**Exhibit 2.1**

 

**STOCK PURCHASE AGREEMENT**

 

**among**

 

**Veeco Instruments Inc. (“Seller”),**

 

**Veeco Metrology Inc. (the “Company”)**

 

**and**

 

**Bruker Corporation (“Buyer”)**

 

 

**August 15, 2010**

 

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**TABLE OF CONTENTS**

 
|                                                                              |                                          | **Page** |
|-----------------------------------------------------------------------------------|-----------------------------------------------|----------|
| ** **                                                                        |                                          |     |
| **ARTICLE I** PURCHASE                                                       | 1                                             |
| ** **                                                                        |                                          |
| Section 1.01                                                                 | Stock Purchase                                | 1        |
| Section 1.02                                                                 | Asset Purchase                                | 2        |
| Section 1.03                                                                 | Escrow                                        | 2        |
| Section 1.04                                                                 | The Contribution and Distribution Transaction | 2        |
| Section 1.05                                                                 | Closing Net Working Capital Adjustment        | 3        |
|                                                                              |                                          |     |
| **ARTICLE II** CLOSING                                                       | 5                                             |
| ** **                                                                        |                                          |
| Section 2.01                                                                 | Time and Place of the Closing                 | 5        |
| Section 2.02                                                                 | Deliveries                                    | 5        |
|                                                                              |                                          |     |
| **ARTICLE III** REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER | 5                                             |
| ** **                                                                        |                                          |
| Section 3.01                                                                 | Existence and Power                           | 5        |
| Section 3.02                                                                 | Corporate Authorization                       | 6        |
| Section 3.03                                                                 | Noncontravention                              | 6        |
| Section 3.04                                                                 | Governmental Authorization                    | 6        |
| Section 3.05                                                                 | Capitalization                                | 6        |
| Section 3.06                                                                 | Subsidiaries                                  | 7        |
| Section 3.07                                                                 | Financial Statements                          | 7        |
| Section 3.08                                                                 | Events Subsequent                             | 7        |
| Section 3.09                                                                 | No Undisclosed Liabilities                    | 8        |
| Section 3.10                                                                 | Taxes                                         | 8        |
| Section 3.11                                                                 | Property                                      | 10       |
| Section 3.12                                                                 | Intellectual Property                         | 12       |
| Section 3.13                                                                 | Material Contracts and Government Contracts   | 13       |
| Section 3.14                                                                 | Legal Compliance                              | 14       |
| Section 3.15                                                                 | Proceedings and Orders                        | 14       |
| Section 3.16                                                                 | Labor Matters                                 | 14       |
| Section 3.17                                                                 | Employee Benefit Plans                        | 15       |
| Section 3.18                                                                 | Environmental Matters                         | 16       |
| Section 3.19                                                                 | Insurance                                     | 16       |
| Section 3.20                                                                 | Customers                                     | 17       |
| Section 3.21                                                                 | Suppliers                                     | 17       |
| Section 3.22                                                                 | Accounts Receivable                           | 17       |
| Section 3.23                                                                 | Affiliate Transactions                        | 18       |
| Section 3.24                                                                 | Brokers                                       | 18       |
| Section 3.25                                                                 | Product Warranties                            | 18       |
| Section 3.26                                                                 | Inventory                                     | 18       |
|                                                                              |                                          |     |
| **ARTICLE IV** REPRESENTATIONS AND WARRANTIES OF THE BUYER                   | 18                                            |
| ** **                                                                        |                                          |     |
| Section 4.01                                                                 | Corporate Existence and Power                 | 19       |
| Section 4.02                                                                 | Corporate Authorization                       | 19       |

 

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|                                                   |                                                                | **Page** |
|--------------------------------------------------------|---------------------------------------------------------------------|----------|
| ** **                                             |                                                                |     |
| Section 4.03                                      | Noncontravention                                                    | 19       |
| Section 4.04                                      | Governmental Authorization                                          | 19       |
| Section 4.05                                      | Proceedings and Orders                                              | 19       |
| Section 4.06                                      | Financing                                                           | 20       |
| Section 4.07                                      | Foreign Ownership                                                   | 21       |
| Section 4.08                                      | Solvency                                                            | 21       |
| Section 4.09                                      | Securities Act                                                      | 21       |
| Section 4.10                                      | Brokers                                                             | 22       |
|                                                   |                                                                |     |
| **ARTICLE V** PRE-CLOSING COVENANTS               | 22                                                                  |
| ** **                                             |                                                                |
| Section 5.01                                      | Reasonable Best Efforts                                             | 22       |
| Section 5.02                                      | Operation of Business                                               | 23       |
| Section 5.03                                      | Publicity                                                           | 24       |
| Section 5.04                                      | Access                                                              | 24       |
| Section 5.05                                      | Confidentiality                                                     | 25       |
| Section 5.06                                      | Financing                                                           | 25       |
| Section 5.07                                      | No Other Representations or Warranties                              | 26       |
| Section 5.08                                      | Certain Company Accruals                                            | 26       |
| Section 5.09                                      | Transition Services                                                 | 26       |
| Section 5.10                                      | Third Party Consents                                                | 26       |
|                                                   |                                                                |     |
| **ARTICLE VI** POST-CLOSING COVENANTS             | 27                                                                  |
| ** **                                             |                                                                |
| Section 6.01                                      | General                                                             | 27       |
| Section 6.02                                      | Employee Matters                                                    | 27       |
| Section 6.03                                      | Tax Matters                                                         | 28       |
| Section 6.04                                      | Name Change                                                         | 33       |
| Section 6.05                                      | Covenant Not to Compete                                             | 34       |
|                                                   |                                                                |     |
| **ARTICLE VII** CONDITIONS TO OBLIGATION TO CLOSE | 34                                                                  |
| ** **                                             |                                                                |
| Section 7.01                                      | Conditions to Obligations of Each Party Under This  Agreement       | 34       |
| Section 7.02                                      | Additional Conditions to Obligations of the Buyer                   | 35       |
| Section 7.03                                      | Additional Conditions to Obligations of the Company and the  Seller | 36       |
|                                                   |                                                                |     |
| **ARTICLE VIII** TERMINATION                      | 37                                                                  |
| ** **                                             |                                                                |
| Section 8.01                                      | Termination                                                         | 37       |
| Section 8.02                                      | Effect of Termination                                               | 38       |
|                                                   |                                                                |     |
| **ARTICLE IX** INDEMNIFICATION                    | 38                                                                  |
| ** **                                             |                                                                |
| Section 9.01                                      | Indemnification of the Buyer                                        | 38       |
| Section 9.02                                      | Indemnification of the Seller                                       | 38       |
| Section 9.03                                      | Third Party Claims                                                  | 38       |
| Section 9.04                                      | Payment of Claims                                                   | 40       |
| Section 9.05                                      | Limitations on Indemnification                                      | 40       |
| Section 9.06                                      | Exclusive Remedy                                                    | 41       |
| Section 9.07                                      | Effect of Insurance, Taxes and Other Recoveries                     | 41       |
| Section 9.08                                      | No Double Recovery                                                  | 42       |
| Section 9.09                                      | Survival of Representations, Warranties and Covenants               | 42       |

 

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|                              |                                  | **Page** |
|-----------------------------------|---------------------------------------|----------|
| ** **                        |                                  |     |
| **ARTICLE X** DEFINITIONS    | 43                                    |
| ** **                        |                                  |
| Section 10.01                | Defined Terms                         | 43       |
|                              |                                  |     |
| **ARTICLE XI** MISCELLANEOUS | 54                                    |
| ** **                        |                                  |     |
| Section 11.01                | Expenses                              | 54       |
| Section 11.02                | No Third-Party Beneficiaries          | 54       |
| Section 11.03                | Entire Agreement                      | 55       |
| Section 11.04                | Exhibits and Schedules                | 55       |
| Section 11.05                | Succession and Assignment             | 55       |
| Section 11.06                | Counterparts and Facsimile Signatures | 55       |
| Section 11.07                | Notices                               | 55       |
| Section 11.08                | Governing Law                         | 56       |
| Section 11.09                | Jurisdiction; Waiver of Jury Trial    | 56       |
| Section 11.10                | Amendments and Waivers                | 57       |
| Section 11.11                | Severability                          | 57       |
| Section 11.12                | Construction                          | 57       |
| Section 11.13                | Specific Performance                  | 57       |

 
| **Appendices** |                                        |   |
|----------------|---------------------------------------------|--------|
|           |                                        |   |
| Appendix A     | Modified GAAP                               |   |
| Appendix B     | Value Schedule                              |   |
|           |                                        |   |
| **Exhibits**   |                                        |   |
|           |                                        |   |
| Exhibit A | Company Selected Assets                     |   |
| Exhibit B | Seller Selected Assets                      |   |
| Exhibit C | Purchased  Assets                           |   |
| Exhibit D | Assumed  Liabilities                        |   |
| Exhibit E | Form of  Business Transfer Agreement   |   |
| Exhibit F | Form of  Escrow Agreement              |   |
| Exhibit G | Transfer  of Non-U.S. Employees             |   |
| Exhibit H | Consulting  Agreement Terms                 |   |
| Exhibit I | Form of  Transition Services Agreement |   |

 

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**STOCK PURCHASE AGREEMENT**

 

**THIS STOCK PURCHASE AGREEMENT** (this “Agreement”)is made and entered into as of August 15, 2010 among (i) VeecoInstruments Inc., a Delaware corporation (the “Seller”); (ii) VeecoMetrology Inc., an Arizona corporation (the “Company”); and(iii) Bruker Corporation, a Delaware corporation (the “Buyer”).  The Seller, the Company and the Buyer arereferred to herein collectively as the “Parties” and individually as a “Party”.

 

**WHEREAS**, the Seller is the record owner of all of theissued and outstanding capital stock of the Company;

 

**WHEREAS**, upon the terms and subject to the conditions setforth herein, the Buyer desires to purchase from the Seller and the Sellerdesires to sell to the Buyer all of the issued and outstanding capital stock ofthe Company (the “Stock Purchase”);

 

**WHEREAS**, the Company owns certain assets described on Exhibit A(the “Company Selected Assets”), the Seller (or one of its Subsidiaries)owns certain assets described on Exhibit B (the “Seller SelectedAssets”), and the Seller and the Company are simultaneously herewithentering into a Contribution and Distribution Agreement (the “Contributionand Distribution Agreement”) pursuant to which the Company shalldistribute, transfer and/or license the Company Selected Assets to the Seller(or one of its Subsidiaries) and the Seller will contribute and transfer to theCompany the Seller Selected Assets (the “Contribution and DistributionTransaction”) prior to the Closing;****and

 

**WHEREAS**, Buyer, through itself or one or more of its director indirect Subsidiaries, desires to purchase and assume from Seller or one ormore of its direct or indirect Subsidiaries, and Seller, through itself or oneor more of its direct or indirect Subsidiaries, desires to sell, transfer andassign to Buyer or one of more of its Subsidiaries, the assets described on Exhibit C(the “Purchased Assets”) and the liabilities described on Exhibit D(the “Assumed Liabilities”) upon the terms and subject to the conditionsspecified in this Agreement (the “Asset Purchase”).

 

**NOW, THEREFORE**, in consideration of the foregoing and therespective representations, warranties, covenants and agreements set forthherein, and intending to be legally bound hereby, the Parties agree as follows:

 

**ARTICLE I**

 

**PURCHASE**

 

Section 1.01                                Stock Purchase.

 

(a)                                  General.  On the terms and subject to the conditionsset forth herein, the Buyer agrees to purchase from the Seller, and the Selleragrees to sell to the Buyer, the Shares, which Shares collectively constituteand shall constitute as of the Closing Date all of the issued and outstandingshares of capital stock of the Company, for the Purchase Price as specified inSection 1.01(b).

 

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(b)                                 Purchase Price.  The combined purchase prices for the Shares(the “Stock Purchase Price”) and the Purchased Assets (the “AssetPurchase Price” and together with the Stock Purchase Price, the “PurchasePrice”), subject to the assumption by the Buyer of the Assumed Liabilities,shall be Two Hundred Twenty-Nine Million Dollars ($229,000,000), subject toadjustment as set forth in this Article I. The Purchase Price shall be paid by the Buyer to the Seller at theClosing in cash by delivery to the Seller of immediately available funds.  The Parties agree that the allocation of the PurchasePrice between the Stock Purchase Price and the Asset Purchase Price shall bedetermined using the procedures specified in Section 6.02(h)(iii).  The Asset Purchase Price shall be paid by theBuyer (as agent for each Subsidiary of the Buyer party to a Business TransferAgreement) to the Seller (as agent for each Subsidiary of the Seller party to aBusiness Transfer Agreement) at the Closing in cash by delivery to the Sellerof immediately available funds.

 

(c)                                  Flow of Funds.  At least two (2) Business Days prior tothe Closing, the Parties shall agree upon a flow of funds memorandum settingforth all payments required to be made by or on behalf of all Parties at theClosing, including for each such payment identification of the payor, thepayee, the amount and the wire transfer information.

 

Section 1.02                                Asset Purchase.  The Purchased Assets shall be sold, conveyed,transferred, assigned and delivered, and the Assumed Liabilities shall beassumed, pursuant to (i) a business transfer agreement for each non-UnitedStates jurisdiction in which Purchased Assets or Assumed Liabilities arelocated, based substantially on the form attached hereto as Exhibit E,with only such deviations therefrom as are required by Applicable Law (the “BusinessTransfer Agreements”), and (ii) such other agreements as mayreasonably be required to effect the sale, conveyance, transfer, assignment anddelivery of the Purchased Assets and assumption of the Assumed Liabilities,which shall be executed no later than at or as of the Closing by one or more ofthe Seller’s Subsidiaries, as appropriate, and the Buyer or one of itsSubsidiaries (documents identified in item (ii), together with the BusinessTransfer Agreements, are sometimes hereinafter referred to collectively as the “AssetPurchase Documents”).  Such sale,assignment, transfer, conveyance and delivery of the Purchased Assets and suchassumption of the Assumed Liabilities will be subject to the terms andconditions of this Agreement and the Asset Purchase Documents.

 

Section 1.03                                Escrow.  On the Closing Date and immediately beforethe Closing, the Seller, the Buyer and Branch Banking and Trust Company (the “EscrowAgent”) shall enter into an Escrow Agreement in the form attached hereto asExhibit F (the “Escrow Agreement”).  On the Closing Date and immediately beforethe Closing, the Buyer shall withhold Twenty-Two Million Nine Hundred ThousandDollars ($22,900,000) (the “Escrow Deposit”) from the Stock PurchasePrice and deposit such amount into escrow pursuant to the terms of the EscrowAgreement.

 

Section 1.04                                TheContribution and Distribution Transaction.  Simultaneously with the execution of thisAgreement, the Seller and the Company shall enter into the Contribution andDistribution Agreement and, provided that all conditions precedent to theContribution and Distribution Transaction set forth in the Contribution andDistribution Agreement have been satisfied or waived, the Seller and theCompany shall consummate, or cause to be consummated, the Contribution andDistribution Transaction prior to the Closing. In connection with the 

 

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consummation of the Contribution and DistributionTransaction, the Seller and the Company shall enter into a license agreement insubstantially the form attached to the Contribution and Distribution Agreementas Exhibit C thereto (the “License Agreement”), pursuant to whichthe Company shall license certain Intellectual Property to the Seller on theterms and conditions set forth in the License Agreement.

 

Section 1.05                                Closing NetWorking Capital Adjustment.

 

(a)                                  Within thirty(30) days after the Closing Date, the Buyer shall prepare and deliver to theSeller a pro forma balance sheet of the Company together with a statement ofthe Closing Net Working Capital (the “Statement of Closing Net WorkingCapital”) and a copy of all work papers relating to the preparation of theStatement of Closing Net Working Capital. The Statement of Closing Net Working Capital shall be based upon thebooks and records of the Company and the books and records relating to thePurchased Assets and Assumed Liabilities and shall be prepared in accordancewith Modified GAAP.  The Seller, and anyaccountants or advisors retained by the Seller, shall be permitted access tothe books and records of the Company and to the personnel familiar with thepreparation of the Statement of Closing Net Working Capital for the purposes ofreviewing the Statement of Closing Net Working Capital.

 

(b)                                 The Statementof Closing Net Working Capital shall be final and binding on the Parties unlessthe Seller shall, within thirty (30) days after the delivery of the Statementof Closing Net Working Capital, deliver to the Buyer written notice of anydisagreement with the Statement of Closing Net Working Capital, which noticeshall describe the nature of any such disagreement.  If the Seller raises any objections withinthe aforesaid thirty (30) day period, then the Seller and the Buyer shall ingood faith attempt to resolve the disputed matter.  If the Seller and the Buyer are unable toresolve all disagreements within thirty (30) days after receipt by the Buyer ofa written notice of disagreement, then, within ten (10) days thereafter,the Seller and the Buyer shall jointly select an arbiter from a nationallyrecognized independent public accounting firm that is not the independentauditor of any of the Buyer or the Company or their Affiliates or any firm thathas provided services to the Buyer, the Seller or the Company since December 31,2007 (or such other arbiter as the parties shall mutually select).  If the Buyer and the Seller are unable toselect an arbiter within such time period, the American Arbitration Associationshall make such selection (the Person so selected shall be referred to hereinas the “Accounting Arbitrator”).

 

(c)                                  The AccountingArbitrator shall consider only those matters set forth in the Statement ofClosing Net Working Capital upon which the Buyer and the Seller have disagreedand shall be required to resolve the matters in accordance with the terms andprovisions of this Agreement.  Insubmitting a dispute to the Accounting Arbitrator, each of the Buyer and theSeller shall concurrently furnish, at its own expense, to the AccountingArbitrator and the other Party such documents and information as the AccountingArbitrator may request.  Each of theBuyer and the Seller may also furnish to the Accounting Arbitrator such otherinformation and documents as it deems relevant, with copies of such submissionand all such documents and information being concurrently given to the otherParty.  Neither the Buyer nor the Sellershall have or conduct any communication with the Accounting Arbitrator withoutthe other Party’s either being present or receiving a concurrent copy of any writtenor email communication.  The AccountingArbitrator may conduct a conference concerning the objections 

 

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of, and disagreements between, the Seller and theBuyer, at which conference each Party shall have the right to (i) presentits documents, materials and other evidence (previously provided to theAccounting Arbitrator and the other Party), and (ii) have present itsadvisors, accountants, counsel and other representatives.

 

(d)                                 The AccountingArbitrator shall resolve each item of disagreement based solely on thepresentations and supporting material provided by the Parties and not pursuantto any independent review (the foregoing, however, shall not preclude theAccounting Arbitrator from independent research of facts or determining properapplication of Modified GAAP or the terms of this Agreement with respect to thesubject matter of the objections and disagreement between the Parties).  The Parties will instruct the AccountingArbitrator to issue a detailed written report within thirty (30) days after theselection of the Accounting Arbitrator that sets forth the resolution of allitems in dispute and that contains a final Statement of Closing Net WorkingCapital.  Such report shall be final andbinding upon the Parties.  The fees andexpenses of the Accounting Arbitrator incurred in connection with thedetermination of the disputed items by the Accounting Arbitrator shall be borneby the Seller and the Buyer in an amount proportionate to the dollar amountcontested and not awarded to such Party as a percentage of the total dollaramount contested by the Parties, as determined by the AccountingArbitrator.  The Buyer, the Company andthe Seller shall cooperate fully with the Accounting Arbitrator and respond ona timely basis to all requests for information or access to documents orpersonnel made by the Accounting Arbitrator or by other Parties hereto, allwith the intent to fairly and in good faith resolve all disputes relating tothe Statement of Closing Net Working Capital as promptly as reasonablypracticable.

 

(e)                                  If the amount representing Closing Net Working Capital (calculated in amanner consistent with prior practice before June 27, 2010 and inaccordance with this Section 1.05(e)) as reflected in the Statement ofClosing Net Working Capital as finally determined in accordance with thisSection 1.05 is less than the Target Closing Net Working Capital by morethan Five Hundred Thousand Dollars ($500,000), the Purchase Price shall be decreasedon a dollar-for-dollar basis by the amount of such shortfall (but only to theextent that such shortfall exceeds Five Hundred Thousand Dollars($500,000)).  If the amount representingClosing Net Working Capital (calculated in a manner consistent with priorpractice before June 27, 2010 and in accordance with this Section 1.05(e))as reflected in the Statement of Closing Net Working Capital as finallydetermined in accordance with this Section 1.05 is greater than the TargetClosing Net Working Capital by more than Five Hundred Thousand Dollars($500,000), the Purchase Price shall be increased by the sum of (i) OneDollar ($1.00) for each dollar of Closing Net Working Capital in excess ofThirty-Two Million Seven Hundred Seventy-Six Thousand Dollars ($32,776,000) upto and including Thirty-Three Million One Hundred Twenty-Seven Thousand Dollars($33,127,000), and (ii) by Fifty Cents ($0.50) for each dollar of ClosingNet Working Capital in excess of Thirty-Three Million One Hundred Twenty-SevenThousand Dollars ($33,127,000). Notwithstanding the foregoing, the Parties agree that if the amount ofClosing Backlog is materially lower than $30,900,000, then the Parties willnegotiate in good faith regarding an equitable adjustment to the Purchase Priceadjustment contemplated by this Section 1.05.

