EXECUTION COPY
ACQUISITION AGREEMENT
by and among
ZYGO CORPORATION,
SIGHT SYSTEMS, INC. and
THE SHAREHOLDERS OF SIGHT SYSTEMS, INC.
dated as of
August 19, 1997
TABLE OF CONTENTS
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RECITALS ................................................................... 1
ARTICLE I. DEFINITIONS.................................................... 1
ARTICLE II. ACQUISITION ................................................... 3
Section 2.01. Acquisition ............................................ 3
Section 2.02. Status of Zygo Shares................................... 3
Section 2.03. Deliveries; Escrow...................................... 3
Section 2.04. Closing................................................. 4
ARTICLE III. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY.......... 4
Section 3.01. Organization, Etc....................................... 4
Section 3.02. Other Company Interests................................. 4
Section 3.03. Capitalization.......................................... 4
Section 3.04. Authorization........................................... 5
Section 3.05. No Violation............................................ 5
Section 3.06. Approvals............................................... 5
Section 3.07. Financial Statements and Other Information.............. 6
Section 3.08. No Undisclosed Liabilities.............................. 7
Section 3.09. Corporate Action........................................ 7
Section 3.10. Certain Events.......................................... 7
Section 3.11. Taxes................................................... 8
Section 3.12. Litigation.............................................. 9
Section 3.13. Compliance with Laws.................................... 9
Section 3.14. Title to and Condition of Property...................... 9
Section 3.15. Environmental Matters................................... 10
Section 3.16. Contracts............................................... 10
Section 3.17. Employee and Labor Matters and Plans.................... 11
Section 3.18. Insurance Policies...................................... 11
Section 3.19. Brokerage Fees.......................................... 12
Section 3.20. No Product Liabilities; Product Warranties.............. 12
Section 3.21. Suppliers and Customers................................. 12
Section 3.22. Intellectual Properties................................. 13
Section 3.23. Licenses................................................ 14
Section 3.24. Restrictive Documents and Territorial Restrictions...... 14
Section 3.25. Bank Accounts........................................... 14
Section 3.26. Accounting Matters...................................... 14
Section 3.27. No Misleading Statements................................ 14
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.............. 15
Section 4.01. Authorization; Ownership of Company Shares.............. 15
Section 4.02. No Violation............................................ 15
Section 4.03. Approvals............................................... 16
Section 4.04. Securities Act Matters.................................. 16
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ACQUIROR....................... 17
Section 5.01. Organization, Etc....................................... 17
Section 5.02. Capitalization.......................................... 17
Section 5.03. Authorization........................................... 17
Section 5.04. No Violation............................................ 18
Section 5.05. Approvals............................................... 18
Section 5.06. Commission Filings...................................... 18
Section 5.07. Financial Statement and Other Information............... 19
Section 5.08. Compliance with Laws.................................... 19
Section 5.09. Brokerage Fees.......................................... 19
ARTICLE VI. COVENANTS AND AGREEMENTS........................................ 20
Section 6.01. Confidentiality......................................... 20
Section 6.02. Public Announcements.................................... 20
Section 6.03. Certain Tax Matters..................................... 20
(a) Sales and Transfer Taxes........................... 20
(b) Tax Returns and Payment of Taxes for Periods
through the Closing Date........................... 20
(c) Indemnification for Taxes.......................... 21
(d) Tax Audits......................................... 22
(e) Mutual Cooperation................................. 22
Section 6.04. Issuance of Options to Acquire Zygo Common Stock........ 23
Section 6.05. Benefits Arrangements................................... 23
Section 6.06. Pooling Affiliates' Letters............................. 23
Section 6.07. Further Assurances...................................... 23
Section 6.08. Opinions of the Company's Counsel....................... 24
ARTICLE VII. CONDITIONS OF CLOSING.......................................... 24
Section 7.01. Conditions to All Parties' Obligations................. 24
(a) Illegality or Legal Constraint..................... 24
(b) Governmental Authorizations........................ 24
(c) Escrow Agreement................................... 24
(d) Registration Agreement............................. 24
(e) Employment and Non-Compete Agreements.............. 24
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Section 7.02. Conditions to the Obligations of Acquiror to
Effect the Acquisition.................................. 24
(a) Representations and Warranties Accurate............ 24
(b) Performance by the Company and the Shareholders.... 25
(c) Consents........................................... 25
(d) Opinion of Counsel................................. 25
(e) Proceedings; Receipt of Documents.................. 25
(f) Due Diligence...................................... 25
(g) No Material Adverse Effect......................... 25
(h) Pooling Affiliate Letters.......................... 25
(i) Pooling of Interests............................... 25
(j) Fairness Opinion................................... 25
(k) Supporting Documents............................... 26
Section 7.03. Conditions to the Obligations of the Company and
the Shareholders to Effect the Acquisition.............. 26
(a) Representations and Warranties Accurate............ 26
(b) Performance by Acquiror............................ 26
(c) Proceedings........................................ 26
(d) Opinion of Counsel................................. 26
ARTICLE VIII. INDEMNIFICATION............................................... 26
Section 8.01. Indemnification by the Shareholders..................... 26
(a) Joint Indemnification.............................. 26
(b) Several Indemnification............................ 27
Section 8.02. Indemnification by Acquiror............................. 27
Section 8.03. Limitations............................................. 27
Section 8.04. Notice and Defense of Claims............................ 28
Section 8.05. Non-Exclusive Remedy.................................... 28
Section 8.06. Survival of Representations and Warranties.............. 28
Section 8.07. Reimbursement........................................... 29
Section 8.08. Other Indemnification Provision......................... 30
ARTICLE IX. GENERAL PROVISIONS.............................................. 30
Section 9.01. Effect of Due Diligence................................. 30
Section 9.02. Expenses................................................ 30
Section 9.03. Successors and Assigns.................................. 30
Section 9.04. Entire Agreement........................................ 30
Section 9.05. Notices................................................. 31
Section 9.06. Applicable Law.......................................... 31
Section 9.07. No Third Party Beneficiaries............................ 31
Section 9.08. Amendments and Waivers.................................. 31
Section 9.09. Severability............................................ 31
Section 9.10. Construction............................................ 31
Section 9.11. Counterparts............................................ 32
Section 9.12. Headings................................................ 32
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EXHIBITS
Exhibit 6.06 Form of Pooling Affiliates' Letter
Exhibit 7.01(c) Escrow Agreement
Exhibit 7.01(d) Registration Agreement
Exhibit 7.01(e)(1) Form of Employment and Non-Compete Agreement -- Grant
Exhibit 7.01(e)(2) Form of Employment and Non-Compete Agreement -- Xxxxxxx
Exhibit 7.01(e)(3) Form of Employment and Non-Compete Agreement -- Chan
Exhibit 7.02(d) Legal Opinion of Gee & Xxxxxx
Exhibit 7.03(d) Legal Opinion of Fulbright & Xxxxxxxx L.L.P.
SCHEDULES
Schedule 1 Shareholders and Company Stock Information
Schedule 2 Company's Disclosure Schedule
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ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of August 19, 1997 (this "AGREEMENT"), by
and among Sight Systems, Inc., a California corporation (the "COMPANY"), Zygo
Corporation, a Delaware corporation ("ACQUIROR" or "ZYGO"), and the individuals
listed on Schedule 1 hereto, constituting all the holders of capital stock of
the Company (each, a "SHAREHOLDER" and collectively, the "SHAREHOLDERS").
RECITALS
WHEREAS, Acquiror desires to acquire, and the Shareholders and the Company
desire that the Shareholders transfer, all of the issued and outstanding shares
(the "COMPANY SHARES") of common stock, no par value per share, of the Company
("COMPANY STOCK"), owned by the Shareholders, in a transaction which is intended
to qualify as a tax-free reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"), all
upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms and conditions set forth herein, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
In this Agreement the following words and phrases shall have the meanings
hereinafter set forth:
"Acquisition" shall mean the acquisition of the Company Shares pursuant to
the terms of this Agreement.
"Affiliate" or "affiliate" shall mean, with respect to any Person, any
other Person that, directly or indirectly, controls or is controlled by or is
under common control with such Person. As used in this definition of
"Affiliate", the term "control" and any derivatives thereof mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract, or otherwise.
"Agreement" shall mean this Acquisition Agreement.
"Business" shall mean the business conducted and contemplated to be
conducted by the Company.
"Escrow Agreement" shall mean that certain escrow agreement, dated as of
the Closing Date, by and among Acquiror, the Shareholders, the Company and
Continental Stock Transfer & Trust Company, as escrow agent, in the form of
Exhibit 7.01(c) hereto.
"Governmental Entity" shall mean any court, administrative agency or
commission or other federal, state or local government or governmental authority
or instrumentality.
"Hazardous Materials" shall mean any (a) toxic or hazardous materials or
substances; (b) solid wastes, including asbestos, buried contaminants,
chemicals, flammable or explosive materials; (c) radioactive materials; (d)
petroleum wastes and spills or releases of petroleum products; and (e) any other
chemical, pollutant, contaminant, substance or waste that is regulated by any
Governmental Entity under any Environmental Law (as hereinafter defined).
"Knowledge" shall mean, with respect to the Company, the actual present
knowledge of any of the Shareholders or any officer of the Company, and with
respect to Acquiror, the actual present knowledge of any executive officer of
Acquiror.
"Liens" shall mean all liens, charges, security interests, pledges, rights
or claims of others, restraints on transfer or other encumbrances.
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on the business, prospects, results of operations,
financial condition or assets of such Person and its subsidiaries, if any, taken
as a whole.
"Person" shall mean an individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
"Registration Agreement" shall mean that certain registration agreement,
dated as of the Closing Date, by and among Acquiror and each of the
Shareholders.
"Regulatory Authority" shall mean any foreign, federal, state or local
government or governmental authority the approval of which, or filing with, is
legally required or permitted for consummation of the transactions contemplated
by this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Unregistered Shares" shall mean shares of stock issued in a transaction
which has not been registered under the Securities Act.
"Zygo Subsidiary" shall mean any corporation of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are directly or
indirectly owned by Acquiror.
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ARTICLE II.
