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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 28, 1998
VEECO INSTRUMENTS INC.
---------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-16244 11-2989601
- ------------------------------------------------------------------------------
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
Terminal Drive, Plainview, New York 11803
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516)349-8300
------------
Not Applicable
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 5. Other Events.
----------------
On February 28, 1998, Veeco Instruments Inc., a Delaware corporation (the
"Registrant") signed a definitive merger agreement with Digital Instruments,
Inc., of Santa Barbara, California ("Digital"), pursuant to which Digital agreed
to merge with and into the Registrant. Under the merger agreement, each
outstanding share of the capital stock of Digital (the "Digital Shares") will be
converted into the right to receive that number of the Registrant's shares as
determined by dividing 5,633,725 by the aggregate number of Digital Shares
issued and outstanding immediately prior to the filing of an agreement of merger
and certificate of merger with the Secretary of State of California and
Delaware, respectively, upon surrender of the certificates to the Registrant
representing such shares of Digital common stock. The merger is intended to be
accounted for as a pooling of interests transaction. The consummation of the
merger is subject to a number of conditions, including approval by the
Registrant's shareholders, confirmation from the Registrant's independent
accountants regarding its concurrence that the merger may be accounted for as a
pooling of interests and receipt of any necessary governmental and third party
consents.
On March 2, 1998, the Registrant issued a press release announcing the
execution of the merger agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
(c) Exhibits.
99.1 Agreement and Plan of Merger Among Veeco Instruments Inc. and Digital
Instruments, Inc. and its Security Holders dated February 28, 1998.
99.2 Press release dated March 2, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VEECO INSTRUMENTS INC.
Date: March 6 , 1998 By: /s/ Edward H. Braun
-------------------------------
Edward H. Braun
Chairman, Chief Executive Officer
and President
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
99.1 Agreement and Plan of Merger Among Veeco Instruments
Inc. and Digital Instruments, Inc. and its Security
Holders dated February 28, 1998.
99.2 Press release dated March 2, 1998.
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EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
AMONG
VEECO INSTRUMENTS INC.,
DIGITAL INSTRUMENTS, INC.
AND
ITS SECURITYHOLDERS
FEBRUARY 28, 1998
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TABLE OF CONTENTS
PAGE
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.01 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . .1
II. THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.02 Effective Time of the Merger . . . . . . . . . . . . . . . . . . .7
2.03 Closing of the Merger. . . . . . . . . . . . . . . . . . . . . . .7
2.04 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . .7
2.05 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . .8
2.06 Subsequent Action. . . . . . . . . . . . . . . . . . . . . . . . .9
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.01 Organization of the Company. . . . . . . . . . . . . . . . . . . .9
3.02 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.03 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.04 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 11
3.06 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 11
3.07 Compliance with Law; Governmental Authorizations . . . . . . . . 12
3.08 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.09 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . 15
3.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . 16
3.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 17
3.15 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 19
3.16 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.17 Tangible Property. . . . . . . . . . . . . . . . . . . . . . . . 24
3.18 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 24
3.19 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . 25
3.20 Officers and Employees . . . . . . . . . . . . . . . . . . . . . 25
3.21 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.22 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . 26
3.23 Banking Relationships. . . . . . . . . . . . . . . . . . . . . . 26
3.24 Transactions with Shareholders and Affiliates. . . . . . . . . . 26
3.25 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . 27
3.26 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.27 Accuracy of Representations and Warranties . . . . . . . . . . . 27
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3.28 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 27
3.29 No Disposition . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.30 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.31 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
IV. REPRESENTATIONS AND WARRANTIES OF VEECO . . . . . . . . . . . . . . . . 28
4.01 Organization of Veeco. . . . . . . . . . . . . . . . . . . . . . 28
4.02 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.03 Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . 29
4.04 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.05 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . 30
4.06 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 30
4.07 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.08 Restrictions on Business Activities. . . . . . . . . . . . . . . 31
4.09 Governmental Authorization . . . . . . . . . . . . . . . . . . . 31
4.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 31
4.11 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 31
4.12 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . 31
4.13 Accuracy of Representations and Warranties . . . . . . . . . . . 32
4.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.01 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.02 Conduct of the Business of the Company Pending the Closing Date. 32
5.03 Conduct of Business of the Company and Veeco . . . . . . . . . . 32
5.04 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.05 Environmental Transfer Laws. . . . . . . . . . . . . . . . . . . 34
5.06 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.07 Notice of Breach; Disclosure . . . . . . . . . . . . . . . . . . 34
5.08 Payment of Indebtedness by Affiliates. . . . . . . . . . . . . . 34
5.09 No Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.10 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . 35
5.11 FIRPTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.12 Blue Sky Laws. . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.13 Listing of Additional Shares . . . . . . . . . . . . . . . . . . 36
5.14 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . 36
5.15 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . 36
5.16 HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . . . 37
5.17 Nomination of Director . . . . . . . . . . . . . . . . . . . . . 37
5.18 Distribution to Stockholders . . . . . . . . . . . . . . . . . . 37
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VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF VEECO. . . . . . . . . . . . 37
6.01 Representations and Warranties . . . . . . . . . . . . . . . . . 37
6.02 Performance of Covenants . . . . . . . . . . . . . . . . . . . . 38
6.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.04 Consents and Approvals; HSR Act Compliance . . . . . . . . . . . 38
6.05 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . 38
6.06 Accounting Opinion . . . . . . . . . . . . . . . . . . . . . . . 38
6.07 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.08 Material Changes . . . . . . . . . . . . . . . . . . . . . . . . 38
6.09 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . 38
6.10 Delivery of Documents. . . . . . . . . . . . . . . . . . . . . . 39
6.11 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.12 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . 39
6.13 Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.14 Certificates of Merger . . . . . . . . . . . . . . . . . . . . . 39
6.15 IBM License. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.16 Acquisition of Robin Hill Properties, Inc. . . . . . . . . . . . 40
6.17 Acquisition of Digital Instruments GmbH. . . . . . . . . . . . . 40
VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. . . . . . . . . . . 40
7.01 Representations and Warranties . . . . . . . . . . . . . . . . . 40
7.02 Performance of Covenants . . . . . . . . . . . . . . . . . . . . 40
7.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.04 Consents and Approvals; HSR Act Compliance . . . . . . . . . . . 41
7.05 Accounting Opinion . . . . . . . . . . . . . . . . . . . . . . . 41
7.06 Material Changes . . . . . . . . . . . . . . . . . . . . . . . . 41
7.07 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . 41
7.08 Delivery of Documents. . . . . . . . . . . . . . . . . . . . . . 41
7.09 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.10 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . 42
7.11 Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.12 Certificates of Merger . . . . . . . . . . . . . . . . . . . . . 42
7.13 IBM License. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
III. INDEMNIFICATION; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 42
8.01 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.02 Indemnification by the Stockholders. . . . . . . . . . . . . . . 42
8.03 Indemnification by Veeco . . . . . . . . . . . . . . . . . . . . 43
8.04 Procedure for Indemnification -- Third Party Claims. . . . . . . 43
IX. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.01 Termination Events . . . . . . . . . . . . . . . . . . . . . . . 44
9.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 45
9.03 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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X. MISCELLANEOUS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.01 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 45
10.02 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.03 Public Announcements . . . . . . . . . . . . . . . . . . . . . . 46
10.04 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 46
10.06 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.07 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 46
10.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.09 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.10 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.13 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . 48
10.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.15 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . 48
10.16 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . 48
Exhibit A-1 Agreement of Merger to be filed with the Secretary of State
of the State of California
Exhibit A-2 Certificate of Merger to be filed with the Secretary of
State of the State of Delaware
Exhibit B FIRPTA Notification Letter; Form of Notice to Internal
Revenue Service together with written authorization from
Digital
Exhibit C-1 Digital Affiliates Agreement
Exhibit C-2 Veeco Affiliates Agreement
Exhibit D Registration Rights Agreement
Exhibit E Irrevocable Proxy
Exhibit F Noncompetition Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 28, 1998,
among Veeco Instruments Inc., a Delaware corporation ("VEECO"), Digital
Instruments, Inc., a California corporation (the "COMPANY"), and the
stockholders listed on Schedule 3.02(a) hereof (the "STOCKHOLDERS").
The Boards of Directors of the Company and Veeco have determined
that it is advisable and in the best interests of their respective stockholders
for the Company to merge with and into Veeco with the result that Veeco shall be
the surviving corporation (the "MERGER"), upon the terms and conditions set
forth herein and in accordance with the provisions of the California General
Corporation Law (the "CGCL") and the Delaware General Corporation Law (the
"DGCL").
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, it is agreed as follows:
I. DEFINITIONS.
1.01 CERTAIN DEFINITIONS. For purposes of this Merger Agreement,
the following terms shall have the following meanings:
(a) "AFFILIATE" of any Person shall mean a Person which directly
or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such
Person.
(b) "BENEFIT PLANS" shall have the meaning set forth in Section
3.14(a).
(c) "CERTIFICATES OF MERGER" shall have the meaning set forth in
Section 2.02.
(d) "CGCL" shall have the meaning set forth in the recitals to
this Merger Agreement.
(e) "CLOSING" shall have the meaning set forth in Section 2.03.
(f) "CLOSING DATE" shall have the meaning set forth in Section
2.03.
(g) "COBRA" shall have the meaning set forth in Section 3.14(e).
(h) "CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder.
(i) "COMMISSION" or "SEC" shall mean the United States Securities
and Exchange Commission.
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(j) "COMPANY" shall have the meaning set forth in the recitals to
this Merger Agreement.
(k) "COMPANY COMMON STOCK" shall mean the common shares of the
Company.
(l) "CONSTITUENT CORPORATIONS" shall have the meaning set forth
in Section 2.01.
(m) "CONTRACT" shall mean any agreement, arrangement, commitment,
indemnity, indenture, instrument, lease or understanding,
including any and all amendments, supplements, and
modifications (whether oral or written) thereto, whether or
not in writing.
(n) "DAMAGES" shall have the meaning set forth in Section 8.02.
(o) "DGCL" shall have the meaning set forth in the recitals to
this Merger Agreement.
(p) "DIGITAL AFFILIATES" shall have the meaning set forth in
Section 5.14(a).
(q) "EFFECTIVE TIME" shall have the meaning set forth in Section
2.02.
(r) "ENVIRONMENT" shall mean the soil, land surface or subsurface
strata, surface waters (including navigable waters, ocean
waters, streams, ponds, drainage basins, and wetlands),
groundwaters, drinking water supply, stream sediments;
ambient air (including indoor air), plant and animal life,
and any other environmental medium or natural resource.
(s) "ENVIRONMENTAL LAWS" shall mean any state, federal or local
laws, ordinances, codes or regulations relating to pollution,
natural resources, protection of the Environment, or public
health and safety, including, without limitation, laws and
regulations relating to the handling and disposal of medical
and biological waste.
(t) "EQUITY SECURITIES" shall mean any (i) capital stock or any
securities representing any other equity interest or (ii) any
securities convertible into or exchangeable for capital stock
or any other rights, warrants or options to acquire any of
the foregoing securities.
(u) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(v) "ERISA AFFILIATE" shall mean with respect to any person (i)
any corporation which is a member of a controlled group of
corporations,
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within the meaning of Section 414(b) of the Code, of which
that person is a member, (ii) any trade or business (whether
or not incorporated) which is a member of a group of trades
or businesses under common control, within the meaning of
Section 414(c) of the Code, of which that person is a member,
and (iii) any member of an affiliated service group, within
the meaning of Section 414(m) and (o) of the Code, of which
that person or any entity described in clause (i) or (ii) is
a member.
(w) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(x) "FAIRNESS OPINION" shall have the meaning set forth in
Section 6.06.
(y) "FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.05.
(z) "FIRPTA" shall mean the Foreign Investment and Real Property
Tax Act of 1980.
(aa)"GAAP" shall mean United States generally accepted accounting
principles.
(bb)"GOVERNMENTAL AUTHORITY" shall mean any government or any
agency, bureau, board, commission, court, department,
official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or
local, domestic or foreign.
(cc)"HAZARDOUS SUBSTANCES" shall mean (i) any hazardous or toxic
waste, substance or material defined as such in (or for the
purposes of) any Environmental Law, (ii) asbestos-containing
material, (iii) medical and biological waste, (iv)
polychlorinated biphenyls, (v) petroleum products, including
gasoline, fuel oil, crude oil and other various constituents
of such products and (vi) any other chemicals, materials or
substances, exposure to which is prohibited, limited, or
regulated by any Environmental Laws.
(dd)"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(ee)"INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 3.15.
(ff)"IRS" shall mean the Internal Revenue Service of the United
States or any successor agency, and, to the extent relevant,
the United States Department of the Treasury.
(gg)"ISSUANCE DATE" shall have the meaning set forth in Section
8.01.
3
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(hh)"KNOWLEDGE" shall mean, (i) with respect to an individual,
the actual knowledge, after reasonable inquiry, of such
individual, and (ii) with respect to any Person other than an
individual, the actual knowledge, after reasonable inquiry,
of the officers and directors of such entity or other persons
performing similar functions.
(ii)"LAW" shall mean any constitutional provision or any statute
or other law, rule or regulation of any Governmental
Authority and any decree, injunction, judgment, order,
ruling, assessment or writ.
(jj)"LEASED REAL PROPERTY" shall have the meaning set forth in
Section 3.16(b).
(kk)"LEASED TANGIBLE PROPERTY" shall have the meaning set forth
in Section 3.17(b).
(ll)"LEASES" shall have the meaning set forth in Section 3.16(b).
(mm)"LICENSES" shall have the meaning set forth in Section
3.07(b).
(nn)"LIEN" shall mean any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of
first refusal, easement, servitude, encroachment or other
survey defect, transfer restriction or other encumbrance of
any nature whatsoever.
(oo)"MATERIAL ADVERSE EFFECT" shall mean, with respect to any
entity or group of entities, any event, change or effect that
is materially adverse to the condition (financial or
otherwise), properties, assets, liabilities, business,
operations or results of operations of such entity and its
subsidiaries, taken as a whole.
(pp)"MATERIAL CONTRACT" shall mean any Contract required to be
listed on Schedule 3.09(a).
(qq)"MERGER" shall have the meaning set forth in the recitals to
this Merger Agreement.
(rr)"MERGER AGREEMENT" shall mean this Agreement and Plan of
Merger.
(ss)"MERGER CONSIDERATION" shall have the meaning set forth in
Section 2.05(a).
(tt)"MULTIEMPLOYER PLAN" shall have the meaning set forth in
Section 3.14(a).
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(uu)"NASDAQ" shall mean The NASDAQ Stock Market, Inc.
(vv)"OWNED REAL PROPERTY" shall have the meaning set forth in
Section 3.16(a).
(ww)"OWNED TANGIBLE PROPERTY" shall have the meaning set forth in
Section 3.17(a).
(xx)"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
(yy)"PERSON" shall mean any individual, corporation, limited
liability company, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated
organization, or other organization, whether or not a legal
entity, and any Governmental Authority.
(zz)"PROXY STATEMENT" shall have the meaning set forth in Section
5.10(b).
(aaa)"RELEASE" shall mean any spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping, or
other releasing, whether intentional or unintentional.
(bbb)"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(ccc)"STOCKHOLDER INDEMNITEES" shall have the meaning set forth
in Section 8.03.
(ddd)"STOCKHOLDERS" shall have the meaning set forth in the
recitals to this Merger Agreement.
(eee)"SUBSIDIARY" shall have the meaning set forth in Section
3.03.
(fff)"SURVIVING CORPORATION" shall have the meaning set forth in
Sec-tion 2.01.
(ggg)"TANGIBLE PROPERTY LEASES" shall have the meaning set forth
in Sec-tion 3.17(b).
(hhh)"TAX" or "TAXES" shall mean any and all taxes (whether
Federal, state, local or foreign), including, without
limitation, income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding,
excise, occupation, value added, ad valorem, transfer and
other taxes, duties or assessments of any nature whatsoever,
together with any interest, penalties or additions to tax
imposed with respect thereto.
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(iii)"TAX RETURNS" shall mean any returns, reports and forms
required to be filed with any Governmental Authority.
(jjj)"THREATENED" shall mean the following: a claim, proceeding,
dispute, action, or other matter will be deemed to have been
"Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally
or in writing) that would lead a prudent Person to conclude
that such a claim, proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
(kkk)"VEECO" shall have the meaning set forth in the recitals to
this Merger Agreement.