 

(f)                                    If anyadjustment pursuant to this Section 1.05 results in an aggregate increasein the Purchase Price, within five (5) Business Days after the finaldetermination of the 

 

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Closing Net Working Capital, the Buyer shall remitto the Seller in immediately available funds the amount of such increase.  Conversely, if any adjustment pursuant tothis Section 1.05 results in an aggregate reduction in the Purchase Price,within five (5) Business Days after the final determination of the ClosingNet Working Capital, the Seller and the Buyer shall send joint writteninstructions to the Escrow Agent, instructing the Escrow Agent to distribute tothe Buyer in immediately available funds the amount of such reduction from theEscrow Deposit.

 

**ARTICLE II**

 

**CLOSING**

 

Section 2.01                                Time and Placeof the Closing.  The closingof the Transactions (the “Closing”) shall take place at the offices ofMorrison & Foerster LLP, 1290 Avenue of the Americas, New York, NY 10104-0050, as soon aspracticable, and in any event within three (3) Business Days, followingthe satisfaction or waiver of the conditions set forth in Article VII, oron such other date as the Buyer and the Seller may mutually agree inwriting.  If the Closing would otherwiseoccur hereunder between September 20 and September 30, 2010, theClosing shall occur as of 12:01 a.m. on October 1, 2010.

 

Section 2.02                                Deliveries.  At the time of the Closing, (a) theSeller shall deliver to the Buyer a stock certificate or certificatesrepresenting all of the Shares, endorsed in blank or accompanied by a dulyexecuted assignment document or documents, (b) the Seller and the Companyshall deliver to the Buyer the various certificates, instruments and documentsreferred to in Section 7.02, (c) the Buyer shall deliver the PurchasePrice to the Seller and the Escrow Deposit to the Escrow Agent, each as setforth in Article I, and (d) the Buyer shall deliver to the Seller thecertificates, instruments and documents referred to in Section 7.03.

 

**ARTICLE III**

 

**REPRESENTATIONS AND WARRANTIES OFTHE COMPANY AND THE SELLER**

 

Exceptas set forth in the disclosure schedules delivered by the Company and theSeller to the Buyer on the date hereof (the “Company Disclosure Schedules”)and subject to Section 11.04, the Company and the Seller represent andwarrant as of the date hereof (except to the extent that a representation,warranty or Company Disclosure Schedule expressly states that suchrepresentation or warranty, or the information in such Company DisclosureSchedule, is accurate only as of an earlier date) to the Buyer as follows:

 

Section 3.01                                Existence andPower.  The Company is a corporationduly incorporated, validly existing and in good standing under the laws of theState of Arizona.  The Company is dulyqualified to do business as a foreign corporation and is in good standing ineach other jurisdiction where the transaction of its business requires suchqualification, except where the lack of such qualification would not reasonablybe expected to have a Material Adverse Effect on the Company.  The Seller is a corporation dulyincorporated, validly existing and in good standing under the laws of the Stateof Delaware.  The Company has heretoforemade available to the Buyer true and complete copies of the Company Articlesand bylaws of the Company as in effect as of the date hereof.

 

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Section 3.02                                CorporateAuthorization.  Each of theCompany and the Seller has all requisite corporate power, authority and legalright under its respective articles or certificate of incorporation and bylawsto enter into this Agreement, perform its obligations under this Agreement andconsummate the Transactions.  Theexecution, delivery and performance by each of the Company and the Seller ofthis Agreement and any Ancillary Document to which either of them is a partyand the consummation by each of the Company and the Seller of the Transactionshave been duly authorized by all necessary corporate action on the part of theCompany and the Seller, including approval by their respective Boards ofDirectors.  Assuming the dueauthorization, execution and delivery of this Agreement by each Party (otherthan the Company and the Seller), this Agreement constitutes a valid andlegally binding agreement of each of the Company and the Seller, enforceableagainst them in accordance with its terms and conditions, subject to ApplicableLaws of general application relating to public policy, bankruptcy, insolvencyand the relief of debtors, Applicable Laws governing specific performance,injunctive relief and other equitable remedies and general principles ofequity.

 

Section 3.03                                Noncontravention.  Assuming that all filings, registrations,Permits, authorizations, consents and approvals contemplated bySection 3.04 have been duly made or obtained, as applicable, neither theexecution and delivery by the Company or the Seller of this Agreement or anyAncillary Document to which either is a party, nor the consummation by theCompany or the Seller of the Transactions (i) violate any provision of theCompany Articles, the certificate of incorporation of the Seller or the bylawsof the Company or the Seller, or (ii) will result in a violation or breachof, or constitute a default under, any of the terms of any Material Contract.

 

Section 3.04                                GovernmentalAuthorization.  Theexecution and delivery by each of the Company and the Seller of this Agreementand any Ancillary Documents to which either of them is a party, and theconsummation by each of the Company and the Seller of the Transactions, requireno action by or in respect of, or filing with, any Governmental Body, other than(i) compliance with any requirements of the HSR Act and any ForeignAntitrust Laws, (ii) compliance with any applicable requirements of anyapplicable securities laws, whether federal, state or foreign and (iii) anyactions or filings the absence of which would not reasonably be expected tohave a Material Adverse Effect on the Company or materially impair the abilityof the Company or the Seller to consummate the Transactions.

 

Section 3.05                                Capitalization.  As of the date hereof, the authorized capitalstock of the Company consists of one thousand (1,000) shares of Common Stock,of which there are one hundred (100) shares of Common Stock issued andoutstanding.  No shares of Common Stockare held in the treasury of the Company. All outstanding shares of Common Stock are duly authorized, validlyissued, fully paid and nonassessable. The Company does not have any outstanding bonds, debentures, notes orother obligations, the holders of which have the right to vote (or that areconvertible into or exercisable for securities having the right to vote) on anymatter.  There are no options, warrantsor other rights (including preemptive rights) or agreements, arrangements orcommitments of any character, whether or not contingent, relating to issued orunissued Common Stock or obligating the Company to issue, redeem, repurchase orotherwise acquire any share of Common Stock, or other equity interest in theCompany.  The Seller is the sole recordowner of the Shares, free of any Encumbrances, and the Seller has the power andauthority to sell the Shares to the Buyer.

 

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Section 3.06                                Subsidiaries.  Except as set forth on Schedule 3.06, as ofthe date hereof the Company does not own, directly or indirectly, any shares ofcapital stock or other equity or ownership interests in any other Person(collectively, “Third Party Interests”). The Company has no rights to, and is not bound by any commitment orobligation to, acquire by any means, directly or indirectly, any Third PartyInterests or to make any investment in, or contribution or advance to, anyPerson.

 

Section 3.07                                FinancialStatements.

 

(a)                                  Attached toSchedule 3.07(a) of the Company Disclosure Schedules are true and correctcopies of (i) the unaudited combined balance sheet of the Company and therelated international business units/sales and service organizations (the “CompanyBalance Sheet”) as of June 27, 2010 (the “Company Balance SheetDate”), and the related unaudited combined statement of income of the Companyand the related international business units/sales and service organizationsfor the six (6) fiscal months ended June 27, 2010, (ii) theaudited combined balance sheet of the Company and the related internationalbusiness units/sales and service organizations as of December 31, 2009,and the related audited combined statement of income of the Company and therelated international business units/sales and service organizations for theyear ended December 31, 2009, and (iii) the unaudited combined balancesheets of the Company and the related international business units/sales andservice organizations as of December 31, 2007 and 2008 and the relatedunaudited combined statements of income of the Company and the relatedinternational business units/sales and service organizations for the yearsended December 31, 2007 and 2008 (collectively, the “Company FinancialStatements”).

 

(b)                                 Except asindicated on Schedule 3.07(b) of the Company Disclosure Schedules or inthe Company Financial Statements, the Company Financial Statements fairlypresent in all material respects the financial position of the Company and therelated international business units/sales and service organizations as of therespective dates thereof and the results of operations of the Company and therelated international business units/sales and service organizations for theperiods then ended, as applicable, all in accordance with GAAP (in the case ofunaudited Company Financial Statements, subject to the absence of footnotesthereto and year-end audit adjustments).

 

Section 3.08                                EventsSubsequent.

 

(a)                                  Since theCompany Balance Sheet Date through the date hereof, (i) there has not beenany Material Adverse Effect on the Company, and, (ii) except for theTransactions, the Company has been operated only in the Ordinary Course ofBusiness.

 

(b)                                 Since theCompany Balance Sheet Date through the date hereof, there has not been any:

 

(i)                                     damage,destruction or other casualty, whether or not covered by insurance, materiallyaffecting the Company or any assets material to the business owned, held orused by the Company;

 

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(ii)                                  transaction orcommitment made, or Contract entered into, by the Company, or termination oramendment by the Company of any Contract, in either case, that is material tothe Company, other than transactions, commitments, Contracts, terminations oramendments made in the Ordinary Course of Business;

 

(iii)                               sale or otherdisposition of assets that are owned, held or used by the Company other than inthe Ordinary Course of Business;

 

(iv)                              cancellation,compromise, settlement, waiver or release by the Company involving anamount in excess of One Hundred Thousand Dollars ($100,000);

 

(v)                                 (w) increasein the compensation or fringe benefits of any present or former director,officer, employee or consultant of the Company, (x) grant of any severanceor termination pay to any present or former director, officer or employee ofthe Company, (y) establishment, adoption, entrance into, amendment ortermination of any Employee Benefit Plan or collective bargaining agreement(other than as may be required by the terms of an existing Employee BenefitPlan or as may be required by Applicable Law or in order to maintain itsqualification under Sections 401 and 501 of the Code or to provide for theeffects of Section 409A of the Code) or (z) grant of any equity orequity-based awards, in the case of each of clause (w), (x), (y) or (z) above,other than in the Ordinary Course of Business or as may be required underApplicable Law or for which the Seller, rather than the Company, shall beresponsible; or

 

(vi)                              agreement,whether in writing or otherwise, to do any of the foregoing.

 

(c)                                  Except as setforth in Schedule 3.08 of the Company Disclosure Schedules, since December 31,2009 through the date hereof, there has been no resignation or termination ofany management level employee of the Company.

 

Section 3.09                                No UndisclosedLiabilities.  As of thedate hereof, there are no liabilities or obligations of the Company of any kindwhatsoever, including any inter-company liabilities, whether accrued,contingent, absolute, determined, determinable or otherwise, other thanliabilities, obligations, conditions or circumstances (a) disclosed andprovided for in the Company Balance Sheet, (b) of a nature not required byGAAP to be reflected on a balance sheet of the Company, (c) incurred orarising in the Ordinary Course of Business since the Company Balance Sheet Dateor in connection with the Transactions, (d) related to the futureperformance of any Contract, (e) of a subject matter covered by any of theother representations and warranties set forth in this Agreement or otherwisedisclosed in the Company Disclosure Schedules, (f) that would not reasonablybe expected to have a Material Adverse Effect on the Company or (g) thatwill be discharged or paid in full prior to the Closing Date.

 

Section 3.10                                Taxes.

 

(a)                                  The Company hasfiled (or has had filed on its behalf) all Tax Returns required to have beenfiled by it, except for Tax Returns the non-filing of which would notreasonably be expected to have a Material Adverse Effect on the Company.  Except as set forth on Schedule 3.10(a), theCompany has not requested or obtained any extension of time within 

 

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which to file any Tax Return, which Tax Return hasnot since been filed.  All Taxes requiredto have been paid by the Company (whether or not shown on any Tax Return) havebeen paid or are currently being disputed in good faith except for Taxes theliability for which would not reasonably be expected to have a Material AdverseEffect on the Company.

 

(b)                                 There is noProceeding presently pending or Threatened with regard to any Tax matterconcerning the Company that would reasonably be expected to have a MaterialAdverse Effect on the Company.

 

(c)                                  The Company hasnot received a written ruling relating to any Tax, or entered into a writtenagreement with any Taxing Authority relating to any Tax, that would have continuingeffect after the Closing Date with respect to any taxable period for which theCompany has not filed a Tax Return, and there are no requests for issuance ofsuch a ruling or agreement pending on behalf of the Company.

 

(d)                                 Except as setforth on Schedule 3.10(d), neither the Company, nor any Person on behalf of theCompany, has waived any statute of limitations or agreed to any extension oftime that has continuing effect with respect to assessment or collection of anyTax for which the Company is expected to be held liable.

 

(e)                                  The Company isnot, nor has it been, a party to any Tax allocation, Tax sharing or similaragreement or arrangement the principal purpose of which is or was theallocation of Tax liabilities computed on a consolidated, combined, unitary orsimilar basis (a “Group Return”) among entities that have been or willbe required to compute their Tax liability by filing on such a basis.  Except as set forth on Schedule 3.10(e),the Company (i) has not been a member of an “affiliated group” (within themeaning of Section 1504 of the Code) filing a consolidated federal incomeTax Return, or included or required to be included in any other group ofentities filing or required to file any other type of Group Return that wouldcause the Company to be liable for Taxes under Treasury RegulationSection 1.1502-6 (or any similar provision of state, local or foreignlaw), and (ii) is not liable for Taxes of another Person having liabilityon the basis described in clause (i) either by contract or by reasonof being a transferee or successor of such a Person.

 

(f)                                    The Company hasnot constituted (or been included, or required to be included, in a Tax Returnfor a group of entities filing income Tax Returns on a consolidated, combined,unitary or similar basis during a taxable period that included anothercorporation that constituted during such taxable period) either a “distributingcorporation” or a “controlled corporation” within the meaning ofSection 355(a)(1)(A) of the Code in a distribution qualifying (orintended to qualify) under Section 355 of the Code (or so much ofSection 356 as relates to Section 355).

 

(g)                                 The Company hasmade available to the Buyer complete and accurate copies of all of thefollowing materials:  (i) all incomeTax Returns filed by or with respect to the Company that relate to taxableperiods ending after December 31, 2006 (other than Group Returns),(ii) all examination reports relating to Taxes of the Company issued afterDecember 31, 2006, proposing any material change to any Tax Returnpreviously filed by the Company or asserting a Company obligation to file amaterial Tax Return that has not been filed (but 

 

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including only the portion of such a report inrespect of any Group Return that is relevant to adjustments concerning Companyitems relevant to such Group Return) and (iii) all statements of Taxesassessed after December 31, 2006, against the Company (other than inrespect of Group Returns) in excess of amounts shown on Tax Returns filed forthe relevant taxable period before such assessment.

 

(h)                                 The Company hasnot been a beneficiary of or participated in any “reportable transaction”within the meaning of Treasury Regulations Section 1.6011-4(b)(1) thatwas, is or, to the Knowledge of the Company, will be, required to be disclosedunder Treasury Regulations Section 1.6011-4.

 

(i)                                     Since December 31,2006, the Company has received no notice in writing from any Taxing Authoritythat such Taxing Authority believes that the Company was required to file anyTax Return of a type referred to in such notice that the Company has not filedfor the most recent period for which such Tax Return would be due, the failureto file of which would be reasonably likely to have a Material Adverse Effecton the Company.

 

(j)                                     No property ofthe Company is “tax-exempt use property” or “tax-exempt bond financed property”within the meaning of Section 168 of the Code, and no property of theCompany directly or indirectly secures any debt the interest on which is exemptfrom Tax under Section 103(a) of the Code.

 

(k)                                  The Company isnot a party to any “safe harbor lease” within the meaning ofSection 168(f)(8) of the Internal Revenue Code of 1954, as amendedand in effect immediately before amendment by the Tax Equity and FiscalResponsibility Act of 1982.

 

(l)                                     No property ofthe Company is used predominately outside the United States within the meaningof Section 168(g)(1)(A) of the Code.

 

(m)                               The Company isnot a party to any Contract under which it is treated as a lessor or lessee of “limiteduse property” within the meaning of Rev. Proc. 2001-28.

 

(n)                                 The Company isnot a party to any joint venture, partnership or other agreement or arrangementthat is treated or required to be treated as a partnership for U.S. federalincome Tax purposes.  The Company doesnot own any interest in an entity that either is treated or required to betreated as an entity disregarded as separate from its owner for U.S. federalTax purposes, or is an entity as to which an election pursuant to TreasuryRegulations Section 301.7701-3 has been made.

 

(o)                                 To theKnowledge of the Company and the Seller, no claim has been made by a TaxingAuthority on or after January 1, 2008, in a jurisdiction in which theCompany does not file Tax returns or pay Tax that it is or may be subject totaxation by such jurisdiction.

 

Section 3.11                                Property.

 

(a)                                  Schedule 3.11(a) ofthe Company Disclosure Schedules contains a correct and complete list anddescription of all Owned Real Property. Except as set forth on 

 

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Schedule 3.11(a) of the Company DisclosureSchedules, the following applies to the Owned Real Property:

 

(i)                                     To theKnowledge of the Company and the Seller, the current use and operation of theOwned Real Property comply in all material respects with present applicablezoning and other land use laws regulating the use or occupancy of the OwnedReal Property or the activities conducted thereon.

 

(ii)                                  The Owned RealProperty is not subject to any leases, tenancies or occupancies, except that ofthe Company.

 

(iii)                               The Company andthe Seller have not granted to any third parties any options to lease orpurchase any Owned Real Property.

 

(iv)                              The Company andthe Seller have not caused any work or improvements to be performed upon ormade to any of the Owned Real Property for which there remains outstanding anymaterial payment obligation that could result in the imposition of any materiallien on the Owned Real Property or the Improvements thereon.

 

(b)                                 Schedule 3.11(b) ofthe Company Disclosure Schedules contains a correct and complete description ofthe Company’s Leased Real Property and each lease, sublease, license, or otheruse agreement (each, a “Lease”) establishing the Company’s interest insuch Leased Real Property.

 

(i)                                     Seller has madeavailable to Buyer a true and correct copy of each Lease, together withamendments thereto.

 

(ii)                                  To the Seller’sKnowledge, the Company has a valid leasehold in and to all Real Property that isthe subject of the Leases.

 

(iii)                               To the Seller’sKnowledge, each such Lease is in full force and effect as of the date hereof.

 

(iv)                              To the Seller’sKnowledge, no written notice of material default under any such Lease has beensent or received by the Seller which remains uncured as of the date hereof.

 

(c)                                  To the Seller’sKnowledge, neither the Seller nor the Company has received any written noticefrom any Governmental Body asserting a material violation or alleged materialviolation of applicable Laws with respect to the Company Real Property thatremains uncured as of the date hereof.

 

(d)                                 To the Seller’sKnowledge, neither the Seller nor the Company has received any written claim orright of adverse possession by any Person with respect to the Company RealProperty.

 

(e)                                  To the Seller’sKnowledge, (i) no portion of the Company Real Property is subject to anyOrder for sale, condemnation, expropriation or taking (by eminent domain or 

 

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otherwise) by any Governmental Body, and (ii) nosuch sale, condemnation, expropriation or taking has been proposed orthreatened.

 

(f)                                    The Companydoes not lease or sublease any real property or interests therein in connectionwith, and necessary for, the present operation of the business of the Companyother than the Company Real Property.

 

(g)                                 To the Seller’sKnowledge, there is no material defect in the condition or repair of theImprovements at the Owned Real Property which prevents the operation of themetrology business of the Company at such Owned Real Property in the OrdinaryCourse of Business.

 

(h)                                 Schedule 3.11(h) ofthe Company Disclosure Schedules sets forth a true, correct and complete listof all items of tangible personal property owned by the Company as of theCompany Balance Sheet Date having a net book value per unit in excess ofTwenty-Five Thousand Dollars ($25,000); or not owned by the Company but in thepossession of or used or useful in the business of the Company and havingrental payments therefor in excess of One Hundred Thousand Dollars ($100,000)per year (collectively, the “Personal Property”).  The Company has good title to, or a validleasehold interest in, all of its Personal Property, free and clear of anyEncumbrances, except for Permitted Encumbrances.

 

(i)                                     Except as setforth on Schedule 3.11(i) of the Company Disclosure Schedules, to theKnowledge of the Company, the Company’s material items of equipment are in goodworking condition and repair in all material respects, free from materialdefects and such equipment is adequate and suitable for the purpose for whichit is currently being used.

 

(j)                                     Norepresentation or warranty is made in this Section 3.11 with respect toany Intellectual Property (which is the subject of Section 3.12).

 

Section 3.12                                IntellectualProperty.

 

(a)                                  Schedule 3.12(a) ofthe Company Disclosure Schedules lists all issued patents, registeredtrademarks and registered copyrights and pending applications for patents,trademarks and copyrights, in each caseowned by the Company (the “Company Registered Intellectual Property”).  Each item of material issued or registeredCompany Registered Intellectual Property was, to the Knowledge of Company,validly issued or registered, as applicable, is subsisting and has not expiredor been canceled or abandoned, and all documents, certificates and feesrequired to be filed or paid on or before the date hereof with respect to theCompany Registered Intellectual Property have been filed or paid with therelevant patent, trademark, copyright or other authorities.  Except as set forth on Schedule 3.12(a) ofthe Company Disclosure Schedules, the Company owns the entire right, title andinterest in and to the Company Registered Intellectual Property, free and clearof any Encumbrances.