ACQUISITION AND SALE
Section 2.01. Acquisition and Sale. At the Closing (as hereinafter
defined), upon the terms and subject to the conditions contained herein, each of
the Shareholders shall sell, transfer and deliver to Acquiror the number of
Company Shares indicated opposite his name on Schedule 1 hereto, and Acquiror
shall purchase and acquire from each such Shareholder, all right, title and
interest of such Shareholder in and to all of the Company Shares to be sold by
such Shareholder (as indicated on Schedule 1 hereto), free and clear of all
Liens, in consideration of the issuance by Acquiror to each of the Shareholders
of the number of Unregistered Shares (collectively, the "ZYGO SHARES") of Common
Stock, $.10 par value per share, of Acquiror ("ZYGO COMMON STOCK") indicated
opposite his name on Schedule 1 hereto.
Section 2.02. Status of Zygo Shares. The Zygo Shares being issued to the
Shareholders at the Closing shall consist in their entirety, at the time of
their issuance, of Unregistered Shares of Zygo Common Stock, pursuant to the
exemption from registration contained in Section 4(2) of the Securities Act. As
promptly as practicable subsequent to the Closing, Acquiror will file with the
Securities and Exchange Commission (the "COMMISSION") a registration statement
covering the public resale of the Zygo Shares by the Shareholders and will use
its reasonable good faith efforts to have such registration statement declared
effective by the Commission as promptly as practicable thereafter, all in
accordance with the terms of the Registration Agreement.
Section 2.03. Deliveries; Escrow.
(a) At the Closing, each Shareholder shall deliver to Acquiror
certificate(s) representing the number of Company Shares indicated opposite
his name on Schedule 1 hereto, in each case accompanied by stock power(s)
duly executed in blank, with signatures appropriately notarized, and with
all necessary stock transfer and other documentary stamps attached.
(b) At the Closing, Acquiror shall (i) deposit with the Escrow Agent
stock certificates representing 15,000 Zygo Shares (the "ESCROWED ZYGO
SHARES") pursuant to the terms of the Escrow Agreement (which Escrowed Zygo
Shares shall be deposited with the Escrow Agent on behalf of the
Shareholders in the respective amounts indicated under the column heading
"Escrowed Zygo Shares" on Schedule 1 hereto) and (ii) deliver to each of
the Shareholders stock certificates representing the number of Zygo Shares
indicated opposite such Shareholder's name on Schedule 1 hereto under the
column heading "Net Zygo Shares Being Issued to the Shareholder at
Closing." The Escrowed Shares shall serve as security for the
indemnification obligations of the Shareholders as provided in Section
6.03(c) and Article VIII hereof.
Section 2.04. Closing. The closing (the "CLOSING") of the Acquisition shall
take place at the offices of Acquiror, Middlefield, Connecticut, as soon as
practicable following the time all conditions to the respective obligations of
the parties have been satisfied or waived. Each party hereto agrees to use its
reasonable efforts to satisfy
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promptly the conditions to the obligations of the respective parties hereto in
order to expedite the Closing. The date of the Closing is the "CLOSING DATE."
ARTICLE III.
REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
Except as set forth (by reference to the applicable Section of this
Agreement) in the disclosure schedule delivered by the Company to Acquiror on
the date hereof (the "DISCLOSURE SCHEDULE"), a copy of which is attached hereto
as Schedule 2, the Company and each Shareholder hereby jointly and severally
represent and warrant to Acquiror as follows:
Section 3.01. Organization, Etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full corporate power and authority to conduct its business as
it is now being conducted and to own, operate or lease the properties and assets
it currently owns, operates or holds under lease. The Company is duly qualified
or licensed to do business and is in good standing as a foreign corporation in
each jurisdiction where the character of its business or the nature of its
properties makes such qualification or licensing necessary, except where the
failure to so qualify or be licensed would not have a Material Adverse Effect on
the Company. All of the jurisdictions in which the Company is qualified or
licensed to do business are set forth on the Disclosure Schedule. The Company
has heretofore delivered to Acquiror true and correct copies of the Articles of
Incorporation and By-laws of the Company as in effect on the date hereof.
Section 3.02. Other Company Interests. The Company has no legal or
beneficial equity interest, directly or indirectly, in any corporation,
partnership, joint venture or other entity.
Section 3.03. Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth on the Disclosure Schedule. All of
the issued and outstanding shares of capital stock of the Company are owned of
record by the Shareholders, in the respective amounts indicated on Schedule 1
hereto. The Company does not hold any shares in its own capital. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
the Company are as set forth in the Company's Articles of Incorporation, and all
such designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable corporate laws. All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable. All of the outstanding securities of the Company were issued in
compliance with all applicable federal and state securities and corporate laws.
None of the outstanding securities has been issued in violation of any
preemptive rights, rights of first refusal or similar rights. There are no
outstanding options, warrants, convertible securities, calls, rights,
commitments, preemptive rights or agreements or instruments or understandings of
any character to which the Company or any Shareholder is a party or by which the
Company or any Shareholder is bound, obligating the Company or any
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Shareholder to issue, deliver or sell, or cause to be issued, delivered or sold,
contingently or otherwise, additional shares of capital stock of the Company or
any securities or obligations convertible into or exchangeable for such shares
or to grant, extend or enter into any such option, warrant, convertible
security, call, right, commitment, preemptive right or agreement. There are no
outstanding obligations, contingent or other, of the Company or any Shareholder
to purchase, redeem or otherwise acquire any shares of capital stock of the
Company. Neither the Company nor any Shareholder is a party to any voting trust
agreement or other contract, agreement, arrangement, commitment, plan or
understanding restricting or otherwise relating to voting, dividend or other
rights with respect to any of the capital stock of the Company.
Section 3.04. Authorization. The Company has all requisite corporate power
and authority to enter into this Agreement and each of the other agreements
contemplated hereby, to carry out its obligations under this Agreement and each
of the other agreements contemplated hereby and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and each of the other agreements contemplated hereby, the consummation of the
transactions contemplated hereby and thereby and the performance by the Company
of its obligations hereunder and thereunder have been duly authorized by all
necessary corporate action on the part of the Company and its shareholders. Each
of this Agreement and the other agreements contemplated hereby has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms (except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether
enforceability is considered in equity or at law).
Section 3.05. No Violation. The execution and delivery of this Agreement
and each of the other agreements contemplated hereby by the Company does not,
and the consummation by the Company of the transactions contemplated hereby and
thereby, and compliance with the terms hereof and thereof will not, (a) conflict
with, or result in any violation of or default or loss of any benefit under, any
provision of the Company's Articles of Incorporation or By-laws; (b) conflict
with, or result in any violation of or default or loss of any benefit under, any
License, grant, statute, law, rule or regulation, or any judgment, decree or
order of any Governmental Entity to which the Company is a party or to which any
of its property is subject; (c) conflict with, or result in a breach or
violation of, or accelerate the performance required by, the terms of any
agreement, contract, indenture or other instrument to which the Company is a
party or to which any of its property is subject, or constitute a default or
loss of any right thereunder or an event which, with the lapse of time or notice
or both, might result in a default or loss of any right thereunder or the
creation of any Lien upon any of the assets or properties of the Company; or (d)
result in any suspension, revocation, impairment, forfeiture or nonrenewal of
any License.
Section 3.06. Approvals. The execution and delivery of this Agreement and
each of the other agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby by the Company will not require the
consent,
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approval, order or authorization of any Governmental Entity or Regulatory
Authority or any other Person under any statute, law, rule, regulation, permit,
license, agreement, indenture or other instrument to which the Company is a
party or to which any of its property is subject, and no declaration, filing or
registration with any Governmental Entity or Regulatory Authority is required or
advisable by the Company in connection with the execution and delivery of this
Agreement and each of the other agreements contemplated hereby, the consummation
by the Company of the transactions contemplated hereby and thereby, or the
performance by the Company of its obligations hereunder and thereunder.
Section 3.07. Financial Statements and Other Information.
(a) The Company has delivered to Acquiror true, correct and complete
copies of the Company's unaudited balance sheet (the "BALANCE SHEET") as at
June 30, 1997 (the "BALANCE SHEET DATE"), and unaudited balance sheets as
at September 30, 1996, December 31, 1996 and March 31, 1997, and the
related statement of income for each of the three month periods ended
September 30, 1996, December 31, 1996, March 31, 1997 and June 30, 1997
(all of such balance sheets and statements of income being referred to
collectively as the "FINANCIAL STATEMENTS").
(b) The Financial Statements are in accordance with the books and
records of the Company and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
covered thereby, and the balance sheets included therein present fairly as
of their respective dates the financial condition of the Company. All
liabilities and obligations, whether absolute, accrued, contingent or
otherwise, whether direct or indirect, and whether due or to become due,
which existed at the date of such Financial Statements have been disclosed
in the balance sheets included in the Financial Statements (or in notes, if
any, to the Financial Statements) to the extent such liabilities were
required, under generally accepted accounting principles, to be so
disclosed. The liabilities on the Balance Sheet consist solely of accrued
obligations and liabilities incurred by the Company in the ordinary course
of its business to Persons which are not Affiliates of the Company. The
statements of income included in the Financial Statements provided
hereunder present fairly the results of operations of the Company for the
periods indicated, and the notes, if any, included in the Financial
Statements present fairly the information purported to be shown thereby.
(c) Since the Balance Sheet Date there has been no change in the
assets or liabilities, or in the business or condition, financial or
otherwise, or in the results of operations of the Company, which has had or
is reasonably likely to have a Material Adverse Effect on the Company.
(d) All properties, investments, tangible assets and deferred costs
reflected in the Balance Sheet, collectively, have a fair market or
realizable value at least equal to the value thereof as reflected therein.
(e) The accounts receivable of the Company included in the Balance
Sheet are collectible in full over the period of usual trade terms (by use
of the
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Company's normal collection methods without resort to litigation or
reference to a collection agency), and there do not exist any defenses,
counterclaims and set-offs which would materially adversely affect such
receivables, and all such receivables are actual and bona fide receivables
representing obligations for the total dollar amount thereof shown on the
books of the Company. The Company has fully performed all obligations with
respect thereto which it was obligated to perform to the date hereof. The
Company has delivered to Acquiror a true and complete aging schedule of the
Company's accounts receivable as of July 31, 1997.
(f) The Company has records that accurately and validly reflect its
transactions and accounting controls that are reasonably designed to insure
that such transactions are (i) in all material respects executed in
accordance with its management's general or specific authorization and (ii)
recorded in conformity with generally accepted accounting principles.