(lll)"VEECO AFFILIATES" shall have the meaning set forth in
Section 5.14(b).
(mmm)"VEECO AUTHORIZATIONS" shall have the meaning set forth in
Section 4.09.
(nnn)"VEECO BALANCE SHEET" shall have the meaning set forth in
Section 4.06.
(ooo)"VEECO BALANCE SHEET DATE" shall have the meaning set forth
in Section 4.05.
(ppp)"VEECO FINANCIAL STATEMENTS" shall have the meaning set
forth in Section 4.04.
(qqq)"VEECO OPTIONS" shall have the meaning set forth in Section
4.02(b).
(rrr)"VEECO'S BROKERS" shall have the meaning set forth in
Section 4.12.
(sss)"VEECO SEC DOCUMENTS" shall have the meaning set forth in
Section 4.04.
(ttt)"VEECO SHARES" shall mean the common stock, $.01 par value
per share, of Veeco.
(uuu)"VEECO STOCKHOLDERS MEETING" shall have the meaning set
forth in Section 5.10(a).
1.02 The words "hereof," "herein," "hereby" and "hereunder," and words
of like import, refer to this Merger Agreement as a whole and not
to any particular Section hereof. References herein to any
Section, Schedule or Exhibit refer to such Section of, or such
Schedule or Exhibit to, this Merger Agreement, unless the context
otherwise requires. All pronouns and any variations thereof refer
to the masculine, feminine or neuter gender, singular or plural,
as the context may require.
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II. THE MERGER
2.01 THE MERGER. At the Effective Time (as defined in Section 2.02
hereof) of the Merger, the Company shall be merged with and into
Veeco. The separate existence of the Company shall thereupon
cease and Veeco shall continue its corporate existence as the
surviving corporation (the "SURVIVING CORPORATION") under the
laws of the State of Delaware under its present name. The Company
and Veeco are sometimes referred to collectively herein as the
"CONSTITUENT CORPORATIONS".
2.02 EFFECTIVE TIME OF THE MERGER. At the Closing (as defined in
Section 2.03 hereof), the parties hereto shall cause (i) an
agreement of merger substantially in the form of EXHIBIT A-1
annexed hereto to be executed and filed with the Secretary of
State of the State of California, as provided in Section 1103 of
the CGCL and (ii) a certificate of merger substantially in the
form of EXHIBIT A-2 annexed hereto to be executed and filed with
the Secretary of State of the State of Delaware, as provided in
Section 252 of the DGCL (collectively, the "CERTIFICATES OF
MERGER"), and shall take all such other and further actions as
may be required by law to make the Merger effective. The Merger
shall become effective as of the date and time of the filing of
such Certificates of Merger. The date and time of such
effectiveness are referred to herein as the "EFFECTIVE TIME".
2.03 CLOSING OF THE MERGER. Unless this Merger Agreement shall
theretofore have been terminated pursuant to the provisions of
Section 9.01 hereof, the closing of the Merger (the "Closing")
shall take place on the second business day following the day on
which the last of the conditions set forth in Articles VI and VII
hereof are fulfilled or waived, subject to applicable laws (the
"CLOSING DATE"), at the offices of Kaye, Scholer, Fierman, Hays &
Handler, LLP, 425 Park Avenue, New York, New York 10022 unless
another time, date or place is agreed to in writing by the
parties hereto.
2.04 EFFECTS OF THE MERGER. At the Effective Time of the Merger:
(a) the separate existence of the Company shall cease and the
Company shall be merged with and into Veeco, which shall be
the Surviving Corporation;
(b) the Certificate of Incorporation and By-Laws of Veeco as in
effect immediately prior to the Effective Time shall be the
Certificate of Incorporation and By-Laws of the Surviving
Corporation until each shall thereafter be amended in
accordance with each of their terms and as provided by law;
(c) the directors of Veeco immediately prior to the Effective
Time shall be the initial directors of the Surviving
Corporation, subject to Section 5.17, and the officers of
Veeco immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold
office in accordance with
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the Certificate of Incorporation and By-Laws of the Surviving
Corporation, in each case until their respective successors
are duly elected and qualified;
(d) the Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public as well as
of a private nature, of each of the Constituent Corporations,
and all property, real, personal, and mixed, and all debts
due on whatever account, and all other choses in action, and
all and every other interest of or belonging to or due to
each of the Constituent Corporations shall be taken and
deemed to be transferred to and vested in the Surviving
Corporation without further act or deed; and
(e) the Surviving Corporation shall thenceforth be responsible
and liable for all liabilities and obligations of each of the
Constituent Corporations, and any claim existing or action or
proceeding pending by or against either of the Constituent
Corporations may be prosecuted as if such Merger had not
taken place or the Surviving Corporation may be substituted
in its place. Neither the rights of creditors nor liens upon
the property of either of the Constituent Corporations shall
be impaired by the Merger.
2.05 CONVERSION OF SHARES. As of the Effective Time, by virtue of the
Merger and without any further action on the part of Veeco, the
Company, or any holder of any Equity Securities of the
Constituent Corporations:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted
into the right to receive that number of Veeco Shares (the
"Merger Consideration") as determined by dividing (x)
5,633,725 by (y) the aggregate number of shares of Company
Common Stock issued and outstanding immediately prior to the
Effective Time, upon surrender of the certificates to Veeco
representing such shares of Company Common Stock.
(b) The Merger Consideration shall be adjusted to reflect fully
the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities
convertible into Veeco Shares or Company Common Stock),
reorganization, recapitalization or other like change with
respect to Veeco Shares or Company Common Stock occurring
after the date hereof and prior to the Effective Time.
(c) No fraction of a Veeco Share will be issued, but in lieu
thereof each holder of shares of Company Common Stock who
would otherwise be entitled to a fraction of a Veeco Share
(after aggregating all fractional shares of Veeco Shares to
be received by such holder) shall receive from Veeco an
amount of cash (rounded to the nearest whole cent) equal to
the product of (i) such fraction, multiplied by (ii) the
average closing price of a Veeco Share for the
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twenty most recent days that Veeco Shares have traded ending
on the trading day immediately prior to the Effective Time,
as reported on NASDAQ.
(d) All Company Common Stock by virtue of the Merger and without
any action on the part of the holders thereof, shall no
longer be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of a certificate
representing any Company Common Stock shall thereafter cease
to have any rights with respect to such Company Common Stock,
except the right to receive the Merger Consideration for the
Company Common Stock upon the surrender of such certificate
in accordance with this Section.
(e) Promptly after the Effective Time, Veeco shall make available
to an exchange agent designated by the Company and Veeco the
Merger Consideration issuable in exchange for shares of
Company Common Stock and cash in an amount sufficient for
payment in lieu of fractional shares pursuant to Section
2.05(c).
(f) Promptly following proper delivery of a certificate
representing Company Common Stock by the holder thereof to
the exchange agent designated by the Company and Veeco, Veeco
shall cause such exchange agent to deliver to such holder a
certificate representing the Merger Consideration times the
number of shares of Company Common Stock represented by the
certificate so delivered by such holder.
2.06 SUBSEQUENT ACTION. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances and any other
actions or things are necessary, desirable or proper to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of
the rights, properties or assets of the Constituent Corporations
as a result of, or in connection with, the Merger, the officers
and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Constituent
Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on
behalf of the Constituent Corporations or otherwise, all such
other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Merger
Agreement.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS.
The Company and each of the Stockholders jointly and severally,
represent and warrant to Veeco as follows:
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3.01 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of California, and is qualified or licensed as a
foreign corporation to do business in each other jurisdiction
where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect upon its business or operations.
The jurisdictions where the Company is so qualified to do
business as a foreign corporation are set forth in Schedule 3.01.
The Company has all requisite corporate power to own, operate and
lease its assets and to carry on its business as now being
conducted. The Company has delivered to Veeco correct and
complete copies of its Articles of Incorporation and By-Laws as
in effect on the date hereof.
3.02 CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 100,000 shares of Company Common Stock, of which
50,250 are issued and outstanding as of the date hereof and
52,193.5 will be issued and outstanding immediately prior to the
Closing. A complete list of the record and beneficial owners of
all the issued and outstanding shares of Company Common Stock as
of the date hereof and as of the time immediately prior to the
Closing and the holdings of each such record and beneficial owner
are set forth in Schedule 3.02(a), and such shares are or
immediately prior to the Closing will be owned of record and
beneficially by such persons free and clear of all Encumbrances.
All of the outstanding shares of Company Common Stock have been
or immediately prior to the Closing will be duly authorized and
validly issued and are or immediately prior to the Closing will
be fully paid and nonassessable and were or immediately prior to
the Closing will have been issued in conformity with applicable
laws. No other shares of capital stock of the Company are or will
be outstanding or held as treasury shares. Except as set forth in
Schedule 3.02(a), no legend or other reference to any purported
Lien appears upon any certificate representing shares of the
Company Common Stock.
(b) Except as set forth in Schedule 3.02(b), there are no
outstanding Equity Securities, or other obligations to issue
or grant any rights to acquire any Equity Securities, of the
Company or any of its Subsidiaries, or any Contracts to
restructure or recapitalize the Company or any of its
Subsidiaries. There are no outstanding Contracts of the
Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Equity Securities of the Company or any
such Subsidiary. All outstanding Equity Securities of the
Company have been duly authorized and validly issued and are
fully paid and nonassessable and were issued in conformity
with applicable laws. As of the Closing, no options,
warrants, convertible securities or rights will be
exercisable or exchangeable for, convertible into, or
otherwise give its holder any right to acquire shares of
capital stock of the Company.
(c) Contemporaneously with the execution and delivery of this
Agreement Stockholders holding a majority of the outstanding
Company Common Stock, calculated on a fully-diluted basis,
have each executed and delivered
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an Irrevocable Proxy with respect to its shares of Company
Common Stock in the form attached as EXHIBIT E.
3.03 SUBSIDIARIES. Schedule 3.03 contains a list of each subsidiary of
the Company, including as subsidiaries for the purposes of this
Agreement Digital Instruments GmbH, a company organized under the
laws of Germany, and Robin Hill Properties, Inc., a corporation
organized under the laws of the State of California, both of
which are now owned by Affiliates of the Company and both of
which will become subsidiaries of the Company on or before the
Closing (each, a "SUBSIDIARY" and collectively, the
"SUBSIDIARIES"), including its name, jurisdiction of
incorporation or organization, other jurisdictions in which it is
qualified or licensed to do business as a foreign corporation,
and capitalization (including the identity of each stockholder
and the number of shares held by each). Each Subsidiary is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization as set forth
on Schedule 3.03, with full corporate power and authority to own
its properties and to engage in its business as presently
conducted and is not required to qualify or be licensed as a
foreign corporation in any other jurisdiction where failure to so
qualify could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Schedule 3.03, all of the
outstanding Equity Securities of each Subsidiary are owned of
record and beneficially by the Company or one or more
Subsidiaries, free and clear of Liens. No legend or other
reference to any purported Lien appears upon any certificate
representing equity securities of each Subsidiary. All of the
outstanding Equity Securities of each Subsidiary have been duly
authorized and validly issued and are fully paid and
nonassessable and were issued in conformity with applicable laws.
There are no outstanding options, warrants, convertible
securities or other rights to subscribe for, to purchase, or
Contracts to issue or grant any rights to acquire, any Equity
Securities of any Subsidiary or to restructure or recapitalize
any Subsidiary. There are no outstanding Contracts of any
Subsidiary to repurchase, redeem or otherwise acquire any Equity
Securities of any Subsidiary. The Company has delivered or made
available to Veeco complete and correct copies of the Certificate
or Articles of Incorporation and By-Laws or other organizational
documents of each Subsidiary, as in effect on the date hereof.
3.04 AUTHORIZATION. The Company has full corporate power and authority
to execute, deliver and perform this Merger Agreement and the
Certificates of Merger and to consummate the transactions
contemplated hereby. Each of the Stockholders has the right,
capacity and all requisite authority to execute, deliver and
perform this Merger Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Merger Agreement, the Certificates of Merger and all other
documents and agreements to be delivered pursuant hereto and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by the board of directors and
stockholders of the Company, and no other corporate proceedings
on the part of the Company are necessary to authorize this Merger
Agreement, the Certificates of Merger and any related documents
or
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<PAGE>
agreements or to consummate the transactions contemplated hereby.
As of the Closing, no stockholder of the Company will have any
rights to dissent under applicable law and there will be no
shares of the Company entitled to dissenters' or appraisal
rights. This Merger Agreement has been duly and validly executed
and delivered by the Company and each of the Stockholders and the
Certificates of Merger when executed at the Closing will be duly
and validly executed and delivered by the Company. This Merger
Agreement constitutes a legal, valid and binding agreement of the
Company and each of the Stockholders enforceable in accordance
with its terms and the Certificates of Merger when executed at
the Closing will be legal, valid and binding agreements of the
Company enforceable in accordance with their terms.
3.05 FINANCIAL STATEMENTS. The Company has delivered to Veeco (i)
balance sheets for the Company as of December 31, 1996, 1995,
1994 and 1993, and related statements of income, stockholders'
equity and cash flows for the fiscal years then ended, together
with the audit reports thereon of Arthur Andersen LLP, (ii)
unaudited balance sheets for Digital Instruments GmbH as of
December 31, 1996 and 1997, and related statements of income for
the fiscal years then ended (iii) an unaudited balance sheet for
Robin Hill Properties, LLC as of December 31, 1997, and related
statement of income for the fiscal year then ended and (iv) an
unaudited combined balance sheet for the Company and its
Subsidiaries as of December 31, 1997 and related combined
statements of income, stockholders' equity and cash flows for the
fiscal year then ended (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements fairly present the
financial condition, results of operations and cash flows of the
Company or the Company and its Subsidiaries, as the case may be,
on the dates and for the financial periods then ended, in
accordance with GAAP consistently applied. There has been no
material change in the Company's accounting policies, except as
described in the notes to the Financial Statements.
3.06 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
Subsidiaries has any obligation or liability of any nature
(matured or unmatured, fixed or contingent) which are material to
the Company and its Subsidiaries, taken as a whole other than
those (i) set forth or adequately provided for in the balance
sheet of the Company or such Subsidiary, as the case may be, as
at December 31, 1996, (ii) not required to be set forth on such
balance sheet under GAAP, or (iii) incurred in the ordinary
course of business since December 31, 1996 and consistent with
past practice.
3.07 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORIZATIONS. (a) Each of the
Company and its Subsidiaries has complied in all respects with,
is not in violation of, and has not received notices of violation
with respect to, any Law with respect to the conduct of its
business, or the ownership or operation of its business, except
such failures to comply or violations as could not reasonably be
expected to have a Material Adverse Effect on the Company.
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(b) Each of the Company and each of its Subsidiaries has obtained
all licenses, permits, certificates, consents and approvals
from Governmental Authorities (the "LICENSES") that are
necessary for the business and operations of the
Company or such Subsidiary, as the case may be, except where
the failure to obtain or have any such Licenses could not
reasonably be expected to have a Material Adverse Effect on
the Company. All such Licenses are listed in Schedule
3.07(b), are in full force and effect, and no written notice
of any material violation has been received by the Company or
any Subsidiary in respect of any such License. Except as set
forth in Schedule 3.07(b), the consummation of the
transactions contemplated hereunder and the operation of the
business of the Company by the Surviving Corporation in the
manner in which it is currently operated will not require the
transfer of any License that may not be transferred to the
Surviving Corporation without the consent or approval of any
Governmental Authority or other Person.
3.08 NO CONFLICTS. Except as set forth in Schedule 3.08, the
execution, delivery and performance by the Company of this Merger
Agreement and the consummation of the transactions contemplated
hereby will not (a) violate any provision of the Articles of
Incorporation or By-Laws or other organizational documents of the
Company or any of its Subsidiaries, (b) violate, or be in
conflict with, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under, or result in, or provide the basis for, the termination
of, or accelerate the performance required by, or excuse
performance by any Person of any of its obligations under, or
cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Lien
upon any property or assets of the Company or any of its
Subsidiaries under, any Material Contract to which the Company or
any of its Subsidiaries is a party or by which any of their
property or assets are bound, or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, (c)
subject to compliance with the HSR Act, violate any Law
applicable to the Company or any of its Subsidiaries or (d)
violate or result in the revocation or suspension of any License.