 

(b)                                 Schedule 3.12(b) ofthe Company Disclosure Schedules lists all material agreements pursuant towhich the Company (i) has received a license or sub-license with respectto any material item of Intellectual Property (excluding any (A) commercialoff-the-shelf software products and (B) any agreements with aggregateannual license, maintenance, support and other fees of less than One HundredThousand Dollars ($100,000)); or (ii) has licensed to 

 

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Third Parties the right to use any material item ofCompany Registered Intellectual Property (other than (x) customer,developer and reseller licenses and other agreements entered into in theOrdinary Course of Business, and (y) sale and license-back arrangements, licensesto standards bodies and other licenses that are not intended to generaterevenue) (such agreements, the “Material Intellectual Property Agreements”).  To the Knowledge of the Company, (i) allof the Material Intellectual Property Agreements are valid and bindingagreements of the Company; (ii) the Company is not in material breachunder any Material Intellectual Property Agreement; and (iii) no ThirdParties to the Material Intellectual Property Agreements are in material breachthereof, except where such breach would not reasonably be expected to have aMaterial Adverse Effect on the Company.

 

(c)                                  Except as setforth in Schedule 3.12(c) of the Company Disclosure Schedules and to theKnowledge of the Company, (i) the Company owns or has the right to use allIntellectual Property necessary for the operation of the business of theCompany as currently conducted (including any new products of the Companycurrently planned by the Company as of the date hereof to be launched betweenthe date hereof and December 31, 2011); (ii) no Person is infringing,misappropriating or diluting any of the Company Registered IntellectualProperty, such that the occurrence of any of the foregoing has had or wouldreasonably be expected to have a Material Adverse Effect on the Company; and (iii) theCompany has not misappropriated or infringed upon the Intellectual Propertyrights of any Third Party.

 

(d)                                 The Company hastaken steps customary and reasonable in its industry to protect and preservethe confidential and proprietary nature of all Confidential Information of theCompany except to the extent that the failure to take such steps would notreasonably be expected to have a Material Adverse Effect on the Company.  The Company has a policy of requiring eachemployee, consultant and independent contractor to execute proprietaryinformation, confidentiality and assignment agreements substantially in theCompany’s standard forms that assign to the Company all rights to anyIntellectual Property relating to the Company’s business that is developed bythe employees, consultants or contractors, as applicable.  To the Knowledge of the Company, there hasnot been any unauthorized disclosure of any Confidential Information related tothe Company.  To the Knowledge of theCompany, none of the activities of the employees of the Company performed forthe Company violates any agreement or arrangement which any such employee haswith a former employer.

 

Section 3.13                                MaterialContracts and Government Contracts.

 

(a)                                  Schedule 3.13(a) ofthe Company Disclosure Schedules lists all of the following written Contractsto which the Company is a party (other than Leases) as of the date hereof:(i) any Contract the performance of which requires payment by or to theCompany during the next twelve (12) months in excess of One Hundred ThousandDollars ($100,000) (other than Contracts for the supply of goods or servicesentered into in the Ordinary Course of Business), (ii) any Contractconcerning the establishment by the Company of a partnership, joint venture orsimilar arrangement, including any Contract between the Company, on the onehand, and any Affiliate of the Company, on the other hand, (iii) anyContract containing a non-competition clause, (iv) any Contract foracquisition of capital stock or all or substantially all assets of anotherPerson or a division thereof (whether by merger, stock or asset purchase),(v) any Contract regarding dispositions of any assets of the Company(other than the sale of inventory in 

 

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the Ordinary Course of Business or with a value lessthan One Hundred Thousand Dollars ($100,000)), (vi) any Contract involvingany resolution or settlement of any actual or Threatened Proceeding with avalue of greater than One Hundred Thousand Dollars ($100,000), and(vii) any Contract with a distributor, agent or sales representative whogenerated orders for the Company in excess of Two Hundred Fifty ThousandDollars ($250,000) during the fiscal year ended December 31, 2009.  The Contracts listed in Schedule 3.13(a) ofthe Company Disclosure Schedules are referred to in this Agreement as the “MaterialContracts”.  The Company has madeavailable to the Buyer a copy of each Material Contract, which copies are trueand complete in all material respects.

 

(b)                                 All of theMaterial Contracts are valid, binding and currently in full force andeffect.  The Company is not in materialdefault as of the date hereof under any of the Material Contracts, and, to theKnowledge of the Company, no event has occurred as of the date hereof that,through the passage of time or the giving of notice, or both, would constitutea default by the Company or give rise to a right of termination or cancellationby another party under any of the Material Contracts.  To the Knowledge of the Company, no otherPerson is in default under any of the Material Contracts.  Except as described in Schedule 3.13(b) ofthe Company Disclosure Schedules, none of the Material Contracts has beencancelled, terminated, amended or modified.

 

(c)                                  To theKnowledge of the Company, the Company is in compliance in all material respectswith all pricing, cost accounting, cost recording, cost charging, progressbilling and other requirements of Applicable Laws regarding governmentcontracting, in each case, required by any Governmental Body with which theCompany currently does business.

 

Section 3.14                                LegalCompliance.  Except asset forth in Schedule 3.14 of the Company Disclosure Schedules, the Company isin compliance with all Applicable Laws and Orders of any Governmental Bodyexcept where the failure to so comply would not reasonably be expected to havea Material Adverse Effect on the Company. Except as set forth in Schedule 3.14 of the Company DisclosureSchedules, the Company has not received any written notice of, and the Companyhas no Knowledge of, any existing violation of a material nature of anyApplicable Laws and/or Orders applicable to the Company.

 

Section 3.15                                Proceedings andOrders.  Except as set forth inSchedule 3.15 of the Company Disclosure Schedules or as would not reasonably beexpected to have a Material Adverse Effect on the Company, the Company(i) is not subject to any outstanding Order, and (ii) is not a partyto any pending Proceeding or, to the Knowledge of the Company, ThreatenedProceeding.

 

Section 3.16                                Labor Matters.  Except as set forth on Schedule 3.16 of theCompany Disclosure Schedules, the Company is in compliance with all ApplicableLaws respecting employment and employment practices, terms and conditions ofemployment, wages and hours, except for any noncompliance which would notreasonably be expected to have a Material Adverse Effect on the Company.  There is no unfair labor practice complaintpending or, to the Knowledge of the Company, Threatened against the Companybefore the National Labor Relations Board. The Company is not a party to or subject to, and is not currentlynegotiating in 

 

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connection with entering into, any collectivebargaining agreement or other contract or understanding with a labor union ororganization.

 

Section 3.17                                EmployeeBenefit Plans.

 

(a)                                  Schedule 3.17(a) ofthe Company Disclosure Schedules contains a correct and complete listidentifying each Employee Benefit Plan, and each other material employment,severance or similar contract with respect to which the Company has anyunsatisfied liability.  Copies of suchplans and contracts (and, if applicable, related trust or funding agreements orinsurance policies) and all amendments thereto and, if applicable, all currentsummary plan descriptions and summaries of material modifications together withthe most recent annual report (Form 5500, including any applicableschedules and attachments thereto) prepared in connection with any such plan ortrust have been made available for review by the Buyer.

 

(b)                                 Neither theCompany nor any ERISA Affiliate sponsors, maintains or contributes to, or has,in the past six (6) years, sponsored, maintained or contributed to, anyEmployee Benefit Plan that is subject to Title IV of ERISA or that is a “multiemployerplan” (within the meaning of Section 3(37) of ERISA).

 

(c)                                  Except as setforth in Schedule 3.17(c) of the Company Disclosure Schedules, eachEmployee Benefit Plan that is intended to be qualified under Section 401(a) ofthe Code is the subject of a favorable determination or opinion letter from theInternal Revenue Service (“IRS”). Each Employee Benefit Plan has been maintained in material compliancewith its terms and with Applicable Law; and all contributions required to bemade under each Employee Benefit Plan have been timely made or accrued inaccordance with past custom and practice.

 

(d)                                 Except asotherwise provided in this Agreement or set forth in Schedule 3.17(d) ofthe Company Disclosure Schedules, the consummation of the Transactions will notby itself entitle any employee or independent contractor of the Company to anymaterial severance pay from the Company or material acceleration of the time ofpayment or vesting or trigger any payment or funding by the Company (through agrantor trust or otherwise) of material compensation or benefits under,increase the amount payable by the Company or trigger any other materialobligation of the Company pursuant to, any Employee Benefit Plan.

 

(e)                                  Except to theextent required under Sections 601 through 609 of ERISA andSection 4980B of the Code, the Company provides no health or welfarebenefits for any retired or former employee, and is not obligated to providehealth or welfare benefits to any active employee following such employee’sretirement or other termination of service.

 

(f)                                    Excludingroutine claims for benefits, there is no action, suit, audit, proceeding or, tothe Knowledge of the Company, investigation pending against or involving or, tothe Knowledge of the Company, Threatened against or involving any EmployeeBenefit Plan before any court or arbitrator or any Governmental Body, or state,federal or local official.

 

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Section 3.18                                EnvironmentalMatters.

 

(a)                                  Except as setforth in Schedule 3.18 of the Company Disclosure Schedules and except as wouldnot reasonably be expected to have a Material Adverse Effect on the Company, tothe Knowledge of the Company, (i) the Company has transported, stored,and/or disposed of any Hazardous Materials handled by the Company in compliancewith all Environmental Laws, (ii) the Company has operated its businesswith all Permits required under Environmental Law, (iii) the Company hasnot received any written notice of any Proceeding or Order concerning anyEnvironmental Condition or Environmental Claim, and (iv) no asbestos,polychlorinated biphenyls or urea formaldehyde in amounts or conditions inviolation of Environmental Law has been placed, stored or located by theCompany on the Leased Real Property or the Owned Real Property.  There is no pending or, to the Knowledge ofthe Company, Threatened civil or criminal litigation, written notice of violation,inquiry or information request by any Governmental Body, relating to anyviolation of Environmental Law involving the Company.

 

(b)                                 To the Company’sKnowledge, there have been no Releases of any Hazardous Materials into theEnvironment by the Company, or, with respect to any such Releases of HazardousMaterials, the Company has given all required notices to Governmental Bodies(copies of which have been made available to the Buyer).

 

(c)                                  The Company hasmade available to the Buyer, prior to the execution of this Agreement, true,correct and complete copies of all environmental reports, studies,investigations and audits, whether complete or incomplete, that were conductedby the Company or at the Company’s request within the past year and thatpertain to the Leased Real Property or the Owned Real Property.

 

(d)                                 To theKnowledge of the Company and the Seller, there are no underground fuel orunderground tanks for storage of any materials of environmental concern at anyproperty currently owned, operated or leased by the Company, and since January 1,2007, no such tanks have been closed, removed or taken out of service from anysuch facilities.

 

(e)                                  Neither the Company nor its corporate predecessors or Affiliates tookany action at any time that caused or contributed to the release or disposal ofany industrial solvent containing PCE (CAS Number 127-18-4), TCE (CAS Number79-01-6), or its degradation products, at, on, or under the Santa BarbaraProperty.

 

(f)                                    The Deposit Receipt and Real Estate Purchase Contract between DigitalInstruments, Inc. and Raytheon Company, dated December 20, 1996 (“DIIContract”) is in full force and effect. The DII Contract has not beenmodified, supplemented or amended in any way that would impact Raytheon’sobligations, including, without limitation, the indemnification and remediationobligations described in Paragraphs 11 and 12 of the DII Contract (herein “RaytheonIndemnity”).

 

Section 3.19                                Insurance.  Schedule 3.19 of the Company DisclosureSchedules sets forth a true, correct and complete list of all fire, theft, casualty,general liability, workers’ compensation, business interruption, environmentalimpairment, product liability, automobile and other property/casualty insurancepolicies (excluding any insurance policies relating to any Employee BenefitPlan or financial product policies, such as directors and officers, employment 

 

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practices, fiduciary, crime and travel accidentpolicies) maintained by the Seller for itself and its Subsidiaries, and underwhich the Company is listed as either a beneficiary or an insured, specifyingthe insurer and the effective date of each such policy (collectively, the “InsurancePolicies”) and all claims made by the Company under such Insurance Policiessince December 31, 2006. True, correct and complete copies of allInsurance Policies have been previously made available by the Company to theBuyer.  All premiums due on the InsurancePolicies or renewals thereof have been paid, and there is no default under theInsurance Policies. Except as set forth on Schedule 3.19 of the CompanyDisclosure Schedules, the Company has no material outstanding claim or materialdispute with any insurance carrier regarding claims, settlements or premiums.

 

Section 3.20                                Customers.  Schedule 3.20 of the Company DisclosureSchedules sets forth (A) a correct and complete list of the top twenty(20) customers of the Company on the basis of annual revenues for the fiscalyear ended December 31, 2009 (the “Major Customers”), (B) alist of Contracts with any Major Customer in effect or outstanding as of thedate hereof other than Contracts entered into in the Ordinary Course ofBusiness and (C) a list of the Company’s top ten (10) serviceContracts on the basis of the unfilled value of such Contracts as of June 27,2010 (provided that Material Contracts listed on Schedule 3.13(a) of theCompany Disclosure Schedules need not be relisted on Schedule 3.20 of theCompany Disclosure Schedules).  No MajorCustomer within the last twelve (12) months has canceled or otherwiseterminated, or, to the Knowledge of the Company, Threatened to cancel orotherwise terminate, any customer relationship of such Major Customer with theCompany.

 

Section 3.21                                Suppliers.

 

(a)                                  Schedule 3.21(a) ofthe Company Disclosure Schedules sets forth a list of the Company’s suppliersof goods or services with whom the Company had aggregate purchases for thefiscal year ended December 31, 2009 in excess of One Hundred ThousandDollars ($100,000) (each, a “Material Supplier”), showing the aggregateamount that the Company paid to each such Material Supplier during suchperiod.  No Material Supplier hascanceled or otherwise terminated or, to the Knowledge of the Company,Threatened to cancel or otherwise terminate, its relationship with the Company.

 

(b)                                 Schedule3.21(b)(i) of the Company Disclosure Schedules sets forth a list of theCompany’s suppliers that are Sole Source Suppliers of any raw materials,services, supplies, equipment or parts to the metrology business, and, to theKnowledge of the Company, no such supplier, nor any key supplier set forth inSchedule 3.21(b)(ii) of the Company Disclosure Schedules, has indicated inthe six (6) month period prior to the date hereof that it shall cease, ormaterially decrease, its supply of products or services to the Company.

 

Section 3.22                                AccountsReceivable.  Except asset forth in Schedule 3.22 of the Company Disclosure Schedule, all accountsreceivable of the Company reflected on the Company Balance Sheet that remainuncollected as of the date hereof are valid receivables, arising from salesactually made or services actually provided, net of the applicable reserve fordoubtful accounts on the Company Balance Sheet or in Schedule 3.22 of theCompany Disclosure Schedules.  All suchaccounts receivable are reflected on the Company Balance Sheet or in Schedule3.22 of the Company Disclosure Schedules in accordance with GAAP as of the 

 

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date thereof. To the Company’s Knowledge, there is no contest, counterclaim or rightof setoff under any Contract with any obligor of any such account receivablerelating to the amount or validity of such account receivable.  No such obligor has been released in whole orin part by the Company from paying the full value of its obligation to theCompany and the Company has not agreed to do so.  No such account receivable has beensubordinated or assigned by the Company and the Company has not agreed to doso.

 

Section 3.23                                AffiliateTransactions.  Except asset forth in Schedule 3.23 of the Company Disclosure Schedules or as otherwiseexpressly set forth herein, since January 1, 2009 through the date hereof,no Affiliate of the Company has had any (A) material business arrangementor relationship with the Company, or (B) interest in any material asset,real or personal, tangible or intangible, owned by the Company.  Except as set forth in Schedule 3.23 of theCompany Disclosure Schedules or as otherwise expressly set forth herein, thereare no material assets owned by the Seller or any of its Affiliates (other thanthe Company) that are used in the business of the Company.  Since the Company Balance Sheet Date, throughthe date hereof, there has been no material change in the intercompanyagreements between the Seller or any of its Affiliates (other than theCompany), on the one hand, and the Company on the other hand.

 

Section 3.24                                Brokers.  Except as set forth in Schedule 3.24 of theCompany Disclosure Schedules, no broker, finder or investment banker (each, a “Broker”)is entitled to any brokerage, finder’s or other fee or commission in connectionwith the Transactions for which the Company or its Affiliates will beresponsible.

 

Section 3.25                                ProductWarranties.  Except asset forth in Schedule 3.25 of the Company Disclosure Schedules, during thetwelve (12) month period prior to the date hereof, there have been no materialclaims for the breach of any product warranty or any material liability withrespect to any product manufactured and sold by the Company, other than warrantyclaims (to replace, repair or refund) made in the Ordinary Course of Business.

 

Section 3.26                                Inventory.  Taking into account the reserves forinventory in the Company’s financial records, to the Knowledge of the Company,the inventory held by the Company as of the date hereof is of a quantity andquality reasonably considered usable and salable in the Ordinary Course ofBusiness, and the quantities of such inventory are not excessive, but arereasonable for the continued operation of the metrology business of the Companyin the Ordinary Course of Business.

 

**ARTICLE IV**

**REPRESENTATIONS AND WARRANTIES OFTHE BUYER**

 

Exceptas set forth in the disclosure schedules delivered by the Buyer to the Selleron the date hereof (the “Buyer Disclosure Schedules”), the Buyerrepresents and warrants as of the date hereof, except to the extent that arepresentation, warranty or Buyer Disclosure Schedule expressly states thatsuch representation or warranty, or the information in such Buyer DisclosureSchedule, is accurate only as of an earlier date, to the Seller as follows:

 

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Section 4.01                                CorporateExistence and Power.  The Buyeris a corporation duly incorporated, validly existing and in good standing underthe laws of its state of incorporation. The Buyer is duly qualified to do business as a foreign corporation andis in good standing in each other jurisdiction where the transaction of itsbusiness requires such qualification, except where the lack of suchqualification would not reasonably be expected to have a Material AdverseEffect on the Buyer.  The Buyer hasheretofore made available to the Seller true and complete copies of thecertificate or articles of incorporation and bylaws of the Buyer as currentlyin effect.

 

Section 4.02                                CorporateAuthorization.  The Buyerhas all requisite corporate power, authority and legal right under itscertificate of articles or certificate of incorporation and bylaws (orcomparable organizational documents) to enter into this Agreement, perform itsobligations under this Agreement and consummate the Transactions.  The execution, delivery, and performance bythe Buyer of this Agreement and any Ancillary Documents to which it is a party,and the consummation by the Buyer of the Transactions, have been dulyauthorized by all necessary corporate action on the part of the Buyer,including the approval of its Board of Directors.  Assuming the due authorization, execution anddelivery of this Agreement by each Party (other than the Buyer), this Agreementconstitutes a valid and legally binding agreement of the Buyer, enforceableagainst it in accordance with its terms and conditions, subject to ApplicableLaws of general application relating to public policy, bankruptcy, insolvencyand the relief of debtors, Applicable Laws governing specific performance,injunctive relief and other equitable remedies and general principles ofequity.

 

Section 4.03                                Noncontravention.  Except for the consents, approvals,authorizations, Permits and material contracts described in Schedule 4.03 ofthe Buyer Disclosure Schedules, neither the execution and delivery of thisAgreement, nor the consummation of the Transactions, do (i) violate anyprovision of the charter, bylaws or other governing documents of the Buyer,(ii) result in a violation or breach of, or constitute (with or withoutdue notice or lapse of time or both) a default (or give rise to any right oftermination, amendment, cancellation or acceleration) under any of the terms ofany note, bond, mortgage, indenture, license, contract, lease, or otherinstrument or obligation to which the Buyer is a party (or result in theimposition of any Encumbrance (other than Permitted Encumbrances) upon theBuyer’s assets) or (iii) violate any Applicable Law or any Order of anyGovernmental Body applicable to the Buyer.

 

Section 4.04                                GovernmentalAuthorization.  The executionand delivery by the Buyer of this Agreement and any Ancillary Documents towhich it is a party, and the consummation by the Buyer of the Transactions,require no action by or in respect of, or filing with, any Governmental Body,other than (i) compliance with any applicable requirements of the HSR Actand any Foreign Antitrust Laws and (ii) compliance with any applicablerequirements of any applicable securities laws, whether federal, state orforeign.

 

Section 4.05                                Proceedings andOrders.  Except as set forth inSchedule 4.05 of the Buyer Disclosure Schedules, the Buyer (i) is notsubject to any outstanding Order, and (ii) is not party to any pendingProceeding or, to the Knowledge of the Buyer, Threatened Proceeding, thatwould, in any case, prohibit or materially impair the Buyer’s ability toperform its obligations under this Agreement or to complete the Transactions inaccordance with the terms of this Agreement and the Ancillary Documents.

 

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Section 4.06                                Financing.  The Buyer has available, and on the ClosingDate shall have available, sufficient funds, available lines of credit or othersources of immediately available funds to enable the Buyer to pay the PurchasePrice and all Transaction Expenses payable by the Buyer pursuant hereto.

 

(a)                                  Schedule 4.06of the Buyer Disclosure Schedules sets forth true, accurate and complete copiesof an executed debt commitment letter, dated as of July 12, 2010 (as thesame may be amended or replaced in accordance with Section 5.06, the “DebtProvider Letter”) from JPMorgan Chase Bank, N.A. (the “Buyer DebtProvider”) regarding debt funding available to the Buyer in the amountnoted therein for the purpose of funding the Purchase Price and all TransactionExpenses payable by the Buyer pursuant hereto and the Ancillary Documents (the “DebtFunding”).

