. The RS DC Slab Series laser has several
competitive advantages. Among these advantages are its exceptional beam
quality and focusability which permit faster and narrower welds and higher
cutting speeds with minimal heat input in thin materials. Another significant
feature is the Slab Series laser's compact design and lightweight construction
(enabling the laser head to be mounted onto moving laser systems where flying
optic or moving table designs would not be practical). Finally, because the
Slab design eliminates the need for gas circulation (resulting in reduced
maintenance costs), its low gas consumption contributes to overall lower
running costs and allows the laser gas bottle to be integrated into the laser
head, eliminating the need to install an expensive laser gas supply. The
Company's current focus with respect to its Slab Series lasers is on
increasing their power output and reducing their manufacturing costs in order
to achieve more attractive pricing.
The Company's RS HF Series lasers have established Rofin-Sinar as a
worldwide leader in multi-kilowatt cross-flow CO/2/ lasers. These are CO/2/
lasers in which the laser gas flows perpendicularly to the resonator. The
Company believes that the HF Series laser is the smallest industrial laser in
the 4 kW to 6 kW power range. Combining proven cross-flow design principles
with modern high-frequency (HF) discharge excitation technology, the HF Series
laser's fast welding speeds and low operating costs make it an ideal tool for
all welding applications. The HF Series laser has several features which give
it a strong competitive edge over its competitors across the full range of
welding applications. Its compact design (the laser head and power supply are
integrated into one unit) allows easy integration into automated processing
systems on the factory floor. Because the HF excitation uses proprietary
dielectric coated electrodes, there is no corrosion of the electrodes or
contamination of the laser optics, resulting in significantly longer service
intervals and therefore reduced maintenance costs. Since its introduction in
fiscal 1995, the Company has shipped over 30 units, predominantly to customers
in the Automotive industry in the United States, where the HF Series laser has
set standards in a significant number of welding applications, including the
welding of transmissions, tailored blanks and many other car parts and
components.
The Company's SM-Series fast axial flow CO/2/ laser is used for both
cutting and welding applications. In the fast-axial flow principle, the gas
discharge occurs in a tube in the same direction as the resonator, through
which the laser gas mixture flows at a high speed. The SM-Series design
features a simple resonator structure and a limited number of optical
components which guarantee
33
<PAGE>
excellent consistent beam quality and output stability (which are important
for maintaining high cutting and welding speeds and uniformly high quality
cuts and welding seams). This laser family has a number of proprietary
features developed by Rofin-Sinar, including a highly efficient switch mode
power supply and a patented resonator fold for easy circular polarization,
eliminating the need for two additional external mirrors which would otherwise
be required. The SM laser's high pointing stability and low beam divergence
make it highly suited for integration into production systems having complex
beam delivery paths. Due to the potential to reduce the manufacturing cost of
the Slab lasers, the Company intends over the next three years to replace the
SM-Series product family with the Slab-Series laser.
The Company's family of Nd:YAG laser products for cutting and welding and
their principal markets and representative applications are shown in the
following table and such products' competitive advantages are discussed below:
<TABLE>
<CAPTION>
MODE OF PRICE RANGE PRINCIPAL
LASER SERIES POWER RANGE EXCITATION (PER UNIT) MARKETS APPLICATIONS
- ------------ -------------- ---------- ----------- -------------- ----------------------
<S> <C> <C> <C> <C> <C>
RSY P- 50 W -- 1 kW Flash Lamp $ 55,000- Automotive; Spot-and seam-welding;
Series $180,000 Medical device fine cutting
RSY 1 kW -- 2.5 kW Flash Lamp $140,000- Automotive Welding of car bodies
CW- $220,000
Series
</TABLE>
The Company's RSY P-Series of pulsed Nd:YAG lasers are designed to meet the
requirements of a wide range of welding and cutting applications. Their high
peak power, flexible fiberoptic beam delivery and the small focused spot size
of the laser beam allow these lasers to be successfully applied in many
cutting and welding applications. The RSY lasers' pulse shaping capability
(achieved through programming of the power supply) makes these lasers
particularly well suited to the processing of metallurgically difficult
materials such as aluminum and its different alloys. These lasers can be
integrated into a wide range of both fixed optic and fiberoptic beam delivery
systems.
Rofin-Sinar's RSY CW-Series of continuous wave Nd:YAG lasers represent the
Company's latest development in high-power industrial Nd:YAG lasers as they
are designed exclusively for use with flexible fiberoptic beam delivery
systems, making them particularly well suited for integration into complex
production systems. The key competitive advantages of the CW-Series lasers are
their pulse shaping capability and multiple power output configurations. These
configurations include continuous wave and pulsed power ramping modes
separately or in combination with each other, which allows the Company to
address a wide range of customer applications. (Power ramping is particularly
suited for achieving smooth welds and avoiding cracks during the welding
process.) In addition, several features of the CW-Series laser such as the
simple resonator design, easy to access power supply and highly durable
ceramic pumping chambers are designed with a view to long service intervals
and therefore low maintenance costs.
The Company is actively engaged in the development of diode-pumped solid-
state Nd:YAG lasers through a joint research program with the Fraunhofer
Institute for Laser Technology as well as through a second program sponsored
by the Bavarian Government. The Company's objective is to develop diode-pumped
lasers capable of performing heavy industrial material processing applications
(e.g. car body welding), as well as marking applications, more rapidly than
previously possible and at reduced operating and maintenance costs. Such
lasers also have potential for use in marking applications, where they could
be developed in much more compact systems. See "--Research and Development."
Laser Marking Products
The Company first entered the laser marking business in 1989 when it
acquired Laser Optronic GmbH from Coherent General Inc. and designed and
introduced the "PowerLine" laser marker. Since
34
<PAGE>
fiscal 1991, the Company's sales of laser markers have grown 700% (increasing
from 50 units in fiscal 1991 to 350 units in fiscal 1995). The Company
established itself as the laser marking market leader in Europe (principally
in the Automotive and Semiconductor & Electronics industries) in fiscal 1994
and in the Asia/Pacific region in fiscal 1995 (principally in the
Semiconductor & Electronics industry). The table below summarizes the
breakdown in sales of laser markers in the Company's three principal
geographic markets in fiscal 1995 and the first nine months of fiscal 1996 (by
dollar volume).
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL 1995 JUNE 30, 1996
----------- -------------
(IN THOUSANDS)
<S> <C> <C>
Europe:
Germany........................................ $7,828 $8,270
Rest of Europe................................. 8,289 7,237
North America.................................... 920 1,809
Asia/Pacific..................................... 5,986 8,529
</TABLE>
The Company's business strategy for its laser marking business is four-
fold: (i) to expand its position in the U.S. laser marking market, with a
particular focus on the Semiconductor & Electronics and Automotive industries;
(ii) to capitalize on its installed base of CO/2/ and Nd:YAG laser customers,
primarily in the Automotive industry, to cross-sell its marking products to
these same customers; (iii) to capitalize on the success of its laser marking
of small integrated circuits to develop new applications for wafer processing,
micro-welding and micro-soldering and (iv) to develop a stand-alone laser
marker targeted at the low-end portion of the laser marking market.
The Company attributes the success of its laser marking products and the
significant growth it has experienced in the laser marking business to a
number of competitive advantages:
. Since Rofin-Sinar builds its own Nd:YAG laser sources and utilizes its
own proprietary Laser Work Bench software, it is able to tailor its
laser marking solutions to the customer's requirements.
. The Company's know-how with respect to Nd:YAG laser beam power, mode
structure and high frequency switching capability enables it to ensure
optimal marking quality on a wide variety of different materials from
the standpoint of marking contrast and speed.
. The Company's expertise in the design and manufacture of fiberoptic beam
delivery systems allows it to optimize laser marking solutions for
complex production processes in which the writing head is located
several yards away from the laser head or the laser beam is multiplexed
through beam-switching and -splitting to multiple workstations, without
loss of marking quality, contrast or speed. Based on its extensive
experience using fiber optics for cutting and welding applications, the
Company has developed a special fiber system to be used for transferring
the beam to the galvo head without losing beam quality. This allows
flexible system solutions and easy laser integration.
. Rofin-Sinar's laser marking products incorporate high value-added
software consisting of the Company's Laser Work Bench software and a
number of network communications software protocols that enable its
laser marking products to interface with a customer's host computers.
The Laser Bench Software permits virtually any character (of any size or
font) or graphic to be marked on a variety of materials (including
metals, plastics, ceramics and wood) of different contours. The broad
range of network communications software supported by the Company,
combined with the resources of Rofin-Sinar's in-house software
engineering group, makes Rofin-Sinar an ideal partner for customers
(especially in the Automotive and Semiconductor & Electronics
industries) who have enterprise-wide computer networks linking
production facilities in disparate geographic locations and who desire
customized network interface solutions.
35
<PAGE>
The Company's family of laser marking products and their principal target
markets and representative applications are shown in the table below:
<TABLE>
<CAPTION>
MODE OF PRINCIPAL
PRODUCT POWER RANGE EXCITATION PRICE RANGE TARGET MARKETS APPLICATIONS
------- ----------- ---------- ----------- ----------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
PowerLine; 25-150 W Flash Lamp $ 80,000- Semiconductors & Marking of integrated circuits;
CombiLine $ 200,000 Electronics; Automotive component identification
</TABLE>
PowerLine. The Company's standard PowerLine laser marking product consists
of a Nd:YAG laser in the range of 25 to 150W, a galvo-head, a personal
computer with Pentium processor on board and Rofin-Sinar's proprietary Laser
Work Bench software. The modular design of the PowerLine marker enables
customers to order the most suitable configuration for their production
process or system (e.g. OEM customers may order the laser head and laser
supply and laser cooling assembly plates as subassemblies without the cabinet
for easier integration into the handling system specified by the end user).
The PowerLine marker's Nd:YAG laser incorporates a unique dual lamp ceramic
cavity design using "long-life" lamps (guaranteed to provide 1,200 hours
usage) which results in higher output power (and therefore higher marking
speeds), higher energy efficiency and therefore reduced operating costs, high
beam quality and therefore constant and reliable marking quality, and longer
service intervals. The Company's proprietary Laser Work Bench software
provides operators with a user-friendly desktop publishing environment that
allows them to manipulate fonts, import graphics, preview marking and control
all laser parameters and job programs. Special options and accessories
include, among other things, a double-marking head allowing marking speeds of
up to 600 characters per second in certain applications (marking of integrated
circuits), as well as beam-switching and -splitting options for marking of
products in different locations.
CombiLine. The CombiLine is a complete laser marking system that the
Company introduced in 1994. Built on a modular design, the CombiLine consists
of a PowerLine laser marker that can be combined with a variety of parts
handling systems developed by the Company. The parts handling options offered
by the Company include motor driven positioning tables, foil handling systems
for marking labels, conveyor belts and pick-and-place systems, allowing the
CombiLine to be customized as a turn-key system according to the customer's
specifications. Since its introduction, the Company has shipped over 60 units
of the CombiLine, principally in Europe.
Development of Stand-Alone Marker and Other New Applications. To date, the
Company has shipped the majority of its laser markers to large customers in
the Automotive and Semiconductor & Electronics industries. The Company has
also targeted the low-end laser marking market in Europe, which is currently
served by a number of smaller regional competitors. Based on recent market
tests in selected European markets, the Company believes there is demand for a
more standardized stand-alone laser marker. The Company is currently
developing a lower-cost, more standardized version of its PowerLine product
with the same basic software but fewer features and options, which it expects
to begin shipping in the second quarter of fiscal 1997. In addition, the
Company believes that there are several potential marking applications in the
Automotive market which have not yet been fully tapped (e.g. deep marking of
metal components).
APPLICATIONS DEVELOPMENT AND SYSTEM INTEGRATION
In addition to manufacturing and selling laser sources for cutting and
welding and laser marking products, the Company also develops in its
applications centers in Hamburg and Gunding-Munich, Germany and Plymouth,
Michigan laser-based solutions for customers seeking alternatives to
conventional manufacturing techniques. The Company believes that the more than
20 years' laser technology experience and know-how embodied in the Company's
applications groups, developed as a result of its participation in a broad
range of industrial markets, provide it with a competitive advantage over
other laser manufacturers. Many new applications such as welding of tailored
blanks, metal tubes and diamond-tipped saw blades were pioneered in the
Company's applications centers and have generated multiple laser orders for
the Company in later years.
36
<PAGE>
Consistent with its objective of being a flexible supplier able to adapt to
customers' needs, the Company from time to time acts as a system integrator at
the request of the customer and takes on responsibility to integrate its laser
sources with other machine components selected by the Company and deliver a
complete laser system to the end-user. Typically this occurs with a customer
that does not have its own in-house engineering resources and wishes to take
advantage of the Company's laser processing expertise and comprehensive range
of services. In such instances, the Company's laser systems include precision
or fiberoptics for beam delivery, robotics, or parts handling devices and
other optical components and control software.
MARKETS AND CUSTOMERS
Rofin-Sinar's laser products and systems are sold to three principal
industrial markets: the Machine Tool, Automotive and Semiconductor &
Electronics industries. The following table sets forth the distribution of the
Company's total sales in fiscal 1995 and the first nine months of fiscal 1996
among the Company's principal markets and each market's primary applications:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED PRIMARY
PRINCIPAL MARKET FISCAL 1995 JUNE 30, 1996 APPLICATIONS
---------------- ----------- ------------- ---------------------
<C> <C> <C> <S>
Machine Tool................. 36% 33% Cutting
Welding and component
Automotive................... 23 24 marking
Marking of integrated
Semiconductor & Electronics.. 13 17 circuits
--- ---
72% 74%
</TABLE>
The remaining 28% and 26%, respectively, of sales in fiscal 1995 and the
first nine months of fiscal 1996 were attributable to customers in a wide
variety of other industries (including the aerospace and consumer goods
industries, medical device manufacturers, job shops, universities and
institutes). The Company has sold more than 4,000 laser sources since 1975 and
currently has over 1,500 active customers (including multinational companies
with multiple facilities purchasing from the Company).
Many of Rofin-Sinar's customers are among the largest global participants
in their respective industries. Over 80% of Rofin-Sinar's sales in fiscal 1995
were made to existing customers. It is the Company's experience that once a
customer has successfully integrated a laser system into its production
process, significant opportunities are created for repeat sales and new
applications, from time to time to a different division or plant of the same
customer. The following is a representative list of OEM customers and end-
users of Rofin-Sinar's products, spare parts and services worldwide during
fiscal 1993, 1994 and 1995 (all of whom have purchased multiple laser sources
or laser marking products from the Company during such three-year period):
<TABLE>
<CAPTION>
AUTOMOTIVE AUTOMOTIVE SEMICONDUCTOR &
MACHINE TOOL MANUFACTURERS SUPPLIERS ELECTRONICS OTHER
- ------------ --------------- --------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Adige Sala Audi Autoliv Amkor Aerospatiale
Amada BMW Bosch ASM Allflex
Arnold Chrysler Hoesch Platinen Bosch Boeing
Balliu Ford Morton Cherry Braun
Behrens General Motors Stola Cypress Caisley
Cincinnati Mercedes-Benz Temic Mitsumi Norton
Daewoo
Heavy In-
dustries Peugeot/Citroen Thyssen Philips Osram
Lasercomb Renault TRW SGS Thomson Pratt & Whitney
Nishinbo Volkswagen Utilase Siemens Quasar
Prima
Industrie Volvo Witzenmann Silicon System Rutting
Salvagnini ZF United Technologies Schmole
Strippit Scholler
</TABLE>
37
<PAGE>
The Company's ten largest customers accounted for 31.2%, 34.5% and 29.6% of
total sales in fiscal 1994 and 1995 and the first nine months of fiscal 1996,
respectively. Except for one customer which represented 8.6%, 7.6% and 6.0% of
total sales in fiscal 1994 and 1995 and the first nine months of fiscal 1996,
respectively, no one customer accounted for more than 5% of total sales in any
of such periods.
The following charts set forth the distribution of Rofin-Sinar's sales of
cutting and welding lasers and laser marking products among the Company's
principal markets in fiscal 1995 and the first nine months of fiscal 1996:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL 1995 JUNE 30, 1996
----------------------- -----------------------
PRINCIPAL MARKET CUTTING/WELDING MARKING CUTTING/WELDING MARKING
- ---------------- --------------- ------- --------------- -------
<S> <C> <C> <C> <C>
Machine Tool................... 50% -- 46% --
Automotive..................... 24 20 28 15
Semiconductor & Electronics.... -- 47 -- 58
Other.......................... 26 33 26 27
----- ----- ----- -----
Total........................ 100.0% 100.0% 100.0% 100.0%
</TABLE>
SALES, MARKETING AND DISTRIBUTION
Rofin-Sinar sells its products in approximately 25 countries through OEMs
and to major end-users who have in-house engineering resources capable of
integrating the Company's products into their own production systems. Laser
sources for cutting applications are marketed and sold principally to OEMs in
the Machine Tool industry who sell cutting machines incorporating the
Company's laser products without any substantial involvement by the Company.
Laser sources for welding applications are marketed and sold both to systems
integrators and to end-users. Laser marking products are marketed and sold
principally to OEMs for integration into their handling systems (mainly for
integrated circuit marking applications). In the case of both welding lasers
and laser marking products, since product samples are required to be run
through the OEM's system, the end-user is significantly involved in the
selection of the laser component and will typically specify that it desires a
Rofin-Sinar device. In such cases, the Company's application engineers work
directly with the end-user to optimize the application's performance and
demonstrate the superiority of the Company's products.
The Company has 27 direct sales engineers operating in 12 countries, of
whom 16 persons are dedicated to marketing of the Company's CO/2/ and Nd:YAG
lasers for cutting and welding and 11 persons are dedicated to marketing of
the Company's laser marking products. In addition, Rofin-Sinar has 12
independent distributors and agents who market the Company's welding and
cutting laser products and laser marking products in Australia, Brazil,
Denmark, Israel, the Philippines, the People's Republic of China, Portugal,
Singapore, South Korea, Spain, Sweden and Taiwan.
The following table sets forth the distribution of the Company's total
sales (including sales delivered through distributors) of cutting and welding
lasers and laser marking products among the three principal geographic regions
during fiscal 1995 and the first nine months of fiscal 1996:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL 1995 JUNE 30, 1996
----------------------- -----------------------
PRINCIPAL MARKET CUTTING/WELDING MARKING CUTTING/WELDING MARKING
- ---------------- --------------- ------- --------------- -------
<S> <C> <C> <C> <C>
Europe:
Germany....................... 18% 34% 23% 32%
Rest of Europe................ 25 36 17 28
North America................... 48 4 45 7
Asia/Pacific.................... 9 26 15 33
----- ----- ----- -----
Total......................... 100.0% 100.0% 100.0% 100.0%
</TABLE>
38
<PAGE>
Over the next five years, demand for industrial lasers is expected to
increase in the Asia/Pacific region. The Company believes that the market with
the greatest long-term potential over the next ten to fifteen years is China,
principally due to the expansion of domestic automobile production in that
country. Consistent with this belief, in 1994 the Company entered into a
technology license and supply agreement with NELC under which NELC
manufactures CO/2/ laser sources for sale in the Chinese market.
The Company directs its worldwide sales and marketing of cutting and
welding lasers from its offices in Hamburg, Germany. Worldwide sales and
marketing of laser marking products is directed from the Company's offices in
Gunding-Munich, Germany. U.S. sales of the Company's cutting and welding laser
products are managed out of its Plymouth, Michigan facility. In 1995, the
Company opened a sales office in Phoenix, Arizona in proximity to major
semiconductor manufacturers to support expansion of the Company's laser
marking business in the U.S. market. In Europe, Rofin-Sinar also maintains
sales and service offices in Italy, France, the United Kingdom and Belgium. A
sales office is maintained in California to cover the Asia/Pacific region
(other than Japan); the Company intends to open a sales office in that region
in fiscal 1997. In Japan, the Company's principal distributor is its joint
venture with Marubeni Corporation and Nippei Toyama Corporation.
CUSTOMER SERVICE AND REPLACEMENT PARTS
During fiscal 1995 and the first nine months of fiscal 1996, approximately
25% of the Company's revenues were generated from sales of after-sale services
and replacement parts for its laser products. The Company believes that a high
level of customer support is necessary to develop successfully and maintain
long-term relationships with its OEM and end-user customers in its laser
products and laser marking systems business. This close relationship is
maintained as customer needs change and evolve. Recognizing the importance of
its existing and growing installed base, the Company follows its customers
into new geographic regions by providing local service and support. Rofin-
Sinar has over 90 customer service personnel. The Company's field service and
in-house technical support personnel receive ongoing training with respect to
the Company's laser products, maintenance procedures, laser-operating
techniques and processing technology. Rofin-Sinar believes its worldwide
customer service support organization is one of the largest among industrial
laser and laser-based system manufacturers and provides it with a significant
competitive advantage over many of its competitors. Most of the Company's
distributors also provide customer service and support.
Many of Rofin-Sinar's laser products are operated 24 hours a day in high
speed, quality oriented manufacturing operations. Accordingly, in fiscal 1994
the Company successfully launched 24 hour, year-round service support to its
U.S. and German customers and 8 hour response time for its major customers.
This support includes field service personnel who reside in close proximity to
the Company's installed base. Rofin-Sinar plans to adopt similar service
support elsewhere. The Company provides customers with process diagnostic and
verification techniques, as well as specialized training in the operation and
maintenance of its systems. The Company also offers regularly scheduled and
intensive training programs and customized maintenance contracts for its
customers.
Of Rofin-Sinar's customer service personnel, approximately 70 employees
operate in the field in 40 countries. Field service personnel are also
involved in the installation of the Company's systems.
Rofin-Sinar's approach to the sale of replacement parts is closely linked
to the Company's strategic focus on rapid customer response. The Company has
round-the-clock order entry and provides same or next day delivery of parts
worldwide in order to minimize disruption to a customer's manufacturing
operations. Rofin-Sinar generally agrees to provide after sale parts and
service for 10 years if requested by the customer. The Company's growing base
of installed laser sources and laser marking products is expected to continue
to generate a stable source of parts and service sales.
39
<PAGE>
COMPETITION
LASER PRODUCTS FOR CUTTING AND WELDING
The market for laser products and systems is fragmented, and includes a
large number of competitors, many of which are small or privately owned or
which compete with Rofin-Sinar on a limited geographic, industry-specific or
application-specific basis. The Company also competes in certain target
markets with competitors which are part of large industrial groups and have
access to substantially greater financial and other resources than the
Company. Competition among laser manufacturers includes attracting and
retaining qualified engineering and technical personnel. The overall
competitive position of the Company will depend upon a number of factors,
including the performance and reliability of its products, the level of
customer support and manufacturing quality, the compatibility of its products
with existing laser systems and the Company's ability to develop successfully
for commercial distribution diode-pumped solid state lasers and participate in
the growth of these emerging technologies, as well as price.
Rofin-Sinar believes it is among the top three suppliers of laser sources
in the worldwide market for cutting and welding applications. Companies such
as Trumpf, Fanuc and PRC (for CO/2/ lasers) and Haas and Lumonics (for Nd:YAG
lasers) compete in certain of the markets in which Rofin-Sinar operates.
However, in the Company's opinion, none of these companies competes in all of
the industries, applications and geographic markets currently served by Rofin-
Sinar. Only Trumpf/Haas has a product range and worldwide presence similar to
those of the Company. The Company believes that it has a strong competitive
advantage over such companies due to its exclusive access (for material
applications) to the patented diffusion-cooling technology incorporated in its
CO/2/ slab lasers. In the Company's view, the technology protected by these
patents represents a significant step forward in industrial laser technology
for material processing and an important source of the Company's future growth
and profitability.
Laser Marking Products
Significant competitive factors in the laser marking market include system
performance and flexibility, cost, the size of each manufacturer's installed
base, capability for customer support, and breadth of product line. Because
many of the components required to develop and produce a laser marker are
commercially available, barriers to entry into this market are low, and the
Company expects new competitive product entries into this market. The Company
believes that its PowerLine and CombiLine laser markers will compete favorably
in this market primarily due to the performance and price characteristics of
such products.
The Company's PowerLine and CombiLine marking products compete in the laser
marking market with conventional ink-based and acid-etching technologies, as
well as with laser mask-marking. The Company believes that its principal
competitors in the laser marking market include Baasel, General Scanning and
Excel Technology.
Rofin-Sinar also competes with manufacturers of conventional non-laser
products in applications such as welding, drilling, cutting and marking. The
Company believes that as industries continue to modernize, seek to reduce
production costs and require more precise and flexible manufacturing, the
features of laser-based systems will become more desirable than systems
incorporating conventional manufacturing techniques and processes. Advances in
fiber-optic beam delivery systems, improvements in reliability and
introduction of higher-power CO/2/ lasers and diode-pumped lasers capable of
performing heavy industrial material processing applications, as well as
marking applications, more rapidly than previously possible are expected to
result in increased acceptance of laser applications by industrial users.
40
<PAGE>
MANUFACTURING AND ASSEMBLY
Rofin-Sinar manufactures and tests its CO/2/ and Nd:YAG laser products for
cutting and welding at its Hamburg, Germany and Plymouth, Michigan facilities.
The Company's laser marking products are manufactured and tested at its
facilities in Gunding-Munich, Germany. See "Properties." The Company's joint
venture in Japan performs assembly and testing of SM-Series CO/2/ lasers.
Given the competitive nature of the laser business, the Company focuses
substantial efforts on maintaining and enhancing the efficiency and quality of
its manufacturing operations. The Company believes that a principal reason for
its success in the industrial laser market for materials processing is the
high quality of its product engineering and manufacturing capabilities. The
Company utilizes just in time and cell-based manufacturing techniques to
reduce manufacturing cycle times and inventory levels thus enabling it to
offer on-time delivery and high quality products to its customers.
Rofin-Sinar's in-house manufacturing includes only those manufacturing
operations which are critical to achieve quality standards or protect
intellectual property. These manufacturing activities consist primarily of
product development, testing of components and subassemblies some of which are
supplied from within the Company and others of which are supplied by third
party vendors and then integrated into the Company's finished products,
assembly and final testing of the completed product, as well as proprietary
software design and hardware/software integration. The Company minimizes the
number of suppliers and component types but, wherever practicable, it has at
least two sources of supply for key items. The Company has a qualifying
program for its vendors and generally seeks to build long-term relationships
with such vendors. Roots(R) blowers (used to accelerate gas flow in its SM-
Series fast axial flow CO/2/ lasers) are the only component the Company
purchases from a single supplier. The Company has no reason to believe it
could not purchase such component from alternative sources of supply on
comparable terms. Rofin-Sinar is not dependent on any supplier and has not
experienced any difficulty in obtaining necessary materials and components.
Rofin-Sinar is committed to meeting internationally recognized
manufacturing standards. In 1995, the Company's Hamburg facility received ISO
9001 certification. The Company intends to apply for IS0 9001 certification of
all of its manufacturing sites and anticipates obtaining ISO 9001
certification of its Gunding-Munich facility during fiscal 1997. The Company
expects its U.S. operation to be qualified by Ford as a Q-1 supplier in fiscal
1997.
The Company's production is controlled by production planning software. By
reducing the variety of products and options, designing new products on a
modular concept, reducing the number of vendors and the depth of production
through outsourcing, the Company has been able to reduce its manufacturing
costs significantly over the last three years and improved its production
efficiency.
RESEARCH AND DEVELOPMENT
During fiscal 1993, 1994 and 1995 and the first nine months of fiscal 1996,
Rofin-Sinar spent $10.3 million, $6.8 million, $6.7 million and $5.9 million,
respectively, on research and development. In addition, the Company received
funding under government grants totaling $448,000, $611,000, $1.4 million and
$476,000 in fiscal 1993, 1994 and 1995 and the first nine months of fiscal
1996, respectively. The decline in the Company's expenditures on research and
development from fiscal 1993 to fiscal 1994 is primarily attributable to the
refocusing of the Company's research and development activities on more
readily marketable new products.
Rofin-Sinar's research and development activities are directed at meeting
customers' manufacturing needs and application processes. Core competences
include CO/2/ gas lasers and Nd:YAG solid state lasers, precision optics,
electronic power supplies, fiber optics, beam delivery, control interfaces,
software programming and systems integration. The Company strives for
customer-driven development activities and promotes the use of alliances with
key customers and joint development programs in a wide range of its target
markets.
41
<PAGE>
Rofin-Sinar has approximately 56 employees engaged in product research and
development, of whom approximately 40 are professional engineers or have
master's or doctoral degrees (including 25 Ph.D.'s). The Company's research
and development activities are carried out in three centers in Hamburg and
Gunding, Germany and Plymouth, Michigan and are centrally coordinated and
managed. Interaction and communication among research and development
personnel throughout the Company promote a sharing of their cumulative
expertise. Rofin-Sinar maintains close working relationships with the leading
industrial, government and university research laboratories in Germany,
including the Fraunhofer Institute for Laser Technology in Aachen, the
Institute for "Technische Physik" of the German Space and Aerospace Research
Center in Stuttgart, the Fraunhofer Institute for Material Science in Dresden
and the Laser Center in Hanover, and elsewhere around the world, including the
University of Alberta in Canada. Such relationships include funding of
research, joint development programs, personnel exchange programs and
licensing of patents developed at such institutes. For a discussion of certain
technology transfer agreements between the Company and Siemens, see
"Intellectual Property" and "Related Transactions."
The Company recently agreed in principle on a research program with the
Fraunhofer Institute for Laser Technology to develop a modular 5 kW diode-
pumped Nd:YAG laser. Under this arrangement, the total project budget to be
spent by both parties is approximately $6.5 million. Under the terms of the
collaboration, the Company will be granted access to technology already
developed by the Fraunhofer Institute. The Company anticipates that the
project's development and manufacturing scale-up efforts will occur over a
five-year period. No assurance can be given that the collaboration with the
Fraunhofer Institute will be successful.
INTELLECTUAL PROPERTY
Rofin-Sinar has intellectual property which includes patents, proprietary
software, technical know-how and expertise, designs, process techniques and
inventions. While policies and procedures are in place to protect critical
intellectual properties, Rofin-Sinar believes that its success depends to a
larger extent on the innovative skills, know-how, technical competence and
abilities of the Company's personnel. The Company is also an exclusive
licensee on a worldwide basis of two patents, one of which expires in January
2005 (as to which the license is exclusive for five years from
commercialization of products) and one of which expires in July 2007 (as to
which the license is exclusive for the duration of the patent), covering the
diffusion-cooled technology used in its Slab-Series CO/2/ lasers for
industrial material processing applications. In the Company's view, the
technology protected by these two patents represents a significant step
forward in industrial laser technology for material processing and an
important source of the Company's future growth and profitability.
Rofin-Sinar protects its intellectual property in a number of ways
including, in certain circumstances, through patents. The Company has sought
patent protection primarily in Germany and the United States. Some patents
have also been registered in other jurisdictions including Great Britain,
France, Italy and Japan. The Company currently holds 32 separate patents for
inventions relating to lasers, processes and power supplies which expire from
1997 to 2014. In addition, Rofin-Sinar requires its employees and certain of
its customers, suppliers, distributors, agents and consultants to enter into
confidentiality agreements to further safeguard the Company's intellectual
property.
The Company from time to time receives notices from third parties alleging
infringement of such parties' patent or other intellectual property rights by
the Company's products. While such notices are common in the Company's
industry and the Company has in the past been able to develop non-infringing
technology or license necessary patents or technology on commercially
reasonable terms, there can be no assurance that the Company would in the
future prevail in any litigation seeking damages or expenses from the Company
or to enjoin the Company from selling its products on the basis of such
alleged infringement, or that the Company would be able to develop any non-
infringing technology or license any valid and infringed patents on
commercially reasonable terms. In the event any third party made a valid claim
against the Company or its customers and a license were not made
42
<PAGE>
available to the Company on commercially reasonable terms, the Company would
be adversely affected.
In July 1996, the Company received notice of an opposition filed by a
competitor in the EPO which challenges on a number of grounds one of the two
third-party patents licensed by the Company covering certain aspects of its
diffusion-cooled CO/2/ Slab laser. The U.S.-issued counterpart of this patent
was previously the subject of a reexamination proceeding in the PTO at the
conclusion of which the patent was upheld. While the decision of the PTO is
not binding on the EPO, based on the outcome of the U.S. reexamination
proceeding and management's review of the arguments made in the notice of
opposition, the Company believes that such notice of opposition is without
substantial merit. The Company intends to defend the EPO opposition proceeding
vigorously.
In July 1996, the Company received a letter from a manufacturer of sealed-
off, RF-excited CO/2/ lasers for military and commercial avionics applications
offering a license of its U.S. patents covering such technology in exchange
for a cross-license of the Company's CO/2/ Slab laser technology. Based on its
review of the patents held by such manufacturer, the Company does not believe
that its products infringe such patents, and it intends to defend vigorously
any infringement action which such party may commence against the Company.
From time to time, the Company files notices of opposition to certain
patents on laser technologies held by others, including academic institutions
and competitors of the Company, which the Company believes could inhibit its
ability to develop products in this area. In particular, the Company has a
pending notice of opposition against a patent held by a competitor which it
believes conflicts with a third-party patent licensed by the Company covering
certain aspects of its diffusion-cooled CO/2/ Slab laser. No assurance can be
given that the Company will be able to avoid an action by such competitor or
others or not be forced to initiate its own actions to protect its proprietary
position.
ORDER BACKLOG
The Company's order backlog at the end of fiscal 1993, 1994 and 1995 and
the first nine months of fiscal 1996 has increased significantly over the
comparable prior period. The Company's order backlog was $12.5 million at the
end of fiscal 1993, $17 million at the end of fiscal 1994 and $26.5 million at
the end of fiscal 1995 and $35.9 million at the end of the first nine months
of fiscal 1996.
An order is booked by Rofin-Sinar when an unconditional purchase order has
been received where a delivery date has been assigned. Delivery schedules
range from one week to six months, depending on the size, complexity and
availability of the product or system ordered, although typical delivery dates
for laser source products range 8-12 weeks from the date an order is placed.
During fiscal 1996, as the rate of order intake for laser marking products has
increased dramatically, average delivery dates for such products were for a
time extended by approximately four weeks, but have returned to normal
delivery times.
In addition to achieving record sales for the first nine months of 1996,
the Company's order backlog at June 30, 1996 of $35.9 million was the largest
quarter-end backlog in Rofin-Sinar's history. This backlog represents a 35.5%
increase over the order backlog at September 30, 1995 and a 111% increase over
the order backlog at September 30, 1994. To reduce its order backlog for laser
marking products and satisfy anticipated future growth in the marking segment
of its sales, the Company has recently expanded its production facility in
Gunding-Munich, Germany and added manufacturing employees which has enabled
the Company to increase its manufacturing capacity by 50%. Except for this
expansion in Gunding-Munich, the Company does not anticipate having to
increase materially the size of its manufacturing facilities to meet sales
expectations through the end of fiscal 1996.
43
<PAGE>
However, in the event that the Company's marketing activities in the United
States related to its laser marking systems result in additional demand for
such systems, the Company will need to add manufacturing in the United States
in fiscal 1997. In addition, in the event that the Company is able to
implement anticipated improvements in the product design and manufacturing of
its diffusion-cooled CO/2/ Slab lasers which would enable it to offer such
lasers at more attractive prices, the Company anticipates that it will need to
expand its manufacturing capacity in Europe and in the United States in fiscal
1997 or 1998 in order to satisfy the resulting increase in demand for such
products. The Company estimates that the total capital expenditures required
to add such manufacturing capacity in the United States and Europe would be in
the range of $500,000 to $750,000. Currently, Rofin-Sinar does not operate
full second shifts at any of its manufacturing facilities.
LASER TECHNOLOGY
General. The term "laser" is an acronym for "Light Amplification by
Stimulated Emission of Radiation." Lasers were first developed in the early
1960s in the United States. As illustrated in the diagram below, a laser
consists of an active lasing medium (1) that gives off its own light
(radiation) when excited, an optical resonator with a partially reflective
output mirror at one end (2) a fully reflective rear mirror at the other (3)
that permits the light to bounce back and forth between the mirrors through
the lasing medium, and an external energy source (4) used to excite the lasing
medium. The energy source can be light from special lamps, light from another
laser, an electric current or a chemical reaction. The lasing medium can be a
gas, a liquid, a semiconductor or a solid. A laser works by causing the energy
source to excite (pump) the lasing medium which converts the energy from the
source into an emission consisting of particles of light (photons) (5). These
photons stimulate the release of more photons, as they are reflected between
the two mirrors which form the resonator. The resulting build-up in the number
of photons is emitted in the form of a laser beam (6) through an output port
or "window." By changing the energy and the lasing medium, different
wavelengths and types of laser light can be produced. The laser produces light
from the lasing medium to achieve the desired intensity, uniformity and
wavelength through a series of reflective mirrors. The heat generated by the
excitation of the lasing medium is dissipated through a cooling mechanism,
which varies according to the type of laser technology.
The principal factors that distinguish different types of lasers and
determine the particular laser suitable for a specific application are pulse
duration, wavelength, output power, spatial coherence and cost per watt of
laser power. Lasers can be used for material processing because of their
excellent focusability. When focused by means of lenses or mirrors the energy
density in the focus spot is so high that metals and other materials can be
melted and vaporized.
The first type of industrial laser, the continuous wave CO/2/ laser, was
first commercialized in the mid-1970's. Successive laser technologies, such as
pulsed CO/2/, diffusion-cooled high-power CO/2/, solid-state and diode-pumped
technology, have required or will require (as the case may be) more than a
decade between initial development and industrial commercialization. Although
industrial applications for lasers were developed in the United States in the
1960's and 1970's, beginning in the late 1980's the focus of laser technology
development shifted to Germany, principally due to the significant level of
research and development activity at government-funded research institutes and
universities. The Company maintains close working relationships with a number
of these important research institutes and universities.
Principal Laser Technologies. The two principal types of laser technology used
for material processing are CO/2/ lasers and Nd:YAG flash-lamp pumped solid
state lasers. CO/2/ lasers and Nd:YAG flash-lamp pumped solid state lasers
accounted for 40% and 46%, respectively, of the total industrial laser market
for material processing in 1995, respectively, and are projected to account
for 37% and 41%, respectively, of the total market in 1996. Whereas CO/2/
lasers in general have the advantage of better mode structure (i.e., the shape
of the laser beam as it burns into the material being processed)
44
<PAGE>
and lower running costs, Nd:YAG lasers have the advantage of a shorter
wavelength, thereby enabling the use of more flexible fiberoptic beam delivery
systems, which does not exist for CO/2/ lasers (due to the longer wavelength
of the light they emit). Of the other laser types sold in the industrial laser
market for material processing, diode-pumped lasers accounted for 2% of the
total industrial laser market for material processing in 1995 and are
projected to account for 3% of the total market in 1996.
[Diagram illustrating operation of a laser]
CO/2/ lasers, which use CO/2/ gas as the lasing medium, are divided into
high-power (above 500 W) and low-power (below 500 W) applications. There are
two methods for CO/2/ excitation, radio frequency ("HF") and direct current
("DC") excitation. Most high power CO/2/ lasers are based on gas flow (i.e., a
continuous supply of fresh laser gas flows through the laser cavity to create
the energy necessary for excitation). Due to their ability to generate
comparatively high levels of continuous wave ("CW") power, CO/2/ lasers are a
particularly attractive laser medium for material processing applications.
Material processing applications for CO/2/ laser sources vary according to the
power output and configuration of the laser system. The primary applications
for high power CO/2/ lasers are cutting and welding of metal. Low power CO/2/
lasers are used principally for marking, cutting and engraving of non-metal
materials. While both low- and high-power CO/2/ lasers are used for cutting,
the materials they are used to process and their physical size can vary
significantly.
Nd:YAG lasers currently use flash lamps as the source of excitation (and
are therefore called "flash-lamp pumped"). The lasing medium is a solid state
Nd:YAG crystal rod. The Nd:YAG crystal rod and the flash lamps are positioned
in a cavity, which is either a gold or a ceramic reflector. The output power
is determined by the size of the rod and by the numbers of cavities within the
laser resonator. Typical output powers vary from 50 W to 4000 W. Nd:YAG lasers
can be run in either a pulsed or continuous wave manner. Marking applications
generally require higher pulsing frequencies than can be achieved with pulsed
flash lamps. Such frequencies are achieved by inserting a Q-switch (a fast
electro-optical shutter) into the laser resonator, enabling frequencies to be
switched up or down in multiples of 10 kHz at a time.
Recent development efforts in the area of Nd:YAG lasers have focused on the
use of laser diodes as the means of excitation instead of flash lamps.
Laboratory testing has shown that diode laser
45
<PAGE>
excitation can increase the electrical efficiency of a Nd:YAG laser from
approximately 4% to approximately 15%, making it comparable with the
electrical efficiency of CO/2/ laser technology. However, to date, the high
costs and short life of laser diodes have hindered widespread acceptance by
industrial customers of diode-pumped technology in high power lasers.
Currently, diode-pumped solid state lasers are commercially available only at
the 10 W level. It is Rofin-Sinar's intention to develop cost effective
solutions for diode-pumped Nd:YAG laser sources in the 100 W range (for
marking) and up to 5 kW range (for cutting and welding). See "--Business
Strategy"; "--Research and Development."
EMPLOYEES
At June 30, 1996, Rofin-Sinar had 443 full time employees, of which 300
were in Germany, 100 were in the United States, 12 in France, 16 in Italy and
15 in Japan. Of such 443 employees, 149 were engaged in manufacturing, 82 in
sales and marketing, 106 in customer service, 65 in research and development
and 41 in general management, administration and finance.
While the Company's employees are not covered by collective bargaining
agreements and the Company has never experienced a work stoppage, slowdown or
strike, the Company's employees at its Hamburg and Gunding-Munich facilities
are represented by a seven-person and five-person works council, respectively,
as well as by a four-person central works council. Matters relating to
compensation, benefits and work rules are negotiated and resolved between
management and the works council for the relevant location. The Company
considers its relations with its employees to be excellent.
PROPERTIES
The Company's manufacturing facilities include the following:
<TABLE>
<CAPTION>
LOCATION OF FACILITY OWNED OR LEASED SIZE (SQ. FT.) PRIMARY ACTIVITY
-------------------- --------------- -------------- -------------------------------------
<S> <C> <C> <C>
Hamburg, Germany........ Owned* 110,840 CO/2/ lasers, Nd:YAG lasers
Gunding-Munich, Germa-
ny..................... Leased 36,469 Nd:YAG lasers, laser marking products
Plymouth, Michigan...... Leased 58,075 CO/2/ lasers
Sakai Atsugi-shi, Ja-
pan.................... Leased 11,100 CO/2/ lasers
</TABLE>
- --------
*The facility is owned by RSL; the real property on which the facility is
located is leased by RSL under a 99-year lease.
The Company's leases of its facilities in Plymouth, Michigan and Gunding-
Munich, Germany expire in 1998 (with renewal options until 2001) and 2005,
respectively. The leases on its Japanese facilities in Atsugi-shi expire in
1997 (renewable for two years) and in 1998 (renewable for three years).
The Company maintains sales, administration and research and development
facilities at each of the Hamburg, Gunding-Munich and Plymouth locations. The
Company also maintains sales and service offices worldwide, all of which are
leased.
Except as noted above under "Order Backlog," the Company believes that its
existing facilities are adequate to meet its needs for the next 12 months and
that suitable additional or alternative space would be available, if
necessary, in the future on commercially reasonable terms. The Company expects
to make additional capital expenditures to support its diode-pumped solid
state laser development activities and add manufacturing and testing capacity
in North America for selected components and products, which may also require
certain leasehold improvements in the Company's Plymouth, Michigan facility.
46
<PAGE>
GOVERNMENT REGULATION
The majority of the Company's laser products sold in the United States are
classified as Class IV Laser Products under applicable rules and regulations
of the Center for Devices and Radiological Health ("CDRH") of the U.S. Food
and Drug Administration. The same classification system is applied in the
European markets. Safety rules are formulated with Deutsche Industrie Norm
(i.e., German Industrial Standards) or ISO standards which are internationally
harmonized. Such regulations generally require a self-certification procedure
pursuant to which a manufacturer must file with the CDRH with respect to each
product incorporating a laser device, periodic reporting of sales and
purchases and compliance with product labeling standards. The Company's laser
products for cutting and welding and laser marking products can result in
injury to human tissue if directed at an individual or otherwise misused. The
Company believes that its laser products for cutting and welding and laser
marking products are in substantial compliance with all applicable laws for
the manufacture of laser devices.
47
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS OF THE COMPANY
The following table sets forth certain information and ages as of August 1,
1996 regarding each of the Company's executive officers, key employees and
directors:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Peter Wirth............. 49 Chairman of the Board of Directors, Chief Executive
Officer and President
Hinrich Martinen........ 54 Executive Vice President, Research and Development/
Operations, Chief Technical Officer and Director
Gunther Braun........... 38 Executive Vice President, Finance and
Administration, Chief Financial Officer and
Director
Walter Volkmar.......... 53 Manager, RSL Marking Division
Joseph Ferrario......... 49 President, RSI
Richard Walker.......... 51 Vice President -- Sales and Marketing, RSI
Bernd Ladiges........... 54 European Sales Manager, RSL
Ulrich Hefter........... 43 Manager of Research and Development for the Marking
Division, RSL
</TABLE>
PETER WIRTH is Chairman of the Board of Directors, Chief Executive Officer
and President of the Company. He has also served as the General Manager of RSL
since October 1994. From 1991 until October 1994, Dr. Wirth was President of
Rofin-Sinar, Inc. He joined Rofin-Sinar in 1979 as Sales Manager for
Industrial Lasers, and became Director, Sales and Marketing in 1983. He holds
a Master's Degree and a Ph.D in Physics from the Technical University in
Munich, Germany.