3.09 CONTRACTS. (a) Schedule 3.09 contains a complete and accurate
list, and the Company has delivered or made available to Veeco
true and complete copies (or, in the case of oral contracts,
summaries), of:
(i) each Contract that is executory in whole or in part
and involves performance of services or delivery of
goods or materials by the Company or any of its
Subsidiaries of an amount or value in excess of
$200,000;
(ii) each Contract that is executory in whole or in part
and was not entered into in the ordinary course of
business and that involves expenditures or receipts
of the Company or any of its Subsidiaries in excess
of $50,000;
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(iii) each lease, rental or occupancy agreement, license
agreement, installment and conditional sale
agreement, and any other Contract affecting the
ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or
personal property (except personal property leases
and installment and conditional sales agreements
having a value per item or aggregate payments of
less than $10,000 per annum;
(iv) other than licensing agreements entered into in
connection with product sales in the ordinary
course of the Company's or any of its
Subsidiaries' business, each material licensing
agreement or any other material Contract with
respect to patents, trademarks, copyrights, or
other Intellectual Property, including material
Contracts with current or former employees,
consultants, or contractors regarding the
appropriation or the non-disclosure of any of the
Intellectual Property;
(v) each collective bargaining agreement and any other
Contract to or with any labor union or other
employee representative of a group of employees;
(vi) each joint venture, partnership, and any other
material Contract (however named) involving a
sharing of profits, losses, costs or liabilities by
the Company with any other Person;
(vii) each Contract containing covenants that in any way
purport to restrict the business activity of the
Company or any of its Subsidiaries or limit the
freedom of the Company or any of its Subsidiaries
to engage in any line of business or to compete
with any Person;
(viii) each Contract providing for material payments to
or by any Person based on sales, purchases, or
profits, other than direct payments for goods;
(ix) each power of attorney that is currently effective
and outstanding granted by and relating to the
Company or any of its Subsidiaries;
(x) each Contract that contains or provides for an
express undertaking by the Company or any of its
Subsidiaries to be responsible for consequential
damages;
(xi) each Contract that is executory in whole or in
part and involves capital expenditures in excess
of $50,000;
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(xii) each written warranty, guaranty, and/or other
similar undertaking with respect to contractual
performance extended by the Company or any of its
Subsidiaries other than in the ordinary course of
business; and
(xiii) each Contract with any employee, director or
officer.
(b) Each Material Contract is in full force and effect and
enforceable in accordance with its terms (subject to
bankruptcy, insolvency and other proceedings at law or in
equity relating to the rights of creditors generally).
(c) Except as set forth in Schedule 3.09(c), each of the Company
and each of its Subsidiaries has fulfilled in all material
respects all obligations required pursuant to each Material
Contract to have been performed by it.
(d) Except as set forth in Schedule 3.09(d), none of the Company
or any of its Subsidiaries has received any written notice of
default under any Material Contract, no default (beyond any
applicable grace or cure period) has occurred under any
Material Contract on the part of the Company or any of its
Subsidiaries or, to the Company's knowledge, on the part of
any other party thereto, nor has any event occurred which
with the giving of notice or the lapse of time, or both,
would constitute any default on the part of the Company or
any of its Subsidiaries under any Material Contract nor, to
the Company's knowledge, has any event occurred which with
the giving of notice or lapse of time, or both, would
constitute any default on the part of any other party to any
Material Contract.
(e) Except as set forth in Schedule 3.09(e), no consent or
approval of any party to any of the Material Contracts is
required for the execution, delivery or performance of this
Merger Agreement or the consummation of the transactions
contemplated hereby to which the Company or any of its
Subsidiaries is a party.
(f) Except as set forth in Schedule 3.09(f), to the knowledge of
the Company, no officer, director, agent, or employee of the
Company or any of its Subsidiaries is bound by any Contract
that purports to limit the ability of such officer, director,
agent or employee to (i) engage in or continue any conduct,
activity or practice relating to the business of the Company
or such Subsidiary, as the case may be, or (ii) assign to the
Company or to any other Person any rights to any invention,
improvement or discovery.
3.10 LITIGATION. Except as set forth in Schedule 3.10, there are no
actions, suits or legal, administrative, arbitration or other
proceedings or governmental investigations pending or, to the
Company's knowledge, Threatened against the Company or any of its
Subsidiaries before or by any Governmental Authority, and, to the
Company's
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knowledge, no basis exists for any such action. Except as set
forth in Schedule 3.10, none of the Company or any of its
Subsidiaries is a party to or subject to any judgment, order,
writ, injunction, decree or award of any Governmental Authority.
3.11 BOOKS AND RECORDS. The books and records of the Company and its
Subsidiaries, all of which have been made available to Veeco, set
forth in all respects all material transactions affecting the
Company and its Subsidiaries, and such books and records have
been properly kept and maintained and are complete and correct in
all material respects.
3.12 TAXES. Except as set forth in Schedule 3.12, the Company does not
own stock, and has not previously owned stock, in any
corporation. At all times since its formation, the Company has
qualified as an "S corporation," as defined in Section 1361(a)(1)
of the Code, for federal and all relevant state and local tax
purposes and will continue to so qualify through the Closing
Date. The Company and each Subsidiary has filed or caused to be
filed on a timely basis all Tax Returns that are or were required
to be filed by the Company or such Subsidiary pursuant to the
Laws of each Governmental Authority with taxing power over the
Company and its assets and business or any Subsidiary and its
assets and business, except where such failure to file could not
reasonable be expected to result in taxes, fines, penalties and
other liabilities to the Company and its Subsidiaries in excess
of $100,000 in the aggregate. Each Tax Return filed by the
Company or any Subsidiary was true, correct and complete in all
material respects when it was filed and each Tax Return that will
be filed on or before the Closing Date will be true, correct and
complete in all material respects when it is filed. The Company
and each Subsidiary has delivered to Veeco complete copies of all
Tax Returns that it has filed for the past three years. Each of
the Company and each Subsidiary has paid all Taxes that have or
may have become due pursuant to those Tax Returns, or otherwise,
or pursuant to any assessment received by the Company or such
Subsidiary, except such Taxes, if any, as are being contested in
good faith and as to which adequate reserves have been provided
in the Financial Statements. All Tax Returns required to be filed
by the Company or any Subsidiary for the period from the date
hereof up to and including the Closing Date have been or will be
timely filed, and all Taxes for such period will be paid by the
Company or such Subsidiary. Except as set forth in Schedule 3.12,
all Tax Returns of the Company and each Subsidiary have been
audited by the IRS or relevant Governmental Authorities or are
closed by the applicable statute of limitations for all taxable
years through December 31, 1993. All deficiencies proposed
(including interest, penalties and additions to tax that were or
are proposed to be assessed thereon, if any) as a result of such
audits have been paid, reserved against in the Financial
Statements, settled, or, as described in Schedule 3.12, are being
contested in good faith by appropriate proceedings. All Taxes
that the Company or any Subsidiary is, or was, required by Law to
withhold and collect have been duly withheld and collected and,
to the extent required, have been paid to the appropriate
Governmental Authority. Except as set forth in Schedule 3.12,
neither the Company nor any Subsidiary has given, or been
requested to give, waivers or extensions (or is
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or would be subject to a waiver or extension given by any other
entity) of any statute of limitations relating to the payment of
Taxes for which it may be liable. Except as set forth in Schedule
3.12, there are no Liens with respect to Taxes upon any of the
properties or assets, real or personal, tangible or intangible,
of the Company or any Subsidiary. Neither the Company nor any
Subsidiary has agreed, nor is it required, to include in income
any adjustment pursuant to Section 481(a) of the Code (or similar
provisions of other law or regulations) by reason of a change in
accounting method or otherwise. Neither the Company nor any
Subsidiary has, with regard to any assets or property held by the
Company or any Subsidiary, filed a consent to the application of
Section 341(f)(2) of the Code. There is no agreement, plan,
arrangement, or other contract covering any employee or
independent contractor of the Company or any Subsidiary that
could give rise to the payment of any amount that could not be
deductible by the Company, any Subsidiary or Veeco pursuant to
Section 280G of the Code. Neither the Company nor any Subsidiary
is a "U.S. real property holding corporation," as defined in
Section 897(c)(2) of the Code. There is no tax sharing agreement
that will require any payment by the Company or any Subsidiary
after the date of this Merger Agreement. No Subsidiary is a
"personal holding company," a "foreign personal holding company,"
a "passive foreign investment company," an "FSC" or a "DISC," as
defined in Code Sections 542, 552, 1297, 922 and 992,
respectively. No Subsidiary is a "controlled foreign
corporation," as defined in Code Section 957, which has, or will
have, accumulated earnings and profits (for purposes of Code
Section 1248) for all taxable periods ending prior to and up to
and including the Closing Date.
3.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth herein
and in Schedule 3.13, since December 31, 1996, neither the
Company nor any of its Subsidiaries has:
(a) changed any of the Company's or such Subsidiary's authorized
or issued capital stock; granted any stock option or right to
purchase shares of capital stock of the Company or such
Subsidiary; issued any Equity Security; granted any
registration rights; purchased, redeemed, retired, or
otherwise acquired any shares of any such capital stock; or,
except as permitted by Section 5.18 hereof, declared or paid
any dividend or other distribution or payment in respect of
shares of capital stock;
(b) amended the Articles of Incorporation or By-laws or other
organizational documents of the Company or such Subsidiary;
(c) other than in the ordinary course of the Company's or such
Subsidiary's business and other than annual salaries paid to
newly hired employees not in excess of $50,000 per employee
and annual increases in salary not in excess of $10,000 per
employee, paid or increased any bonuses, salaries, or other
compensation to any stockholder, director, officer or
employee or entered into any employment, severance, or
similar Contract with any director, officer, or employee,
since December 31, 1997;
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(d) adopted, amended or otherwise increased the payments to or
benefits under, any Benefit Plan for or with any employees of
the Company or such Subsidiary;
(e) damaged, destroyed or lost any asset or property of the
Company or such Subsidiary, whether or not covered by
insurance, where such damage, destruction or loss could
reasonably be expected to have a Material Adverse Effect on
the Company;
(f) materially amended, renewed, failed to renew, negotiated,
terminated (other than due to any scheduled expiration) or
received written notice of termination (other than due to any
scheduled expiration) of any Material Contract (or any
Contract which if in existence would constitute a Material
Contract), or defaulted (beyond any applicable notice or
grace period) on any of its obligations under any Material
Contract or entered into any new Material Contract or took
any action that could reasonably be expected to jeopardize
the continuance of its material supplier or customer
relationships;
(g) sold (other than sales of inventory in the ordinary course of
business), leased, or otherwise disposed of any material
asset or property of the Company or such Subsidiary or
mortgaged, pledged, or imposed any Lien on any material asset
or property of the Company or such Subsidiary, including the
sale, lease, or other disposition of any of the Intellectual
Property;
(h) incurred or assumed any long-term debt (including obligations
in respect of capital leases) in excess of $10,000, in the
aggregate, (ii) assumed, guaranteed, endorsed or otherwise
became liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other Person (other
than endorsements of checks in the ordinary course) in excess
of $10,000, in the aggregate, or (iii) made any loans,
advances or capital contributions to, or investment in, any
Person other than a Subsidiary (not including Digital
Instruments GmbH) in excess of $10,000, in the aggregate;
(i) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course
of business consistent with past practice, or failed to pay
or otherwise satisfy any material claims, liabilities or
obligations on a basis, and within the time, consistent with
past practice;
(j) cancelled or waived any material claims or rights;
(k) except as described in the notes to the Financial Statements
materially changed any of the accounting methods used by the
Company or such Subsidiary;
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(l) merged or consolidated with or into any other Person; or
(m) agreed, whether orally or in writing, to do any of the
foregoing.
Except as set forth herein and in Schedule 3.13, since December 31, 1996, there
has not been any Material Adverse Effect with respect to the Company.
3.14 EMLOYEE BENEFIT PLANS. (a) Except as set forth in Schedule
3.14(a), and except for customary payroll practices and policies,
including overtime compensation, paid vacation, holiday and sick
days, paid leaves of absence, travel and automobile allowances
and expense reimbursements, in any case which are described in
the employee handbook which has been delivered to Veeco, neither
the Company nor any of its Subsidiaries (i) maintains or
contributes to or has any obligation with respect to, and none of
the employees of the Company or any of its Subsidiaries is
covered by, any bonus, deferred compensation, severance pay,
pension, profit-sharing, retirement, insurance, stock purchase,
stock option, or other fringe benefit plan, arrangement or
practice, written or otherwise, or any other "employee benefit
plan," as defined in Section 3(3) of ERISA, whether formal or
informal (collectively, the "BENEFIT PLANS"). None of the Benefit
Plans is, and neither the Company nor any of its Subsidiaries (or
any of their ERISA Affiliates) has ever maintained or had an
obligation to contribute to, or incurred any other obligation
with respect to, (i) a plan subject to Section 412 of the Code or
Title I, Subtitle B, Part 3 of ERISA, (ii) a "multiemployer
plan," as defined in Section 3(37) of ERISA, (a "MULTIEMPLOYER
PLAN"), (iii) a "multiple employer plan," as defined in ERISA or
the Code, or (iv) a funded welfare benefit plan, as defined in
Section 419 of the Code. Neither the Company nor any of its
Subsidiaries has any agreement or commitment to create any
additional Benefit Plan, or to modify or change any existing
Benefit Plan. The Company and its Subsidiaries do not have any
other ERISA Affiliates.
(b) With respect to each Benefit Plan, the Company has heretofore
delivered or caused to be delivered or made available to
Veeco true, correct and complete copies of (i) all documents
which comprise the most current version of each of such
Benefit Plan, including any related trust agreements,
insurance contracts, or other funding or investment
agreements and any amendments thereto, and (ii) with respect
to each Benefit Plan that is an "employee benefit plan," as
defined in Section 3(3) of ERISA, (w) the three most recent
Annual Reports (Form 5500 Series) and accompanying schedules
for each of the Benefit Plans for which such a report is
required, (x) the most current summary plan description (and
any summary of material modifications), (y) the three most
recent certified financial statements for each of the Benefit
Plans for which such a statement is required or was prepared,
and (z) for each Benefit Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code, all IRS
determination letters issued with respect to such Plan.
Except as set forth in Schedule 3.14(b), since the date of
the documents
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delivered, there has not been any material change in the
assets or liabilities of any of the Benefit Plans or any
change in their terms and operations which could reasonably
be expected to affect or alter the tax status or materially
affect the cost of maintaining such Plan, and none of the
Benefit Plans has been or will be amended prior to the
Closing Date. Except as set forth in Schedule 3.14(b), each
of the Benefit Plans can be amended, modified or terminated
by the Company or a Subsidiary within a period of thirty (30)
days, without payment of any additional compensation or
amount or the additional vesting or acceleration of any such
benefits, except to the extent that such vesting is required
under the Code upon the complete or partial termination of
any Benefit Plan intended to be qualified within the meaning
of Section 401(a) of the Code.
(c) The Company and each of its Subsidiaries has performed and
complied in all material respects with all of its obligations
under and with respect to the Benefit Plans and each of the
Benefit Plans has, at all times, in form, operation and
administration complied in all material respects with its
terms, and, where applicable, the requirements of the Code,
ERISA and all other applicable Laws. Each Benefit Plan which
is intended to be "qualified" within the meaning of Section
401(a) of the Code has been determined by the IRS to be so
qualified and nothing has occurred which reasonably could be
expected to adversely affect such qualified status.
(d) All group health plans covering employees of the Company or
any of its Subsidiaries have been operated in material
compliance with the continuation coverage requirements of
Section 4980B of the Code (and any predecessor provisions)
and Part 6 of Title I of ERISA ("COBRA"). ----- Neither the
Company nor any of its Subsidiaries has any obligation to
provide health benefits or other non-pension benefits to
retired or other former employees (or their beneficiaries),
except as specifically required by COBRA.
(e) Neither the Company, any of its Subsidiaries nor any other
"disqualified person" or "party in interest," as defined in
Section 4975 of the Code and Section 3(14) of ERISA,
respectively, has engaged in any "prohibited transaction," as
defined in Section 4975 of the Code or Section 406 of ERISA,
with respect to any Benefit Plan nor have there been any
fiduciary violations under ERISA which could subject the
Company or any of its Subsidiaries (or any officer, director
or employee thereof) to any penalty or Tax under Section
502(i) of ERISA or Sections 4971 and 4975 of the Code.
(f) Except as set forth in Schedule 3.14(f), with respect to any
Benefit Plan: (i) no filing, application or other matter is
pending with the IRS, the PBGC, the United States Department
of Labor or any other governmental body, (ii) there is no
action, suit or claim pending nor, to the knowledge of the
Company, Threatened, other than routine claims for benefits,
and (iii) there are no outstanding material liabilities for
Taxes, penalties or fees.