Section 3.08. No Undisclosed Liabilities. There are no liabilities of the
Company of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, determined or determinable or otherwise, and whether
direct or indirect, and no existing condition, situation or set of circumstances
that could reasonably result in such a liability, other than (a) liabilities
disclosed in the Balance Sheet, (b) liabilities which have arisen in the
ordinary course of business and consistent with past practice (none of which is
a liability for breach of contract, breach of warranty, tort, infringement claim
or lawsuit) which, individually or in the aggregate, have not had or would not
reasonably be expected to have a Material Adverse Effect on the Company and (c)
liabilities incurred subsequent to the Balance Sheet Date for accounting,
brokerage and legal fees in connection with the negotiation and preparation of
this Agreement and the consummation of the transactions contemplated hereby.
Section 3.09. Corporate Action. All corporate action of the Board of
Directors and of the shareholders of the Company taken on or prior to the date
hereof has been duly authorized, adopted or ratified in accordance with
applicable law and the Articles of Incorporation and By-laws of the Company and
has been duly recorded in its corporate minute books (true, correct and complete
copies of which have been delivered to or made available for inspection by
Acquiror).
Section 3.10. Certain Events. Since the Balance Sheet Date, the Company has
not (a) sold, assigned or transferred any of its tangible assets except in the
ordinary course of business, or canceled any debt or claim, (b) sold, assigned,
transferred or granted any license with respect to any patent, trademark, trade
name, service xxxx, copyright, trade secret or other intangible asset, (c)
suffered any loss of property or waived any right of substantial value whether
or not in the ordinary course of business, (d)(I) granted any severance or
termination pay to any of its directors, officers, employees or consultants,
(II) increased any benefits payable under any existing severance or termination
pay policies or employment agreements, or (III) increased the compensation,
bonus or other benefits payable to any of its directors, officers, consultants
or employees, (e) made any material change in the manner of its business or
operations, (f) entered into any transaction except in the ordinary course of
business
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or as otherwise contemplated hereby or (g) entered into any commitment
(contingent or otherwise) to do any of the foregoing.
Section 3.11. Taxes. (a) Except as set forth on the Disclosure Schedule,
(i) all tax returns (including, without limitation, income, profit, franchise,
sales and use, excise, severance, occupation, property, gross receipts, payroll
and withholding tax returns and information returns), deposits and reports (all
such returns, deposits and reports herein referred to collectively as "TAX
RETURNS" or singularly as a "TAX RETURN"), including without limitation the Tax
Returns for the years ended December 31, 1994, 1995 and 1996, of or relating to
any federal, state, local or foreign or other governmental tax (all, together
with any penalties, additions to tax, fines and interest thereon or related
thereto, herein referred to collectively as "TAXES" or singularly as a "TAX")
that are required to be filed or deposited for, by, on behalf of or with respect
to the Company have been filed or deposited duly and on a timely basis and all
Taxes and filing fees shown to be due and payable on such Tax Returns have been
paid in full and all installments, assessments and charges of which the Company
is aware or has received notice and which are due and payable by the Company
have been paid in full; (ii) true, correct and complete copies of all such Tax
Returns relating to Taxes due from or with respect to the Company, its income,
assets or operations, have been delivered to Acquiror, and all such Tax Returns
and the information and data contained therein have been properly and accurately
compiled and completed, fairly present the information purported to be shown
therein and reflect all liabilities for Taxes for the periods covered by such
Tax Returns; (iii) all Taxes imposed on the Company (or for which the Company is
or could be liable, whether to any Governmental Entity or to other Persons (as,
for example, under tax allocation agreements)), for all periods up to the
Closing Date which are due and payable on or before the Closing Date, have been
paid; (iv) none of such Tax Returns are now under audit or examination by any
federal, state, local or foreign or other Governmental Entity and there are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment or collection of any Tax or deficiency of any
nature against the Company or with respect to any such Tax Return; (v) the
Company has withheld and remitted all amounts required to be withheld and have
paid such amounts due to the appropriate authority on a timely basis and in the
form required under the appropriate legislation; (vi) the Company has not been,
and is currently not, required to file a Tax Return in any jurisdiction other
than the United States and the State of California; (vii) neither the Company
nor any other person (including any of the Shareholders) on behalf of the
Company has (A) filed a consent pursuant to Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by
the Company, (B) agreed to or is required to make any adjustments pursuant to
Section 481(a) of the Code or any similar provision of state, local or foreign
law by reason of a change in accounting method initiated by the Company or has
any knowledge that the Internal Revenue Service has proposed any such adjustment
or change in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of the Company, (C) executed or entered
into any closing agreement pursuant to Section 7121 of the Code or any
predecessor provisions thereof or any similar provision of state, local or
foreign law with respect to the Company, or (D) requested any extension of time
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within which to file any Tax Return, which Tax Return has since not been filed;
(viii) there is no contract, agreement plan or arrangement covering any person
that, individually or collectively, could give rise to the payment of any amount
that would not be deductible by Zygo, the Company or any of their respective
Affiliates by reason of Section 280G of the Code, or would constitute
compensation in excess of the limitation set forth in Section 162(m) of the
Code; and (ix) there are no liens as a result of any unpaid Taxes upon any of
the assets of the Company.
(b) No Shareholder is a foreign person within the meaning of Section
1445 of the Code. The Company has never made an election under Section 1362
of the Code, or under any analogous or similar provision of state or local
law, to be treated as an "S" corporation. The Company has never owned any
Subsidiaries and has never been a member of any consolidated, combined or
affiliated group of corporations for any Tax purposes. After the date
hereof, no election or consent with respect to any Tax (or the computation
thereof) affecting the Company will be made without the written consent of
Acquiror.
Section 3.12. Litigation. There is no action, suit, investigation,
arbitration or proceeding (whether by any Governmental Entity or other Person)
pending or, to the Knowledge of the Company, threatened or any basis in fact
therefor, against or involving the Company or any of its officers, directors,
employees, shareholders or consultants (in all instances, in their capacity as
such), assets, business or products, whether at law or in equity.
Section 3.13. Compliance with Laws. The Company has complied with all
applicable laws (including rules, regulation, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) of any Governmental
Entity relating to or affecting the operation, conduct or ownership of its
properties or business, except where the failure to so comply has not had, and
would not have, a Material Adverse Effect on the Company. There is no existing
law, rule, regulation or order, whether federal, state, local or foreign, which
would prohibit or materially restrict the Company from, or otherwise materially
adversely affect the Company in, conducting its business in the manner in which
it is conducted as of the date hereof in any jurisdiction in which it is now
conducting business or in which it currently proposes to conduct business.
Section 3.14. Title to and Condition of Property.
(a) The Company does not own any real property. The Disclosure
Schedule identifies all of the rights and interests in leasehold estates
owned by the Company as of the date hereof, and the nature and amount of
its interest therein. To the Knowledge of the Company, the Company has
valid, subsisting and enforceable leases to all leasehold estates
identified and reflected in the Disclosure Schedule and either good and
marketable title or rights as lessee to all personalty of any kind or
nature owned or used by the Company in connection with the Business, in
each case free and clear of all Liens except for (i) Liens, defects or
irregularities of title identified on the Disclosure Schedule which,
individually or in the aggregate, do not detract from or materially
interfere with the present or reasonably foreseeable use or value of the
properties subject thereto or otherwise have or reasonably could have a
Material
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Adverse Effect on the Company, and (ii) Liens for non-delinquent Taxes and
non-delinquent statutory liens arising other than by reason of default by
the Company. The assets and properties owned or leased by the Company are
sufficient to operate and conduct the Business in a manner consistent with
at least the same standards of quality and reliability as have been
achieved as of the date hereof. The Company's possession of such property
has not been disturbed and no claim has been asserted, whether oral or in
writing, against the Company adverse to its rights in such leasehold
interests.
(b) All buildings, structures, appurtenances and material items of
machinery, equipment and other material tangible assets used by the Company
in connection with the Business are in good operating condition and repair,
normal wear and tear excepted, are usable in the ordinary course of
business, are adequate and suitable for the uses to which they are being
put and conform in all material respects to all applicable laws,
ordinances, codes, rules, regulations and authorizations relating to their
construction, use and operation, except where such non-compliance would not
have a Material Adverse Effect on the Company.
Section 3.15. Environmental Matters.
(a) The business of the Company as currently being conducted does not
violate any applicable law or regulation relating to pollution, the
environment, human safety and health, transportation or the production,
storage, labeling or disposition of Hazardous Materials (collectively,
"ENVIRONMENTAL LAWS"); (b) the Company has timely filed all reports
required to be filed, has obtained all required approvals and permits and
has generated and maintained all required data, documentation, and records
under Environmental Laws; (c) the Company has not (and no other Person has)
placed, held, located, stored, buried, dumped, disposed, spilled or
released any Hazardous Materials on, beneath or about any of the properties
used, owned or leased by the Company; and (d) the Company has not received
any notice from any Governmental Entity or private or public entity
advising it that it is responsible for or potentially responsible for
corrective action or investigation or response costs with respect to a
release, a threatened release or clean up of Hazardous Materials and has no
reason to believe that such notice may be forthcoming.
Section 3.16. Contracts.
The Disclosure Schedule contains a complete list of all currently effective
written or oral contracts, agreements, commitments or arrangements of the
Company (i) involving $5,000 or more, individually or in the aggregate, (ii)
which may not be immediately terminated without penalty (or any augmentation or
acceleration of benefits); (iii) relating to the borrowing of money, or the
guarantee of any obligation (third party or otherwise) for the borrowing of
money; (iv) providing for any covenant not to compete by the Company or
otherwise restricting in any way the Company's engaging in any business activity
(including a description of the businesses to which the covenant not to compete
applies); (v) relating to consultancies, professional retentions, agency, sales
or distributorship arrangements pertaining to the Business or its products or
activities; (vi) involving contracts, agreements or commitments requiring the
Company to indemnify or hold harmless any Person; or (vii) which could
reasonably be
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considered material to the Business (all contracts, agreements, arrangements or
commitments to which the Company is a party relating to the Business, whether or
not listed on the Disclosure Schedule, being hereinafter referred to as
"CONTRACTS"). True and correct copies of all the Contracts listed on the
Disclosure Schedule have been furnished to Acquiror. All Contracts are valid and
binding obligations of the Company and, to the Knowledge of the Company, of the
other respective parties thereto. The Company has duly performed its obligations
under all Contracts in all material respects to the extent such obligations have
accrued, and no breach or default thereunder by the Company or, to the Knowledge
of the Company, any other party thereto has occurred that could impair the
ability of the Company to enforce any material rights thereunder.
Section 3.17. Employee and Labor Matters and Plans.