HINRICH MARTINEN is Executive Vice President, Research and
Development/Operations and Chief Technical Officer, as well as a member of the
Board of Directors of the Company. He has held a number of senior R&D
management positions since joining RSL in 1981 and is currently the Technical
Director of RSL. Mr. Martinen holds a Master's Degree in Physics from the
University of Hamburg, Germany.
GUNTHER BRAUN is Executive Vice President, Finance and Administration, and
Chief Financial Officer of the Company, as well as a member of its Board of
Directors. Since 1994, he has also been the Financial Director for Rofin-Sinar
Laser GmbH. He joined RSL in 1989 when RSL acquired Laser Optronic's marking
division from Coherent General Inc. Mr. Braun holds a Business Administration
degree from the Fachhochschule in Regensburg, Germany.
WALTER VOLKMAR has been the Manager of the Marking Division of RSL since
1994. He joined RSL in 1989 when RSL acquired Laser Optronic's marking
division from Coherent General Inc. Dr. Volkmar holds Master's Degrees in
Mechanical Engineering and Business Administration from the Technical
University in Darmstadt, and a Ph.D. in Economics and Trade from the
University of Parma in Italy.
JOSEPH FERRARIO has been the President of RSI since August 1994, after
joining RSI as General Manager earlier that year. From 1992 to 1994, Mr.
Ferrario was an independent business consultant to industrial companies. From
1981 until 1992, Mr. Ferrario held senior positions in engineering, research
and product development, service, sales and marketing management with Sciaky
Brothers Limited, which produces electron beam equipment and laser welding
systems. Mr. Ferrario holds a B.S. in Physics from St. Louis University and a
Master's Degree in Business Administration from Northwestern University.
48
<PAGE>
RICHARD WALKER has been the Vice President -- Sales and Marketing of RSI
since 1993. Prior to that, he was Vice President -- Marketing for Nd:YAG
products. Mr. Walker joined RSI in 1988. Mr. Walker holds a B.S. from the
University of London.
BERND LADIGES has been the European Sales Manager of RSL since 1987. He
joined RSL in 1982.
ULRICH HEFTER has been the Research and Development Manager of the Marking
Division since 1984. He joined RSL in 1989 when RSL acquired Laser-Optronic's
marking division from Coherent General, Inc. Dr. Hefter holds a Master's
Degree and a Ph.D. in Physics from the University of Kaiserslautern, Germany.
Messrs. Wirth, Martinen, Braun, Volkmar, Ferrario and Walker are members of
the Company's Operating Committee, which is responsible for establishing and
implementing the Company's business strategy.
The Company's Board of Directors intends to appoint Ralph Reins, Gary
Willis and one other individual not affiliated with the Company to its Board
of Directors shortly after the consummation of the Offerings. Summarized below
is certain information with respect to each of Messrs. Reins and Willis:
RALPH REINS became President and Chief Executive Officer of AP Parts
International, Inc. in 1996. Previously, Mr. Reins served as President and
Chief Executive Officer of Envirotest Systems Corp. in 1995, as President
of Allied Signal Automotive from 1991 through 1994 and as President of
United Technologies Automotive from 1990 to 1991. Prior to that, he was
Chairman, Chief Executive Officer, President and Chief Operating Officer of
Mack Truck from 1989 to 1990 and President and Chief Executive Officer of
ITT Automotive from 1985 to 1989. Mr. Reins is a member of the University
of Michigan's National Advisory Council and the Society of Automotive
Engineers. He is 55 years of age.
GARY WILLIS has been President, Chief Executive Officer and Director of
Zygo Corporation since 1992. He was an independent consultant between 1990
and 1992. Before 1990, Mr. Willis was President, Chief Executive Officer
and a director of the Foxboro Company. Mr. Willis is 50 years of age.
Each of Messrs. Reins and Willis has indicated an intention to purchase a
portion of the shares of Common Stock to be reserved for sale to employees and
certain other persons. See "Underwriting."
Upon the appointment of such outside directors, the Company's Board of
Directors will be divided into three classes of directors serving staggered
three-year terms. See "Description of Capital Stock--Certain Provisions of the
Company's Certificate of Incorporation and By-laws."
It is expected that the Company's Board of Directors will establish an
Audit Committee and a Compensation Committee, each consisting of two or more
directors, none of whom will be an officer or employee of the Company.
The responsibilities of the Audit Committee will be to recommend to the
Board of Directors the independent public accountants to be selected to
conduct the annual audit of the books and records of the Company, review the
proposed scope of such audit and approve the audit fees to be paid, review the
adequacy and effectiveness of the accounting and internal financial controls
of the Company with the independent public accountants and the Company's
financial and accounting staff and review and approve transactions between the
Company and its directors, officers and affiliates.
The responsibilities of the Compensation Committee will be to provide a
general review of the Company's compensation and benefit plans to ensure that
they meet corporate financial and strategic objectives. The responsibilities
of the Compensation Committee also include administering the Equity
49
<PAGE>
Incentive Plan and the Annual Incentive Plan (both of which are described
below), including selecting the officers and salaried employees to whom awards
will be granted and making such awards.
DIRECTOR COMPENSATION
Directors who are not currently receiving compensation as officers or
employees of the Company are entitled to an annual cash retainer fee of
$15,000 plus an honorarium of $1,000 and $500 for each board meeting and
committee meeting, respectively, which they attend, plus reimbursement of
expenses. In addition, prior to the consummation of the Offerings, the Company
intends to adopt a non-employee director stock plan (the "Directors' Plan")
pursuant to which each member of the Board of Directors who is not an employee
of the Company and who is elected or continues as a member of the Board of
Directors is entitled to receive an initial grant of 1,500 shares of
restricted stock and thereafter an annual grant of 1,500 shares of restricted
stock. The Compensation Committee of the Board of Directors administers the
Directors' Plan.
The maximum number of shares of Common Stock reserved for issuance under
the Directors' Plan is shares (subject to adjustment for certain events
such as stock splits and stock dividends), and the Company intends to file
immediately after the Offerings a registration statement on Form S-8 under the
Securities Act to register the shares of Common Stock reserved for issuance
under the Directors' Plan.
EXECUTIVE COMPENSATION
The table below shows information concerning cash and noncash compensation
for the Chief Executive Officer and the four most highly compensated executive
officers other than the Chief Executive Officer of the Company (the "Named
Executive Officers") for the fiscal year ended September 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1)
---------------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) (2) COMPENSATION ($) (3)
- --------------------------- ---------- ------------- --------------------
<S> <C> <C> <C>
Peter Wirth...................... $231,236 $20,684 --
Chairman, Chief Executive Offi-
cer and President
Hinrich Martinen................. 206,796 20,684 --
Executive Vice President, Re-
search and Development/ Opera-
tions and Chief Technical Offi-
cer
Gunther Braun.................... 129,980 13,789 --
Executive Vice President, Fi-
nance and Administration, and
Chief Financial Officer
Walter Volkmar................... 132,675 20,250 --
Manager, RSL Marking Division
Joseph Ferrario.................. 133,900 49,754 5,510
President, RSI
</TABLE>
- --------
(1) Amounts paid in German marks have been translated into U.S. dollars at the
weighted average exchange rate for the fiscal year ended September 30,
1995 (US$1.00 : DM 1.4504).
(2) Includes discretionary bonuses awarded by Siemens (with respect to Messrs.
Wirth, Martinen and Braun), and bonuses awarded pursuant to the RSL Bonus
Plan (as defined below) (with respect to Mr. Volkmar) and the RSI
Incentive Compensation Plan (as defined below) (with respect to Mr.
Ferrario).
(3) With respect to Messrs. Wirth, Martinen, Braun and Volkmar, the amounts
shown represent contributions to a [deferred] pension plan account in
Germany. With respect to Mr. Ferrario, the amount shown represents RSI's
matching contribution on behalf of Mr. Ferrario to the Siemens Savings
Plan.
50
<PAGE>
PENSION PLANS
RSL PENSION PLAN
Messrs. Wirth, Martinen, Braun and Volkmar participate in the Rofin-Sinar
Laser GmbH Pension Plan (the "RSL Pension Plan") for RSL executives. As is the
normal practice with German companies, the RSL Pension Plan is unfunded.
According to the provisions of the RSL Pension Plan, a participant will
receive a pension if he (i) is at least 60 years old when he leaves RSL or he
is no longer employed due to a permanent disability resulting in more than 50%
inability to practice his profession and (ii) has served at least ten years
with RSL at the time of separation.
The annual benefits payable under the RSL Pension Plan commencing at the
statutory retirement age of 65 (according to German law) are calculated based
upon the age at which the participant leaves RSL pursuant to tables attached
to the RSL Pension Plan. Book reserves are kept to record benefit accruals
under the RSL Pension Plan. Messrs. Wirth, Martinen, Braun and Volkmar joined
RSL on July 1, 1979, October 1, 1981, November 1, 1984 and March 1, 1985,
respectively. Assuming retirement at or after age 60, Messrs. Wirth, Martinen,
Braun and Volkmar would receive a monthly pension benefit of $2,765, $2,765,
$902 and $1,289, respectively (at the German mark/U.S. dollar exchange rate in
effect on August 2, 1996).
Siemens Corporation Retirement Plan
RSI is a participating employer in the Siemens Corporation Retirement Plan,
a qualified defined benefit pension plan maintained for U.S. employees. Under
the Siemens Corporation Retirement Plan, employees receive annual pension
benefits equal to the sum of 1.125% of the first $12,000 of the employee's
average final compensation and 1.5% of "average final compensation" in excess
of $12,000, multiplied by the number of years of service in which the employee
was employed by a participating employer. Average final compensation is based
upon the period of four consecutive plan years out of the last ten full plan
years preceding the employee's retirement which produces the highest amount.
Pension benefits under the Siemens Corporation Retirement Plan are subject to
reduction for benefits payable to the employee under any other tax-qualified
defined benefit pension plan attributable to the same period of service as the
benefits payable under the Siemens Corporation Retirement Plan. Benefits under
the Siemens Corporation Retirement Plan are funded through contributions by SC
to a trust maintained in connection with such plan.
RSI employees who are participants in the Siemens Corporation Retirement
Plan will cease to participate in such plan after a transition period
following the consummation of the Offerings. In connection with the
consummation of the Offerings, SC will transfer an amount required pursuant to
Section 414(l) of the Internal Revenue Code of 1986, as amended (the "Code")
to satisfy the pension obligation relating to the RSI participants in the
Siemens Corporation Retirement Plan to a separate trust in favor of such
participants.
Retirement benefits payable under qualified defined benefit plans are
subject to annual pension limitations imposed under Section 415 of the Code,
for which limitations vary annually. The current Section 415 limitation is
$120,000. In addition, Section 401(a)(17) of the Code specifies a maximum
amount of annual compensation, also adjusted annually, that may be taken into
account in computing benefits under a qualified defined benefit plan. The
current Section 401(a)(17) limitation is $150,000. The Siemens Corporation
Pension Preservation Plan, a nonqualified and unfunded plan in which certain
highly compensated employees of RSI (including Mr. Ferrario) participate,
provides benefits in excess of the applicable Code limitations. Such RSI
employees will cease to participate in the Siemens Corporation Pension
Preservation Plan upon the consummation of the Offerings.
51
<PAGE>
The following table shows the estimated annual pension benefits provided by
the combination of the Siemens Corporation Retirement Plan and the Siemens
Corporation Pension Preservation Plan, based on the remuneration and years of
service classifications indicated:
PENSION PLAN TABLE (1)
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000.............................. $27,450 $36,600 $45,750 $ 54,900 $ 64,050
150,000.............................. 33,075 44,100 55,125 66,150 77,175
175,000.............................. 38,700 51,600 64,500 77,400 90,300
200,000.............................. 44,325 59,100 73,875 88,650 103,425
225,000.............................. 49,950 66,600 83,250 99,900 116,550
250,000.............................. 55,575 74,100 92,625 111,150 129,675
</TABLE>
- --------
(1) Annual pension benefits are calculated with respect to remuneration levels
of up to $250,000, which amount is in excess of 120% of the covered
compensation of Mr. Ferrario, the only Named Executive Officer who
participates in either the Siemens Corporation Retirement Plan or the
Siemens Corporation Pension Preservation Plan.
The amounts shown are on a single life annuity basis and assume retirement
at age 65. As of September 30, 1995, Mr. Ferrario had one year of benefit
service under the Siemens Corporation Retirement Plan. Mr. Ferrario's
covered compensation under the Siemens Corporation Retirement Plan does not
differ by more than 10% from his annual compensation set forth in the
Summary Compensation Table.
EQUITY INCENTIVE PLAN
Prior to the consummation of the Offerings, the Company intends to adopt
the Equity Incentive Plan. The Equity Incentive Plan will be administered by
the Compensation Committee, which will be comprised exclusively of nonemployee
Directors. The Equity Incentive Plan will provide for the grant of incentive
and nonqualified stock options, restricted stock and performance shares
(individually, an "Award" or collectively, "Awards"). Employees who will be
eligible to receive Awards are officers or certain salaried employees with
potential to contribute to the future success of the Company or its
subsidiaries. The Compensation Committee will have discretion to select the
employees to whom Awards will be granted (from among those eligible), to
determine the type, size and terms and conditions applicable to each Award and
the authority to interpret, construe and implement the provisions of the
Equity Incentive Plan. The Compensation Committee's decisions will be binding
on the Company and employees eligible to participate in the Equity Incentive
Plan and all other persons having any interest in the Equity Incentive Plan.
It is presently anticipated that grants of Awards will be made to the
executive officers and certain other officers of the Company concurrently with
the Offerings as set forth in the Equity Incentive Plan Table below.
EQUITY INCENTIVE PLAN TABLE
<TABLE>
<CAPTION>
OPTIONS
------------------
NO. OF DOLLAR
NAME AND POSITION OPTIONS AMOUNT (1)
----------------- ------- ----------
<S> <C> <C>
Peter Wirth............................................... 42,000
Chairman, Chief Executive Officer and President
Hinrich Martinen.......................................... 36,000
Executive Vice President, Research and
Development/Operations
and Chief Technical Officer
Gunther Braun............................................. 36,000
Executive Vice President, Finance and Administration
and Chief Financial Officer
Walter Volkmar............................................ 30,000
Manager, RSL Marking Division
Joseph Ferrario........................................... 30,000
President, RSI
</TABLE>
- --------
(1)Assumes a per share price of [ ], the initial public offering price.
52
<PAGE>
The material terms of the Awards described in the table above are as
follows: The exercise price for all Options granted as of the Effective Date
will be equal to the initial public offering price. All Options granted as of
the closing of the Offerings will vest at the rate of 20% annually on the
first five anniversaries of the closing of the Offerings.
The number of shares that will be available for award under the Equity
Incentive Plan through the fifth anniversary of the closing of the Offerings
is 1,500,000 shares (includes Awards issued effective as of the closing of the
Offerings). Common Stock issued under the Equity Incentive Plan may be either
authorized but unissued shares, treasury shares or any combination thereof. To
the fullest extent permitted under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), any shares of Common Stock subject to an Award
which lapses, expires or is otherwise terminated without the issuance of such
shares may become available for new Awards.
Set forth below is a description of the types of Awards that may be granted
under the Equity Incentive Plan.
Stock Options
Options (each an "Option") to purchase shares of Common Stock, which may be
nonqualified or incentive stock options, may be granted under the Equity
Incentive Plan at an exercise price (the "Option Price") determined by the
Compensation Committee in its discretion, provided that, with respect to
incentive stock options, the Option Price may be no less than the fair market
value of the underlying Common Stock on the date of grant (110% of fair market
value in the case of an incentive stock option granted to a ten percent
shareholder). Each Option represents the right to purchase one share of Common
Stock at a specified price.
Options will expire not later than ten years after the date on which they
are granted (five years in the case of an incentive stock option granted to a
ten percent shareholder). Options become exercisable at such times and in such
installments as determined by the Compensation Committee and such
exerciseability will generally be based on (i) length of service or (ii) the
attainment of performance goals established by the Compensation Committee;
provided that no Option may be exercised within the first six months following
the date of grant. The Compensation Committee may also accelerate the period
for the exercise of any or all Options held by an optionee. Payment of the
Option Price must be made in full at the time of exercise in cash, certified
or bank check, note or other instrument acceptable to the Compensation
Committee.
Restricted Stock
An Award of restricted stock ("Restricted Stock") is an Award of Common
Stock that is subject to such restrictions as the Compensation Committee deems
appropriate, including forfeiture conditions and restrictions against transfer
for a period specified by the Compensation Committee. Restricted Stock Awards
may be granted under the Equity Incentive Plan for or without consideration.
Restrictions on Restricted Stock may lapse in installments based on factors
selected by the Compensation Committee. The Compensation Committee, in its
sole discretion, may waive or accelerate the lapsing of restrictions in whole
or in part. Prior to the expiration of the restricted period, except as
otherwise provided by the Compensation Committee, a grantee who has received a
Restricted Stock Award has the rights of a shareholder of the Company,
including the right to vote and to receive cash dividends on the shares
subject to the Award. Stock dividends issued with respect to shares covered by
a Restricted Stock Award will be treated as additional shares under such Award
and will be subject to the same restrictions and other terms and conditions
that apply to the shares with respect to which such dividends are issued.
Performance Shares
A performance share Award (a "Performance Share") is an Award of a number
of units that represent the right to receive a specified number of shares of
Common Stock upon satisfaction of
53
<PAGE>
certain specified performance criteria, subject to such other terms and
conditions as the Compensation Committee deems appropriate. Performance
objectives will be established before, or as soon as practicable after, the
commencement of the performance period (the "Performance Period") and may be
based on net earnings, operating earnings or income, absolute and/or relative
return on equity or assets, earnings per share, cash flow, pre-tax profits,
earnings growth, revenue growth, comparisons to peer companies, any
combination of the foregoing and/or such other measures, including individual
measures of performance, as the Compensation Committee deems appropriate.
Prior to the end of a Performance Period, the Compensation Committee, in its
discretion and only under conditions that do not affect the deductibility of
compensation attributable to Performance Shares under Section 162(m) of the
Code, may adjust the performance objectives to reflect an event that may
materially affect the performance of the Company, or a subsidiary or a
division of the Company, including, but not limited to, market conditions or a
significant acquisition or disposition of assets or other property by the
Company, or a subsidiary or a division of the Company. The extent to which a
grantee is entitled to payment in settlement of a Performance Share Award at
the end of the Performance Period will be determined by the Compensation
Committee, in its sole discretion, based on whether the performance criteria
have been met.
Payment in settlement of a Performance Share Award will be made as soon as
practicable following the last day of the Performance Period, or at such other
time as the Compensation Committee may determine, in shares of Common Stock.
Additional Information
Under the Equity Incentive Plan, if there is any change in the outstanding
shares of Common Stock by reason of any stock dividend, recapitalization,
merger, consolidation, stock split, combination or exchange of shares or other
form of reorganization, or any other change involving the Common Stock, such
proportionate adjustments as may be necessary (in the form determined by the
Compensation Committee) to reflect such change will be made to prevent
dilution or enlargement of the rights with respect to the aggregate number of
shares of Common Stock for which Awards in respect thereof may be granted
under the Equity Incentive Plan, the number of shares of Common Stock covered
by each outstanding Award, and the price per share in respect thereof.
Generally, an individual's rights under the Equity Incentive Plan may not be
assigned or transferred (except in the event of death).
In the event of a change in control and except as the Compensation
Committee (as constituted immediately prior to such change in control) may
otherwise determine in its sole discretion: (i) all Options then outstanding
will become fully exercisable as of the date of the change in control, whether
or not then exercisable; (ii) all restrictions and conditions of all
Restricted Stock Awards then outstanding will lapse as of the date of the
change in control; and (iii) all Performance Share Awards will be deemed to
have been fully earned as of the date of the change in control. The above
notwithstanding, any Award granted within six months of a change in control
will not be afforded any such acceleration as to exercise, vesting and payment
rights or lapsing as to conditions or restrictions. For purposes of the Equity
Incentive Plan, a "change in control" shall have occurred when (A) any person
(other than Siemens or any of its affiliates prior to the consummation of the
Offerings, the Company, any subsidiary of the Company, any employee benefit
plan of the Company or of any subsidiary of the Company, or any person or
entity organized, appointed or established by the Company or any subsidiary of
the Company for or pursuant to the terms of any such plans), alone or together
with its affiliates and associates (collectively, an "Acquiring Person"),
shall become the beneficial owner of 20% or more of the then outstanding
shares of Common Stock or the combined voting power of the Company's then
outstanding voting securities (except pursuant to an offer for all outstanding
shares of Common Stock at a price and upon such terms and conditions as a
majority of the Continuing Directors (as defined below) determine to be in the
best interests of the Company and its shareholders (other than an Acquiring
Person on whose behalf the offer is being made)), or (B)
54
<PAGE>
during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors and any new director (other
than a director who is a representative or nominee of an Acquiring Person)
whose election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved (collectively, the "Continuing Directors"), no longer constitute a
majority of the Board of Directors. Notwithstanding the foregoing, prior to
the consummation of the Offerings, no change in control will be deemed to have
occurred if Siemens and any of its affiliates are the beneficial owners of 50%
or more of the combined voting power of the Company's then outstanding voting
securities and designees of Siemens and its affiliates constitute a majority
of the Board of Directors.
The Equity Incentive Plan will remain in effect until terminated by the
Board of Directors and thereafter until all Awards granted thereunder are
satisfied by the issuance of shares of Common Stock or the payment of cash or
otherwise terminated pursuant to the terms of the Equity Incentive Plan or
under any Award agreements. Notwithstanding the foregoing, no Awards may be
granted under the Equity Incentive Plan after the tenth anniversary of the
effective date of the Equity Incentive Plan. The Board of Directors may at any
time terminate, modify or amend the Equity Incentive Plan; provided, however,
that no such amendment, modification or termination may adversely affect an
optionee's or grantee's rights under any Award theretofore granted under the
Equity Incentive Plan, except with the consent of such optionee or grantee,
and no such amendment or modification will be effective unless and until the
same is approved by the shareholders of the Company when such shareholder
approval is required to comply with applicable law, regulation or stock
exchange rule.
Certain U.S. Federal Income Tax Consequences of Options
Certain of the U.S. federal income tax consequences to optionees and the
Company of Options granted under the Equity Incentive Plan are generally set
forth in the following summary.
An employee to whom an incentive stock option ("QSO") that qualifies under
Section 422 of the Code is granted will not recognize income at the time of
grant or exercise of such Option. No federal income tax deduction will be
allowable to the Company upon the grant or exercise of such QSO. However, upon
the exercise of a QSO, any excess in the fair market price of the Common Stock
over the Option Price constitutes a tax preference item that may have
alternative minimum tax consequences for the employee. When the employee sells
such shares more than one year after the date of transfer of such shares and
more than two years after the date of grant of such QSO, the employee will
normally recognize a long-term capital gain or loss equal to the difference,
if any, between the sale prices of such shares and the aggregate Option Price.
If the employee does not hold such shares of the required period, when the
employee sells such shares, the employee will generally recognize ordinary
compensation income and possibly capital gain or loss in such amounts as are
prescribed by the Code and the regulations thereunder and the Company will
generally be entitled to a federal income tax deduction in the amount of such
ordinary compensation income.
An employee to whom a nonqualified stock option ("NSO") is granted will not
recognize income at the time of grant of such Option. When such employee
exercises such NSO, the employee will recognize ordinary compensation income
equal to the difference, if any, between the Option Price paid and the fair
market value, as of the date of Option exercise, of the shares the employee
receives. The tax basis of such shares to such employee will be equal to the
Option Price paid plus the amount includible in the employee's gross income,
and the employee's holding period for such shares will commence on the date on
which the employee recognized taxable income in respect of such shares.
Subject to the applicable provisions of the Code and regulations thereunder,
the Company will generally be entitled to a federal income tax deduction in
respect of an NSO in an amount equal to the ordinary compensation income
recognized by the employee.
55
<PAGE>
ANNUAL INCENTIVE PLAN ARRANGEMENTS
The Company currently has in effect two short-term cash incentive plans,
the RSL Annual Bonus Plan in Germany and the RSI Incentive Compensation Plan
in the United States. The Company intends to replace such plans with an Annual
Incentive Plan as described below. See "--Annual Incentive Plan."
RSL Annual Bonus Plan. Approximately 20 key managers in Germany are
eligible for participation in RSL's annual bonus program. This program
provides for annual cash bonus payments based on (i) the operating results of
the respective business unit, and (ii) personal targets established for each
participating manager. Depending on the seniority and the position held by the
respective manager, such bonus payments can account for up to 40% of the
salary to be paid. In fiscal 1995, approximately $20,250 was paid out to Mr.
Volkmar pursuant to this plan.
In March 1996, RSL agreed with its central works council with respect to
fiscal 1996 to pay a special bonus to its employees (excluding Messrs. Wirth,
Martinen and Braun) aggregating 7.5% of RSL's income from operations for such
fiscal year as reflected in RSL's statutory accounts, to be paid in the first
quarter of fiscal 1997.
RSI Incentive Compensation Plan. Under the RSI Incentive Compensation Plan,
cash incentive compensation is awarded to all RSI employees on an annual basis
based upon the extent to which RSI's financial performance (in terms of annual
revenue and pre-tax profits) exceeds certain threshold performance goals.
Individual performance is also considered in determining an employee's
incentive compensation. In fiscal 1995, Mr. Ferrario earned $49,754 under this
plan.
Annual Incentive Plan. Prior to the consummation of the Offerings, the
Company intends to adopt the Rofin-Sinar Technologies Inc. Annual Incentive
Plan (the "Annual Incentive Plan"), which will be administered by the
Compensation Committee. Employees assigned to certain management positions
will be eligible to participate in the Annual Incentive Plan.
Under the Annual Incentive Plan, annual bonuses will be based upon the
extent to which the Company's financial performance (in terms of net earnings,
operating income, earnings per share, cash flow, absolute and/or relative
return on equity or assets, pre-tax profits, earnings growth, revenue growth,
comparison to peer companies, any combination of the foregoing and/or other
appropriate measures in such manner as the Compensation Committee deems
appropriate) during the year has met or exceeded certain performance goals
specified by the Compensation Committee. Some performance goals may include
elements that specify individual achievement objectives directly related to
such individual's areas of responsibility. Performance goals will be
determined by the Compensation Committee prior to the commencement of the
applicable plan year. Under the Annual Incentive Plan, participants will be
entitled to receive an award for any year in an amount ranging from 20% to 45%
of such participant's "base salary." Awards under the Annual Incentive Plan
will be paid 75% in cash and 25% in restricted stock. Payments in Restricted
Stock will be made pursuant to the terms and conditions of the Equity
Incentive Plan.
In the event a participant terminates employment prior to the end of a year
for any reason other than disability, retirement, death or involuntary layoff,
no award under the Incentive Plan will be paid for such year unless otherwise
determined by the Committee in its sole discretion. If employment terminates
by reason of disability, retirement, death or involuntary layoff (provided
that such participant participated in the Annual Incentive Plan for at least
six months), the participant will be entitled to receive a pro rata award. In
the event of a "change in control" (as defined in the Equity Incentive Plan),
the payment of awards will be accelerated and the amount of such awards will
be calculated as if the applicable performance goals had been met.
The Board of Directors may terminate or amend the Annual Incentive Plan, in
whole or in part, at any time; provided that no such termination or amendment
may impair any rights that may have accrued under such plan. Because awards
under the Annual Incentive Plan are based on the
56
<PAGE>
attainment of specified performance goals, it is not possible to determine the
benefits and amounts that will be received by any individual participant or
group of participants in the future.
EMPLOYMENT AGREEMENTS
In August 1994, RSL entered into an employment agreement with Peter Wirth
(the "Wirth Employment Agreement"). Pursuant to the terms of the Wirth
Employment Agreement, Mr. Wirth agreed to serve as RSL's General Manager. The
Wirth Employment Agreement can be terminated either by RSL or by the executive
upon two years' prior notice. Mr. Wirth also agreed not to compete with RSL
throughout the term of his employment with RSL and not to disclose any
confidential information thereafter. In exchange for his services, RSL agreed
to compensate Mr. Wirth with a base salary of $228,800 per annum (subject to
annual adjustment). Mr. Wirth is entitled to a yearly discretionary bonus
determined by the Chairman of the Shareholder's Advisory Board of RSL.
Effective simultaneously with the closing of the Offerings, the Wirth
Employment Agreement will be terminated and the Company intends to enter into
a new employment agreement with the executive, the terms of which are
described below.
In June 1987, RSL entered into an employment agreement with Hinrich
Martinen (the "Martinen Employment Agreement"). Pursuant to the terms of the
Martinen Employment Agreement, Mr. Martinen agreed to serve as RSL's Technical
Director--Research and Development Operations. The Martinen Employment
Agreement can be terminated either by RSL or by the executive upon two years'
prior notice. Mr. Martinen also agreed not to compete with RSL throughout the
term of his employment, and not to disclose any confidential information
thereafter. In exchange for his services, RSL agreed to compensate Mr.
Martinen with a base salary of $175,770 per annum (subject to annual
adjustment). Mr. Martinen is entitled to a yearly discretionary bonus
determined by the Chairman of the Shareholder's Advisory Board. Effective
simultaneously with the closing of the Offerings, the Martinen Employment
Agreement will be terminated and the Company intends to enter into a new
employment agreement with the executive, the terms of which are described
below.
In January 1994, RSL entered into an employment agreement with Gunther
Braun (the "Braun Employment Agreement"). Pursuant to the terms of the Braun
Employment Agreement, Mr. Braun agreed to serve as RSL's Financial Director.
The Braun Employment Agreement can be terminated either by RSL or by the
executive upon one year's prior notice. Mr. Braun also agreed not to compete
with RSL throughout the term of his employment with RSL, and for six months
thereafter, and to not disclose any confidential information thereafter. In
exchange for his services, RSL agreed to compensate Mr. Braun with a base
salary of $122,615 per annum (subject to annual adjustment). Mr. Braun is also
entitled to a yearly discretionary bonus determined by the Chairman of the
Shareholder's Advisory Board. Effective simultaneously with the closing of the
Offerings, the Braun Employment Agreement will be terminated and the Company
intends to enter into a new employment agreement with the executive, the terms
of which are described below.
Effective simultaneously with the closing of the Offerings, the Company and
RSL intend to enter into new employment agreements with Messrs. Wirth,
Martinen and Braun (collectively, the "New Employment Agreements"), under
which the executives will each retain their existing job titles, and will each
be entitled to a base compensation of not less than DM 367,500, DM 319,500 and
DM 231,000, respectively ($245,000, $213,000 and $154,000, respectively, at an
exchange rate of DM 1.5 per $1.00) plus a yearly discretionary bonus
determined by the Compensation Committee. Each New Employment Agreement will
have an indefinite term, subject to earlier termination by either the Company
and RSL or the executive upon two years' prior notice; provided that such
notice may not be given by either the Company and RSL or the executive prior
to the second anniversary of the closing of the Offerings. In accordance with
the New Employment Agreements, each executive will agree (i) not to disclose
or exploit any of the Company's Confidential Information (as defined therein),
(ii) to assign to the Company all inventions or improvements made by the
executive in the course of his employment with the Company, and (iii) not to
compete with the Company for a six month period after the completion of his
term of employment with the Company.
57
<PAGE>
OWNERSHIP OF COMMON STOCK
Rofin-Sinar Technologies Inc. was incorporated prior to the Offerings as a
holding company for RSL and RSI. Prior to the closing of the Offerings, SPC
will hold all of the outstanding stock of Rofin-Sinar Technologies Inc.
Contemporaneously with the consummation of the Offerings, the Company will
repurchase the one share of Common Stock held by SPC for $1,000. Immediately
after the closing of the Offerings, all of the shares of Rofin-Sinar
Technologies Inc.'s outstanding Common Stock will be held by persons who have
purchased Common Stock in the Offerings.
CERTAIN TRANSACTIONS
Prior to the Offerings, the business of the Company was conducted by
subsidiaries of Siemens, which is a company organized under the laws of the
Federal Republic of Germany whose principal business is the design,
development, manufacture and marketing of a wide range of electrical and
electronics products and systems. Siemens originally acquired the laser
businesses of Rofin-Sinar in 1987 to obtain access to laser technologies for
application in a number of industrial areas. Since being acquired, however,
the Company has been allowed to pursue broader goals and to develop
capabilities independent of Siemens. Siemens and the Company have concluded
that Rofin-Sinar will have a better opportunity to achieve its full potential
as an independent entity rather than as a part of Siemens. In connection with
the Offerings, Siemens and certain of its subsidiaries will enter into the
following agreements with respect to the transfer of the laser business of
Siemens to the Company. The transfers contemplated by such agreements will be
consummated immediately prior to the closing of the Offerings.
TRANSFER AGREEMENTS
The Company, Siemens and SPC will, prior to the closing of the Offerings,
enter into certain sale and transfer agreements (collectively, the "Transfer
Agreements") pursuant to which, immediately prior to the closing of the
Offerings, the Company will purchase all of the outstanding capital stock of
RSL from Siemens and all of the outstanding capital stock of RSI from SPC for
an aggregate purchase price of $ million. Because the purchase price for RSL
and RSI is based on the offering price of the shares of Common Stock of the
Company being sold in the Offerings, it reflects the factors considered in
determining such offering price. Such offering price was determined through
discussions and negotiations among the Company, Siemens, SPC and the
Underwriters. See "Underwriting."
The Transfer Agreements will govern the allocation of liabilities and
obligations of the respective businesses of the Company, Siemens and their
respective subsidiaries. Pursuant to the Transfer Agreements, the Company and
Siemens will each be responsible for all claims and liabilities relating to
its own business and the businesses of its respective subsidiaries (whether or
not such claims and liabilities are asserted, or arise from activities
occurring, prior to the closing of the Offerings), except as provided in the
Transfer Agreements and the Tax Allocation and Indemnification Agreement (as
defined below), and will each indemnify the other against such claims and
liabilities.
Pursuant to the Transfer Agreements, the Company and Siemens have each
agreed to indemnify each other and their respective affiliates for certain
liabilities that may arise after the offering date (which is defined to be the
date of closing of the Offerings). The Company will indemnify Siemens and its
affiliates for any claims or liabilities arising out of (i) the ownership or
operation by the Company of its business, properties or assets after the
completion of the Offerings, (ii) any breach or inaccuracy in any of the
representations or warranties of the Company contained in the Transfer
Agreements or (iii) any failure by the Company to perform any of its
obligations, covenants or agreements contained in or contemplated by the
Transfer Agreements. In addition, the Company irrevocably and unconditionally
waives any right against Siemens or any of its subsidiaries for any
reimbursement or funding of any losses incurred by RSL pursuant to a profit
and loss transfer arrangement between RSL and Siemens which has been
terminated and relating to periods following the termination for tax purposes
of such arrangement.
58
<PAGE>
Siemens will indemnify the Company and its affiliates for (i) any breach or
inaccuracy in any of the representations or warranties relating to Siemens
contained in the Transfer Agreements, (ii) any failure by Siemens to perform
any of its obligations, covenants or agreements contained in the Transfer
Agreements and (iii) for all German and certain other taxes imposed upon RSL
for tax periods prior to the consummation of the Offerings. Although Siemens
will receive a dividend in respect of RSL's fiscal 1996 earnings shortly before
the end of such fiscal year, a capital contribution in like amount will be made
to RSL by Siemens immediately prior to the transfer of the RSL stock to the
Company, with the effect that such earnings will be for the account of RSL.
Siemens and the Company have also agreed that the Company will bear a pro rata
portion (based on the proportion that $13 million bears to the total gross
proceeds of the Offerings assuming no exercise of the Underwriters' over-
allotment option) of the expenses of the Offerings, including underwriting
discounts and commissions, all legal, financial advisory, accounting and
auditing fees and expenses, all SEC, NASD and other filing fees and expenses,
and certain other fees and expenses incurred in connection with the Offerings.
The Transfer Agreements also provide that Siemens and its subsidiaries,
subject to certain exceptions, will not engage in the design, development,
engineering, manufacture and marketing of laser products for material
processing applications for a period of four years after the closing of the
Offerings.
TAX ALLOCATION AND INDEMNIFICATION AGREEMENT
For United States federal income tax reporting purposes, for periods prior
to the date of consummation of the Offerings, the Company and RSI will, until
the date of the Offerings, file a consolidated federal income tax return with
other members of the affiliated group of corporations of which Siemens
Corporation ("SC"), the parent company of SPC, is the common parent (the "SC
Group"). Under United States Federal income tax law, each corporation in a
consolidated group is liable for all taxes of the consolidated group. In the
event that SC and other members of the SC Group do not discharge the tax
obligations for Federal income tax periods of the SC Group which end with the
tax period which includes the date of consummation of the Offerings, the
Company and RSI could be required under law to satisfy such obligations. The
Company believes that it is not reasonably likely that the Company will incur
any material liability for tax obligations of the SC Group for income prior to
the date of consummation of the Offerings in excess of the tax obligations
imposed on the income of the Company and RSI prior to such date.
The Company, RSI, SC and SPC will enter into a Tax Allocation and
Indemnification Agreement (the "TAIA") to reflect the fact that the Company and
RSI will no longer be a part of the SC Group because of the consummation of the
Offerings. Pursuant to the TAIA, the SC Group will bear the economic burden of
all income taxes imposed on the income of any member of the SC Group, including
the Company and RSI, with respect to a tax period prior to the date of
consummation of the Offerings. SC and SPC will indemnify the Company and RSI
for (i) all such income taxes and (ii) any reduction in the deferred tax asset
of RSI attributable to its net operating loss carryforwards, which reduction
results from an adjustment to taxable income for a period prior to the date of
consummation of the Offerings. The TAIA also contains provisions for the
disposition of audits and contests regarding tax items relating to RSI during
the period it was a member of the SC Group.
INTERCOMPANY TRANSACTIONS
In the ordinary course of business, the Company and its subsidiaries and
Siemens or affiliates of Siemens have from time to time entered into various
business transactions and agreements, and the Company and its subsidiaries and
Siemens or such affiliates of Siemens may enter into additional transactions
and agreements from time to time in the future. See Note 10 of the Notes to the
Combined Financial Statements.
59
<PAGE>
The Company and its subsidiaries have provided certain products (primarily
laser markers) and related services to Siemens and its affiliates. Revenue
from such transactions amounted to $1.6 million, $2.9 million and $1.2 million
for the fiscal years ended September 30, 1993, 1994 and 1995, and $3.5 million
for the nine-month period ended June 30, 1996, respectively. In addition, the
Company and its subsidiaries have from time to time purchased certain products
(primarily electrical components, subassemblies and computers used in the
Company's products) from Siemens and its affiliates. Such purchases totalled
approximately $2.2 million, $2.7 million and $2.4 million for the fiscal years
ended September 30, 1993, 1994 and 1995 and $4.1 million for the nine-month
period ended June 30, 1996, respectively. The Company expects to continue to
engage in transactions involving products and services with Siemens and its
affiliates following the Offerings on generally the same basis as it would
engage in transactions with any other unaffiliated third party. In addition,
the Company and Siemens intend to continue their cooperative relationship for
the development of certain advanced industrial laser technologies.
The Company also had sales to one of its joint venture partners in Japan
amounting to $255,000 in 1993, $1.3 million in 1994, $2.2 million in 1995 and
$1.6 million for the nine-month period ended June 30, 1996, respectively.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock"). The following
summary description of the capital stock of the Company does not purport to be
complete and is subject to the detailed provisions of, and qualified in its
entirety by reference to, the Certificate of Incorporation as amended by a
Certificate of Amendment to be effective as of the date of the Underwriting
Amendment (the "Certificate of Incorporation") and By-laws, copies of which
have been filed as exhibits to the Registration Statement of which this
Prospectus is a part, and to the applicable provisions of the DGCL.
COMMON STOCK
Upon completion of the Offerings, the Company will have 10,000,000 shares
of Common Stock outstanding (assuming no exercise of the Underwriters' over-
allotment option and excluding 400,000 shares issuable at the initial public
offering price upon exercise of options to be granted to certain officers of
the Company and 4,500 shares of restricted stock issued at the initial public
offering price to non-employee directors of the Company pursuant to employee
benefit plans at the time of the Offerings).
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to the
rights of any holders of Preferred Stock, holders of Common Stock are entitled
to receive ratably such dividends as may be declared by the Board of Directors
out of funds legally available. See "Dividend Policy." In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock are entitled to share ratably in the distribution of all assets
remaining after payment of liabilities, subject to the rights of any holders
of Preferred Stock. The holders of Common Stock have no preemptive rights to
subscribe for additional shares of the Company and no right to convert their
Common Stock into any other securities. In addition, there are no redemption
or sinking fund provisions available to the Common Stock. All of the
outstanding shares of Common Stock are, and the Common Stock offered hereby
will be, fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors of the Company is authorized, without further
shareholder action, to divide any or all shares of authorized Preferred Stock
into one or more series and to fix and determine
60
<PAGE>
the designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereon, of
any series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion or exchange
privileges. The issuance of Preferred Stock could adversely affect the voting
power of holders of Common Stock and could have the effect of delaying,
deferring or impeding a change in control of the Company. As of the date of
this Prospectus, the Board of Directors of the Company has not authorized any
series of Preferred Stock and there are no plans, agreements or understandings
for the issuance of any shares of Preferred Stock.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS
Shareholders' rights and related matters are governed by the DGCL, the
Certificate of Incorporation and By-laws. Certain provisions of the
Certificate of Incorporation and By-laws, which are summarized below, may have
the effect, either alone or in combination with each other and the ability of
the Board of Directors to issue preferred stock without further stockholder
approval, of discouraging or making more difficult a tender offer or takeover
attempt that is opposed by the Company's Board of Directors but that a
shareholder might consider to be in its best interest. Such provisions may
also adversely affect prevailing market prices for the Common Stock. See "Risk
Factors--Potential Anti-Takeover Effects of Delaware Law; Possible Issuances
of Preferred Stock." The Company believes that such provisions are necessary
to enable the Company to develop its business in a manner that will foster its
long-term growth without disruption caused by the threat of a takeover not
deemed by the Board of Directors to be in the best interests of the Company
and its stockholders. For purposes of this description, the term "Rofin-Sinar"
or the "Company" refers only to Rofin-Sinar Technologies Inc., and excludes
its subsidiaries.
Classified Board of Directors and Related Provisions. The Certificate of
Incorporation provides that the Board of Directors shall be classified with
approximately one-third of the Board of Directors elected each year. The By-
laws provide that the Board of Directors will consist of not less than three
nor more than ten directors, with the exact number of directors initially to
be equal to six and thereafter to be fixed from time to time by a majority of
the total number of directors which the Company would have if there were no
vacancies. See "Management--Executive Officers, Key Employees and Directors."
The directors shall be divided into three classes, designated Class I, Class
II and Class III. Each class shall consist, as nearly as may be possible, of
one-third of the total number of directors constituting the entire Board of
Directors. The initial division of the Board of Directors into classes shall
be made by the decision of a majority of the entire Board of Directors. The
term of the initial Class I directors shall terminate on the date of the 1997
annual meeting of stockholders; the terms of the Initial Class II directors
shall terminate on the date of the 1998 annual meeting of stockholders; and
the term of the initial Class III directors shall terminate on the date of the
1999 annual meeting of stockholders. At each annual meeting of stockholders
beginning in 1997, successor to the class of directors whose term expires at
that annual meeting shall be elected for a three-year term. In addition,
subject to certain limited exceptions, if the number of directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director. Subject
to the rights of holders of any outstanding preferred stock issued by the
Company, vacancies on the Board of Directors may be filled only by the Board
of Directors or the shareholders acting at an annual meeting.
The Certificate of Incorporation also provides that, subject to the rights
of holders of any preferred stock then outstanding and any requirements of
law, directors may be removed only for cause by the affirmative vote of the
holders of at least 80% of the outstanding shares of the Company then entitled
to vote generally in the election of directors, voting as a single voting
group.
61
<PAGE>
Action by Written Consent; Special Meeting. The Certificate of
Incorporation and By-laws provide that an action may be taken by written
consent in lieu of a meeting of shareholders only with the consent of the
holders of 100% of the outstanding shares of the Company. The Certificate of
Incorporation and By-laws provide that special meetings of shareholders may
only be called by the Chairman of the Board or a majority of the Board of
Directors.
Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The Certificate of Incorporation and By-laws establish advance
notice procedures with regard to shareholder proposals and the nomination,
other than by or at the direction of the Board of Directors or a committee
thereof, of candidates for election as directors. These procedures provide
that the notice of shareholder proposals and shareholder nominations for the
election of directors at an annual meeting must be in writing and received by
the Secretary of the Company not less than 60 days nor more than 90 days prior
to the anniversary date of the previous year's annual meeting or, if the date
of the annual meeting is not within 30 days of the anniversary date of the
previous year's annual meeting, not later than the close of business on the
tenth day following the day on which notice of the date of such meeting was
mailed or public disclosure of the date of the meeting of shareholders was
made, whichever first occurs. The notice of shareholder nominations must set
forth certain information with respect to the shareholder giving the notice
and with respect to each nominee.