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(g) Except as set forth in Schedule 3.14(g), neither the
execution and delivery of this Merger Agreement nor the
consummation of any or all of the contemplated transactions
will: (i) entitle any current or former employee of the
Company or any of its Subsidiaries to severance pay,
unemployment compensation or any similar payment, (ii)
accelerate the time of payment or vesting or increase the
amount of any compensation due to any such employee or former
employee, or (iii) directly or indirectly result in any
payment made or to be made to or on behalf of any person to
constitute a "parachute payment" within the meaning of
Section 280G of the Code.
3.15 INTELLECTUAL PROPERTY.
(a) The Company or its Subsidiaries own or have the right to
make, have made, use, sell, and license all new and useful
inventions, discoveries and all letters patent (including but
not limited to all reissues, extensions, renewals, divisions
and continuations thereof and thereto (including
continuations-in-part)) and all applications therefor; Use
(as such term is defined below), sell and license all
copyrights, mask works, trademarks and service marks and all
registrations and applications for registration thereof; Use,
sell and license all trade secrets, know-how, inventory,
algorithms, methods, processes, protocols, methodologies,
computer software (including but not limited to source code
in object code and source code form), design, functional,
technical and other specifications (for computer software and
other properties) and all other tangible and intangible
proprietary materials and information required for the
conduct of the business of the Company and its Subsidiaries
("Intellectual Property"). For the purposes of this Section
3.15, "Use" (and as the context requires, "Used") means the
right to use, execute, distribute, publish, reproduce,
perform, display, transmit, make available, make
modifications and prepare derivative works.
(b) Except as set forth on Schedule 3.15(b), with respect to the
Intellectual Property which the Company or its Subsidiaries
own, and to the extent of their rights therein, Veeco shall
have the right to (i) sue for (and otherwise assert claims
for) and shall have no limitation on its ability to recover
damages and obtain any and all other appropriate remedies
available at law or equity for any past, present or future
infringement, misappropriation or other violation thereof
(and settle all such suits, actions and proceedings); (ii)
seek appropriate protection therefor (including where
appropriate the right to seek copyright, trademark and
service mark registrations and letters patent in the United
States and all other countries and governmental divisions);
and (iii) claim all rights and priority thereunder to the
extent, if any, that the Company or any of its Subsidiaries
is entitled to claim any such rights and priority
notwithstanding the other provisions of this Agreement.
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(c) Schedule 3.15(c) sets forth a complete and accurate list (i)
in subsection 1, of all letters patent owned by the Company
or its Subsidiaries; (ii) in subsection 2, of all U.S.
Federal trademark and service mark registrations owned by the
Company or its Subsidiaries; (iii) in subsection 3, of all
U.S. common law trademarks and service marks owned by the
Company or its Subsidiaries; (iv) in subsection 4, of all
U.S. letters patent owned by the Company or its Subsidiaries
which are as of the date hereof subject to a reissue
proceeding in the U.S. Patent and Trademark Office (the
"PTO"); (v) in subsection 5, of all applications for U.S.
letters patent filed by and subject to ongoing prosecution by
the Company or its Subsidiaries, (vi) in subsection 6, of all
applications for letters patent in jurisdictions other than
the United States filed by and subject to ongoing prosecution
by the Company or its Subsidiaries; (vii) in subsection 7, of
all applications for U.S. Federal trademark or service mark
registrations filed by and subject to ongoing prosecution by
the Company or its Subsidiaries; (viii) in subsection 8, of
all applications for trademark or service mark registrations
in jurisdictions other than the United States filed by and
subject to ongoing prosecution by the Company or its
Subsidiaries; and (ix) in subsection 9, of all patent
interference and similar proceedings in which the Company (or
any of its Subsidiaries) is involved, including but not
limited to interferences and the like asserted against the
Company and interferences and the like which the Company has
provoked.
(d) Except as set forth in Schedule 3.15(d), (i) all authorship
in the computer software, documentation, software design,
technical and functional specifications created by the
Company or its Subsidiaries and used in products or services
created by the Company or its Subsidiaries (including but not
limited to the software in the controllers sold by the
Company but excluding software owned by others that is part
of hardware purchased by the Company for use in its products
or services), is original and (ii) all computer software and
related documentation manuals contained or Used in products
of (including documentation and product and user manuals) or
services provided by the Company or its Subsidiaries are
owned by or licensed to the Company or its Subsidiaries and
such licenses provide the Company or its Subsidiaries with
the right to sublicense or otherwise authorize use of the
licensed subject matter to their customers and authorized
third party users.
(e) (i) Except for third parties which have rights pursuant to
the agreements set forth in Schedule 3.15(f)(B) and except
for rights granted to the customers of the Company, the
Company or its Subsidiaries have the sole and exclusive right
to Use, sell and license each of the copyrights owned by the
Company or its Subsidiaries and to make, Use, sell and
license each item of Intellectual Property listed in Schedule
3.15(c), subsections 1 and 2, hereto (the foregoing
collectively referred to as "Company-Owned IP Registrations")
and (ii) except as set forth in Schedule 3.15(e), the Company
and its Subsidiaries
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have no knowledge that any of the Company-Owned IP
Registrations are invalid, unenforceable or not subsisting.
With the exception of copyright rights, all Company-Owned IP
Registrations have been and currently remain duly registered
with or issued by the appropriate governmental agency of the
United States or of foreign countries as indicated in
Schedule 3.15(c), subsections 1 and 2, hereto and all
required maintenance and annuity fees have been paid in full
to and all declarations required pursuant to 15 U.S.C.
Sections 1058 and 1065 (and foreign counterparts to the same)
have been accepted by the proper governmental authority.
(f) (i) Schedule 3.15(f)(A) sets forth a complete and accurate
list of the agreements, including but not limited to license
agreements, and of all parties thereto under which the
Company or any of its Subsidiaries obtains or is the
beneficiary of any license or right to use any Intellectual
Property right of any third party (singularly or
collectively, a "Licensed-In Agreement" or the "Licensed-In
Agreements") and (ii) Schedule 3.15(f)(B) sets forth a
complete and accurate list of the material agreements,
including but not limited to license agreements, to which the
Company or any of its Subsidiaries is a party and pursuant to
which a third party is authorized to Use any of the
Intellectual Property rights of the Company or any of its
Subsidiaries.
(g) Except as set forth in Schedule 3.15(g), each of the
copyrights owned by the Company or its Subsidiaries and each
item of Intellectual Property listed in the Schedules
delivered pursuant to Section 3.15(c) hereto, excluding
subsection 9 thereof (the "Company-Owned IP") (i) is free and
clear of any attachments, liens, security interests, UCC
filings or any other encumbrances; (ii) is not subject to any
outstanding judicial order, decree, judgment or stipulation
or to any agreement restricting the scope of the Company's or
its Subsidiaries' use thereof; (iii) together with each item
of Intellectual Property which the Company or any of its
Subsidiaries has a right to Use or practice pursuant to one
or more Licensed - In Agreements, is not subject to any
suits, actions, claims or demands of any third party and no
action or proceeding, whether judicial, administrative or
otherwise, has been instituted, is pending or, to the
knowledge of the Company, threatened which challenges or
affects the rights of the Company or any of its Subsidiaries
in the same.
(h) Except as set forth in Schedule 3.15(h), (i) neither the
Company nor any of its Subsidiaries has received any claim
that, any cease and desist or equivalent letter regarding, or
any other notice of any allegation to the effect that any of
the Company's or the Subsidiaries' products, software,
apparatus, methods or services which the Company or its
Subsidiaries make, Use, sell, offer or provide infringes
upon, misappropriates or otherwise violates the Intellectual
Property of any third party; (ii) the Company and its
Subsidiaries have no knowledge of any unauthorized Use by,
unauthorized disclosure to
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or by or infringement, misappropriation or other violation of
any of their Intellectual Property by any third party or any
current or former officer, employee, independent contractor,
consultant or any other agent of the Company or any of its
Subsidiaries (a "Company Agent" or the "Company Agents");
(iii) neither the Company nor any of its Subsidiaries has
entered into any agreement to indemnify any third party
against any claim of infringement, misappropriation or other
violation of Intellectual Property rights other than
indemnification provisions contained in purchase orders,
customer agreements, Licensed-In Agreements or software
licenses arising in the ordinary course of business; and (iv)
during the last ten (10) years neither the Company nor any of
its Subsidiaries has been charged in any suit, action or
proceeding with, or has charged others with, unfair
competition, infringement, misappropriation, wrongful use of
or any other violation or improper or illegal activity with
respect to or affecting Intellectual Property or with claims
contesting the validity, ownership or right to make, Use,
sell, license or dispose of Intellectual Property.
(i) Except as set forth in Schedule 3.15(i), (i) all computer
software created by employees of the Company within the scope
of their employment by the Company and used in Company
products or services and all original copyrightable
authorship therein is owned by the Company; (ii) all rights
in all inventions and discoveries made, developed or
conceived by Company Agents during the course of their
employment (or other retention) by the Company and material
to the business of the Company or its Subsidiaries or made,
written, developed or conceived with the use or assistance of
the Company's facilities or resources and which are the
subject of one or more issued letters patent or applications
for letters patent have been assigned in writing to the
Company; (iii) the policy of the Company and its Subsidiaries
requires each employee of the Company to sign documents
confirming that he or she assign to the Company all
Intellectual Property rights made, written, developed or
conceived by him or her during the course of his or her
employment (or other retention) by the Company and relating
to the business of the Company or its Subsidiaries or made,
written, developed or conceived with the use or assistance of
the Company's facilities or resources to the extent that
ownership of any such Intellectual Property rights does not
vest in the Company by operation of law, and to the extent
that any employee of the Company has not executed such
documents, the Company will require such employee to execute
such documents at or before the Closing; and (iv) all
Intellectual Property rights made, written, developed or
conceived by each Company Agent during the course of his or
her retention by the Company and material to the business of
the Company or its Subsidiaries have been assigned or
licensed to the Company or its Subsidiaries, except where the
failure to have obtained one or more of such assignments or
licenses would not have a Material Adverse Effect on the
Company.
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(j) Except as set forth in Schedule 3.15(j), the Intellectual
Property owned by, licensed to or Used by the Company or its
Subsidiaries prior to the execution of this Agreement will
enable Veeco subsequent to the Effective Time to fully carry
on without restriction all aspects of the business of the
Company and its Subsidiaries as and to the extent such
business was carried on by the Company or its Subsidiaries
prior to the Merger. Except as set forth in Schedule 3.15(j),
the Company or its Subsidiaries either own all right, title
and interest in, or have a valid, binding, continuing and
transferable right to Use, all of such Intellectual Property.
(k) To the extent that any moral rights or rights of droit moral
are deemed to exist or apply in any jurisdiction to any
computer software, documentation, specifications, products or
other material (whether or not the Company or its
Subsidiaries owns the copyright(s) therein) and that such
rights are owned by or vest in the Company or its
Subsidiaries or the Company Agents, the Company and its
Subsidiaries agree to and hereby waive or hereby agree to
seek a waiver in favor of the Company and its Subsidiaries,
Veeco and its successors of any and all such moral rights or
rights of droit moral, and in addition, the Company and its
Subsidiaries agree and confirm that Veeco and its successors
shall have the right to make derivative works of and in all
other ways and by all means modify all software,
specifications, documentation and other material subject to
copyright protection owned by the Company or its
Subsidiaries.
(l) The Company believes that it has taken all reasonable and
practicable steps to protect and preserve the confidentiality
of all Intellectual Property (including without limitation
trade secrets and source code) not subject to copyright or
issued letters patent ("Confidential IP Information"). The
Company believes that all Use by the Company or any of its
Subsidiaries of Confidential IP Information not owned by the
Company or any of its Subsidiaries has been and is pursuant
to the terms of a written agreement between the Company (or
one of its Subsidiaries) and the owner of such Confidential
Information, or is otherwise lawful.
(m) The Company and each of its Subsidiaries will do all acts
necessary or reasonably requested to be done by Veeco in
order to perfect title to the Intellectual Property in Veeco,
including, without limitation, to execute and deliver to
Veeco any and all oaths, assignments, affidavits and other
documents in form and substance as may be requested by Veeco;
to communicate all facts known to Company relating to the
Intellectual Property; to furnish Veeco with any and all
information, documents, materials or records of any kind in
its control relating to the Intellectual Property; and to
discharge its obligations under this subsection (m) promptly
but in any event within such time period(s) as is required to
allow Veeco to timely preserve or assert its rights in
connection with the maintenance,
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enforcement or defense of the rights in Intellectual Property
assigned to Veeco hereunder. The rights provided in this
subsection (m) are cumulative of any rights of Veeco in this
Agreement and shall be deemed transferable in whole or in
part by Veeco to its successors and assigns.
3.16 REAL PROPERTY. (a) Schedule 3.16(a) describes all real property
owned by the Company and its Subsidiaries (the "OWNED REAL
PROPERTY"). True and complete copies of all --------------------
owners policies of title insurance obtained for the benefit of
the Company or any of its Subsidiaries have been delivered or
made available to Veeco. The Company or one or more of its
Subsidiaries has good and marketable title to all of the Owned
Real Property together with all buildings, improvements, fixtures
(including, without limitation, all heating, plumbing, air
conditioning, ventilation and electrical equipment), rights of
way, easements and appurtenances thereto, free and clear of all
Liens other than (i) municipal and zoning ordinances; (ii)
recorded easements for public utilities serving the Real
Property; and (iii) Liens for Taxes not yet due and payable, none
of which materially interfere with the use or occupancy of any of
the Real Property; and (iv) the Liens disclosed in Schedule
3.16(a). Except as set forth in Schedule 3.16(a), all Owned Real
Property is legally occupied by the Company or any of its
Subsidiaries and not by any tenants or other occupants. Except as
set forth in Schedule 3.16(a), no Owned Real Property shall be
subject to any lease or sublease at or immediately after the
Closing.
(b) Schedule 3.16(b) contains a list of all leases (collectively,
the "LEASES") pursuant to which the Company or any of its
Subsidiaries leases any real property (the "LEASED REAL
PROPERTY" and, together with the Owned Real Property, the
"REAL PROPERTY"). True and correct copies of the Leases have
been delivered or made available to Veeco. All of the Leases
are valid, binding and enforceable in accordance with their
terms (subject to bankruptcy, insolvency and other
proceedings at law or in equity relating to the rights of
creditors generally), and are in full force and effect; the
Company has received no notice, and has no knowledge, of any
default by the Company or any of its Subsidiaries (beyond any
applicable grace or cure period) under any of the Leases,
and, to the Company's knowledge, no other party to any of the
Leases is in breach or default thereunder; and all lessors
under the Leases have or by the Closing Date will have
consented to the consummation of the transactions
contemplated hereby, to the extent that the applicable lease
requires such consent, without requiring modification in the
rights or obligations of the tenant under such Leases. No
sublease by the Company or any of its Subsidiaries of any
Leased Real Property is currently in effect. The Company's
and its Subsidiaries' leasehold interests are subject to no
Lien or other encumbrance created by the Company.
3.17 TANGIBLE PROPERTY. (a) Schedule 3.17(a) contains the Company's
and its Subsidiaries' depreciation ledger of all material
machinery, equipment, fixtures, motor vehicles and other tangible
personal property owned by the Company and its
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Subsidiaries (collectively, the "OWNED TANGIBLE PROPERTY").
Except as set forth in Schedule 3.17(a), the Company or one or
more of its Subsidiaries has good title to all Owned Tangible
Property free and clear of all Liens.
(b) Schedule 3.17(b) contains a list as of the date indicated in
such schedule of (i) all material machinery, equipment,
fixtures and other tangible personal property owned by
another Person subject to any capital lease or rental
agreement that constitutes a Material Contract to which the
Company or any of its Subsidiaries is a party (collectively,
the "LEASED TANGIBLE PROPERTY") and (ii) a list of the leases
of the Leased Tangible Property (the "TANGIBLE PROPERTY
Leases"). Each of the Tangible Property Leases is in full
force and effect and constitutes a valid and binding
obligation of the Company or one or more of its Subsidiaries
and, to the Company' s knowledge, the other party thereto,
enforceable in accordance with its terms. The Company has
received no notice, and has no knowledge, of any default by
the Company or any of its Subsidiaries (beyond any applicable
grace or cure period) under any of the Tangible Property
Leases, and, to the Company's knowledge, no other party to
any of the Tangible Property Leases is in breach or default
thereunder.