(a) The Company does not maintain (i) any "employee benefit plan," as
such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), whether or not subject to the provisions of
ERISA; (ii) any personnel policy; or (iii) any other employment,
consulting, collective bargaining, stock option, stock bonus, stock
purchase, phantom stock, incentive, bonus, deferred compensation,
retirement, severance, vacation, dependent care, employee assistance,
material fringe benefit, medical, dental, sick leave, death benefit, golden
parachute or other compensatory plan, contract, policy or arrangement which
is not an employee benefit plan as defined in Section 3(3) of ERISA (each
such plan, contract, policy and arrangement being herein referred to as an
"EMPLOYEE PLAN").
(b) The Disclosure Schedule sets forth a complete and accurate list
showing the names, the rate of compensation (and the portions thereof
attributable to salary and bonuses, respectively) and location of all
employees of or consultants to the Company (each an "EMPLOYEE"). There are
no covenants, agreements or restrictions, including but not limited to
employee non-compete agreements, prohibiting, limiting or in any way
restricting any Employee from engaging in any types of business activity in
any location.
(c) The Disclosure Schedule sets forth all outstanding loans and other
advances made by the Company to any of its officers, directors, employees,
shareholders or consultants.
Section 3.18. Insurance Policies. The Disclosure Schedule identifies all
insurance policies covering the Company and its business, employees, agents and
assets, copies of which have been provided to Acquiror. Each such policy is in
full force and effect and is adequate in coverage and amount to insure fully
against risks to which the Company and its employees, businesses, properties and
other assets may be exposed in the operation of its business prior to the
Closing. None of such policies shall, pursuant to their terms, in any way be
affected by, or terminate or lapse by reason of, this Agreement. All premiums
with respect to such insurance policies have been paid on a timely basis, and no
notice of cancellation or termination has been received with respect to any such
policy. There are no pending claims against such insurance by or on behalf of
the Company. The Company has not been refused any insurance with respect to its
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assets or operations, nor has its coverage been limited, by any insurance
carrier to which it has applied for any such insurance.
Section 3.19. Brokerage Fees. Neither the Company, the Shareholders nor any
of their respective Affiliates has retained any financial advisor, broker, agent
or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement or any of the agreements contemplated hereby
or any transaction contemplated hereby or thereby or any transaction of like
nature that would be required to be paid by the Company or any Shareholder,
except for the retention of X.X. Xxxxxxxxx & Company pursuant to the agreement
previously delivered to Acquiror.
Section 3.20. No Product Liabilities; Product Warranties.
(a) The Company has not incurred, and to the Knowledge of the Company
there is no reason to believe there is any basis for alleging, any
liability, damage, loss, cost or expense as a result of any defect or other
deficiency (whether of design, materials, workmanship, labeling,
instructions or otherwise) ("PRODUCT LIABILITY") with respect to any
product sold or service rendered by the Company, whether such Product
Liability is incurred by reason of any express or implied warranty
(including, without limitation, any warranty of merchantability or
fitness), any doctrine of common law (tort, contract or other), any
statutory provision or otherwise and irrespective of whether such Product
Liability is covered by insurance, other than chargebacks incurred in the
ordinary course of business and consistent with past practice and none of
which have, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(b) The Company has furnished Acquiror with the standard forms of
purchase orders for its products and services that are in effect or
proposed to be used by the Company, which forms contain all warranties and
guarantees given by the Company to its customers with respect to their
products and services, except for those warranties imposed by law. There
are no pending or, to the Knowledge of the Company, threatened claims under
any warranty or guaranty against the Company. No credits have been given in
respect of any such warranty or guaranty (including without limitation any
returns or allowances).
Section 3.21. Suppliers and Customers.
(a) The Disclosure Schedule lists (i) all suppliers of the Business to
which the Company (x) made payments during the period from January 1, 1997
through July 31, 1997, or (y) made or expects to make payments, in excess
of five percent of the cost of sales of the Company, during the year ending
December 31, 1997, (ii) all customers of the Business that paid the Company
during the year ended December 31, 1996, or that has paid or the Company
expects will pay to the Company during the year ending December 31, 1997,
more than five percent of the sales revenues of the Company for such
periods and (iii) all other suppliers and customers of the Business the
loss of any of which, individually or in the aggregate with all other
suppliers or customers affiliated with such supplier or customer, would
reasonably be expected to have a Material Adverse Effect on the Company.
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(b) To the Knowledge of the Company, none of the customers or
suppliers of the Company listed on the Disclosure Schedule in Section 3.21
have expressed an intention to cease purchasing from, selling to or dealing
with the Company nor has any information been brought to its attention by
such customer or supplier which would reasonably lead it to believe any
such customer or supplier intends to alter in any material respect the
amount of such purchases, sales or the extent of dealings with the Company
(including in the event of the consummation of the Acquisition). To the
Knowledge of the Company, all suppliers to the Business will be able to
fulfill outstanding or currently anticipated purchase orders placed by the
Company which, individually or in the aggregate, exceed $25,000. The
Company has no information which might reasonably indicate, nor has any
information been brought to its attention which might reasonably lead it to
believe that, any customer of the Business will cancel any outstanding or
currently anticipated purchase orders placed with the Company which,
individually or in the aggregate, exceed $25,000.
(c) Neither the Company nor, to the Knowledge of the Company, any of
its officers, directors, shareholders or Affiliates, nor any relative or
spouse (or relative of such spouse) of any such officer, director,
shareholder or Affiliate, nor any entity controlled by one or more of the
foregoing: (i) owns, directly or indirectly, any interest in (excepting
less than 2% stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director, employee
or consultant of, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent, customer or
client of the Business; (ii) owns, directly or indirectly, in whole or in
part, any tangible or intangible property that the Business uses in the
conduct of its business; or (iii) has any cause of action or other claim
whatsoever against, or owes any amount to, the Company, except for claims
in the ordinary course of business such as for accrued vacation pay,
accrued benefits under employee benefit plans, and similar matters and
agreements existing on the date hereof.
Section 3.22. Intellectual Properties. The Disclosure Schedule contains an
accurate and complete list of all domestic and foreign patents, patent
applications, patent licenses, software licenses (other than generally available
pre-packaged "off-the- shelf" software) and know-how licenses, trade names,
trademarks, copyrights, service marks, trademark registrations and applications,
service xxxx registrations and applications, and copyright registrations and
applications owned (in whole or in part), licensed to any extent or used or
anticipated to be used by the Company in the conduct of the Business, whether in
the name of the Company, any employee or otherwise (collectively, the
"INTELLECTUAL PROPERTY"). The Company either owns all right, title and interest
in and to, or possesses the exclusive right to use, the Intellectual Property
used in the conduct of the Business and each item constituting part of the
Intellectual Property in which the Company has an ownership or license interest
has been, to the extent indicated on the Disclosure Schedule, duly registered
with, filed in or issued by, as the case may be, the United States Patent and
Trademark Office or such other Governmental Entities as are indicated on the
Disclosure Schedule and such registrations, filings and issuances remain in full
force and effect. No claim of infringement or misappropriation of any
Intellectual Property of any other Person has been made nor, to the Knowledge of
the Company, threatened against the Company and the Company is not infringing or
misappropriating any Intellectual Property of any
-13-
other Person. Without limiting any other provisions hereof, the Company has not
granted any license, franchise or permit to any Person to use any of the
Intellectual Property of the Company and no other Person has the right to use
the same trademarks, service marks or trade names used by the Company or any
similar trademarks, service marks or trade names likely to lead to confusion.
Section 3.23. Licenses. The Company has all licenses, permits, consents and
other governmental certificates, authorizations and approvals required by every
federal, state, local and foreign Governmental Entity for the conduct of the
Business and the use of its properties as presently conducted or used, other
than those the failure of which to hold has not had and would not have a
Material Adverse Effect on the Company (collectively, "LICENSES"). The
Disclosure Schedule contains a true and complete list of the Licenses. All of
the Licenses are in full force and effect and no action or claim is pending nor,
to the Knowledge of the Company, is threatened to revoke or terminate any
License or declare any License invalid in any material respect. The Company has
taken all necessary action to maintain such Licenses. The Disclosure Schedule
contains a true and complete list of all federal, state, local and foreign
governmental or judicial consents, orders, decrees and other compliance
agreements relating to the Company or any of its assets or business under which
the Company is operating or bound.
Section 3.24. Restrictive Documents and Territorial Restrictions. The
Company is not subject to, or a party to, any charter, by-law, mortgage, Lien,
lease, license, permit, agreement, contract, instrument, law, rule, ordinance,
regulation, order, judgment or decree, or any other restriction of any kind or
character, which could, to the Knowledge of the Company, (i) materially
adversely affect the business, prospects, operations or condition (financial or
otherwise) of the Business or any of its assets or property, or the continued
operation of the Business after the date hereof on substantially the same basis
as heretofore operated or (ii) restrict the ability of the Company to acquire
any property or conduct business in any area.
Section 3.25. Bank Accounts. The Disclosure Schedule contains a true,
correct and complete list of the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which the Company maintains safe deposit boxes or accounts of any nature and the
names of all Persons authorized to draw thereon, make withdrawals therefrom or
have access thereto.
Section 3.26. Accounting Matters. Neither the Company, any Shareholder nor
any of their Affiliates has taken or agreed to take any action that would
prevent Acquiror from accounting for the Acquisition as a "pooling of interests"
under generally accepted accounting principles. It is understood that KPMG Peat
Marwick LLP ("KPMG"), in part, will rely upon this representation for the
purposes of issuing the opinion required pursuant to section 7.02(i) hereof.
Section 3.27. No Misleading Statements. This Agreement, the information and
schedules referred to herein and the certificates that have been furnished to
Acquiror in connection with the transactions contemplated hereby do not include
any untrue statement of a material fact and do not omit to state any material
fact necessary to
-14-
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading. To the Knowledge of the Company,
there is no fact relating to the Company which materially adversely affects or
in the future would be reasonably likely (so far as the Company can now
reasonably foresee) to materially adversely affect the business, condition
(financial or otherwise), property or assets of the Company which is not
referred to herein or in this corresponding section of the Disclosure Schedule.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby severally agrees and represents and warrants to
Acquiror as follows:
Section 4.01. Authorization; Ownership of Company Shares.
(a) Such Shareholder has all requisite power and authority to enter
into this Agreement and each of the other agreements contemplated hereby to
which he is a party, and to carry out his obligations under this Agreement
and each of the other agreements contemplated hereby to which he is a
party, and to consummate the transactions contemplated hereby and thereby.