 

(b)                                 The statementsmade in the Debt Provider Letter are true, correct, accurate and complete as ofJuly 12, 2010, and have not been amended, modified or terminated in anyrespect.  As of the date hereof, theamount of unused availability under the Buyer Debt Provider facility continuesto be the amount of unused availability set forth in the Debt Provider Letterin all material respects.  No event hasoccurred that, with or without notice, lapse of time or both, would constitutea default or breach on the part of the Buyer or the Buyer Debt Provider underany term or condition of the Debt Provider Letter.  The Buyer has no reason to believe that itwill be unable to satisfy on a timely basis any term or condition of theClosing to be satisfied by the Buyer contained in the Debt ProviderLetter.  The Debt Funding, plus othercash immediately available to the Buyer for purposes of the Transactions, issufficient to pay the Purchase Price and all Transaction Expenses payable bythe Buyer pursuant hereto, and to allow the Buyer to perform all of its otherobligations under this Agreement and to consummate the Transactions, subject tothe terms hereof.

 

(c)                                  Other than asset forth in the Debt Provider Letter, there are no contractual contingencies,side letters or similar arrangements under any agreement relating to theTransactions to which the Buyer or any of its Affiliates is a party that wouldpermit the Buyer Debt Provider to reduce the total amount of the Debt Funding,or to impose any additional condition precedent to availability of the DebtFunding.  The board of directors of theBuyer has authorized the Buyer to draw on the funds available to the Buyerunder the Debt Provider Letter as necessary to enable the Buyer to pay thePurchase Price and any and all Transaction Expenses payable by the Buyerpursuant to this Agreement and the Ancillary Documents.  The Buyer has received commitments from theBuyer Debt Provider that the Buyer is entitled to call in accordance with theDebt Provider Letter, in an amount sufficient to enable the Buyer to pay thePurchase Price and all Transaction Expenses payable by the Buyer pursuant tothis Agreement and the Ancillary Documents.  The Buyer has provided all applicable noticesunder the Debt Provider Letter and taken all other actions required to be takenby it thereunder to draw on the requisite amount of the commitment to the Buyerof the Buyer Debt Provider, sufficient (when taken together with other sourcesof funds immediately available to the Buyer) to enable the Buyer to pay thePurchase Price and any and all Transaction Expenses payable by the Buyerpursuant to this Agreement and the Ancillary Documents.

 

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Section 4.07                                ForeignOwnership.

 

(a)                                  Schedule 4.07(a) of the Buyer Disclosure Schedules sets forth theidentity of each governmental entity or non-U.S. Person, and such Person’sspecific right or interest, that has a direct or indirect right or interestwith respect to the corporate activities (including any economic rights) ofBuyer or any of Buyer’s Affiliates.

 

(b)                                 Schedule 4.07(b) of the Buyer Disclosure Schedules sets forth theprior acquisition transactions of the Buyer and Buyer’s Affiliates that weresubject to CFIUS review, indicating whether each was approved during theinitial 30-day review period or was subject to an investigation and if suchprior acquisition transaction was not approved within 30 days of initial notificationto CFIUS, indicating how many days elapsed between the initial CFIUSnotification and approval of the transaction by CFIUS.

 

(c)                                  Schedule 4.07(c) of the Buyer Disclosure Schedules sets forth allexisting agreements of the Buyer and Buyer’s Affiliates with CFIUS or any ofits member agencies indicating, with respect to each agreement: (i) thegovernmental agency involved, (ii) the subject matter of the agreement,(iii) the date that it was entered into and (iv) any audits or otherinvestigations by CFIUS with respect to compliance with such agreement.  Neither the Buyer or any of its Affiliateshas, or may have, breached or violated or would, with notice, the passage oftime or both, breach or violate, in any material respect any agreement with CFIUSor any of its member agencies.

 

Section 4.08                                Solvency.  The Buyer is not entering into this Agreementor the Ancillary Documents with the intent to hinder, delay or defraud anyPerson to which the Buyer is, or may become, indebted.  The Purchase Price is not less than thereasonably equivalent and fair market value of the Shares and the PurchasedAssets.  Immediately following theClosing and after giving effect to the Stock Purchase, the Asset Purchase andthe other Transactions, the Buyer shall not (i) be insolvent (eitherbecause its financial condition is such that the sum of its debts and otherliabilities, including subordinated, contingent, disputed, unliquidated orotherwise, is greater than the fair market value of its assets or because thefair saleable value of its assets is less than the amount required to pay itsprobable liability on its existing debts as they become absolute and mature);(ii) have unreasonably small capital with which to engage in its business;(iii) have incurred debts or liabilities beyond its ability to pay them asthey become due; or (iv) be unable to realize upon its assets and pay itsdebts and other liabilities, including subordinated, contingent, disputed,unliquidated or otherwise, as they mature in the normal course ofbusiness.  No fact, circumstance orcondition exists that would be reasonably likely to render the Buyer insolvent.

 

Section 4.09                                Securities Act.  The Buyer (i) understands that theShares have not been, and will not be, registered under the Securities Act of1933, as amended (the “Securities Act”), or under any state securitieslaws, and are being offered and sold in reliance upon federal and stateexemptions for transactions not involving any public offering, (ii) isacquiring the Shares solely for its own account for investment purposes, andnot with a view to the distribution thereof, (iii) is a sophisticatedinvestor with knowledge and experience in business and financial matters, (iv) hasreceived certain information concerning the Seller and the Company and has hadthe opportunity to obtain additional information as desired in order toevaluate the merits and the risks inherent in holding the Shares, (v) isable to bear the economic risk and lack of liquidity 

 

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inherent in holding the Shares and (vi) is an “AccreditedInvestor” as defined in Regulation D under the Securities Act.

 

Section 4.10                                Brokers.  Except as set forth in Schedule 4.10 of theBuyer Disclosure Schedules, no Broker is entitled to any brokerage, finder’s orother fee or commission in connection with the Transactions based uponarrangements made by or on behalf of the Buyer or any of its Affiliates.

 

**ARTICLE V**

 

**PRE-CLOSING COVENANTS**

 

Section 5.01                                Reasonable BestEfforts.

 

(a)                                  The Partiesshall each cooperate with the other and use (and shall cause their respectiveSubsidiaries to use) their respective reasonable best efforts to promptly(i) take or cause to be taken all actions, and do or cause to be done allthings, necessary, proper or advisable to consummate and make effective theTransactions as soon as practicable, including preparing and filing promptlyand fully all documentation to effect all necessary filings, notices,petitions, statements, registrations, submissions of information, applicationsand other documents, (ii) obtain all approvals, consents, registrations,permits, authorizations and other confirmations required to be obtained fromany Third Party necessary, proper or advisable to consummate the Transactions,and (iii) execute and deliver such documents, certificates and otherpapers as a Party may reasonably request to evidence the other Party’ssatisfaction of its obligations hereunder. Subject to Applicable Laws relating to the exchange of information andin addition to Section 5.01(d), the Parties shall have the right to reviewin advance, and, to the extent practicable, each will consult the other on, anyinformation relating to the Company or the Buyer and its Subsidiaries, as thecase may be, that appears in any filing made with, or written materialssubmitted to, any Third Party and/or any Governmental Body in connection withthe Transactions.

 

(b)                                 Withoutlimiting the foregoing, the Parties shall: (i) within five (5) BusinessDays of the date of this Agreement each make an appropriate filing pursuant tothe HSR Act and each make (or, if applicable, the applicable Party shall make)any Foreign Antitrust Laws with respect to the Stock Purchase and as promptlyas practicable file any other required submissions under the HSR Act and takeany and all other actions necessary or appropriate to bring about theexpiration or termination of any applicable waiting period under the HSR Actand any Foreign Antitrust Laws; and (ii) cooperate with one another (A) promptlyto determine whether any other filings are required to be or should be made orconsents, approvals, permits or authorizations are required to be or should beobtained under any other Applicable Law, including any Foreign Antitrust Lawand (B) promptly, and in any event within ten (10) Business Days,make any such filings, furnishing information required in connection therewithand seeking to obtain timely any such consents, permits, authorizations orapprovals.

 

(c)                                  Withoutlimiting Section 5.01(a), each Party shall:

 

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(i)                                     use itsreasonable best efforts to avoid the entry of, or to have vacated orterminated, any Order that would restrain, prevent or delay the Closing or theconsummation of any of the Transactions, including defending through litigationor arbitration on the merits any claim asserted in any court by any Person; and

 

(ii)                                  use itsreasonable best efforts to avoid or eliminate each and every impediment underthe HSR Act and any Foreign Antitrust Laws that may be asserted by anyGovernmental Body with respect to the Transactions so as to enable the Closingto occur as soon as reasonably possible.

 

(d)                                 Each Partyshall keep the other Party reasonably apprised of the status of mattersrelating to the completion of the Transactions and work cooperatively inconnection with obtaining all required approvals or consents of anyGovernmental Body (whether domestic, foreign or supranational).  In that regard, each Party shall, to theextent permitted by Applicable Law and subject to all applicable privileges,including the attorney-client privilege, without limitation:  (i) promptly notify the other Party of,and if in writing, furnish the other Party with copies of (or, in the case ofmaterial oral communications, advise the other orally of), any communicationsfrom or with any Governmental Body with respect to the Transactions,(ii) permit the other Party to review and discuss in advance, and considerin good faith the views of the other Party in connection with, any proposedwritten (or any material proposed oral) communication with any suchGovernmental Body, (iii) not participate in any meeting with any suchGovernmental Body unless it consults with the other Party in advance and, tothe extent permitted by such Governmental Body, gives the other the opportunityto attend and participate thereat, (iv) furnish the other Party withcopies of all correspondence, filings and communications (and memoranda settingforth the substance thereof) between it and any such Governmental Body withrespect to this Agreement, the Ancillary Documents and the Transactions, and(v) furnish the other Party with such necessary information and reasonableassistance as the other Party may reasonably request in connection with itspreparation of necessary filings or submissions of information to any suchGovernmental Body.

 

Section 5.02                                Operation ofBusiness.  Except(a) for the consummation of the Transactions, or (b) as set forth onSchedule 5.02 of the Company Disclosure Schedules or as otherwise expresslycontemplated by this Agreement, the Contribution and Distribution Agreement,the Asset Purchase Documents or any other Ancillary Document, during the periodfrom the date hereof and continuing until the earlier of the termination ofthis Agreement or the Closing Date, the Company shall conduct its business inthe Ordinary Course of Business.  TheCompany agrees to pay debts and Taxes when due unless subject to good faithdispute, and to pay or perform other obligations in the Ordinary Course ofBusiness subject to good faith disputes over whether payment or performance isowing.  Without limiting the generalityof the foregoing, except (i) for the consummation of the Transactions,(ii) as set forth in Schedule 5.02 of the Company Disclosure Schedules or(iii) to the extent consented to by the Buyer, from the date hereof untilthe Closing Date, the Company shall not, and the Seller shall not cause theCompany to, do any of the following:

 

(i)                                     adopt orpropose any change to the Company Articles or the Company’s bylaws;

 

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(ii)                                  merge orconsolidate with any other Person or acquire all or substantially all of thestock or assets of any other Person or effect any business combination, recapitalizationor similar transaction;

 

(iii)                               sell, lease,license or otherwise dispose of any material amount of assets, securities orproperty except (A) pursuant to existing Contracts or commitments or(B) in the Ordinary Course of Business;

 

(iv)                              except in theOrdinary Course of Business (including, without limitation, distributions fortax liabilities of the stockholders) declare, set aside or pay any dividend orother distribution with respect to the capital stock of the Company;

 

(v)                                 create or incurany Encumbrance on any material asset other than (A) in the OrdinaryCourse of Business or (B) Permitted Encumbrances;

 

(vi)                              make anymaterial loan, advance or capital contribution to or investment in any Person;

 

(vii)                           change anymethod of accounting or accounting principles or practice, except for any suchchange required by reason of a concurrent change in GAAP; or

 

(viii)                        agree or committo do any of the foregoing.

 

Section 5.03                                Publicity.  The Parties shall (i) develop a jointcommunication plan with respect to this Agreement and the Transactions,(ii) ensure that all press releases and other public statements withrespect to this Agreement and the Transactions shall be consistent with suchjoint communication plan, and (iii) consult promptly with each other priorto issuing any press release or otherwise making any public statement withrespect to this Agreement, the Stock Purchase, the Asset Purchase and theTransactions, provide to the other Party for review a copy of any such pressrelease or statement, and not issue any such press release or make any suchpublic statement without the other Party’s consent, unless either Partydetermines in good faith that such disclosure is required or advisable underApplicable Law or any listing agreement with, or rules and regulations of,a securities exchange.

 

Section 5.04                                Access.  The Company shall permit representatives ofthe Buyer (including legal counsel and accountants) to have, upon prior writtennotice, reasonable access during normal business hours and under reasonablecircumstances, and in a manner so as not to interfere with the normal businessoperations of the Company, to the premises, personnel, books, records(including Tax records), Contracts, and documents of or solely pertaining tothe Company.  Neither the Buyer nor anyof its respective representatives shall contact any employee, customer,supplier or landlord of the Company without the prior written consent of theExecutive Vice President and General Manager of the Company.  The Buyer shall retain for a reasonableperiod after the Closing Date (and at least as long as is consistent with theBuyer’s record-retention policies and practices), those books, records(including Tax records), Contracts and documents of or pertaining to theCompany, and shall provide the Seller and its representatives reasonable accessthereto, during normal business hours and on prior notice, for reasonablebusiness purposes and for the purpose of historical research and publication ofhistorical materials relating to the Company.

 

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Section 5.05                                Confidentiality.  The Buyer shall comply with, and shall causeits representatives to comply with, all of its and their obligations under theconfidentiality agreement, dated as of May 6, 2010 (the “ConfidentialityAgreement”), between the Seller and the Buyer with respect to the terms andconditions of this Agreement and the Transactions and the Company informationdisclosed pursuant to Section 5.04 or otherwise, which agreement willremain in full force and effect until the Closing Date, and shall survive anytermination of this Agreement.

 

Section 5.06                                Financing.

 

(a)                                  The Buyer shalluse its reasonable best efforts to (i) satisfy all conditions applicableto the Buyer in the Debt Provider Letter; and (ii) consummate the DebtFunding at or prior to the Closing. Immediately after this Agreement is executed and delivered by theParties, the Buyer shall trigger the call provisions under the Debt ProviderLetter, provide all applicable notices thereunder and take any and all otheractions required to be taken by the Buyer thereunder to call the Buyer DebtProvider to contribute the requisite amount of its commitment to the Buyersufficient (when taken together with other sources of funds immediatelyavailable to the Buyer) to enable the Buyer to pay the Purchase Price and anyand all Transaction Expenses payable by the Buyer pursuant to this Agreementand the Ancillary Documents.

 

(b)                                 In the eventthat any portion of the Debt Funding becomes unavailable on the terms andconditions contemplated in the Debt Provider Letter, the Buyer shall use itsreasonable best efforts to obtain any such unavailable portion from alternativesources on comparable or more favorable terms to the Buyer (as determined inthe reasonable good faith judgment of the Buyer) as promptly as practicablefollowing the occurrence of such event. The Buyer shall promptly provide the Seller with the documentationevidencing such alternative sources of financing and shall give the Sellerprompt notice (but in any event within two (2) Business Days) of anymaterial breach by any party to the Debt Provider Letter or any termination ofthe Debt Provider Letter.  The Buyershall keep the Seller informed on a reasonably current basis in reasonabledetail of the status of its efforts to arrange for replacement financing, ifnecessary, and shall not permit any material amendment or modification to bemade to, or any waiver of any material provision or remedy under, the DebtProvider Letter (or any replacement thereof) without first consulting with theSeller or, if such amendment or modification would or would be reasonablyexpected to prevent, delay or hinder the Buyer’s ability to consummate theTransactions, without first obtaining the Seller’s prior written consent (whichconsent shall not be unreasonably withheld).

 

(c)                                  For theavoidance of doubt, if the Buyer fails to obtain the Debt Funding contemplatedby the Debt Provider Letter, or any alternative financing, the Buyer shallcontinue to be obligated to perform its obligations under this Agreement,including this Section 5.06, and to consummate the Stock Purchase, theAsset Purchase and the other Transactions on the terms contemplated hereby(subject only to satisfaction or waiver of the conditions set forth inSections 7.01 and 7.02, as applicable). The Parties hereby agree and acknowledge that, with respect to the Buyer’sobligations pursuant to this Section 5.06, time is of the essence.  Notwithstanding anything to the contrary inthis Agreement, there shall be no cure period for any breach by the Buyer ofthis Section 5.06.

 

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Section 5.07                                No OtherRepresentations or Warranties.

 

(a)                                  The Buyeracknowledges and agrees that it has made its own inquiry and investigationinto, and, based thereon, has formed an independent judgment concerning, theSeller and the Company and their businesses and operations, and the Buyer hasrequested such documents and information from the Seller and the Company as itconsiders material in determining whether to enter into this Agreement and toconsummate the Transactions.  The Buyeracknowledges and agrees that it has had an opportunity to ask all questions ofand receive answers from the Seller and the Company in determining whether toenter into this Agreement and to consummate the Transactions.  In connection with such investigation, theBuyer and its representatives have received from the Seller, the Company ortheir respective representatives certain other estimates, projections and otherforecasts for the Seller and the Company and certain estimates, plans andbudget information.

 

(b)                                 The Buyeragrees that, except for the representations and warranties made by the Companythat are expressly set forth in Article III of this Agreement (as modifiedby the Company Disclosure Schedules) and in any certificate provided pursuantto Sections 7.02(a) and 7.02(b), neither the Seller nor the Companynor any other Person makes, or shall be deemed to have made, any representationor warranty, express or implied, of any kind, including any representation orwarranty as to merchantability, habitability, workmanship, profitability,future performance, fitness for a particular purpose or non-infringement, whetheror not contained in any document or other communication provided or otherwisemade available to the Buyer or any Person acting on behalf of the Buyer duringthe course of due diligence or otherwise (including in any managementpresentation, information or offering memorandum, supplemental information,data room, estimate, projection, forecast, plan, budget or otherforward-looking information or other materials or information with respect toany of the above).

 

Section 5.08                                Certain CompanyAccruals. The Seller shall take or cause to be taken allactions necessary for it to assume all accruals on the books and records of theCompany in respect of certain obligations of the Company and/or the Sellerlisted on Schedule 5.08 of the Company Disclosure Schedules and shall pay (i) thebonus compensation and profit sharing liabilities set forth therein (whichamounts shall be prorated for the partial year ended on the Closing Date andshall expressly exclude any accrued sales commissions) within thirty (30) daysafter the Closing and (ii) the transaction incentive payments andseverance payments set forth therein within thirty (30) days after the Closingor at such later date as is contemplated by the applicable agreement governingany such payments.

 

Section 5.09                                TransitionServices. During the period commencing on the date hereofand ending three (3) days prior to the Closing Date, the Parties maymutually agree in writing to modify the transition services described onSchedule A attached to the Transition Services Agreement on terms andconditions mutually agreeable to the Parties.

 

Section 5.10                                Third PartyConsents. The Seller and the Company shall use (and shallcause their respective Subsidiaries to use) their respective commerciallyreasonable best efforts to promptly obtain, and deliver to the Buyer, thethird party consents set forth on Schedule 3.03 of the Company DisclosureSchedules prior to the Closing.  To theextent the same, in whole or in part, are not so obtained, such efforts shallcontinue for a period of six months after the 

 

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Closing and the parties shall cooperate with eachother in any reasonable arrangement to provide that the Company shall receiveall of the benefits (and bear all of the obligations) of the Seller (or theapplicable Affiliate of the Seller) in, to or under any of the agreements setforth on Schedule 3.03.

 

**ARTICLE VI**

 

**POST-CLOSING COVENANTS**

 

Section 6.01                                General.  In case at any time after the Closing anyfurther action is necessary to carry out the purposes of this Agreement, eachParty shall take such further action (including the execution and delivery ofsuch further instruments and documents) as the other Party reasonably mayrequest, all at the sole cost and expense of the requesting Party.

 

Section 6.02                                EmployeeMatters.

 

(a)                                  For the periodfrom the Closing Date through the first (1st) anniversary thereof, the Buyeragrees to provide, or cause the Company to provide, each employee of theCompany (each, a “Company Employee”) with (i) compensation(including salary, wages, and historical bonus potential but excluding anyequity-based compensation, transaction, severance or change of control bonusesor payments) that is no less favorable in the aggregate than the compensation providedby the Company immediately prior to the Closing; and (ii) employeebenefits plans, programs and arrangements that in all material respects are noless favorable in the aggregate than the employee benefits as in effect forother employees of the Buyer and its Affiliates immediately prior to theClosing (collectively, “Comparable Compensation and Benefits”).