(c) Except as set forth in Schedule 3.17(c), all Owned Tangible
Property and all Leased Tangible Property (collectively, the
"TANGIBLE Property") is in good and usable working condition,
normal wear and tear excepted, and is suitable for the
purposes for which it is used or is being replaced according
to the Company's or its Subsidiaries' replacement policy.
3.18 ENVIRONMENTAL MATTERS. (a) Each of the Company's and its
Subsidiaries' ownership and operation of its business is and has
been in material compliance with all Environmental Laws. Each of
the Company and its Subsidiaries has obtained all approvals
necessary or required under all applicable Environmental Laws for
the ownership and operation of its business, all such approvals
are in effect, neither the Company nor its Subsidiaries has
received written notice of any action to revoke or modify any of
such approvals, and the ownership and operation of the Company's
and its Subsidiaries' businesses is and has been in material
compliance with all terms and conditions thereof. Except as set
forth in Schedule 3.18(a), neither the Company nor its
Subsidiaries has received written notice of any pending, or
Threatened, claim or investigation by any Governmental Authority
or any other Person concerning the Company's or such Subsidiary's
potential liability under Environmental Laws in connection with
the ownership or operation of its business. Except as set forth
in Schedule 3.18(a), there has not been a Release of any
Hazardous Substance at, upon, in, from or under any premises now
or previously owned or occupied by the Company nor any of its
Subsidiaries or upon which its assets are or were located at any
time during the Company's or such Subsidiary's ownership and/or
occupancy thereof. None of the Real Property has been or is used
as a treatment, storage or disposal facility for Hazardous
Substances; and, except as set forth in Schedule 3.18(a), no
Hazardous Substances are present on any of the Real Property
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except in such quantities as are handled in material compliance
with all applicable manufacturer's instructions and in material
compliance with all applicable Environmental Laws and as are used
in the operation of the Company's or such Subsidiary's business.
(b) The Company has (i) provided or made available to Veeco all
test results, records, notices, disclosures and reports in
the Company's or any of its Subsidiaries' possession or
control with respect to the Real Property and any real
property previously owned or occupied by the Company or any
of its Subsidiaries, including all correspondence with any
Governmental Authority as described in Schedule 3.18(b),
concerning any and all past and/or present health, safety
and/or environmental issues or concerns and (ii) made all
disclosures, including notice of a Release or Threatened
Release of a Hazardous Substance, required of the Company or
any of its Subsidiaries under any Environmental Law.
(c) Except as set forth in Schedule 3.18(c), neither the Company
nor any of its Subsidiaries has received written notice, or
otherwise obtained knowledge, of the existence of any
circumstances or conditions that have a reasonable likelihood
of resulting in any Damages for which the Company or such
Subsidiary could be liable arising pursuant to any
Environmental Law.
3.19 LABOR RELATIONS. Except as set forth in Schedule 3.19, neither
the Company nor any of its Subsidiaries is conducting its
business in violation of any applicable Laws relating to
employment or labor, including, without limitation, those Laws
relating to wages, hours, collective bargaining, unemployment
insurance, workers' compensation, equal employment opportunity
and the payment and withholding of Taxes. Except as set forth in
Schedule 3.19, no union or other collective bargaining unit has
been certified as representing any of the employees of the
Company or its Subsidiaries nor has the Company or any of its
Subsidiaries agreed to recognize any union or other collective
bargaining unit. Except as set forth in Schedule 3.19, there are
no labor disputes pending or, to the knowledge of the Company and
each of its Subsidiaries, Threatened, involving strikes, work
stoppages, slowdowns or lockouts. There are no grievance
proceedings or claims of unfair labor practices filed or, to the
knowledge of the Company, Threatened to be filed with the
National Labor Relations Board against the Company or any of its
Subsidiaries. To the knowledge of the Company, there is no union
representation or organizing effort pending or Threatened against
the Company or any of its Subsidiaries.
3.20 OFFICERS AND EMPLOYEES. The Company has previously delivered or
made available to Veeco a true and complete list of the names and
current salaries of all the employees of the Company and its
Subsidiaries. Except as disclosed in Schedule 3.20, there is no
employment agreement, employee benefit or incentive compensation
plan or program, severance policy or program or any other plan or
program to which the Company or any of its Subsidiaries is a
party (i) that is or could, pursuant to its
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terms, be triggered or accelerated by reason of or in connection
with the execution of this Merger Agreement or the consummation
of the transactions contemplated by this Merger Agreement or (ii)
which contains "change in control" provisions pursuant to which
the payment, vesting or funding of compensation or benefits is
triggered or accelerated by reason of or in connection with the
execution of or consummation of the transactions contemplated by
this Merger Agreement. Except as set forth in Schedule 3.20, no
employee whose annual salary is in excess of $50,000 (exclusive
of bonuses) has given notice to the Company or any of its
Subsidiaries to cancel or otherwise terminate such person's
relationship with the Company or its Subsidiaries.
3.21 INSURANCE. Schedule 3.21 contains a complete list of all of the
Company's and its Subsidiaries' policies of insurance in effect
as of the date hereof. The insurance policies to which the
Company or any of its Subsidiaries is a party provide, in the
reasonable judgment of the Company's management, adequate
insurance coverage for the assets and operations of the Company
and its Subsidiaries in light of present insurance market
conditions. All of such policies are in full force and effect,
and there is no default (beyond any applicable grace or cure
period) with respect to any provision contained in any such
policy, nor has there been any failure to give any notice or
present any claim under any liability policy in a timely fashion
or in the manner or detail required by such liability policy,
except any such failure as could not reasonably be expected to
have a Material Adverse Effect on the Company. The Company has
delivered or made available copies of all such policies to Veeco.
Except as set forth in Schedule 3.21, there are no outstanding
unpaid premiums or claims, and no retroactive or retrospective
premium adjustments with respect to such policies, and no notice
of cancellation or nonrenewal has been received by the Company or
any of its Subsidiaries with respect to, or disallowance of any
claim under, any such policy.
3.22 BROKERS AND FINDERS. No broker, finder, agent or similar
intermediary has acted on the Company's or any of its
Subsidiaries' or any Stockholder's behalf in connection with this
Merger Agreement or the transactions contemplated hereby, and
there are no brokerage commissions, finders' fees or similar fees
or commissions payable in connection therewith based on any
Contract with the Company or any of its Subsidiaries or any
Stockholder or any action taken by the Company or any of its
Subsidiaries or any Stockholder.
3.23 BANKING RELATIONSHIPS. Schedule 3.23 sets forth the names and
locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the
Company or any of its Subsidiaries has a banking relationship. At
the Closing, the Company will deliver to Veeco copies of all
records in its or any of its Subsidiaries' possession, including
all signatures or authorization cards, pertaining to such safe
deposit boxes and bank accounts.
3.24 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. Except as set
forth in Schedule 3.24 and except for salary, benefits, other
compensation and expense reimbursement
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payable in the ordinary course and consistent with past
practices, there are no amounts in excess of $5,000 owing from
the Company or any of its Subsidiaries to any present or former
shareholder or Affiliate of the Company or any of its
Subsidiaries, nor are there any amounts in excess of $5,000 owing
from any such Person to the Company or any of its Subsidiaries,
nor are there currently pending any transactions between the
Company or any of its Subsidiaries and any such Person, nor since
December 31, 1996 have there been any transactions between the
Company or any of its Subsidiaries and any such Person.
3.25 ACCOUNTS RECEIVABLE. Except as set forth in Schedule 3.25, the
accounts receivable of the Company and its Subsidiaries (a) are
bona fide accounts receivable created in the ordinary and usual
course of business in connection with bona fide transactions and
consistent with past practice, (b) are current, and (c) have been
properly accrued in accordance with GAAP consistently applied and
any reserves or allowances for doubtful accounts have been
properly accrued in accordance with GAAP consistently applied.
3.26 INVENTORY. Except as set forth in Schedule 3.26, all the
inventories of the Company and its Subsidiaries are suitable,
useable and saleable in the ordinary course of business
consistent with past practices, except to the extent of normal
obsolescence or to the extent written down or reserved against.
Except as set forth in Schedule 3.26, the inventories stated in
the December 31, 1996 and December 31, 1997 balance sheets have
been stated in accordance with GAAP consistently applied. The
Company does not know of any adverse condition affecting a
material source of materials available to the Company or any of
its Subsidiaries.
3.27 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of the Company set forth in this Merger Agreement
and in any agreement, certificate or other document required to
be delivered or given to Veeco by the Company pursuant to this
Merger Agreement or referred to in this Merger Agreement or in
any such other agreement, certificate or document will be true
and correct at the Closing Date with the same force and effect as
if made on that date.
3.28 POOLING OF INTERESTS. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any of their
respective directors, officers or stockholders has taken any
action which would interfere with Veeco's ability to account for
the Merger as a pooling of interests.
3.29 NO DISPOSITION. None of the Digital Affiliates has any plan or
intention to sell, exchange, or otherwise dispose of a number of
shares of Veeco Shares received in the Merger that would reduce
such Digital Affiliate ownership of Veeco Shares to a number of
shares having a value, as of the Effective Time, of less than 80
percent of the value of all of the formerly outstanding stock of
the Company held by such Digital Affiliate as of the Effective
Time. For purposes of this representation, shares of Company
Common Stock surrendered by dissenters or exchanged for cash in
lieu
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of fractional shares of Veeco Shares will be treated as
outstanding Company Common Stock as of the Effective Time and
shares of Company Common Stock and Veeco Shares held by the
Digital Affiliates and otherwise sold, redeemed or disposed of
prior or subsequent to the Merger are considered in making this
representation.
3.30 SOLVENCY. The Company is not under the jurisdiction of a court in
a Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code and the fair market value of the assets
of the Company will, as of the Effective Time, exceed the sum of
its liabilities, plus the amount of liabilities, if any, to which
the assets are subject.
3.31 DISCLOSURE. No representation or warranty contained in this
Merger Agreement and none of the information furnished by the
Company or any of the Stockholders set forth herein, in the
exhibits or schedules hereto or in any other document required to
be delivered by the Company or any of the Stockholders to Veeco,
or its accountants, counsel or other advisers pursuant to this
Merger Agreement or referred to in this Merger Agreement or in
any such other document, contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
IV. REPRESENTATIONS AND WARRANTIES OF VEECO
Veeco hereby represents and warrants to the Company as follows:
4.01 ORGANIZATION OF VECCO. (a) Veeco is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, and is qualified or licensed as a foreign
corporation to do business in each other jurisdiction where the
failure to so qualify would have a Material Adverse Effect upon
its business or operations. The jurisdictions in which Veeco is
so qualified to do business as a foreign corporation are set
forth in Schedule 4.01. Veeco has all requisite corporate power
to own, operate and lease its assets and to carry on its business
as now being conducted. Veeco has delivered to the Company
correct and complete copies of its Certificate of Incorporation
and By-Laws as in effect on the date hereof.
(b) Veeco has full corporate power and authority to execute,
deliver and perform this Merger Agreement and the
Certificates of Merger, and to consummate the transactions
contemplated hereby. The execution, delivery and performance
of this Merger Agreement, the Certificates of Merger and all
other documents and agreements to be delivered pursuant
hereto and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the board of
directors of Veeco. Prior to the Closing, the execution,
delivery and performance of this Merger Agreement, the
Certificates of Merger and all other documents and agreements
to be delivered pursuant hereto and the consummation of the
transactions contemplated hereby will be duly and validly
authorized by the stockholders
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of Veeco and no other corporate proceedings on the part of
Veeco are necessary to authorize this Merger Agreement, the
Certificates of Merger and any related documents or
agreements or to consummate the transactions contemplated
hereby. As of the Closing, no stockholder of Veeco will have
any rights to dissent under applicable law. This Merger
Agreement has been duly and validly executed and delivered by
Veeco, and the Certificates of Merger when executed at the
Closing will be duly and validly executed and delivered by
Veeco. This Merger Agreement constitutes a legal, valid and
binding agreement of Veeco enforceable in accordance with its
terms and the Certificates of Merger when executed at the
Closing will be legal, valid and binding agreements of Veeco
enforceable in accordance with their terms.
4.02 CAPITALIZATION. (a) The authorized capital stock of Veeco
consists of 25,000,000 Veeco Shares, of which 8,962,960 were
issued and outstanding as of February 26, 1998 and 500,000 shares
of preferred stock, none of which are outstanding. All of the
outstanding Veeco Shares have been duly authorized and validly
issued and are fully paid and nonassessable and were issued in
conformity with applicable laws.
(b) As of February 26, 1998, 1,067,121 Veeco Shares were issuable
upon the exercise of options granted under the Veeco
Instruments Inc. Amended and Restated 1992 Employees' Stock
Option Plan and under the Amended and Restated Veeco
Instruments Inc. 1994 Stock Option Plan for Outside Directors
and 135,190 Veeco Shares were issuable upon the exercise of
options granted to shareholders of Wyko Corporation in the
merger of a wholly-owned subsidiary of Veeco with and into
Wyko Corporation in July 1997 (collectively, the "VEECO
OPTIONS"). Except for the Veeco Options, there are no
outstanding Equity Securities, or other obligations to issue
or grant any rights to acquire any Equity Securities, of
Veeco, or any Contracts to restructure or recapitalize Veeco.
There are no outstanding Contracts of Veeco to repurchase,
redeem or otherwise acquire any Equity Securities of Veeco.
All outstanding Equity Securities of Veeco have been duly
authorized and validly issued in conformity with applicable
laws.
4.03 NON-CONTRAVENTION. The execution, delivery and performance by
Veeco of this Merger Agreement and the consummation of the
transactions contemplated hereby will not (a) violate any
provision of the Certificate of Incorporation or By-Laws of
Veeco, (b) violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or excuse
performance by any Person of any of its obligations under, or
cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Lien
upon any property or assets of Veeco under, any material Contract
to which Veeco is a party or by which any of its property or
assets are bound, or to which any of the property or assets of
Veeco is subject, except for Contracts wherein the other party
thereto has consented to the consummation of this transaction,
(c) violate any
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Law applicable to Veeco or (d) violate or result in the
revocation or suspension of any material license, permit,
certificate, consent or approval from a Governmental Authority
that is necessary for the business and operations of Veeco.
4.04 REPORTS. Veeco has furnished to the Company a true and complete
copy of each statement, report, registration statement (with the
prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act), definitive proxy statement, and other filings
filed with the SEC by Veeco since January 1, 1995, and, prior to
the Effective Time, Veeco will have furnished the Company with
true and complete copies of any additional statements, reports
and documents filed with the SEC by Veeco prior to the Effective
Time (collectively, the "VEECO SEC Documents"). All documents
required to be filed as exhibits to the Veeco SEC Documents have
been so filed. All Veeco SEC Documents were filed as and when
required by the Exchange Act or the Securities Act, as
applicable. The Veeco SEC Documents include all statements,
reports and documents required to be filed by Veeco pursuant to
the Exchange Act and the Securities Act. As of their respective
filing dates, the Veeco SEC Documents complied in all material
respects with the requirements of the Exchange Act and the
Securities Act, as applicable, and none of the Veeco SEC
Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to
the extent corrected by a subsequently filed Veeco SEC Document.
None of Veeco's subsidiaries is required to file any statements,
reports or documents with the SEC. The financial statements of
Veeco and its subsidiaries, including the notes thereto, included
in the Veeco SEC Documents (the "VEECO FINANCIAL STATEMENTS"),
complied as to form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto as of their
respective dates (except as may be indicated in the notes thereto
or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The
Veeco Financial Statements fairly present the consolidated
financial condition, operating results and cash flows of Veeco
and its subsidiaries at the dates and during the periods
indicated therein in accordance with GAAP consistently applied
(subject, in the case of unaudited statements, to normal,
recurring year-end adjustments and additional footnote
disclosures). There has been no material change in Veeco's
accounting policies except as described in the notes to the Veeco
Financial Statements. At all times since January 1, 1995 Veeco
has (i) filed as and when due all documents required to be filed
with NASDAQ, and (ii) otherwise timely performed all of Veeco's
obligations pursuant to the rules and regulations of NASDAQ.