Each of this Agreement and the other agreements contemplated hereby to
which such Shareholder is a party has been duly executed and delivered by
such Shareholder and constitutes the legal, valid and binding obligation of
such Shareholder enforceable against such Shareholder in accordance with
its terms (except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally or by general principles of equity, regardless of whether such
enforceability is considered in equity or at law).
(b) Such Shareholder has, and immediately prior to the transfer of the
Company Shares being sold by such Shareholder hereunder to Acquiror will
have, good and marketable title to the Company Shares being sold by such
Shareholder hereunder, free and clear of any Liens. Upon the delivery of
and payment for such Company Shares hereunder, Acquiror will acquire good
and marketable title to, and all of such Shareholder's rights in, such
Company Shares, free and clear of any Liens.
Section 4.02. No Violation. The execution and delivery of this Agreement
and each of the other agreements contemplated hereby to which such Shareholder
is a party by such Shareholder does not, and the consummation by such
Shareholder of the transactions contemplated hereby and thereby, and compliance
with the terms hereof and thereof will not, conflict with, or result in a breach
or violation of or default or loss of any benefit under, or accelerate the
performance required by, the terms of any law, statute, regulation, order,
judgment or decree or any agreement, contract, indenture or other instrument to
which such Shareholder is a party or to which any of such Shareholder's
properties are subject, or constitute a default or loss of any right thereunder
or an event which, with the lapse of time or notice or both, might result in
-15-
a default or loss of any right thereunder or the creation of any Lien upon any
of the assets or properties of such Shareholder.
Section 4.03. Approvals. The execution and delivery of this Agreement and
each of the other agreements contemplated hereby to which such Shareholder is a
party and the consummation of the transactions contemplated hereby and thereby
by such Shareholder will not require the consent, approval, order or
authorization of any Governmental Entity or Regulatory Authority or any other
Person under any statute, law, rule, regulation, permit, license, agreement,
indenture or other instrument to which such Shareholder is a party or to which
any of his properties are subject, and no declaration, filing or registration
with any Governmental Entity or Regulatory Authority is required by such
Shareholder in connection with the execution and delivery of this Agreement and
each of the other agreements contemplated hereby to which such Shareholder is a
party, the consummation by such Shareholder of the transactions contemplated
hereby and thereby or the performance by such Shareholder of his obligations
hereunder and thereunder.
Section 4.04. Securities Act Matters.
(a) Such Shareholder understands that the Zygo Shares, at the time of
their original issuance by Zygo, will not have been registered under the
Securities Act or any state securities laws by reason of their issuance in
a transaction exempt from the registration requirements of the Securities
Act and applicable state securities laws and that such Zygo Shares must be
held indefinitely unless a subsequent disposition thereof is registered
under the Securities Act and applicable state securities laws or is exempt
from such registration. Zygo has undertaken to so file a registration
statement with the Commission as promptly as practicable after the Closing
Date and to use its reasonable good faith efforts to have the Zygo Shares
so registered for resale as promptly as practicable thereafter, as provided
in Section 2.02 hereof.
(b) Such Shareholder is acquiring the Zygo Shares for such
Shareholder's own account and not with a view to, or for sale in connection
with, directly or indirectly, any distribution thereof that would require
registration under the Securities Act or applicable state securities laws.
(c) Such Shareholder and such Shareholder's, attorneys, accountants,
investment and financial advisors, if any, have had the opportunity to
review the books and records of Acquiror and have been provided access to
such information as such Shareholder or such Shareholder's advisors, if
any, have requested.
(d) Such Shareholder understands that the Zygo Shares, until they are
registered as contemplated by Section 2.02 hereof, will bear the following
legend (or a substantially similar legend):
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE
-16-
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION OR
THE DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH DISPOSITION WILL NOT
REQUIRE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED."
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror hereby agrees and represents and warrants to the Shareholders as
follows:
Section 5.01. Organization, Etc. Acquiror is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as it is now
being conducted and to own, operate or lease the properties and assets it
currently owns, operates or holds under lease. Acquiror is duly qualified or
licensed to do business and is in good standing as a foreign corporation in each
jurisdiction where the character of its business or the nature of its properties
makes such qualification or licensing necessary, except where the failure to so
qualify or be licensed would not have a Material Adverse Effect on Acquiror.
Acquiror has heretofore made available to the Company true and correct copies of
its Certificate of Incorporation and By-laws as in effect on the date hereof.
Section 5.02. Capitalization. The authorized capital stock of Acquiror
consists of 15,000,000 shares of Zygo Common Stock, of which 10,558,340 shares
are issued and outstanding as of June 30, 1997 and 207,600 are held in treasury.
The Zygo Shares, when issued pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable and will not have been
issued in violation of any preemptive rights or of any federal or state law.
Section 5.03. Authorization. Acquiror has all requisite corporate power and
authority to enter into this Agreement and each of the other agreements
contemplated hereby, to carry out its obligations under this Agreement and each
of the other agreements contemplated hereby and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Acquiror of this
Agreement and each of the other agreements contemplated hereby, the consummation
of the transactions contemplated hereby and thereby and the performance by
Acquiror of its obligations hereunder and thereunder have been duly authorized
by all necessary corporate action on the part of Acquiror. Each of this
Agreement and the other agreements contemplated hereby has been duly executed
and delivered by Acquiror and constitutes the legal, valid and binding
obligation of Acquiror, enforceable against Acquiror in accordance with its
terms (except as the enforceability thereof may be
-17-
limited by any applicable bankruptcy, insolvency or other laws affecting
creditors' rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law).
Section 5.04. No Violation. The execution and delivery of this Agreement
and each of the other agreements contemplated hereby by Acquiror does not, and
the consummation by Acquiror of the transactions contemplated hereby and
thereby, and compliance with the terms hereof and thereof will not, (a) conflict
with, or result in any violation of or default or loss of any benefit under, any
provision of the Certificate of Incorporation or By-laws of Acquiror; (b)
conflict with, or result in any violation of any statute, law, rule or
regulation, or any judgment, decree or order of any Governmental Entity to which
Acquiror is a party or to which any of its properties is subject; (c) conflict
with, or result in a breach or violation of, or accelerate the performance
required by, the terms of any material agreement, contract, indenture or other
instrument to which Acquiror is a party or to which any of its properties is
subject, or constitute a default or loss of any right thereunder or an event
which, with the lapse of time or notice or both, might result in a material
default or loss of any material right thereunder or the creation of any Lien
upon any of the assets or properties of Acquiror; or (d) result in any
suspension, revocation, impairment, forfeiture or nonrenewal of any License of
Acquiror.
Section 5.05. Approvals. The execution and delivery by Acquiror of this
Agreement and each of the agreements contemplated hereby, and the consummation
of the transactions contemplated hereby and thereby will not require the
consent, approval, order or authorization of any Governmental Entity or
Regulatory Authority or any other Person under any statute, law, rule,
regulation, permit, license, agreement, indenture or other instrument to which
Acquiror is a party or to which any of its properties are subject, and no
declaration, filing or registration with any Governmental Entity or Regulatory
Authority is required or advisable by Acquiror in connection with the execution
and delivery of this Agreement and each of the other agreements contemplated
hereby, the consummation by Acquiror of the transactions contemplated hereby and
thereby or the performance by Acquiror of its obligations hereunder and
thereunder, other than compliance with any applicable requirements under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), the Securities
Act and state securities and "blue sky" laws.
Section 5.06. Commission Filings. Acquiror has delivered to the Company
true, correct and complete copies of Acquiror's Annual Report on Form 10-K for
the fiscal year ended June 30, 1996 (the "ZYGO 10-K"), Acquiror's Quarterly
Reports on Form 10-Q for the quarters ended September 30, 1996, December 31,
1996 and March 31, 1997 (the "ZYGO 10-QS"), Acquiror's Current Reports on Form
8-K dated August 30, 1996 and September 27, 1996, Acquiror's Current Reports on
Form 8-K/A dated November 4, 1996 and November 14, 1996, and Acquiror's Proxy
Statement dated October 8, 1996 (collectively, the "ZYGO EXCHANGE ACT FILINGS"),
which are the only reports, schedules and definitive proxy statements filed by
Acquiror with the Commission on or after June 30, 1996. Acquiror has timely
filed in the preceding twelve (12) months all the material required to be filed
by it pursuant to the applicable provisions of the Securities Act and pursuant
to Sections 13, 14 and 15(d) of the
-00-
Xxxxxxxx Xxx. The Zygo Exchange Act Filings (including the documents
incorporated by reference therein), as of their respective filing dates, did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, and the Zygo Exchange
Act Filings were timely filed and complied when filed in all material respects
with the applicable requirements of the Exchange Act.
Section 5.07. Financial Statement and Other Information.
(a) The audited balance sheet and any related notes and schedules
included or incorporated by reference in the Zygo 10-K and the unaudited
balance sheet and any related notes and schedules included in the Zygo 10-Q
for the quarter ended March 31, 1997 each presents fairly the consolidated
financial position of Acquiror and the Zygo Subsidiaries as of its
respective date and the other financial statements included in the Zygo
10-K and such Zygo 10-Q present fairly the consolidated results of
operations or other information included therein of Acquiror and the Zygo
Subsidiaries for the respective periods or as of the respective dates
therein set forth, subject, in the case of unaudited statements, to normal
year end adjustments which are not material in amount or effect, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved (except as otherwise
stated therein).
(b) Except as disclosed in the Zygo Exchange Act Filings, since March
31, 1997, there has been no change in the assets or liabilities, or in the
business or condition, financial or otherwise, or in the results of
operations of Acquiror and the Zygo Subsidiaries, taken as a whole, which
has had or is reasonably likely to have a Material Adverse Effect on
Acquiror.
Section 5.08. Compliance with Laws. The business of Acquiror and the Zygo
Subsidiaries has not been conducted in violation of any law or any ordinance or
regulation of any Governmental Entity, except for violations that individually
or in the aggregate would not and, insofar as may reasonably be foreseen, in the
future will not, have a Material Adverse Effect on Acquiror. Neither Acquiror
nor any Zygo Subsidiary is in default with respect to any order, writ,
injunction or decree known to or served upon Acquiror or any Zygo Subsidiary of
any Governmental Entity, which default would have a Material Adverse Effect on
Acquiror.
Section 5.09. Brokerage Fees. Neither Acquiror, any Zygo Subsidiary nor any
of their respective Affiliates has retained any financial advisor, broker, agent
or finder or paid or agreed to pay any financial advisor, broker, agent or
finder on account of this Agreement or any transaction contemplated hereby or
any transaction of like nature that would be required to be paid by Acquiror or
any Zygo Subsidiary, except for the financial advisor referred to in Section
7.02(j) hereof.