 

(b)                                 Notwithstandingthe foregoing, with respect to each benefit plan, program, practice, policy orarrangement (including the Buyer’s severance plans, policies, or arrangements,and paid time off, vacation, and sick leave policies), maintained by the Buyeror the Company and in which any of the Company Employees become eligible toparticipate (the “Buyer Plans”), for purposes of determining eligibilityto participate, vesting and benefit accrual**,** employmentservice with the Company (or predecessor employers to the extent the Companyprovides past service credit) shall be treated as employment service with theBuyer and/or any of its applicable Subsidiaries; provided, however,that such prior employment service shall not be recognized to the extent thatsuch recognition would result in a duplication of benefits.  Such credit for prior employment service alsoshall apply for purposes of satisfying any waiting periods or evidence ofinsurability requirements applicable under any of the Buyer Plans.  The Buyer shall use its commerciallyreasonable efforts to cause each of the applicable Buyer Plans to (i) waiveall limitations as to pre-existing condition exclusions, evidence ofinsurability requirements and waiting periods with respect to participation andcoverage requirements applicable to Company Employees and their eligibledependents under the Buyer Plans, except to the extent that such limitations,evidence of insurability and waiting periods were applicable to suchindividuals under a comparable Employee Benefit Plan, and (ii) giveCompany Employees and their eligible dependents credit under the Buyer Plansfor amounts paid during the year in which the Closing occurs under acorresponding Employee Benefit Plan for purposes of 

 

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satisfying any applicable deductibles, co-paymentsand out-of-pocket maximums as though such amounts had been paid in accordancewith the terms and conditions of the Buyer Plans.

 

(c)                                  The Buyer shallcause the applicable Buyer Plan to accept eligible rollover distributions (asdefined in Section 402(c)(4) of the Code and inclusive of anyoutstanding participant loans) from Company Employees with respect to anyaccount balances distributed on or as of the Closing Date by the applicableEmployee Benefit Plan.  The distributionsand rollovers described herein shall comply with Applicable Law; and each Partyshall make all filings and take any actions required of such Party underApplicable Law in connection therewith.

 

(d)                                 The Buyer shallassume and honor all balances under the Company’s vacation, paid time off, andsick leave policies accrued by Company Employees as of the Closing Date to theextent set forth in the Statement of Closing Net Working Capital as finallydetermined in accordance with Section 1.05.

 

(e)                                  With respect to matters relating to theNon-Company Employees, the Seller and the Buyer agree to the procedures, termsand conditions set forth in Exhibit G.

 

(f)                                    The Parties acknowledge that the lists ofemployees on Schedules 10.01(a), 10.01(d), 10.01(e) and G.6 are completeand accurate to the knowledge of each Party as of the date of this Agreement,but remain subject to review and correction. The Parties shall cooperate to review and, if required, correct eachsuch Schedule within ten (10) days after the date of this Agreement.

 

Section 6.03                                Tax Matters**.**

 

(a)                                  Post-ClosingTax Return Filings.

 

(i)                                     The Sellershall prepare and timely file (or cause to be prepared and timely filed) withthe appropriate Taxing Authorities all income Tax Returns for the Company forall taxable periods ending on or before the Closing Date (each, a “SellerReturn”).   The Seller will include the Company in afederal consolidated income tax return of the affiliated group of which Selleris the common parent for the taxable year of the Company that includes theClosing Date.  If necessary topermit the Seller to properly file any Seller Return, the Buyer shall causeeach Seller Return to be executed by an authorized Person on behalf of theCompany.  The Buyer shall prepare andtimely file (or cause to be prepared and timely filed) with the appropriate TaxingAuthorities all Tax Returns (other than Seller Returns) required to be filed bythe Company with respect to any taxable period beginning before the ClosingDate that are due after the Closing Date (each a “Buyer Return”).  The Buyer (or the Company) shall timely paythe Tax shown as due on each such Tax Return (other than Seller Returns thatare Group Returns), and shall be entitled to indemnification in respect of suchTax to the extent provided by Section 9.01.  Each such Tax Return shall be prepared in amanner consistent with the prior practice of the Company unless otherwiserequired by Applicable Law or specified in Schedule 6.03(a)(i).  The Buyer shall make such revisions to BuyerReturns as are reasonably requested by the Seller within fifteen (15) daysafter receipt by the Seller of each Buyer Return for review pursuant to Section 6.03(a)(ii).

 

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(ii)                                  The Buyer shallprovide the Seller with a copy of each Buyer Return that the Buyer proposes tofile for review and approval at least thirty (30) days before the filing ofsuch return (or, if required to be filed within thirty (30) days after the ClosingDate or the end of the taxable period to which such return relates, as soon asreasonably practicable following the Closing or end of such taxable period, asthe case may be), accompanied by a statement (a “Pre-Closing Tax Statement”)setting forth and calculating in reasonable detail the Pre-Closing Taxes (asdefined below) and Indemnified Taxes that are shown as due on such TaxReturn.  For purposes of this Agreement, “IndemnifiedTaxes” means the excess of the Pre-Closing Taxes over the amount of suchPre-Closing Taxes that was taken into account in computing the Closing NetWorking Capital.  Failure to file a TaxReturn that would be a Buyer Tax Return shall not limit the Seller’sindemnification obligation for Indemnified Taxes under Section 9.01 in anycase that such non-filing is consistent with the prior practice of the Companyin respect of the similar Tax Return in the immediately preceding taxableperiod.

 

(iii)                               If the Sellerdisagrees with the manner of preparation of a Buyer Return or the amount ofPre-Closing Taxes or Indemnified Taxes calculated in a Pre-Closing TaxStatement with respect to such Buyer Return, within thirty (30) days afterreceipt of such Buyer Return and Pre-Closing Tax Statement the Seller shallprovide to the Buyer a notice of such dispute (a “Tax Statement Dispute”).  If the Seller does not provide a notice ofTax Statement Dispute within such thirty-day period, the Seller shall be deemedto have accepted the Buyer Tax Return and Pre-Closing Tax Statement relatingthereto for purposes of Article IX. If the Seller provides the Buyer with a notice of a Tax StatementDispute, the Seller shall also provide the Buyer with a written explanation ofthe reasons for its disagreement with such Buyer Return and/or Pre-Closing TaxStatement.  The Buyer and the Sellershall attempt to resolve their disagreement within the fifteen (15) daysfollowing the Seller’s notification to the Buyer of a Tax StatementDispute.  If the Seller and the Buyercannot reach complete agreement within fifteen (15) days, they each shallselect a Tax expert from an accounting firm or law firm knowledgeable in thearea of the dispute, and such experts shall attempt to resolve thedifferences.  Each Party shall be responsiblefor the costs and fees of its Tax expert. If the Buyer and the Seller are unable to resolve their disagreementthrough their respective Tax experts, the dispute shall be submitted to anarbitrator (the “Tax Arbitrator”) pursuant to the procedures describedin Section 1.05(b) with respect to the Accounting Arbitrator, forresolution within fifteen (15) days of such submission.  The decision of the Tax Arbitrator withrespect to such dispute shall be binding upon the Parties.

 

(iv)                              EachPre-Closing Tax Statement with respect to a Buyer Return shall be treated asthe notice required by Section 9.04(a) in respect of any claim forindemnity by any Buyer Indemnified Party in respect of the Indemnified Taxesshown thereon with respect to a Buyer Return. Any Loss attributable to Indemnified Taxes shall be determined byreference to actual losses or expenses of the Buyer Indemnified Parties in thesame manner as other Losses pursuant to Article IX, and, for instance,shall be reduced by any Tax benefit that is correlative to the incurring of orpayment of such Indemnified Taxes.  Theamount of the Loss attributable to Indemnified Taxes shown in any Pre-ClosingTax Statement as finally determined pursuant to the preceding paragraph shallbe treated as a “Loss” that is indemnifiable pursuant to Section 9.01.  For purposes of this Agreement, “Pre-ClosingTaxes” means all Taxes attributable to taxable periods (or the portionthereof) of the Company, the Seller and the Seller’s Subsidiaries ending on orbefore the Closing Date, all Taxes attributable to the Section 

 

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338(h)(10) Election, all Taxes attributable tothe transactions described in Sections 1.02 and 1.04 hereof, other than (x) Taxesthat are Transaction Expenses required to be borne by the Buyer pursuant toSection 11.01, and (y) Taxes incurred by the Company other than inthe ordinary course of business or contemplated by this Agreement, that areattributable to the acts or omissions of the Buyer or the Buyer’s Affiliatesoccurring after the Closing time on the Closing Date.

 

(v)                                 The provisionsof any Tax sharing agreement under which the Company may incur liability to theSeller or any of its Affiliates shall be terminated on or before the ClosingDate in respect of any taxable period or portion thereof of the Companybeginning after the Closing Date, and any liability of the Company to theSeller or any of its Affiliates under any such Tax sharing agreement shall bedischarged or released on or before the Closing Date, so that the Company shallneither have nor thereafter incur any liability to Seller or any of itsAffiliates thereunder.

 

(b)                                 Taxable YearClosing; Allocation of Taxes.  The Buyer and the Seller shall, unlessotherwise required by Applicable Law, treat the taxable periods of the Companyas ending as of the close of business on the Closing Date.  The Buyer shall not permit the Company totake any action after the Closing timeon the Closing Date that is out of the Ordinary Course of Business, except asrequired by this Agreement.  For purposesof this Agreement, Taxes incurred by the Company with respect to a taxableperiod that includes but does not end on the Closing Date shall be allocated tothe portion of the period ending on the Closing Date: (i) except asprovided in (ii) and (iii) below, such as sales tax, to the extentfeasible, on a specific identification basis, according to the date of theevent or transaction giving rise to the Tax, and (ii) except as providedin (iii) below, with respect to periodically assessed ad valorem Taxes andTaxes not otherwise reasonably allocable to specific transactions or events, inproportion to the number of days in such period occurring through the ClosingDate compared to the total number of days in such period, and (iii) in thecase of any Tax based upon or related to income or receipts, in an amount equalto the Tax that would be payable if the relevant taxable period ended on theClosing Date including taxable periods of any flow-though entities in which Companyholds any equity interest.  Anycredits relating to a taxable period that begins before and ends after theClosing Date shall be taken into account as though the relevant taxable periodended on the Closing Date.  Alldeterminations necessary to give effect to the foregoing allocations shall bemade in a manner consistent with prior practices of the Company.  For avoidance of doubt, for all income taxpurposes, all deductions arising under section 83(h) of the Code as aresult of exercises or settlement of options by Company Employees against stockof the Seller after the Closing Date shall reported by the Parties as expensesof the Seller as successor to the Company pursuant to Section 381 of theCode, and neither Buyer nor the Company shall take any Tax reporting positioninconsistent with such treatment by the Seller.

 

(c)                                  Tax Elections; Amended Returns.  Except in connection with a Proceedingresolved pursuant to Section 6.03(e) (including consistentcorrelative adjustments to Tax Returns for non-audited taxable periods), no Partyor Affiliate of a Party may amend or cause the amendment of a Tax Return of theCompany, or file or amend any Tax election, or file a Tax Return after the duedate thereof, concerning the Company, in each case, with respect to any taxableperiod that would affect the computation of Pre-Closing Taxes, without thewritten consent of the Seller, which consent shall not be unreasonably withheldor delayed.  The Buyer 

 

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shall, upon request by the Seller, cooperate in thepreparation of and submission to the proper Taxing Authority of any amended TaxReturn with respect to the Company for any taxable period beginning before theClosing Date that is necessary to cause such Tax Return to be consistent with adjustmentsto a Tax Return for any other taxable period proposed by a Taxing Authority orcorrelative to adjustments of items included in the consolidated federal incomeTax Return of the Seller or Tax Returns of its other Affiliates, or that isotherwise required by Applicable Law to be filed.

 

(d)                                 Overpaymentsand Overaccruals of Certain Taxes.  If, as the result of an audit or examination,a claim for refund, the filing of an amended Tax Return or other determination,other than amounts attributable to any carryback of Tax attributes of the Buyeror its Affiliates (including the Company) arising in a taxable period (orportion thereof) beginning after the Closing Date (but subject to prior consentof Seller pursuant to Section 6.03(c) to the filing of such carrybackclaim), there has been an overpayment with respect to Taxes of the Company fortaxable periods or a portion thereof ending on the Closing Date that would beIndemnified Taxes if unpaid as of the Closing Date, Taxes paid pursuant to aclaim for indemnification under Section 9.01, or an overaccrual of Taxesthat were reflected as a liability in the calculation of Closing Net WorkingCapital, the Buyer shall promptly pay an amount equal to such overpayment oroveraccrual, and the interest actually received thereon, to the Seller uponreceipt by (or crediting for the benefit of) the Buyer or its Affiliates orreversal of the overaccrual on the financial statements of the Buyer or theCompany, unless and to the extent that the entitlement to any refund or creditof such overpayment was taken into account in computing the amount ofindemnified Loss in respect of such Taxes or reflected in the calculation ofClosing Net Working Capital.  For theavoidance of doubt, the Buyer shall not offset any Tax refunds payable to theSeller hereunder against any indemnifiable Losses except with the prior writtenconsent of the Seller.

 

(e)                                  Audits and Contests Regarding Taxes.  Any Party who receives, or whose Affiliatereceives, any notice of a pending or Threatened Tax audit, assessment oradjustment or other Proceeding related to Taxes against or with respect to theCompany that may give rise to a right to indemnification from the EscrowDeposit pursuant to the terms of Article IX shall promptly notify the Sellerwithin five (5) Business Days of receipt of such notice.  The Buyer and the Seller each agree toconsult with and to keep the other informed on a regular basis regarding thestatus of any Tax Proceeding to the extent that such Proceeding could affect aliability of any of the Parties (including indemnity obligationshereunder).  The Seller shall have theright to represent the Company’s interests in any Tax Proceeding pertaining toIndemnified Taxes or Taxes of the Seller and to employ counsel of its choice atthe Seller’s expense in such Proceeding, and to control the disposition of anyissue involved in such Proceeding; provided that, except in the case of aProceeding relating to a Group Return in which the Company was included for anyperiod through the Closing Date, the Buyer shall have the right to participatein such Proceeding at its own expense, and shall be entitled to control thedisposition of any issue involved in such Proceeding that reasonably would notbe expected to affect either Indemnified Taxes or Taxes of the Seller.  Both the Buyer and the Seller shall beentitled to represent their own interests in light of their responsibilities(including indemnity obligations) for related Taxes, at their own expense, inany Tax Proceeding involving a taxable period of the Company that includes butdoes not end on the Closing Date or involving both a taxable period of theCompany ending on or before the Closing Date and a taxable period ending afterthe Closing Date, and no 

 

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such Proceeding may be settled or compromised by theSeller or the Buyer without the consent of both the Seller and the Buyer, whichconsent shall not be unreasonably withheld. Except as otherwise provided in this Section 6.03(e), theprovisions of Article IX, including the provisions therein addressingsettlement authority, shall govern the manner in which Tax Proceedings areconducted.

 

(f)                                    Cooperation,Access to Information and Records Retention.  The Seller and the Buyer shall cooperate asand to the extent reasonably requested by the other in connection with thepreparation and filing of Tax Returns as provided herein and any Proceedingwith respect to Taxes relating to the Company. Such cooperation shall include the provision of records and informationreasonably relevant to any Tax Return or Tax Proceeding and making employeesavailable on a mutually convenient basis to provide additional information andexplanation of any material provided hereunder. The Buyer agrees (i) to retain all books and records relevant toTaxes of the Company (including Tax Returns (other than income Tax Returns,which shall be retained by the Seller)) relating to any taxable periodbeginning before the Closing Date until the expiration of the statute oflimitations for assessment of Taxes for such respective taxable period, and(ii) to give the Seller reasonable written notice prior to transferring,destroying or discarding any such books and records and, if the Seller sorequests, the Buyer shall allow the Seller to take possession of or copy suchbooks and records.

 

(g)                                 TaxCertificates.  The Buyerand the Seller agree, upon request of the other, to use all reasonable effortsto obtain any certificate or other document from any Governmental Body as maybe necessary to mitigate, reduce or eliminate any Tax that could be imposed(including with respect to the Transactions).

 

(h)                                 Section 338(h)(10) Election;Purchase Price Allocation.

 

(i)                                     The Seller andthe Buyer agree they shall make a joint election under Section 338(h)(10) ofthe Code (and any similar elections permitted by applicable state or local Taxlaw) (collectively, the “Section 338(h)(10) Elections”) withrespect to sale and purchase of the Shares under this Agreement.  The Buyer shall provide a properly completed Form 8023(previously executed on behalf of the Buyer) to Seller before the Closing, andthe Seller shall execute and deliver to the Buyer on the Closing Date such Form 8023and any other such documents that are or have been provided by the Buyer forexecution at the Closing that are required to make effective the Section 338(h)(10) Elections.  Each Party shall promptly execute such otherforms as may be reasonably requested by the other in connection with making orperfecting the Section 338(h)(10) Elections.  The Buyer shall be responsible for thepreparation and filing of all forms and documents required to make the Section 338(h)(10) Elections.  The Parties shall cooperate fully with eachother and make available to each other such Tax data and other information asmay be reasonably required by the Buyer or the Seller in order to timely filethe Section 338(h)(10) Elections. The Parties shall take a consistent position for all relevant Taxpurposes that the Parties’ election under Section 338(h)(10) and anysimilar elections under state and local law were validly made and fullyeffective.

 

(ii)                                  In connectionwith the Section 338(h)(10) Elections and the Asset Purchase, theParties agree that the Purchase Price and other items properly includible inthe deemed sales price of the assets of the Company pursuant to the Section 338(h)(10) Elections

 

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and Asset Purchase (the “Tax Consideration”)shall be allocated for Tax purposes among the Company’s assets in a mannerconsistent with the provisions of Section 338 and Section 1060 of theCode and all regulations promulgated thereunder.  The Tax Consideration shall be allocatedamong the Company’s assets and the Purchased Assets in a manner consistent withthe fair market values of such assets as are agreed between the Parties ordetermined pursuant to Section 6.03(h)(iii).  Appendix B (the “Value Schedule”)sets forth the amounts that the Parties agree as of the Closing Date are thefair market values of specific assets or groups of assets listed thereon (ifany).

 

(iii)                               The Buyer shalldeliver to the Seller, along with the Statement of Closing Net Working Capitalpursuant to Section 1.05(a), a statement containing the Buyer’s proposedallocation of the Tax Consideration among the Company’s assets and thePurchased Assets (the “Allocation Statement”), and draft IRS Forms 8883and 8594 as proposed to be included by the Buyer with its Tax Return for thetaxable year that includes the Closing Date. The Allocation Statement shall be prepared in a manner consistent withthe Value Schedule.  Within thirty (30)days after receipt of the Allocation Statement, the Seller shall review andcomment on the Allocation Statement, and provide to the Buyer draft IRS Forms8883 and 8594 proposed to be included by the Seller in its Tax Return for thetaxable year in which the Closing occurs. Any dispute regarding the Allocation Statement or manner of completingthe Parties’ respective Forms 8883 and 8594 shall be resolved by an independentaccounting firm selected under procedures similar to those specified in Section 1.05.

 

(iv)                              The Partiesagree (A) to be bound by the Allocation Statement as finally agreedbetween the Parties or as determined by an independent accounting firm pursuantto Section 6.03(h)(iii), (B) to act in a manner consistent with theAllocation Statement in the preparation and filing of income Tax Returns(including filing their respective Forms 8883 and 8894 and any amendedthereto), (C) to provide a copy of any amendment or supplement to its Form 8883or 8894 to the other as promptly as practicable after such amendment orsupplement is filed with the IRS and (D) in the course of any Proceedingconcerning Taxes, to take no position and cause their Affiliates to take noposition inconsistent with the Allocation Statement; provided, however, that ifin any audit of any Tax Return of any Party by a Taxing Authority theallocation of the Tax Consideration is finally determined by a Taxing Authorityto be different from the Allocation Statement, then each Party may (but shallnot be required to) take any position or action consistent with the allocationof the Tax Consideration as finally determined in such Proceeding.  In the event that any Taxing Authoritydisputes the allocation of the Tax Consideration as reflected by any of theParties on their respective Tax Returns, such Party shall promptly notify theother Parties of the nature of such dispute.

 

Section 6.04                                Name Change.  The Buyer shall cause the Company to make allfilings, take all other actions, and provide all notices necessary to (i) changethe Company’s corporate name upon the Closing to a name that does not includethe word “Veeco” or any variation or simulation thereof, (ii) promptly adoptnew trade names, trademarks and servicemarks that do not include the word “Veeco”or any variation or simulation thereof; (iii) promptly cause allregistrations relating to Company Registered Intellectual Property, Owned RealProperty and other Company-owned assets to be amended to reflect the newCompany name, (iv) promptly cause all bank, brokerage, line of credit, andother financial accounts to be updated to reflect the new Company name, and (v) promptlycause all Encumbrances relating to the Company to be 

 

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updated to reflect the new Company name.  Notwithstanding the foregoing, the Sellershall grant to the Company a non-exclusive, limited, paid-up license to use the“Veeco” trademark during a transition period not to exceed six (6) monthssolely for purposes of (A) selling any inventory of the Company thatcontains, or is marked with, such trademarks and is existing as of the Closingor (B) using and distributing any marketing materials of the Company thatcontain, or are marked with, such trademarks and are existing as of theClosing.