4.05 ABSENCE OF CERTAIN CHANGES. Since December 31, 1997 (the "VEECO
BALANCE SHEET DATE"), Veeco and its subsidiaries have conducted
their business in the ordinary course consistent with past
practice and there has not occurred: (i) any change, event or
condition (whether or not covered by insurance) that has resulted
in, or might reasonably be expected to result in, a Material
Adverse Effect to Veeco; (ii) except
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as listed on Schedule 4.05, any acquisition, sale or transfer of
any material asset of Veeco or any of its subsidiaries other than
in the ordinary course of business and consistent with past
practice; (iii) any change in accounting methods or practices
(including any change in depreciation or amortization policies or
rates) by Veeco or any revaluation by Veeco of any of its assets;
(iv) any declaration, setting aside, or payment of a dividend or
other distribution with respect to the shares of Veeco, or any
direct or indirect redemption, purchase or other acquisition by
Veeco of any of its shares of capital stock; (v) except as listed
on Schedule 4.05, any material contract entered into by Veeco or
any of its subsidiaries, other than in the ordinary course of
business and as provided to the Company, or any material
amendment or termination of, or default under, any material
contract to which Veeco or any of its subsidiaries is a party or
by which it or any of them is bound; or (vi) any agreement by
Veeco or any of its subsidiaries to do any of the things
described in the preceding clauses (i) through (v) (other than
negotiations with the Company and its representatives regarding
the transactions contemplated by this Agreement).
4.06 NO UNDISCLOSED LIABILITIES. Neither Veeco nor any of its
subsidiaries has any obligations or liabilities of any nature
(matured or unmatured, fixed or contingent) which are material to
Veeco and its subsidiaries, taken as a whole, other than those
(i) set forth or adequately provided for in the Balance Sheet of
Veeco and its subsidiaries included in Veeco's Quarterly Report
on Form 10-Q for the period ended September 30, 1997 (the "VEECO
BALANCE SHEET"), (ii) not required to be set forth on the Veeco
Balance Sheet under GAAP, or (iii) incurred in the ordinary
course of business since the Veeco Balance Sheet Date and
consistent with past practice.
4.07 LITIGATION. Except as disclosed in Veeco's Quarterly Report on
Form 10-Q for the period ended September 30, 1997, (i) there is
no private or governmental action, suit, proceeding, claim,
arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of Veeco or
any of its subsidiaries, Threatened against Veeco or any of its
subsidiaries or any of their respective properties or any of
their respective officers or directors (in their capacities as
such) that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Veeco, and (ii)
there is no judgment, decree or order against Veeco or any of its
subsidiaries or, to the knowledge of Veeco or any of its
subsidiaries, any of their respective directors or officers (in
their capacities as such) that could prevent, enjoin, alter or
materially delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a
Material Adverse Effect on Veeco.
4.08 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material
agreement, judgment, injunction, order or decree binding upon
Veeco or any of its subsidiaries which has or reasonably could be
expected to have the effect of prohibiting or materially
impairing any current or future business practice of Veeco or any
of its subsidiaries, any acquisition of property by Veeco or any
of its subsidiaries or the conduct of
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business by Veeco or any of its subsidiaries as currently
conducted or as proposed to be conducted by Veeco or any of its
subsidiaries.
4.09 GOVERNMENTAL AUTHORIZATION. Veeco and each of its subsidiaries
have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other
authorization of a Governmental Authority that is required for
the operation of Veeco's or any of its subsidiaries' business or
the holding of any interest in its properties (collectively, the
"VEECO AUTHORIZATIONS"), and all of such Veeco Authorizations are
in full force and effect, except where the failure to obtain or
have any of such Veeco Authorizations could not reasonably be
expected to have a Material Adverse Effect on Veeco.
4.10 COMPLIANCE WITH LAWS. Each of Veeco and its subsidiaries has
complied with, are not in violation of, and have not received any
notices of violation with respect to, any federal, state, local
or foreign statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business,
except for such violations or failures to comply as could not be
reasonably expected to have a Material Adverse Effect on Veeco.
4.11 POOLING OF INTERESTS. Neither Veeco nor any of its subsidiaries
nor, to the knowledge of Veeco, any of their respective
directors, officers or stockholders has taken any action which
would interfere with Veeco's ability to account for the Merger as
a pooling of interests.
4.12 BROKERS AND FINDERS. Except for those Persons ("VEECO'S BROKERS")
previously disclosed to the Company or its agents or
representatives, no broker, finder, agent or similar intermediary
has acted on Veeco's behalf in connection with this Merger
Agreement or the transactions contemplated hereby, and there are
no brokerage commissions, finders' fees or similar fees or
commissions payable in connection therewith based on any Contract
with Veeco or any action taken by Veeco. Veeco shall pay all fees
and disbursements of Veeco's Brokers.
4.13 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Veeco set forth in this Merger Agreement and in
any agreement, certificate or other document required to be
delivered or given to the Company by Veeco pursuant to this
Merger Agreement or referred to in this Merger Agreement or in
any such other agreement, certificate or document will be true
and correct at the Closing Date with the same force and effect as
if made on that date.
4.14 DISCLOSURE. No representation or warranty contained in this
Merger Agreement and none of the information furnished by Veeco
set forth herein, in the exhibits or schedules hereto or in any
other document required to be delivered by Veeco to the Company,
or its accountants, counsel or other advisers pursuant to this
Merger Agreement or referred to in this Merger Agreement or in
any such other document,
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contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or
therein not misleading.
V. COVENANTS
5.01 ACCESS. Between the date hereof and the Closing Date, the Company
shall, and shall cause its Subsidiaries to, provide Veeco and
each of its authorized employees, agents, officers and
representatives with reasonable access to the properties, books,
records, Tax Returns, contracts, information, documents and
personnel of the Company and its Subsidiaries as they relate to
the Company's and its Subsidiaries' businesses as Veeco may
reasonably request for the purpose of making such investigation
of the business, properties, financial condition and results of
operations of the Company's and its Subsidiaries' businesses as
it may deem appropriate or necessary. Between the date hereof and
the Closing Date, Veeco shall, and shall cause its subsidiaries
to, provide the Company and each of its authorized employees,
agents, officers and representatives with reasonable access to
the properties, books, records, Tax Returns, contracts,
information, documents and personnel of Veeco and its
subsidiaries as they relate to Veeco's and its subsidiaries'
businesses as the Company may reasonably request for the purpose
of making such investigation of the business, properties,
financial condition and results of operations of Veeco's and its
subsidiaries' businesses as they may deem appropriate or
necessary.
5.02 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE.
Except as otherwise expressly permitted by this Merger Agreement,
between the date hereof and the Closing Date, the Company shall
not, and shall not permit any of its Subsidiaries to, without the
prior consent of Veeco, take any affirmative action, or fail to
take any reasonable action within its control, as a result of
which any of the changes or events listed in Section 3.13 is
reasonably likely to occur.
5.03 CONDUCT OF BUSINESS OF THE COMPANY AND VEECO. During the period
from the date of this Agreement and continuing until the earlier
of the termination of this Agreement and the Effective Time, each
of the Company and Veeco agrees (except to the extent expressly
contemplated by this Agreement or as consented to in writing by
the other), to carry on its and its subsidiaries' business in the
usual, regular and ordinary course in substantially the same
manner as heretofore conducted, to pay and to cause its
subsidiaries to pay debts and Taxes when due (subject (i) to good
faith disputes over such debts or taxes and (ii) in the case of
Taxes of the Company or any of its Subsidiaries, to Veeco's
consent (which consent will not be unreasonably withheld or
delayed) to the filing of material Tax Returns if applicable), to
pay or perform other obligations when due, and to use all
reasonable efforts consistent with past practice and policies to
preserve intact its and its subsidiaries' present business
organizations, use its best efforts consistent with past practice
to keep available the services of its and its subsidiaries'
present officers and key employees and agents and use its best
efforts consistent with past practice to preserve its and its
subsidiaries' relationships and good will with customers,
suppliers, distributors, licensors, licensees, landlords,
creditors, employees, agents and others having business dealings
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with it or its subsidiaries, to the end that its and its
subsidiaries' goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Each of the Company and Veeco shall, and
shall cause each of its subsidiaries to, confer with the other
concerning operational matters of a material nature and otherwise
report periodically to the other concerning the status of its
business, operations and finances, and those of its subsidiaries.
Without limiting the foregoing, except as expressly contemplated
by this Agreement, neither the Company nor Veeco shall do, cause
or permit any of the following, or allow, cause or permit any of
its subsidiaries to do, cause or permit any of the following,
without the prior written consent of the other:
(a) CHARTER DOCUMENTS. Cause or permit any amendments to its
Certificate or Articles of Incorporation or Bylaws;
(b) DIVIDENDS; CHANGES IN CAPITAL STOCK. Except as permitted by
Section 5.18 hereof, declare or pay any dividends on or make
any other distributions (whether in cash, stock or property)
in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or
repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees,
directors and consultants in accordance with agreements
providing for the repurchase of shares in connection with any
termination of service to it or its subsidiaries;
(c) POOLING. Take any action which would interfere with Veeco's
ability to account for the Merger as a pooling of interests;
or
(d) OTHER. Take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.03(a) through (c) above,
or any action which would make any of its representations or
warranties contained in this Agreement untrue or incorrect in
any material respect or prevent it from performing or cause
it not to perform its covenants hereunder in any material
respect.
5.04 CONSENTS. The Company and Veeco shall cooperate and use their
respective best efforts to obtain, prior to the Effective Time,
all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties
to the Material Contracts as are necessary for consummation of
the transactions contemplated by this Merger Agreement and for
the Surviving Corporation to enjoy all rights under such Material
Contracts after the consummation of the transactions contemplated
by this Merger Agreement.
5.05 ENVIRONMENTAL TRANSFER LAWS. The Company shall, and shall cause
its Subsidiaries to, comply in a timely fashion with the material
requirements of all Environmental Laws applicable to the transfer
of its business and any licenses associated with the operation of
the business. The Company shall, and shall cause its Subsidiaries
to,
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complete all necessary disclosure statements required by
Environmental Laws applicable to the transfer of its business and
provide the statements to Veeco prior to Closing, all in proper
form for appropriate recordation and filing, except for actions
or failures to take action which could not reasonably be expected
to have a Material Adverse Effect on the Company or such
Subsidiary.
5.06 TAX MATTERS. Between the date hereof and the Closing Date, the
Company and each Subsidiary shall file or cause to be filed on a
timely basis all Tax Returns that are required to be filed by it
pursuant to the Laws of each Governmental Authority with taxing
power over it or its assets and businesses. Each of such Tax
Returns will be true, correct and complete when filed. Neither
the Company nor any Subsidiary shall make any election or file
any amended Tax Return reflecting any position that could result
in a material adverse Tax consequence to Veeco, the Company or
the Subsidiary for any period beginning on or after the Effective
Time. All transfer, documentary, gross receipts, sales, use and
property gains Taxes, and liabilities similar in nature, imposed
or payable on the sale or transfer of the Company's or any
Subsidiary's business pursuant to this Merger Agreement or the
consummation of any of the transactions contemplated hereby shall
be paid by the Company. The Company and each Subsidiary shall
timely file all required transfer Tax Returns and/or notices of
the transfer of the Company's or any Subsidiary's business with
the appropriate Governmental Authority. Veeco shall cooperate
with the Company, which cooperation shall include, without
limitation, providing information and executing and delivering
documents, in connection with the Company's or any Subsidiary's
obligations under this Section.
5.07 NOTICE OF BREACH; DISCLOSURE. Each party shall promptly notify
the other of (i) any event, condition or circumstance of which
such party becomes aware occurring from the date hereof to the
Closing Date that would constitute a violation or breach of this
Merger Agreement (or a breach of any representation or warranty
contained herein) or, if the same were to continue to exist as of
the Closing Date, would constitute the non-satisfaction of any of
the conditions set forth in Article VI or VII, as the case may be
or (ii) any event, occurrence, transaction, or other item of
which such party becomes aware which would have been required to
have been disclosed on any schedule or statement delivered
hereunder had such event, occurrence, transaction or item existed
as of the date hereof.
5.08 PAYMENT OF INDEBTEDNESS BY AFFILIATES. Except as set forth in
Schedule 5.08, the Company shall cause all indebtedness owed to
the Company or any of its Subsidiaries by any Affiliate (other
than wholly-owned Subsidiaries) to be paid in full prior to
Closing.
5.09 NO NEGOTIATION. Until such time, if any, as this Merger Agreement
is terminated pursuant to Section 9.01, the Company shall not
solicit or entertain offers from, negotiate with, or in any
manner discuss, encourage, recommend or agree to any proposal of,
any other potential buyer or buyers of all or any substantial
portion of
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the Company's or any of its Subsidiaries' business or any Equity
Interest in the Company or any of its Subsidiaries and any such
offers received by the Company shall promptly be rejected in
writing. The Company shall promptly inform Veeco of any contact
with any third party relating to the subject matter set forth
above.
5.10 STOCKHOLDER APPROVAL (a) Veeco shall cause an annual or special
meeting of its stockholders (the "VEECO STOCKHOLDER MEETING") to
be duly called and held as soon as reasonably practicable after
the date hereof for the purpose of approving this Merger
Agreement, the Merger and all actions contemplated hereby.
Subject to their fiduciary duties under applicable law, the Board
of Directors of Veeco will recommend that Veeco's stockholders
approve the Merger and the adoption of the Merger Agreement. The
Proxy Statement referred to below shall contain such
recommendation. Subject to fiduciary obligations under applicable
law, the Board of Directors of Veeco shall use its best efforts
to solicit from stockholders of Veeco proxies in favor of the
Merger and for the approval and adoption of this Merger Agreement
and shall take all other action in its judgment necessary to
secure the vote or consent of the stockholders required by the
DGCL to effect the Merger.
(b) As promptly as practicable after the date hereof, Veeco shall
prepare, file with the Commission under the Exchange Act and
use all reasonable efforts to have cleared by the Commission
and mailed to its stockholders, a proxy (the "PROXY
STATEMENT"), with respect to the Veeco Stockholder Meeting,
the form and content of which shall be subject to the
Company's reasonable approval. The Company shall cooperate
with and provide its reasonable assistance to Veeco in the
preparation and filing of the Proxy Statement. The Company
shall provide to Veeco for inclusion in the preliminary Proxy
Statement to be filed with the Commission an audited combined
balance sheet for the Company and its Subsidiaries as of
December 31, 1997 prepared in accordance with GAAP
consistently applied, which will fairly present the financial
condition of the Company and its Subsidiaries as of the date
thereof. The term "Proxy Statement" shall mean such proxy
statement at the time it initially is mailed to Veeco's
stockholders and all amendments or supplements thereto. The
information provided and to be provided by the Company and
Veeco, respectively, for use in the Proxy Statement, on the
date the Proxy Statement is first mailed to Veeco's
stockholders and on the date of the Veeco Stockholder Meeting
shall be true and correct in all material respects and shall
not, on such dates, contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made not misleading, and the Company and Veeco each
agree to correct any information provided by it for use in
the Proxy Statement which shall have become false or
misleading in any material respect and take all steps
necessary to cause such corrected information to be filed
with the Commission and disseminated to the stockholders of
Veeco, in each case as and to the extent required by
applicable federal securities laws.
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The Proxy Statement shall comply as to form in all material
respects with all applicable requirements of federal
securities laws.
5.11 FIRPTA. The Company and each Subsidiary shall, prior to the
Closing Date, provide Veeco with a properly executed FIRPTA
Notification Letter, substantially in the form of EXHIBIT B
attached hereto, which states that shares of capital stock of the
Company and each Subsidiary do not constitute "United States real
property interest" under Section 897(c) of the Code, for purposes
of satisfying Veeco's obligations under Treasury Regulation
Section 1.1445-2(c)(3). In addition, simultaneously with delivery
of such Notification Letter, the Company and each Subsidiary
shall have provided to Veeco, as agent for the Company, a form of
notice to the IRS in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2) and substantially in the form of
EXHIBIT B annexed hereto along with written authorization for
Veeco to deliver such form of notice to the IRS on behalf of the
Company and each Subsidiary upon the Closing of the Merger.
5.12 BLUE SKY LAWS. Veeco shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of Veeco Shares in
connection with the Merger. The Company shall use its reasonable
efforts to assist Veeco as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are
applicable in connection with the issuance of Veeco Shares in
connection with the Merger.
5.13 LISTING OF ADDITIONAL SHARES. Prior to the Effective Time, Veeco
shall file with NASDAQ a Notification Form for Listing of
Additional Shares with respect to the Merger Consideration.