Indemnification. The Certificate of Incorporation and By-laws provide that
the Company shall advance expenses to and indemnify each director and officer
of the Company to the fullest extent permitted by law.
Amendments. Shareholders may adopt, alter, amend or repeal provisions of
the By-laws only by vote of the holders of 80% or more of the outstanding
Common Stock and any other voting securities. In addition, the affirmative
vote of the holders of 80% or more of the outstanding Common Stock and any
other voting securities is required to amend certain provisions of the
Certificate of Incorporation, including the provisions referred to above
relating to the classification of the Company's Board of Directors, filling
vacancies on the Board of Directors, removal of directors only for cause,
prohibiting shareholder action by written consent, prohibiting the calling of
special meetings by shareholders and approval of amendments to the By-laws.
LIMITATIONS ON DIRECTORS' LIABILITY
The Company's Certificate of Incorporation provides that no director of the
Company shall be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases
pursuant to Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit. The effect of these provisions
is to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of fiduciary duty as a director
(including breaches resulting from grossly negligent behavior), except in the
situations described above. These provisions will not limit the liability of
directors under federal securities laws.
SECTION 203 OF DELAWARE GENERAL CORPORATION LAW
Section 203 of the DGCL prohibits certain transactions between a Delaware
corporation and an "interested stockholder," which is defined as a person who,
together with any affiliates or associates of such person, beneficially owns,
directly or indirectly, 15% or more of the outstanding voting shares of a
Delaware corporation. This provision prohibits certain business combinations
(defined broadly to include mergers, consolidations, sales or other
dispositions of assets having an aggregate value in excess of 10% of the
consolidated assets of the corporation, and certain transactions that would
62
<PAGE>
increase the interested stockholder's proportionate share ownership in the
corporation) between an interested stockholder and a corporation for a period
of three years after the date the interested stockholder becomes an interested
stockholder, unless (i) the business combination is approved by the
corporation's board of directors prior to the date the interested stockholder
becomes an interested stockholder, (ii) the interested stockholder acquired at
least 85% of the voting stock of the corporation (other than stock held by
directors who are also officers or by certain employee stock plans) in the
transaction in which it becomes an interested stockholder or (iii) the
business combination is approved by a majority of the board of directors and
by the affirmative vote of 66 2/3% of the outstanding voting stock that is not
owned by the interested stockholder.
RIGHTS AGREEMENT
The Company intends to enter into a Rights Agreement between the Company
and The Bank of New York, as Rights Agent, immediately prior to the Closing of
the Offerings. Pursuant to the Rights Agreement, a right (a "Right") to
purchase one share of Common Stock at a price of $ (the "Purchase Price"),
exercisable only in certain circumstances, will be issued along with each
share of Common Stock offered hereby. A Right will also be issued along with
each other share of Common Stock issued by the Company until the earliest of
the Distribution Date (as defined below), the redemption of the Rights or the
Expiration Date (as defined below). Rights may also be issued with respect to
shares of Common Stock issued after the Distribution Date in certain
circumstances.
Until the earlier of (i) such time as the Company learns that a person or
group (including any affiliate or associate of such person or group) has
acquired, or has obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Stock (such person or group, subject to certain
exceptions, being an "Acquiring Person") and (ii) such date, if any, as may be
designated by the Board of Directors following the commencement of, or first
public disclosure of an intent to commence, a tender or exchange offer for
outstanding Common Stock which could result in the offeror becoming the
beneficial owner of 20% or more of the outstanding Common Stock (the earlier
of such dates, subject to certain exceptions, being the "Distribution Date"),
the Rights will be evidenced by the certificates for the Common Stock
registered in the names of the holders thereof (which certificates for Common
Stock will also be deemed to be Right Certificates, as defined below) and not
by separate Right Certificates. Therefore, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Stock
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
on the tenth anniversary of the closing of the Offerings (the "Expiration
Date") unless earlier redeemed or canceled by the Company as described below.
The number of shares of Common Stock or other securities issuable upon
exercise of a Right, the Purchase Price, the Redemption Price (as defined
below) and the number of Rights associated with each outstanding share of
Common Stock are all subject to adjustment by the Board of Directors in the
event of any change in the Common Stock, whether by reason of stock dividends,
stock splits, recapitalization, mergers, consolidations, combinations or
exchanges of securities, other similar changes in capitalization, or any
distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Common Stock (other
than the Rights or regular quarterly cash dividends), or otherwise.
In the event a person becomes an Acquiring Person, the Rights will entitle
each holder of a Right (other than those held by an Acquiring Person (or any
affiliate or associate of such Acquiring
63
<PAGE>
Person)) to purchase, for the Purchase Price, that number of shares of Common
Stock equivalent to the number of shares of Common Stock which at the time of
the transaction would have a market value of twice the Purchase Price. Any
Rights that are at any time beneficially owned by an Acquiring Person (or any
affiliate or associate of an Acquiring Person) will be null and void and
nontransferable and any holder of any such Right (including any purported
transferee or subsequent holder) will be unable to exercise or transfer any
such Right.
After there is an Acquiring Person, the Board of Directors may elect to
exchange each Right (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the securities that would be issuable at such time upon the
exercise of one Right pursuant to the terms of the Rights Agreement, and
without payment of the Purchase Price.
In the event the Company is acquired in a merger by, or other business
combination with, or 50% or more of its assets or assets representing 50% or
more of its earning power are sold, leased, exchanged or otherwise transferred
(in one or more transactions) to, a publicly traded corporation, each Right
will entitle its holder (subject to the next paragraph) to purchase, for the
Purchase Price, that number of common shares of such corporation which at the
time of the transaction would have a market value of twice the Purchase Price.
In the event the Company is acquired in a merger by, or other business
combination with, or 50% or more of its assets or assets representing 50% or
more of the earning power of the Company are sold, leased, exchanged or
otherwise transferred (in one or more transactions) to, an entity that is not
a publicly traded corporation, each Right will entitle its holder (subject to
the next paragraph) to purchase, for the Purchase Price, at such holder's
option, (i) that number of shares of such entity (or, at such holder's option,
of the surviving corporation in such acquisition, which could be the Company)
which at the time of the transaction would have a book value of twice the
Purchase Price or (ii) if such entity has an affiliate which has publicly
traded common shares, that number of common shares of such affiliate which at
the time of the transaction would have a market value of twice the Purchase
Price.
At any time prior to the earlier of (i) such time as a person becomes an
Acquiring Person and (ii) the Expiration Date, the Board of Directors may
redeem the Rights in whole, but not in part, at a price (in cash or Common
Stock or other securities of the Company deemed by the Board of Directors to
be at least equivalent in value) of $.01 per Right, subject to adjustment as
provided in the Rights Agreement (the "Redemption Price"); provided that, for
the 120-day period after any date of a change (resulting from a proxy or
consent solicitation) in a majority of the Board in office at the commencement
of such solicitation, the Rights may only be redeemed if (A) there are
directors then in office who were in office at the commencement of such
solicitation and (B) the Board, with the concurrence of a majority of such
directors then in office, determines that such redemption is, in its judgment,
in the best interests of the Company and its stockholders. Immediately upon
the action of the Board of Directors electing to redeem the Rights, the
Company will make an announcement thereof, and, upon such election, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
At any time prior to the Distribution Date, the Company may, without the
approval of any holder of the Rights, supplement or amend any provision of the
Rights Agreement (including the date on which the Distribution Date would
occur or the time during which the Rights may be redeemed), except that no
supplement or amendment shall be made which reduces the Redemption Price
(other than pursuant to certain adjustments therein), provides for an earlier
Expiration Date or makes certain changes to the definition of Acquiring
Person. However, for the 120-day period after any date of a change (resulting
from a proxy or consent solicitation) in a majority of the Board of Directors
in office
64
<PAGE>
at the commencement of such solicitation, the Rights Agreement may be
supplemented or amended only if (A) there are directors then in office who
were in office at the commencement of such solicitation and (B) the Board of
Directors, with the concurrence of a majority of such directors then in
office, determines that such supplement or amendment is, in their judgment, in
the best interests of the Company and its stockholders.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on substantially all the Rights being acquired.
The Rights will not interfere with any merger or other business combination
approved by the Board since the Board of Directors may, at its option, at any
time prior to any person becoming an Acquiring Person, redeem all but not less
than all of the then outstanding Rights at a redemption price of $.01 per
Right (subject to adjustment).
Reference is hereby made to the Rights Agreement to be entered into between
the Company and the Rights Agent specifying the terms of the Rights, which
includes as Exhibit A the form of Rights Certificate, and this description is
qualified in its entirety by reference to the terms and conditions thereof.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is The Bank of New
York.
65
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offerings, the Company will have 10,000,000 shares
of Common Stock outstanding (assuming no exercise of any options granted by
the Company or the Underwriters' overallotment option and excluding any shares
of restricted stock issued to non-employee directors of the Company). All
shares sold in the Offerings will be freely tradeable without restriction or
further registration under the Securities Act, except for any shares purchased
by "affiliates" (as defined in the Securities Act) of the Company, which will
be subject to the resale limitations of Rule 144 under the Securities Act
("Rule 144").
Generally, Rule 144 provides that a person who has owned "restricted"
shares of Common Stock for at least two years, is entitled to sell on the open
market in broker's transactions within any three-month period a number of
shares that does not exceed the greater of (i) one percent of the then
outstanding shares of Common Stock and (ii) the average weekly trading volume
in the Common Stock on the open market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain
restrictions relating to manner of sale and the availability of current public
information about the Company. As defined in Rule 144, an "affiliate" of an
issuer is a person that directly or indirectly controls, or is controlled by,
or is under the common control with, such issuer.
Each of the Company, its directors and officers have agreed not to directly
or indirectly offer for sale, pledge to sell, file a registration statement
relating to, announce the intention to sell, issue (in the case of the
Company), contract to sell or otherwise dispose of any Common Stock, with
certain limited exceptions, for a period of 180 days after the date of this
Prospectus without the prior written consent of the Representatives of the
Underwriters.
The Company intends to file a registration statement under the Securities
Act to register all shares of Common Stock issuable under the Equity Incentive
Plan. See "Management--Equity Incentive Plan." This registration statement is
expected to be filed as soon as practicable following the consummation of the
Offerings and will become effective immediately upon filing. Shares covered by
this registration statement as to which an Equity Incentive Plan participant's
rights have fully vested and been exercised will be eligible for sale in the
public market after the effective date of such registration.
Prior to the Offerings, there has been no public market for the Common
Stock and there can be no assurance that a regular trading market will develop
or be sustained after the Offerings. The initial public offering price will be
determined through negotiations between the Company and the Underwriters based
on factors described under the caption "Underwriting" and may not be
indicative of the market price after the Offerings. See "Underwriting."
66
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States federal tax
considerations applicable to the ownership and disposition of Common Stock by
"Non-U.S. Holders." In general, a "Non-U.S. Holder" is a beneficial owner of
Common Stock other than: (i) a citizen or resident of the United States, (ii)
a corporation or partnership created or organized in the United States or
under the laws of the United States or of any state or (iii) an estate or
trust, the income of which is includible in gross income for United States
federal income tax purposes regardless of its source. The term "Non-U.S.
Holder" does not include individuals who were United States citizens within
the ten-year period immediately preceding the date of this Prospectus and
whose loss of United States citizenship had as one of its principal purposes
the avoidance of United States taxes. This discussion is based on current law,
which is subject to change and is for general information only. There are a
number of proposed changes to existing law that would affect the taxation of
income earned by foreign trusts and their beneficiaries and the taxation of
citizens or residents of the U.S. who abandon their U.S. citizenship or
residence. It is not clear whether these proposals will ultimately be enacted,
but holders should consult with their tax advisors concerning the possible
effect of such proposed legislation. This discussion does not address aspects
of United States federal taxation other than income and estate taxation and
does not address all aspects of income and estate taxation, nor does it
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder.
Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, would affect the United States
taxation of dividends paid to a Non-U.S. Holder on Common Stock. The Proposed
Regulations are generally proposed to be effective with respect to dividends
paid after December 31, 1997, subject to certain transition rules. The
discussion below is not intended to be a complete discussion of the provisions
of the Proposed Regulations, and prospective investors are urged to consult
their tax advisors with respect to the effect the Proposed Regulations would
have if adopted.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE UNITED STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES INCOME AND OTHER
TAX CONSEQUENCES OF HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.
DIVIDENDS
The Company does not anticipate paying cash dividends on the Common Stock
in the foreseeable future. The Company may in the future consider paying cash
dividends on the Common Stock. However, the Board of Directors of the Company
has made no decision with respect to the payment of any such dividends,
including the timing and amount of any such dividend. See "Dividend Policy."
If dividends are paid on the Common Stock, these payments will be treated as a
dividend for United States federal income tax purposes to the extent of the
Company's current or accumulated earnings and profits for such tax purposes.
The portion of a payment that exceeds such earnings and profits will be
treated as a return of capital to the extent of each Non-U.S. Holder's tax
basis in the Common Stock. The portion of a payment that exceeds such earnings
and profits and tax basis will be treated as a gain from the sale or other
disposition of the Common Stock to the extent of such excess, with the tax
consequences described below under "--Sale of Common Stock."
In general, any dividends (i.e., distributions to the extent of current or
accumulated earnings and profits for United States federal income tax
purposes) paid to a Non-U.S. Holder of Common Stock will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively
connected with a trade or business carried on by the Non-U.S. Holder within
the United States or (ii) if certain income tax treaties apply,
67
<PAGE>
attributable to a permanent establishment in the United States maintained by
the Non-U.S. Holder. For purposes of determining whether tax is to be withheld
at a 30% rate or at a lower rate as prescribed by an applicable tax treaty,
the Company ordinarily will presume that dividends paid to an address in a
foreign country are paid to a resident of such country absent knowledge that
such presumption is not warranted. Under the Proposed Regulations, to obtain a
reduced rate of withholding under a treaty, a Non-U.S. Holder would generally
be required to provide an Internal Revenue Service Form W-8 certifying such
Non-U.S. Holder's entitlement to benefits under a treaty. The Proposed
Regulations would also provide special rules to determine whether, for
purposes of determining the applicability of a tax treaty, dividends paid to a
Non-U.S. Holder that is an entity should be treated as paid to the entity or
to those holding an interest in that entity.
Dividends effectively connected with such a United States trade or business
or attributable to such United States permanent establishment generally will
not be subject to withholding tax (if the Non-U.S. Holder files certain forms,
including IRS Form 4224, with the payor of the dividend) and generally will be
subject to United States federal tax on a net income basis, in the same manner
as if the Non-U.S. Holder were a resident of the United States. In the case of
a Non-U.S. Holder that is a corporation, dividend income so connected or
attributable may also be subject to the branch profits tax (which is generally
imposed on a foreign corporation on the repatriation from the United States of
its effectively connected earnings and profits subject to certain adjustments)
at a 30% rate (or a lower rate prescribed by an applicable income tax treaty).
A Non-U.S. Holder that is eligible for a reduced rate of United States
withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for refund
with the IRS.
SALE OF COMMON STOCK
In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain recognized upon the disposition of Common Stock unless:
(i) the gain is effectively connected with a trade or business carried on by
the Non-U.S. Holder within the United States or, alternatively, if certain tax
treaties apply, attributable to a permanent establishment in the United States
maintained by the Non-U.S. Holder (and in either such case, the branch profits
tax may also apply if the Non-U.S. Holder is a corporation), (ii) in the case
of a Non-U.S. Holder who is a nonresident alien individual and holds Common
Stock as a capital asset, such individual is present in the United States for
183 days or more in the taxable year of disposition, and either (a) such
individual has a "tax home" (as defined for United States federal income tax
purposes) in the United States or (b) the gain is attributable to an office or
other fixed place of business maintained by such individual in the United
States, (iii) the Non-U.S. Holder is subject to tax pursuant to the provisions
of the United States tax law applicable to certain United States expatriates
or (iv) the Company is or has been a United States real property holding
corporation for United States federal income tax purposes (which the Company
does not believe that it is or is likely to become) at any time within the
shorter of the five-year period preceding such disposition or such Non-U.S.
Holder's holding period.
ESTATE TAX
Common Stock owned or treated as owned by an individual who is not a
citizen or resident (as defined for United States federal estate tax purposes)
of the United States at the time of death will be includible in the
individual's gross estate for United States federal estate tax purposes unless
an applicable estate tax treaty provides otherwise, and therefore may be
subject to United States federal estate tax.
68
<PAGE>
BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS
The Company must report annually to the IRS and to each Non-U.S. Holder the
amount of dividends paid to, and the tax withheld with respect to, each Non-
U.S. Holder. These reporting requirements apply regardless of whether
withholding was reduced or eliminated by an applicable tax treaty. Copies of
this information also may be made available under the provisions of a specific
treaty or agreement with the tax authorities in the country in which the Non-
U.S. Holder resides or is established.
Under current rules, United States backup withholding (which generally is
imposed at the rate of 31% on certain payments to persons that fail to furnish
the information required under the United States information reporting
requirements) and information reporting generally will not apply to (i)
dividends paid on Common Stock to a Non-U.S. Holder that is subject to
withholding at the 30% rate (or that is subject to withholding at a reduced
rate under an applicable treaty), (ii) under current law, dividends paid to a
Non-U.S. Holder at an address outside of the United States or (iii) persons
who otherwise establish an exemption from backup withholding. However, under
the proposed regulations, in the case of dividends paid after December 31,
1997 (December 31, 1999 in the case of dividends paid to accounts in existence
on or before the date that is 60 days after the Proposed Regulations are
published as final regulations), a Non-U.S. Holder generally would be subject
to backup withholding at a 31% rate, unless certain certification procedures
(or, in the case of payments made outside the United States with respect to an
offshore account, certain documentary evidence procedures) are complied with,
directly or through an intermediary.
The payment of proceeds from the disposition of Common Stock to or through
a United States office of a broker will be subject to information reporting
and United States backup withholding unless the owner, under penalties of
perjury, certifies among other things, its status as a Non-U.S. Holder, or
otherwise establishes an exemption. The payment of proceeds from the
disposition of Common Stock to or through a non-U.S. office of a non-U.S.
broker generally will not be subject to backup withholding and information
reporting, except as noted below. In the case of proceeds from the disposition
of Common Stock paid to or through a non-United States office of a broker that
is: (i) a United States person, (ii) a "controlled foreign corporation" for
United States federal income tax purposes or (iii) a foreign person 50% or
more of whose gross income for a specified three-year period is effectively
connected with a United States trade or business, (a) backup withholding will
not apply unless such broker has actual knowledge that the owner is not a Non-
U.S. Holder and (b) information reporting will apply unless the broker has
documentary evidence in its files that the owner is a Non-U.S. Holder (and the
broker has no actual knowledge to the contrary). The Proposed Regulations
would, if adopted, alter the foregoing rules in certain respects. Among other
things, the Proposed Regulations would provide certain presumptions under
which a Non-U.S. Holder would be subject to backup withholding and information
reporting unless the Company receives certification from the holder of non-
U.S. status.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded
or credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
IRS.
69
<PAGE>
UNDERWRITING
The U.S. Underwriters named below, for whom Deutsche Morgan Grenfell/C. J.
Lawrence Inc., Alex. Brown & Sons Incorporated and Lehman Brothers Inc. are
acting as representatives (the "U.S. Representatives"), and the International
Underwriters named below, for whom Morgan Grenfell & Co., Limited, Alex. Brown
& Sons Limited and Lehman Brothers International (Europe) are acting as
representatives (the "International Representatives") have severally agreed,
subject to the terms and conditions contained in the Underwriting Agreement
(the form of which is filed as an exhibit to the Company's Registration
Statement, of which this Prospectus is a part), to purchase from the Company
the respective number of shares of Common Stock indicated below opposite their
respective names. The Underwriters are committed to purchase all of the
shares, if they purchase any.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------
<S> <C>
Deutsche Morgan Grenfell/C. J. Lawrence Inc........................
Alex. Brown & Sons Incorporated....................................
Lehman Brothers Inc................................................
-------
Subtotal.....................................................
-------
<CAPTION>
INTERNATIONAL UNDERWRITERS
--------------------------
<S> <C>
Morgan Grenfell & Co., Limited.....................................
Alex. Brown & Sons Limited.........................................
Lehman Brothers International (Europe).............................
-------
Subtotal.....................................................
-------
Total......................................................
=======
</TABLE>
Deutsche Morgan Grenfell/C. J. Lawrence Inc. is acting as Global
Coordinator of the Offerings.
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions.
The U.S. Underwriters and the International Underwriters have entered into
an Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, sales may be made between the U.S. Underwriters and the
International Underwriters of such number of shares of Common Stock as may be
mutually agreed. The price of any shares of Common Stock so sold shall be the
public offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the International
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are United States
persons or to persons they believe intend to resell to persons who are United
States persons, and the U.S. Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or sell shares of Common Stock
to any non-United States person or to persons they believe intend to resell to
non-United States persons, except, in each case, for transactions pursuant to
such agreement. As used herein, "United States person" means any national or
resident of the United States or any corporation, pension, profit-sharing or
other trust or other entity organized under the laws of the United States or
of any political subdivision thereof (other than a branch located outside of
the United States of any United States person) and includes any United States
branch of a person who is otherwise not a United States person and "United
States" means the United States of America, its territories, its possessions
and all areas subject to its jurisdiction.
The Underwriters propose to offer the Common Stock to the public on the
terms set forth on the cover page of this Prospectus. The Price to Public and
Underwriting Discount will be identical in
70
<PAGE>
the U.S. and International Offerings. The U.S. Underwriters may allow to
selected dealers (who may include the Underwriters) a concession of not more
than $ per share. Such selected dealers may reallow a concession of not
more than $ to certain other dealers. After the public offering, the price
and concessions and re-allowances to dealers and other selling terms may be
changed by the Underwriters. The Common Stock is offered subject to receipt
and acceptance by the Underwriters, and to certain other conditions, including
the right to reject orders in whole or in part. The Underwriters do not intend
to sell any of the shares of Common Stock offered hereby to accounts over
which they exercise discretionary authority.
The Company has granted an option to the Underwriters to purchase up to a
maximum of 1,500,000 additional shares of Common Stock to cover over-
allotments, if any, at the public offering price, less the underwriting
discount set forth on the cover page of this Prospectus. Such option may be
exercised at any time until 30 days after the date of the Underwriting
Agreement. To the extent the Underwriters exercise this option, each of the
Underwriters will be committed, subject to certain conditions, to purchase
such additional shares in approximately the same proportion as set forth in
the above table. The Underwriters may purchase such shares only to cover over-
allotments made in connection with the Offering.
Pursuant to the Intersyndicate Agreement, each International Underwriter
has represented and agreed that it has not offered or sold, and has agreed not
to offer or sell, any shares of Common Stock, directly or indirectly, in
Canada in contravention of the securities laws of Canada or any province or
territory thereof and has represented that any offer of shares of Common Stock
in Canada will be made only pursuant to an exemption from the requirement to
file a prospectus in the province or territory of Canada in which such offer
is made. Each International Underwriter has further agreed to send to any
dealer who purchases from it any shares of Common Stock a notice stating in
substance that, by purchasing such shares such dealer represents and agrees
that it has not offered or sold, and will not offer or sell, directly or
indirectly, any of such shares in Canada or to, or for the benefit of, any
resident of Canada in contravention of the securities laws of Canada or any
province or territory thereof and that any offer of shares of Common Stock in
Canada will be made only pursuant to an exemption from the requirement to file
a prospectus in the province or territory of Canada in which such offer is
made, and that such dealer will deliver to any other dealer to whom it sells
any of such shares of Common Stock a notice to the foregoing effect.
Pursuant to the Intersyndicate Agreement, each International Underwriter
has represented and agreed that (i) it has not offered or sold and will not
offer or sell any shares of Common Stock offered hereby to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purpose of their business or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
(the "Regulations"), (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with respect
to anything done by it in relation to the shares of Common Stock offered
hereby in, from or otherwise involving the United Kingdom, and (iii) it has
only issued or passed on and will only issue or pass on to any person in the
United Kingdom any document received by it in connection with the issue of the
shares of Common Stock offered hereby if that person is a kind described in
Article 11 (3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom such document may otherwise
lawfully be issued or passed on.
Pursuant to the Intersyndicate Agreement, each International Underwriter
has represented and agreed that it has not offered or sold, and will not offer
or sell, directly or indirectly, in Japan or to or for the account of any
resident thereof, any shares of Common Stock acquired in connection with this
offering, except for offers or sales to Japanese International Underwriters or
dealers and except
71
<PAGE>
pursuant to any exemption from the regulation requirement of the Securities
and Exchange Law of Japan. Each International Underwriter has further agreed
to send to any dealer who purchases from it any of such shares of Common Stock
a notice stating in substance that such dealer may not offer or sell any of
such shares, directly or indirectly, in Japan or to or for the account of any
resident thereof, except pursuant to any exemption from the registration
requirement of the Securities and Exchange Law of Japan, and that such dealer
will send to any other dealer to whom it sells any shares a notice to the
foregoing effect.
The Company and SC have agreed to indemnify the several Underwriters
against certain liabilities including civil liabilities under the Securities
Act of 1933, as amended, or contribution to payments the Underwriters may be
required to make in respect thereof.
In connection with the Offering, the Company and each of the Company's
directors and executive officers have agreed, with certain exceptions, not to
offer, sell or otherwise dispose of any shares of Common Stock for a period of
180 days after the first date on which shares of Common Stock are offered
hereby to the public, without the prior written consent of Deutsche Morgan
Grenfell/C. J. Lawrence Inc.
The Company has reserved up to 300,000 shares of Common Stock, representing
three percent of the shares of Common Stock to be sold in the Offering, for
sale to all of its employees and to three director nominees at the public
offering price set forth on the cover page hereof. The Company's employees in
Germany will be offered an opportunity to purchase up to 500 of such reserved
shares per person of Common Stock in the Offering, and will be entitled to pay
for such shares on a deferred basis through payroll deductions to be made
prior to December 31, 1996. If the reserved shares are not sold to employees
of the Company, they will be sold to the public in the U.S. Offering and the
International Offering in the same proportion as the total number of shares of
Common Stock to be offered to the public is allocated between such offerings.
Prior to the Offerings, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock has been
determined by negotiations between Siemens, the Company and the U.S.
Representatives. Among the factors considered in determining the initial
public offering price were the market values and price/earnings multiples of
publicly traded common stock of certain other companies in the material
processing and electro-optical laser industries and in the machine tool
industry of comparable size serving similar markets, the sales, earnings and
cash flow history and trends of the Company, the experience of the Company's
management and the position of the Company in its industry and its prospects.
Additionally, consideration was given to the general status of the securities
markets, the market conditions for new offerings of securities, the demand for
the Common Stock and for similar securities of comparable companies.
The Company is currently negotiating a loan facility with Deutsche Bank AG,
an affiliate of Deutsche Morgan Grenfell/C. J. Lawrence Inc. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Shearman & Sterling, New York, New York. Certain legal
matters in connection with the Offerings will be passed upon for the
Underwriters by Davis Polk & Wardwell, New York, New York.
EXPERTS
The financial statements of the Company as of September 30, 1994 and 1995
and June 30, 1996 and for each of the fiscal years in the three-year period
ended September 30, 1995 and for the nine-month period ended June 30, 1996
have been included in this Prospectus and elsewhere in this Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, included herein, and upon the authority of said
firm as experts in accounting and auditing.
72
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. a Registration Statement (which term shall
encompass any amendment thereto) on Form S-1 under the Securities Act, with
respect to the shares of Common Stock offered by this Prospectus. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto, to which reference is hereby
made. Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to summarize the material terms of such
documents, but are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
Upon completion of the Offerings, the Company will be subject to the
informational requirements of the Exchange Act, and in accordance therewith
will file reports and other information with the Commission. The Registration
Statement and the exhibits and schedules thereto, as well as all such reports
and other information filed with the Commission, may be inspected at the
public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and are also
available for inspection and copying at prescribed rates at the regional
offices of the Commission located at 500 West Madison Street, Chicago,
Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York
10048, and at the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of such site is: http://www.sec.gov.
The Company intends to distribute to its stockholders annual reports
containing audited financial statements.
73
<PAGE>
GLOSSARY OF SELECTED TECHNICAL TERMS
Techniques used in laser beam
BEAM-SWITCHING/BEAM-SPLITTING delivery systems which permit the
laser beam to be used alternately or
simultaneously at different
workstations.
CO/2/ LASERS Lasers in which the lasing medium is
carbon dioxide. CO/2/ lasers used
today for material processing
usually are based either on cross-
flow or axial flow designs.
CO/2/ SLAB LASERS CO/2/ lasers in which a HF discharge
takes place between water-cooled
copper electrodes which have a large
surface allowing maximum heat
dissipation (known as "diffusion
cooling") and achieving high power
density.
CROSS-FLOW CO/2/ LASERS CO/2/ lasers in which the laser gas
flows perpendicularly to the
resonator axis.
DIFFUSION-COOLING TECHNOLOGY See definition of Slab lasers.
DIODE-PUMPED SOLID STATE LASERS Nd:YAG lasers in which the source of
excitation is a laser diode instead
of a flash lamp.
ELECTRICAL EFFICIENCY The ratio of output light energy to
input electrical energy.
FAST AXIAL-FLOW CO/2/ LASERS CO/2/ lasers in which the laser gas
discharge occurs in a tube, through
which the laser gas mixture flows at
a high speed, ensuring that heat is
effectively removed.
FLASH LAMP-PUMPED SOLID STATE LASERS Nd:YAG lasers in which the source of
excitation is a krypton flash lamp
or krypton arc lamp.
GALVO-HEAD A moving mirror system used in a
laser marker to deflect the Nd:YAG
laser beam during the vector marking
process.
ND:YAG LASERS Lasers in which the lasing medium is
neodymium located in a solid crystal
made up of yttrium-aluminum-garnet,
usually rod-shaped.
OPTICAL RESONATOR The part of laser in which the
excited emission of photons bounces
back and forth through the lasing
medium.
PHOTONS Particles of light.
Q-SWITCH A fast electro-optical shutter
inserted into the laser resonator,
enabling frequencies to be switched
at multiples of 10kHz.
SPATIAL COHERENCE One of the chief characteristics of
a laser beam: light in which the
light waves are all moving along
together in unison.
TAILORED BLANK WELDING
A welding technique pioneered by the
Company for welding dissimilar
metals of different thicknesses into
one sheet.
74
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
INDEX TO COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Audited Combined Financial Statements:
Independent Auditors' Report............................................ F-2
Combined Balance Sheets as of September 30, 1994 and 1995 and June 30,
1996................................................................... F-3
Combined Statements of Operations for the fiscal years ended September
30, 1993,
1994 and 1995 and the nine months ended June 30, 1995 (unaudited) and
June 30, 1996.......................................................... F-4
Combined Statements of Stockholders' Equity for the fiscal years ended
September 30, 1993, 1994 and 1995 and the nine months ended June 30,
1996................................................................... F-5
Combined Statements of Cash Flows for the fiscal years ended September
30, 1993, 1994 and 1995 and the nine months ended June 30, 1995
(unaudited) and
June 30, 1996.......................................................... F-6
Notes to Combined Financial Statements.................................. F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders of Rofin-Sinar Technologies Inc. and Affiliates:
We have audited the accompanying combined balance sheets of Rofin-Sinar
Technologies Inc. and Affiliates as of September 30, 1994 and 1995 and June
30, 1996, and the related combined statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
September 30, 1995 and for the nine month period ended June 30, 1996. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Rofin-Sinar
Technologies Inc. and Affiliates as of September 30, 1994 and 1995 and June
30, 1996, and the results of their operations and their cash flows for each of
the years in the three-year period ended September 30, 1995 and the nine month
period ended June 30, 1996, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Detroit, Michigan
July 19, 1996
F-2
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, JUNE 30,
1994 1995 1996
------------- ------------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................... $ 839 $ 691 $ 1,260
Trade accounts receivable.............. 18,858 26,404 36,696
Less allowance for doubtful accounts... (1,005) (1,252) (1,120)
-------- -------- --------
Trade accounts receivable, net....... 17,853 25,152 35,576
Other accounts receivable.............. 851 1,264 1,419
Inventories (note 2)................... 20,634 28,169 34,142
Prepaid expenses....................... 158 184 183
Deferred income tax assets -- current
(note 9).............................. 7,864 6,614 5,721
-------- -------- --------
Total current assets................. 48,199 62,074 78,301
PROPERTY AND EQUIPMENT, AT COST (note
3)...................................... 38,148 41,352 40,217
Less accumulated depreciation.......... (12,113) (14,237) (15,241)
-------- -------- --------
Property and equipment, net.......... 26,035 27,115 24,976
DEFERRED INCOME TAX ASSETS -- NONCURRENT
(note 9)................................ 1,745 1,574 1,085
OTHER ASSETS............................. 688 232 147
-------- -------- --------
Total assets......................... $ 76,667 $ 90,995 $104,509
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit (note 6)................ $ 18,900 $ 18,900 $ 18,900
Bank loans (note 5).................... 3,480 2,905 --
Loan from affiliate (note 5)........... -- -- 6,687
Advances from Parent (note 6).......... 7,000 7,000 7,000
Accounts payable, trade................ 3,808 5,640 5,819
Income taxes payable (note 9).......... -- -- 3,333
Accrued liabilities (note 4)........... 10,084 11,496 16,442
Deferred income tax liability --
current (note 9)..................... -- 1,603 1,139
-------- -------- --------
Total current liabilities............ 43,272 47,544 59,320
PENSION OBLIGATIONS (note 8)............. 2,840 3,762 3,369
MINORITY INTERESTS....................... (28) 16 22
-------- -------- --------
Total liabilities.................... 46,084 51,322 62,711
COMMITMENTS AND CONTINGENCIES (note 7)...
STOCKHOLDERS' EQUITY:
Parent's capital....................... 29,114 34,224 39,021
Cumulative foreign currency translation
adjustment............................ 1,469 5,449 2,777
-------- -------- --------
Total stockholders' equity........... 30,583 39,673 41,798
-------- -------- --------
Total liabilities and stockholders'
equity.............................. $ 76,667 $ 90,995 $104,509
======== ======== ========
</TABLE>
See accompanying notes to combined financial statements.
F-3
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
COMBINED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER ENDED
30, JUNE 30,
-------------------------- -------------------
1993 1994 1995 1995 1996
-------- ------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales..................... $ 60,034 $69,217 $92,466 $65,460 $83,372
Cost of goods sold............ 47,745 46,993 57,162 40,475 51,466
-------- ------- ------- ------- -------
Gross profit............ 12,289 22,224 35,304 24,985 31,906
Selling, general, and
administrative expenses (note
13).......................... 21,951 17,059 20,673 14,534 15,221
Research and development
expenses..................... 10,276 6,834 6,719 5,903 5,850
-------- ------- ------- ------- -------
Income (loss) from
operations................... (19,938) (1,669) 7,912 4,548 10,835
Other expense (income):
Interest expense, net (notes
5 and 6)................... 1,654 1,308 1,272 947 790
Minority interest........... (720) 5 9 2 6
Miscellaneous............... 514 134 366 110 (53)
-------- ------- ------- ------- -------
Total other expense, net.. 1,448 1,447 1,647 1,059 743
-------- ------- ------- ------- -------
Income (loss) before
income taxes............. (21,386) (3,116) 6,265 3,489 10,092
Income tax expense (benefit)
(note 9)..................... (1,565) (1,422) 3,052 1,725 4,354
-------- ------- ------- ------- -------
Net income (loss)....... $(19,821) $(1,694) $ 3,213 $ 1,764 $ 5,738
======== ======= ======= ======= =======
Pro forma net income per
share........................ $ $
======= =======
</TABLE>
See accompanying notes to combined financial statements.
F-4
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1993, 1994, AND 1995
AND THE NINE MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE
FOREIGN
CURRENCY TOTAL
PARENT'S TRANSLATION STOCKHOLDERS'
CAPITAL ADJUSTMENT EQUITY
-------- ----------- -------------
<S> <C> <C> <C>
BALANCES at September 30, 1992 ............ $ 59,574 $ 2,885 $ 62,459
Foreign currency translation adjustment.... -- (3,054) (3,054)
Capital distributions to Parent............ (3,747) -- (3,747)
Net loss................................... (19,821) -- (19,821)
-------- ------- --------
BALANCES at September 30, 1993 ............ 36,006 (169) 35,837
Foreign currency translation adjustment.... -- 1,638 1,638
Capital distributions to Parent............ (5,198) -- (5,198)
Net loss................................... (1,694) -- (1,694)
-------- ------- --------
BALANCES at September 30, 1994 ............ 29,114 1,469 30,583
Foreign currency translation adjustment.... -- 3,980 3,980
Capital contributions from Parent.......... 1,897 -- 1,897
Net income................................. 3,213 -- 3,213
-------- ------- --------
BALANCES at September 30, 1995 ............ 34,224 5,449 39,673
Foreign currency translation adjustment.... -- (2,672) (2,672)
Capital distributions to Parent............ (941) -- (941)
Net income................................. 5,738 -- 5,738
-------- ------- --------
BALANCES at June 30, 1996.................. $ 39,021 $ 2,777 $ 41,798
======== ======= ========
</TABLE>
See accompanying notes to combined financial statements.
F-5
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
----------------------------- -------------------
1993 1994 1995 1995 1996
--------- -------- -------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)....... $ (19,821) $ (1,694) $ 3,213 $ 1,764 $ 5,738
Adjustments to reconcile
net income (loss) to
net cash provided
(used) by operating
activities:
Depreciation and
amortization......... 2,803 2,527 2,364 1,773 1,830
Loss on disposal of
property and
equipment............ 244 32 214 369 19
Deferred income
taxes................ (1,565) (1,328) 2,476 2,787 908
Minority interest in
losses of
subsidiary........... (720) 5 9 2 6
Change in operating
assets and
liabilities:
Trade accounts
receivable......... 13,959 3,969 (6,683) (7,349) (11,404)
Other accounts
receivable......... 4,812 (5) (184) (146) (354)
Inventories......... 6,881 3,846 (6,204) (3,548) (6,197)
Prepaid expenses and
other.............. 312 60 235 62 56
Accounts payable,
trade.............. (3,377) (1,961) 2,782 7,384 263
Income taxes
payable............ -- -- -- -- 3,446
Accrued liabilities
and pension
obligation......... 85 414 1,619 (494) 4,636
--------- -------- -------- ------- -------
Net cash provided
(used) by
operating
activities....... 3,613 5,865 (159) 2,604 (1,053)
--------- -------- -------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to furniture
and equipment.......... (1,086) (452) (1,936) (1,447) (1,393)
Proceeds from sale of
furniture and
equipment.............. 280 201 553 100 --
Investment in
subsidiary............. -- -- (19) (19) --
--------- -------- -------- ------- -------
Net cash used by
investing
activities....... (806) (251) (1,402) (1,366) (1,393)
--------- -------- -------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase (decrease) in
parent capital......... (3,747) (5,198) 1,897 (1,293) (941)
Borrowings from
affiliate.............. -- -- -- -- 6,921
Repayments to bank...... -- (79) (515) (94) (2,905)
--------- -------- -------- ------- -------
Net cash provided
(used) by
financing
activities....... (3,747) (5,277) 1,382 (1,387) 3,075
--------- -------- -------- ------- -------
Effect of foreign currency
translation on cash...... 144 (88) 31 87 (60)
--------- -------- -------- ------- -------
Net increase (decrease) in
cash..................... (796) 249 (148) (62) 569
Cash at beginning of
period................... 1,386 590 839 839 691
--------- -------- -------- ------- -------
Cash at end of period..... $ 590 $ 839 $ 691 $ 777 $ 1,260
========= ======== ======== ======= =======
Cash paid during the
period for interest...... $ 131 $ 125 $ 139 $ 60 $ 90
========= ======== ======== ======= =======
Cash paid during the
period for income taxes.. $ -- $ -- $ -- $ -- $ --
========= ======== ======== ======= =======
</TABLE>
See accompanying notes to combined financial statements.
F-6
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1993, 1994, AND 1995
(DOLLARS IN THOUSANDS)
1.SUMMARY OF ACCOUNTING POLICIES
(a) Description of the Company and Business
The accompanying financial statements present the historical financial
information of the industrial laser businesses of Siemens AG (Siemens
or Parent), representing the combined operations of Rofin-Sinar Inc. (a
United States company), and Rofin-Sinar Laser GmbH (a Federal Republic
of Germany limited liability company), each of which is owned either
directly or indirectly by Siemens. Rofin-Sinar Laser GmbH includes the
consolidated accounts of its 99.97 percent-owned subsidiary, Rofin-
Sinar France S.A.; its 90.65 percent (83.5 percent in 1993 and 1994)-
owned subsidiary, Rofin-Sinar Italiana S.r.L.; and its 51 percent-owned
subsidiary, Rofin Marubeni Laser Corporation (a Japanese entity).
Because Rofin-Sinar Inc. and Rofin-Sinar Laser GmbH are each directly
or indirectly wholly owned by a common parent, the accompanying
financial statements are presented as combined rather than
consolidated. All significant intercompany balances and transactions
have been eliminated in combination.
Immediately prior to the closing of a public offering (the "Offering")
of common stock of Rofin-Sinar Technologies Inc., a newly formed
holding company indirectly owned by Siemens AG, the business operations
of Rofin-Sinar Inc. and Rofin-Sinar Laser GmbH (Rofin Sinar Group),
including all assets and liabilities, will be sold to Rofin-Sinar
Technologies Inc. (reorganization). A portion of the proceeds from the
public offering will be used to purchase all outstanding stock of
Rofin-Sinar Group from Siemens AG and its subsidiaries. The
reorganization will constitute a combination of entities under common
control and, for financial statement purposes, will be accounted for by
combining the historical accounts of Rofin-Sinar Group and Rofin-Sinar
Technologies Inc. (Rofin-Sinar or Company), in a manner similar to
pooling-of-interests accounting.
The primary business of Rofin-Sinar is to develop, manufacture, and
market industrial lasers and supplies used for material processing
applications. The majority of the Company's customers are in the
machine tool, automotive, semiconductor, and electronics industries and
are located in the United States, Europe, and Asia. Rofin-Sinar
generates approximately 75 percent of its revenues from the sale and
installation of new lasers and approximately 25 percent from
aftermarket support for the Company's existing laser products.
The combined financial statements are derived from the historical
financial statements of Rofin-Sinar Group. Management believes the
accompanying statements of operations include a reasonable allocation
of all expenses the Company will incur as an independent company.
The accompanying unaudited comparative combined statements of
operations and cash flows for the nine months ended June 30, 1995 have
been prepared by management and in their opinion, contain all
adjustments, consisting of normal recurring adjustments, necessary to
present fairly the Company's results of operations and cash flows for
the nine months ended June 30, 1995.
(b)Inventories
Inventories are stated at the lower of cost or market after provisions
for excess and obsolete inventory salable at prices below cost. Costs
are determined using the first in, first out and weighted average cost
methods.
F-7
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
(c)Property and Equipment
Property and equipment are recorded at cost and depreciated over their
useful lives, except for leasehold improvements, which are amortized
over the lesser of their useful lives or the term of the lease. The
methods of depreciation are straight line for financial reporting
purposes and accelerated for income tax purposes. Depreciable lives for
financial reporting purposes are as follows:
<TABLE>
<CAPTION>
USEFUL
LIVES
----------
<S> <C>
Buildings....................................................... 40 years
Machinery and equipment......................................... 3-10 years
Furniture and fixtures.......................................... 3-10 years
Computers and software.......................................... 3-4 years
Leasehold improvements.......................................... 5-15 years
</TABLE>
(d)Revenue Recognition
Revenues are recognized when a laser product is shipped or services are
performed.
(e)Income Taxes
Income taxes are accounted for following Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (Statement
109). Under the asset and liability method of Statement 109, deferred
income taxes are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred taxes of a change in tax
rates is recognized in income in the period that includes the enactment
date.
The Company's results have been included in the consolidated federal
income tax return of Siemens Corporation in the U.S. and, for periods
prior to October 1, 1995, Siemens AG in Germany. For periods from and
after October 1, 1995, the Company will file a separate tax return in
Germany. For purposes of these financial statements, income taxes are
computed on a separate tax return basis.
(f)Accounting for Warranties
The Company issues a standard warranty of one year for parts and labor
on lasers that are sold. However, extended warranties for up to two
years on parts and one year on labor are negotiated on a contract-by-
contract basis. The Company provides for estimated warranty costs as
products are shipped.
(g)Foreign Currency Translation
In accordance with Statement of Financial Accounting Standards No. 52,
Foreign Currency Translation, the assets and liabilities of the
Company's operations outside the United States are translated into U.S.
dollars at exchange rates in effect on the balance sheet date, and
revenues and expenses are translated using a weighted average exchange
rate during the period. Gains or losses resulting from translating
foreign currency financial statements are recorded in a separate
component of shareholders' equity. Gains or losses resulting from
foreign currency transactions are included in net income.
F-8
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
(h)Research and Development Expenses
Research and development costs are expensed when incurred and are net
of government grants of $448, $611, $1,400 and $476 received for the
years ended September 30, 1993, 1994, and 1995 and the nine months
ended June 30, 1996, respectively. The Company has no future
obligations under such grants.
(i)Financial Instruments
Financial instruments of the Company, consisting principally of cash,
accounts receivable, accounts payable, and bank loans, are recorded at
amounts which approximate estimated fair value. The estimated fair
value amounts are determined by the Company using available market
information and available valuation methodologies.