 

Section 6.05                                Covenant Not toCompete.  For a period of five (5) yearsfrom and after the Closing Date, the Seller will not, directly or indirectlyand in any capacity of any nature whatsoever, engage in the business ofdesigning, manufacturing or selling atomic force microscopes, scanning probemicroscopes, stylus profilers or fast 3D optical microscopes used to providesurface measurements in (a) research or (b) offline or qualityassurance (QA) production environments, in any geographic area in which theCompany conducts that business as of the Closing Date; provided, however,that the Seller may own less than five percent (5%) of the outstanding stock ofany company and shall not be deemed to engage solely by reason thereof in anyof its businesses; provided, further, that this section shall notprevent the Seller from designing, manufacturing, using or selling in-situmetrology equipment for use in process equipment systems or incorporatingthird-party metrology equipment into Seller’s process equipment systems.  In addition, (A) for a period of two (2) yearsfrom and after the Closing Date, the Seller will not, directly or indirectlyand in any capacity of any nature whatsoever, solicit for employment,consulting or other similar relationship any then current employees of theCompany or any Non-Company Employees hired by Buyer, or any persons who wereemployees of the Company at any time within the immediately preceding six (6) months,and (B) for a period of one (1) year from and after the Closing Date,the Seller will not, directly or indirectly and in any capacity of any naturewhatsoever, hire as an employee, consultant or in a similar capacity any thencurrent employee of the Company or any Non-Company Employees hired by Buyer, orany persons who were employees of the Company at any time within theimmediately preceding six (6) months; provided, however, that theSeller and its Affiliates may at any time make offers to and hire any employeeor consultant who is not selected by the Buyer to continue to provide servicesto the Company or an Affiliate of the Company following the Closing or who isterminated by the Buyer or any of its Affiliates (including the Companyfollowing the Closing).  Furthermore,nothing in the immediately preceding sentence shall be construed to prevent theSeller from hiring such employees or consultants resulting from advertising ofopen positions, participating in job fairs or the like, or other forms ofsoliciting candidates for employment or consulting services which are generalin nature.

 

**ARTICLE VII**

 

**CONDITIONS TO OBLIGATION TO CLOSE**

 

Section 7.01                                Conditions toObligations of Each Party Under This Agreement.  The respective obligations of each Party toeffect the Stock Purchase and the Asset Purchase shall be subject to thesatisfaction at or prior to the Closing of the following conditions (any or allof which may be waived in writing by a Party, in whole or in part):

 

(a)                                  Proceedings.  No Governmental Body of competentjurisdiction shall have enacted, issued, promulgated, enforced or entered anystatute, rule, regulation or Order (whether 

 

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temporary, preliminary or permanent) that (i) isin effect and (ii) has the effect of making the Stock Purchase illegal orotherwise prohibiting consummation of the Stock Purchase (which illegality orprohibition would reasonably be expected to have a Material Adverse Effect onthe Buyer and its Subsidiaries on a combined basis with the Company), if theStock Purchase were consummated notwithstanding such statute, rule, regulationor Order; provided, however, that prior to asserting thiscondition, subject to Section 5.01, each of the Parties shall have usedtheir reasonable best efforts to prevent the entry of any Order and to appealas promptly as possible any such Order that may be entered.

 

(b)                                 RegulatoryApprovals.  Anyapplicable mandatory waiting periods, together with any extensions thereof, includingany additional waiting period required as a consequence of any supplementalrequest by a Governmental Body, under the HSR Act and any Foreign AntitrustLaws shall have expired or been terminated.

 

(c)                                  Completion ofContribution and Distribution and License.  The Contribution and DistributionTransaction, including, the execution and delivery of the License Agreement,shall have been consummated in accordance with the terms and subject to theconditions set forth in the Contribution and Distribution Agreement.

 

Section 7.02                                AdditionalConditions to Obligations of the Buyer.  The obligations of the Buyer to effect theStock Purchase and the Asset Purchase shall be subject to the satisfaction ator prior to the Closing of the following conditions (any or all of which may bewaived in writing by the Buyer, in whole or in part):

 

(a)                                  Representationsand Warranties.  Therepresentations and warranties of the Company set forth in Article III ofthis Agreement shall be true and correct in all material respects as of theClosing Date, as if made as of such time (except to the extent that suchrepresentations and warranties expressly relate to a specific date, in whichcase such representations and warranties shall be true and correct in allmaterial respects as of such date).  TheBuyer shall have received a certificate signed on behalf of the Company to sucheffect.

 

(b)                                 Agreements andCovenants.  Each of theCompany and the Seller shall have performed or complied with all of itscovenants hereunder in all material respects through the Closing.  The Buyer shall have received a certificatesigned on behalf of the Company to such effect.

 

(c)                                  Documents.  All of the other documents, instruments andagreements to be executed and/or delivered pursuant to this Agreement(including the Asset Purchase Documents and the Escrow Agreement) shall havebeen executed by the parties thereto other than the Buyer and delivered to theBuyer.

 

(d)                                 No MaterialAdverse Effect.  Since thedate of this Agreement, no Material Adverse Effect on the Company shall haveoccurred.

 

(e)                                  ConsultingAgreement.  The Buyershall have entered into either (i)  a new employment agreement on termsand conditions mutually satisfactory to Mark Munch and Buyer or (ii)  atransition consulting agreement with Mark Munch having a duration of at leastsix (6) months, on substantially the terms and conditions set forth in Exhibit H.

 

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(f)                                    SeveranceArrangements.  The Sellershall have assumed full responsibility for any severance or similar paymentsdue to Mark Munch and Ross Smith, and any Company Employee that is entitled tosuch payments, in each case, as a result of the consummation of theTransactions (without regard to whether such payments become due as a matter oflaw or by contract) and not due to any action or inaction of the Buyer or itsAffiliates following the Closing.

 

(g)                                 TransitionServices Agreement.  The Companyand the Seller shall have entered into a transition services agreement in theform attached hereto as Exhibit I.

 

(h)                                 ContinuedEmployment by Designated Non-Company Employees.  At least seventy-five percent (75%) of theDesignated Non-Company Employees shall have either (i) delivered dulyexecuted employment offer letters or employment agreements in customary form tothe Buyer or an Affiliate, or (ii) in jurisdictions in which employmentcontinues automatically as a result of “transfer of undertaking” or similarforeign laws, continued employment with the Buyer or an Affiliate in accordancewith Applicable Laws.

 

(i)                                     FIRPTA.  The Seller and the Company shall each havedelivered a Foreign Investment and Real Property Tax Act of 1980 (“FIRPTA”)Certification, which (i) states that such Person is not a foreign person, (ii) setsforth such Person’s name, identifying number and address, and (iii) issigned by such Person under penalties of perjury, meeting the requirement ofTreasury Regulations Section 1.1445-2(b)(2).

 

(j)                                     Title Policy.  Chicago Title Company or another titleinsurance company licensed to do business in the State of California, shall beirrevocably and unconditionally committed to issue to the Company a CLTAstandard coverage policy of owner’s title insurance inan amount not less then the fair market value of the Santa Barbara Property insuring theCompany as the fee owner of the Santa Barbara Property, subject only to thePermitted Encumbrances and the other standard exceptions in such policy form.

 

Section 7.03                                AdditionalConditions to Obligations of the Company and the Seller.  The obligations of the Company and the Sellerto effect the Stock Purchase and the Asset Purchase shall be subject to thesatisfaction at or prior to the Closing of the following conditions (any or allof which may be waived in writing by the Company and the Seller, in whole or inpart):

 

(a)                                  Representationsand Warranties.  Therepresentations and warranties of the Buyer set forth in Article IV ofthis Agreement shall be true and correct in all material respects as of theClosing Date, as if made as of such time (except to the extent that suchrepresentations and warranties expressly relate to a specific date or as of thedate hereof, in which case such representations and warranties shall be trueand correct in all material respects as of such date).  The Seller shall have received a certificatesigned on behalf of the Buyer to such effect.

 

(b)                                 Agreements andCovenants.  The Buyershall have performed or complied with all of its covenants hereunder in allmaterial respects through the Closing. The Seller shall have received a certificate signed on behalf of theBuyer to such effect.

 

(c)                                  Documents.  All of the documents, instruments andagreements to be executed and/or delivered pursuant to this Agreement(including the Asset Purchase Documents 

 

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and the Escrow Agreement) shall have been executedby the parties thereto other than the Seller and the Company and delivered tothe Seller.

 

**ARTICLE VIII**

 

**TERMINATION**

 

Section 8.01                                Termination.  This Agreement may beterminated and the Stock Purchase and Asset Purchase may be abandoned at anytime prior to the Closing:

 

(a)                                  By mutualwritten consent of the Buyer and the Seller;

 

(b)                                 By either theBuyer or the Seller if:

 

(i)                                     the Closingshall not have been consummated on or before the Termination Date; provided,however, that if, as of such date, as it may be extended pursuanthereto, (A) any applicable mandatory waiting periods, including anyextensions thereof or any additional waiting periods required as a consequenceof any supplemental request by a Governmental Body, under the HSR Act or anyForeign Antitrust Laws shall not have expired or been terminated, and(B) all other conditions set forth in Article VII have been satisfied(other than those conditions that can by their terms only be satisfied inconnection with the Closing, provided that such conditions are not incapable ofbeing performed at the Closing), then the Termination Date, or any extensionthereof, may be extended at the sole discretion of the Seller for an additionalsix (6) months (provided that the Seller’s right to extend the TerminationDate pursuant hereto shall be limited to two (2) three (3)-monthextensions); or

 

(ii)                                  a GovernmentalBody shall have issued an Order or taken any other action, in each case thathas become final and non-appealable and that restrains, enjoins or otherwiseprohibits the Stock Purchase and/or Asset Purchase.

 

(c)                                  By the Buyer,if (i) the Buyer is not in material breach of its obligations under thisAgreement, and (ii) (x) any of the representations and warranties ofthe Company set forth herein become untrue or inaccurate such thatSection 7.02(a) would not be satisfied or (y) there has been abreach on the part of the Company or the Seller of any of its covenants oragreements contained in this Agreement such that Section 7.02(b) wouldnot be satisfied, and, in each of case (x) and case (y), such breach (ifcurable) has not been cured within thirty (30) days after written notice to theSeller; or

 

(d)                                 By the Seller,if (i) neither the Company nor the Seller is in material breach of itsobligations under this Agreement, and (ii) (x) any of therepresentations and warranties of the Buyer set forth herein become untrue orinaccurate such that Section 7.03(a) would not be satisfied or(y) there has been a breach on the part of the Buyer of any of itscovenants or agreements contained in this Agreement such that Section 7.03(b) wouldnot be satisfied, and, in each of case (x) and case (y), other than abreach by the Buyer of its covenants set forth in Section 5.06, suchbreach (if curable) has not been cured within thirty (30) days after writtennotice to the Buyer.

 

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Section 8.02                                Effect ofTermination.

 

Exceptas provided in this Section 8.02, in the event of the termination of thisAgreement pursuant to Section 8.01, this Agreement (other than thisSection 8.02, Section 5.03, Section 5.05 andSections 11.01, 11.03, 11.05, 11.07, 11.08 and 11.09, which shall survivesuch termination) shall forthwith become void, and there shall be no liabilityon the part of any Party or any of their respective officers or directors tothe other and all rights and obligations of any Party will cease, except thatnothing herein will relieve any Party from liability for (i) breach of anycovenant or agreement contained in this Agreement, including, withoutlimitation, the failure to consummate the Transactions, or (ii) actualfraud.

 

**ARTICLE IX**

 

**INDEMNIFICATION**

 

Section 9.01                                Indemnificationof the Buyer.  Subject tothe limitations set forth in this Article IX, from and after the Closing,the Buyer and its officers, directors, employees, Affiliates and agents(collectively, the “Buyer Indemnified Parties”), shall be entitled toindemnification for any and all Losses arising out of (a) any inaccuracyof any representation or the breach of any warranty made by the Company inArticle III or in any Ancillary Document; (b) any nonfulfillment bythe Company before the Closing, or by the Seller or any Affiliate of the Sellerof any covenant or agreement in this Agreement or any Ancillary Document thathas not been cured within thirty (30) days after receipt of written noticethereof by the Seller, and/or (c) Indemnified Taxes (except as otherwise providedin Section 6.03(a)(ii)).  Except forclaims based on the Seller’s or the Company’s fraud or intentionalmisrepresentation or claims for Indemnified Taxes or claims based on a breachof Section 3.18(e) or (f), indemnification under this Section 9.01shall be limited to recovery from the Escrow Deposit.

 

Section 9.02                                Indemnificationof the Seller.  From andafter the Closing, the Buyer shall defend, indemnify and hold the Seller andits officers, directors, employees, stockholders, Affiliates and agents(collectively, the “Seller Indemnified Parties”) harmless from andagainst any and all Losses arising out of (a) any inaccuracy of anyrepresentation or the breach of any warranty made by the Buyer inArticle IV or in any Ancillary Document and/or (b) any nonfulfillmentby the Company after the Closing, or by the Buyer or any Affiliate of the Buyerof any covenant or agreement in this Agreement or in any Ancillary Documentthat has not been cured within thirty (30) days after receipt of written noticethereof by the Buyer.

 

Section 9.03                                Third PartyClaims.

 

(a)                                  In the eventthat any Buyer Indemnified Party desires to make a claim against the EscrowDeposit or any Seller Indemnified Party desires to make a claim against theBuyer, in each case in connection with any Proceeding, demand or other claim ofa Third Party****at any time instituted against ormade upon such Indemnified Party for which such Indemnified Party may seekindemnification hereunder (a “Third Party Claim”), such IndemnifiedParty shall promptly notify the applicable Indemnification Control Person ofsuch Third Party Claim and the Indemnified Party’s claim for indemnificationwith respect thereto.

 

(b)                                 TheIndemnification Control Person shall have the right to assume the defense ofany Third Party Claim with counsel of its choice by providing written notice tothe 

 

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Indemnified Party within thirty (30) days after theIndemnification Control Person has received notice of such Third Party Claim; provided,however, that, except as otherwise provided in respect of claims subjectto Section 6.03(e), the Indemnified Party shall not be required to permitsuch an assumption of the defense of any Third Party Claim that, if not firstpaid, discharged or otherwise complied with, would reasonably be expected toresult in a Material Adverse Effect on the Buyer or the Seller (as the case maybe).

 

(c)                                  The assumptionof the defense of any Third Party Claim by the Indemnification Control Personshall not constitute an admission of responsibility to indemnify theIndemnified Party or in any manner impair or restrict the Indemnifying Party’srights to later be reimbursed its costs and expenses if indemnification underthis Agreement with respect to such Proceeding, demand or other claim was notrequired.  The Indemnification ControlPerson shall not, in the defense of such claim, consent to the entry of anyjudgment (other than a judgment of dismissal on the merits without costs) orenter into any settlement without the written consent of the Indemnified Party,which consent shall not be unreasonably withheld, delayed or conditioned,except that no such consent shall be required if the sole relief provided ismonetary damages that are reimbursed to the Indemnified Party in full as Losses(subject to, with respect to claims by the Buyer Indemnified Parties, theremaining Deductible Amount, if any, that will be paid by the Buyer IndemnifiedParty, and subject to the other indemnification limitations set forth in this Agreement).

 

(d)                                 If theIndemnification Control Person assumes the defense of a Third Party Claim, theIndemnified Party shall be entitled to participate in the defense of suchclaim, but solely by observation and comment to the Indemnification ControlPerson, and any counsel selected by the Indemnified Party shall not appear onits behalf in any Proceeding arising hereunder. The Indemnified Party shall bear the fees and expenses of any additionalcounsel retained by it to participate in its defense.

 

(e)                                  If theIndemnification Control Person does not assume the defense of a Third PartyClaim after receipt of notice of such Third Party Claim from the IndemnifiedParty pursuant to Sections 9.03(a) and 9.03(b), the Indemnified Partymay defend against such claim in such manner as it reasonably deemsappropriate.  The Indemnified Party maynot settle such claim without the written consent of the IndemnificationControl Person, which consent shall not be unreasonably withheld, delayed orconditioned.

 

(f)                                    The BuyerIndemnified Parties and the Seller Indemnified Parties shall cooperate in goodfaith and in all respects with the Indemnification Control Person and itsrepresentatives (including its counsel) in the investigation, negotiation,settlement, trial and/or defense of any Third Party Claim (and any appealarising therefrom).  The Parties shallcooperate with each other in any notifications to and information requests ofany insurers.  No individualrepresentative of any Indemnifying Party, or any Indemnifying Party’sAffiliates, shall be personally liable for any Loss or Losses under thisAgreement, except as specifically agreed to by said individual representative.

 

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Section 9.04                                Payment ofClaims.

 

(a)                                  In the eventthat any Buyer Indemnified Party desires to seek indemnification under thisArticle IX, the Buyer shall give reasonably prompt written notice to theSeller specifying the facts constituting the basis for such claim and theamount, to the extent known, of the claim asserted.  If the Seller disputes such claim forindemnification, it shall notify the Buyer within thirty (30) days after itsreceipt of notice of such claim for indemnification, whereupon the Buyer andthe Seller shall meet and attempt in good faith to resolve their differenceswith respect to such claim for indemnification. If the dispute has not been resolved within thirty (30) days after suchparties first met to attempt a resolution, either the Seller or the Buyer mayinitiate litigation in accordance with Section 11.09.  If the Seller does not dispute such claim forindemnification, the Escrow Agent shall, to the extent jointly requested by theSeller and the Buyer, pay the Buyer Indemnified Party an amount in cash equalto the amount of such claim in accordance with the terms of the EscrowAgreement.

 

(b)                                 In the eventthat any Seller Indemnified Party desires to seek indemnification under thisArticle IX, the Seller shall give reasonably prompt written notice to theBuyer specifying the facts constituting the basis for such claim and theamount, to the extent known, of the claim asserted.  If the Buyer disputes such claim forindemnification, it shall notify the Seller within thirty (30) days after itsreceipt of notice of such claim for indemnification, whereupon the Buyer andthe Seller shall meet and attempt in good faith to resolve their differenceswith respect to such claim for indemnification. If the dispute has not been resolved within thirty (30) days after suchparties first met to attempt a resolution, either the Seller or the Buyer mayinitiate litigation in accordance with Section 11.09.  If the Buyer does not dispute such claim forindemnification, the Buyer shall pay, or shall cause the Company to pay, theSeller Indemnified Party an amount in cash equal to the amount of such claim.

 

Section 9.05                                Limitations onIndemnification.  Except forclaims based on the Seller’s or the Company’s fraud or intentionalmisrepresentation, claims for Indemnified Taxes, or claims based on a breach ofSection 3.18(e) or (f), no claim may be made against the EscrowDeposit unless and until the Buyer Indemnified Parties have incurred aggregateLosses for which the Buyer Indemnified Parties are entitled to indemnificationpursuant to this Agreement in excess of Two Million Dollars ($2,000,000) in theaggregate (the “Deductible Amount”) and then only to the extent thatsuch aggregate amount of Losses exceeds the Deductible Amount.  With respect to claims based on a breach ofSection 3.18(e) or (f), no claim may be made against the EscrowDeposit or otherwise unless and until the Buyer Indemnified Parties haveincurred aggregate Losses for which the Buyer Indemnified Parties are entitledto indemnification pursuant to this Agreement in excess of Five HundredThousand Dollars ($500,000) in the aggregate (the “Environmental DeductibleAmount”) and then only to the extent that such aggregate amount of Lossesexceeds the Environmental Deductible Amount. Notwithstanding any other provision in this Agreement to the contrary,except for claims based on the Seller’s or the Company’s fraud or intentionalmisrepresentation or claims for Indemnified Taxes, the maximum aggregateindemnification to which all the Buyer Indemnified Parties are entitled shallnot exceed an amount equal to the Escrow Deposit.  Notwithstanding any other provision of thisAgreement to the contrary, if on the Closing Date any Buyer Indemnified Partyknows of any information that would cause one or more of the representations orwarranties in this Agreement to be inaccurate as of the date made, the BuyerIndemnified Parties shall have no right or remedy after the Closing withrespect to such inaccuracy and shall be deemed to have waived all rights toindemnification in respect thereof.

 

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Section 9.06           Exclusive Remedy.  Except in the case of actual fraud orintentional misrepresentation by the Company or the Seller arising from itsrepresentations and warranties contained in Article III of this Agreement,the Buyer acknowledges and agrees that the indemnification set forth in thisArticle IX shall be the sole and exclusive remedy of the Buyer and itsAffiliates for any and all Losses or any other liabilities sustained orincurred by the Buyer or its Affiliates or their successors and assigns inconnection with this Agreement, the Ancillary Documents, the Stock Purchase,the Asset Purchase or otherwise arising out of the Transactions; and the Buyerhereby waives any other remedy that they, or any other Person entitled toindemnification hereunder, may have hereunder, at law, in equity orotherwise.  Once any portion of theEscrow Deposit is released pursuant to the terms of the Escrow Agreement, theBuyer Indemnified Parties shall have no further claim to such amounts.  Except as provided in this Article IX,no claim, action or remedy shall be brought or maintained by any BuyerIndemnified Party against the Seller or its officers, directors, employees,stockholders, Affiliates or agents, and no recourse shall be brought or grantedagainst any of them, by virtue of or based upon any alleged misstatement oromission respecting any inaccuracy in or breach of any of the representations,warranties or covenants of any Party hereto set forth or contained in thisAgreement or any Ancillary Document.

 

Section 9.07           Effect of Insurance, Taxes andOther Recoveries.