5.14 AFFILIATE AGREEMENTS. (a) Schedule 5.14(a) sets forth those
Persons who are directors or executive officers holding shares
of, or who the Company believes may otherwise be deemed to be
"Affiliates" of, the Company (collectively, the "DIGITAL
AFFILIATES"). The Company shall provide Veeco such information
and documents as Veeco shall reasonably request for purposes of
reviewing such list. The Company shall use its best efforts to
deliver or cause to be delivered to Veeco on or before March 12,
1998 (and in each case prior to the Effective Time) from each of
the Digital Affiliates, an executed Affiliate Agreement
substantially in the form of EXHIBIT C-1 annexed hereto. Veeco
shall be entitled to place appropriate legends on the
certificates evidencing any Veeco Shares to be received by such
Digital Affiliates pursuant to the terms of this Merger
Agreement, and to issue appropriate stop transfer instructions to
the transfer agent for Veeco Shares, consistent with the terms of
such Affiliates Agreements.
(b) Schedule 5.14(b) sets forth those Persons who are directors
or executive officers holding shares of, or who Veeco
believes may otherwise be deemed to be "Affiliates" of, Veeco
(collectively, the "Veeco Affiliates"). Veeco shall provide
the Company such information and documents as the Company
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shall reasonably request for purposes of reviewing such list.
Veeco shall use its reasonable efforts to deliver or cause to
be delivered to the Company on or before March 12, 1998 (and
in each case prior to the Effective Time) from each of the
Veeco Affiliates, an executed Affiliate Agreement
substantially in the form of EXHIBIT C-2 annexed hereto.
5.15 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
provided in this Agreement, each of Veeco and the Company shall
use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective, as soon as reasonably practicable,
the transactions contemplated by this Agreement (including the
satisfaction of the conditions contained in Articles VI and VII
hereof as required thereby).
5.16 HSR ACT COMPLIANCE. The parties shall (i) promptly following
execution and delivery of this Agreement, file Pre-Merger
Notification and Report Forms in accordance with the HSR Act with
respect to the transactions contemplated by this Agreement, (ii)
promptly file any other required filings under the HSR Act, and
(iii) respond in good faith, in cooperation with each other, to
all requests for information, documentary or otherwise, by any
Governmental Body pursuant to the HSR Act.
5.17 NOMINATION OF DIRCTORS. In the event the Veeco Stockholder
Meeting is held simultaneously with Veeco's annual meeting to
elect directors, Veeco shall cause (i) Virgil Elings to be
nominated to stand for election in the class of Veeco directors
whose terms expire at Veeco's 2000 annual meeting of stockholders
and (ii) John Gurley to be nominated to stand for election in the
class of Veeco directors whose terms expire at Veeco's 1999
annual meeting of stockholders, in each case to take office
immediately following the Effective Time. In the event the Veeco
Stockholder Meeting is not held simultaneously with Veeco's
annual meeting to elect directors, (i) Virgil Elings shall be
appointed as a director of Veeco in the class of Veeco directors
whose terms expire at Veeco's 2000 annual meeting of stockholders
and (ii) John Gurley shall be appointed as a director of Veeco in
the class of Veeco directors whose terms expire at Veeco's 1999
annual meeting of stockholders, in each case to take office
immediately following the Effective Time.
5.18 DISTRIBUTION TO STOCKHOLDERS. Notwithstanding anything to the
contrary contained herein, the Company shall be permitted to make
distributions to the Stockholders prior to the Closing in an
aggregate amount equal to the lesser of (a) the sum of (i) 45% of
the Company's net income before income taxes for the period
beginning January 1, 1998 and ending on the day immediately
preceding the Closing Date, plus (ii) $750,000 or (b) the product
of (i) the average percentage of net income before income taxes
distributed to the Company's stockholders for the Company's 1996
and 1997 fiscal years times (ii) the Company's net income before
income taxes for the period beginning January 1, 1998 and ending
on the day immediately preceding the Closing Date.
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VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF VEECO
The obligation of Veeco to enter into and complete the Closing is
conditioned upon the satisfaction or waiver in writing by Veeco, on or before
the Closing Date, of the following conditions:
6.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company and the Stockholders contained in
this Merger Agreement, the Schedules or Exhibits hereto or in any
certificate or document delivered to Veeco by the Company in
connection with the transactions contemplated by this Merger
Agreement shall be true in all material respects on and as of the
Closing Date with the same effect as though such representations
and warranties were made on such date.
6.02 PERFORMANCE OF COVENANTS. The Company and each Stockholder shall
have performed and complied in all material respects with all of
the agreements, covenants and conditions required by this Merger
Agreement to be performed and complied with by them prior to or
on the Closing Date.
6.03 LITIGATION. No investigation, suit, action or other proceeding,
or injunction or final judgment relating thereto shall be
Threatened or pending on the Closing Date before any court or
Governmental Authority in which it is sought to restrain or
prohibit or to obtain Damages or other relief in connection with
this Merger Agreement or the consummation of the transactions
contemplated hereby.
6.04 CONSENTS AND APPROVALS; HSR ACT ACOMPLIANCE. All licenses and
other consents or approvals of Governmental Authorities and the
consents of the parties to any Material Contracts referred to in
Section 5.04 shall have been obtained. The requirements of the
HSR Act applicable to the transactions contemplated by this
Merger Agreement shall have been complied with, and the waiting
period thereunder shall have expired or been terminated.
6.05 FAIRNESS OPINION. On or prior to the date on which the Proxy
Statement is first mailed to stockholders of Veeco, the board of
directors of Veeco shall have received the written opinion of
Merrill Lynch & Co., Inc., financial advisor to Veeco, in form
and substance reasonably satisfactory to Veeco, to the effect
that the consideration to be paid to the stockholders pursuant to
Section 2.05(a) hereof is fair from a financial point of view to
Veeco (the "FAIRNESS Opinion").
6.06 ACCOUNTING OPINION. On or prior to the date on which the Proxy
Statement is first mailed to stockholders of Veeco, the board of
directors of Veeco shall have received the written opinion of
Ernst & Young LLP, dated the date of the mailing, the form and
substance of which is reasonably satisfactory to Veeco, regarding
the appropriateness of "pooling of interests" accounting for the
Merger.
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6.07 APPRAISALS. No holder of Company Common Stock outstanding
immediately prior to the Effective Time shall have validly
elected, pursuant to California law, to demand appraisal of their
Company Common Stock.
6.08 MATERIAL CHANGES. There shall not have been any material adverse
change in the assets, properties, condition (financial or
otherwise), prospects or results of operations of the Company and
its Subsidiaries, taken as a whole, from the date hereof to the
Closing Date, nor shall there exist any condition which could
reasonably be expected to result in such a material adverse
change.
6.09 STOCKHOLDER APPROVAL. This Merger Agreement and the Merger
contemplated hereby shall have been approved and adopted by the
requisite vote of the stockholders of Veeco entitled to vote
thereon at the Veeco Stockholder Meeting.
6.10 DELIVERY OF DOCUMENTS. There shall have been delivered to Veeco
the following:
(i) a certificate of the Company, dated the Closing
Date, signed by its Chief Executive Officer, to the
effect that the conditions specified in Sections
6.01 and 6.02 have been fulfilled;
(ii) a certificate of the Secretary of the Company
certifying copies of (x) the Articles of
Incorporation and By-Laws of the Company; (y) all
requisite corporate resolutions of the Company
approving the execution and delivery of this Merger
Agreement and the consummation of the transactions
contemplated herein; and (z) the identification and
signature of each officer of the Company executing
this Merger Agreement;
(iii) a registration rights agreement substantially in
the form of EXHIBIT D annexed hereto, duly
executed by each of the Stockholders; and
(iv) a noncompetition agreement substantially in the
form of EXHIBIT F annexed hereto, duly executed by
each of the executive officers of the Company who
are Stockholders.
6.11 LEGAL OPINION. Veeco shall have received an opinion of Richard
Clark, general counsel of the Company, reasonably satisfactory to
Veeco and its counsel addressed to Veeco and dated the Closing
Date.
6.12 AFFILIATE AGREEMENTS. Veeco shall have received on or before
March 12, 1998 from each of the Affiliates of the Company an
executed Affiliate Agreement substantially in the form of EXHIBIT
C-1 annexed hereto.
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6.13 TAX OPINION. Veeco shall have received a written opinion of Kaye,
Scholer, Fierman, Hays & Handler, LLP, in form and substance
reasonably satisfactory to Veeco, dated on or about the Closing
Date, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code,
and Veeco and the Company will each be a party to a
reorganization within the meaning of Section 368(b) of the Code.
In rendering this opinion, counsel shall be entitled to rely
upon, among other things, reasonable assumptions as well as
representations of Veeco, the Company and certain Stockholders.
6.14 CERTIFICATES OF MERGER. Prior to the Effective Time, each of the
Certificates of Merger shall be accepted for filing with the
Secretary of State of the State of California and the Secretary
of State of the State of Delaware, as applicable.
6.15 IBM LICENSE. Veeco shall be satisfied in its reasonable
discretion either (i) that the Agreement dated March 1, 1993
between International Business Machines Corporation and the
Company will continue in full force and effect following the
Closing and that Veeco will have the full benefit of the rights
in favor of the Company set forth therein or (ii) with the terms
of a substitute agreement among IBM, Veeco and the Company.
6.16 ACQUISITION OF ROBIN HILL PROPERTIES, INC. The Company shall have
acquired 100% of the capital stock of Robin Hill Properties,
Inc., a California corporation, on terms satisfactory to Veeco,
and Veeco shall have received evidence satisfactory to it of such
acquisition; PROVIDED, HOWEVER, that in the event such
acquisition shall not have occurred, this Agreement may be
amended to provide for this condition to be satisfied by Veeco's
direct acquisition of 100% of the capital stock of Robin Hill
Properties, Inc. in exchange for 133,725 Veeco Shares and the
number of Veeco Shares set forth in clause (x) of Section 2.05(a)
shall thereupon be reduced by 133,725 Veeco Shares.
6.17 ACQUISITION OF DIGITAL INSTRUMENTS GMBH. The Company shall have
acquired a 100% ownership interest in Digital Instruments GmbH, a
company organized under the laws of Germany, on terms
satisfactory to Veeco, and Veeco shall have received evidence
satisfactory to it of such acquisition; PROVIDED, HOWEVER, that
in the event such acquisition shall not have occurred, this
Agreement may be amended to provide for this condition to be
satisfied by Veeco's direct acquisition of a 100% ownership
interest in Digital Instruments GmbH in exchange for 21,588 Veeco
Shares and the number of Veeco Shares set forth in clause (x) of
Section 2.05(a) shall thereupon be reduced by 21,588 Veeco
Shares.
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VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The Company's obligation to enter into and complete the Closing
is conditioned upon the satisfaction or waiver in writing by the Company, on or
before the Closing Date, of all of the following conditions:
7.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Veeco contained in this Merger Agreement, the
Schedules or Exhibits hereto or in any certificate or document
delivered to the Company by Veeco in connection with the
transactions contemplated by this Merger Agreement shall be true
in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties were
made on such date.
7.02 PERFORMANCE OF COVENANTS. Veeco shall have performed and complied
in all material respects with all of the agreements, covenants
and conditions required by this Merger Agreement to be performed
and complied with by it prior to or on the Closing Date.
7.03 LITIGATION. No investigation, suit, action or other proceeding,
or injunction or final judgment relating thereto directly or
indirectly shall be Threatened or pending on the Closing Date
before any court or Governmental Authority in which it is sought
to restrain or prohibit or to obtain Damages or other relief in
connection with this Merger Agreement or the consummation of the
transactions contemplated hereby.
7.04 CONSENTS AND APPROVALS; HSR ACT COMPLIANCE. All licenses and
other consents or approvals of Governmental Authorities and the
consents of the parties to any Material Contracts referred to in
Section 6.04 shall have been obtained. The requirements of the
HSR Act applicable to the transactions contemplated by this
Agreement shall have been complied with, and the waiting period
thereunder shall have expired or been terminated.
7.05 ACCOUNTING OPINION. On or prior to the date on which the Proxy
Statement is first mailed to stockholders of Veeco, the board of
directors of the Company shall have received the written opinion
of Arthur Andersen LLP, dated the date of the mailing, the form
and substance of which is reasonably satisfactory to the Company,
regarding the appropriateness of "pooling of interests"
accounting for the Merger.
7.06 MATERIAL CHANGES. There shall not have been any material adverse
change in the assets, properties, condition (financial or
otherwise), prospects or results of operations of Veeco and its
subsidiaries taken as a whole from the date hereof to the Closing
Date, nor shall there exist any condition which could reasonably
be expected to result in such a material adverse change.
7.07 STOCKHOLDER APPROVAL. This Merger Agreement and the Merger
contemplated hereby shall have been approved and adopted by the
requisite vote of the stockholders of Veeco entitled to vote
thereon at the Veeco Stockholders Meeting.
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7.08 DELIVERY OF DOCUMENTS. There shall have been delivered to the
Company the following:
(i) A certificate of Veeco, dated the Closing Date,
signed by the Chief Executive Officer of Veeco to
the effect that the conditions specified in
Sections 7.01 and 7.02 have been fulfilled;
(ii) a certificate of the Secretary of Veeco certifying
copies of (x) the Certificate of Incorporation and
By-Laws of Veeco; (y) all requisite corporate
resolutions of Veeco approving the execution and
delivery of this Merger Agreement and the
consummation of the transactions contemplated
herein; and (z) the identification and signature of
each officer of Veeco executing this Merger
Agreement;
(iii) a certificate of the Secretary of Veeco certifying
the vote of the stockholders of Veeco at the Veeco
Stockholder Meeting regarding the Merger; and
(iv) a registration rights agreement substantially in
the form of EXHIBIT D annexed hereto, duly executed
by Veeco.
7.09 LEGAL OPINION. The Company shall have received an opinion of
Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to Veeco,
reasonably satisfactory to the Company and its counsel addressed
to the Company and dated the Closing Date.
7.10 AFFILIATE AGREEMENTS. The Company shall have received on or
before March 12, 1998 from each of the Affiliates of Veeco an
executed Affiliate Agreement substantially in the form of EXHIBIT
C-2 annexed hereto.
7.11 TAX OPINION. The Company shall have received a written opinion of
Marilyn Barrett, Esq., in form and substance reasonably
satisfactory to the Company, dated on or about the Closing Date,
to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code, and Veeco and
the Company will each be a party to a reorganization within the
meaning of Section 368(b) of the Code. In rendering this opinion,
counsel shall be entitled to rely upon, among other things,
reasonable assumptions as well as representations of Veeco, the
Company and certain Stockholders.
7.12 CERTIFICATES OF MERGER. Prior to the Effective Time, the
Certificates of Merger shall be accepted for filing with the
Secretary of State of the State of California and the Secretary
of State of the State of Delaware, as applicable.
7.13 IBM LICENSE. The Company shall be satisfied in its reasonable
discretion either (i) that the Agreement dated March 1, 1993
between International Business Machines
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Corporation and the Company will continue in full force and
effect following the Closing and that Veeco will have the full
benefit of the rights in favor of the Company set forth therein
or (ii) with the terms of a substitute agreement among IBM, Veeco
and the Company.
VIII. INDEMNIFICATION; REMEDIES
8.01 SURVIVAL. All representations, warranties and agreements
contained in this Merger Agreement or in any certificate or other
document delivered pursuant to this Merger Agreement shall
survive the Closing or any termination of this Agreement for the
time periods set forth herein; PROVIDED, that if the Closing
occurs, (i) the Stockholders shall have no liability (for
indemnification or otherwise) with respect to any representation
or warranty, or agreement to be performed and complied with by
the Company or the Stockholders prior to the Closing, unless the
Stockholders are given notice asserting a claim with respect
thereto and specifying the factual basis of that claim in
reasonable detail to the extent then known by Veeco on or before
(A) the date upon which the audited financial statements of Veeco
and its subsidiaries for the fiscal year ended December 31, 1998
are issued (the "ISSUANCE DATE"), or (B) the third (3rd)
anniversary of the Closing Date, in the case of any claim with
respect to Section 3.18 relating to the land and building
occupied by the Company and located at 112 Robin Hill Road, Santa
Barbara, California 93117; and (ii) Veeco shall have no liability
(for indemnification or otherwise) with respect to any
representation or warranty, or agreement to be performed and
complied with prior to the Closing, unless on or before the
Issuance Date, Veeco is given notice asserting a claim with
respect thereto and specifying the factual basis of that claim in
reasonable detail to the extent known by the Stockholders.