(j)Use of Estimates
Management of the Company makes a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual
results could differ from these estimates.
(k)Earnings per Share
Pro forma net income per share has been calculated for the year ended
September 30, 1995 and the nine months ended June 30, 1996 assuming
that shares have been outstanding for such periods. Such shares
represent the number of shares to be issued pursuant to the Offerings,
a portion of the proceeds from which will be used to purchase the
shares of Rofin-Sinar Group and to repay $7 million of indebtedness
owned to Siemens and its affiliate.
2. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
JUNE
SEPTEMBER 30, 30,
--------------- -------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Finished goods...................................... $ 5,502 $ 8,243 $ 6,699
Work in progress.................................... 4,824 5,595 7,535
Raw materials and supplies.......................... 5,401 7,337 10,094
Demo inventory...................................... 1,998 2,754 4,609
Service parts....................................... 2,909 4,240 5,205
------- ------- -------
Total inventories................................. $20,634 $28,169 $34,142
======= ======= =======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment include the following:
<TABLE>
<CAPTION>
JUNE
SEPTEMBER 30, 30,
--------------- -------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Buildings........................................... $24,166 $26,159 $24,197
Technical machinery and equipment................... 4,635 5,491 5,512
Furniture and fixtures.............................. 5,822 5,907 6,153
Computers and software.............................. 2,619 2,828 2,916
Leasehold improvements.............................. 906 967 1,439
------- ------- -------
$38,148 $41,352 $40,217
======= ======= =======
</TABLE>
F-9
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
4. ACCRUED LIABILITIES
At September 30, 1994 and 1995 and June 30, 1996, accrued liabilities are
comprised of the following:
<TABLE>
<CAPTION>
JUNE
30,
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Employee compensation............................... $ 3,646 $ 4,256 $ 5,910
Warranty reserves................................... 2,375 4,020 4,561
Customer deposits................................... 509 395 1,868
Other............................................... 3,554 2,825 4,103
------- ------- -------
$10,084 $11,496 $16,442
======= ======= =======
</TABLE>
5. BANK AND AFFILIATE LOANS
The Company's Japanese subsidiary had loans with Bank of Yokohama and
Sakura Bank totalling $3,480 and $2,905 at September 30, 1994 and 1995,
respectively. The floating interest rates to
the banks ranged from 4.0 percent to 4.75 percent in 1993, 3.4 percent to
4.4 percent in 1994, and 1.6 percent to 2.6 percent in 1995. Such loans
were guaranteed by Siemens affiliates.
In fiscal 1996 the Company's Japanese subsidiary repaid its bank loans and
borrowed amounts from an affiliate of Siemens which totaled $6,687 at June
30, 1996. Interest on the affiliate loans is at a floating market rate
which was 2 percent at June 30, 1996.
6. LINE OF CREDIT
The line of credit represents intercompany borrowings outstanding from the
Parent of $18,900 for all periods presented. Interest expense has been
calculated at floating market rates for each of the periods presented,
which were 8.8 percent, 6.7 percent and 6.2 percent for the years ended
September 30, 1993, 1994, and 1995, respectively, and 6.2 percent and 4.9
percent for the nine months ended June 30, 1995 and 1996, respectively.
In addition, these financial statements assume non-interest bearing
advances from Siemens AG of $7,000 for all periods presented which will be
repaid by the Company from the proceeds of the Offering.
7. LEASE COMMITMENTS
The Company leases operating facilities and equipment under operating
leases which expire at various dates through 2001. The lease agreements
require payment of real estate taxes, insurance, and maintenance expenses
by the Company.
Minimum lease payments for future fiscal years under noncancelable
operating leases as of June 30, 1996 are:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING SEPTEMBER 30, TOTAL
-------------------------------- -----
<S> <C>
1996.............................................................. $282
1997.............................................................. 928
1998.............................................................. 538
1999.............................................................. 248
2000.............................................................. 185
2001 and thereafter............................................... 45
</TABLE>
F-10
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
Rent expense charged to operations for the years ended September 30, 1993,
1994, and 1995 and the nine months ended June 30, 1996, approximates
$1,335, $1,306, $1,300, and $1,000, respectively.
8. EMPLOYEE BENEFIT PLANS
Substantially all of the Company's U.S. and German employees participate in
defined benefit pension plans. The Company's U.S. plan began in fiscal
1995.
The following table sets forth the funded status of the plans at the
balance sheet dates:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
-------------- --------
1994 1995 1996
------- ------ --------
<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested employees................................ $ 810 $1,363 $1,413
Nonvested employees............................. 1,010 1,709 1,801
------- ------ ------
Accumulated benefit obligation................ 1,820 3,072 3,214
Effects of assumed future compensation increase... 357 880 1,018
------- ------ ------
Projected benefit obligation.................. 2,177 3,952 4,232
Plan assets....................................... -- -- 682
------- ------ ------
Projected benefit obligation in excess of plan
assets....................................... 2,177 3,952 3,550
Unrecognized net gain............................. 663 465 426
Unrecognized prior service cost................... -- (655) (607)
------- ------ ------
Accrued Pension Cost............................ $ 2,840 $3,762 $3,369
======= ====== ======
</TABLE>
Pension costs consist of the following components:
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED ENDED
SEPTEMBER 30, JUNE 30,
--------------- -----------
1993 1994 1995 1996
---- ---- ---- -----------
<S> <C> <C> <C> <C>
Service cost.................................. $199 $203 $391 $323
Interest on projected benefit obligations..... 141 144 229 206
Amortization of unrecognized prior service
cost......................................... -- -- 63 47
Amortization of unrecognized gain............. -- (2) (32) (16)
---- ---- ---- ----
Net pension cost.............................. $340 $345 $651 $560
==== ==== ==== ====
</TABLE>
Pensions generally provide benefits based on years of service. A discount
rate for the U.S. of 7.5 percent (7.0 percent for foreign plan) as of
September 30, 1993 and 1995 and June 30, 1996, and 8.0 percent (7.5 percent
for foreign plan) as of September 30, 1994, is assumed. Increases in future
compensation levels for the plan are projected at 5 percent. Prior service
costs and actuarial gains and losses are generally amortized over the
average remaining service period of active employees.
The Company has a 401(k) profit-sharing plan for the benefit of all
eligible U.S. employees, as defined by the plan. Participating employees
may contribute up to 16 percent of their qualified annual compensation. The
Company matches 50 percent of the first 6 percent of the employees'
compensation contributed as a salary deferral. Company contributions for
the years ended September 30, 1993, 1994, and 1995, and the nine months
ended June 30, 1996 are $103, $95, $115, and $90, respectively.
F-11
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
9. INCOME TAXES
Income (loss) before income taxes is attributable to the following
geographic regions:
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER ENDED
30, JUNE 30,
------------------------- -----------
1993 1994 1995 1996
-------- ------- ------ -----------
<S> <C> <C> <C> <C>
United States......................... $ (4,598) $ 1,315 $ 649 $ 3,108
Germany............................... (15,257) (3,845) 5,631 6,562
France................................ 21 140 289 203
Italy................................. (250) 93 193 122
Japan................................. (1,302) (819) (497) 97
-------- ------- ------ -------
$(21,386) $(3,116) $6,265 $10,092
======== ======= ====== =======
</TABLE>
The provision for income tax expense (benefit) is comprised of the
following amounts:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
---------------------------------------
1993 1994 1995 1996
-------- -------- -------------------
<S> <C> <C> <C> <C>
Current:
United States.................... $ -- $ -- $ -- $ --
Foreign.......................... -- (94) 576 3,446
-------- -------- ------- ------
Total current.................. -- (94) 576 3,446
Deferred:
United States.................... (1,565) 465 249 1,107
Foreign.......................... -- (1,793) 2,227 (199)
-------- -------- ------- ------
Total deferred................. (1,565) (1,328) 2,476 908
-------- -------- ------- ------
Total income tax expense
(benefit)..................... $ (1,565) $(1,422) $ 3,052 $4,354
======== ======== ======= ======
</TABLE>
Statutory tax rates in the U.S., Italy, France, and Japan approximate 35
percent, 52 percent, 37 percent (33 percent in 1993 and 1994), and 52
percent, respectively, for all periods presented.
German corporate tax law applies the imputation system with regard to the
taxation of the income of a corporation (such as Rofin-Sinar Laser GmbH
(RSL)). In general, retained corporate income is subject to a municipal
trade tax (which for Hamburg and Gunding on a combined basis is 16.7%),
which is deductible for federal corporate income tax purposes, a federal
corporate income tax rate of 45% (50% prior to January 1, 1994) and,
effective January 1, 1995, a surcharge of 7.5% on the federal corporate
income tax amount.
Profits which are distributed by a German corporate taxpayer (such as RSL)
in the form of a dividend are subject to a reduced federal corporate income
tax rate of 30% (36% prior to January 1, 1994) plus the 7.5% surcharge on
the federal corporate income tax amount calculated at the reduced rate.
Dividends paid by RSL to Rofin-Sinar Technologies Inc. ("RST") are subject
to a withholding tax at a rate of 5% pursuant to the income tax treaty
currently in effect between the United States and Germany.
Tax expense and deferred taxes have been recorded at rates assuming all
earnings of RSL will be dividended to RST.
F-12
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
The difference between actual income tax expense and the amount computed by
applying the U.S. federal income tax rate of 35 percent is as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30,
---------------------------- -----------
1993 1994 1995 1996
-------- -------- -------- -----------
<S> <C> <C> <C> <C>
Computed "expected" tax expense
(benefit)........................ $ (7,485) $ (1,060) $ 2,193 $3,532
Foreign operating loss for which
no benefit is recognized......... 8,378 421 257 --
Use of unrecognized net operating
loss carryforward................ -- -- -- (50)
Difference between U.S. and
foreign statutory rates.......... (2,233) (387) 446 775
Change in foreign tax rate........ (19) (365) 147 --
Other............................. (206) (31) (9) 97
-------- -------- ------- ------
Actual tax expense (benefit)...... $ (1,565) $(1,422) $ 3,052 $4,354
======== ======== ======= ======
</TABLE>
The tax effects of temporary differences that give rise to the net deferred
tax assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
---------------- --------
1994 1995 1996
------- ------- --------
<S> <C> <C> <C>
Deferred tax assets:
Foreign:
German reorganization benefits.................. $ 3,708 $ 3,621 $ 2,970
Net operating loss carryforwards................ 4,155 2,157 1,861
Other, net...................................... 234 283 640
------- ------- -------
8,097 6,061 5,471
United States:
Bad debt allowance.............................. 105 105 105
Accrued liabilities............................. 573 980 1,399
Inventory....................................... 1,058 1,300 928
Net operating loss carryforward................. 5,257 4,340 3,495
Other........................................... 42 60 27
------- ------- -------
Gross deferred tax assets....................... 15,132 12,846 11,425
Less: Valuation allowance....................... 2,192 2,028 1,861
------- ------- -------
Net deferred tax assets....................... $12,940 $10,818 $ 9,564
Deferred tax liabilities:
Foreign:
Depreciation.................................... (2,227) (2,501) (2,405)
Inventory....................................... (435) (916) (1,138)
Bad debt allowance.............................. (87) (297) (354)
Accrued liabilities ............................ (582) (519) --
------- ------- -------
(3,331) (4,233) (3,897)
------- ------- -------
Net deferred income tax assets................ $ 9,609 $ 6,585 $ 5,667
======= ======= =======
</TABLE>
F-13
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and
projections for future taxable income over the periods in which the
deferred tax assets are deductible, management believes it is more likely
than not that the Company will realize the benefits of these deductible
differences, net of the existing valuation allowances at June 30, 1996.
At June 30, 1996, the Company has U.S. federal net operating loss
carryforwards available of $9,800, which expire in 2002, and Japanese net
operating loss carryforwards of $3,800, which expire in 2000. Upon the
consummation of the Offerings, the utilization by the Company of its U.S.
net operating loss carryforwards will be subject to limitation under
Section 382 of the Internal Revenue Code of 1986, as amended, as a result
of the occurrence of a change of ownership within the meaning of Section
382.
Pursuant to tax arrangements between the Company and Siemens in Germany,
certain prior period net operating losses of the Company in Germany have
been used by Siemens and are not available to the Company to reduce future
income tax liabilities in Germany.
10.RELATED PARTY TRANSACTIONS
The Company purchases certain goods and services from Siemens AG and its
affiliates. The amount of such purchases, which are primarily raw material
inventories, is $2,204, $2,704, $2,445 and $4,098 for the years ended
September 30, 1993, 1994, 1995 and the nine months ended June 30, 1996,
respectively. The Company also recorded sales to Siemens AG and its
affiliates totaling $1,598, $2,890, $1,241 and $3,450 for the years ended
September 30, 1993, 1994, 1995 and the nine months ended June 30, 1996,
respectively.
The Company also had sales to one of its joint venture partners in Japan
amounting to $255 in 1993, $1,323 in 1994, $2,172 in 1995, and $1,193 for
the first nine months of 1996.
The terms of the Company's purchases from and sales to related parties have
generally been on terms comparable to those available in connection with
purchases from or sales to unaffiliated parties.
F-14
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
11.GEOGRAPHIC INFORMATION
Assets, revenues and income (loss) before taxes, by geographic region, at
September 30, 1994 and 1995 and June 30, 1996 and for the years ended
September 30, 1993, 1994, and 1995 and the nine months ended June 30, 1996,
are summarized below:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
---------------- --------
1994 1995 1996
ASSETS ------- ------- --------
<S> <C> <C> <C>
United States.................................... $21,692 $28,129 $ 27,636
Germany.......................................... 52,129 59,678 70,176
Other............................................ 7,990 9,524 13,798
Intercompany eliminations........................ (5,144) (6,336) (7,101)
------- ------- --------
Total........................................ $76,667 $90,995 $104,509
======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
TOTAL BUSINESS INTERSEGMENT REVENUE
------------------------------------- --------------------------------------
NINE NINE
MONTHS MONTHS
ENDED YEARS ENDED ENDED
YEARS ENDED SEPTEMBER 30, JUNE 30, SEPTEMBER 30, JUNE 30,
--------------------------- -------- ---------------------------- --------
1993 1994 1995 1996 1993 1994 1995 1996
REVENUES ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
United States...... $25,371 $ 30,627 $ 35,189 $ 32,928 $ 2,636 $ 1,668 $ 3,595 $ 5,464
Germany............ 42,490 44,479 70,020 51,480 13,881 12,884 21,419 7,172
Other.............. 9,889 8,936 12,534 12,144 1,199 273 263 544
Intercompany
eliminations...... (17,716) (14,825) (25,277) (13,180) (17,716) (14,825) (25,277) (13,180)
------- -------- -------- -------- -------- -------- -------- --------
Total........... $60,034 $ 69,217 $ 92,466 $ 83,372 $ -- $ -- $ -- $ --
======= ======== ======== ======== ======== ======== ======== ========
<CAPTION>
EXTERNAL REVENUES
--------------------------------
NINE
MONTHS
YEARS ENDED ENDED
SEPTEMBER 30, JUNE 30,
----------------------- --------
1993 1994 1995 1996
REVENUES ------- ------- ------- --------
<S> <C> <C> <C> <C>
United States...... $22,735 $28,959 $31,594 $27,464
Germany............ 28,609 31,595 48,601 44,308
Other.............. 8,690 8,663 12,271 11,600
Intercompany
eliminations...... -- -- -- --
------- ------- ------- --------
Total........... $60,034 $69,217 $92,466 $83,372
======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
NINE
MONTHS
YEARS ENDED ENDED
SEPTEMBER 30, JUNE 30,
------------------------- --------
1993 1994 1995 1996
INCOME (LOSS) BEFORE TAXES -------- ------- ------ --------
<S> <C> <C> <C> <C>
United States............................ $ (4,598) $ 1,315 $ 649 $ 3,108
Germany.................................. (15,257) (3,845) 5,631 6,562
Other.................................... (1,531) (586) (15) 422
-------- ------- ------ -------
Total................................ $(21,386) $(3,116) $6,265 $10,092
======== ======= ====== =======
</TABLE>
12.RECENTLY ISSUED ACCOUNTING STANDARDS
During October 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock-Based Compensation." Effective for
fiscal years beginning after December 15, 1995, Statement No. 123
encourages companies to include the fair value of any stock awards issued
as compensation expense within their income statements. Companies that
choose to remain with Accounting Principles Board Opinion No. 25 (which
uses the intrinsic value method to account for stock awards) must disclose
pro forma net income and earnings per share as if the fair value of the
award had been included as compensation expense. The Company anticipates
remaining with the intrinsic value method.
On March 31, 1995, the Financial Accounting Standards Board issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of." This Statement provides guidance
for recognition and measurement of impairment of long-lived assets, certain
identifiable intangibles and goodwill related both to assets to be held and
used and assets to be disposed of. The Company intends
F-15
<PAGE>
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS)
to adopt this Statement as of the first quarter of its next fiscal year and
anticipates that the effect of such adoption will be immaterial.
13.PROVISION FOR DOUBTFUL ACCOUNTS
The Company incurred expenses related to uncollectible accounts receivable
of $1,513, $831, $1,549 and $267 for the years ended September 30, 1993,
1994 and 1995, and for the nine months ended June 30, 1996, respectively.
These expenses are included in "Selling, general, and administrative
expenses."
F-16
<PAGE>
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE
SHARES OF COMMON STOCK TO WHICH IT
RELATES OR AN OFFER TO, OR A
SOLICITATION OF, ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................................................... 3
Risk Factors............................................................ 7
Use of Proceeds......................................................... 13
Dividend Policy......................................................... 13
Dilution................................................................ 14
Capitalization.......................................................... 15
Selected Combined Financial Information and Operating Data.............. 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................................. 17
Business................................................................ 26
Management.............................................................. 48
Ownership of Common Stock............................................... 58
Certain Transactions.................................................... 58
Description of Capital Stock............................................ 60
Shares Eligible for Future Sale......................................... 66
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock........................................................... 67
Underwriting............................................................ 70
Legal Matters........................................................... 72
Experts................................................................. 72
Additional Information.................................................. 73
Glossary of Selected Technical Terms.................................... 74
Index to Financial Statements........................................... F-1
</TABLE>
UNTIL , 1996 (25 DAYS AFTER THE
DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN
THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATIONS OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
[ROFIN-SINAR LOGO APPEARS HERE]
10,000,000 Shares
COMMON STOCK
DEUTSCHE MORGAN GRENFELL
ALEX. BROWN & SONS INCORPORATED
LEHMAN BROTHERS
PROSPECTUS
, 1996
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows the expenses, other than underwriting discounts
and commissions, to be incurred in connection with the sale and distribution
of the securities being registered. Except for the SEC registration fee, the
NASD filing fee and the Nasdaq National Market quotation fee, all of the
following amounts are estimates.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC Registration Fee............................................. $ 39,656
NASD Filing Fee.................................................. 12,000
Nasdaq National Market Quotation Fee............................. 42,511
Blue Sky Fees and Expenses....................................... 20,000
Legal Fees and Expenses.......................................... 600,000
Accounting Fees and Expenses..................................... 450,000
Printing Expenses................................................ 200,000
Transfer Agent Fees.............................................. 7,500
Miscellaneous Expenses........................................... 328,333
----------
Total.......................................................... $1,700,000
==========
</TABLE>
The Company will bear a pro rata portion of the foregoing expenses equal to
the proportion between $13 million and the total gross proceeds from the
Offerings.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides, in summary,
that directors and officers of Delaware corporations are entitled, under
certain circumstances, to be indemnified against all expenses and liabilities
(including attorney's fees) incurred by them as a result of suits brought
against them in their capacity as a director or officer, if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful; provided that no indemnification may be made against expenses in
respect of any claim, issue or matter as to which they shall have been
adjudged to be liable to the Company, unless and only to the extent that the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, they are fairly and reasonably entitled to
indemnification for such expenses which the court shall deem proper. Any such
indemnification may be made by the Company only as authorized in each specific
case upon a determination by the shareholders or disinterested directors that
indemnification is proper because the indemnitee has met the applicable
standard of conduct. The Certificate of Incorporation of the Company permits
indemnification of its directors and officers to the maximum extent permitted
by Delaware law, as the same may be amended from time to time.
The Company has in effect a directors and officers liability insurance
policy indemnifying the directors and officers of the Company for certain
liabilities incurred by them, including liabilities under the Securities Act.
The Company pays the entire premium of this policy.
The Company's Certificate of Incorporation contains a provision that
eliminates the personal liability of directors of the Company for monetary
damages for certain breaches of fiduciary duty, as permitted by Section
102(b)(7) of the Delaware General Corporation Law.
Pursuant to the Underwriting Agreement between the Company and the
Underwriters included as Exhibit 1 to this Registration Statement, the
officers and directors of the Company are indemnified by the Underwriters
against certain civil liabilities under the Securities Act.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Other than one share issued to Siemens Power Corporation upon the
Registrant's incorporation, no securities of the Registrant have been issued
or sold by the Registrant in the last three years.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1.1 --Form of Underwriting Agreement
3.1 --Certificate of Incorporation of the Company and Form of Certificate of
Amendment thereto
3.2 --By-laws of the Company
4.1 --Specimen Certificate of Common Stock*
4.2 --Form of Rights Agreement
5.1 --Opinion of Shearman & Sterling as to the validity of Common Stock
10.1 --Form of Sale and Transfer Agreement between Siemens
Aktiengesellschaft and Rofin-Sinar Technologies Inc.
10.2 --Form of Sale and Transfer Agreement by and among Siemens Power Corpo-
ration and Rofin-Sinar Technologies Inc.
10.3 --Form of Tax Allocation and Indemnification Agreement among Rofin-Sinar
Technologies Inc., Rofin-Sinar Inc., Siemens Corporation and Siemens
Power Corporation
10.4 --Joint Venture Agreement, dated as of May 27, 1992, by and among Rofin
Sinar Laser GmbH, Marubeni Corporation and Nippei Toyama Corporation+
10.5 --Cooperation Agreement, dated as of May 27, 1992, among Nippei Toyama
Corporation, Rofin-Sinar Laser GmbH and Marubeni Corporation+
10.6 --Cooperation Agreement, dated as of May 27, 1992, among Rofin Sinar La-
ser GmbH, Marubeni Corporation and Nippei Toyama Corporation+
10.7 --Inheritable Building Right (Erbbaurecht), dated as of March 1, 1990,
between Rofin Sinar Laser GmbH and Lohss GmbH (in German, English sum-
mary provided)+
10.8 --Lease Agreement, dated August 10, 1990, between Josef and Maria Kranz
and Rofin Sinar Laser GmbH (in German, English summary provided)+
10.9 --Lease Agreement, dated June 14, 1989, between DR Group and Rofin-Sinar
Incorporated (Mast Street property)+
10.10 --Lease Agreement, dated March 25, 1993, between DR Group and Rofin-
Sinar Incorporated (Plymouth Oaks Drive property)+
10.11 --Rofin-Sinar Laser GmbH Pension Plan (in German, English summary
provided)
21.1 --List of Subsidiaries of the Registrant+
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Shearman & Sterling (included in Exhibit 5.1 above)
24.1 --Power of Attorney+
27.1 --Financial Data Schedule for fiscal year ended September 30, 1995+
27.2 --Financial Data Schedule for nine months ended June 30, 1996
</TABLE>
- --------
+ Previously filed.
* To be filed by amendment.
(b) Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts
II-2
<PAGE>
All other supplementary schedules relating to the registrant are omitted
because they are not required or because the required information, where
material, is contained in the Consolidated Financial Statements or Notes
thereto.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended (the "Act"), the information omitted from the
form the prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described above under Item 14 "Indemnification of
Directors and Officers," or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of a Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of their counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(c) The Registrant hereby further undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NEW YORK, STATE OF NEW YORK, ON AUGUST 30, 1996.
Rofin-Sinar Technologies Inc.
/s/ Peter Wirth
By: _________________________________
PETER WIRTH CHAIRMAN OF THE BOARD
OF DIRECTORS, CHIEF EXECUTIVE
OFFICER AND PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND AS OF THE 30TH DAY OF AUGUST, 1996.
SIGNATURE TITLE DATE
/s/ Peter Wirth Chairman of the
- ------------------------------------- Board of Directors, August 30, 1996
PETER WIRTH Chief Executive
Officer and
President
Executive Vice
* President, Research August 30, 1996
- ------------------------------------- and
HINRICH MARTINEN Development/Operations,
Chief Technical
Officer and
Director
* Executive Vice August 30, 1996
- ------------------------------------- President, Finance
GUNTHER BRAUN and Administration,
Chief Financial
Officer, Principal
Accounting Officer
and Director
/s/ Peter Wirth
*By_____________________________
Peter Wirth
Attorney-in-Fact
II-4
<PAGE>
SCHEDULE II
ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1993, 1994, AND 1995
AND NINE MONTHS ENDED JUNE 30, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO COSTS BALANCE AT
DESCRIPTION BEGINNING OF PERIOD AND EXPENSES DEDUCTIONS END OF PERIOD
----------- ------------------- ---------------- ---------- -------------
<S> <C> <C> <C> <C>
September 30, 1993...... 1,035 1,513 (553) 1,995
September 30, 1994...... 1,995 831 (1,821) 1,005
September 30, 1995...... 1,005 1,549 (1,302) 1,252
June 30, 1996........... 1,252 267 (399) 1,120
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
1.1 --Form of Underwriting Agreement
3.1 --Certificate of Incorporation of the Company and Form of Certificate of
Amendment thereto
3.2 --By-laws of the Company
4.1 --Specimen Certificate of Common Stock*
4.2 --Form of Rights Agreement
5.1 --Opinion of Shearman & Sterling as to the validity of Common Stock
10.1 --Form of Sale and Transfer Agreement between Siemens Aktiengesellschaft
and Rofin-Sinar Technologies Inc.
10.2 --Form of Sale and Transfer Agreement by and among Siemens Power
Corporation and Rofin-Sinar Technologies Inc.
10.3 --Form of Tax Allocation and Indemnification Agreement among Rofin-Sinar
Technologies Inc., Rofin-Sinar Inc. and Siemens Power Corporation
10.4 --Joint Venture Agreement, dated as of May 27, 1992, by and among Rofin
Sinar Laser GmbH, Marubeni Corporation and Nippei Toyama Corporation+
10.5 --Cooperation Agreement, dated as of May 27, 1992, among Nippei Toyama
Corporation, Rofin-Sinar Laser GmbH and Marubeni Corporation+
10.6 --Cooperation Agreement, dated as of May 27, 1992, among Rofin Sinar
Laser GmbH, Marubeni Corporation and Nippei Toyama Corporation+
10.7 --Inheritable Building Right (Erbbaurecht), dated as of March 1, 1990,
between Rofin Sinar Laser GmbH and Lohss GmbH (in German, English
summary provided)+
10.8 --Lease Agreement, dated August 10, 1990, between Josef and Maria Kranz
and Rofin Sinar Laser GmbH (in German, English summary provided)+
10.9 --Lease Agreement, dated June 14, 1989, between DR Group and Rofin-Sinar
Incorporated (Mast Street property)+
10.10 --Lease Agreement, dated March 25, 1993, between DR Group and Rofin-
Sinar Incorporated (Plymouth Oaks Drive property)+
10.11 --Rofin-Sinar Laser GmbH Pension Plan (in German, English summary
provided)
21.1 --List of Subsidiaries of the Registrant+
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Shearman & Sterling (included in Exhibit 5.1 above)
24.1 --Power of Attorney+
27.1 --Financial Data Schedule for fiscal year ended September 30, 1995+
27.2 --Financial Data Schedule for nine months ended June 30, 1996
</TABLE>
- --------
+ Previously filed.
* To be filed by amendment.
<PAGE>
EXHIBIT 1.1
Dated September . , 1996
ROFIN-SINAR TECHNOLOGIES INC.
. shares of common stock, par value $. per share
_________________________________
UNDERWRITING AGREEMENT
_________________________________
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. INTERPRETATION 1
2. UNDERWRITING 3
3. CLOSING 4
4. UNDERTAKINGS 6
5. COMMISSIONS; TERMS OF THE PUBLIC OFFERING 9
6. EXPENSES 9
7. REPRESENTATIONS AND WARRANTIES 10
8. INDEMNITY 17
9. LISTING 20
10. CONDITIONS PRECEDENT 20
11. TERMINATION 27
12. NOTICES 28
13. MISCELLANEOUS 29
14. GOVERNING LAW 29
</TABLE>
SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
1. The Underwriters...................................................22
2. Documents Identified for the Purpose of this Agreement.............22
</TABLE>
<PAGE>
THIS AGREEMENT is made on September ., 1996 AMONG:
(1) Rofin-Sinar Technologies Inc. (the "COMPANY");
(2) Siemens Corporation ("SC"); and
(3) Deutsche Morgan Grenfell/C.J. Lawrence Inc. ("DEUTSCHE MORGAN GRENFELL"),
Alex. Brown & Sons Incorporated and Lehman Brothers Inc. (together, the
"CO-MANAGERS") and the other Underwriters named in Schedule 1 hereto
(together the "UNDERWRITERS").
WHEREAS:
(A) The Company, which is incorporated under the laws of the State of Delaware,
proposes to issue and sell . shares of its common stock, par value $0.01
per share, in an international offering in respect of which Deutsche Morgan
Grenfell will act as global co-ordinator and lead manager. In addition,
the Company proposes to grant Deutsche Morgan Grenfell and the Co-Managers,
on behalf of the Underwriters, the option to purchase up to an additional .
Shares.
(B) The Offer Shares are to be purchased by the Underwriters and distributed in
an international offering (the "OFFERING") pursuant to the terms of this
agreement.
(C) The Company has filed with the Commission the Registration Statement, and
has filed or will file with the Commission the Prospectus relating to the
Offer Shares.
(D) The issued share capital of the Company is currently $., represented by .
Shares. Under the Certificate of Incorporation of the Company [and a
resolution duly adopted by the Company's shareholder at [an extraordinary]
general meeting of the Company held on ., 1996] the board of directors of
the Company has full power and authority to make available for sale and to
issue up to . Shares without the same requiring first to be offered to
shareholders of the Company. At a meeting of the board of directors held
on ., 1996 it was resolved that the Firm Shares and up to the whole of the
Additional Shares should be sold for and issued on the terms of this
Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this Agreement (including the Recitals and the Schedule):
"ADDITIONAL SHARES" means up to . additional Shares, the subject of the
option granted by the Company to the Underwriters under clause 2(b);
"AFFILIATE" has the meaning given to it by Rule 501(b) of Regulation D
under the Securities Act;
"CLOSING" means the First Closing or the Second Closing as the context
requires;
<PAGE>
"COMMISSION" means the United States Securities and Exchange Commission;
"COMMISSIONS" means the commissions referred to in clause 5;
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended;
"FIRM SHARES" means . Shares, to be sold to the Underwriters pursuant to
clause 3(1);
"FIRST CLOSING" means the implementation of all the actions described in
clause 3(1);
"GROUP" means the Company and its consolidated subsidiaries;
"INDEMNIFIED PERSON" means any of the Underwriters, any of their affiliates
or controlling persons (as defined in Section 15 of the Securities Act or
Section 20 of the Exchange Act) or any of their respective directors,
officers, employees or agents;
"OFFERING" has the meaning given to it in Recital (B);
"OFFER PRICE" means $. per Offer Share;
"OFFER SHARES" means the Firm Shares and as many of the Additional Shares
as are required to be issued;
"PRELIMINARY PROSPECTUS" means the Prospectus in preliminary form;
"PROFIT AND LOSS TRANSFER TERMINATION AGREEMENT" means the Profit and Loss
Transfer Termination Agreement dated . between Siemens and Rofin-Sinar
Laser GmbH;
"PROSPECTUS" means the Prospectus in the form first used to confirm sales
of Offer Shares. The Prospectus is contained in the Registration
Statement;
"PURCHASE PRICE" means $. per Offer Share;
"R-S SALE AGREEMENT" means the Sale and Transfer Agreement dated ., 1996
between the Company and Siemens.
"REGISTRATION STATEMENT" means the registration statement (File No. 333-
09539) filed by the Company with respect to the Offer Shares, as amended at
the time it became effective, including the information (if any) deemed to
be part of the registration statement at the time of effectiveness pursuant
to Rule 430A under the Securities Act. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant
to Rule 462(b) under the Securities Act, then any reference herein to the
term "Registration Statement" shall be deemed to include such abbreviated
registration statement.
"SPC" means Siemens Power Corporation, a Delaware corporation;
2
<PAGE>
"SPC SALE AGREEMENT" means the Sale and Transfer Agreement dated ., 1996
between the Company and SPC;
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended;
"SHARES" means shares of common stock, par value $0.01 each, of the
Company;
"SIEMENS" means Siemens Aktiengesellschaft;
"SIGNIFICANT SUBSIDIARY" means Rofin-Sinar Inc. and Rofin-Sinar Laser GmbH;
"SUBSEQUENT CLOSING" means the implementation of all the actions described
in clause 3(2);
"TAX ALLOCATION AGREEMENT" means the Tax Allocation and Indemnification
Agreement dated ., 1996 among the Company, Rofin Sinar Inc. and SPC;
"U.S. REPRESENTATIVES" means Deutsche Morgan Grenfell and the Co-Managers.
(2) In this agreement:
(a) references to a person include a body corporate and an unincorporated
association of persons;
(b) references to a party to this agreement include references to the
successors or assigns (immediate or otherwise) of that party.
(3) Where any statement is qualified by the expression "to the best of [a
person's] knowledge" or any similar expression, that statement shall be
deemed to include an additional statement that it has been made after due
and careful inquiry.
(4) Subclauses (1) to (3) above apply unless the context otherwise requires.
(5) The headings in this Agreement do not affect its interpretation.
2. UNDERWRITING
Subject to the terms and conditions of this Agreement:
(a) the Company agrees to issue and sell the Firm Shares and, upon
exercise of the option described below, the Additional Shares, to the
several Underwriters;
(b) the Company irrevocably grants to the several Underwriters an option
to require the Company to issue and sell to the several Underwriters
the Additional Shares, such option to be exercisable on one or more
occasions upon notice to the Company from Deutsche Morgan Grenfell on
behalf of the Underwriters given not later than . (New York time) on
., 1996;
3
<PAGE>
(c) each Underwriter severally agrees, upon the basis of the
representation and warranties contained herein, and subject to the
conditions stated in clause 10 hereof, to purchase from the Company
the number of Firm Shares set out against its name in Schedule 1
hereto, at the Purchase Price, such amount being subject to increase
by an amount representing the Underwriter's pro rata share (calculated
by dividing the aggregate number of Firm Shares purchased by such
Underwriter by the aggregate number of Firm Shares purchased by all
Underwriters) of the number of Additional Shares required to be issued
by the Company;
(d) the Underwriters propose to make a public offering of the Firm Shares
as soon after this Agreement has been executed and the Registration
Statement has become effective as in Deutsche Morgan Grenfell's
judgment is advisable;
(e) If, at a Closing, any one or more of the Underwriters shall fail or
refuse to purchase Offer Shares that it has or they have agreed to
purchase hereunder on such date, and the aggregate number of Offer
Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the
aggregate number of the Offer Shares to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions
that the number of Firm Shares set forth opposite their respective
names in the Schedule bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or
in such other proportions as Deutsche Morgan Grenfell may specify, to
purchase the Offer Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date.
If, at the First Closing, any Underwriter or Underwriters shall fail
or refuse to purchase Firm Shares and the aggregate number of Firm
Shares with respect to which such default occurs is more than one-
tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to Deutsche Morgan Grenfell and the Company
for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter or the Company. In any
such case either Deutsche Morgan Grenfell or the Company shall have
the right to postpone the Closing, but in no event for longer than
seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents
or arrangements may be effected. If, at the Subsequent Closing, any
Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the
aggregate number of Additional Shares to be purchased, the non-
defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase Additional Shares or (ii) purchase
not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of
such default. Any action taken under this paragraph shall not relieve
any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
4
<PAGE>
3. CLOSING
(1) At 10:00 am (New York time) on ., 1996 or at such other time and/or date as
the Company and Deutsche Morgan Grenfell on behalf of the Underwriters may
agree:
(a) the Company shall issue the Firm Shares and shall deliver
certificates, in definitive form and registered in such names and in
such denominations as Deutsche Morgan Grenfell and the Co-Managers
shall request in writing not later than two full business days prior
to the First Closing, evidencing the Firm Shares for the respective
accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Firm Shares to the Underwriters
duly paid, against payment of the purchase money therefor; and
(b) Deutsche Morgan Grenfell and the Co-Managers on behalf of the
Underwriters shall pay to the Company by wire transfer of immediately
available funds the net purchase money in respect of the Firm Shares
(representing the aggregate Purchase Price of the Firm Shares [and
less the amount specified in clause 6(2)]) in U.S. dollars.
(2) At 10:00 am (New York time) on whichever is the later of the date of the
First Closing and the third business day after notice to purchase
Additional Shares is given under clause 2(b), or at such other time and/or
date as the Company and Deutsche Morgan Grenfell on behalf of the
Underwriters may agree:
(a) the Company will issue such Additional Shares and deliver
certificates, in definitive form and registered in such names and in
such denominations as Deutsche Morgan Grenfell shall request in
writing not later than two full business days prior to the Closing for
the Additional Shares, evidencing the Additional Shares for the
respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Additional Shares
to the Underwriters duly paid, against payment of the purchase money
therefor; and
(b) Deutsche Morgan Grenfell and the Co-Managers on behalf of the
Underwriters shall pay to the Company by wire transfer of immediately
available funds the net purchase money in respect of the Additional
Shares (representing the aggregate Purchase Price of the Additional
Shares) in U.S. dollars.
5
<PAGE>
(3) A certificate or certificates for the Offer Shares to be delivered to the
Underwriters shall be delivered to the Co-Managers at the offices of
Deutsche Morgan Grenfell, 31 West 52nd Street, New York, New York 10019-
6160 for the accounts of the Underwriters on the respective Closing in
accordance with the instructions delivered in accordance with Section
3(1)(a) or Section 3(2)(a) above.
(4) Offer Shares to be held through The Depository Trust Company ("DTC") shall
be registered by [name of Registrar] in the name of DTC's nominee, Cede &
Co., and credited to the accounts of such DTC participants as Deutsche
Morgan Grenfell shall request in writing not later than the applicable date
on which Deutsche Morgan Grenfell shall notify the Company in accordance
with Section 3(1)(a) or Section 3(2)(a).
4. UNDERTAKINGS
(1) Siemens undertakes with the Underwriters that it will bear and pay (or, in
respect of any duty, tax, commission, fee or the like for which the
Underwriters are initially liable, will promptly reimburse the same to the
Underwriters) any stamp or other duties, taxes, commissions or fees or
charges on or in connection with the issue, sale, purchase, distribution
and/or delivery of the Offer Shares and the execution, delivery and
performance of this Agreement and any value added tax payable in connection
with the commissions and other amounts payable or allowable by the Company
and otherwise in connection with the transactions envisaged by this
Agreement.
(2) The Company will not and will not publicly announce any intention to (and
will cause its subsidiaries and affiliates not to and not announce any
intention to), without the prior written consent of Deutsche Morgan
Grenfell, (a) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option to sell, grant any option right
or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any Share or any security convertible into or exercisable or
exchangeable for Shares, or (b) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Shares, whether any such transaction described in clause
(a) or (b) above is to be settled by delivery of Shares or other such
securities, in cash or otherwise, for a period of [180] days after the
First Closing, other than Shares (or any securities convertible into or
exchangeable for Shares), offered, issued, allotted, appropriated or
granted to employees (including directors) or former employees of the
Company, its subsidiaries and/or associated companies or persons related to
such employees (including directors) or former employees, directly or
indirectly, pursuant to any employee share scheme or arrangement for any
one or more employees generally, which is disclosed in the Prospectus.
6
<PAGE>
(3) If, at any time when a Prospectus relating to the Offer Shares is required
to be delivered under the Securities Act or in connection with the initial
distribution of the Offer Shares, any event occurs as a result of which the
Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Securities Act or
the rules thereunder or applicable law, the Company will promptly, at its
own expense: (i) prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or effect such
compliance; and (ii) supply any amended or supplemented Prospectus to the
Underwriters in such quantities as the Underwriters may reasonably request.
Before making any such amendment, supplement or filing, the Company will
furnish Deutsche Morgan Grenfell with a copy of each such proposed
amendment or supplement, and will not make any proposed amendment,
supplement or filing to which Deutsche Morgan Grenfell, on behalf of the
Underwriters, reasonably objects.
(4) The Company will use all reasonable efforts to qualify the Offer Shares for
offering and sale in each jurisdiction as Deutsche Morgan Grenfell, on
behalf of the Underwriters, shall designate including, but not limited to,
under applicable state securities ("Blue Sky") laws of certain states of
the United States of America or other U.S. jurisdictions and the Company
shall maintain such qualifications in effect for such period as Deutsche
Morgan Grenfell, on behalf of the Underwriters, may reasonably require in
order to complete the placement of the Offer Shares; provided, however,
--------
that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject.
(5) The Company will:
(a) prepare the Prospectus in a form approved by the Underwriters and file
such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act;
(b) furnish to Deutsche Morgan Grenfell, without charge, four signed
copies of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and, during the
period in which the Prospectus is required by law to be delivered in
7
<PAGE>
connection with sales by an Underwriter or dealer, as many copies of
the Prospectus, and any supplements and amendments thereto or to the
Registration Statement, as Deutsche Morgan Grenfell may reasonably
request;
(c) advise the Underwriters, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and furnish the Underwriters copies
thereof;
(d) advise Deutsche Morgan Grenfell, promptly after it receives notice
thereof, of (i) the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, (ii) the suspension of the qualification
of the Offer Shares for offering or sale in any jurisdiction, (iii)
the initiation or threatening of any proceeding for any such purpose,
or (iv) any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and
(e) in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any qualification of the Offer Shares for
offering or sale in any jurisdiction, promptly to use its best efforts
to obtain the withdrawal of such order.
(6) The Company will make generally available to the Company's security holders
and to Deutsche Morgan Grenfell and the Co-Managers as soon as practicable
an earnings statement covering the twelve-month period ending [September
30, 1996] that satisfies the provisions of Section 11(a) of the Securities
Act and the rules and regulations of the Commission thereunder.
5. COMMISSIONS; TERMS OF THE PUBLIC OFFERING
The Offer Shares are to be offered to the public initially at the Offer
Price. In consideration of the agreement by the Underwriters to underwrite
and pay for the Offer Shares as provided above, the Company shall pay to
the Underwriters commissions, by way of deduction from the Offer Price of
an amount equal to the difference between the Offer Price and the Purchase
Price per Offer Share. The Company is advised by Deutsche Morgan Grenfell
that the U.S.
8
<PAGE>
Underwriters initially propose to offer part of the Offer Shares to be
offered and sold in the United States as part of the Offering to certain
dealers selected by the U.S. Representatives at a price that represents a
concession not in excess of U.S. $. per Offer Share under the Offer Price,
and that any Underwriter may allow, and such dealers may reallow, a
concession, not in excess of U.S. $. per Offer Share, to any Underwriter or
in the case of the U.S. Underwriters to certain other dealers.
6. EXPENSES
(1) SC shall bear and pay all costs and expenses incurred in connection with
the Offering, including, but not limited to: fees and expenses of its
lawyers and lawyers for the Company and of any reporting accountants, fees
and expenses in connection with the registration of the Offer Shares under
the Securities Act and the preparation and filing of the Registration
Statement, the Prospectus and all amendments and supplements thereto, the
printing and distribution of the Prospectus and any preliminary prospectus,
the printing and production of all other documents connected with the issue
and distribution of the Offer Shares (including this Agreement and any
other related agreements), transfer taxes payable in connection with the
transfer of the Offer Shares to the Underwriters, expenses related to the
qualification of the Offer Shares under the state securities or Blue Sky
laws, including filing fees and the fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the
preparation of any Blue Sky or Legal Investment Memoranda, the filing fees
and expenses, if any, incurred with respect to any filing with the National
Association of Securities Dealers, Inc., all expenses arising from the
listing of the Shares on the NASDAQ National Market, listing agents' fees
and the arrangements for signing this Agreement, and the costs and expenses
of the roadshow (including roadshow consultants, venues and travel and
accommodation for the Company's directors and employees).
(2) SC agrees that the expenses of Deutsche Morgan Grenfell shall be reimbursed
by SC to the extent provided in the engagement letter dated March 8, 1996
among Deutsche Morgan Grenfell, Siemens and certain affiliates of Siemens.
7. REPRESENTATIONS AND WARRANTIES
(1) As a condition of the obligation of the Underwriters to underwrite and pay
for the Offer Shares, the Company represents, warrants and undertakes to
the Underwriters as follows:
9
<PAGE>
REGISTRATION STATEMENT AND PROSPECTUS
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to
the best of the Company's knowledge, threatened by the Commission;
(b) that (i) each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder and
(iii) the Prospectus does not contain and, as amended or supplemented,
if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this subclause 7(1)(b) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information furnished to the Company in writing by the Underwriters
through Deutsche Morgan Grenfell expressly for use therein;
(c) that each Preliminary Prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder; and each Preliminary Prospectus as of its date did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; except that the representations and
warranties set forth in this subclause 7(1)(c) do not apply to
statements or omissions in any Preliminary Prospectus based upon
information furnished to the Company in writing by the Underwriters
through Deutsche Morgan Grenfell expressly for use therein.