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ARTICLE VI.
COVENANTS AND AGREEMENTS
Section 6.01. Confidentiality. Each of Acquiror, the Company and the
Shareholders will hold, and shall cause their counsel, independent certified
public accountants, appraisers, investment bankers and other advisors to hold in
confidence any confidential data or information made available to it by the
other in connection with this Agreement using the same standard of care to
protect such confidential data or information as is used to protect its own
confidential information. Each party hereto recognizes and acknowledges that a
breach by it of this Section 6.01 will cause irreparable and material loss and
damage to the other parties hereto as to which they will not have adequate
remedy at law or in damages. Accordingly, each party acknowledges and agrees
that the issuance of an injunction or other equitable remedy is an appropriate
remedy for any such breach.
Section 6.02. Public Announcements. Acquiror must agree in advance prior to
the issuance of any press release or the making of any public statement with
respect to this Agreement and the transactions contemplated hereby by any party
hereto.
Section 6.03. Certain Tax Matters. The following provisions shall govern
the allocation of responsibility as among Acquiror, the Company and the
Shareholders for certain tax matters following the Closing Date:
(a) Sales and Transfer Taxes. All sales and transfer Taxes (including
stock and real estate transfer Taxes), if any, incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the
Shareholders. Shareholders shall, at their own expense, file or prepare for
filing all necessary Tax Returns and other documentation with respect to all
such sales or transfer Taxes, and, if required by applicable law or if necessary
to secure any applicable exemption, Acquiror shall join in the execution of any
such Tax Returns or other documentation.
(b) Tax Returns and Payment of Taxes for Periods through the Closing
Date. The Shareholders and the Company shall be responsible for, and shall cause
to be prepared and timely filed, all tax returns for the Company for all Tax
periods ending on or before the Closing Date, and the Shareholders and the
Company (but only to the extent then wholly-owned by the Shareholders) shall
cause to be paid when due all Taxes in respect of such Tax periods. The cost of
the preparation of such tax returns shall be borne by the Company. All Tax
Returns described in this Section 6.02(b) shall be prepared in a manner
consistent with prior practice unless a past practice has been finally
determined to be incorrect by the applicable taxing authority or a contrary
treatment is required by applicable tax laws (or judicial or administrative
interpretations thereof). The Shareholders shall cause the Company to provide
Acquiror with copies of such completed Tax Returns at least 10 days prior to the
filing date, and Acquiror shall be provided an opportunity to review such Tax
Returns and supporting workpapers and schedules prior to the filing of such Tax
Returns. In the event that the amount of any Taxes for Tax periods ending on or
before the Closing
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Date, or for which the Shareholders are otherwise responsible pursuant to
Section 6.03(c)(iii), exceeds the amount accrued on the Balance Sheet, the
Shareholders, jointly and severally, shall pay to Acquiror such excess within
ten (10) days after written notice thereof by Acquiror. Acquiror shall prepare
or cause to be prepared and filed all Tax Returns for the Company for all Tax
periods ending after the Closing Date.
(c) Indemnification for Taxes.
(i) The Shareholders shall, subject to the provisions of Section
8.03, jointly and severally indemnify, defend and hold harmless Acquiror and the
Company against (A) all Taxes attributable to the Company with respect to any
Tax period ending on or prior to the Closing Date and the cost of preparation of
all associated tax returns, (B) all Taxes attributable to the Company with
respect to the portion of any Tax period which begins before and ends after the
Closing Date for which the Shareholders are responsible, pursuant to Section
6.03(c)(iii) and (C) any Taxes arising by reason of any breach by the
Shareholders or inaccuracy of any of the representations contained in Section
3.11 hereof, less in each case any amount previously reserved or accrued for
Taxes on the Balance Sheet Date. Notwithstanding any other provision of this
Agreement, the obligation of the Shareholders to indemnify and hold harmless
Acquiror and the Company from Taxes under this Section 6.03 shall begin on the
Closing Date and end upon the expiration of the statute of limitations
(including any extensions thereof) applicable to the assessment and collection
of any Taxes for and against which Acquiror and the Company are indemnified and
held harmless by the Shareholders hereunder, to the extent that a claim for
indemnification hereunder has not theretofore been made in writing.
Notwithstanding the first sentence of this Section 6.03(c), the indemnification
obligation of the Shareholders set forth in this Section 6.03(c) shall not be
subject to the "basket" limitation contained in Section 8.03 hereof. Any
indemnification obligation owed to the Acquiror or the Company pursuant to this
Section 6.03(c) shall be satisfied first with the Escrowed Shares, if any, in
accordance with the terms of the Escrow Agreement.
(ii) In determining the amount of any indemnification payment by
the Shareholders pursuant to this Section 6.03(c), there shall be deducted or
added, respectively, from or to the amount to be paid an amount equal to (A) the
present value of any net Tax benefit (federal, state, local or foreign)
realized, or reasonably expected to be realized, by Zygo or the Company as a
consequence of an event giving rise to any payment pursuant to this Section
6.03(c), or (B) the present value of any net Tax detriment (federal, state,
local or foreign) realized, or reasonably expected to be realized, by Zygo or
the Company as a consequence of an event giving rise to any payment pursuant to
this Section 6.03(c) or the receipt of any such payment. For purposes of this
Section 6.03(c)(ii), "present value" shall be calculated using the applicable
annual Federal mid-term rate, as that term is defined in the Code, as in effect
for the month in which the payment is to be made. For purposes of this Section
6.03(c)(ii), the amount of any "Tax benefit" and "Tax detriment" shall be
calculated using the highest effective Tax rate applicable or known to be
applicable with respect to the Tax period or periods for which the Tax benefit
or the Tax detriment, as the case may be, is reasonably expected to be realized
or incurred.
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(iii) For federal income tax purposes, the taxable year of the
Company shall end as of the close of the Closing Date and, with respect to all
other Taxes, the Shareholders and Acquiror will, unless prohibited by applicable
law, close the taxable period of the Company as of the close of the Closing
Date. Neither the Shareholders nor Acquiror shall take any position inconsistent
with the preceding sentence on any Tax Return. In any case where applicable law
does not permit the Company to close its taxable year on the Closing Date or in
any case in which a Tax is assessed with respect to a taxable period which
includes the Closing Date (but does not begin or end on that day), then Taxes,
if any, attributable to the taxable period of the Company beginning before and
ending after the Closing Date shall be allocated (i) to the Shareholders for the
period up to and including the Closing Date, and (ii) to Acquiror for the period
subsequent to the Closing Date.
(d) Tax Audits. Acquiror shall notify the Shareholders in writing of
any pending or threatened audit or examination by any Tax authority (a "TAX
AUDIT") or a Tax assessment for which the Shareholders may be liable for
indemnification under this Agreement within thirty (30) days after Acquiror's
receipt of notice of such pending or threatened Tax Audit or assessment. A
majority in interest of the Shareholders shall have the right, at their own
expense, to control any Tax Audit, initiate any claim for refund, contest,
resolve and defend against any assessment, notice of deficiency, or other
adjustment or proposed adjustment relating to any and all Taxes for any Tax
period of the Company ending on or before the Closing Date, provided, however,
that the Shareholders shall in no event take any position in any such proceeding
which would subject Acquiror or the Company to any civil fraud or any civil or
criminal penalty, and provided, further, that the Shareholders shall not
consent, without the prior written approval of Acquiror, to any change in the
treatment of any item which would in any material respect affect the Tax
liability of Acquiror or the Company for a period subsequent to the Closing
Date. Acquiror shall have the right, at its expense, to control any other Tax
Audit, initiate any other claim for refund, and contest, resolve and defend
against any other assessment, notice of deficiency, or other adjustment or
proposed adjustment relating to Taxes for any Tax period ending after the
Closing Date with respect to the Company.
(e) Mutual Cooperation. The parties shall provide each other with such
assistance as may reasonably be requested by any of them in connection with the
preparation of any Tax Return, any Tax Audit or other examination by any Tax
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each will retain and provide the other with any records or
information that may be relevant to such Tax Return, Tax Audit or examination,
proceedings or determination. Such assistance shall include making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder and shall include providing
copies of any relevant Tax Returns and supporting work schedules. The party
requesting assistance hereunder shall reimburse the other for reasonable
expenses incurred in providing such assistance. Without limiting in any way the
foregoing provisions of this Section 6.03, Acquiror hereby agrees to retain,
until the appropriate statutes of limitation (including any extensions) expire,
copies of all Tax Returns, supporting work schedules and other records or
information that may be relevant to such Tax Returns of the Company for all Tax
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periods that include the dates from January 1, 1991 to the Closing Date,
inclusive, and that it will not destroy or otherwise dispose of such records
without first providing the Shareholders with a reasonable opportunity to review
and copy such records.
Section 6.04. Issuance of Options to Acquire Zygo Common Stock. Zygo agrees
that it shall, in consultation with and based upon the recommendations of Xxxxx
Xxxxx, on or immediately after the Closing Date, grant options to purchase up to
an aggregate of 60,000 shares of Zygo Common Stock to executive officers and key
employees of the Company, under Zygo's existing stock option plan, at an
exercise price equal to the last reported sale price on the Nasdaq National
Market per share of Zygo Common Stock on the Closing Date (or, if later, on the
first day of any such executive officer's or key employee's employment with the
Company or Zygo).
Section 6.05. Benefits Arrangements. It is Acquiror's present intention
that from and after the Closing, Acquiror shall, or shall cause the Company to,
provide all of the employees of the Company with salary and wages at not less
than their current levels and Acquiror shall, or shall cause the Company to,
continue in effect all employee benefit plans, programs, policies or
arrangements as are currently provided by the Company to its employees. It is
the Acquiror's further intention to provide the employees of the Company, over a
phase-in period, with benefits which are generally comparable in the aggregate
to the benefits provided to other similarly situated employees of Acquiror and
Zygo Subsidiaries.
Section 6.06. Pooling Affiliates' Letters. The Company shall cause each
person who is an "affiliate," as that term is used in paragraphs (c) and (d) of
rule 145 under the U.S. Securities Act, of the Company to deliver to Acquiror on
or prior to the Closing Date a written agreement, substantially in the form of
Exhibit 6.06 hereto (the "POOLING AFFILIATE LETTERS"). The Company shall use its
commercially reasonable efforts to provide Acquiror with such information as
Acquiror shall reasonably request for purposes of making its own determination
of persons who may be deemed to be affiliates of the Company.