 

(a)           The amount of any Losses for which indemnification isprovided under this Article IX shall be reduced by (a) any amounts that may be recovered by the Indemnified Party or any ofits Affiliates from any Third Party, including, without limitation, recovery ofLosses covered by the Raytheon Indemnity or Losses that otherwise arise fromthe legal obligations of the Raytheon Company,  (b) any insurance proceeds or other cashreceipts or source of reimbursement that may be received by the IndemnifiedParty or any of its Affiliates with respect to such Losses (each source namedin clauses (a) and (b), a “Collateral Source”) and (c) theamount of any net Tax benefit, if any, available to the Indemnified Party orits Affiliates attributable to such Losses. The Indemnified Party shall, and shall cause its Affiliates to,diligently pursue all available remedies and causes of action to recover theamount of its claim as may be available from any Collateral Source.  In the event that an Indemnifying Partyindemnifies an Indemnified Party on any claim referred to in the previoussentence and the Indemnified Party is not pursuing such claim, the IndemnifiedParty shall assign to the Indemnifying Party, to the fullest extent allowable,its rights and causes of action with respect to such claim.  In the event that such assignment is notpermissible, the Indemnifying Party shall be allowed to pursue such claim inthe name of the Indemnified Party or its Affiliate at the Indemnifying Party’sexpense.  The Indemnified Party shallprovide the Indemnifying Party reasonable assistance in prosecuting such claim,including making the Indemnified Party’s books and records relating to suchclaim available and making its and its Affiliates’ employees available forinterviews, depositions, testimony and similar matters.  If the amount of any Loss with respect to anyindemnification claim is required to be reduced under this Section 9.07after the date on which the Indemnifying Party is required pursuant to thisArticle IX to pay such indemnification claim, the Indemnified Party shallpromptly reimburse the Indemnifying Party any amount that the IndemnifyingParty would not have had to pay pursuant to this Article IX had such reductionbeen determined at or prior to the time of such payment.

 

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(b)           Indemnified Partiesshall not seek indemnification under this Article IX of any Lossespotentially covered by the Raytheon Indemnity, unless and until IndemnifiedParties have exhausted all reasonable efforts to obtain indemnification for thefull amount of such Losses pursuant to the terms of the Raytheon Indemnity.

 

(c)           For purposes of this Article IX, the amount of theLosses relating to any item included as a liability or reserve in calculatingthe Closing Net Working Capital shall be calculated net of the amount soincluded.

 

(d)           The Buyer shall take, and shall cause its Affiliates totake, all reasonable steps to mitigate and otherwise minimize their Losses tothe maximum extent reasonably possible upon and after becoming aware of anyevent that would reasonably be expected to give rise to any Losses.

 

Section 9.08           No Double Recovery.  Notwithstanding the fact that any Buyer IndemnifiedParty may have the right to assert claims for indemnification under or inrespect of more than one provision of this Agreement in respect to any fact,event, condition or circumstance, no Person shall be entitled to recover theamount of any Losses suffered by such Person more than once under both thisAgreement and the Ancillary Documents in respect of such fact, event, conditionor circumstance, and no Buyer Indemnified Party shall have recourse to theEscrow Deposit to the extent that the Buyer has otherwise been fullycompensated on a dollar-for-dollar basis for such Losses pursuant to theClosing Net Working Capital adjustment set forth in Section 1.05.

 

Section 9.09           Survival of Representations,Warranties and Covenants.  Therepresentations and warranties in this Agreement or any Ancillary Documentdelivered by or on behalf of the Parties hereto shall survive the Closing for aperiod of twelve (12) months after the Closing Date, provided that therepresentations in Section 3.18(e) and(f) shall survive for a period of sixty (60) months after the Closing Dateand the representations in Section 3.10 shall survive untilsixty (60) days after expiration of the applicable statute of limitations.  The covenants and agreements of the Partiesto be wholly performed prior to the Closing shall survive the Closing for aperiod of twelve (12) months after the Closing Date; and the other covenants oragreements to be performed at or after the Closing shall survive the Closinguntil fully performed.  After the end ofthe twelve (12) month period set forth in each of the two preceding sentences,no claim for breach of such representations, warranties or covenants may bebrought, and no action with respect thereto may be commenced, no BuyerIndemnified Party shall have recourse to the Escrow Deposit and no Party shallhave any liability or obligation with respect thereto, unless the IndemnifiedParty gave written notice to the Indemnifying Party, specifying withparticularity the breach of the representation, warranty or covenant claimed,on or before the expiration of such twelve (12) month period, in which case theright of the Party providing such written notice to assert its right toindemnification as to the matters so noticed shall not expire until the disputeis resolved under the terms of this Agreement.

 

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**ARTICLE X**

 

**DEFINITIONS**

 

Section 10.01         Defined Terms.  When used in this Agreement, the followingterms shall have the meanings set forth below:

 

“AccountingArbitrator” has the meaning set forth in Section 1.05(b).

 

“Affiliate”has the meaning set forth in Rule 12b-2 of the regulations promulgatedunder the Securities Exchange Act of 1934, as amended.

 

“Agreement”has the meaning set forth in the preamble hereof.

 

“AllocationStatement” has the meaning set forth in Section 6.03(h)(iii).

 

“AncillaryDocuments” means the documents, instruments and agreements to be executedand/or delivered pursuant to this Agreement or pursuant to any AncillaryDocument.

 

“ApplicableLaw” or “Applicable Laws” means, with respect to any Person, any and all laws(including the common law), ordinances, constitutions, regulations, statutes,treaties, rules, codes, licenses, requirements, orders and injunctions adopted,enacted, implemented, promulgated, issued, entered by or under the authority ofany Governmental Body having jurisdiction over such Person or any of suchPerson’s properties or assets.

 

“AssetPurchase” has the meaning set forth in the recitals hereof.

 

“AssetPurchase Documents” has the meaning set forth in Section 1.02.

 

“AssetPurchase Price” has the meaning set forth in Section 1.02.

 

“AssumedLiabilities” has the meaning set forth in the recitals hereof.

 

“Broker”has the meaning set forth in Section 3.24.

 

“BusinessDay” means any day of the year other than a Saturday, Sunday or any other dayon which commercial banks in New York, New York are authorized or required bylaw to be closed.

 

“BusinessTransfer Agreement” has the meaning set forth in Section 1.02.

 

“Buyer”has the meaning set forth in the preamble hereof.

 

“BuyerDebt Provider” has the meaning set forth in Section 4.06(a).

 

“BuyerDisclosure Schedules” has the meaning set forth in Article IV.

 

“BuyerIndemnified Parties” has the meaning set forth in Section 9.01.

 

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“BuyerPlans” has the meaning set forth in Section 6.02(b).

 

“BuyerReturn” has the meaning set forth in Section 6.03(a)(i).

 

“Cash”means, as of the close of business on the Closing Date, the sum of the cash ofthe Company determined in accordance with GAAP together with cash on hand, cashreflected in bank accounts and cash equivalents, including marketablesecurities.

 

“CFIUS”means the Committee on Foreign Investment in the United States.

 

“Closing”has the meaning set forth in Section 2.01.

 

“ClosingBacklog” means the aggregate dollar amount of all unfilled orders for productsand services of the Company and its international business units/sales andservice organizations as of the Closing Date.

 

“ClosingDate” means the date on which the Closing occurs.

 

“ClosingNet Working Capital” means, on the Closing Date (but without giving effect tothe Closing), the sum of current assets of the Company and current assets ofthe Company’s international business units/sales and service organizationsattributable to the Purchased Assets and Assumed Liabilities (in each case,excluding any income Tax assets of the Company and any Cash distributed on theClosing Date pursuant to the Contribution and Distribution Agreement) minus thesum of current liabilities of the Company and current liabilities of theCompany’s international business units/sales and service organizationsattributable to the Purchased Assets and Assumed Liabilities (in each case,excluding (i) any income Tax liabilities of the Company, (ii) anyliabilities for bonus compensation, transaction incentive payments and profitsharing, (iii) any portion of the Transaction Expenses paid or payable bythe Seller, (iv) any amounts paid or payable by the Seller or any of itsAffiliates (other than the Company) for accrued vacation, paid time off or sickleave that is not assumed and honored by the Buyer (or one of its Affiliates)in accordance with Section G-13 of Exhibit G), and (v) liabilitiesdue to any termination or resignation of Company Employees or Non-CompanyEmployees prior to the Closing, in each case as determined in accordance withModified GAAP.

 

“Code”means the Internal Revenue Code of 1986, as amended.

 

“CollateralSource” has the meaning set forth in Section 9.07.

 

“CommonStock” means the common stock, par value $0.01 per share, of the Company.

 

“Company”has the meaning set forth in the preamble hereof.

 

“CompanyArticles” means the articles of incorporation of the Company.

 

“CompanyBalance Sheet” has the meaning set forth in Section 3.07(a).

 

“CompanyBalance Sheet Date” has the meaning set forth in Section 3.07(a).

 

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“CompanyDisclosure Schedules” has the meaning set forth in Article III.

 

“CompanyEmployee” has the meaning set forth in Section 6.02.

 

“CompanyFinancial Statements” has the meaning set forth in Section 3.07(a).

 

“CompanyReal Property” means collectively, the Owned Real Property and the Leased RealProperty.

 

“CompanyRegistered Intellectual Property” has the meaning set forth inSection 3.12(a).

 

“CompanySelected Assets” has the meaning set forth in the recitals hereof.

 

“ComparableCompensation and Benefits” has the meaning set forth in Section 6.02(a).

 

“ConfidentialInformation” means any information or compilation of information not generallyknown to the public or the industry or that the Company has not disclosed toThird Parties without a written obligation of confidentiality relating to theCompany’s procedures, techniques, methods, concepts, ideas, affairs, products,processes or services, including information relating to distribution,marketing, merchandising, selling, research, development, manufacturing,purchasing, accounting, engineering, financing, costs, pricing and pricingstrategies and methods, customers, suppliers, creditors, employees,contractors, agents, consultants, plans, billing, needs of customers andproducts and services used by customers, all lists of suppliers, distributorsand customers and their addresses, prospects, sales calls, products, services,prices and the like, as well as any specifications, formulas, plans, drawings,accounts or sales records, sales brochures, catalogs, code books, manuals,trade secrets, knowledge, know-how, operating costs, sales margins, methods ofoperations, invoices or statements and the like; provided, however,that the term “Confidential Information” shall not be deemed to includeinformation that (i) becomes generally available to the public without anyfault of the Company, (ii)  is disclosed to a Governmental Body pursuantto Applicable Law and is publicly available as a result of such disclosure, (iii) isreleased by the Company without restriction, (iv) is received by Buyerwithout restriction from a third party properly in possession thereof and notsubject to confidentiality obligations with respect thereto, or (v) isindependently developed by Buyer without reference to the ConfidentialInformation.

 

“ConfidentialityAgreement” has the meaning set forth in Section 5.05.

 

“Contract”means any agreement, lease, license agreement (other than a license granted bya Governmental Body), contract, consensual obligation, promise, commitment,arrangement, understanding or undertaking (whether written or oral and whetherexpress or implied) of any type, nature or description.

 

“Contributionand Distribution Agreement” has the meaning set forth in the recitals hereof.

 

“Contributionand Distribution Transaction” has the meaning set forth in the recitals hereof.

 

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“DebtFunding” has the meaning set forth in Section 4.06(a).

 

“DebtProvider Letter” has the meaning set forth in Section 4.06(a).

 

“DeductibleAmount” has the meaning set forth in Section 9.05.

 

“DesignatedNon-Company Employees” means the Non-Company Employees listed onSchedule 10.01(a) of the Company Disclosure Schedules; provided,however, if the Buyer fails to continue a Non-Company Employee’semployment in accordance with Applicable Laws, or to make a “qualified offer”to a Non-Company Employee, as applicable, in accordance with Schedule G,or proposes to relocate such Non-Company Employee within one (1) yearafter the Closing, then such Non-Company Employee shall not be deemed to be a “DesignatedNon-Company Employee.”

 

“DIIContract” has the meaning set forth in Section 3.18(f).

 

“Dollars”and the sign “$” mean United States Dollars.

 

“EmployeeBenefit Plan” means any material “employee benefit plan” (as such term isdefined in ERISA Section 3(3)) that is covered by Title I of ERISA and ismaintained or sponsored by the Company or any of its ERISA Affiliates for thebenefit of any current or former employee, director, consultant or independentcontractor of the Company.

 

“Encumbrances”means any mortgage, pledge, assessment, security interest, lease, lien, adverseclaim, levy, charge or other encumbrance of any kind.

 

“Environment” has themeaning set forth in the Comprehensive Environmental Response, Compensation andLiability Act of 1980, as amended.

 

“EnvironmentalClaim” means administrative, regulatory or judicial action, suits, demands,demand letters, claims, notices of non-compliance or violation, investigationor Proceedings, Orders or agreements, arising under any Environmental Law or anyPermit issued under any Environmental Law, including (i) EnvironmentalClaims by Governmental Bodies for enforcement, cleanup, removal, response,remedial or other action or damage pursuant to any applicable EnvironmentalLaw, and (ii) Environmental Claims by any Third Party seeking damages orinjunctive relief resulting from Environmental Conditions or arising fromalleged injury or threat of injury to health, safety or the Environment.

 

“EnvironmentalCondition” means the presence or introduction into the Environment of anyHazardous Materials (and any resulting air, soil, groundwater or surface watercontamination without regard to the location to which such resultingcontamination has migrated or spread) as a result of which the Company has ormay become liable to any Person or by reason of which the Company or any assetsof the Company may suffer or be subject to an Environmental Claim.

 

“EnvironmentalLaws” means all Applicable Laws and any Order that (i) regulates orrelates to (x) the protection or clean-up of the Environment; (y) theuse, treatment, generation, storage, transportation, handling, disposal orrelease of Hazardous Materials; or (z) the preservation or protection ofwaterways, groundwater, drinking water, air, wildlife, plants or 

 

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othernatural resources; or (ii) imposes liability with respect to any of theforegoing, including the Comprehensive Environmental Response, Compensation andLiability Act, 42 U.S.C. Section 9601 et seq.; the Resource Conservationand Recovery Act, 42 U.S.C. Section 6901 et seq.; the Federal WaterPollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; theToxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the CleanAir Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42U.S.C. Section 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C.Section 2701 et seq.; or any other Applicable Law of similar effect, eachas amended from time to time.

 

“ERISA”means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISAAffiliate” means each entity that is treated as a single employer with theCompany for purposes of Code Section 414.

 

“EscrowAgent” has the meaning set forth in Section 1.03.

 

“EscrowAgreement” has the meaning set forth in Section 1.03.

 

“EscrowDeposit” has the meaning set forth in Section 1.03.

 

“Field Office” means an office outside the UnitedStates used by the Seller or a Subsidiary as a place of employment of at leastone employee as of immediately prior to the Closing who will be hired by theBuyer or an Affiliate pursuant to this Agreement.

 

“FINSA”****means the Foreign Investment and NationalSecurity Act of 2007, 50 U.S.C. App. §2061, amending the Defense Production Actof 1950, 50 U.S.C. App. §2170.

 

“FIRPTA”has the meaning set forth in Section 7.02(i).

 

“ForeignAntitrust Laws” means any applicable foreign or supranational law, regulation,legislation or decree of any jurisdiction other than the United States designedto prohibit, restrict or regulate actions for the purpose or effect ofmonopolization, restraint of trade or merger control.

 

“GAAP”means United States generally accepted accounting principles as in effect fromtime to time, as applied by the Company.

 

“GovernmentalBody” means any (i)  nation, state, county, city, town, village, districtor other jurisdiction of any nature; (ii) federal, state, local,municipal, foreign or other government; (iii)  governmental orquasi-governmental authority of any nature (including any governmental agency,branch, board, commission, department, instrumentality, office or other entity,and any court or other tribunal); (iv) multi-national organization orbody; and/or (v) government entity exercising, or entitled or purportingto exercise, any administrative, executive, judicial, legislative, police,regulatory or taxing authority or power of any nature.

 

“GroupReturn” has the meaning set forth in Section 3.10(e).

 

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“HazardousMaterials” means (i) any petroleum or petroleum products, asbestos in anyform, and polychlorinated biphenyls, and (ii) any chemicals, materials orsubstances, whether solid, liquid or gas defined as or included in thedefinition of “contaminant,” “pollutant,” “hazardous substances,” “hazardouswastes,” “hazardous materials,” “extremely hazardous wastes,” “restrictedhazardous wastes,” “toxic substances,” or “toxic pollutants” under anyapplicable Environmental Law.

 

“HSRAct” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, asamended, and the rules and regulations thereunder.

 

“Improvements”means any and all structures, buildings, building systems (including withoutlimitation roof, HVAC, electrical, plumbing, sprinklers and fire safetysystems), irrigation systems, drainage systems, wells, septic systems, roads,fixtures and other improvements on, servicing or related to any of the OwnedReal Property, together with the systems and facilities servicing the same.

 

“IndemnificationControl Person” means (i) in the event of a claim by a Seller IndemnifiedParty, the Buyer; and (ii) in the event of a claim by a Buyer IndemnifiedParty against the Escrow Deposit, the Seller.

 

“IndemnifiedParty” means any Person entitled to seek indemnification pursuant to Article IX.

 

“IndemnifiedTaxes” has the meaning set forth in Section 6.03(a)(ii).

 

“IndemnifyingParty” means any Person against whom indemnification may be sought pursuant toArticle IX.

 

“InsurancePolicies” has the meaning set forth in Section 3.19.

 

“IntellectualProperty” means any and all (i) inventions (whether patentable orunpatentable and whether or not reduced to practice), all improvements thereto,and all patents, patent applications and patent disclosures, together with allreissuances, continuations, continuations in part, revisions, extensions andreexaminations thereof; (ii) trademarks, service marks, trade dress,logos, trade names, assumed names and corporate names, together with alltranslations, adaptations, derivations and combinations thereof and includingall goodwill associated therewith, and all applications, registrations andrenewals in connection therewith; (iii) copyrightable works, allcopyrights and all applications, registrations and renewals in connectiontherewith; (iv) mask works and all applications, registrations andrenewals in connection therewith; (v) trade secrets and confidentialbusiness information (including ideas, research and development, know-how,technology, formulas, compositions, processes and techniques, technical data,designs, drawings, specifications, customer and supplier lists, pricing andcost information and business and marketing plans and proposals);(vi) computer software (including data and related software programdocumentation in computer-readable and hard-copy forms); (vii) otherintellectual property and proprietary rights of any kind, nature ordescription, including web sites and web site domain names; and(viii) copies of tangible embodiments thereof (in whatever form ormedium).

 

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“IRS”has the meaning set forth in Section 3.17(c).

 

“Knowledge”of or “Known” by (i) the Company or the Seller means the actual knowledgeof, or actually known by, the individuals listed on Schedule 10.01(b), and(ii) the Buyer means the actual knowledge of, or actually known by, theindividuals listed on Schedule 10.01(c).

 

“Lease”has the meaning set forth in Section 3.11(b).

 

“LeasedReal Property” means and includes all Real Property that the Company shalleither occupy or use or has the right to occupy or use as of the Closing, butthat is not owned by the Company.

 

“LicenseAgreement” has the meaning set forth in Section 1.04.

 

“Loss”or “Losses” of a Person means any and all liabilities, losses, costs, expenses,damages, fines, penalties, charges, assessments and judgments (includingreasonable attorneys’ and independent accountants’ fees) actually incurred bysuch Person; provided that in connection with any indemnity claimhereunder, Losses shall exclude (i) Losses that are for consequential,special, exemplary, or punitive damages, (ii) Losses for lost profits, and(iii) Loses based upon any multiplier of the Company’s earnings, cash flowor any other premium or valuation metric.

 

“MajorCustomers” has the meaning set forth in Section 3.20.

 

“MaterialAdverse Effect” means, with respect to any Person, any change or event oreffect that is materially adverse to the business or financial condition ofsuch Person and its Subsidiaries, taken as a whole, excluding, in each case,any change, event or effect arising out of or resulting from (i) changes in general legal, Tax, regulatory orbusiness conditions that, in each case, generally affect the geographic regionsor industries in which such Person conducts its business, including changes inthe use, adoption or non-adoption of industry standards; (ii) changesin conditions in the U.S. or global economy or capital, financial, credit,foreign exchange or securities markets generally, including any disruption thereof; (iii) fires, epidemics,quarantine restrictions, strikes, freight embargoes, earthquakes,hurricanes, floods, landslides or other acts of God or natural disasters;(iv) national or international political conditions, any outbreak orescalation of hostilities, insurrection or war, whether or not pursuant todeclaration of a national emergency or war, acts of terrorism or similarcalamity or crisis; (v) acts of the Government in its sovereign capacity;(vi) changes in Applicable Law or applicable accounting regulations orprinciples or interpretations thereof; (vii) any failure to meet anyestimates, earnings or other financial projections, performance measures oroperating statistics (but not excluding any such failure described in thisclause (vii) in the event that the revenues and bookings of the Companyand its international business units/sales and service organizations for thethird quarter of fiscal year 2010 are less than eighty percent (80%) of theaverage revenues and bookings of the Company and its international businessunits/sales and service organizations for the first and second quarters offiscal year 2010); (viii) the negotiation, announcement, pendency,execution, delivery or performance of this Agreement or the AncillaryDocuments, the consummation of any of the Transactions or the identity of theother Party, including any termination of, denial of, reduction in, or similarnegative impact on relationships, contractual or 

 

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otherwisewith any customers, suppliers, distributors, partners or employees of suchPerson; (ix) such Person’s actions taken, delayed or omitted to be takenin accordance with this Agreement or taken at the request or with the consentof the other Party or any change, event or effect relating to any action taken(or any failure to take any action) by any other Party hereto; (x) anymatter set forth in any of the Company Disclosure Schedules; or (xi) anychange, event or effect that has been cured prior to the Closing.