(d) that there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement;
(e) that there are no legal or governmental proceedings pending or, to the
best of the Company's knowledge, threatened to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the
10
<PAGE>
Prospectus and are not so described, or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
LISTING
(f) that application has been made to have the Offer Shares listed on the
NASDAQ National Market;
FINANCIAL STATEMENTS
(g) that the audited combined financial statements of the Company
appearing in the Prospectus were prepared in accordance with U.S.
generally accepted accounting principles consistently applied and that
they present fairly in all material respects the financial condition
of the Company as at the dates at which they were prepared and the
results of operations of the Company in respect of the periods for
which they were prepared;
MATERIAL ADVERSE CHANGE
(h) that there has been no material adverse change or any development
involving a prospective material adverse change in the condition
(financial or otherwise) or the earnings, business or prospects of the
Company and its subsidiaries, taken as a whole, since June 30, 1996,
other than as described in the Prospectus (including any amendments or
supplements thereto filed prior to the date hereof);
CORPORATE POWER AND AUTHORITY
(i) that the Company has been duly incorporated and is validly existing as
a corporation in good standing under Delaware law with full power and
authority to own, lease and operate its properties and assets and
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which its ownership, leasing or operation of its
property or assets or the conduct of its business requires such
qualification, except to the extent that the failure to so qualify or
be in good standing would not in the aggregate have a material adverse
effect on the condition (financial or otherwise) or the earnings,
business or prospects of the Company and its subsidiaries, taken as a
whole, and has full power and authority to execute and perform its
obligations under this Agreement, the R-S Sale Agreement, the SPC Sale
Agreement and the Tax Allocation Agreement; each Significant
Subsidiary is a corporation duly incorporated and validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, and each has full power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectus and is duly qualified to transact business
11
<PAGE>
and is in good standing in each jurisdiction in which its ownership,
leasing or operation of its property or assets or the conduct of its
business requires such qualification, except to the extent that the
failure to so qualify or be in good standing would not in the
aggregate have a material adverse effect on the condition (financial
or otherwise) or the earnings, business or prospects of the Company
and its subsidiaries, taken as a whole; all of the issued and
outstanding shares of each of the Company's subsidiaries have been
duly authorized and are fully paid and are, or, upon the consummation
of the share purchases contemplated by the R-S Sale Agreement and the
SPC Sale Agreement prior to the First Closing, will be, owned by the
Company, directly or indirectly, free and clear of any liens,
encumbrances, equities or claims;
(j) that no receiver or liquidator (or similar person) has been appointed
in respect of the Company or any Significant Subsidiary or in respect
of any part of the assets or undertaking of the Company or any
Significant Subsidiary; no resolution, order of any court, regulatory
body, governmental body or otherwise, or, to the best of the Company's
knowledge, petition or application for an order, has been passed, made
or presented for the winding up of the Company or any Significant
Subsidiary or for the protection of the Company or any such
Significant Subsidiary from its creditors; and neither the Company nor
any Significant Subsidiary has stopped or suspended payments of its
debts, become unable to pay its debts or otherwise become insolvent;
(k) that the execution of this Agreement, the R-S Sale Agreement, the SPC
Sale Agreement and the Tax Allocation Agreement by the Company has
been duly authorized by the Company and this Agreement, the R-S Sale
Agreement, the SPC Sale Agreement and the Tax Allocation Agreement
constitute legal, valid and binding obligations of the Company
enforceable in accordance with their terms subject to the laws of
bankruptcy and other laws affecting the rights of creditors generally
and to general equity principles;
(l) that all corporate approvals and authorizations required by the
Company for the execution of this Agreement, the R-S Sale Agreement,
the SPC Sale Agreement and the Tax Allocation Agreement, the
performance of their respective terms and the issue and distribution
of the Offer Shares have been obtained and are unconditional and in
full force and effect;
(m) that the execution of this Agreement, the R-S Sale Agreement, the SPC
Sale Agreement and the Tax Allocation Agreement, the performance of
their respective terms and the issue and distribution of the Offer
Shares (i) will not violate any Delaware law or regulation or, to the
best of the Company's knowledge, any other law or regulation, (ii) are
not contrary to the provisions of the Certificate of Incorporation of
the Company, as amended, and (iii) will not result in any breach of
the terms of, or constitute a default under, any instrument, agreement
or order to which the Company is a party or by which it or its
property is bound, except, in the case of clauses (i) and (iii) above,
such violations of laws or regulations or such breaches or defaults
that would not in the aggregate have a material adverse effect on
12
<PAGE>
the condition (financial or otherwise) or the earnings, business or
prospects of the Company and its subsidiaries taken as a whole;
(n) that all consents, approvals and authorizations of any court,
government department or other regulatory body (other than under the
Blue Sky laws of the various states of the United States), if any,
required by the Company for the execution of this Agreement, the R-S
Sale Agreement, the SPC Sale Agreement and the Tax Allocation
Agreement, the performance of their terms and the issue and
distribution of the Offer Shares have been obtained and are
unconditional and in full force and effect;
(o) that the execution of the Profit and Loss Transfer Termination
Agreement by Rofin-Sinar Laser GmbH has been duly authorized by Rofin-
Sinar Laser GmbH and the Profit and Loss Transfer Termination
Agreement constitutes a legal, valid and binding obligation of Rofin-
Sinar Laser GmbH enforceable in accordance with its terms subject to
the laws of bankruptcy and other laws affecting the rights of
creditors generally;
(p) that all corporate approvals and authorizations required by Rofin-
Sinar Laser GmbH for the execution of the Profit and Loss Transfer
Termination Agreement and the performance of its terms have been
obtained and are unconditional and in full force and effect;
(q) that the execution of the Profit and Loss Transfer Termination
Agreement and the performance of its terms by Rofin-Sinar Laser GmbH
(i) will not violate any German law or regulation or, to the best of
the Company's knowledge, any other law or regulation, (ii) are not
contrary to the provisions of the Satzung of Rofin-Sinar Laser GmbH
and (iii) will not result in any breach of the terms of, or constitute
a default under, any material instrument, agreement or order to which
the Rofin-Sinar Laser GmbH is a party or by which it or its property
is bound;
(r) that the execution of the R-S Sale Agreement and the performance of
its terms are not contrary to the provisions of the Satzung of Rofin-
Sinar Laser GmbH;
(s) that all consents, approvals and authorizations of any court,
government department or other regulatory body required by Rofin-Sinar
Laser GmbH for the execution of the R-S Sale Agreement and the
performance of its terms have been obtained and are unconditional and
in full force and effect;
(t) that the Company is not an "investment company" and, after giving
effect to the consummation of the share purchases under the R-S Sale
Agreement and the SPC Sale Agreement and to the offering of the Offer
Shares and the application of the proceeds therefrom, will not be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended;
THE OFFER SHARES
13
<PAGE>
(u) that the authorized capital stock of the Company conforms to the
description thereof contained in the Prospectus under the heading
"Description of Capital Stock";
(v) that the Share outstanding prior to the issuance of the Offer Shares
has been duly authorized and is validly issued, fully paid and non-
assessable;
(w) that the Offer Shares will, on issue and receipt of payment therefor
in accordance with the terms of this Agreement, be validly issued,
fully paid and non-assessable and free from all liens, charges,
encumbrances and other third party rights arising under the laws of
the State of Delaware, and that the existing shareholder of the
Company has validly waived its pre-emption rights (if any) with
respect to the Offer Shares and no other person has any pre-emptive or
other rights with respect to the Offer Shares;
CAPITALIZATION
(x) that the consolidated capitalization of the Company and its
subsidiaries, after giving effect to the conversion into equity of
$11,000,000 aggregate principal amount of inter-company debt owed to
Siemens as provided for in Exhibit 6(d) to the SPC Sale Agreement is
as set forth in the Prospectus under the heading "Capitalization";
LITIGATION
(y) that, except as described in the Prospectus, neither the Company nor
any Significant Subsidiary is:
(i) in breach of the terms of, or in default under, any instrument,
agreement or order to which it is a party or by which it or its
property is bound, except for such breaches or defaults that
would not in the aggregate have a material adverse effect on the
condition (financial or otherwise) or the earnings, business or
prospects of the Company and its subsidiaries, taken as a whole;
(ii) involved in any litigation, arbitration or governmental
proceedings relating to claims or amounts which individually or
collectively may have, or have had in the previous 12 months, a
material adverse effect on the condition (financial or otherwise)
or the earnings, business or prospects of the Company and its
subsidiaries, taken as a whole, or are otherwise material in the
context of the Offering, nor is any such litigation, arbitration
or governmental proceeding pending or, to the best of the
Company's knowledge, threatened; or
(iii) involved in or the subject of any current or pending
investigation or proceedings (whether administrative, regulatory
or otherwise) whether in the United States or elsewhere, that, if
resolved adversely to the Company, would in the aggregate have a
material adverse effect on the condition (financial or otherwise)
or the earnings, business or prospects of the Company and its
subsidiaries, taken as a whole;
LICENCES AND CONSENTS
14
<PAGE>
(z) the Company and each Significant Subsidiary has obtained all such
consents, authorizations, certificates, licences and permits from all
supranational, national, municipal and other public authorities, as
are required by such public authorities to enable the Company or (as
the case may be) the relevant Significant Subsidiary to carry on the
business and operations now operated by it and which are material to
the business of the Group; and the Company has not received any notice
of proceedings relating to the revocation or modification (except as
described in the Prospectus) of any such consent, authorization,
certificate, licence or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have
a material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Group; the
Company and its subsidiaries own or possess all of the other licenses,
know-how, trademarks, copyrights, trade secrets, and trade names
necessary to operate the business now operated by them, except where
the failure to own or possess such licenses, know-how, trademarks,
copyrights, trade secrets or trade names would not in the aggregate
have a material adverse effect on the condition (financial or
otherwise) or the earnings, business or prospects of the Company and
its subsidiaries, taken as a whole; and except as disclosed in the
Prospectus neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing where such
infringement or conflict would have a material adverse effect on the
condition (financial or otherwise) or the earnings, business affairs
or business prospects of the Group;
MARKET MANIPULATION
(aa) that neither the Company nor any of its affiliates nor any person
acting on behalf of any of them has taken or will take, directly or
indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the
price of the Offer Shares;
FLORIDA DISCLOSURE
(bb) that the Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of
Cuba or with any person or affiliate located in Cuba.
(2) As a condition of the obligation of the Underwriters to underwrite and pay
for the Offer Shares, SC represents, warrants and undertakes to the
Underwriters as follows:
(a) that the execution of the R-S Sale Agreement and the Profit and Loss
Transfer Termination Agreement by Siemens has been duly authorized by
Siemens, and the R-S Sale Agreement and the Profit and Loss Transfer
Termination Agreement constitute legal, valid and binding obligations
of Siemens enforceable in accordance with their terms subject to the
laws of bankruptcy and other laws affecting the rights of creditors
generally;
15
<PAGE>
(b) that all corporate approvals and authorizations required by Siemens
for the execution of the R-S Sale Agreement and the Profit and Loss
Transfer Termination Agreement and the performance of their respective
terms have been obtained and are unconditional and in full force and
effect;
(c) that the execution of the R-S Sale Agreement and the Profit and Loss
Transfer Termination Agreement and the performance of their respective
terms by Siemens (i) will not violate any German law or regulation or,
to the best of SC's knowledge, any other law or regulation, (ii) are
not contrary to the provisions of Siemens' Satzung and (iii) will not
result in any breach of the terms of, or constitute a default under,
any instrument, agreement or order to which Siemens is a party or by
which it or its property is bound, except, in the case of clauses (i)
and (iii) above, such violations of laws or regulations or such
breaches or defaults that would not in the aggregate have a material
adverse effect on the condition (financial or otherwise) or the
earnings, business or prospects of Siemens and its subsidiaries, taken
as a whole;
(d) that all consents, approvals and authorizations of any court,
government department or other regulatory body required by Siemens for
the execution of the R-S Sale Agreement and the Profit and Loss
Transfer Termination Agreement and for the performance of their terms
have been obtained and are unconditional and in full force and effect;
(e) that the execution of the SPC Sale Agreement and the Tax Allocation
Agreement by SPC has been duly authorized by SPC, and the SPC Sale
Agreement and the Tax Allocation Agreement constitute legal, valid and
binding obligations of SPC enforceable in accordance with their terms
subject to the laws of bankruptcy and other laws affecting the rights
of creditors generally and to general equity principles;
(f) that all corporate approvals and authorizations required by SPC for
the execution of the SPC Sale Agreement and the Tax Allocation
Agreement and the performance of their respective terms have been
obtained and are unconditional and in full force and effect;
(g) that the execution of the SPC Sale Agreement and the Tax Allocation
Agreement and the performance of their respective terms by SPC (i)
will not violate any New York law or regulation or, to the best of
SC's knowledge, any other law or regulation, (ii) are not contrary to
the provisions of SPC's Articles of Incorporation and (iii) will not
result in any breach of the terms of, or constitute a default under,
any instrument, agreement or order to which SPC is a party or by which
it or its property is bound, except, in the case of clauses (i) and
(iii) above, such violations of laws or regulations or such breaches
or defaults that would not in the aggregate have a material adverse
effect on the condition (financial or otherwise) or the earnings,
business or prospects of SPC and its subsidiaries, taken as a whole;
16
<PAGE>
(h) that all consents, approvals and authorizations of any court,
government department or other regulatory body required by SPC for the
execution of the SPC Sale Agreement and the Tax Allocation Agreement
and for the performance of their terms have been obtained and are
unconditional and in full force and effect;
(i) that the profit and loss transfer agreement dated ., 1996 between
Siemens and Rofin-Sinar GmbH has been terminated, effective September
30, 1996; and
(j) that (i) each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder and
(iii) the Prospectus does not contain and, as amended or supplemented,
if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this subclause 7(2)(j) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information furnished to the Company in writing by the Underwriters
through Deutsche Morgan Grenfell expressly for use therein.
(3) The above representations and warranties shall be deemed to be repeated at
each Closing and such representations and warranties and the indemnity in
clause 8 below shall continue in full force and effect notwithstanding:
(a) any Underwriter's actual or constructive knowledge with respect to any
of the matters referred to in the representations and warranties of
the Company or of Siemens or any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company or of Siemens, their respective officers or
directors or any person controlling the Company;
(b) the completion of the arrangements set out in this Agreement for the
issue and sale of the Offer Shares; or
(c) the termination of this Agreement.
8. INDEMNITY
(1) The Company and SC hereby undertake to the Underwriters, jointly and
severally, to indemnify and hold harmless each Indemnified Person from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by any
Indemnified Person in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
furnished to the Company in writing by the Underwriters through Deutsche
Morgan Grenfell expressly for use therein; provided, however, that SC's
--------
aggregate liability under this Section 8(1) shall be limited to an amount
equal to the aggregate purchase price received by SC and Siemens under the
R-S Sale Agreement and the SPC Sale Agreement. The foregoing indemnity
agreement with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims damages or liabilities purchased Shares (or any person who controls
such Underwriter within the meaning of Section 15 of the 1933 Act) if a
copy of the Prospectus (as then amended or supplemented if
17
<PAGE>
the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
such is required by law, at or prior to the written confirmation of the
sale of such Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(2) Each Underwriter hereby undertakes, severally and not jointly, to indemnify
and hold harmless the Company, SC, the directors of each of the Company and
SC, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, but only with reference to information furnished to the
Company in writing by the Underwriters through Deutsche Morgan Grenfell
expressly for use in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendments or supplements thereto.
(3) In case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought
pursuant to clause (1) or (2) of this clause 8, such person (for purposes
of this subclause (3), the "indemnified party") shall promptly notify the
person against whom such indemnity may be sought (for purposes of this
subclause (3), the "indemnifying party") in writing and the indemnifying
party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party and any others which the indemnifying party may designate
in such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for (a) the fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Indemnified Persons and (b) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Company, SC, their
respective directors, the officers of
18
<PAGE>
the Company who sign the Registration Statement and each person, if any,
who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any
such separate firm for Indemnified Persons, such firm shall be designated
in writing by Deutsche Morgan Grenfell. In the case of any such separate
firm for the Company or SC, and such of their respective directors,
officers and control persons, such firm shall be designated in writing by
the Company or SC, as the case may be. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(4) To the extent the indemnification provided for in subclause (1) or (2) of
this clause 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (a) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties, on the
one hand, and the indemnified party or parties, on the other hand, from the
offering of the Offer Shares or (b) if the allocation provided above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in subclause (a) above
but also the relative fault of the indemnifying party or parties on the one
hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and SC and
its affiliates (other than the Company) on the one hand and the
Underwriters on the other hand in connection with the offering of the Offer
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Offer Shares (before deducting expenses)
received by the Company and SC and its affiliates (other than the Company)
and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate Offer Price of the Offer Shares. The
relative fault of the Company and SC and its affiliates (other than the
Company) on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or SC and its affiliates (other than the Company) or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters respective obligations to contribute pursuant
to this clause 8 are
19
<PAGE>
several in proportion to the respective number of Offer Shares they have
purchased hereunder, and not joint.
(5) The Company, SC and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this clause 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in subclause (4) of
this clause 8. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
clause 8, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Offer Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of clause 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
clause 8 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
(6) The indemnity and contribution provisions contained in this clause 8 shall
remain operative and in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or the
Company, or their respective officers or directors or any person
controlling them and (c) acceptance of and payment for any of the Offer
Shares.
9. LISTING
The Company has made or caused to be made an application for the listing of
the Offer Shares on the NASDAQ National Market. The Company shall
endeavour to obtain the listing as promptly as practicable and the Company
shall furnish any and all documents, instruments, information and
undertakings that may be necessary or advisable in order to obtain or
maintain the listing.
20
<PAGE>
10. CONDITIONS PRECEDENT
(1) The obligations of the Company to issue and sell the Offer Shares to the
Underwriters and the several obligations of the Underwriters to purchase
and pay for the Shares are conditional upon the Registration Statement
having become effective not later than . (New York Time) on ., 1996.
The several obligations of the Underwriters to purchase the Offer Shares
are conditional upon the following further considerations:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing date there shall not have occurred any change, or any
development involving a prospective change, in the condition
(financial or otherwise) or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in the
judgment of Deutsche Morgan Grenfell, is material and adverse and that
makes it, in the judgment of Deutsche Morgan Grenfell, impracticable
to market the Offer Shares on the terms and in the manner contemplated
in the Prospectus.
(b) the following documents shall be delivered to the Underwriters:
(A) a legal opinion relating to matters of United States law from Shearman
& Sterling, counsel for the Company, dated the date of the Closing, to
the effect that:
(i) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Delaware, has the
corporate power and authority to own, lease and operate its
properties and assets and conduct its business as described in
the Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership, leasing or operation of its property
or assets or the conduct of its business, requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole;
(ii) Rofin-Sinar Inc. has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and assets and
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership, leasing or operation of its property or assets or the
conduct of its business requires such qualification, except to
the extent that the failure to be so qualified or be
21
<PAGE>
in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(iii) this Agreement, the R-S Sale Agreement and the SPC Sale
Agreement and the Tax Allocation Agreement have been duly
authorized, executed and delivered by the Company;
(iv) the authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus
under the heading "Capitalization";
(v) the Share outstanding prior to the issuance of the Offer Shares
has been duly authorized and is validly issued, fully paid and
non-assessable;
(vi) the Offer Shares have been duly authorized and, when issued and
delivered against payment therefor in accordance with the terms
of this Agreement, will be validly issued, fully paid and non-
assessable, and the issuance of such Shares will not be subject
to any preemptive or similar rights;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement, the R-S Sale Agreement, the SPC Sale Agreement and the
Tax Allocation Agreement will not contravene (i) any provision of
applicable law or the certificate of incorporation or by-laws of
the Company or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or (ii) to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any subsidiary; (i) and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, the R-S Sale
Agreement, the SPC Sale Agreement and the Tax Allocation
Agreement except such as may be required by the 1933 Act or the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares;
(viii) the statements (A) in the Prospectus under the captions
"Certain United States Federal Tax Considerations for Non-U.S.
Holders of Common Stock" and "Description of Capital Stock" and
(B) in the Registration Statement in Items 14 and 15, in each
case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the
matters referred to therein;
(ix) the Company is not an "investment company" and, after giving
effect to the offering of the Offer Shares and application of the
proceeds therefrom, will
22
<PAGE>
not be an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended; and
(x) such counsel is of the opinion that the Registration Statement
and Prospectus (except for financial statements and schedules
included therein as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder.
(B) a letter from Shearman & Sterling, counsel for the Company, to the
effect that they have not verified, and are not passing upon and do
not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus. They have, however, generally reviewed and discussed
such statements with certain officers of the Company, their counsel
and their auditors, and with representatives of the Underwriters. In
the course of this review and discussion, no facts have come to their
attention that lead them to believe (i) that the Registration
Statement (except for the financial statements, including the notes
and schedules thereto, and other financial and statistical data
included therein or omitted therefrom, as to which they have not been
required to comment), at the time it became effective, contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) that the Prospectus (except for the
financial statements, including the notes and schedules thereto and
other financial and statistical included therein or omitted therefrom,
as to which they have not been required to comment), at the time it
was issued, or on the date of the Closing, contained or contains any
untrue statement of a material fact or omitted or omits to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(C) a legal opinion relating to matters of German law from Shearman &
Sterling, counsel for the Company, dated the date of the Closing, to
the effect that:
(i) Rofin-Sinar Laser GmbH has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
Federal Republic of Germany, has the corporate power and
authority to own, lease and operate its properties and assets and
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership, leasing or operation of its property or assets or the
conduct of its business requires such qualification, except to
the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(ii) the execution of the R-S Sale Agreement and the performance of
its terms are not contrary to the provisions of the Satzung of
Rofin-Sinar Laser GmbH; and
23
<PAGE>
(iii) the execution and delivery by Rofin-Sinar Laser GmbH of, and
the performance by Rofin-Sinar Laser GmbH of its obligations
under, the Profit and Loss Transfer Termination Agreement will
not contravene (i) any provision of applicable law or the Satzung
of Rofin-Sinar Laser GmbH or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon Rofin-
Sinar Laser GmbH or any of its subsidiaries that is material to
Rofin-Sinar Laser GmbH and its subsidiaries, taken as a whole, or
(ii) to the best of such counsel's knowledge, any judgment, order
or decree of any governmental body, agency or court having
jurisdiction over the Rofin-Sinar Laser GmbH or any subsidiary,
and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required
for the performance by Rofin-Sinar Laser GmbH of its obligations
under the Profit and Loss Transfer Termination Agreement.
(D) a legal opinion from Davis Polk & Wardwell, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to
in subparagraphs (iii) and (v) (but only as to this Agreement), (x)
(but only as to the statements in the Prospectus under "Description of
Capital Stock" and "Underwriting") and in clause B.
(E) a legal opinion from ., counsel for Siemens Corporation, dated the
date of the Closing, to the effect that:
(i) this Agreement has been duly authorized, executed and delivered
by SC;
(ii) the SPC Sale Agreement and the Tax Allocation Agreement have been
duly authorized, executed and delivered by SPC and (assuming due
execution and delivery by the other parties thereto) constitute
valid and legally binding agreements of SPC, enforceable in
accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and similar laws of
general applicability relating to or affecting creditors' rights
and to general principles of equity;
(iii) the compliance by SPC with all of the provisions of the SPC
Sale Agreement and the Tax Allocation Agreement and the
consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which SPC
or any of its subsidiaries is a party or by which SPC or any of
its subsidiaries is bound or to which any of the property or
assets of SPC or any of its subsidiaries is subject, except for
any such breach or violation which, individually or in the
aggregate, would not have a material adverse effect on SPC and
its subsidiaries, taken as a whole, nor will such action result
in any violation of the provisions of the certificate of
incorporation or by-laws of SPC or any statute or any order, rule
or regulation known to such counsel of any governmental authority
or agency having jurisdiction over SPC or any of its
24
<PAGE>
subsidiaries or any of their properties;
(iv) no material consents, approvals, authorization or orders of or
qualifications with any governmental body or agency is required
in the United States for the consummation by SPC of the
transactions contemplated by the SPC Sale Agreement and the Tax
Allocation Agreement, except [name of any such consent, approval,
authorization or order] which [has][have] been duly obtained and
are in full force and effect; and
(v) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of
the Company or any of its subsidiaries is subject, or of any
statutes, regulations, contracts or other documents, that are
required to be described in the Registration Statement or the
Prospectus and are not so described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required.
(F) a legal opinion from ., counsel for Siemens, dated the date of
Closing, to the effect that:
(i) the R-S Sale Agreement and the Profit and Loss Transfer
Termination Agreement have been duly authorized, executed and
delivered by Siemens, and (assuming due execution and delivery by
the other parties thereto) constitute valid and legally binding
agreements of Siemens, enforceable in accordance with their
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating
to or affecting creditors' rights;
(ii) the compliance by Siemens with all of the provisions of the R-S
Sale Agreement and the Profit and Loss Transfer Termination
Agreement and the consummation of the transactions therein
contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such
counsel to which Siemens or any of its subsidiaries is a party or
by which Siemens or any of its subsidiaries is bound or to which
any of the property or assets of Siemens or any of its
subsidiaries is subject, except for any such breach or violation
which, individually or in the aggregate, would not have a
material adverse effect on Siemens and its subsidiaries, taken as
a whole, nor will such action result in any violation of the
provisions of the Satzung of Siemens or any statute or any order,
rule or regulation known to such counsel of any governmental
authority or agency having jurisdiction over Siemens or any of
its subsidiaries or any of their properties; and
(iii) no material consents, approvals, authorization or orders of or
qualifications
25
<PAGE>
with, any governmental body or agency is required in Germany for
the consummation by Siemens of the transactions contemplated by
the SPC Sale Agreement and the Tax Allocation Agreement, except
[name of any such consent, approval, authorization or order]
which [has][have] been duly obtained and are in full force and
effect.
(c) The opinions of counsel to the Company and to Siemens described herein
shall be rendered to the Underwriters at the request of the Company or
Siemens, as the case may be, and shall so state therein.
(d) The Company and SC each shall have furnished or caused to be furnished
to the Underwriters at the Closing certificates of officers of the
Company and of SC, respectively, satisfactory to the Underwriters as
to the accuracy of the representations and warranties of the Company
and of SC, respectively, herein at and as of such Closing, as to the
performance by the Company and of SC, respectively, of all their
respective obligations hereunder to be performed at or prior to such
Closing, as to such other matters as the Underwriters may reasonably
request and, with respect to the certificate of officers of the
Company, to the effect set forth in clause (a) above.
(e) Siemens shall have furnished to the Underwriters at the Closing a
letter satisfactory to the Underwriters, substantially in the form of
Exhibit A hereto.
(f) Siemens shall have furnished to the Underwriters at the Closing a
certificate substantially in the form of Exhibit B hereto.
(g) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act
and in accordance with clause 4(b) hereof; the Registration Statement
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission
shall have been complied with to the reasonable satisfaction of the
Underwriters.
(h) The delivery to the Underwriters, on each of the date hereof and the
Closing date, of a letter dated the date hereof or the Closing date,
as the case may be, in form and substance satisfactory to the
Underwriters and substantially in the form of Exhibit C hereto, from
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus.
(i) The NASDAQ National Market shall have admitted the Shares for
quotation on or before the First Closing.
(j) Pursuant to the terms of the R-S Sale Agreement, the Company shall
simultaneously herewith purchase all of the outstanding capital stock
of Rofin-Sinar Laser GmbH
26
<PAGE>
from Siemens.
(k) Pursuant to the terms of the SPC Sale Agreement, the Company shall
simultaneously herewith purchase all of the outstanding capital stock
of Rofin Sinar Inc. from SPC.
(l) The Tax Allocation Agreement shall have been executed by the Company,
Rofin Sinar Inc. and SPC.
(m) The Profit and Loss Transfer Termination Agreement shall have been
executed by Siemens and Rofin-Sinar Laser GmbH.
(n) $11,000,000 of intercompany indebtedness owed by Rofin-Sinar Inc. to
SC shall have been converted to equity.
(2) In the event that any of the foregoing conditions is not satisfied on or
before the relevant Closing, this Agreement shall (subject as mentioned
below) terminate and the parties to this Agreement shall (except for the
liability of SC in relation to expenses as provided in clause 6, the
indemnity provided in clause 8 and any liability arising before or in
relation to such termination) be under no further liability or obligation
arising out of this Agreement, provided that Deutsche Morgan Grenfell on
behalf of the Underwriters may in its discretion and by notice to the
Company waive, or extend the time for, satisfaction of any of the above
conditions or of any part of them.
11. TERMINATION
This Agreement shall be subject to termination by notice given by the
Underwriters to the Company and SC, if (a) after the execution and delivery
of this Agreement and prior to the date of the Closing (i) trading
generally shall have been suspended or materially limited on or by, as the
case may be, any of the New York Stock Exchange, the American Stock
Exchange or the National Association of Securities Dealers, Inc., (ii) a
general moratorium on commercial banking activities in New York shall have
been declared by either Federal or New York State authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial, political, economic or market conditions or any
calamity or crisis that, in the judgment of Deutsche Morgan Grenfell, on
behalf of the Underwriters, is material and adverse [to the financial
markets of the United States] and (b) in the case of any of the events
specified in clauses (a)(i) through (iii), such event, singly or together
with any other such event, makes it, in the judgment of Deutsche Morgan
Grenfell, on behalf of the Underwriters, impracticable to market the Offer
Shares on the terms and in the manner contemplated in the Prospectus.
12. NOTICES
Any notice or notification in any form to be given under this Agreement may
be delivered in person or sent by facsimile or telephone (subject in the
case of a communication by telephone to confirmation by facsimile)
addressed to:
27
<PAGE>
IN THE CASE OF THE COMPANY:
Rofin Sinar Technologies, Inc.
45701 Mast Street
Plymouth, MI 48170
Facsimile: .
Attention: .
copy to:
Rofin Sinar Laser GmbH
Berzeliusstrasse 85
D-22113 Hamburg, Germany
Facsimile: .
Attention: .
IN THE CASE OF SC:
Siemens Corporation
1301 Avenue of the Americas
New York, New York 10019
Facsimile: (212) 258-4490
Attention: General Counsel
IN THE CASE OF THE UNDERWRITERS:
Deutsche Morgan Grenfell/C. J. Lawrence, Inc.
31 West 52nd Street
New York, NY 10019-6160
Attention: Equity Capital Markets Group ([name])
Any such notice shall take effect, in the case of delivery, at the time of
delivery and, in the case of facsimile, at the time of receipt.
13. MISCELLANEOUS
(1) Time shall be of the essence of this Agreement.
(2) This Agreement may be executed in any number of counterparts, all of which,
taken together, shall constitute one and the same agreement and any party
may enter into this Agreement by executing a counterpart.
28
<PAGE>
14. GOVERNING LAW
This Agreement is governed by, and shall be construed in accordance with,
New York law.
29
<PAGE>
IN WITNESS of which this Agreement has been executed on the date written above.
Yours faithfully,
Rofin Sinar Technologies, Inc.
By:
By:
Siemens Corporation
By:
By:
Deutsche Morgan Grenfell/C. J. Lawrence Inc.
By:
For: Underwriters listed on Schedule 1
By: Deutsche Morgan Grenfell/C.J. Lawrence Inc.
30
<PAGE>
SCHEDULE 1
THE UNDERWRITERS
UNDERWRITER UNDERWRITING COMMITMENT
Deutsche Morgan Grenfell/ [number of Firm Shares]
C.J. Lawrence Inc.
Alex. Brown & Sons Incorporated
Lehman Brothers Inc.
_______________________
Total [number of Firm Shares]
31
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
ROFIN-SINAR TECHNOLOGIES INC.
ROFIN-SINAR TECHNOLOGIES INC., a Delaware corporation, HEREBY
CERTIFIES AS FOLLOWS:
1. The name of the Corporation is Rofin-Sinar Technologies Inc. The
date of filing of its original Certificate of Incorporation with the Secretary
of State of the State of Delaware was July 19, 1996.
2. This Certificate of Amendment sets forth an amendment to the
Certificate of Incorporation of the Corporation which was duly adopted by the
written consent of the sole stockholder of the Corporation entitled to vote
thereon in accordance with the provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
3. Article IV, Section 4.1 of the Certificate of Incorporation is
hereby amended in full to be and read as follows:
"ARTICLE VI
SECTION 4.1. Authorized Capital. Shares. The total number of shares
------------------ ------
of all classes of capital stock that the Corporation shall have the
authority to issue is 35,000,000 shares, of which (i) 30,000,000
shares shall be common stock, par value $0.01 per share ("Common
Stock"), and (ii) 5,000,000 shares shall be preferred stock, par value
$0.01 per share ("Preferred Stock")."
<PAGE>
2
IN WITNESS WHEREOF, ROFIN-SINAR TECHNOLOGIES INC. has caused this
certificate to be signed by ________________, its __________________, and
attested by Christopher C. Paci , its Secretary, this ____ day of August , 1996.
ROFIN-SINAR TECHNOLOGIES INC.
By: __________________________________
Name:
Title:
ATTEST:
______________________________
Christopher C. Paci
Secretary
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ROFIN-SINAR TECHNOLOGIES INC.
_____________________________________
ARTICLE I
Name
----
SECTION 1.1. Name. The name of the corporation is Rofin-Sinar
----
Technologies Inc. (the "Corporation").
ARTICLE II
Registered Office and Registered Agent
--------------------------------------
SECTION 2.1. Office and Agent. The address of the registered office
----------------
of the Corporation in the State of Delaware is Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801.
The name of the registered agent of the Corporation at such address is The
Corporation Trust Company.
ARTICLE III
Corporate Purpose
-----------------
SECTION 3.1. Purpose. The purpose of the Corporation is to engage in
-------
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware (the "DGCL").
ARTICLE IV
Capitalization
--------------
SECTION 4.1. Authorized Capital. Shares. The total number of shares
------------------ ------
of all classes of capital stock that the Corporation shall have authority to
issue is 1,500 shares, of which (i) 1,000 shall be common stock, par value $.01
per share ("Common Stock"), and (ii) 500 shares shall be preferred stock, par
value $.01 per share ("Preferred Stock").
<PAGE>
2
SECTION 4.2. Common Stock. (a) Voting Rights. Each holder of
------------ -------------
Common Stock shall have one vote on each matter submitted to a vote at a meeting
of stockholders for each share of Common Stock held of record by such holder as
of the record date for such meeting.
(b) Dividends and Distributions. Subject to any rights of holders of
---------------------------
any class or series of Preferred Stock, when, as and if dividends or
distributions are declared on outstanding shares of Common Stock, whether
payable in cash, in property or in securities of the Corporation, each holder of
outstanding shares of Common Stock shall be entitled to share ratably in such
dividends and distributions in proportion to the number of shares of Common
Stock held by such holder.
(c) Liquidation. Subject to any rights of holders of any class or
-----------
series of Preferred Stock, upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, each holder of outstanding
shares of Common Stock shall be entitled to share ratably in the assets of the
Corporation to be distributed among the holders of shares of Common Stock in
proportion to the number of shares of Common Stock held by such holder.
(d) No Preemptive Rights. The holders of shares of Common Stock
--------------------
shall have no preemptive or preferential rights of subscription to any shares of
any class of capital stock of the Corporation or any securities convertible into
or exchangeable for shares of any class of capital stock of the Corporation.
SECTION 4.3. Preferred Stock. Shares of Preferred Stock of the
---------------
Corporation may be issued from time to time in one or more classes or series,
each of which class or series shall have such distinctive designation or title
as shall be fixed by the affirmative vote of a majority of the whole Board of
Directors of the Corporation (the "Board of Directors") prior to the issuance of
any shares thereof. Each such class or series of Preferred Stock shall have
such voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions, including the dividend rate,
redemption price and liquidation preference, and may be convertible into, or
exchangeable for, at the option of either the holder or the Corporation or upon
the happening of a specified event, shares of any other class or classes or any
other series of the same or any other class or classes of capital stock, or any
debt securities, of the Corporation at such price or prices or at such rate or
rates of exchange and with such adjustments as shall be stated and expressed in
this Certificate of Incorporation or in any amendment hereto or in such
resolution or resolutions providing for the issuance of such class or series of
Preferred Stock as may be adopted from time to time by the affirmative vote of a
majority of the whole Board of Directors prior to the issuance of any shares
thereof pursuant to the authority hereby expressly vested in it, all in
accordance with the DGCL. The authority of the Board of Directors with respect
to each
<PAGE>
3
series shall also include, but not be limited to, the determination of
restrictions, if any, on the issue or reissue of any additional shares of
Preferred Stock.
ARTICLE V
Compromise or Arrangement
-------------------------
SECTION 5.1. Compromise or Arrangement. Whenever a compromise or
-------------------------
arrangement is proposed between the Corporation and its creditors or any class
of them and/or between the Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of the Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers appointed
for the Corporation under the provisions of Section 291 of the DGCL or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of the DGCL, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the Corporation, as the case may be, to be summoned in
such a manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or the members of the class of creditors, and/or on all the
stockholders or the members of the class of stockholders, of the Corporation, as
the case may be, and also on the Corporation.
ARTICLE VI
Indemnification
---------------
SECTION 6.1. Indemnification. (a) General. The Corporation (i)
--------------- -------
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he is or was a
director or an officer of the Corporation, or is or was serving at the request
of the Corporation as a director or an officer of another corporation,
partnership, joint venture, trust or other enterprise, to the full extent
authorized or permitted by law, as now or hereafter in effect, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he
<PAGE>
4
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (ii) may indemnify, if
the Board of Directors determines such indemnification is appropriate, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was an employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as an employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, to the full extent authorized or permitted by law, as
now or hereafter in effect, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person seeking indemnification did not act
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) Derivative Actions. The Corporation (i) shall indemnify any
------------------
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director or an officer of the Corporation, or is or was serving at the
request of the Corporation as a director or an officer of another corporation,
partnership, joint venture, trust or other enterprise, to the full extent
authorized or permitted by law, as now or hereafter in effect, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and (ii) may indemnify, if the Board of
Directors determines such indemnification is appropriate, any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was an employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as an employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, to the full extent authorized or permitted by law, as
now or hereafter in effect, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; provided, however, that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be
<PAGE>
5
liable to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
(c) Successful Defense. To the extent that (i) a director or an
------------------
officer of the Corporation or (ii) any other employee or agent of the
Corporation who the Board of Directors has authorized the Corporation to
indemnify, has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Proceedings Initiated by any Person. Notwithstanding anything to
-----------------------------------
the contrary contained in subsections (a) or (b) above, except for proceedings
to enforce rights to indemnification, the Corporation shall not be obligated to
indemnify any person in connection with a proceeding (or part thereof) initiated
by such person unless such proceeding (or part thereof) was authorized in
advance, or unanimously consented toby the Board of Directors.
(e) Procedure. Any indemnification under subsections (a) and (b)
---------
above (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (a) and (b)
above. Such determination shall be made (i) by a majority vote of the directors
who are not parties to such action, suit or proceeding even though less than a
quorum, or (ii) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (iii) by the stockholders.
(f) Advancement of Expenses. Expenses (including attorneys' fees)
-----------------------
incurred by a director or an officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking in form and substance satisfactory to
the Corporation by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Corporation pursuant to this Article VI or as otherwise authorized by
law. Such expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
(g) Rights Not Exclusive. The indemnification and advancement of
--------------------
expenses provided by, or granted pursuant to, the other subsections of this
Article VI shall not be deemed exclusive of any other rights to which those
seeking indemnification or
<PAGE>
6
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(h) Insurance. The Corporation may purchase and maintain insurance
---------
on wazzu behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of the DGCL.
(i) Definition of "Corporation". For purposes of this Article VI,
---------------------------
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article VI with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(j) Certain Other Definitions. For purposes of this Article VI,
-------------------------
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves service by,
such director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation", as referred to in
this Article VI.
(k) Continuation of Rights. The indemnification and advancement of
----------------------
expenses provided by, or granted pursuant to, this Article VI shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
<PAGE>
7
(l) Repeal or Modification. Any repeal or modification of this
----------------------
Article VI by the stockholders of the Corporation shall not adversely affect any
rights to indemnification and to advancement of expenses that any person may
have at the time of such repeal or modification with respect to any acts or
omissions occurring prior to such repeal or modification.
ARTICLE VII
Liability of a Director
-----------------------
SECTION 7.1. Director Liability. (a) A director of the Corporation
------------------
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived any improper personal benefit.
(b) If the DGCL is amended hereafter to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
authorized by the DGCL, as so amended, without further action by either the
Board of Directors or the stockholders of the Corporation.
(c) Any repeal or modification of this Article VII shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to or at
the time of such repeal or modification.
ARTICLE VIII
Management of the Affairs of the Corporation
--------------------------------------------
SECTION 8.1. Management of the Affairs of the Corporation. (a) The
--------------------------------------------
business and affairs of the Corporation shall be managed by the Board of
Directors, which may exercise all the powers of the Corporation and do all such
lawful acts and things that are not conferred upon or reserved to the
stockholders by law, by this Certificate of Incorporation or by the by-laws of
the Corporation (the "By-Laws").
(b) Election of directors of the Corporation need not be by written
ballot, unless required by the By-Laws.
<PAGE>
8
(c) The following provisions are inserted for the limitation and
regulation of the powers of the Corporation and of its directors and
stockholders:
(1) The By-Laws, or any of them, may be altered, amended or repealed,
or new by-laws may be made, but only to the extent any such alteration,
amendment, repeal or new by-law is not inconsistent with any provision of
this Certificate of Incorporation as it may be amended from time to time,
either by a majority of the whole Board of Directors or by the stockholders
of the Corporation upon the affirmative vote of the holders of at least a
80% of the outstanding capital stock entitled to vote thereon.
(2) The Board of Directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The initial division of the
Board of Directors shall be made by the decision of a majority of the
entire Board of Directors. The term of the initial Class I directors shall
terminate on the date of the 1997 annual meeting of stockholders; the term
of the initial Class II directors shall terminate on the date of the 1998
annual meeting of stockholders; and the term of the initial Class III
directors shall terminate on the date of the 1999 annual meeting of
stockholders. At each annual meeting of stockholders, beginning with the
1997 annual meeting of stockholders, successors to the class of directors
whose term expires at that annual meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, but in no case will a
decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected and
shall qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. The term of a director elected by
stockholders to fill a newly created directorship or other vacancy shall
expire at the same time as the terms of the other directors of the class
for which the new directorship is created or in which the vacancy occurred.
Any vacancy on the Board of Directors that results from an increase in the
number of directors and any other vacancy occurring on the Board of
Directors, howsoever resulting, may be filled only by a majority of the
directors then in office, even if less than a quorum, or by a sole
remaining director. Any director so elected by the Board of Directors to
fill a vacancy shall hold office for a term that shall coincide with the
term of the class to which such director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an
annual or special meeting
<PAGE>
9
of stockholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of this
Certificate of Incorporation or the resolution or resolutions adopted by
the Board of Directors pursuant to Section 4.3 hereof applicable thereto,
and such directors so elected shall not be divided into classes pursuant to
this Section 8.1(c) unless expressly provided by such terms.
(3) Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors of the Corporation,
except as may be otherwise provided in this Certificate of Incorporation
with respect to the right of holders of Preferred Stock of the Corporation
to nominate and elect a specified number of directors in certain
circumstances.
(A) Nomination of persons for election to the Board of Directors
may be made at any annual meeting of stockholders, or at any special
meeting of stockholders called for the purpose of electing directors,
(i) by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (ii) by any stockholder of the
Corporation (x) who is a stockholder of record on the date of the
giving of the notice provided for in this Section 8.1(c)(3) and on the
record date for the determination of stockholders entitled to vote at
such meeting and (y) who complies with the notice procedures set forth
in this Section 8.1(c)(3). In addition to any other applicable
requirements, for a nomination to be made by a stockholder pursuant to
clause (ii) of this Section 8.1(c)(3)(A), such stockholder must have
given timely notice thereof in proper written form to the Secretary of
the Corporation.
(B) To be timely, a stockholder's notice to the Secretary
pursuant to clause (ii) of Section 8.1(c)(3)(A) must be delivered to
or mailed and received at the principal executive offices of the
Corporation (i) in the case of an annual meeting, not less than 60
days nor more than 90 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided,
however, that in the event that the annual meeting is called for a
date that is not within 30 days before or after such anniversary date,
notice by the stockholder in order to be timely must be so received
not later than the close of business on the tenth day following the
day on which such notice of the date of the annual meeting is mailed
or such public disclosure of the date of the annual meeting is made,
whichever first occurs, or (ii) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later
than the close of business on the tenth day following the day on which
notice of the date of the special meeting is
<PAGE>
10
mailed or public disclosure of the date of the special meeting is
made, whichever first occurs.
(C) To be in proper written form, a stockholder's notice to the
Secretary pursuant to clause (ii) of Section 8.1(c)(3)(A) must set
forth (a) as to each person whom the stockholder proposes to nominate
for election as a director, (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of
shares of capital stock of the Corporation which are owned
beneficially or of record by the person and (iv) any other information
relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection
with solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act, and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the
notice, (i) the name and record address of such stockholder, (ii) the
class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such
stockholder, together with evidence reasonably satisfactory to the
Secretary of such beneficial ownership, (iii) a description of all
arrangements or understandings between such stockholder and each
proposed nominee and any other person or persons (including their
names) pursuant to which the nomination(s) are to be made by such
stockholder, (iv) a representation that such stockholder intends to
appear in person or by proxy at the meeting to nominate the persons
named in its notice and (v) any other information relating to such
stockholder that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section
14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of
each proposed nominee to being named as a nominee and to serve as a
director if elected.