Section 6.07. Further Assurances. The Company and the Shareholders from
time to time after the Closing, at Acquiror's request, will execute, acknowledge
and deliver to Acquiror such other instruments of conveyance and transfer and
will take such other actions and execute and deliver such other documents,
certifications and further assurances, all at Acquiror's expense, as Acquiror
may reasonably require in order to vest more effectively in Acquiror, or to put
Acquiror more fully in possession of, the Company Shares. In case at any time
after the Closing any further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties hereto agrees, subject to
applicable laws, to use all reasonable efforts promptly to take or cause to be
taken all further action and promptly to do or cause to be done all further
things (including the execution and delivery of such further instruments and
documents) as any party reasonably may request.
Section 6.08. Opinions of the Company's Counsel. The Company shall use its
best efforts to cause to be delivered to Zygo at the Closing Date the opinions
of the Company's counsel required by Section 7.02(d) hereof.
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ARTICLE VII.
CONDITIONS OF CLOSING
Section 7.01. Conditions to All Parties' Obligations. The obligations of
all the parties to this Agreement to effect the Acquisition shall be subject to
the fulfillment or satisfaction, at or prior to the Closing of the following
conditions or the mutual written waiver by the parties:
(a) Illegality or Legal Constraint. No temporary restraining order,
preliminary or permanent injunction or other order or restraint issued by any
court of competent jurisdiction, no statute, rule, regulation, order, decree,
restraint or pronouncement by any Governmental Entity, and no other legal
restraint or prohibition which would prevent or have the effect of preventing
the consummation of the Acquisition shall have been issued or adopted or be in
effect.
(b) Governmental Authorizations. All permits, approvals, filings and
consents required or advisable to be obtained or made prior to the consummation
of the Acquisition under applicable federal laws or applicable laws of any state
or foreign country having jurisdiction over the Acquisition and the other
transactions contemplated herein shall have been obtained or made, as the case
may be, on terms and conditions satisfactory to the Company, the Shareholders
and Acquiror, acting reasonably.
(c) Escrow Agreement. The Company, Acquiror, the Shareholders and the
Escrow Agent shall have executed and delivered the Escrow Agreement.
(d) Registration Agreement. Acquiror and the Shareholders shall have
executed and delivered the Registration Agreement.
(e) Employment and Non-Compete Agreements. Xxxxx Xxxxx, Xxxxxxx
Xxxxxxx and Xxxxxx Xxxx shall have entered into an employment and non-compete
agreement with the Company substantially in the form of Exhibit 7.01(e)(1), (2)
and (3), respectively.
Section 7.02. Conditions to the Obligations of Acquiror to Effect the
Acquisition. The obligations of Acquiror under this Agreement to effect the
Acquisition shall be subject to the fulfillment or satisfaction, at or prior to
the Closing, of the following conditions, unless waived by Acquiror in its sole
discretion:
(a) Representations and Warranties Accurate. All representations and
warranties of the Company and the Shareholders contained in this Agreement
(including the Disclosure Schedule hereto), and all written information required
to be delivered to Acquiror by the Company or any Shareholder on or prior to the
Closing Date pursuant to this Agreement, shall be true in all respects as of the
date when made and on and as of the Closing Date.
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(b) Performance by the Company and the Shareholders. The Company and
each of the Shareholders shall have performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement to be performed and complied with by the Company or any Shareholder
prior to or on the Closing Date.
(c) Consents. Any consent required for the consummation of the
Acquisition under any Contract or material License shall have been delivered to
Acquiror.
(d) Opinion of Counsel. Acquiror shall have received the opinion of
Gee & Xxxxxx, counsel to the Company and the Shareholders, dated as of the
Closing Date, in the form of Exhibit 7.02(d) hereto.
(e) Proceedings; Receipt of Documents. All corporate and other
proceedings taken or required to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Acquiror and its counsel, and counsel to
Acquiror shall have received all such information and such counterpart originals
or certified or other copies of such documents as Acquiror or its counsel may
reasonably request. Acquiror shall have received such other instruments,
approvals and other documents as it may reasonably request to make effective the
transactions contemplated hereby.
(f) Due Diligence. Acquiror shall have completed its legal, financial
and business investigation of the Business, the Company's assets and the
liabilities of the Company to its satisfaction, in its sole discretion.
(g) No Material Adverse Effect. Since the Balance Sheet Date, there
shall have been no change in the Business, assets, liabilities, prospects,
results of operations or financial condition of the Company which has had or is
reasonably likely to have a Material Adverse Effect on the Company.
(h) Pooling Affiliate Letters. Acquiror shall have received the
Pooling Affiliate Letters referred to in Section 6.06.
(i) Pooling of Interests. Acquiror shall have received an opinion from
KPMG, in form reasonably satisfactory to Acquiror, to the effect that the
Acquisition would be properly accounted for as a "pooling of interests" in
accordance with generally accepted accounting principles and all published
rules, regulations and policies of the U.S. Commission.
(j) Fairness Opinion. Acquiror shall have received from Alex. Xxxxx &
Sons, Inc., its financial advisor, an opinion to the effect that, as of the date
hereof, the consideration to be paid in the Acquisition is fair, from a
financial point of view, to Zygo and its stockholders, and Alex. Xxxxx & Sons,
Inc. shall not have withdrawn such opinion on or prior to the Closing Date.
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(k) Supporting Documents. Acquiror and its counsel shall have received
a certificate of the President and Treasurer of the Company dated the Closing
Date and certifying that the conditions set forth in Sections 7.02(a), 7.02(b)
and 7.02(g) hereof have been satisfied, and certificates of the Secretary or
other officer of the Company and other information with respect to the corporate
proceedings and operations and affairs of the Company as Acquiror or counsel to
Acquiror may reasonably request. All such documents shall be satisfactory in
form and substance to Acquiror and its counsel.
Section 7.03. Conditions to the Obligations of the Company and the
Shareholders to Effect the Acquisition. The obligations of the Company and the
Shareholders under this Agreement to effect the Acquisition shall be subject to
the fulfillment or satisfaction, at or prior to the Closing of the following
conditions, unless waived by the Company in its sole discretion:
(a) Representations and Warranties Accurate. All representations and
warranties of Acquiror contained in this Agreement, and all written information
required to be delivered to the Company by Acquiror on or prior to the Closing
Date pursuant to this Agreement, shall be true in all respects as of the date
when made and on and as of the Closing Date.
(b) Performance by Acquiror. Acquiror shall have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by it prior to or
on the Closing Date.
(c) Proceedings. All corporate and other proceedings taken or required
to be taken by Acquiror in connection with the transactions contemplated hereby
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and the Shareholders and counsel to the Company and the
Shareholders.
(d) Opinion of Counsel. The Company shall have received the opinion of
Fulbright & Xxxxxxxx L.L.P., counsel to Acquiror, dated as of the Closing Date,
in the form of Exhibit 7.03(d) hereto.
ARTICLE VIII.
INDEMNIFICATION
Section 8.01. Indemnification by the Shareholders.
(a) Joint Indemnification. Subject to the provisions of Section 8.03,
the Shareholders shall jointly and severally indemnify, defend and hold harmless
Acquiror and its officers, directors, employees, agents and representatives from
and against and in respect of any and all losses, damages, expenses,
liabilities, claims, settlements, assessments and judgments (including
reasonable costs and attorney's fees and other expenses arising out of any
claim, or the defense, settlement or investigation thereof, made with respect to
any of the foregoing) (collectively, "LOSSES") incurred or suffered
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by Acquiror, arising out of, based upon or resulting from any inaccuracy,
misrepresentation or breach of representation and warranty contained in Article
III of this Agreement or non-fulfillment of any covenant or agreement of the
Company or any Shareholder contained in this Agreement or any certificate or
instrument furnished pursuant hereto; provided, however, that for purposes of
determining the amount of any Losses incurred or suffered by Acquiror under this
subsection 8.01(a) (but not as to whether there is any inaccuracy,
misrepresentation or breach of representation and warranty), all such
representations and warranties shall be deemed to have been made without any
qualification as to materiality or Knowledge.
(b) Several Indemnification. Subject to the provisions of Section
8.03, each Shareholder shall severally indemnify, defend and hold harmless
Acquiror and its officers, directors, employees, agents and representatives from
and against and in respect of any and all Losses incurred or suffered by
Acquiror, arising out of, based upon or resulting from any inaccuracy,
misrepresentation or breach by such Shareholder of any of his representations
and warranties contained in Article IV of this Agreement or any certificate or
instrument furnished pursuant hereto.
Section 8.02. Indemnification by Acquiror. Subject to the provisions of
Section 8.03, Acquiror shall indemnify, defend and hold harmless each of the
Shareholders and his successors and assigns, from and against and in respect of
any Losses incurred or suffered by such Shareholder or his successors and
assigns, arising out of, based upon or resulting from any inaccuracy,
misrepresentation or breach by Acquiror of any of its representations and
warranties or non-fulfillment of any of its respective covenants or agreements
contained in this Agreement or any certificate or instrument furnished pursuant
hereto.
Section 8.03. Limitations. (a) No party hereto shall be entitled to make
any claim for indemnification under this Article VIII with respect to the
inaccuracy, misrepresentation or breach of any representation and warranty or
non-fulfillment of any covenant or agreement contained in this Agreement after
the date on which such representation, warranty, covenant or agreement ceases to
survive pursuant to Section 8.06.
(b) Notwithstanding anything to the contrary contained herein,
Acquiror shall not be entitled to indemnification from the Company or any
Shareholder pursuant to either Section 8.01 or 8.02 hereof, until the aggregate
losses suffered by Acquiror (from actions or inactions of any of the Company,
the Shareholder(s), or any combination of any of them) and for which
indemnification is available to Acquiror hereunder exceed $250,000, whereupon
Acquiror shall be entitled to claim indemnification for all losses suffered by
it and for which indemnification is available to it hereunder.
(c) Any claim by one party to this Agreement against any other party
to this Agreement for breach of any covenant or representation and warranty in
this Agreement shall be subject to the limitations set forth in this Article
VIII; provided, however, that such limitations shall not apply to any fraud
claim.