 

“MaterialContracts” has the meaning set forth in Section 3.13(a).

 

“MaterialIntellectual Property Agreements” has the meaning set forth inSection 3.12(b).

 

“MaterialSupplier” has the meaning set forth in Section 3.21.

 

“ModifiedGAAP” has the meaning set forth on Appendix A.

 

“Non-CompanyEmployees” means each employee of the Seller or any direct or indirectSubsidiary of the Seller (other than the Company) who is primarily engaged inthe business of the Company and which the Parties intend to transfer to the Buyeror any direct or indirect Subsidiary of the Buyer.  Schedule 10.01(d) of the CompanyDisclosure Schedule sets forth the name of each such individual so employed asof the date hereof.

 

“Non-U.S.Employees” means each employee of the Seller or any direct or indirectSubsidiary of the Seller (other than the Company) employed primarily at alocation outside the United States who is primarily engaged in the business ofthe Company and which the Parties intend to transfer to the Buyer or any director indirect Subsidiary of the Buyer. Schedule 10.01(e) of the Company Disclosure Schedule sets forth thename of each such individual so employed as of the date hereof.

 

“Order”means any order, judgment, award, decision, consent decree, injunction, ruling,writ, charge or other restriction of a Governmental Body that is binding on anyPerson or its property under Applicable Law.

 

“OrdinaryCourse of Business” means the ordinary course of business consistent with pastpractice (including with respect to quantity and frequency).

 

“OwnedReal Property” means and includes any Real Property that is, or as of theClosing will be, owned in fee by the Company.

 

“Party”or “Parties” has the meaning set forth in the preamble hereof.

 

“Permit”or “Permits” means any and all permits, licenses, filings, authorizations,registrations, qualifications, consents, approvals or indicia of authority (andany pending applications for approval or renewal of a Permit) issued by anyGovernmental Body that are required by, or issued to or on behalf of, a Person,in order for the Company or such Person to own, , operate or maintain itsassets or conduct its business.

 

“PermittedEncumbrances” means (a) Taxes, assessments and other governmental levies,fees or charges that are (i) not due and payable as of the Closing Date,or (ii) being contested by 

 

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appropriateProceedings, (b) statutory Encumbrances, mechanic’s liens and similarliens for labor, materials or supplies, in each case incurred in the OrdinaryCourse of Business for amounts that are (i) not delinquent by more thanninety (90) days, or (ii) being contested in good faith by appropriateProceedings and shall have adequately bonded over or released as of theClosing, (c) pledges or deposits to secure obligations under ApplicableLaws related to workers’ compensation or similar legislation or to securepublic or statutory obligations, (d) deposits to secure the performance ofbids, trade contracts, leases, statutory obligations, surety and appeal bonds,performance bonds and other similar obligations, (e) Encumbrances that area matter of public record, (f) present or future zoning, building codesand other land use Applicable Law regulating the use or occupancy of Real Propertyor the activities conducted thereon that are imposed by any Governmental Bodyhaving jurisdiction over such Real Property, (g)  purchase money liens(but excluding any such liens with respect to Owned Real Property) and lienssecuring rental payments under capital lease arrangements,(h) Encumbrances referred to in the Company Disclosure Schedules,(i) Encumbrances reflected in the Company Balance Sheet and(j) easements, rights of way, covenants, conditions, restrictions andother similar matters and other title defects and Encumbrances that do notmaterially impair (either individually or in the aggregate) the use oroccupancy of Real Property or the operation of the business of the Company.

 

“Person”means an individual, a partnership, a limited partnership, a corporation, alimited liability company, an association, a joint stock company, a trust, ajoint venture, an unincorporated organization or any other business entity or aGovernmental Body.

 

“PersonalProperty” has the meaning set forth in Section 3.11(h).

 

“Pre-ClosingTax Statement” has the meaning set forth in Section 6.03(a)(ii).

 

“Pre-ClosingTaxes” has the meaning set forth in Section 6.03(a)(iv).

 

“Proceeding(s)”means any claim, suit, litigation, arbitration, hearing, audit, investigationor other action (whether civil, criminal, administrative or investigative)commenced, brought, conducted, or heard by or before, any Governmental Body orarbitrator.

 

“PurchasePrice” has the meaning set forth in Section 1.01(b).

 

“PurchasedAssets” has the meaning set forth in the recitals hereof.

 

“RaytheonIndemnity” has the meaning set forth in Section 3.18(f).

 

“RealProperty” of any Person, means, collectively, all real property or intereststherein owned, leased, occupied, used or controlled by such Person, togetherwith all buildings, structures, improvements and fixtures located thereon, andeasements and other rights and interests appurtenant thereto.

 

“Release”has the meaning set forth in the Comprehensive Environmental Response,Compensation and Liability Act of 1980, as amended.

 

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“SantaBarbara Property” means the office and manufacturing facility located at 112Robin Hill Road, Santa Barbara, California.

 

“Section 338(h)(10) Elections”has the meaning set forth in Section 6.03(h)(i).

 

“SecuritiesAct” has the meaning set forth in Section 4.09.

 

“Seller”has the meaning set forth in the preamble hereof.

 

“SellerIndemnified Parties” has the meaning set forth in Section 9.02.

 

“SellerReturn” has the meaning set forth in Section 6.03(a)(i).

 

“SellerSelected Assets” has the meaning set forth in the recitals hereof.

 

“Shares”means 100 shares of the Common Stock.

 

“SoleSource Suppliers” means suppliers of items which would require significantdesign engineering resources to either (a) qualify an alternate supplierof such item or (b) redesign the Company product to use a similar itemfrom a different supplier.

 

“Statementof Closing Net Working Capital” has the meaning set forth inSection 1.05(a).

 

“StockPurchase” has the meaning set forth in the recitals hereof.

 

“StockPurchase Price” has the meaning set forth in Section 1.01(b).

 

“Subsidiary”means, with respect to any Person, (i) if a corporation, a majority of thetotal voting power of shares of stock entitled (without regard to theoccurrence of any contingency) to vote in the election of directors thereof isat the time owned or controlled, directly or indirectly, by that Person or oneor more other Subsidiaries of that Person or a combination thereof, or(ii) if a limited liability company, partnership, association, or other businessentity (other than a corporation), a majority of partnership or other similarownership interest thereof is at the time owned or controlled, directly orindirectly, by that Person or one or more Subsidiaries of that Person or acombination thereof and for this purpose a Person owns a majority ownershipinterest in such a business entity (other than a corporation) if such Personshall be allocated a majority of such business entity’s gains or losses orshall be or shall control any managing director or general partner of suchbusiness entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

 

“TargetClosing Net Working Capital” means Thirty-Two Million Two Hundred Seventy-SixThousand Dollars ($32,276,000).

 

“Tax”or “Taxes” means (a) any tax of any kind whatsoever payable to aGovernmental Body, including all income, gross receipts, license, payroll,employment, excise, severance, stamp, occupation, premium, windfall profits,environmental, customs duties, capital stock, ad valorem, value added,inventory, franchise, profits, withholding, social security (or similar),unemployment, disability, Real Property, personal property, unclaimed property,escheat, sales, 

 

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use,transfer, registration, alternative or add-on minimum, or estimated tax, andincluding any interest, penalty, or addition thereto, whether disputed or not;and (b) any liability for the Taxes described in clause (a) ofanother Person imposed under Treasury Regulations Section 1.1502-6 (or anysimilar provision of foreign, state or local law), as a transferee orsuccessor, by contract, or otherwise.

 

“TaxArbitrator” has the meaning set forth in Section 6.03(a)(iii).

 

“TaxConsideration” has the meaning set forth in Section 6.03(h)(ii).

 

“TaxReturn” means any return, declaration, report, claim for refund, or informationreturn or statement with respect to any Tax required to be filed, or actuallyfiled, with a Taxing Authority, including any schedule or attachment thereto,and including any amendment thereof.

 

“TaxStatement Dispute” has the meaning set forth in Section 6.03(a)(iii).

 

“TaxingAuthority” means the Governmental Body responsible for the administration ofany Tax.

 

“TerminationDate” means the ninetieth (90th) day after the date hereof, as such date may beextended pursuant to Section 8.01(b).

 

“ThirdParty” or “Third Parties” means any Person that is neither a Party to thisAgreement nor a Subsidiary or Affiliate of any Party.

 

“ThirdParty Claim” has the meaning set forth in Section 9.03(a).

 

“ThirdParty Interests” has the meaning set forth in Section 3.06.

 

“Threatened”means as follows: a Proceeding, dispute or other matter will be deemed to havebeen “Threatened” if any demand or statement has been made in writing, or anynotice has been given in writing that would lead a reasonably prudent Person toconclude that such a Proceeding, dispute or other matter will, with substantialcertainty, be asserted, commenced, taken or otherwise pursued in the future; provided,however, that the foregoing shall not include customer billing, serviceor warranty disputes in the Ordinary Course of Business.

 

“TransactionExpenses” has the meaning set forth in Section 11.01.

 

“Transactions”means the Stock Purchase, the Asset Purchase and any other transactionscontemplated by or pursuant to this Agreement, the Contribution andDistribution Agreement, the Asset Purchase Documents or any of the otherAncillary Documents.

 

“Transferee” meansBruker AXS GmbH, a company organized under the laws of Germany, which is aSubsidiary of the Buyer.

 

“Transferor” withrespect to a Non-U.S. Employee, means the Subsidiary of the Seller that employssuch Non-U.S. Employee.

 

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“Tucson Facility” meansthe office facility located at 2650 East Elvira Road, Tucson, Arizona.

 

“TucsonLease Agreement” shall have the meaning set forth in the recitals to theContribution and Distribution Agreement.

 

“ValueSchedule” has the meaning set forth in Section 6.03(h)(ii).

 

**ARTICLE XI**

 

**MISCELLANEOUS**

 

Section 11.01         Expenses.  All costs and expenses (including legal feesand expenses) arising from or incident to this Agreement, the AncillaryDocuments and the Transactions (collectively, the “Transaction Expenses”)incurred by the Buyer (including the commissions, fees or other compensation ofthe Buyer’s Broker) shall be borne by the Buyer.  All Transaction Expenses incurred by theCompany on or prior to the Closing Date (including the commissions, fees orother compensation of the Company’s Broker) shall be borne by the Seller.  All transfer, documentary, sales, use, stamp,registration and other such Taxes (including real estate transfer Taxes), andall conveyance fees, recording charges and other similar fees and charges(including any penalties and interest) incurred in connection with theconsummation of the Transactions shall be shared equally by the Buyer and theSeller.  Each Party shall, and shallcause its respective Affiliates to, at its own expense, prepare and cause to befiled all necessary Tax Returns and other documentation required by ApplicableLaw to be filed by such Party or Affiliate of such Party with respect to allsuch Taxes, fees and charges, and, if required by Applicable Law, the Partiesshall, and shall cause their respective Affiliates to, join in the execution ofany such Tax Returns and other documentation. Each Party shall be responsible for all filing fees for any requiredfilings by it, including under the HSR Act and any notifications made pursuantto any Foreign Antitrust Laws.  Notwithstanding the foregoing, if either Party failsto perform any of its obligations under this Agreement, theAncillary Documents or the Transactions or if any dispute arises between the Parties relating to this Agreement,the Ancillary Documents or the Transactions, then the defaulting Party or the Party not prevailing in such dispute,as the case may be, shall pay any and all costs and expenses incurred by theother Party on account of such default and/or in enforcing or establishing itsrights hereunder, including, without limitation, court costs and reasonableattorneys’ fees and disbursements.  Anysuch attorneys’ fees and other expenses incurred by either Party in enforcing ajudgment in its favor under this Agreement, the Ancillary Documents orthe Transactions shall be recoverableseparately from and in addition to any other amount included in such judgment,and such attorneys’ fees obligation is intended to be severable from the otherprovisions of this Agreement, the Ancillary Documents and theTransactions and to survive and not bemerged into any such judgment.

 

Section 11.02         No Third-Party Beneficiaries.  Except as otherwise set forth inArticle I and Article IX, this Agreement shall not confer any rightsor remedies upon any Person other than the Parties and their respectivesuccessors and permitted assigns.

 

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Section 11.03         Entire Agreement.  This Agreement, including the CompanyDisclosure Schedules, the Buyer Disclosure Schedules and any Appendices andExhibits attached hereto, the Escrow Agreement, the Confidentiality Agreementand the other documents referred to herein, constitutes the entire agreement amongthe Parties and supersedes any prior understandings, agreements orrepresentations by or among the Parties, written or oral, to the extent thatthey relate in any way to the subject matter hereof.

 

Section 11.04         Exhibits and Schedules.  The Company Disclosure Schedules, the BuyerDisclosure Schedules and any Exhibits and Appendices attached hereto areincorporated herein by reference and made a part hereof.  A fact or matter disclosed in the CompanyDisclosure Schedules with respect to one section or subsection shall be deemedto be disclosed with respect to each other section or subsection where suchdisclosure is appropriate to the extent that it is reasonably apparent fromreading such Company Disclosure Schedule that such disclosure is applicable to suchother sections or subsections.  From timeto time prior to the Closing, the Company may amend, supplement or revise theCompany Disclosure Schedules with respect to any matter, which disclosure shallbe effective for all purposes under this Agreement, including to cure anymisrepresentation or breach of warranty that otherwise might have existedhereunder by reason of such matter and for purposes of Article IX; providedthat the disclosure provided in any such amended, supplemented or revisedschedule shall in no way be effective for purposes of the conditions set forthin Article VII.

 

Section 11.05         Succession and Assignment.  This Agreement shall be binding upon andinure to the benefit of the Parties and their respective successors andpermitted assigns.  No Party may assignthis Agreement or any of its rights, interests or obligations hereunder withoutthe prior written approval of the other Party.

 

Section 11.06         Counterparts and FacsimileSignatures.  This Agreement may beexecuted in two (2) or more counterparts, each of which shall be deemed anoriginal but all of which together shall constitute one and the sameinstrument.  The counterparts of thisAgreement may be executed and delivered by facsimile signature by any of theParties to any other Party and the receiving Party may rely on the receipt ofsuch document so executed and delivered by facsimile as if the original hadbeen received.

 

Section 11.07         Notices.  All notices, requests, demands, claims andother communications hereunder shall be in writing and shall be deemed dulygiven (a) upon receipt if delivered personally, (b) upon confirmationif telecopied or (c) on the first Business Day following dispatch if sentby an internationally recognized overnight courier service, such as FederalExpress; provided that if delivered on a date that is not a Business Dayor after 5:00 p.m. on a Business Day, such notice, request, demand, claimor other communication shall be deemed delivered on the next succeedingBusiness Day; provided, further, that such notice, request,demand, claim or other communication is delivered to the applicable Party atsuch Party’s address or facsimile number as set forth below.

 

(a)           If to the Buyeror to the Company after the Closing, addressed to it at:

 

Frank H. Laukien, Ph.D.

President and Chief Executive Officer

 

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Bruker Corporation

40 Manning Road

BillericaMA 01821

Facsimile:  (978) 667-2917

 

Witha copy to:

 

RichardM. SteinNixon Peabody LLP100 Summer StreetBoston, MA 02110Facsimile:  866-382-6139

 

(b)           If to theSeller or to the Company prior to the Closing, addressed to it at:

 

Veeco Instruments Inc.Terminal DrivePlainview, NY 11803Facsimile:   (516) 677-0380

Attention:   General Counsel

 

Witha copy to:

 

Morrison &Foerster LLP1650 Tysons Boulevard, Suite 400McLean, Virginia 22102Facsimile:  (703) 760-7700Attention:  Thomas J. Knox, Esq.

 

AnyParty may change the address to which notices, requests, demands, claims andother communications hereunder are to be delivered by giving the other Partiesnotice in the manner herein set forth.

 

Section 11.08         Governing Law.  This Agreement shall be governed by andconstrued in accordance with the domestic laws of the State of Delaware withoutgiving effect to any choice or conflict of law provision or rule (whetherof the State of Delaware or any other jurisdiction) that would cause theapplication of the laws of any jurisdiction other than the State of Delaware.

 

Section 11.09         Jurisdiction; Waiver of Jury Trial.  Except for disputes to be resolved underSection 1.05(b) or Section 6.03(a)(iii), the Parties agree thatany Proceeding seeking to enforce any provision of, or based on any matterarising out of or in connection with, this Agreement or the Transactions shallbe brought in any federal court located in the State of Delaware or anyDelaware state court, and each of the Parties hereby irrevocably consents tothe jurisdiction of such courts (and of the appropriate appellate courtstherefrom) in any Proceeding and irrevocably waives, to the fullest extentpermitted by Applicable Law, any objection that it may now or hereafter have tothe venue of any such Proceeding in any such court or that any such Proceedingbrought in any such court has been brought in an inconvenient forum.  Process in any such Proceeding may be servedon any Party anywhere in the world, whether within or 

 

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without the jurisdiction of any such court.  Without limiting the foregoing, each Partyagrees that service of process on such Party as provided in Section 11.07shall be deemed effective service of process on such Party.  EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVESANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF ORRELATED TO THIS AGREEMENT OR THE TRANSACTIONS.

 

Section 11.10         Amendments and Waivers.  No amendment of any provision of thisAgreement shall be valid unless the same shall be in writing and signed by eachof the Parties.  No waiver by any Partyof any provision of this Agreement or any default, misrepresentation, or breachof warranty or covenant hereunder, whether intentional or not, shall be validunless the same shall be in writing and signed by the Party making such waiver,nor shall such waiver be deemed to extend to any prior or subsequent default,misrepresentation, or breach of warranty or covenant hereunder or affect in anyway any rights arising by virtue of any prior or subsequent such occurrence.

 

Section 11.11         Severability.  Any term or provision of this Agreement thatis invalid or unenforceable in any situation in any jurisdiction shall notaffect the validity or enforceability of the remaining terms and provisionshereof or the validity or enforceability of the offending term or provision inany other situation or in any other jurisdiction.

 

Section 11.12         Construction.  The Parties have participated jointly in thenegotiation and drafting of this Agreement. In the event that an ambiguity or question of intent or interpretationarises, this Agreement shall be construed as if drafted jointly by the Partiesand no presumption or burden of proof shall arise favoring or disfavoring anyParty by virtue of the authorship of any of the provisions of thisAgreement.  The Parties intend that eachrepresentation, warranty and covenant contained herein shall have independentsignificance.  Any reference in thisAgreement to a statute shall be to such statute, as amended from time to time,and to the rules and regulations promulgated thereunder.  When reference is made in this Agreement toan Exhibit, Appendix, Article, Section or subsection, such reference shallbe to an Exhibit, Appendix, Article, Section or subsection to or of thisAgreement unless otherwise indicated. The table of contents and headings contained in this Agreement are forreference purposes only and shall not affect in any way the meaning orinterpretation of this Agreement.  Thewords “include,” “includes” and “including” when used herein shall be deemed ineach case to be followed by the words “without limitation”.

 

Section 11.13         Specific Performance.  The Parties agree that if, on or prior to theClosing Date, any of the provisions of this Agreement or any other documentcontemplated by this Agreement were not performed in accordance with theirspecific terms or were otherwise breached, irreparable damage would occur, noadequate remedy at law would exist and damages would be difficult to determine;and, therefore, on or prior to the Closing Date, the Parties shall be entitledto specific performance of the terms hereof and thereof, without proof ofactual damages (and each Party hereby waives any requirement for the securingor posting of any bond in connection with such remedy), in addition to anyother remedy hereunder, at law, in equity or otherwise.  The Parties further agree not to assert thata remedy of specific performance pursuant to the preceding sentence isunenforceable, invalid, contrary to law or inequitable for any reason, nor toassert that a remedy of monetary damages would provide an adequate remedy forany such breach.

 

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***[******Signatures onFollowing Page(s)******]***

 

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INWITNESS WHEREOF, the Parties have executed this Agreement as of the date firstabove written.

 

 
|   | **SELLER:**                 |
|--------|-----------------------------|
|   |                        |
|   | **VEECO  INSTRUMENTS INC.** |
|   | ** **                  |
|   |                        |
|   | By:                         | /s/  Authorized Signatory |
|   | Name:                       |   |
|   | Title:                      |   |
|   |                        |
|   |                        |
|   | **COMPANY:**                |
|   |                        |
|   | **VEECO  METROLOGY INC.**   |
|   | ** **                  |
|   |                        |
|   | By:                         | /s/  Authorized Signatory |
|   | Name:                       |   |
|   | Title:                      |   |
|   |                        |
|   |                        |
|   | **BUYER:**                  |
|   |                        |
|   | **BRUKER  CORPORATION**     |
|   | ** **                  |
|   |                        |
|   | By:                         | /s/  Authorized Signatory |
|   | Name:                       |   |
|   | Title:                      |   |
|        |                             |  |  |

 

*[Signature Page toStock Purchase Agreement]*

 

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