(D) No person shall be eligible for election as a director of
the Corporation unless nominated in accordance with the procedures set
forth in this Section 8.1(c)(3). If the chairman of the meeting
determines that a nomination was not made in accordance with the
foregoing procedures, the chairman of the meeting shall declare to the
meeting that the nomination was defective and such defective
nomination shall be disregarded.
<PAGE>
11
(4) Subject to the rights, if any, of the holders of shares of
Preferred Stock then outstanding, any or all of the directors of the
Corporation may be removed from office at any time only for cause by the
affirmative vote of the holders of at least 80% of the outstanding shares
of the Corporation then entitled to vote generally in the election of
directors, considered for purposes of this paragraph as one class.
(5) Any action may be taken by written consent in lieu of a meeting
of shareholders only with the consent of the holders of 100% of the
outstanding shares of the Corporation.
(6) Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by a majority of the members
of the Board of Directors or the Chairman of the Board of the Corporation.
Special meetings of the stockholders of the Corporation may not be called
by any other person or persons.
ARTICLE IX
Amendments
----------
SECTION 9.1. Amendments. Notwithstanding anything contained in this
----------
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the outstanding shares of capital stock of the
Corporation entitled to vote thereon shall be required to amend, repeal, or
adopt any provision inconsistent with, Section 4.3 of Article IV, Section 8.1(c)
of Article VIII or this Article IX of this Certificate of Incorporation.
ARTICLE X
Private Property
----------------
SECTION 10.1. Private Property. The private property of the
----------------
stockholders of the Corporation shall not be subject to the payment of corporate
debts to any extent whatsoever.
<PAGE>
12
ARTICLE XI
Incorporator
------------
The name and mailing address of the sole incorporator is as follows:
Name Mailing Address
---- ---------------
Christopher C. Paci Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this Certificate of Incorporation, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 19th day of
July, 1996.
/s/ Christopher C. Paci
____________________________________
Christopher C. Paci
<PAGE>
BY-LAWS
OF
ROFIN-SINAR TECHNOLOGIES INC.
ARTICLE I
OFFICES
SECTION 1. Registered Office in Delaware. The address of the
-----------------------------
registered office of Rofin-Sinar Technologies Inc. (hereinafter called the
"Corporation") in the State of Delaware shall be The Corporation Trust Company,
1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware
19801, and the registered agent in charge thereof shall be The Corporation Trust
Company.
SECTION 2. Other Offices. The Corporation may have an office or
-------------
offices at any other place or places within or without the State of Delaware.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Annual Meeting. The annual meeting of stockholders for
--------------
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place within or without
the State of Delaware, and at such date and hour, as shall be designated by the
Board of Directors of the Corporation (the "Board") and set forth in the notice
or in a duly executed waiver of notice thereof.
SECTION 2. Special Meetings. A special meeting of the stockholders
----------------
for any purpose or purposes may be called at any time by a majority of the
members of the Board or the Chairman of the Board of the Corporation. A special
meeting of stockholders of the Corporation may not be called by any other person
or persons. Any such meeting shall be held at such place within or without the
State of Delaware, and at such date and hour, as shall be designated in the
notice or in a duly executed waiver of notice of such meeting.
Only such business as is stated in the written notice of a special
meeting may be acted upon thereat.
SECTION 3. Notice of Meetings. Except as otherwise provided by law,
------------------
written notice of each annual or special meeting of stockholders stating the
place, date and
<PAGE>
2
hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is held, shall be given personally or by first
class mail to each stockholder entitled to vote at such meeting, not less than
10 nor more than 60 calendar days before the date of the meeting. If mailed,
such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to the stockholder at such stockholder's address
as it appears on the records of the Corporation. If, prior to the time of
mailing, the Secretary shall have received from any stockholder entitled to vote
a written request that notices intended for such stockholder are to be mailed to
an address other than the address that appears on the records of the
Corporation, notices intended for such stockholder shall be mailed to the
address designated in such request.
Notice of a special meeting may be given by the person or persons
calling the meeting, or, upon the written request of such person or persons, by
the Secretary of the Corporation on behalf of such person or persons. If the
person or persons calling a special meeting of stockholders give notice thereof,
such person or persons shall forward a copy thereof to the Secretary. Every
request to the Secretary for the giving of notice of a special meeting of
stockholders shall state the purpose or purposes of such meeting.
SECTION 4. Waiver of Notice. Notice of any annual or special meeting
----------------
of stockholders need not be given to any stockholder entitled to vote at such
meeting who files a written waiver of notice with the Secretary, duly executed
by the person entitled to notice, whether before or after the meeting. Neither
the business to be transacted at, nor the purpose of, any meeting of
stockholders need be specified in any written waiver of notice. Attendance of a
stockholder at a meeting, in person or by proxy, shall constitute a waiver of
notice of such meeting, except as provided by law.
SECTION 5. Adjournments. When a meeting is adjourned to another
------------
date, hour or place, notice need not be given of the adjourned meeting if the
date, hour and place thereof are announced at the meeting at which the
adjournment is taken. If the adjournment is for more than 30 calendar days, or
if after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the adjourned meeting. At the adjourned meeting any
business may be transacted which might have been transacted at the original
meeting.
When any meeting is convened the presiding officer, if directed by the
Board, may adjourn the meeting if (a) no quorum is present for the transaction
of business, or (b) the Board determines that adjournment is necessary or
appropriate to enable the stockholders (i) to consider fully information which
the Board determines has not been made sufficiently or timely available to
stockholders or (ii) otherwise to exercise effectively their voting rights.
SECTION 6. Quorum. Except as otherwise provided by law or the
------
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), whenever
<PAGE>
3
a class of stock of the Corporation is entitled to vote as a separate class, or
whenever classes of stock of the Corporation are entitled to vote together as a
single class, on any matter brought before any meeting of the stockholders,
whether annual or special, holders of shares entitled to cast a majority of the
votes entitled to be cast by all the holders of the shares of stock of such
class voting as a separate class, or classes voting together as a single class,
as the case may be, outstanding and entitled to vote thereat, present in person
or by proxy, shall constitute a quorum at any such meeting of the stockholders.
If, however, such quorum shall not be present or represented at any such meeting
of the stockholders, the stockholders entitled to vote thereat may adjourn the
meeting from time to time in accordance with Section 5 of this Article II until
a quorum shall be present or represented.
SECTION 7. Voting. Unless otherwise provided in the Certificate of
------
Incorporation, each stockholder represented at a meeting of stockholders shall
be entitled to cast one vote for each share of capital stock entitled to vote
thereat held by such stockholder. Except as otherwise provided by law or the
Certificate of Incorporation or these By-Laws, when a quorum is present with
respect to any matter brought before any meeting of the stockholders, the vote
of the holders of shares entitled to cast a majority of the votes entitled to be
cast by all the holders of the shares constituting such quorum shall decide any
such matter. Votes need not be by written ballot, unless the Board, in its
discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, requires any vote or votes cast at such meeting
to be cast by written ballot.
SECTION 8. Action by Consent. Any action may be taken by written
-----------------
consent in lieu of a meeting of shareholders upon the consent of the holders of
100% of the outstanding shares of the Corporation.
SECTION 9. Proxies. Each stockholder entitled to vote at a meeting
-------
of stockholders may authorize another person or persons to act for such
stockholder by proxy. Such proxy shall be filed with the Secretary before such
meeting of stockholders at such time as the Board may require. No proxy shall
be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
SECTION 10. Advance Notice of Business to Be Transacted at Annual
-----------------------------------------------------
Meetings. (a) To be properly brought before the annual meeting of stockholders,
- --------
business must be either (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board (or any duly
authorized committee thereof), (ii) otherwise properly brought before the
meeting by or at the direction of the Board (or any duly authorized committee
thereof), or (iii) otherwise properly brought before the meeting by any
stockholder of the Corporation (A) who is a stockholder of record on the date of
the giving of the notice provided for in this Section 10 and on the record date
for the determination of stockholders entitled to vote at such meeting and (B)
who complies with the notice procedures set forth in this Section 10. In
addition to any other applicable requirements,
<PAGE>
4
including but not limited to the requirements of Rule 14a-8 promulgated by the
Securities and Exchange Commission under the Exchange Act, for business to be
properly brought before an annual meeting by a stockholder pursuant to clause
(iii) of this Section 10(a), such stockholder must have given timely notice
thereof in proper written form to the Secretary of the Corporation.
(b) To be timely, a stockholder's notice to the Secretary pursuant to
clause (iii) of Section 10(a) must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 60 days nor more
than 90 days prior to the anniversary date of the immediately preceding annual
meeting of stockholders; provided, however, that in the event that the annual
meeting is called for a date that is not within 30 days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth day following the day
on which such notice of the date of the annual meeting is mailed or such public
disclosure of the date of the annual meeting is made, whichever first occurs.
(c) To be in proper written form, a stockholder's notice to the
Secretary pursuant to clause (iii) of Section 10(a) must set forth as to each
matter such stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of such stockholder, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or of record by
such stockholder, together with evidence reasonably satisfactory to the
Secretary of such beneficial ownership, (iv) a description of all arrangements
or understandings between such stockholder and any other person or persons
(including their names) in connection with the proposal of such business by such
stockholder and any material interest of such stockholder in such business and
(v) a representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
(d) Notwithstanding anything in these By-laws to the contrary, no
business shall be conducted at the annual meeting of stockholders except
business brought before such meeting in accordance with the procedures set forth
in this Section 10; provided, however, that, once business has been properly
brought before such meeting in accordance with such procedures, nothing in this
Section 10 shall be deemed to preclude discussion by any stockholder of any such
business. If the chairman of such meeting determines that business was not
properly brought before the meeting in accordance with the foregoing procedures,
the chairman shall declare to the meeting that the business was not properly
brought before the meeting and such business shall not be transacted.
<PAGE>
5
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The property, business and affairs of the
--------------
Corporation shall be managed by the Board, which may exercise all such powers of
the Corporation and do all such lawful acts and things as are not by law or by
the Certificate of Incorporation directed or required to be exercised or done by
the stockholders.
SECTION 2. Number and Term of Holding Office. Subject to the rights,
---------------------------------
if any, of holders of preferred stock of the Corporation, the number of
directors which shall constitute the whole Board shall consist of not less than
three nor more than ten members, with the exact number of directors initially to
be equal to six and thereafter to be fixed by the Board from time to time by a
majority of the whole Board. The Board shall, by resolution passed by a
majority of the Board, designate the directors to serve as initial Class I,
Class II and Class III directors upon filing of the Certificate of Incorporation
with the Secretary of State of the State of Delaware. Except as provided in
Section 4 of this Article III, directors shall be elected by a plurality of the
votes cast at annual meetings of stockholders, and each director so elected
shall hold office as provided by Article VIII of the Certificate of
Incorporation. None of the directors need be stockholders of the Corporation.
Directors may not stand for re-election after reaching age 70.
SECTION 3. Nomination of Directors and Advance Notice Thereof. (a)
--------------------------------------------------
Only persons who are nominated in accordance with the following procedures shall
be eligible for election as directors of the Corporation, except as may be
otherwise provided in the Certificate of Incorporation with respect to the right
of holders of preferred stock of the Corporation to nominate and elect a
specified number of directors in certain circumstances. Nominations of persons
for election to the Board may be made at any annual meeting of stockholders, or
at any special meeting of stockholders called for the purpose of electing
directors, (i) by or at the direction of the Board (or any duly authorized
committee thereof) or (ii) by any stockholder of the Corporation (A) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 3 and on the record date for the determination of stockholders
entitled to vote at such meeting and (B) who complies with the notice procedures
set forth in this Section 3. In addition to any other applicable requirements,
for a nomination to be made by a stockholder pursuant to clause (ii) of this
Section 3(a), such stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.
(b) To be timely, a stockholder's notice to the Secretary pursuant to
clause (ii) of Section 3(a) must be delivered to or mailed and received at the
principal executive offices of the Corporation (i) in the case of an annual
meeting, not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting of
<PAGE>
6
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within 30 days before or after such anniversary
date, notice by the stockholder in order to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting is mailed or such public
disclosure of the date of the annual meeting is made, whichever first occurs, or
(ii) in the case of a special meeting of stockholders called for the purpose of
electing directors, not later than the close of business on the tenth day
following the day on which notice of the date of the special meeting is mailed
or public disclosure of the date of the special meeting is made, whichever first
occurs.
(c) To be in proper written form, a stockholder's notice to the
Secretary pursuant to clause (ii) of Section 3(a) must set forth (i) as to each
person whom the stockholder proposes to nominate for election as a director, (A)
the name, age, business address and residence address of the person, (B) the
principal occupation or employment of the person, (C) the class or series and
number of shares of capital stock of the Corporation which are owned
beneficially or of record by the person and (D) any other information relating
to the person that would be required to be disclosed in a proxy statement or
other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder; and (ii) as to the stockholder
giving the notice, (A) the name and record address of such stockholder, (B) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such stockholder, together with evidence
reasonably satisfactory to the Secretary of such beneficial ownership, (C) a
description of all arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such stockholder, (D) a
representation that such stockholder intends to appear in person or by proxy at
the meeting to nominate the persons named in its notice and (E) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
(d) No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 3. If the chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the chairman of the meeting
shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded.
SECTION 4. Resignation. Any director may resign at any time by
-----------
giving written notice to the Board, the Chief Executive Officer or the Secretary
of the Corporation.
<PAGE>
7
Any such resignation shall take effect at the time specified therein or, if the
time when it shall become effective shall not be specified therein, then it
shall take effect when accepted by action of the Board. Except as aforesaid,
acceptance of such resignation shall not be necessary to make it effective.
SECTION 5. Vacancies. Subject to the rights of the holders of any
---------
series of Preferred Stock or any other class of capital stock of the Corporation
(other than the Common Stock) then outstanding, any vacancy in the Board,
arising from death, resignation, removal, an increase in the number of directors
or any other cause, may be filled only by the Board, the stockholders acting at
an annual meeting or, if the vacancy is with respect to a director elected by a
voting group, by action of any other directors elected by such voting group or
such voting group. Any director elected to fill a vacancy shall hold office for
a term that shall coincide with the term of the class to which such director
shall have been elected.
SECTION 6. Meetings. (a) Annual Meetings. As soon as practicable
-------- ---------------
after each annual election of directors, the Board shall meet for the purpose of
organization and the transaction of other business, unless it shall have
transacted all such business by written consent pursuant to Section 7 of this
Article III.
(b) Other Meetings. Other meetings of the Board shall be held at such
--------------
times as the Board shall from time to time determine or upon call by the
Chairman of the Board, the Chief Executive Officer, the President or any two
directors.
(c) Notice of Meetings. Regular meetings of the Board may be held
------------------
without notice. The Secretary of the Corporation shall give notice to each
director of each special meeting, including the time and place of such special
meeting. Notice of each such meeting shall be given to each director either by
mail, at least two days before the day on which such meeting is to be held, or
by telephone, telegram, facsimile, telex or cable not later than the day before
the day on which such meeting is to be held or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in the
circumstances. Notice of any meeting shall not be required to be given to any
director who shall attend such meeting. A waiver of notice by the person
entitled thereto, whether before or after the time of any such meeting, shall be
deemed equivalent to adequate notice.
(d) Place of Meetings. The Board may hold its meetings at such place
-----------------
or places within or without the State of Delaware as the Board may from time to
time by resolution determine or as shall be designated in the respective notices
or waivers of notice thereof.
(e) Quorum and Manner of Acting. Except as otherwise provided by law,
---------------------------
the Certificate of Incorporation or these By-Laws, a majority of the total
number of directors
<PAGE>
8
then in office shall be necessary at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting, and the
affirmative vote of a majority of those directors present at any such meeting at
which a quorum is present shall be necessary for the passage of any resolution
or act of the Board. In the absence of a quorum for any such meeting, a
majority of the directors present thereat may adjourn such meeting from time to
time until a quorum shall be present thereat. Notice of any adjourned meeting
need not be given.
(f) Organization and Order of Business. The Chairman of the Board
----------------------------------
shall act as chairman of each meeting of the Board and preside thereat, or, in
the absence of the Chairman of the Board at any meeting of the Board, the Chief
Executive Officer shall act as chairman of such meeting and preside thereat, or,
in the absence of both the Chairman of the Board and the Chief Executive Officer
at any meeting of the Board, any other director chosen by a majority of the
directors present thereat shall act as chairman of the meeting and preside
thereat. The Secretary of the Corporation or, in the case of his absence, any
person whom the chairman of the meeting shall appoint, shall act as secretary of
such meeting and keep the minutes thereof.
SECTION 7. Action by Consent. Any action required or permitted to be
-----------------
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent or consents thereto is signed by all
members of the Board or such committee, as the case may be, and such written
consent or consents are filed with the minutes of the proceedings of the Board
or such committee.
SECTION 8. Meetings by Conference Telephone, etc. Any one or more
-------------------------------------
members of the Board, or of any committee thereof, may participate in a meeting
of the Board, or of such committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting.
SECTION 9. Compensation. Each director, in consideration of his
------------
serving as such, shall be entitled to receive from the Corporation such amount
per annum, if any, or such fees, if any, for attendance at meetings of the Board
or of any committee thereof, or both, as the Board shall from time to time
determine. The Board may likewise provide that the Corporation shall reimburse
each director or member of a committee for any expenses incurred by him on
account of his attendance at any such meeting. Nothing contained in this
Section 8 shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
<PAGE>
9
ARTICLE IV
COMMITTEES
The Board, by resolution passed by a majority of the whole Board, may
designate members of the Board to constitute one or more committees which shall
in each case consist of such number of directors, not fewer than two, and, to
the extent permitted by law and provided in the resolution establishing such
committee, shall have and exercise all the powers and authority of the Board in
the management of the business and affairs of the Corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified members at any meeting of any such committee.
In the absence or disqualification of a member of a committee, and in the
absence of a designation by the Board of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board to act at the
meeting in the place of any absent or disqualified member. A majority of all
the members of any such committee may fix its rules of procedure, determine its
action and fix the time and place, whether within or without the State of
Delaware, of its meetings and specify what notice thereof, if any, shall be
given, unless the Board shall otherwise by resolution provide. The Board shall
have power to change the members of any such committee at any time, to fill
vacancies therein and to discharge any such committee, either with or without
cause, at any time. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation. Each committee shall keep regular minutes and report to the
Board when required.
ARTICLE V
OFFICERS
SECTION 1. Executive Officers. The officers of the Corporation shall
------------------
be a Chairman of the Board, a Chief Executive Officer, a President, one or more
Vice Presidents, a Treasurer and a Secretary. Each such officer shall be
elected or appointed by the Board at its annual meeting and shall hold office
for such term as may be determined by the Board. Each such officer shall hold
office until the next succeeding annual meeting of the Board and until his
successor is elected or until his earlier death or resignation or removal in the
manner hereinafter provided. Any two or more offices may be held by the same
person. Officers need not be directors or stockholders of the Corporation.
<PAGE>
10
The Board may elect or appoint such other officers of the Corporation
(including one or more Assistant Vice Presidents, Assistant Treasurers and
Assistant Secretaries) as it deems necessary who shall have such authority and
shall perform such duties as the Board may prescribe. If additional officers
are elected or appointed, each of them shall hold office until his successor is
elected or appointed or until his earlier death or resignation or removal in the
manner hereinafter provided.
SECTION 2. Authority and Duties. All officers, as between themselves
--------------------
and the Corporation, shall have such authority and perform such duties in the
management of the Corporation as may be provided in these By-Laws or, to the
extent not so provided, by resolution of the Board.
SECTION 3. Resignation and Removal. (a) Any officer may resign at
-----------------------
any time by giving written notice to the Board, the Chief Executive Officer or
the Secretary of the Corporation, and such resignation shall take effect at the
time specified therein or, if the time when it shall become effective shall not
be specified therein, when accepted by action of the Board. Except as
aforesaid, the acceptance of such resignation shall not be necessary to make it
effective.
(b) All officers and agents elected or appointed by the Board shall be
subject to removal at any time by the Board with or without cause.
SECTION 4. Vacancies. Any vacancy in any office may be filled for
---------
the unexpired portion of the term in the same manner as provided for election
and appointment to such office.
SECTION 5. Chairman of the Board. The Chairman of the Board shall
---------------------
preside at all meetings of the Board and at all meetings of the stockholders and
shall have and exercise such further powers and duties as may from time to time
be conferred upon or assigned to him by the Board.
SECTION 6. Chief Executive Officer. The Chief Executive Officer of
-----------------------
the Corporation, subject to the direction of the Board, shall have general
charge of the business and affairs of the Corporation, shall have the direction
of all other officers, agents and employees of the Corporation and may assign
such duties to the other officers of the Corporation as he deems appropriate.
SECTION 7. President. The President of the Corporation, subject to
---------
the direction of the Chief Executive Officer, shall have charge of the day-to-
day operations of the Corporation, shall assist the Chief Executive Officer in
carrying out the orders and resolutions of the Board and shall perform such
other duties as the Chief Executive Officer or the Board shall from time to time
assign. At the request of the Chief Executive Officer,
<PAGE>
11
or in case of the absence or inability to act of the Chief Executive Officer,
the President, until otherwise determined, and subject to any limitations
imposed by the Board, shall assume the duties of the Chief Executive Officer
and, when so acting, but subject to the foregoing, shall have all of the powers
of, and be subject to all the restrictions upon, the Chief Executive Officer.
SECTION 8. Vice Presidents. Each Vice President of the Corporation
---------------
shall have such powers and perform such duties as the Chief Executive Officer or
the Board may from time to time prescribe and shall perform such other duties as
may be prescribed by these By-laws.
SECTION 9. Treasurer. The Treasurer of the Corporation shall have
---------
charge and custody of and be responsible for all funds and securities of the
Corporation.
SECTION 10. Secretary. The Secretary of the Corporation shall keep
---------
the records of all meetings of the stockholders and the Board. He shall affix
the seal of the Corporation to all deeds, contracts, bonds or other instruments
requiring the corporate seal when the same shall have been signed on behalf of
the Corporation by a duly authorized officer and shall be the custodian of all
contracts, deeds, documents and all other indicia of title to properties owned
by the Corporation and of its other corporate records.
ARTICLE VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Execution of Documents. Any officer, employee or agent of
----------------------
the Corporation designated by the Board (or any duly authorized committee of the
Board to the extent permitted by law) shall have power to execute and deliver
deeds, contracts, mortgages, bonds, debentures, checks, drafts and other orders
for the payment of money and other documents for and in the name of the
Corporation, and the Board (or such a committee) may authorize any such officer,
employee or agent to delegate such power (including authority to redelegate) by
written instrument to other officers, employees or agents of the Corporation.
SECTION 2. Deposits. All funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to the credit of the Corporation
or otherwise as the Board or the Chief Executive Officer or any other officer of
the Corporation to whom power in that respect shall have been delegated by the
Board shall select.
SECTION 3. Proxies in Respect of Stock or Other Securities of Other
--------------------------------------------------------
Corporations. The Board or the Chief Executive Officer shall designate the
- ------------
officers of the
<PAGE>
12
Corporation who shall have authority from time to time to appoint an agent or
agents of the Corporation to exercise in the name and on behalf of the
Corporation the powers and rights that the Corporation may have as the holder of
stock or other securities in any other corporation, and to vote or consent in
respect of such stock or securities. Such designated officers may instruct the
person or persons so appointed as to the manner of exercising such powers and
rights, and such designated officers may execute or cause to be executed in the
name and on behalf of the Corporation and under its corporate seal, or
otherwise, such written proxies, powers of attorney or other instruments as they
may deem necessary or proper in order that the Corporation may exercise such
powers and rights.
ARTICLE VII
SHARES AND TRANSFER OF SHARES
SECTION 1. Certificates of Stock. Every owner of shares of stock of
---------------------
the Corporation shall be entitled to have a certificate evidencing the number of
shares of stock of the Corporation owned by him or it and designating the class
of stock to which such shares belong, which shall otherwise be in such form as
the Board shall prescribe. Each such certificate shall bear the signature (or a
facsimile thereof) of the Chairman of the Board or the Chief Executive Officer
or the President or a Vice President and the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Corporation.
SECTION 2. Record. A record shall be kept of the name of the person,
------
firm or corporation owning the stock represented by each certificate evidencing
stock of the Corporation issued, the number of shares represented by each such
certificate, and the date thereof, and, in the case of cancellation, the date of
cancellation. Except as otherwise expressly required by law, the person in
whose name shares of stock stand on the books of the Corporation shall be deemed
the owner thereof for all purposes as regards the Corporation.
SECTION 3. Transfer of Stock. (a) The transfer of shares of stock
-----------------
and the certificates evidencing such shares of stock of the Corporation shall be
governed by Article 8 of Subtitle I of Title 6 of the Delaware Code (the Uniform
Commercial Code), as amended from time to time.
(b) Registration of transfers of shares of stock of the Corporation
shall be made only on the books of the Corporation upon request of the
registered holder thereof, or of his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the Corporation, and upon
the surrender of the certificate or certificates evidencing such shares properly
endorsed or accompanied by a stock power duly executed.
<PAGE>
13
SECTION 4. Addresses of Stockholders. Each stockholder shall
-------------------------
designate to the Secretary of the Corporation an address at which notices of
meetings and all other corporate notices may be served or mailed to him, and, if
any stockholder shall fail to so designate such an address, corporate notices
may be served upon him by mail directed to him at his post office address, if
any, as the same appears on the share record books of the Corporation or at his
last known post office address.
SECTION 5. Lost, Destroyed or Mutilated Certificates. A holder of
-----------------------------------------
any shares of stock of the Corporation shall promptly notify the Corporation of
any loss, destruction or mutilation of any certificate or certificates
evidencing all or any such shares of stock. The Board may, in its discretion,
cause the Corporation to issue a new certificate in place of any certificate
theretofore issued by it and alleged to have been mutilated, lost, stolen or
destroyed, upon the surrender of the mutilated certificate or, in the case of
loss, theft or destruction of the certificate, upon satisfactory proof of such
loss, theft or destruction, and the Board may, in its discretion, require the
owner of the lost, stolen or destroyed certificate or his legal representative
to give the Corporation a bond sufficient to indemnify the Corporation against
any claim made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate.
SECTION 6. Facsimile Signatures. Any or all of the signatures on a
--------------------
certificate evidencing shares of stock of the Corporation may be facsimiles.
SECTION 7. Regulations. The Board may make such rules and
-----------
regulations as it may deem expedient, not inconsistent with the Certificate of
Incorporation or these By-Laws, concerning the issue, transfer and registration
of certificates evidencing stock of the Corporation. It may appoint, or
authorize any principal officer or officers to appoint, one or more transfer
agents and one or more registrars, and may require all certificates of stock to
bear the signature or signatures (or a facsimile or facsimiles thereof) of any
of them. The Board may at any time terminate the employment of any transfer
agent or any registrar of transfers. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall cease to be such officer, transfer agent or registrar, whether
because of death, resignation, removal or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed or whose facsimile
signature has been placed upon such certificate or certificates had not ceased
to be such officer, transfer agent or registrar.
SECTION 8. Record Date. In order that the Corporation may determine
-----------
the stockholders entitled to notice of, or to vote at, any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board
<PAGE>
14
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other such action. A determination of stockholders entitled to notice of,
or to vote at, any meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
adjourned meeting.
SECTION 9. Registered Stockholders. The Corporation shall be
-----------------------
entitled to recognize the exclusive right of a person registered on its records
as the owner of shares of stock to receive dividends and to vote as such owner,
shall be entitled to hold liable for calls and assessments a person registered
on its records as the owner of shares of stock, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares of
stock on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
SECTION 10. Stockholder Agreements. Shares of stock of the
----------------------
Corporation may be subject to one or more agreements abridging, limiting or
restricting the rights of any one or more stockholders to sell, assign,
transfer, mortgage, pledge or hypothecate any or all of the stock of the
Corporation held by them, or may be subject to one or more agreements providing
a purchase option with respect to any shares of stock of the Corporation. If
such agreements exist, all certificates evidencing shares of stock subject to
such abridgements, limitations, restrictions or options shall have reference
thereto endorsed on such certificate and such stock shall not thereafter be
transferred on the books of the Corporation except in accordance with the terms
and conditions of such agreement or agreements. Copies of such agreement or
agreements shall be maintained at the offices of the Corporation.
ARTICLE VIII
BOOKS AND RECORDS
The books and records of the Corporation may be kept at such place or
places within or without the State of Delaware as the Board may from time to
time determine.
ARTICLE IX
SEAL
The Board shall provide a corporate seal which shall bear the full
name of the Corporation.
<PAGE>
15
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be
subject to change from time to time, by the Board.
ARTICLE XI
INDEMNIFICATION
SECTION 1. General. The Corporation (a) shall indemnify any person
-------
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director or an officer of
the Corporation, or is or was serving at the request of the Corporation as a
director or an officer of another corporation, partnership, joint venture, trust
or other enterprise, to the full extent authorized or permitted by law, as now
or hereafter in effect, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b) may indemnify, if
the Board of Directors determines such indemnification is appropriate, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was an employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as an employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, to the full extent authorized or permitted by law, as
now or hereafter in effect, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
<PAGE>
16
SECTION 2. Derivative Actions. The Corporation (a) shall indemnify
------------------
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director or an officer of the Corporation, or is or was serving at the
request of the Corporation as a director or an officer of another corporation,
partnership, joint venture, trust or other enterprise, to the full extent
authorized or permitted by law, as now or hereafter in effect, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and (b) may indemnify, if the Board of
Directors determines such indemnification is appropriate, any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was an employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as an employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, to the full extent authorized or permitted by law, as
now or hereafter in effect, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; provided, however, that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
SECTION 3. Successful Defense. To the extent that (a) a director or
------------------
an officer of the Corporation, or (b) any other employee or agent of the
Corporation who the Board has authorized the Corporation to indemnify, has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in sections 1 and 2 above, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
SECTION 4. Proceedings Initiated by any Person. Notwithstanding
-----------------------------------
anything to the contrary contained in sections 1 or 2 above, except for
proceedings to enforce rights to indemnification, the Corporation shall not be
obligated to indemnify any person in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof) was
authorized in advance, or unanimously consented to, by the Board of Directors.
SECTION 5. Procedure. Any indemnification under sections 1 and 2
---------
above (unless ordered by a court) shall be made by the Corporation only as
authorized in the
<PAGE>
17
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in sections 1 and 2 above. Such
determination shall be made (i) by a majority vote of the directors who are not
parties to such action, suit or proceeding even though less than a quorum, or
(ii) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (iii) by the stockholders.
SECTION 6. Advancement of Expenses. Expenses (including attorneys'
-----------------------
fees) incurred by a director or an officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation pursuant to this Article XI or as
otherwise authorized by law. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.
SECTION 7. Rights Not Exclusive. The indemnification and advancement
--------------------
of expenses provided by, or granted pursuant to, the other subsections of this
Article XI shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any by-
law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
SECTION 8. Insurance. The Corporation may purchase and maintain
---------
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of the DGCL.
SECTION 9. Definition of "Corporation". For purposes of this Article
---------------------------
XI, references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article XI with
<PAGE>
18
respect to the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had continued.
SECTION 10. Certain Other Definitions. For purposes of this Article
-------------------------
XI, references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves service by,
such director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation", as referred to in
this Article XI.
SECTION 11. Continuation of Rights. The indemnification and
----------------------
advancement of expenses provided by, or granted pursuant to, this Article XI
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 12. Repeal or Modification. Any repeal or modification of
----------------------
this Article XI by the stockholders of the Corporation shall not adversely
affect any rights to indemnification and to advancement of expenses that any
person may have at the time of such repeal or modification with respect to any
acts or omissions occurring prior to such repeal or modification.
ARTICLE XII
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new by-laws may be made, but only to the extent any such alteration, amendment,
repeal or new by-law is not inconsistent with any provision of the Certificate
of Incorporation, either by a majority of the whole Board or by the stockholders
of the Corporation upon the affirmative vote of the holders of 80% or more of
the outstanding shares of capital stock of the Corporation entitled to vote
thereon.
<PAGE>
EXHIBIT 4.2
================================================================================
RIGHTS AGREEMENT
Dated as of September __, 1996
between
ROFIN-SINAR TECHNOLOGIES, INC.
and
THE BANK OF NEW YORK
as Rights Agent
================================================================================
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
1. Certain Definitions................................................................ 1
2. Appointment of Rights Agent........................................................ 7
3. Issue of Rights and Right Certificates............................................. 7
4. Form of Right Certificates......................................................... 9
5. Execution, Countersignature and Registration....................................... 9
6. Transfer, Split-Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates; Uncertificated Rights.............. 10
7. Exercise of Rights; Expiration Date of Rights...................................... 10
8. Cancellation and Destruction of Right Certificates................................. 12
9. Reservation and Availability of Common Shares..................................... 12
10. Common Shares Record Date......................................................... 13
11. Adjustments in Rights After There is an Acquiring Person; Exchange of Rights for
Shares; Business Combinations.................................................... 14
12. Certain Adjustments............................................................... 18
13. Certificate of Adjustment......................................................... 19
14. Additional Covenants.............................................................. 19
15. Fractional Rights and Fractional Shares........................................... 20
16. Rights of Action.................................................................. 21
17. Transfer and Ownership of Rights and Right Certificates........................... 21
18. Right Certificate Holder Not Deemed a Stockholder................................. 21
19. Concerning the Rights Agent....................................................... 22
</TABLE>
<PAGE>
ii
<TABLE>
<S> <C>
20. Merger or Consolidation or Change of Rights Agent................................. 22
21. Duties of Rights Agent............................................................ 23
22. Change of Rights Agent............................................................ 24
23. Issuance of Additional Rights and Right Certificates.............................. 25
24. Redemption and Termination........................................................ 26
25. Notices........................................................................... 27
26. Supplements and Amendments........................................................ 27
27. Successors........................................................................ 28
28. Benefits of This Rights Agreement; Determinations and Actions by the Board of
Directors, etc.................................................................. 28
29. Severability...................................................................... 29
30. Governing Law..................................................................... 29
31. Counterparts...................................................................... 29
32. Descriptive Headings.............................................................. 29
</TABLE>
Exhibits
- --------
A. Form of Right Certificate
<PAGE>
RIGHTS AGREEMENT dated as of September __, 1996, between
ROFIN-SINAR TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), and THE BANK OF NEW YORK, a national banking
association, as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized the issuance of
one Right (as hereinafter defined) (as such number may hereafter be adjusted
pursuant to the provisions of this Rights Agreement) with respect to each share
of Common Stock, par value $0.01 per share, of the Company (the "Common Stock")
that shall become outstanding on or after September __, 1996 (the "Record
Date"), and prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date (as such terms are hereinafter defined); provided,
--------
however, that Rights may be issued with respect to shares of Common Stock that
- -------
shall become outstanding after the Distribution Date and prior to the earlier of
the Redemption Date or the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase one
Common Share (as hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
-------------------
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or
----------------
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 10% or more of the Common Shares then outstanding, but shall
not include (a) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any of its Subsidiaries, or any Person holding Common
Shares for or pursuant to the terms of any such employee benefit plan or (b) any
such Person who has become such a Beneficial Owner solely because (i) of a
change in the aggregate number of Common Shares outstanding since the last date
on which such Person acquired Beneficial Ownership of any Common Shares or (ii)
it acquired such Beneficial Ownership in the good faith belief that such
acquisition would not (x) otherwise cause such Beneficial ownership to exceed
20% of the Common Shares then outstanding and such Person relied in good faith
in computing the percentage of its Beneficial Ownership on publicly filed
reports or documents of the Company which are inaccurate or out-of-date or (y)
otherwise cause a Distribution Date to occur. Notwithstanding clause (b) of the
prior sentence, if any Person that is not an Acquiring Person due to such clause
(b) does not reduce its percentage of Beneficial Ownership of Common Shares to
below 20% by the close of Business on the fifth Business Day after notice from
the Company (the date of notice being the first day) that such Person's
Beneficial Ownership of Common Shares so exceeds 20%, such Person shall, at the
end of such five Business Day period, become an Acquiring Person (and such
clause (b) shall no longer apply to such Person). For purposes of this
definition, the determination whether any Person acted
<PAGE>
2
in "good faith" shall be conclusively determined by the Board of Directors of
the Company, acting by a vote of those directors of the Company whose approval
would be required to redeem the Rights under Section 24.
"Affiliate" and "Associate", when used with reference to any Person,
--------- ---------
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be
----------------
deemed to "beneficially own", and shall be deemed to have "Beneficial Ownership"
---------------- --------------------
of, any securities:
(i) which such Person or any of such Person's Affiliates or Associates
is deemed to "beneficially own" within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date of this Rights Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however,, that a Person shall
-------- -------
not be deemed the Beneficial Owner of, or to beneficially own, or to have
Beneficial Ownership of, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange thereunder or (B) the right to vote pursuant to any
agreement, arrangement or understanding (written or oral); provided,
--------
however, that a Person shall not be deemed the Beneficial Owner of, or to
-------
beneficially own, any security if (1) the agreement, arrangement or
understanding (written or oral) to vote such security arises solely from a
revocable proxy or consent given to such Person in response to, a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2) the
beneficial ownership of such security is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report);or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (written or
oral) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (ii)(B) of this definition) or
disposing of any securities of the Company.
<PAGE>
3
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own", any securities acquired in
a bona fide firm commitment underwriting pursuant to an underwriting agreement
with the Company.
"Book Value", when used with reference to Common Shares issued by any
----------
Person, shall mean the amount of equity of such Person applicable to each Common
Share, determined (i) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (ii) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (iii) after giving
effect to (A) the exercise of all rights, options and warrants to purchase such
Common Shares (other than the Rights), and the conversion of all securities
convertible into such Common Shares, at an exercise or conversion price, per
Common Share, which is less than such Book Value before giving effect to such
exercise or conversion (whether or not exercisability or convertibility is
conditioned upon occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior to the date as
of which such Book Value is to be determined and to be paid or made after such
date, and (C) any other agreement, arrangement or understanding (written or
oral), or transaction or other action prior to the date as of which such Book
Value is to be determined which would have the effect of thereafter reducing
such Book Value.
"Business Combination" shall have the meaning set forth in Section
--------------------
11(c)(I).
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
------------
and Friday which is not a day on which banking institutions in the
Borough of Manhattan, The City of New York, are authorized or
obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m., New York
-----------------
City time, on such date; provided, however, that, if such date is not a Business
-------- -------
Day, "Close of Business" shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
"Common Shares", when used with reference to the Company prior to a
--------------
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares", when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends
<PAGE>
4
or income payable or distributable on such class or series or the amount of
assets distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that, if at any
-------- -------
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time.
"Common Stock" shall have the meaning set forth in the
-------------
introductory paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of this
--------
Rights Agreement; provided, however, that if there is a Business Combination,
-------- -------
"Company" shall have the meaning set forth in Section 11(c)(III).
The term "control" with respect to any Person shall mean the power to
-------
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Distribution Date" shall have the meaning set forth in Section
------------------
3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
------------
effect on the date in question, unless otherwise specifically provided.
"Exchange Consideration" shall have the meaning set forth in Section
----------------------
11(b)(I).
"Expiration Date" shall have the meaning set forth in Section
----------------
7(a).
"Major Part", when used with reference to the assets of the Company
----------
and its Subsidiaries as of any date, shall mean assets (i) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (ii) accounting for 50% or more of the total value (net of
depreciation and amortization) of all the assets of the Company and its
Subsidiaries (taken as a whole) as would be shown on a consolidated or combined
balance sheet of the Company and its Subsidiaries as of the date in question,
prepared in accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount of net income or
revenues of the Company and its Subsidiaries
<PAGE>
5
(taken as a whole) as would be shown on a consolidated or combined statement of
income of the Company and its Subsidiaries for the period of 12 months ending on
the last day of the Company's monthly accounting period next preceding the date
in question, prepared in accordance with generally accepted accounting
principles then in effect.
"Market Value", when used with reference to Common Shares on any date,
------------
shall be deemed to be the average of the daily closing prices, per share, of
such Common Shares for the period which is the shorter of (1) 30 consecutive
Trading Days immediately prior to the date in question or (2) the number of
consecutive Trading Days beginning on the Trading Day immediately after the date
of the first public announcement of the event requiring a determination of the
Market Value and ending on the Trading Day immediately prior to the record date
of such event; provided, however, that, in the event that the Market Value of
-------- -------
such Common Shares is to be determined in whole or in part during a period
following the announcement by the issuer of such Common Shares of any action of
the type described in Section 12(a) that would require an adjustment thereunder,
then, and in each such case, the Market Value of such Common Shares shall be
appropriately adjusted to reflect the effect of such action on the market price
of such Common Shares. The closing price for each Trading Day shall be the
closing price quoted on the composite tape for securities listed on the New York
Stock Exchange, or, if such securities are not quoted on such composite tape or
if such securities are not listed on such exchange, on the principal United
States securities exchange registered under the Exchange Act (or any recognized
foreign stock exchange) on which such securities are listed, or, if such
securities are not listed on any such exchange, the average of the closing bid
and asked quotations with respect to a share of such securities on the National
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use, or if no such quotations are available, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in such securities selected by the Board of Directors of the
Company. If on any such Trading Day no market maker is making a market in such
securities, the closing price of such securities on such Trading Day shall be
deemed to be the fair value of such securities as determined in good faith by
the Board of Directors of the Company (whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent, the holders of Rights and all other Persons).
"Person" shall mean an individual, corporation, partnership, joint
------
venture, association, trust, unincorporated organization or other entity.
"Principal Party" shall mean the Surviving Person in a Business
---------------
Combination; provided, however, that, if such Surviving Person is a direct or
-------- -------
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person. In the event ultimate control of such Surviving
Person is shared by two or more Persons, "Principal Party" shall mean that
Person that is immediately controlled by such two or more Persons.
<PAGE>
6
"Purchase Price" with respect to each Right shall mean $[ ], as
--------------
such amount may from time to time be adjusted as provided herein, and shall be
payable in lawful money of the United States of America. All references herein
to the Purchase Price shall mean the Purchase Price as in effect at the time in
question.
"Record Date" shall have the meaning set forth in the introductory
-----------
paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
---------------
"Redemption Price" with respect to each Right shall mean $0.01, as
----------------
such amount may from time to time be adjusted in accordance with Section 12.
All references herein to the Redemption Price shall mean the Redemption Price as
in effect at the time in question.
"Registered Common Shares" shall mean Common Shares which are, as of
------------------------
the date of consummation of a Business Combination, and have continuously been
for the 12 months immediately preceding such date, registered under Section 12
of the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a Right in
-----------------
substantially the form attached as Exhibit A.
"Rights" shall mean the rights to purchase Common Shares (or other
------
securities) as provided in this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as in effect
--------------
on the date in question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the total
----------
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"Surviving Person" shall mean (1) the Person which is the continuing
----------------
or surviving Person in a consolidation or merger specified in Section
11(c)(I)(i) or 11(c)(I)(ii) or (2) the Person to which the Major Part of the
assets of the Company and its Subsidiaries is sold, leased, exchanged or
otherwise transferred or disposed of in a transaction specified in Section
11(c)(I)(iii); provided, however, that, if the Major Part of the assets of the
-------- -------
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in one
<PAGE>
7
or more related transactions specified in Section 11(c)(I)(iii) to more than one
Person, the "Surviving Person" in such case shall mean the Person that acquired
assets of the Company and/or its subsidiaries with the greatest fair market
value in such transaction or transactions.
"Trading Day" shall mean a day on which the principal national
------------
securities exchange (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
Section 2. Appointment of Rights Agent. The Company hereby appoint
---------------------------
Agent to act as agent for the Company and the holders of the Rights (who prior
to the Distribution Date shall also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint one or more
co-Rights Agents as it may deem necessary or desirable (the term "Rights
Agent" being used herein to refer, collectively, to the Rights Agent together
with any such co-Rights Agents). In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
Section 3. Issue of Rights and Right Certificates. (a) One Right
--------------------------------------
shall be associated with each Common Share that becomes outstanding on the
Record Date, each additional Common Share that shall become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date
or the Expiration Date and each additional Common Share with which Rights are
issued after the Distribution Date but prior to the earlier of the Redemption
Date or the Expiration Date as provided in Section 23; provided, however,
-------- -------
that, if the number of outstanding Rights are combined into a smaller number of
outstanding Rights pursuant to Section 12(a), the appropriate fractional Right
determined pursuant to such Section shall thereafter be associated with each
such Common Share.
(b) Until the earlier of (i) such time as the Company learns that a
Person has become an Acquiring Person or (ii) the Close of Business on such
date, if any, as may be designated by the Board of Directors of the Company
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any of
its Subsidiaries, or any Person holding Common Shares for or pursuant to the
terms of any such employee benefit plan) for outstanding Common Shares, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of 10% or more of the outstanding Common Shares (the Close of
Business on the earlier of such dates being the "Distribution Date"), (x) the
Rights will be evidenced by the certificates for
<PAGE>
8
Common Shares registered in the names of the holders thereof and not by separate
Right Certificates and (y) the Rights, including the right to receive Right
Certificates, will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the Rights
Agent will send, by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate evidencing one whole Right
for each Common Share (or for the number of Common Shares with which one whole
Right is then associated if the number of Rights per Common Share held by such
record holder has been adjusted in accordance with the proviso in Section 3(a)).