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Section 8.04. Notice and Defense of Claims. Each party entitled to
indemnification under this Article VIII (the "INDEMNIFIED PARTY") shall give
written notice to the party or parties required to provide indemnification (the
"INDEMNIFYING PARTY") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and, in the event of any claim
or demand asserted by a third party; but the failure of any Indemnified Party to
timely give written notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Agreement unless such failure to give notice
materially adversely affected the ability of the Indemnifying Party to defend
such claim. Upon receipt of any such notice, the Indemnifying Party may elect to
defend the Indemnified Party against such claim, suit, action or proceeding, at
its own expense, through counsel of its own choice that is reasonably acceptable
to the Indemnified Party, and from and after such election and for so long as
the Indemnifying Party is diligently prosecuting such defense, the Indemnifying
Party shall not be responsible for any legal fees or expenses of the Indemnified
Party, other than reasonable costs of investigation and subject to Section 8.03
hereof. Failing such election or reasonably diligent prosecution, the
Indemnified Party shall have the right to (but shall not be obligated to) pay,
compromise or defend the same. In any claim, suit, action or proceeding defended
by the Indemnifying Party, the Indemnified Party may participate, at its
expense, in the defense of the same. The Indemnifying Party in the defense of
any such claim, suit, action or proceeding shall not, except with the consent of
the Indemnified Party, consent to the entry of any judgment or entry into any
settlement which (i) does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect to such claim, suit, action or proceeding or (ii)
requires the performance of any act (other than the payment of moneys for which
such Indemnified Party is held harmless hereunder) or the agreement not to
perform any act by the Indemnified Party. The Indemnified Party shall not settle
or compromise any such claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. The
Indemnified Party shall furnish such information regarding itself or the claim
in question as the Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim, suit,
action or proceeding resulting therefrom.
Section 8.05. Non-Exclusive Remedy. Indemnification pursuant to this
Agreement shall not preclude Acquiror or any of the Shareholders from exercising
any other remedies it or such Shareholder may have, including, without
limitation, in the case of Acquiror, pursuant to the Escrow Agreement, subject
to the limitations set forth in Sections 8.03 and 8.04 hereof.
Section 8.06. Survival of Representations and Warranties. All of the
representations, warranties and agreements contained in this Agreement shall
survive the Closing and shall remain in full force and effect until the earlier
of (i) the date on which KPMG's report on their audit of Acquiror's financial
statements for the fiscal year during which the Closing occurs or (ii) the first
anniversary of the Closing Date (such earlier date being referred to as the
"Termination Date") and, thereafter, to the extent a claim, in writing and
setting forth the specific facts giving rise to such claim, is made prior to
such expiration with respect to any breach of such representation, warranty or
agreement, until such claim is finally determined or settled; provided,
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however, that the representations, warranties and agreements of the Company and
the Shareholders relating to Taxes and governmental assessments shall remain in
full force and effect until the expiration of the applicable statute of
limitations (including any extensions thereof); and, provided further, that the
representations and warranties set forth in Sections 3.03, 3.05, 3.17, 3.19,
4.01, 4.02 and 5.04 shall survive and remain in full force and effect forever.
Section 8.07. Reimbursement. Subject to Section 8.03 hereof, at the time
that the Indemnified Party shall suffer a loss because of a breach of any
warranty, representation or covenant by the Indemnifying Party or at the time
the amount of any liability on the part of the Indemnifying Party under this
Agreement is determined (which in the case of payment to third persons shall be
the earlier of (i) the date of such payment, provided that the Indemnified Party
has fully complied with Section 8.04, or (ii) the date that a court of competent
jurisdiction shall enter a final judgment, order or decree (after exhaustion or
expiration of appeal rights) establishing such liability) (such loss or amount
being hereinafter referred to as the "INDEMNITY CLAIM")), the Indemnifying Party
shall forthwith, upon notice from the Indemnified Party, pay to the Indemnified
Party the amount of the Indemnity Claim. The Indemnity Claim shall be paid first
from the Escrow Fund (as such term is defined in the Escrow Agreement), to the
extent then remaining, as provided in the Escrow Agreement. If such amount is
not paid forthwith, then the Indemnified Party may, at its option, take legal
action against the Indemnifying Party for reimbursement in the amount of its
Indemnity Claim. For purposes hereof the Indemnity Claim shall include the
amounts so paid, or determined to be owing by the Indemnified Party together
with costs and reasonable attorney's fees and interest on the foregoing items
(but only to the extent pre-judgment interest due the Indemnified Party is not
already included within such items) at the rate of ten percent (10%) per annum
from the date the Indemnity Claim is due from the Indemnifying Party to the
Indemnified Party as hereinabove provided until the Indemnity Claim shall be
paid.
In addition to its other obligations under this Section 8.07, the
Indemnifying Party agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding for which
indemnification may be required pursuant to this Article VIII, it will, if it
does not assume the defense thereof, reimburse the Indemnified Party on a
monthly basis for all reasonable legal fees or the out-of-pocket expenses
reasonably incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Indemnifying Party's obligation to indemnify the Indemnifying Party for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Indemnified
Party shall promptly return it to the Indemnifying Party, together with interest
at the rate of ten percent (10%) per annum. Any such interim reimbursement
payments which are not made to the Indemnified Party within thirty (30) days of
a request for reimbursement shall bear interest at the rate of ten percent (10%)
per annum from the date of such request.
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Section 8.08. Other Indemnification Provision. Each of the Shareholders
hereby agrees that such Shareholder will not make any claim for indemnification
against the Company by reason of the fact that he was a shareholder, director,
officer, employee or agent of the Company or was serving at the request of the
Company as a director, officer, employee or agent of another entity (whether
such claim is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses or otherwise and whether such claim is pursuant to
any statute, charter document, by-law, agreement or otherwise) with respect to
any action, suit, proceeding, complaint, claim or demand brought by Acquiror
against such Shareholder (whether such action, suit, proceeding, complaint,
claim or demand is pursuant to this Agreement, applicable law or otherwise).
ARTICLE IX.
GENERAL PROVISIONS
Section 9.01. Effect of Due Diligence. No investigation by or on behalf of
Acquiror into the business, operations, prospects, assets or condition
(financial or otherwise) of the Company shall diminish in any way the effect of
any representations or warranties made by the Company or any of the Shareholders
in this Agreement or shall relieve the Company or any of the Shareholders of any
of their respective obligations under this Agreement. No investigation by or on
behalf of the Company or the Shareholders into the business, operations,
prospects, assets or condition (financial or otherwise) of Acquiror and the Zygo
Subsidiaries shall diminish in any way the effect of any representations or
warranties made by Acquiror in this Agreement or shall relieve Acquiror of any
of its obligations under this Agreement.
Section 9.02. Expenses. Except as hereinafter provided, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring the same. All costs and
expenses incurred by the Company or the Shareholders shall be paid prior to the
Closing Date or other suitable arrangements acceptable to Acquiror with respect
thereto shall be made.
Section 9.03. Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, heirs, executors, administrators and legal
representatives. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties hereto.
Section 9.04. Entire Agreement. This Agreement and the other documents
referred to herein contain the entire agreement among the parties hereto with
respect to the transactions contemplated hereby, and controls and supersedes any
prior understandings, agreements or representations by or between the parties,
written or oral, which conflicts with, or may have related to, the subject
matter hereof in any way.
Section 9.05. Notices. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally or sent
-30-
by telefax communication, by recognized overnight courier marked for overnight
delivery, or by registered or certified mail, postage prepaid, addressed as
follows:
(a) If to the Company or the Shareholders, 0000 Xxx Xxxxxx Xxxx #000,
Xxxxxxx Xxxx, XX 00000-0000, Attention: Xxxxx Xxxxx (telefax number (805)
498-5237); with a copy to Xxxxxxx Xxx, Esq., Gee & Xxxxxx, 000 Xxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx 00000 (telefax number (310)
544-7162),
(b) If to Acquiror, Xxxxxx Xxxxx Road, Middlefield, Connecticut 06455-
0448, Attention: Xxxx X. Xxxxxx (telefax number 860-347-8372); with a copy to:
Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxx Xxxxxx, Esq. (telefax number 212-752-5958),
or such other addresses as shall be furnished by like notice by such party. All
such notices and communications shall, when telefaxed (immediately thereafter
confirmed by telephone), be effective when telefaxed, or if sent by nationally
recognized overnight courier service, be effective one business day after the
same has been delivered to such courier service marked for overnight delivery,
or, if mailed, be effective when received.
Section 9.06. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Connecticut,
without reference to or application of any conflicts of laws principles.
Section 9.07. No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the parties and their
respective successors and permitted assigns.
Section 9.08. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Company, Acquiror and Shareholders owning a majority-in-interest of the
outstanding shares of Company Stock. No waiver by any party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
Section 9.09. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
Section 9.10. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
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Section 9.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 9.12. Headings. The headings used in this Agreement are for
convenience only and are not to be considered in construing or interpreting any
term or provision of this Agreement.
-32-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
ZYGO CORPORATION
By: /s/ XXXX X. XXXXXX
---------------------------------
Name: Xxxx X. Xxxxxx
Title: President
SIGHT SYSTEMS, INC.
By: /s/ XXXXX XXXXX
---------------------------------
Name: Xxxxx Xxxxx
Title: President
SHAREHOLDERS:
/s/ XXXXX XXXXX
---------------------------------
Xxxxx Xxxxx
/s/ XXXXXXX X. XXXXXXX
---------------------------------
Xxxxxxx X. Xxxxxxx
/s/ XXXXXX XXXX
---------------------------------
Xxxxxx Xxxx
/s/ XXXX X. XXXXXXX
---------------------------------
Xxxx X. Xxxxxxx
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SCHEDULE 1
Net Zygo
Shares of Shares Being
Shareholder's Company Stock Total Zygo Escrowed Issued to the
Name Owned (and Shares Zygo Shareholder
and Address Being Sold) Being Issued Shares at Closing
----------- ----------- ------------ ------ ----------
Xxxxx Xxxxx ................... 2002 201,180 10,500 190,680
0000 Xxxxxx Xxx Xxxx
Xxxxxxxx Xxxx, XX. 00000
Xxxxxxx X. Xxxxxxx ............ 286 28,740 1,500 27,240
00000 Xxxxxx Xxxxxx #0
Xxxxxxxxxx, XX. 00000
Xxxxxx Xxxx ................... 286 28,740 1,500 27,240
0000 X. Xxxxxxxxx Xxxxx #00
Xxxxxxxx Xxxx, XX. 91360
Xxxx X. Xxxxxxx ............... 286 28,740 1,500 27,240
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX. 00000
----- ------- ------ -------
Totals ............... 2,860 287,400 15,000 272,400
===== ======= ====== =======