8.02 INDEMNIFICATION BY THE STOCKHOLDERS. Each of the Stockholders
shall jointly and severally indemnify and hold harmless Veeco and
each of its respective agents, representatives, employees,
officers, directors, stockholders, controlling persons and
Affiliates (collectively, the "VEECO INDEMNITEES"), and shall
reimburse the Veeco Indemnitees for, any loss, liability, claim,
damage, expense (including, but not limited to, costs of
investigation and defense and reasonable attorneys' fees),
whether or not involving a third-party claim (collectively,
"DAMAGES") arising from or in connection with (a) any inaccuracy
in any of the representations and warranties of any Stockholder
or the Company in this Merger Agreement or in any certificate or
other document required to be delivered by any Stockholder or the
Company pursuant to this Merger Agreement or referred to in this
Merger Agreement or in any such other certificate or document,
(b) any failure of any Stockholder or the Company to perform or
comply with any agreement to be performed or complied with by it
in this Merger Agreement, (c) any claim by any Person for
brokerage or finder's fees or similar payments in connection with
any of the transactions contemplated hereunder as the result of
brokers, finders or investment bankers retained by any
Stockholder or the Company, (d) any claim by any direct or
indirect holder or former holder of capital stock or warrants or
other securities of the
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Company, or (e) Veeco's enforcement of the indemnification
provisions contained herein. Notwithstanding the foregoing, the
Company and the indemnifying Stockholders shall have no liability
to Veeco under clause (a) or (b) of this Section 8.02 until the
aggregate amount of all Damages under such clauses exceeds
$500,000 and then only for all such Damages in excess of such
amount. Notwithstanding the foregoing, the maximum liability of
the Stockholders pursuant to this Section 8.02 shall not exceed
in the aggregate the product of 563,372 Veeco Shares multiplied
by the average of the closing bid prices on NASDAQ for one (1)
Veeco Share for the twenty (20) most recent days that Veeco
Shares have traded ending on the trading day immediately prior to
the Effective Time; provided that the limitations set forth in
this Section 8.02 shall not apply to any Stockholder to the
extent of Damages arising from fraud on the part of such
Stockholder.
8.03 INDEMNIFICATION BY VEECO. Veeco shall indemnify and hold harmless
the Stockholders (the "STOCKHOLDER INDEMNITEES") and shall
reimburse the Stockholder Indemnitees for any Damages arising
from or in connection with (a) any inaccuracy in any of the
representations and warranties of Veeco in this Merger Agreement
or in any certificate or other document required to be delivered
by Veeco pursuant to this Merger Agreement or referred to in this
Merger Agreement or in any such other certificate or document,
(b) any failure by Veeco to perform or comply with any agreement
to be performed or complied with by Veeco in this Merger
Agreement, (c) any claim by any Person for brokerage or finder's
fees or similar payments in connection with any of the
transactions contemplated hereunder as the result of brokers,
finders or investment bankers retained by Veeco, or (d) the
Stockholder Indemnitees' enforcement of the indemnification
provisions contained herein. Notwithstanding the foregoing, Veeco
shall have no liability under clause (a) or (b) of this Section
8.03 until the aggregate amount of all Damages under such clauses
exceeds $500,000 and then only for all such Damages in excess of
such amount. Notwithstanding the foregoing, the maximum liability
of Veeco pursuant to this Section 8.03 shall not exceed the
product of 563,372 Veeco Shares multiplied by the average of the
closing bid prices on NASDAQ for one (1) Veeco Share for the
twenty (20) trading days ending on the trading day immediately
preceding the Closing Date; provided that the limitations set
forth in this Section 8.03 shall not apply to Veeco, to the
extent of Damages arising from fraud on the part of Veeco.
8.04 PROCEDURE FOR INDEMNIFICATION -- THIRD PARTY CLAIMS. Promptly
after receipt by an indemnified party under Section 8.02 or 8.03
of oral or written notice of a claim or the commencement of any
proceeding against it, such indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying party
under such Section, give written notice to the indemnifying party
of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it
may have to any indemnified party except to the extent the
indemnifying party demonstrates that the defense of such action
is prejudiced thereby. In case any such proceeding shall be
brought against an indemnified party and it shall give notice to
the indemnifying party of the commencement thereof, the
indemnifying party shall
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be entitled to participate therein and, to the extent that it
shall wish (unless the indemnifying party is also a party to such
proceeding and the indemnified party determines in good faith
that joint representation would be inappropriate) to assume the
defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party
to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party under such Section for any fees of other
counsel or any other expenses with respect to the defense of such
proceeding, in each case, subsequently incurred by such
indemnified party in connection with the defense thereof. If an
indemnifying party assumes the defense of such proceeding, (a) no
compromise or settlement thereof may be effected by the
indemnifying party without the indemnified party's reasonable
consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any Person and
no effect on any other claims that may be made against the
indemnified party and (ii) the sole relief provided is monetary
damages that are paid in full by the indemnifying party and (b)
the indemnifying party shall have no liability with respect to
any compromise or settlement thereof effected without its
consent. If notice is given to an indemnifying party of the
commencement of any proceeding and it does not, within fifteen
(15) business days after the indemnified party's notice is given,
give notice to the indemnified party of its election to assume
the defense thereof, the indemnifying party shall be bound by any
determination made in such action or any compromise or settlement
thereof effected by the indemnified party. Notwithstanding the
foregoing, if an indemnified party determines in good faith that
there is a reasonable probability that a proceeding may adversely
affect it or its Affiliates other than as a result of monetary
damages, such indemnified party may, by notice to the
indemnifying party, assume the exclusive right to defend,
compromise or settle such proceeding, but the indemnifying party
shall not be bound by any determination of a proceeding so
defended or any compromise or settlement thereof effected without
its consent (which shall not be unreasonably withheld). All
indemnification obligations of the parties hereto shall survive
any termination of this Agreement pursuant to Article IX hereof.
IX TERMINATION.
9.01 TERMINATION EVENTS. This Merger Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective
Time without prejudice to any other rights or remedies either
party may have:
(a) by mutual written consent, duly authorized by the Boards of
Directors of Veeco and the Company;
(b) by either Veeco or the Company if any Governmental Authority
shall have issued an order, decree, injunction or judgment or
taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger and such order or other
action shall have become final and nonappealable;
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(c) by either Veeco or the Company if the Effective Time shall
not have occurred on or before 5:00 p.m., Eastern Time, on
June 30, 1998; provided that the right to terminate this
Merger Agreement under this Section 9.01(c) shall not be
available to any party whose failure to fulfill any
obligation under this Merger Agreement has been the cause of,
or results in, the failure of the Effective Time to have
occurred within such period; or
(d) by either Veeco or the Company by notice to the other if the
satisfaction of any condition to the obligations of the
terminating party has been rendered impossible.
9.02 EFFECT OF TERMINATION. In the event this Merger Agreement is
terminated pursuant to Section 9.01, all further obligations of
the parties hereunder shall terminate, except that the
obligations set forth in Article VIII and Sections 10.01, 10.02
and 10.03 shall survive. Each party's right of termination
hereunder is in addition to any other rights it may have
hereunder or otherwise and the exercise of a right of termination
shall not be an election of remedies.
9.03 AMENDMENT. To the extent permitted by applicable law, this Merger
Agreement may be amended by action taken by or on behalf of the
respective Boards of Directors of the Company and Veeco, at any
time; provided, however, that, following approval by stockholders
of Veeco, no amendment shall be made which under the DGCL would
require the further approval of the stockholders of Veeco, and at
any time, no amendment shall be made which under the CGCL would
require the further approval of the stockholders of the Company
without obtaining such approval. This Merger Agreement may not be
amended except by an instrument in writing signed on behalf of
all of the parties hereto.
X. MISCELLANEOUS.
10.01 CONFIDENTIALITY. Between the date of this Merger Agreement and
the Closing Date, each party will maintain in confidence, and
cause its directors, officers, employees, agents and advisors to
maintain in strict confidence, all written, oral or other
information obtained from another party in connection with this
Merger Agreement or the transactions contemplated hereby,
including, without limitation, sources of supply, vendors,
customers, costs, pricing practices, trade secrets and other
Intellectual Property, salaries and wages, employee benefits,
financial information, business plans, budgets, marketing plans
and projections and all other proprietary information
(collectively, the "CONFIDENTIAL INFORMATION"), unless (i) the
use of such information is necessary or appropriate in making any
filing or obtaining any consent or approval required for the
consummation of the transactions contemplated hereby and the
other party consents to such disclosure or (ii) the furnishing or
use of such information is required by law. If the transactions
contemplated by this Merger Agreement are not consummated, each
party receiving another party's Confidential
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Information will return or, at the disclosing party's option,
destroy all of such Confidential Information, including, but not
limited to, all copies thereof and extracts therefrom and shall
not use such Confidential Information in any manner which may be
detrimental to the disclosing party or its Affiliates.
Notwithstanding the foregoing, the Company may inform employees
of the Company as they deem necessary or desirable of the
existence of this Merger Agreement.
10.02 EXPENSES. Except as expressly otherwise provided herein, each
party shall bear its own expenses incurred in connection with the
preparation, execution and performance of this Merger Agreement
and the transaction contemplated hereby, including all fees and
expenses of agents, representatives, counsel and accountants;
provided, that the Stockholders shall bear all such expenses
incurred by or on behalf of the Company.
10.03 PUBLIC ACCNOUNCEMENTS. Subject to any requirement of applicable
law, all public announcements or similar publicity with respect
to this Merger Agreement or the transactions contemplated hereby
shall be issued only with the consent of Veeco and the Company.
Unless consented to by each party hereto in advance prior to the
Closing, all parties hereto shall keep the provisions of this
Merger Agreement strictly confidential and make no disclosure
thereof to any Person, other than such party's respective legal
and financial advisors, subject to the requirements of applicable
law or securities exchange regulations.
10.04 SUCCESSORS. This Merger Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
10.05 FURTHER ASSURANCES. Each of the parties hereto agrees that it
will, from time to time after the date of this Merger Agreement,
execute and deliver such other certificates, documents and
instruments and take such other action as may be reasonably
requested by the other party to carry out the actions and
transactions contemplated by this Merger Agreement.
10.06 WAIVER. Any provision of this Merger Agreement may be waived at
any time by the party which is entitled to the benefits thereof.
No such waiver shall be effective unless in writing and signed by
the Company and Veeco.
10.07 ENTIRE AGREEMENT. This Merger Agreement (together with the
certificates, agreements, Exhibits, Schedules, instruments and
other documents referred to herein) constitutes the entire
agreement between the parties with respect to the subject matter
hereof and thereof and supersedes all prior agreements, both
written and oral, with respect to such subject matter.
10.08 GOVERNING LAW. THIS MERGER AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN
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SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAW DOCTRINES
EXCEPT TO THE EXTENT THAT CERTAIN MATTERS ARE PREEMPTED BY
FEDERAL LAW OR ARE GOVERNED BY THE LAW OF THE JURISDICTION OF
ORGANIZATION OF THE RESPECTIVE PARTIES.
10.09 ASSIGNMENT. Neither Veeco nor the Company may assign this Merger
Agreement to any other Person without the prior written consent
of the other parties hereto.
10.10 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (a) when
delivered personally, (b) when transmitted by telecopy (receipt
confirmed), (c) on the fifth business day following mailing by
registered or certified mail (return receipt requested), or (d)
on the next business day following deposit with an overnight
delivery service of national reputation, to the parties at the
following addresses and telecopy numbers (or at such other
address or telecopy number for a party as may be specified by
like notice):
If to Veeco:
Terminal Drive
Plainview, New York 11803
Attention: Edward H. Braun,
Chairman, President and Chief Executive Officer
Telephone: (516) 349-8300
Telecopy: (516) 349-9079
With a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Attention: Rory A. Greiss, Esq.
Telephone: (212) 836-8261
Telecopy: (212) 836-7152
If to the Company:
112 Robin Hill Road
Santa Barbara, California 93117
Attention: Virgil Elings and Richard Clark, Esq.
Telephone: (805) 967-1400
Telecopy: (805) 967-7717
10.11 HEADINGS. The headings contained in this Merger Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Merger Agreement.
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10.12 COUNTERPARTS. This Merger Agreement may be executed in multiple
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other party, it being understood that both
parties need not sign the same counterpart.
10.13 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this Merger
Agreement are incorporated by reference herein and are made a
part hereof as if they were fully set forth herein.
10.14 SEVERABILITY. The invalidity of any term or terms of this Merger
Agreement shall not affect any other term of this Merger
Agreement, which shall remain in full force and effect.
10.15 NO THIRD-PARTY BENEFICIARIES. There are no beneficiaries of this
Merger Agreement or of the transactions contemplated hereby and
nothing contained herein shall be deemed to confer upon any one
other than the parties hereto (and their permitted successors and
assigns) any right to insist upon or to enforce the performance
of any of the obligations contained herein.
10.16 TIME OF THE ESSENCE. Time is of the essence with respect to the
obligations of the parties hereunder.
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IN WITNESS WHEREOF, the parties have executed this Merger
Agreement as of the date first above written.
VEECO INSTRUMENTS INC.
By:
------------------------
Name:
Title:
DIGITAL INSTRUMENTS, INC.
By:
------------------------
Name:
Title:
---------------------------
VIRGIL ELINGS
---------------------------
VIRGIL ELINGS, TRUSTEE UNDER
THE ELINGS-WELLS VOTING TRUST
AGREEMENT
---------------------------
VIRGIL ELINGS, TRUSTEE UNDER
THE JEFFREY R. ELINGS VOTING TRUST
AGREEMENT
---------------------------
VIRGIL ELINGS, TRUSTEE UNDER
THE MICHAEL D. ELINGS VOTING TRUST
AGREEMENT
---------------------------
JEFFREY ELINGS
---------------------------
MICHAEL ELINGS
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---------------------------
JOHN GURLEY
---------------------------
MATHEW LONGMIRE AND
PAMELA WROBEL LONGMIRE,
husband and wife, as community property
---------------------------
PETER MAIVALD
---------------------------
MARK ROGERS
---------------------------
BETTY ELINGS-WELLS
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EXHIBIT 99.2
[on Veeco letterhead]
VEECO SIGNS DEFINITIVE MERGER AGREEMENT
WITH DIGITAL INSTRUMENTS, INC.
Plainview, New York, March 2, 1998 -- Veeco Instruments Inc. (NASDAQ:
VECO), today announced that it has signed a definitive merger agreement with
Digital Instruments, Inc. of Santa Barbara, CA, the world leader in scanning
probe/atomic force microscopy (SPM/AFM). The merger was originally announced on
February 9, 1998 when the companies signed an agreement in principle.
Under the terms of the agreement, Digital Instruments shareholders will
receive approximately 5.6 million shares of Veeco common stock. The merger is
subject to a number of conditions, including approval by shareholders of Veeco,
confirmation from Veeco's independent accountants regarding its concurrence that
the merger may be accounted for as a pooling of interests and receipt of any
necessary governmental and third party consents. The proposed merger is expected
to be completed during the second quarter of 1998. Digital Instruments, which is
privately held, had 1997 revenues of approximately $51 million from sales to the
data storage, semiconductor industries and from research and general microscopy
applications.
Veeco Instruments Inc., headquartered in Plainview, New York, is a
worldwide leader in etch and deposition Process Equipment for data storage, and
Process Metrology tools for the data storage, semiconductor and flat panel
display industries. Manufacturing and engineering facilities are located in New
York, California and Arizona. Global sales and service offices are located
throughout the United States, Europe, Japan and Asia-Pacific.
TO THE EXTENT THAT THIS NEWS RELEASE DISCUSSES EXPECTATIONS ABOUT MARKET
CONDITIONS OR ABOUT MARKET ACCEPTANCE AND FUTURE SALES OF THE COMPANY'S
PRODUCTS, OR OTHERWISE MAKES STATEMENTS ABOUT THE FUTURE, SUCH STATEMENTS ARE
FORWARD-LOOKING AND ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE STATEMENTS MADE. THESE
FACTORS INCLUDE THE ABILITY OF THE PARTIES TO COMPLETE INDIVIDUAL CUSTOMERS AND
BY THE MARKETPLACE, AND OTHER FACTORS DISCUSSED IN THE BUSINESS DESCRIPTION AND
MANAGEMENT'S DISCUSSION AND ANALYSIS SECTIONS OF THE COMPANY'S REPORT ON FORM
10-K AND ANNUAL REPORT TO SHAREHOLDERS.