If the number of Rights associated with each Common Share has been adjusted in
accordance with the proviso in Section 3(a), at the time of distribution of the
Right Certificates the Company may make any necessary and appropriate rounding
adjustments so that Right Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Right in accordance
with Section 15(a). As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(c) With respect to any certificate for Common Shares, until the
earliest of the Distribution Date, the Redemption Date or the Expiration Date,
the Rights associated with the Common Shares represented by any such certificate
shall be evidenced by such certificate alone, the registered holders of the
Common Shares shall also be the registered holders of the associated Rights and
the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(d) Certificates issued for Common Shares on and after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Shares), but prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date, shall have printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of September __,
1996, as it may be amended from time to time (the "Rights Agreement"),
between Rofin-Sinar Technologies, Inc. and The Bank of New York, as Rights
Agent, the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of Rofin-Sinar
Technologies, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. Rofin-Sinar Technologies, Inc.
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates or Associates
(as such terms are defined in the Rights Agreement) and by any subsequent
holder of such Rights are null and void and nontransferable.
<PAGE>
9
Notwithstanding the requirements of this paragraph (d), the omission of a legend
shall not affect the enforceability of any part of this Rights Agreement or the
rights of any holder of Rights.
Section 4. Form of Right Certificates. The Right Certificates (and
--------------------------
the form of election to purchase and form of assignment to be printed on the
reverse side thereof) shall be in substantially the form set forth as Exhibit A
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Rights Agreement, or as
may be required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 7, 11 and 23, the Right Certificates,
whenever issued, shall be dated as of the Distribution Date, and on their face
shall entitle the holders thereof to purchase such number of Common Shares as
shall be set forth therein for the Purchase Price set forth therein.
Section 5. Execution, Countersignature and Registration. (a) The
--------------------------------------------
Right Certificates shall be executed on behalf of the Company by the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer or a Vice President (whether preceded by any additional title) of the
Company, either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary,
an Assistant Secretary or a Vice President (whether preceded by any additional
title, provided that such Vice President shall not have also executed the Right
Certificates) of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights Agent and shall
not be valid or obligatory for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such an officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such an officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
execution of this Rights Agreement any such person was not such an officer of
the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office in New York, New York, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced by each of
<PAGE>
10
the Right Certificates, the certificate number of each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates;
- ----------------------------------------------------------------------
Uncertificated Rights. (a) Subject to the provisions of Sections 7(e) and 15,
- ---------------------
at any time after the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split-up, combined or
exchanged for another Right Certificate or Right Certificates representing, in
the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent and shall surrender the Right
Certificate or Right Certificates to be transferred, split-up, combined or
exchanged at the principal office of the Rights Agent; provided, however, that
-------- -------
neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have completed and signed the
certification contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon, the
Rights Agent shall, subject to Sections 7(e) and 15, countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and the
Rights Agent may amend this Rights Agreement pursuant to Section 26 to provide
for uncertificated Rights in addition to or in place of Rights evidenced by
Right Certificates.
Section 7. Exercise of Rights; Expiration Date of Rights. (a)
---------------------------------------------
Subject to Section 7(e) and except as otherwise provided herein (including
Section 11), each Right shall
<PAGE>
11
entitle the registered holder thereof, upon exercise thereof as provided herein,
to purchase for the Purchase Price, at any time after the Distribution Date and
at or prior to the earlier of (i) the Close of Business on [DATE] (the Close of
Business on such date being the "Expiration Date"), or (ii) the Redemption Date,
one Common Share, subject to adjustment from time to time as provided in
Sections 11 and 12.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent
in New York, New York, together with payment of the Purchase Price for each
Common Share as to which the Rights are exercised, at or prior to the earlier of
(i) the Expiration Date or (ii) the Redemption Date.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Common Shares to be purchased together
with an amount equal to any applicable transfer tax, in lawful money of the
United States of America, in cash or by certified check or money order payable
to the order of the Company, the Rights Agent shall thereupon promptly (i)
requisition from any transfer agent of the Common Shares (or make available, if
the Rights Agent is the transfer agent) certificates for the number of Common
Shares to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 15, (iii) promptly after receipt
of such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 15.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
any Rights that are at any time beneficially owned by an Acquiring Person or any
Affiliate or Associate of an Acquiring Person shall be null and void and
nontransferable, and any holder of any such Right (including any purported
transferee or subsequent holder) shall not have any right to exercise or
transfer any such Right.
<PAGE>
12
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form with respect to the Common Shares or
other securities purchasable upon exercise of the Rights and permit such
registration statement to become effective; provided, however, that no such
-------- -------
suspension shall remain effective after, and the Rights shall without any
further action by the Company or any other Person become exercisable immediately
upon, the effectiveness of such registration statement. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and shall issue a
further public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision herein to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite qualification under the
blue sky or securities laws of such jurisdiction shall not have been obtained or
the exercise of the Rights shall not be permitted under applicable law.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up, combination or exchange shall, and any Right Certificate
representing Rights that have become null and void and nontransferable pursuant
to Section 7(e) surrendered or presented for any purpose shall, if surrendered
or presented to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by this Rights Agreement.
The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any Right Certificate purchased
or acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares. (a) The
---------------------------------------------
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Common Shares or any authorized and
issued Common Shares held
<PAGE>
13
in its treasury, free from preemptive rights or any right of first refusal, a
number of Common Shares sufficient to permit the exercise in full of all
outstanding Rights.
(b) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise or
exchange of Rights in accordance with Section 11, the Company covenants and
agrees that it will take all such action as may be necessary to authorize
additional Common Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Common Shares delivered upon exercise or
exchange of Rights shall, at the time of delivery of the certificates for such
Common Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(d) So long as the Common Shares issuable upon the exercise or
exchange of Rights are to be listed on any national securities exchange, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangeable, all Common Shares
reserved for such issuance to be listed on such securities exchange upon
official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all Federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of Right Certificates or of
any Common Shares upon the exercise or exchange of the Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or in respect of the issuance or delivery of certificates for the Common
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or exchange or to issue
or deliver any certificates for Common Shares upon the exercise or exchange of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each Person in whose name any
-------------------------
certificate for Common Shares is issued upon the exercise or exchange of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Shares represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of any Purchase Price (and any applicable transfer
taxes) was made; provided, however, that, if the date of such surrender and
-------- -------
payment is a date upon which the Common Shares transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares on, and such
<PAGE>
14
certificate shall be dated, the next succeeding Business Day on which the Common
Shares transfer books of the Company are open.
Section 11. Adjustments in Rights After There is an Acquiring Person;
---------------------------------------------------------
Exchange of Rights for Shares; Business Combinations. (a) Upon a Person
- ----------------------------------------------------
becoming an Acquiring Person, proper provision shall be made so that each holder
of a Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of Common Shares as shall equal the
result obtained by multiplying the Purchase Price by a fraction, the numerator
of which is the number of Common Shares for which a Right is then exercisable
and the denominator of which is 50% of the Market Value of the Common Shares on
the date on which a Person becomes an Acquiring Person. As soon as practicable
after a Person becomes an Acquiring Person (provided the Company shall not have
elected to make the exchange permitted by Section 11(b)(I) for all outstanding
Rights), the Company covenants and agrees to use its best efforts to:
(I) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the Common Shares purchasable
upon exercise of the Rights;
(II) cause such registration statement to become effective as soon as
practicable after such filing;
(III) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the
Expiration Date; and
(IV) qualify or register the Common Shares purchasable upon exercise
of the Rights under the blue sky or securities laws of such jurisdictions
as may be
necessary or appropriate.
(b)(I) The Board of Directors of the Company may, at its option, at
any time after a Person becomes an Acquiring Person, mandatorily exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that shall have become null and void and nontransferable pursuant to the
provisions of Section 7(e)) for consideration per Right consisting of one-half
of the securities that would be issuable at such time upon the exercise of one
Right in accordance with Section 11(a) (the consideration issuable per Right
pursuant to this Section 11(b)(I) being the "Exchange Consideration"). If the
Board of Directors of the Company elects to exchange all the Rights for Exchange
Consideration pursuant to this Section 11(b)(I) prior to the physical
distribution of the Right Certificates, the Corporation may distribute the
Exchange Consideration in lieu of distributing Right Certificates, in which case
for purposes of this Agreement holders of Rights shall be deemed
<PAGE>
15
to have simultaneously received and surrendered for exchange Right Certificates
on the date of such distribution.
(II) Any action of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to Section 11(b)(I) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have been paid,
to exercise any such Right pursuant to Section 11(c)(I). The Company shall
Promptly give public notice of any such exchange; provided, however, that the
-------- -------
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Rights for the Exchange Consideration will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which shall have become null and void and nontransferable
pursuant to the provisions of Section 7(e)) held by each holder of Rights.
(c) (I) In the event that, following a Distribution Date, directly or
indirectly, any transactions specified in the following clause (i), (ii) or
(iii) of this Section 11(c) (each such transaction being a "Business
Combination") shall be consummated:
(i) the Company shall consolidate with, or merge with and into, any
other Person;
(ii) any Person shall merge with and into the Company and, in
connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for capital stock or other securities of the
Company or of any other Person or cash or any other property; or
(iii) the Company shall sell, lease, exchange or otherwise transfer
or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange or otherwise transfer or dispose of), in one or more transactions,
the Major Part of the assets of the Company and its Subsidiaries (taken as
a whole) to any other Person or Persons,
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement the
<PAGE>
16
securities specified below (or, at such holder's option, if any Business
Combination is consummated at any time after a Person becomes an Acquiring
Person, the securities specified in Section 11(a)):
(A) If the Principal Party in such Business Combination has Registered
Common Shares outstanding, each Right shall thereafter represent the right
to receive, upon the exercise thereof for the Purchase Price in accordance
with the terms of this Rights Agreement, such number of Registered Common
Shares of such Principal Party, free and clear of all liens, encumbrances
or other adverse claims, as shall have an aggregate Market Value equal to
the result obtained by multiplying the Purchase price by two,
(B) If the Principal Party in such Business Combination does not have
Registered Common Shares outstanding, each Right shall thereafter represent
the right to receive, upon the exercise thereof for the Purchase Price in
accordance with the terms of this Rights Agreement, at the election of the
holder of such Right at the time of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving Person in such
Business Combination as shall have an aggregate Book Value immediately
after giving effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two;
(2) such number of Common Shares of the Principal Party in such
Business Combination (if the Principal Party is not also the Surviving
Person in such Business Combination) as shall have an aggregate Book
Value immediately after giving effect to such Business Combination
equal to the result obtained by multiplying the Purchase Price by two;
or
(3) if the Principal Party in such Business Combination is an
Affiliate of one or more Persons which has Registered Common Shares
outstanding, such number of Registered Common Shares of whichever of
such Affiliates of the Principal Party has Registered Common Shares
with the greatest aggregate Market Value on the date of consummation
of such Business Combination as shall have an aggregate Market Value
on the date of such Business Combination equal to the result obtained
by multiplying the Purchase Price by two.
(II) The Company shall not consummate any Business Combination unless
each issuer of Common Shares for which Rights may be exercised, as set forth in
this Section 11(c), shall have sufficient authorized Common Shares that have not
been issued or reserved for issuance (and which shall, when issued upon exercise
thereof in accordance with this
<PAGE>
17
Rights Agreement, be validly issued, fully paid and nonassessable and free of
preemptive rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof) to permit the exercise in full
of the Rights in accordance with this Section 11(c) and unless prior thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights, shall be effective under
the securities Act; and
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a supplemental
agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(c) (including the obligation
of such issuer to issue Common Shares upon the exercise of Rights in
accordance with the terms set forth in Sections 11(c)(I) and
11(c)(III)) and further providing that such issuer, at its own
expense, will use its best efforts to:
(1) cause a registration statement under the Securities Act
on an appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights, to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(2) qualify or register the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights under the
blue sky or securities laws of such jurisdictions as may be
necessary or appropriate; and
(3) list the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights on each national
securities exchange on which the Common Shares were listed prior
to the consummation of the Business Combination or, if the Common
Shares were not listed on a national securities exchange prior to
the consummation of the Business Combination, on a national
securities exchange;
(B) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a
valid, binding and enforceable agreement of such issuer; and
<PAGE>
18
(C) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number of
Common Shares of such issuer which may be purchased upon the exercise
of each Right after the consummation of such Business Combination.
(III) After consummation of any Business Combination and subject to
the provisions of Section 11(c)(II), (i) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(c) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (ii) the term
"Company" shall thereafter be deemed to refer to such issuer, (iii) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the provisions of
Sections 11(a) and 11(b)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (iv) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11(a) and 12(a) and the provisions of
Sections 7, 9 and 10 shall apply, as nearly as reasonably may be, on like terms
to any such Common Shares.
Section 12. Certain Adjustments. (a) To preserve the actual or
-------------------
potential economic value of the Rights, if at any time after the date of this
Rights Agreement there shall be any change in the Common Shares, whether by
reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of securities, split-ups, split-offs,
spin-offs, liquidations, other similar changes in capitalization, any
distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Common Shares (other than
the Rights or regular quarterly cash dividends), or otherwise, then, in each
such event the Board of Directors of the Company shall make such appropriate
adjustments in the number of Common Shares (or the number and kind of other
securities) issuable upon exercise of each Right, the Purchase Price and
Redemption Price in effect at such time and the number of Rights outstanding at
such time (including the number of Rights or fractional Rights associated with
each Common Share) such that following such adjustment such event shall not have
had the effect of reducing or limiting the benefits the holders of the Rights
would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Common Shares, thereafter the number of such
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11(a) and 12(a) and the provisions of
Sections 7, 9 and 10 with respect to the Common Shares shall apply on like
terms, as nearly as reasonably may be, to any such other securities.
<PAGE>
19
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Common Shares or other securities relating to a
Right shall evidence the right to purchase, for the Purchase Price, the adjusted
number and kind of securities purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares or number or kind of other securities issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the terms which were expressed in the initial
Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Common Shares and/or other securities, if any, issuable upon such exercise
over and above the Common Shares and/or other securities, if any, issuable
before giving effect to such adjustment; provided, however, that the Company
-------- -------
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
Section 13. Certificate of Adjustment. Whenever an adjustment is
-------------------------
made as provided in Section 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Common Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
Section 14. Additional Covenants. (a) Notwithstanding any other
--------------------
provision of this Rights Agreement, no adjustment to the number of Common Shares
(or fractions of a share) or other securities for which a Right is exercisable
or the number of Rights outstanding or associated with each Common Share or any
similar or other adjustment shall be made or be effective if such adjustment
would have the effect of reducing or limiting the benefits the holders of the
Rights would have had absent such adjustment, including, without limitation, the
benefits under Sections 11 and 12, unless the terms of this Rights Agreement are
amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the Distribution
Date, except as permitted by Section 26, it will not take (or permit any
Subsidiary of the Company to take) any action if at the time such action is
taken it is reasonably foreseeable that such
<PAGE>
20
action will reduce or otherwise limit the benefits the holders of the Rights
would have had absent such action, including, without limitation, the benefits
under Sections 11 and 12. Any action taken by the Company during any period
after any Person becomes an Acquiring Person but prior to the Distribution Date
shall be null and void unless such action could be taken under this Section
14(b) from and after the Distribution Date.
Section 15. Fractional Rights and Fractional Shares. (a) The Company
---------------------------------------
may, but shall not be required to, issue fractions of Rights or distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company may pay to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 15(a), the current market value of a whole
Right shall be the closing price of the Rights (as determined pursuant to the
second and third sentences of the definition of Market Value contained in
Section 1) for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractions of
Common Shares upon exercise of the Rights or distribute certificates which
evidence fractional Common Shares. In lieu of fractional Common Shares, the
Company may elect to pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Common Share. For purposes of
this Section 15(b), the current market value of a Common Share shall be the
closing price of a Common Share (as determined pursuant to the second and third
sentences of the definition of Market Value contained in Section 1) for the
Trading Day immediately prior to the date of such exercise. If, as a result of
an adjustment made pursuant to Section 12(a), the holder of any Right thereafter
exercised shall become entitled to receive any securities other than Common
Shares, the provisions of this Section 15(b) shall apply, as nearly as
reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractions of
Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates which evidence fractional Common Shares. In lieu of
such fractional Common Shares, the Company may pay to the registered holders of
the Right Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current Market Value of one Common Share as of the date on which a Person became
an Acquiring Person.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as provided in this Section 15.
<PAGE>
21
Section 16. Rights of Action. (a) All rights of action in respect
----------------
of this Rights Agreement are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right certificate and in this Rights Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Rights Agreement and shall be entitled to
specific performance of the obligations of any Person under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
Section 17. Transfer and Ownership of Rights and Right Certificates.
-------------------------------------------------------
(a) Prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the Person in
whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated certificate for
Common Shares made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 18. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, shall be entitled to vote or receive dividends or be deemed,
for any purpose, the holder of the Common Shares or of any other securities of
the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate as
such, any of the rights of a stockholder of the Company including,
<PAGE>
22
without limitation, any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders, or to receive dividends or other distributions
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised to purchase Common Shares in
accordance with the provisions hereof.
Section 19. Concerning the Rights Agent. (a) The Company agrees to
---------------------------
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and from time to time, on demand of the Rights Agent, its reasonable
expenses and other counsel fees and disbursements
incurred in the administration and execution of this Rights Agreement and the
exercise and performances of its duties hereunder.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 20. Merger or Consolidation or Change of Rights Agent. (a)
-------------------------------------------------
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided that such corporation would
--------
be eligible for appointment as a successor Rights Agent under the provisions of
Section 22. In case, at the time such successor Rights Agent shall succeed to
the agency created by this Rights Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the
<PAGE>
23
Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
Section 21. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, of the Common Shares), by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete author ization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, a Vice President (whether or not
preceded by any additional title), the Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any
<PAGE>
24
Right Certificate; nor shall it be responsible for any adjustment required under
the provisions of Section 11 or 12 or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Common Shares to be issued
pursuant to this Rights Agreement or any Right Certificate or as to whether any
Common Shares will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Operating Officer, a Vice President (whether preceded by any
additional title), the Secretary or the Treasurer of the Company in connection
with its duties and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct provided reasonable care was exercised in the selection
and continued employment thereof.
Section 22. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares by registered or certified mail, and to
the holders of the Right Certificates (or, prior to
<PAGE>
25
the Distribution Date, of the Common Shares) by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days, notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares by registered or
certified mail, and to the holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares) by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (or, prior to the Distribution Date, of the Common Shares)
(who shall, with such notice, submit his Right Certificate or, prior to the
Distribution Date, the certificate representing his Common Shares for inspection
by the Company), then the registered holder of any Right Certificate (or, prior
to the Distribution Date, of the Common Shares) may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York (or of any other state of the United States so long as
such corporation is authorized to conduct a stock transfer or corporate trust
business in the State of New York), in good standing, having a principal office
in the State of New York, which is authorized under such laws to exercise stock
transfer or corporate trust powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares, and mail
a notice thereof in writing to the registered holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Shares). Failure to give any
notice provided for in this Section 22, however, or any defect therein shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 23. Issuance of Additional Rights and Right Certificates.
----------------------------------------------------
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, the Company (a) shall, with respect
<PAGE>
26
to Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of Directors
of the Company, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
-------- -------
such Right Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 24. Redemption and Termination. (a) The Board of Directors
--------------------------
of the Company may, at its option, at any time prior to the earlier of (i) such
time as a Person becomes an Acquiring Person and (ii) the Expiration Date, order
the redemption of all, but not fewer than all, the then outstanding Rights at
the Redemption Price (the date of such redemption being the "Redemption Date"),
and the Company, at its option, may pay the Redemption Price either in cash or
Common Shares or other securities of the Company deemed by the Board of
Directors of the Company, in the exercise of its sole discretion, to be at least
equivalent in value to the Redemption Price; provided, however, that, in
-------- -------
addition to any other limitations contained herein on the right to redeem
outstanding Rights (including the occurrence of any event or the expiration of
any period after which the Rights may no longer be redeemed), for the 120-day
period after any date of a change (resulting from a proxy or consent
solicitation) in a majority of the Board of Directors of the Company in office
at the commencement of such solicitation, the Rights may only be redeemed if (A)
there are directors then in office who were in office at the commencement of
such solicitation and (B) the Board of Directors of the Company, with the
concurrence of a majority of such directors then in office, determines that such
redemption is, in their judgment, in the best interests of the Company and its
stockholders.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 Business Days after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then outstanding
Rights by mailing such notice to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Each such notice of redemption will state the method by which payment
of the Redemption Price will be made. The notice, if mailed in the manner
herein provided, shall be conclusively presumed to have been duly given, whether
or not the holder of Rights receives such notice. In any case, failure to give
such notice by mail, or any defect
<PAGE>
27
in the notice, to any particular holder of Rights shall not affect the
sufficiency of the notice to other holders of Rights.
Section 25. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of a Right Certificate
(or, prior to the Distribution Date, of the Common Shares) to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Rofin-Sinar Technologies, Inc.
45701 Mast Street
Plymouth, MI 48170
Attention: General Counsel
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
Bank of New York
101 Barclay Street
New York, N.Y. 10286
Attention: [Stock Transfer Department]
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares.
Section 26. Supplements and Amendments. At any time prior to the
--------------------------
Distribution Date and subject to the last sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Rights Agreement (including, without limitation, the
date on which the Distribution Date shall occur, the time during which the
Rights may be redeemed pursuant to Section 24 or any provision of the Company's
Certificate of Incorporation) without the approval of any holder of the Rights.
From and after the Distribution Date and subject to applicable law, the Company
may, and the Rights Agent shall if the Company so directs, amend this Rights
<PAGE>
28
Agreement without the approval of any holders of Right Certificates (i) to cure
any ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision of this Rights
Agreement or (ii) to make any other provisions in regard to matters or questions
arising hereunder which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Any supplement or amendment adopted during any period after any Person
has become an Acquiring Person but prior to the Distribution Date shall be null
and void unless such supplement or amendment could have been adopted under the
prior sentence from and after the Distribution Date. Any supplement or
amendment to this Rights Agreement duly approved by the Company shall become
effective immediately upon execution by the Company, whether or not also
executed by the Rights Agent. Notwithstanding anything contained in this Rights
Agreement to the contrary, during the 120-day period after any date of a change
(resulting from a proxy or consent solicitation) in a majority of the Board of
Directors of the Company in office at the commencement of such solicitation,
this Rights Agreement may be supplemented or amended only if (A) there are
directors then in office who were in office at the commencement of such
solicitation and (B) the Board of Directors of the Company, with the concurrence
of a majority of such directors then in office, determines that such supplement
or amendment is, in their judgment, in the best interests of the Company and its
stockholders and, after the Distribution Date, the holders of the Rights. In
addition, notwithstanding anything to the contrary contained in this Rights
Agreement, no supplement or amendment to this Rights Agreement shall be made
which (a) reduces the Redemption Price (except as required by Section 12(a)),
(b) provides for an earlier Expiration Date or (c) changes the last two
sentences in the definition of Acquiring Person contained in Section 1.
Section 27. Successors. All the covenants and provisions of this
----------
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. Benefits of This Rights Agreement; Determinations and
-----------------------------------------------------
Actions by the Board of Directors, etc. (a) Nothing in this Rights Agreement
- --------------------------------------
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, of the Common Shares) any legal or equitable right, remedy or
claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, of the
Common Shares).
(b) Except as explicitly otherwise provided in this Rights Agreement,
the Board of Directors of the Company shall have the exclusive power and
authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the
<PAGE>
29
administration of this Rights Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Rights Agreement and
(ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend this Rights
Agreement and a determination of whether there is an Acquiring Person).
Section 29. Severability. If any term, provision, covenant or
------------
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 30. Governing Law. This Rights Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract made under the law
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the law of such State applicable to contracts to be made and
performed entirely within such State.
Section 31. Counterparts. This Rights Agreement may be executed in
------------
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
of this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
ROFIN-SINAR TECHNOLOGIES, INC.
By: _____________________________________
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By: _____________________________________
Name:
Title:
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. R-
__________ Rights
NOT EXERCISABLE AFTER [DATE], OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$[0.01] PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL
AND VOID AND NONTRANSFERABLE.
Right Certificate
ROFIN-SINAR TECHNOLOGIES, INC.
This certifies that , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of September __, 1996 (the "Rights Agreement"), between
Rofin-Sinar Technologies, Inc., a Delaware corporation (the "Company"), and The
Bank of New York, a national banking association, as Rights Agent (the "Rights
Agent"), unless the Rights evidenced hereby shall have been previously redeemed
by the Company, to purchase from the Company at any time after the Distribution
Date (as defined in the Rights Agreement) and prior to 5:00 p.m., New York City
time, on [DATE] (the "Expiration Date"), at the principal office of the Rights
Agent, or its successors as Rights Agent, in New York, New York, one fully paid,
nonassessable share of Common Stock, par value $[0.01] per share, of the Company
(the "Common Shares"), at a purchase price of $____ per share (the "Purchase
Price") payable in cash, upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of
<PAGE>
2
September __, 1996. As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares which may be purchased upon the exercise of each
Right evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
reference to the Rights Agreement is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certifi cates.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price (in cash or shares of Common Stock or other securities of
the Company deemed by the Board of Directors to be at least equivalent in value)
of $[0.01] per Right (which amount shall be subject to adjustment as provided in
the Rights Agreement) at any time prior to the earlier of (i) such time as a
Person becomes an Acquiring Person and (ii) the Expiration Date; provided,
--------
however, that, for the 120-day period after any date of a change (resulting from
- -------
a proxy or consent solicitation) in a majority of the Board of Directors of the
Company in office at the commencement of such solicitation, the Rights may only
be redeemed if (A) there are directors then in office who were in office at the
commencement of such solicitation and (B) the Board of Directors of the Company,
with the concurrence of a majority of such directors then in office, determines
that such redemption is, in their judgment, in the best interests of the Company
and its stockholders.
<PAGE>
3
The Company may, but shall not be required to, issue fractions of
Common Shares or distribute certificates which evidence fractions of Common
Shares upon the exercise of any Right or Rights evidenced hereby. In lieu of
issuing fractional shares, the Company may elect to make a cash payment as
provided in the Rights Agreement for fractions of a share.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company, including, without limitation, any right to
vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in
accordance with the provisions of the Rights Agreement.
<PAGE>
4
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of:
ROFIN-SINAR TECHNOLOGIES, INC.
By: _____________________________________
Name:
Title:
Attest:
____________________________________
Name:
Title:
Countersigned:
THE BANK OF NEW YORK
as Rights Agent,
By: ________________________________
Authorized Officer
<PAGE>
EXHIBIT 5.1
August 30, 1996
Rofin-Sinar Technologies Inc.
45701 Mast Street
Plymouth, MI 48170
Ladies and Gentlemen:
We have acted as counsel for Rofin-Sinar Technologies Inc., a Delaware
corporation (the "Company"), in connection with the filing by the Company with
the Securities and Exchange Commission of a registration statement on Form S-1
(No. 333-09539) (the "Registration Statement") covering the registration under
the Securities Act of 1933, as amended (the "Act"), of 11,500,000 shares (the
"Shares") of the Company's common stock, par value $0.01 per share. The Shares
are to be sold by the Company pursuant to the terms of an underwriting agreement
(the "Underwriting Agreement") between the Company and the underwriters named
therein.
We have examined originals, or copies certified or otherwise
identified to our satisfaction, of such documents and corporate and public
records as we have deemed necessary as a basis for the opinion hereinafter
expressed. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents presented to us as originals and
the conformity to the originals of all documents presented to us as copies. In
rendering our opinion, we have relied as to factual matters upon certificates of
officers of the Company and certificates of public officials.
Our opinion expressed herein is limited to the Federal law of the
United States, the law of the State of New York and the General Corporation Law
of the State of Delaware.
Based on the foregoing and having regard for such legal considerations
as we deem relevant, we are of the opinion that, when issued and delivered in
accordance with the terms of the Underwriting Agreement, the Shares will be
legally issued, fully paid and non-assessable.
<PAGE>
2
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" contained in the prospectus which is included in the Registration
Statement. In giving this consent, we do not thereby concede that we come
within the category of persons whose consent is required by the Act or the
General Rules and Regulations promulgated thereunder.
/s/ Shearman & Sterling
---------------------------
Shearman & Sterling
<PAGE>
Notary's official recording of
the agreement is required
Sale and Transfer Agreement
dated as of ............................... 1996
between
Siemens Aktiengesellschaft
Wittelsbacherplatz 2, 80333 Munich,
having registered seats in Berlin and Munich,
registered in the commercial register of the local court
of Berlin-Charlottenburg under no. HRB 12300
and in the commercial register of the local court
of Munich under no. HRB 6684
("Siemens")
and
Rofin Sinar Technologies Inc.,
45701 Mast Street, Plymouth, Michigan, 48170, U.S.A.,
a company incorporated under the laws of the U.S. State of Delaware
("Rofin")
for the shares of Rofin Sinar Laser GmbH
BerzeliustraBe 87, 22113 Hamburg,
registered in the commercial register of the local court
of Hamburg under no. HRB 18044
("COMPANY")
<PAGE>
2
WHEREAS:
(A) Siemens conducts its laser business in the field of material processing
applications through the COMPANY and an indirectly owned subsidiary, Rofin
Sinar Inc. ("RSI"). Siemens and Rofin have concluded that Siemens' laser
business will have a better opportunity to achieve its full potential as an
independent entity rather than as a part of Siemens.
(B) Rofin proposes to issue and sell certain shares of common stock in an
international initial public offering (the "IPO") and such shares are to be
purchased and distributed by Deutsche Morgan Grenfell/C.J. Lawrence Inc.,
Alex. Brown & Sons Incorporated and Lehman Brothers Inc. (the "U.S.
Underwriters"), Morgan Grenfell & Co., Limited, Alex. Brown & Sons Limited
and Lehman Brothers International (Europe) (the "International
Underwriters", together with the U.S. Underwriters, the "Underwriters")
pursuant to the terms of an agreement to be made among Rofin, Siemens
Corporation and the Underwriters (the "Underwriting Agreement").
(C) It is anticipated that Rofin will use a certain part of the proceeds of the
IPO to pay the purchase price for the sale and transfer of the stock of the
COMPANY as contemplated in this agreement and to purchase the stock of RSI
as will be contemplated in a separate agreement.
IT IS AGREED as follows:
<PAGE>
3
((S)) 1
THE COMPANY
1. The aggregate share capital (Stammkapital) of the COMPANY amounts to DM
4.134.000 (German Marks: four million one hundred thirty four thousand).
Siemens holds all shares (Geschaftsanteile) (the "SHARES") of the COMPANY.
The share capital of the COMPANY is divided in the following SHARES:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
a) share of two million eight hundred thousand 2.800-000,-
b) share of four hundred thousand 400.000,-
c) share of three hundred and thirty-eight thousand 338.000,-
d) share of two hundred and ten thousand 210.000,-
e) share of one hundred thousand 100.000,-
f) share of fifty thousand 2 x 50.000,-
g) share of forty-five thousand 45.000,-
h) share of thirty thousand 30.000,-
i) share of twenty-five thousand 25.000,-
k) share of twenty-two thousand and five hundred 22.500,-
1) share of sixteen thousand 16.000,-
m) share of ten thousand 3 x 10.000,-
n) share of six thousand five hundred 6.500,-
o) share of five thousand 2 x 6.000,-
p) share of one thousand 1,000,-
-----------
4.134.000,-
</TABLE>
The share capital is fully paid in.
2. The business activities of the COMPANY are located in Hamburg and Gunding.
3. The COMPANY has holdings in the following affiliated companies and to the
following extent at the time of the execution of this Agreement:
a) 99,97 % of the shares of Rofin Sinar France S.A., 10, Allee du Cantal,
Z.I., La Petite Montagne Sud, F-91018 Evry Cedex, FRANCE;
b) 90,65 % of the shares of Rofin Sinar Italiana S.r.l., Via Galilei, 1,
I-20090 Rovagnasco di Segrate (MI), ITALY;
c) 51% of the shares of Rofin-Marubeni Laser Corp., Sun-Intelligent Bldg.
4 F, 3162 Sakai Atsugi-shi, Kanagawa-kan, 243 JAPAN.
<PAGE>
4
4. Siemens represents and warrants that (i) all statements made under
Paragraphs 1 to 3 above are true, (ii) the SHARES have validly come into
existence and are free and clear of all liens, security interests, claims
or rights of any third parties or any encumbrances of any kind whatsoever
and (iii) the Articles of Association (Satzung) of the COMPANY dated as of
November 8, 1988 continue to be effective without any changes or amendments
thereto and will not be changed or amended prior to the TRANSFER DATE (as
hereinafter defined). in case any breach or inaccuracy in any of the
representations and warranties of Siemens contained in this subsection
results in Rofin's not acquiring all ownership rights, title and interest
to the SHARES free from any third party rights, Rofin may in addition to
any other rights granted under this Agreement elect to rescind this
Agreement (Ruecktritt vom Vertrag).
((S)) 2
SALE AND TRANSFER
Siemens agrees to sell to Rofin and Rofin agrees to purchase from Siemens all
SHARES mentioned under (S) 1 Section 1 above representing 100% of the capital
stock of the COMPANY. Siemens assigns all such SHARES to Rofin and Rofin
accepts such assign ment. The sale and the assignment of the SHARES shall be
effective as of and shall be conditional upon the occurrence of the transfer
date as defined in (S) 5 of this Agreement (the "TRANSFER DATE").
((S)) 3
PURCHASE PRICE
As consideration for the purchase of the SHARES Rofin agrees to pay to Siemens
an amount of US $............................... million (the "Purchase Price").
The parties to this Agreement acknowledge and agree that the amount of the
Purchase Price reflects the fair market value of the SHARES on the TRANSFER
DATE.
<PAGE>
5
((S)) 4
PAYMENT OF THE PURCHASE PRICE
On the TRANSFER DATE Rofin will promptly pay - or cause the Underwriters to
arrange to pay promptly at Siemens' request - the Purchase Price by wire
transfer of immediately available funds to a bank account designated by Siemens.
((S)) 5
TRANSFER DATE
The TRANSFER DATE shall be on the day on which Siemens receives a notification
from Rofin with a copy to Deutsche Morgan Grenfell/C.J. Lawrence, Inc. in
substantially the form attached as Exhibit 1 hereto. The notification may be
delivered in person or sent by facsimile and Siemens shall immediately upon the
receipt of the notification acknowledge such receipt by returning a
countersigned copy to Rofin with a copy to Deutsche Morgan Grenfell/C.J.
Lawrence, Inc.
((S)) 6
PROFITS
1. Prior to the TRANSFER DATE, Siemens (as the sole shareholder of the
COMPANY) shall adopt a shareholder resolution in substantially the form
attached as Exhibit 2 hereto pursuant to which (i) a portion of the
estimated profits (Gewinn) for the current fiscal year 1995/96 of the
COMPANY (which portion shall be defined in such shareholder resolution and
shall not exceed the anticipated aggregate distributable profits of the
COMPANY for the fiscal year ending on September 30, 1996) shall be
distributed to Siemens (Vorabausschuettung), and (ii) Siemens shall make a
capital contribution in cash to the COMPANY's paid-in capital (Zuzahlung in
die Kapitalruecklage) of an amount equal to the profits distributed by the
COMPANY to Siemens pursuant to the part of the resolution referred to under
(i) above.
2. Siemens represents and warrants that on the TRANSFER DATE, it will have
effected the capital contribution in cash to the COMPANY as contemplated
under Section 1. above. In case of any breach or inaccuracy of any of the
representations and warranties of Siemens contained in sentence 1, the
Purchase Price shall be reduced by the excess of the amount of the profits
for the current fiscal year 1995/96 of the COMPANY distributed to Siemens
as contemplated under Section 1. above over the
<PAGE>
6
amount of the capital contribution in cash to the COMPANY effected by
Siemens as contemplated under Section 1. above.
((S)) 7
NON-COMPETITION AGREEMENT
For four years after the TRANSFER DATE Siemens shall not, and shall cause all of
its affiliates and subsidiaries not to, engage or attempt to engage in the
design, research, development, engineering, manufacture, sale, marketing,
servicing or installation of high power laser products for cutting, welding or
marking industrial materials (the "Business") for commercial purposes anywhere
in the world, whether for its own account or as a partner, joint venturer,
agent, stockholder of a corporation (other than as a beneficial owner of
securities or other interests in a corporation, partnership or other entity
representing less than 5% of the voting power of such corporation, partnership
or other entity).
Notwithstanding anything to the contrary contained in this paragraph, Siemens
shall have the right to acquire the business, assets or equity interest of any
company or entity engaged in the Business to the extent that such acquired
business, assets, company or entity derives no more than [25%] of its revenues
from the Business, with the parties of this Agreement acknowledging that such
transaction shall not be a violation of this paragraph provided the revenues
from the Business do not exceed DM 50 millions.
((S)) 8
INDEMNIFICATION: WAIVER REGARDING LOSSES
1. From and after the TRANSFER DATE, Rofin shall, and shall cause the COMPANY
to, indemnify and hold harmless Siemens from any and all losses, damages
(including consequential and punitive damages), liabilities, claims,
judgments, expenses (including attorneys' fees) and obligations of any kind
whatsoever (collectively "Losses") arising out of, relating to or in
connection with the (i) ownership or operation by Rofin of the COMPANY and
any of their subsidiaries and affiliates, and any of their respective
businesses, properties or assets from and after the TRANSFER DATE, (ii) any
breach or inaccuracy in any of the representations or warranties of Rofin
contained in this Agreement, (iii) any failure by Rofin to perform any of
its obligations, covenants or agreements contained in this Agreement. In
addition Rofin shall, and Rofin shall cause the COMPANY to irrevocably and
unconditionally waive any right or claim against Siemens for any
reimbursement, funding, indemnification or payment whatsoever for Losses
relating to the COMPANY or its subsidiaries or
<PAGE>
7
affiliates and to the period starting on October 1, 1995 due to the
termination for tax purposes of the Profit and Loss Transfer Agreement
(Gewinnabfuehrungsvertrag) dated as of May 16, 1988 between Siemens and the
COMPANY (the "Profit and Loss Transfer Agreement") pursuant to such Profit
and Loss Transfer Agreement. Rofin shall further, and Rofin shall cause
the COMPANY to hold Siemens harmless from any third party claim under the
Stock Corporation Act (Aktiengesetz), if applicable, in connection with the
termination of the Profit and Loss Transfer Agreement by September 30, 1996
as contemplated by the Profit and Loss Transfer Termination Agreement dated
as of June 24/25, 1996 between Siemens and the COMPANY (the "Profit and
Loss Transfer Termination Agreement").
The Profit and Loss Transfer Agreement and the Profit and Loss Transfer
Termination Agreement are attached hereto as Exhibits 2 and 3.
2. From and after the TRANSFER DATE, Siemens shall indemnify and hold harmless
Rofin from any and all Losses arising out of, relating to or in connection
with (i) any breach or inaccuracy in any representations or warranties of
Siemens contained in this Agreement and (ii) any failure by Siemens to
perform any of its obligations, covenants or agreements contained in this
Agreement.
((S)) 9
LIABILITY FOR TAXES, REFUNDS
Siemens agrees to indemnify and hold harmless the COMPANY and its affiliated
companies as per (S) 1 Section 3 of this Agreement for any taxes imposed with
respect to any taxable period ending at, or any taxable period ended prior to,
the TRANSFER DATE, or any taxable period during which the TRANSFER DATE occurs
(with the exception of taxes attributable to actions taken by Rofin or to
business transactions occurring after the TRANSFER DATE), and for any Losses
incurred in contesting or otherwise in connection with such taxes. Any
indemnification required pursuant to this paragraph shall include an amount
sufficient to hold these companies harmless on a net after-tax basis.
Any tax refund (Steuererstattung/Steuergutschrift) including any interest with
respect thereto relating to any taxable period ended at, or any taxable period
ended prior to, the TRANSFER DATE shall be paid to Siemens within 10 business
days of its receipt by the COMPANY and its affiliated companies as per (S) 1
Section 3 of this Agreement.
Siemens shall provide Rofin and its subsidiaries with such cooperation and
information as Rofin or its subsidiaries reasonably may request of Siemens in
connection with tax matters relating to the COMPANY and its subsidiaries
including, but not limited to an audit or other
<PAGE>
8
official proceeding relating to the COMPANY or its subsidiaries. Rofin shall,
and shall cause its subsidiaries to, provide Siemens with such cooperation and
information as Siemens reasonably may request of Rofin or its subsidiaries in
connection with tax matters relating to the COMPANY and its subsidiaries
including but not limited to an audit or other official proceeding relating to
Siemens or its subsidiaries.
((S)) 10
GOVERNING LAW
This Agreement shall be governed by the substantive laws of the Federal Republic
of Germany. The application of the United Nations Convention on Contracts for
the International Sale of Goods of April 11, 1980 if applicable shall be
excluded.
((S)) 11
ARBITRATION
1. All disputes arising out of or in connection with this Agreement including
any dispute regarding its existence, validity or termination, shall be
settled by an amicable effort of both parties to the Agreement. An attempt
to arrive at a settlement shall be deemed to have failed as soon as one of
the parties to the Agreement so notifies the other party in writing.
2. If an attempt at settlement has failed, the disputes shall be finally
settled under the Rules of Arbitration of the International Chamber of
Commerce in Paris by three arbitrators appointed in accordance with the
said Rules.
3. The place of the arbitration shall be Nuremberg. The procedural law of
this place shall apply where the arbitration rules are silent.
((S)) 12
ADVISORY BOARD (BEIRAT)
Siemens shall cause all members of the Advisory Board of the COMPANY nominated
by Siemens (Mr. Huttl, Prof. Danielmeyer, Prof. Schindler, Dr. Schwerna, Mr.
Stubner) to resign from the Advisory Board effective as of the TRANSFER DATE.
<PAGE>
9
((S)) 13
TERMINATION
In the event that the TRANSFER DATE has not occurred on or before September 30,
1996, each party shall be entitled to terminate this Agreement with immediate
effect (Kundigung).
((S)) 14
EXPENSES
All expenses, fees and taxes connected with the sale and the assignment of the
SHARES shall be borne by Siemens. The COMPANY owns real estate property
(Erbbaurecht) in Hamburg (competence of the Finanzamt Hamburg).
((S)) 15
MISCELLANEOUS
1 . Modifications and supplements to this Agreement shall be subject to the
prior written consent of Deutsche Morgan Grenfell/C.J. Lawrence, Inc.,
unless the Underwriting Agreement has been terminated and shall further be
effective only if made in writing, wherever mandatory statutory law does
not provide for a stricter form.
2. All claims between the parties which are not explicitly addressed in this
Agreement are excluded. The foregoing shall not apply to claims which are
based on imperative provisions of the applicable law.
3. Should individual provisions of this Agreement become ineffective this will
not effect the other provisions of the Agreement. The parties to the
Agreement shall attempt to arrive amicably at a new provision of an
economic effect equivalent to the ineffective provision it is replacing.
<PAGE>
EXHIBIT 1
- ---------
[Letterhead of Rofin Sinar Technologies Inc.]
Siemens Aktiengesellschaft
Wittelbacherplatz 2
D-90333 Munich, Germany
Facsimile: _____________________
Attention: _____________________
[Place, September __, 1996]
Dear Sirs,
We refer to the Underwriting Agreement dated as of September __, 1996 among
certain underwriters, Siemens Corporation and ourselves (the "Underwriting
Agreement").
We herewith confirm that we will implement all the actions as required from
us pursuant to clause 3(1)(a) of the Underwriting Agreement today.
Please acknowledge the receipt of this notification by signing below and
return a countersigned copy of this document to us.
Sincerely yours,
ROFIN SINAR TECHNOLOGIES INC.
By: ____________________________
cc: Deutsche Morgan Grenfell/C.J. Lawrence, Inc.
We acknowledge that we have received the above notification today.
SIEMENS AKTIENGESELLSCHAFT
Date: September __, 1996
By: ____________________________
cc: Deutsche Morgan Grenfell/C.J. Lawrence, Inc.
<PAGE>
Privileged and Confidential
---------------------------
DRAFT 8/26/96
Sale and Transfer Agreement
---------------------------
THIS SALE AND TRANSFER AGREEMENT made as of this __ day of September, 1996
by and among Siemens Power Corporation, a Delaware corporation ("SPC") and Rofin
Sinar Technologies Inc., a Delaware corporation ("RST").
WITNESSETH
----------
WHEREAS, SPC owns 1,000 shares (the "RSI Shares") of Common Stock, par
value $1.00 per share, of Rofin-Sinar, Inc., a Delaware corporation ("RSI")
(representing all of the outstanding shares of stock of RSI);
WHEREAS, SPC owns one share of Common Stock, par value $1.00, of RST
(representing all of the outstanding shares of stock of RST), which RST issued
to SPC in exchange for a capital contribution of $1,000; and
WHEREAS, SPC has formed RST for the purpose of selling and transferring
to RST (i) the RSI Shares pursuant to this Agreement and (ii) all of the
outstanding shares of Rofin-Sinar Laser GmbH, a company organized under the laws
of the Federal Republic of Germany ("RSGmbH") pursuant to a Transfer and Sale
Agreement between Siemens Aktiengesellschaft,
<PAGE>
a company organized under the laws of the Federal Republic of Germany ("Siemens
AG") and RST made as of the __ day of September, 1996 (the "RSGmbH Shares Sales
and Transfer Agreement"), all in anticipation of an initial public offering of
the common stock of RST (the "IPO").
NOW, THEREFORE, the parties hereto mutually covenant and agree as follows:
Section 1. Sale and Transfer; Purchase Price.
---------------------------------
SPC hereby sells and transfers to RST, and RST hereby purchases from SPC,
all of the RSI Shares, free and clear of all liens, security interests, claims
or rights of any third parties or any other encumbrances of any kind whatsoever.
SPC shall deliver to RST all certificates representing the RSI Shares, duly
endorsed (or accompanied by duly executed stock powers or other instruments of
transfer). As consideration for the purchase of the RSI Shares, RST hereby
issues to SPC a promissory note in substantially the form attached as Exhibit 1
hereto (the "Promissory Note") in the principal amount of $_________________;
The parties to this Agreement acknowledge and agree that the principal
amount of the Promissory Note shall reflect the fair market value of the RSI
Shares on the date of the First Closing (as defined in the Underwriting
Agreement referred to in Section 7).
2
<PAGE>
Section 2. Repayment of the Notes.
-----------------------
At the time of the First Closing, RST will promptly repay -- or cause the
underwriters in the IPO to arrange to repay promptly -- the full principal
amount of the Promissory Note by wire transfer of immediately available funds at
a bank account designated by SPC.
Section 3. Repurchase of RST Shares
------------------------
At the time of the First Closing, RST will repurchase from SPC for
One Thousand Dollars (U.S.) ($1,000) the one share of RST Common Stock, par
value $1.00 per share, originally issued by RST to SPC upon the formation of
RST.
Section 4. Non-Competition Agreement.
--------------------------
(a) For four years after the date of the First Closing, SPC shall
not, and shall cause each of its affiliates and subsidiaries not to, engage or
attempt to engage in the design, research, development, engineering,
manufacture, sale, marketing, servicing or installation of laser products for
material processing applications, including, without limitation, for cutting,
welding or marking industrial materials (the "Business") for commercial purposes
anywhere in the world, whether for its own account or as a partner, joint
venturer, agent, stockholder of a corporation or otherwise (other than as a
beneficial owner of securities or other interests in a
3
<PAGE>
corporation, partnership or other entity representing less than 5% of the voting
power of such corporation, partnership or other entity). Notwithstanding
anything to the contrary contained in this Section 4(a), SPC shall have the
right to acquire the business, assets or equity interest of any company or
entity engaged in the Business to the extent that such acquired business,
assets, company or entity derives no more than [25%] of its revenues from the
Business, with the parties to this Agreement acknowledging that any such
transaction shall not be a violation of this Section 4(a) provided the revenues
--------
from the Business do not exceed DM 50 million.
(b) Without limiting any other rights that may be available to them
hereunder, the parties acknowledge that (i) the covenants of this Section 4 are
reasonable and necessary for the protection and commercial success of RST and
(ii) RST and its affiliates and subsidiaries will be irrevocably damaged if such
covenants are not specifically enforced. Accordingly, the parties agree that
notwithstanding any other provisions of this Agreement, RST and its affiliates
and subsidiaries shall be entitled (in addition to any other rights and remedies
that it may have at law or in equity) to injunctive relief for the purpose of
restraining SPC or any of its affiliates or subsidiaries from directly or
indirectly taking or continuing to take any acts in violation of this Section 4
(and no bond or other security shall be required in connection therewith).
4
<PAGE>
(c) The provisions contained in this Section 4 as to the time periods,
scope or activities and territories restricted shall be deemed divisible, so
that if any provision contained in this Section 4 is determined by a court or
other authority of competent jurisdiction to be invalid or unenforceable, such
provision shall be deemed modified so as to be valid and enforceable to the full
extent lawfully permitted.
Section 5. Indemnification.
----------------
(a) From and after the First Closing, RST shall, and shall cause RSI to,
indemnify and hold harmless, SPC and each of its subsidiaries and affiliates
(including Siemens AG) from any and all losses, damages (including consequential
and punitive damages), liabilities, claims, judgments, expenses (including
attorneys' fees) and obligations of any kind whatsoever (collectively, "Losses")
arising out of, relating to or in connection with the (i) ownership or operation
of RST or RSI and any of their respective businesses, properties or assets from
and after completion of the IPO, (ii) any breach or inaccuracy in any of the
representations or warranties of RST contained in this Agreement or (iii) any
failure by RST to perform any of its obligations, covenants or agreements
contained in this Agreement or the Promissory Note.
(b) From and after the First Closing, SPC shall, and shall cause each of
its subsidiaries and affiliates to, indemnify and hold harmless RST and RSI
from any and all Losses arising out of, relating to or in connection with (i)
any breach or inaccuracy in any representations or warranties of SPC contained
in this Agreement or (ii) any failure by SPC to
5
<PAGE>
perform any of its obligations, covenants or agreements contained in this
Agreement or the Promissory Note.
Section 6. Other Agreements.
-----------------
Prior to or simultaneously with the effectiveness of this Agreement, the
following additional agreements shall have been executed and delivered:
(a) The Profit and Loss Sharing Termination Agreement dated June ___,
1996 between Siemens AG and RSGmbH, substantially in the form of Exhibit 6(a).
(b) Tax Allocation and Indemnification Agreement among RST, RSI, SPC and
Siemens Corporation, substantially in the form of Exhibit 6(b).
(c) The RSGmbH Shares Sale and Transfer Agreement, substantially in the
form of Exhibit 6(c).
(d) Letter Agreement from Siemens Corporation to RSI regarding
forgiveness of certain indebtedness of RSI, substantially in the form of Exhibit
6(d).
6
<PAGE>
Section 7. Effectiveness of Agreement.
---------------------------
Subject to the immediately following sentence, this Agreement shall become
effective and binding upon the signature of the parties hereto. Notwithstanding
the foregoing, the execution and delivery by Siemens Corporation (and certain of
its affiliates) and Deutsche Morgan Grenfell/ C.J. Lawrence, Inc., on behalf of
the underwriters, of a "firm commitment" underwriting agreement relating to the
IPO (the "Underwriting Agreement") and the occurrence of the First Closing as
defined therein shall be a condition subsequent to the effectiveness of Sections
2,3,4, and 5 hereof.
Section 8. Further Assurances.
-------------------
Each of the parties to this Agreement agrees to use its best efforts to
take any action, prepare any documents, make any filings, complete any
additional formalities and otherwise cooperate as is necessary and desirable to
effect all of the transactions contemplated by this Agreement and the
Underwriting Agreement and to carry out the purposes of this Agreement and the
Underwriting Agreement.
Section 9. Representations and Warranties.
-------------------------------
(a) Each of the parties to this Agreement represents and warrants that
(i) it is a corporation duly organized, validly existing and in good standing
under the laws of its state of
7
<PAGE>
incorporation, (ii) it has full legal right and power and all authority and
approvals required to execute and deliver this Agreement and the Promissory
Note and to perform fully its obligations hereunder and thereunder, and (iii)
this Agreement has been duly executed and delivered by each of the parties
hereto and is a valid and binding obligation of each of the parties enforceable
in accordance with its terms.
(b) SPC further represents and warrants to RST that all of the issued
and outstanding shares of RSI have been duly authorized and validly issued and
are fully paid and nonassessable and owned by SPC free and clear of all liens,
encumbrances, equities or claims.
Section 10. Amendments.
-----------
No amendment, revocation or waiver of a provision of this Agreement shall
be effective unless it is in writing and is consented to in writing by Deutsche
Morgan Grenfell/ C.J. Lawrence, Inc.
Section 11. Counterparts.
-------------
This Agreement may be executed in any number of counterparts, all of which,
taken together, shall constitute one and the same instrument and any party
hereto may execute this Agreement by signing any such counterpart.
8
<PAGE>
Section 12. Governing Law; Disputes.
------------------------
(a) This Agreement shall be governed by the laws of New York, without
giving effect to principles of conflicts of law thereunder.
(b) Except as otherwise provided in the Promissory Note, all disputes
arising, relating to or arising in connection with this Agreement that is not
otherwise amicably settled between the parties shall exclusively be resolved by
arbitration between RST and SPC pursuant to the Commercial Arbitration Rules of
the American Arbitration Association (the "Rules"), with the arbitration taking
place in New York, New York.
The arbitral tribunal shall be composed of three arbitrators appointed in
accordance with the Rules. The Chairman of the arbitral tribunal shall be
nominated by the two arbitrators nominated respectively by RST and SPC within 30
days after the second arbitrator has been appointed. RST expressly acknowledges
and agrees that Siemens AG, the ultimate parent entity of SPC, has not in any
way agreed to or consented to the jurisdiction of the Federal, state or local
courts of the United States for any purpose whatsoever and shall not be so
treated hereunder or thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written, with the acknowledgment that this Agreement shall become effective and
valid as described in Section
9
<PAGE>
7.
SIEMENS POWER CORPORATION ROFIN-SINAR TECHNOLOGIES INC.
By: ________________________ By: __________________________
Name: Name:
Title: Title:
By: ________________________ By: __________________________
Name: Name:
Title: Title:
10
<PAGE>
EXHIBIT 1
---------
DEMAND PROMISSORY NOTE
$__,000,000 New York, New York
September __, 1996
FOR VALUE RECEIVED, Rofin-Sinar Technologies Inc., a Delaware
corporation ("Maker"), unconditionally promises to pay to the order of Siemens
Power Corporation, a Delaware corporation ("Payee"), in the manner and at the
place hereinafter provided, the principal amount of ____ Million Dollars
($__,000,000) on demand, but in any event no later than the First Closing Date
(as defined in the Sale and Transfer Agreement referred to below).
No interest shall accrue or be payable on the unpaid principal amount of
this Note.
All payments of principal in respect of this Note shall be made in
lawful money of the United States of America in same day funds to Payee or its
designee at such place as shall be designated in a written notice delivered to
Maker. Whenever any payment on this Note shall be stated to be due on a day that
is not a Business Day (as defined below), such payment shall instead be made on
the next succeeding Business Day. This Note may be prepaid in whole or in part
at any time without penalty or premium. "Business Day" means any day other than
a Saturday, Sunday or legal holiday under the laws of the State of New York or
any other day on which banking institutions located in such state are authorized
or required by law or other governmental action to close.
In the event of any suit for the enforcement of any right or remedy
pursuant to this Note, the prevailing party shall be entitled to reasonably
attorney's fees, costs and expenses, including the costs of litigation or
arbitration, incurred in connection with such suit.
This Note shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in such
State without regard to conflicts of law doctrines.
This Note is issued pursuant to the terms of a Sale and Transfer
Agreement dated as of September __, 1996 between Payee and Maker dated as of
September __, 1996 and is subject to the terms and conditions thereof.
<PAGE>
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed and
delivered, as of the date and year and at the place first above written.
ROFIN-SINAR TECHNOLOGIES INC.,
a Delaware corporation
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
<PAGE>
DRAFT
8/28/96
TAX ALLOCATION AND INDEMNIFICATION AGREEMENT
--------------------------------------------
AGREEMENT made effective the ______ day of _____________, 1996, by and between
Siemens Corporation, a Delaware corporation ("SC"), Siemens Power Corporation, a
Delaware corporation ("SPC"), Rofin-Sinar Technologies Inc., a Delaware
corporation ("Holdings") and Rofin-Sinar Inc., a Delaware Corporation ("RSI").
WHEREAS, immediately prior to the Distribution Date (defined below), Holdings
is a 100% owned subsidiary of SPC; and
WHEREAS, effective as of the date of the First Closing (as defined in a
certain Underwriting Agreement, dated as of the date hereof, among Holdings, SC
and the Underwriters named therein) (the "Distribution Date"), Holdings will
sell its stock pursuant to an initial public offering and redeem all shares of
its common stock then owned by SPC; and
WHEREAS, immediately prior to the Distribution Date SPC will sell 100% of the
issued and outstanding stock of RSI to Holdings; and
WHEREAS, Holdings and RSI have been members of an affiliated group of
corporations of which SC is the common parent (the "SC Consolidated Group") and
have joined in the filing of consolidated U.S. federal income tax returns of the
SC Consolidated Group at all times from the dates of their respective formations
and up to and including the Distribution Date; and
WHEREAS, Holdings and RSI have joined in the filing of certain consolidated,
combined or unitary State and local tax returns with certain members of the SC
Consolidated Group for certain taxable periods; and
WHEREAS, SPC, SC, Holdings and RSI wish to allocate among themselves the
liabilities of the various corporations for taxes attributable to periods before
and after the Distribution Date.
NOW, THEREFORE, it is agreed among the parties hereto as follows:
SECTION 1. Definitions. For purposes of this Agreement, the terms set forth
-----------
below shall have the following meanings:
"Carryback Item" means any deduction, loss, credit or similar item that is
--------------
economically generated in one or more taxable years and is permitted, under the
applicable provisions of law or regulation, to be carried back to a Taxable
Period prior to the Taxable Period in which the item was economically generated
and thereby to be utilized in computing taxable income or Tax payable for such
earlier Taxable
<PAGE>
Period.
"Code" means the Internal Revenue Code of 1986, as amended and modified
----
from time to time.
"Closing Balance Sheet" means the Audited Combined Balance Sheet of
---------------------
Holdings and its affiliates as of June 30, 1996, appearing in the final Form S-1
Registration Statement filed with the Securities and Exchange Commission.
"Return" means any return, statement, report or form relating to any Tax.
------
"Tax" means any net income, alternative or add-on minimum tax, gross
---
income, gross receipts, withholding, sales, use, ad valorem, value added,
transfer, franchise, profits, license, payroll, employment, excise, severance,
property, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest, penalty, addition
to tax or additional amount imposed by any governmental authority (each, a
"Taxing Authority") responsible for the imposition of any such tax, whether
domestic or foreign.
"Tax Asset" means that portion of the deferred tax asset reflected on the
---------
Closing Balance Sheet which is attributable to the U.S. net operating loss
carryforward of RSI.
"Taxable Period" means the calendar period, or portion thereof, with
--------------
respect to which any Tax is imposed by the relevant Taxing Authority.
SECTION 2. Representations and Warranties of SC and SPC. SC and SPC
--------------------------------------------
represent and warrant to Holdings and RSI as of the close of business on the
Distribution Date that:
(i) Income Tax Returns Due Before Distribution Date Filed. All income Tax
-----------------------------------------------------
returns, statements, reports and forms (collectively, the "Income Tax
Returns") required to be filed with any Taxing Authority on or before
the close of business on the Distribution Date with respect to any
Taxable Period ending on or before the Distribution Date ("Pre-Closing
Tax Period") by, or with respect to, Holdings or RSI, have been filed
or will be filed on or before the Distribution Date in accordance with
all applicable laws;
(ii) Other Pre-Closing Income Tax Returns Will Be Filed. All other Income
--------------------------------------------------
Tax Returns required to be filed with respect to Holdings or RSI with
respect to any Pre-Closing Tax Period will be filed by SPC and SC when
due (taking into account any extension of a required filing date);
Page 2 of 8
<PAGE>
(iii) Payment of Pre-Distribution Income Taxes. Holdings and RSI have timely
----------------------------------------
paid all Taxes shown as due and payable on the Income Tax Returns that
have been filed; and
(iv) Adequacy of Reserves for Pre-Distribution Income Taxes on Closing
-----------------------------------------------------------------
Balance Sheet. The charges, accruals and reserves for income Taxes with
-------------
respect to Holdings and RSI for any Pre-Closing Tax Period reflected in
the Closing Balance Sheet (excluding any provision for deferred income
taxes) are adequate to cover such income Taxes.
SECTION 3. Indemnity.
---------
(a) Indemnity by SC and SPC. SC and SPC agree to indemnify and hold
-----------------------
harmless Holdings and RSI, on a net after-tax basis, against (1) the loss of a
Tax Asset if such loss results from an adjustment to taxable income of RSI or
Holdings for a Taxable Period ending on or before the Distribution Date
(excluding any loss of a Tax Asset attributable to the SC Consolidated Group's
use of RSI's net operating loss carryforward for the Taxable Period of the SC
Consolidated Group that includes the Distribution Date and during which RSI is a
member of the SC Consolidated Group, (2) any loss, damage, liability or expense,
including reasonable fees for attorneys and other outside consultants, incurred
in contesting or otherwise in connection with any Tax Asset or Tax referred to
in clause (1) or (3) of this paragraph, and (3) the following Taxes (except to
the extent current taxes on RSI's Closing Balance Sheet have been specifically
reserved for such Taxes):
(i) Consolidated or Combined Income Taxes for Pre-Distribution Periods.
------------------------------------------------------------------
Taxes imposed on any member of the SC Consolidated Group, including
Holdings and RSI, by any Taxing Authority with respect to any Tax for
which Holdings or RSI files or has filed a Tax Return with any member
of the SC Consolidated Group on a consolidated, combined or unitary
basis with respect to Taxable Periods ending on or before or, in the
case of any member of the SC Consolidated Group other than Holdings or
RSI, Tax Periods including, the Distribution Date; and
(i) Other Pre-Distribution Income Taxes. Income Taxes imposed on
-----------------------------------
Holdings or RSI by any Taxing Authority with respect to any Tax for
which Holdings or RSI did not file a Tax Return with any member of the
SC Consolidated Tax group on a consolidated, combined or unitary
basis, with respect to Taxable Periods ending on or before the
Distribution Date.
(b) Indemnity by Holdings and RSI Holdings and RSI shall be responsible
-----------------------------
for and agree to indemnify and hold harmless SPC and SC against Taxes and
associated expenses of Holdings and RSI not allocated to SPC and SC pursuant to
Section 3(a) hereof, including, but not limited to, all sales, transfer,
property and
Page 3 of 8
<PAGE>
payroll Taxes) imposed on Holdings or RSI for Taxable Periods beginning before
the Distribution Date and including any loss, damage, liability or expense,
including reasonable fees for attorneys and other outside consultants, incurred
in contesting or otherwise in connection with any such Taxes.
(c) Payments Hereunder to be Treated as Purchase Price Adjustment. The
-------------------------------------------------------------
parties hereto agree that any payment hereunder from SPC or SC to Holdings or
RSI shall be treated as a reduction in the price paid by Holdings to SPC to
purchase RSI. Similarly, any payment hereunder from Holdings or RSI to SC or
SPC shall be treated as an increase in the price paid by Holdings to SPC to
purchase RSI.
SECTION 4. Returns and Payments.
--------------------
(a) Tax Returns to be Prepared by SC and SPC. SC and SPC shall prepare
----------------------------------------
and file (or cause to be prepared and filed) in a timely manner all Tax Returns
with respect to Taxes described in Section 3(a).
(b) Tax Returns to be Prepared by Holdings. Holdings and RSI shall
--------------------------------------
prepare and file (or cause to be prepared and filed) in a timely manner all Tax
Returns with respect to Taxes described in Section 3(b).
(c) Consistency With Prior Period Returns. Tax Returns of Holdings and
-------------------------------------
RSI not yet filed for any Taxable Period that begins before the Distribution
Date shall be prepared in a manner consistent with past practices employed with
respect to Holdings and RSI (except to the extent counsel for SC, SPC or
Holdings determines there is no reasonable basis in law therefor or determines
that a Tax Return cannot be so prepared and filed without being subject to
penalties).
(d) Time for Payment.
----------------
(i) Payment of Taxes When Due and Payable. SC or SPC shall pay or cause
-------------------------------------
to be paid when due and payable all Taxes with respect to Holdings and
RSI for which SC and SPC are responsible pursuant to Section 3(a)
hereof. Holdings shall pay or cause to be paid when due and payable
all Taxes for which Holdings and RSI are responsible pursuant to
Section 3(b) hereof.
(ii) Payment of Other Amounts. Payment of any other amounts due under this
-------------------------
Agreement from one party to the other shall be made within three
business days following the date that either an agreement between the
parties is reached that an indemnity amount is payable, an assessment
of a Tax is made by a Taxing Authority, or a "determination" as
defined in section
Page 4 of 8
<PAGE>
1313(a) of the Code is made. If liability under this Agreement is in
respect of costs or expenses other than Taxes under Section 3(a),
payment shall be made by the paying party within five business days
after the date when the paying party has been notified by the party
entitled to payment that the paying party has a liability for a
determinable amount under this Agreement and is provided with
calculations or other materials supporting such liability.
SECTION 5. Refunds. Any Tax refund (including any interest with respect
-------
thereto) relating to any Taxes described in Section 3(a) of this Agreement shall
be the property of SC or SPC, and if any such refund is received by Holdings or
RSI, the full amount of such refund shall be paid to SC or SPC within 10
business days of its receipt by Holdings or RSI. Any Tax refund (including any
interest with respect thereto) relating to any Taxes described in Section 3(b)
of this Agreement shall be the property of Holdings or RSI, as the case may be,
and if any such refund is received by SPC or SC, the full amount of such refund
shall be paid to Holdings within 10 business days of its receipt by SPC or SC;
provided, however, that the right of Holdings or RSI to claim a refund from any
Tax Authority shall in all instances by subject to the limitations of Section 6
hereof.
SECTION 6. Carrybacks. Holdings and RSI agree to forego any right or ability
----------
that may be granted or available to either or both under any applicable
provision of law or regulation to utilize in any Taxable Period that includes or
ends prior to the Distribution Date any Carryback Item that is generated, that
arises or that becomes available for use on or after the Distribution Date, to
the extent that such utilization would require that such Carryback Item be
considered in determining the amount of Taxes payable by or with respect to any
member of the SC Consolidated group other than Holdings or RSI.
SECTION 7. Contests.
--------
(a) Notification of Any Tax Claims. After the Distribution Date, each
------------------------------
party shall promptly notify the other in writing of any written notice of a
proposed assessment or claim in an audit or administrative or judicial
proceeding relating to Holdings or RSI which, if determined adversely to the
taxpayer, would be grounds for indemnification under this Agreement; provided,
--------
however, that a failure to give such notice will not affect the right of the
- -------
party otherwise entitled to indemnification hereunder to receive such
indemnification except to the extent (if any) that, but for such failure, the
indemnifying party could have avoided the Tax liability in question.
(a) Control of Audits and Judicial Proceedings.
------------------------------------------
(i) Control By SPC and SC. In the case of an audit or administrative or
---------------------
Page 5 of 8
<PAGE>
judicial proceeding that relates solely to any Tax for which SPC and
SC are liable pursuant to Section 3(a) hereof, SPC and SC shall have
the right at their expense to control the conduct of such audit or
proceeding.
(ii) Control By Holdings. In the case of an audit or administrative or
-------------------
judicial proceeding that relates solely to any Tax for which Holdings
and RSI are liable pursuant to Section 3(b) hereof, Holdings and RSI
shall have the right at their expense to control the conduct of such
audit or proceeding.
(iii) Instances of Overlapping Liability. In the event of any audit or
----------------------------------
proceeding that could relate to potential Tax liability for SC and
SPC, on the one hand, and Holdings and RSI, on the other hand, SPC and
SC shall have the right to control, in their sole discretion, such
audit or proceeding. However, in this regard, SPC and SC shall be
obligated to treat Holdings and RSI no less favorably than other
members of the SC Consolidated Group.
(c) No Adverse Effect on Other Party. Neither SPC, SC, Holdings nor RSI
--------------------------------
shall enter into any compromise or agree to settle any claim pursuant to any Tax
audit or proceeding which would adversely affect the other party for such
Taxable Period or a prior or subsequent Taxable Period without the written
consent of the other party, which consent may not be unreasonably withheld.
SPC, SC, Holdings and RSI agree to cooperate in the defense against or
compromise of any claim in any audit or proceeding.
SECTION 8. Cooperation and Exchange of Information.
---------------------------------------
(a) Exchange of Information in General. SPC, SC, Holdings and RSI will
----------------------------------
provide each other with such cooperation and information as any of them
reasonably may request of the other in filing any Tax Return, amended Tax Return
or claim for refund, determining a liability for Taxes or a right to a refund of
Taxes, participating in or conducting any audit or other proceeding in respect
of Taxes or making representations to or furnishing information to parties
subsequently desiring to purchase either of Holdings or RSI. Such cooperation
and information shall include providing copies of relevant Tax Returns or
portions thereof, together with accompanying schedules, related work papers and
documents relating to rulings or other determinations by Taxing Authorities. To
the extent Holdings reasonably requests, SC and SPC shall make their employees
available on a basis mutually convenient to both parties to provide explanations
of any documents or information provided hereunder.
(b) Tax Return for September 30, 1996. Holdings and RSI shall provide SPC
---------------------------------
and SC, in a format similar to that provided by RSI to SPC and SC in previous
years, with such information as SPC and SC shall reasonably request in order to
Page 6 of 8
<PAGE>
complete the Tax Returns described in Section 4(a) for any Taxable Period ending
on or including the Distribution Date.
(c) Records Retention. SPC, SC, RSI and Holdings shall retain all Tax
-----------------
Returns, schedules and work papers, records and other documents in their
possession relating to Tax matters of Holdings or RSI for each Taxable Period
first ending after the Distribution Date and for all prior Taxable Periods until
the later of (i) expiration of the statute of limitations of the Taxable Period
to which such Tax Returns and other documents relate without regard to
extensions except to the extent notified by the party in writing of such
extensions for the respective Taxable Periods, or (ii) six years following the
due date (without extension) for such Tax Returns.
(d) Confidentiality. Any information obtained under this Section 8 shall
---------------
be kept confidential except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund of Taxes or in conducting an audit or
other proceeding relating to Taxes.
SECTION 9. Conveyance Taxes. SC and SPC shall be liable for and shall
----------------
indemnify and hold RSI and Holdings harmless against any real property transfer
or gains, sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration, and other fees, and any similar Taxes which
become payable in connection with the transactions contemplated hereby, and
shall file such applications and documents as shall permit any such Tax to be
assessed and paid at or prior to the Distribution Date in accordance with any
available pre-sale filing procedure. Holdings and RSI shall execute and deliver
all instruments and certificates necessary to enable SC and SPC to comply with
the foregoing.
SECTION 10. Miscellaneous.
-------------
(a) Termination of Tax Sharing Agreements. Any tax sharing agreement or
-------------------------------------
arrangement between SPC or SC and Holdings or RSI shall be terminated as of the
Distribution Date; provided, however, that all rights and obligations arising
--------- --------
thereunder with respect to any Taxable Period or portion thereof ending at or
before the Distribution Date shall survive until they are fully effectuated or
performed.
(b) Statute of Limitations. Notwithstanding any provision herein to the
----------------------
contrary, the indemnification obligations under this Agreement shall terminate
at the close of business on the 120th day following the expiration of the
applicable statute of limitations with respect to the Tax liabilities in
question (giving effect to any waiver, mitigation or extension thereof).
(c) Governing Law. This Agreement shall be governed by the laws of
-------------
the State of New York, without giving effect to principles of conflicts of
law thereunder.
Page 7 of 8
<PAGE>
Siemens Power Corporation Rofin-Sinar Inc.
By:_________________________ By: _______________________
Siemens Corporation Rofin-Sinar Technologies, Inc.
By: ________________________ By:________________________
Page 8 of 8
<PAGE>
EXHIBIT 10.11
SUMMARY OF ROFIN-SINAR LASER GMBH PENSION PLAN
1. a) The "Rofin-Sinar Standard Pension Plan" (the "RSPlan") refers to
the guidelines of the "Siemens Altersfursorge GmbH" ("Siemens Standard
Pension Plan") in the applicable version except Sections 13(5), 14 and
18. The pension amount of the RSPlan is 66.7% of the Siemens pension
amount.
The legal basis of the pension is a unilateral promise of Rofin-Sinar
to all employees ("Gesamtzusage"), which need not be accepted
expressly by the employees to be valid. The promise becomes a part of
the individual employment contract of each employee. This pension
promise does not constitute a works agreement between Rofin-Sinar and
the works counsel, because the chairman of the works counsel does not
sign the pension promise on the same page as the management of Rofin-
Sinar.
b) The RSPlan grants irrevocable rights, because the revocation
provisions of the Siemens Standard Pension Plan (sections 13(5), 14,
18, respectively) do not apply under the RSPlan's Subsection 2. The
employment contract for these employees can be changed by terminating
it with the option of altered conditions of employment
(Anderungskundigung) according to Section 2 of the Termination
Protection Act (Kundigungsschutzgesetz). The prerequisites for such
termination are "urgent business requirements" ("dringende
betriebliche Erfordernisse"), such as unprofitability which would lead
to a closing of the business. Furthermore, the employment contract
can be altered by a mutual agreement between Rofin-Sinar and each
employee.
It may be possible that Rofin-Sinar can terminate the pension promise
for future employees; however, the Federal Labour Court has not yet
------
decided such a case.
2. a) Persons receiving a salary in excess of the standard wage must
have a pension agreement with Rofin-Sinar pursuant to Subsection 1.3
of the Rofin-Sinar Pension Plan In Excess. This pension agreement may
be a separate contract or a provision in the employment contract.
b) The pension promise can also be changed by terminating it with the
option of altered conditions of employment according to Section 2 of
the Termination Protection Act or a mutual agreement.
3. Persons transferred from Siemens to Rofin-Sinar are subject to a
special pension promise. They receive one part of their pension from
Siemens according to the Siemens' pension schedules, depending on the
length of their
<PAGE>
service with Siemens, and the other part of their pension comes from
Rofin-Sinar, depending on the length of their service with Rofin-
Sinar, but still according to the Siemens pension schedules.
4. Mr. Martinen and Dr. Wirth have both received pension promises from
--------------------------
Rofin-Sinar referring to the Siemens pension schedules.
<PAGE>
BEDINGUNGEN FUR RUHEGEHALTSABKOMMEN
1. Leistungen aufgrund eines Ruhegehaltsabkommens
Die Siemens Aktiengesellschaft gibt aufgrund des Ruhegehaltsabkommens
1.1. dem Ruhegehaltsberechtigten einen Anspruch auf Ruhegehalt (Nr. 3)
1.2 seiner Ehefrau nach seinem Tode einen Anspruch auf Witwengeld (Nr. 4)
1.3 seinen Kindern nach seinem Tode einen Anspruch auf Waisengeld (Nr. 5)
Als Ruhegehaltsberechtigter ist der Mitarbeiter zu verstehen, mit dem ein
Ruhegehaltsabkommen abgeschlossen wurde.
Das Ruhegehaltsabkommen wird als Erganzung zu den Leistungen der
gesetzlichen Rentenversicherung und zu einer angemessenen Eigenvorsorge
abgeschlossen.
2. Voraussetzungen
Voraussetzung fur diese Leistungen ist, dass der Ruhegehaltsberechtigte bei
seinem Ausscheiden aus den Diensten der Gesellschaft
a) wenigstens das 60. Lebensjahr vollendet hat oder dauernd mehr als 50
Prozent berufsunfahig und deshalb nicht berufstatig ist sowie
b) der Gesellschaft mindestens 10 ruhegehaltsfahige Dienstjahre
angehorte. Bei Berufsunfahigkeit infolge eines Arbeitsunfalles braucht
diese Wartezeit nicht erfullt zu sein.
Die Gesellschaft kann den Grad der Berufsunfahigkeit durch ihren
Vertrauensarzt verbindlich feststellen lassen. Als solche Feststellung gilt
die Entscheidung der Bundesversicherungsanstalt fur Angestellte (BFA) uber
eine entsprechende Berufs- oder Erwerbsunfahigkeitsrente.
Stirbt der Ruhegehaltsberechtigte vor seiner Pensionierung, wird der Tod
der Berufsunfahigkeit gleichgestellt.
Ruhegehaltsfahig sind die nach vollendetem 18. Lebensjahr geleisteten
Dienstzeiten, wenn sie als pensionsfahige Siemens-Dienstzeiten anerkannt
wurden. Fur die Fristen und die Berechtigung unverfallbarer
Pensionsanspruche ist aufgrund der gesetzlichen Regelung die
Betriebszugehorigkeit nach dem letzten tatsachlichen Eintrittstag
massgeblich.
3. Hohe des Ruhegehalts; Erziehungsbeihilfe
3.1 Fur das Ruhegehalt gilt die dem Ruhegehaltsabkommen beiliegende
Tabelle. Massgebend fur die Hohe des Ruhegehaltes ist das
Lebensalter, mit dem der Mitarbeiter aus den Diensten der Gesellschaft
ausscheidet.
Fur Mitarbeiter, die nach dem 21.12.1974 in die Gesellschaft
eingetreten sind und von einem fruheren Arbeitgeber Zahlungen
erhielten oder erhalten werden, die der gleichen
<PAGE>
sozialen Sicherheit dienen wie das Ruhegehalt, gilt folgende Zusage:
Der mitgebrachte Versorgungsbetrag wird durch das Ruhegehalt der
Gesellschaft so erhoht, dass der Ruhegehaltsberechtigte bei Eintritt
des Versorgungsfalles insgesamt den dann gultigen Tabellenbetrag als
Versorgungsbezuge erhalt. Dabei werden nur Zahlungen berucksichtigt,
soweit sie ein anderer Arbeitgeber direkt oder indirekt finanziert
hat, Renten der deutschen gesetzlichen Rentenversicherung nur, soweit
ein Arbeitgeber mehr als seinen gesetzlichen Anteil dazu beigetragen
hat.
War der Ruhegehaltsberechtigte in den letzen zehn Jahren vor dem
Ausscheiden ganz oder teilweise regelmassig weniger als die volle
wochentliche Arbeitszeit tatig, so wird das Ruhegehalt angemessen
gekurzt, sofern nicht Firmenregelungen etwas anderes vorsehen.
3.2 Endet das Dienstverhaltnis mit der Gesellschaft wegen
Berufsunfahigkeit oder durch den Tod, so kann die Gesellschaft unter
Berucksichtigung der Verhaltnisse des Einzelfalles Zuschlage zum
Ruhegehalt oder zu den Hinterbliebenenbezugen gewahren.
3.3 Eine Erziehungsbeihilfe wird fur jedes eheliche oder diesem nach dem
Burgerlichen Gesetzbuch gleichgestellte Kind des
Ruhegehaltsberechtigten gezahlt, das vor dem Ausscheiden des
Ruhegehaltsberechtigten aus dem Dienstverhaltnis mit der Gesellschaft
geboren oder adoptiert wurde, wenn es das 23. Lebensjahr noch nicht
vollendet hat und nicht berufstatig oder verheiratet ist.
Uber diese Altersgrenze hinaus kann nach Lage des Falles die
Erziehungsbeihilfe weiter gewahrt werden, wenn sich das Kind in einer
Berufsausbildung befindet und deren normale Dauer nicht uberschritten
ist.
4. Witwengeld
4.1 Witwengeld wird gezahlt, wenn die Witwe nicht mehr als 15 Jahre junger
ist als der Verstorbene und die Ehe mindestens funf Jahre wahrend der
Dienstzeit des Verstorbenen bei der Gesellschaft bestanden hat.
Der Anspruch auf Witwengeld erlischt im Falle der Wiederverheiratung.
Die geschiedene Frau eines Ruhegehaltsberechtigten erhalt kein
Witwengeld.
4.2 Das Witwengeld betragt 60 Prozent des Ruhegehaltes nach Nummer 3.1.
4.3 Wenn die Ehefrau des Ruhegehaltsberechtigten mehr als 15 Jahre junger
ist als er, steht es im Ermessen der Gesellschaft, ob und in welchem
Umfang Witwengeld gewahrt wird.
5. Waisengeld
5.1 Waisengeld wird jedem Kind eines verstorbenen Ruhegehaltsberechtigten
gezahlt, solange es die Voraussetzungen der Nummer 3.3 Absatz 1
erfullt.
Daruberhinaus kann Waisengeld gewahrt werden, wenn die Voraussetzungen
der Nummer 3.3 Absatz 2 vorliegen.
5.2 Das Waisengeld betragt bei Halbwaisen 15 Prozent und bei Vollwaisen 25
Prozent des Ruhegehaltes nach Nummer 3.1.
<PAGE>
6. Ubergangszahlungen
Nach dem Tod eines Pensionars erhalt sein Ehegatte fur den Sterbemonat und
die folgenden 6 Monate die Bezuge, die der Verstorbene in dieser Zeit
erhalten hatte. Die Hinterbliebenenbezuge werden darauf angerechnet.
7. Zahlung der Leistungen
7.1 Die Zahlungen erfolgen monatlich nachtraglich.
7.2 Ist fur den Beginn oder die Beendigung einer Leistung ein Ereignis
ma gebend, z.B. der Tod oder das Erreichen eines bestimmten
Lebensalters, so beginnen die Leistungen mit dem auf das Ereignis
folgenden Kalendermonat und enden mit dem Kalendermonat, in den das
Ereignis fallt.
7.3 Die Gesellschaft kann von den Berechtigten jederzeit den Nachweis
daruber verlangen, dass die Voraussetzungen fur die Leistungen noch
vorliegen.
7.4 Die Gesellschaft kann von den Ruhegehaltsberechtigten und
gegebenenfalls den Hinterbliebenen jederzeit einen Nachweis uber die
Hohe der Zahlungen verlangen, die gemass Nummer 3.1 Absatz 2 bei der
Hohe der Leistungen berucksichtigt werden.
8. Herabsetzung und Einstellung der Leistungen
8.1 Die Gesellschaft behalt sich vor, die zugesagten Leistungen zu kurzen
oder einzustellen, wenn die wirtschaftliche Lage der Gesellschaft sich
nachhaltig so wesentlich verschlechtert hat, dass ihr eine
Aufrechterhaltung der zugesagten Leistungen nicht mehr zugemutet
werden kann, oder wenn der Personenkreis, die Beitrage, die Leistungen
oder das Pensionierungsalter bei der deutschen gesetzlichen
Rentenversicherung sich wesentlich andern.
Die Gesellschaft kann daher in einem solchen Falle z.B. Bezuge aus der
deutschen gesetzlichen Rentenversicherung oder ahnliche aufgrund von
Gesetzen oder Verordnungen auszuzahlende Betrage, soweit sie auf
Arbeitgeberbeitragen beruhen, auf ihre Leistungen anrechnen.
8.2 Auf die Leistungen aufgrund des Ruhegehaltsabkommens konnen Leistungen
des Hauses Siemens, die nach ihrer Zielsetzung ebenfalls der sozialen
Sicherung des Ruhegehaltsberechtigten oder seiner Angehorigen dienen,
angerechnet werden.
8.3 Die Zahlung der Leistungen wird wieder eingestellt, wenn die
Voraussetzungen, unter denen sie gewahrt wurde (z.B. dauernd mehr als
50 Prozent berufsunfahig), nicht mehr gegeben sind.
9. Erfindungen
Alle Erfindungen, die von einem Ruhegehaltsberechtigten nach seinem
Ubertritt in den Ruhestand gemacht werden und die in das Arbeitsgebiet der
Gesellschaft fallen, sind der Gesellschaft unverzuglich mitzuteilen. Der
Ruhegehaltsberechtigte hat der Gesellschaft gegen eine angemessene
Vergutung Benutzungsrechte in dem von dieser gewunschten Umfange
<PAGE>
einzuraumen. Von einer Entscheidung der Gesellschaft, die innerhalb von 6
Monaten mitgeteilt sein muss, durfen nur mit deren Zustimmung Verhandlungen
mit Dritten gefuhrt werden.
Bei Erfindungen, die auf Arbeitsgebieten der ubrigen Gesellschaften des
Hauses Siemens liegen, wird erwartet, da diese zuerst der in Frage
kommenden Gesellschaft angeboten werden.
10. Anspruche aus dem Ruhegehaltsabkommen
Anspruche aus dem Ruhegehaltsabkommen konnen gemindert werden oder ganz
entfallen, wenn das Dienstverhaltnis aufgrund eines die Gesellschaft zu
fristloser Kundigung berechtigenden Verhaltens endet.
Die Anspruche aus dem Ruhegehaltsabkommen erloschen, wenn ein Empfanger von
Leistungen aus dem Ruhegehaltsabkommen wichtige Interessen des Hauses
Siemens gefahrdet oder verletzt oder ein Verhalten zeigt, das die
Gesellschaft bei Anwendung der dafur geltenden Bestimmungen des deutschen
Rechtes zur fristlosen Entlassung berechtigte, wenn er sich in ihren
Diensten befande. Dies gilt insbesondere auch bei Verstossen des
Ruhegehaltsberechtigten gegen Nummer 9.
11. Unabtretbarkeit der Anspruche
Die Anspruche aus dem Ruhegehaltsabkommen konnen nicht abgetreten oder
verpfandet werden.
12. Besondere Verpflichtungen des Ruhegehaltsberechtigten
Der Ruhegehaltsberechtigte ist verpflichtet, die Zustimmung der
Gesellschaft einzuholen, wenn er nach seinem Ubertritt in den Ruhestand
selbststandig oder unselbststandig beruflich tatig werden will.
Die Gesellschaft ist zur Zustimmung verpflichtet, wenn die beabsichtigte
Tatigkeit nicht gegen die Interessen des Hauses Siemens verstosst und wenn
sie angemessen ist.
13. Allgemeine Erhohung der Pensionszusagen
Die Leistungen an die Pensionare und die Hinterbliebenen werden in dem
gleichen Umfang erhoht, in dem die Gesellschaft die Pensionszusagen an die
noch aktiven Mitarbeiter der gleichen Rangstellung anhebt.
14. Unverfallbarkeit
Fur die Unverfallbarkeit von Anspruchen aus dem Ruhegehaltsabkommen gelten
die gesetzlichen Bestimmungen, soweit sie unabdingbar sind.
Unverfallbare Anspruche bestehen nicht, wenn die Voraussetzungen der Nummer
10 vorliegen.
15. Schadensersatzanspruche gegen Dritte
<PAGE>
Schadensersatzanspruche gegen Dritte, durch deren schuldhaftes Verhalten
der Versorgungsfall verursacht wurde, werden bis zur Hohe der
Versorgungsleistungen aus der betrieblichen Altersversorgung an die
Gesellschaft abgetreten.
<PAGE>
ROFIN [Rofin-Sinar logo] SINAR
L A S E R
R U H E G E H A L T E R U T 3
--------------------------------
Stand: 01.09.1993
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
bei vollendeten ... Lebensjahren zum Zeitpunkt
des Ubertritts in den Ruhestand monatliches Ruhegeld in DM
- --------------------------------------------------------------------------------
<S> <C>
bis 40 einschliesslich 987,--
41 1.017,--
42 1.048,--
43 1.079,--
44 1.108,--
45 1.138,--
46 1.169,--
47 1.200,--
48 1.230,--
49 1.260,--
50 1.291,--
51 1.351,--
52 1.413,--
53 1.474,--
54 1.535,--
55 1.595,--
56 1.657,--
57 1.717,--
58 1.777,--
59 1.839,--
60 und mehr 1.900,--
</TABLE>
<PAGE>
RUHEGEHALTSTABELLEN
<TABLE>
<CAPTION>
bei vollendeten AT GB/FRef AB/HRef ADir/Ber Dir/CBer
Lebensjahren zum
Zeitpunkt des Ubertritts
in den Ruhestand
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
bis 40 einschliesslich 726 1.008 1.480 2.324 3.201
41 748 1.046 1.526 2.385 3.292
42 771 1.085 1.572 2.447 3.384
43 794 1.123 1.618 2.508 3.475
44 817 1.161 1.663 2.569 3.567
45 840 1.199 1.709 2.630 3.658
46 863 1.237 1.755 2.691 3.749
47 886 1.275 1.801 2.752 3.841
48 909 1.313 1.846 2.814 3.933
49 932 1.351 1.892 2.875 4.024
50 955 1.389 1.937 2.936 4.115
51 993 1.450 2.028 3.050 4.282
52 1.031 1.511 2.119 3.164 4.449
53 1.069 1.572 2.211 3.278 4.617
54 1.107 1.633 2.303 3.392 4.785
55 1.145 1.694 2.394 3.506 4.952
56 1.183 1.755 2.485 3.620 5.120
57 1.221 1.816 2.576 3.734 5.287
58 1.259 1.877 2.667 3.848 5.454
59 1.297 1.937 2.759 3.962 5.621
60 1.334 1.998 2.851 4.076 5.789
</TABLE>
*Oktober 93 / P
<PAGE>
The Board of Directors
Rofin-Sinar Technologies Inc. and Affiliates:
We consent to the use of our report, dated July 19, 1996, included in the
Registration Statement of Rofin-Sinar Technologies Inc. and Affiliates on Form
S-1 and to the reference to our firm under the headings "Experts", "Summary
Combined Financial Information" and "Selected Combined Financial Information
and Operating Data" in the related prospectus.
KPMG Peat Marwick LLP
Detroit, Michigan
August 29, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMBINED
FINANCIAL STATEMENTS OF ROFIN-SINAR TECHNOLOGIES INC. AND AFFILIATES FOR THE
NINE MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,260
<SECURITIES> 0
<RECEIVABLES> 36,696
<ALLOWANCES> (1,120)
<INVENTORY> 34,142
<CURRENT-ASSETS> 78,301
<PP&E> 40,217
<DEPRECIATION> (15,241)
<TOTAL-ASSETS> 104,509
<CURRENT-LIABILITIES> 60,164
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 41,798
<TOTAL-LIABILITY-AND-EQUITY> 104,509
<SALES> 83,372
<TOTAL-REVENUES> 83,372
<CGS> 51,466
<TOTAL-COSTS> 72,537
<OTHER-EXPENSES> 743
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 790
<INCOME-PRETAX> 10,092
<INCOME-TAX> 4,354
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,738
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
