SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
Commission file number 0-16244
VEECO INSTRUMENTS INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2989601
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Terminal Drive 11803
Plainview, New York (Zip Code)
Registrant's telephone number, including area code: (516) 349-8300
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Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
Yes /X/ No ___
23,679,098 shares of common stock, $0.01 par value per share, were outstanding as of the close of business on August 2, 2000.
SAFE HARBOR STATEMENT
This Quarterly Report on Form 10-Q (the "Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Discussions containing such forward-looking statements may be found in Items 2 and 3 hereof, as well as within this Report generally. In addition, when used in this Report, the words "believes," "anticipates," "expects," "estimates," "plans," "intends," and similar expressions are intended to identify forward-looking statements. All forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from projected results. Factors that may cause these differences include, but are not limited to:
o the dependence on principal customers and the cyclical nature of the data storage, semiconductor and optical telecommunications industries,
o fluctuations in quarterly operating results,
o rapid technological change and risks associated with the acceptance of new products by individual customers and by the marketplace,
o limited sales backlog,
o the highly competitive nature of industries in which the company operates,
o changes in foreign currency exchange rates, and
o the other matters discussed in the Business Description contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Consequently, such forward-looking statements should be regarded solely as the Company's current plans, estimates and beliefs. The Company does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.
VEECO INSTRUMENTS INC.
INDEX
PART 1. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Income -
Three Months Ended June 30, 2000 and 1999 4
Condensed Consolidated Statements of Income -
Six Months Ended June 30, 2000 and 1999 5
Condensed Consolidated Balance Sheets -
June 30, 2000 and December 31, 1999 6
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2000 and 1999 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosure About Market Risk 19
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 23
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
2000 1999
---- ----
Net sales $ 93,579 $ 77,092
Cost of sales 66,857 40,808
-------- --------
Gross Profit 26,722 36,284
Costs and expenses:
Research and development expense 14,063 9,910
Selling, general and administrative expense 19,158 14,884
Amortization expense 976 108
Other expense (income), net 61 (467)
Merger and reorganization expenses 13,956 --
Asset impairment charge 3,722 --
-------- --------
Operating (loss) income (25,214) 11,849
Interest income, net (136) (236)
-------- --------
(Loss) income before income taxes (25,078) 12,085
Income tax (benefit) provision (9,815) 4,432
-------- --------
Net (loss) income ($15,263) $ 7,653
======== ========
Net (loss) income per common share ($0.65) $0.37
Diluted net (loss) income per common share ($0.65) $0.36
Weighted average shares outstanding 23,463 20,530
Diluted weighted average shares outstanding 23,463 21,186
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SEE ACCOMPANYING NOTES.
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
2000 1999
---- ----
Net sales $ 171,469 $ 151,631
Cost of sales 110,170 80,381
--------- ---------
Gross Profit 61,299 71,250
Costs and expenses:
Research and development expense 27,408 19,649
Selling, general and administrative expense 36,286 29,916
Amortization expense 1,485 239
Other expense (income), net 40 (501)
Merger and reorganization expenses 14,206 --
Asset impairment charge 3,722 --
--------- ---------
Operating (loss) income (21,848) 21,947
Interest income, net (521) (61)
--------- ---------
(Loss) income before income taxes (21,327) 22,008
Income tax (benefit) provision (8,531) 8,189
--------- ---------
Net (loss) income ($ 12,796) $ 13,819
========= =========
Net (loss) income per common share ($0.55) $0.69
Diluted net (loss) income per common share ($0.55) $0.66
Weighted average shares outstanding 23,253 20,161
Diluted weighted average shares outstanding 23,253 20,936
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SEE ACCOMPANYING NOTES.
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2000 1999
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 13,858 $ 29,852
Short-term investments 52,189 50,888
Accounts and trade notes receivable, net 96,443 79,952
Inventories 86,644 85,876
Prepaid expenses and other current assets 13,030 7,507
Deferred income taxes 14,504 12,363
-------- --------
Total current assets 276,668 266,438
Property, plant and equipment at cost, net 63,030 61,298
Excess of cost over net assets acquired, net 9,732 6,500
Other assets, net 11,304 6,960
-------- --------
Total assets $360,734 $341,196
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 32,933 27,723
Accrued expenses 41,958 37,706
Short-term borrowings from line of credit 17,005 10,679
Notes payable to former Digital shareholders -- 8,000
Current portion of long-term debt 1,429 2,773
Other current liabilities 847 7,580
-------- --------
Total current liabilities 94,172 94,461
Long-term debt, net of current portion 15,381 17,252
Other non-current liabilities 5,462 5,539
Shareholders' equity 245,719 223,944
-------- --------
Total liabilities and shareholders' equity $360,734 $341,196
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SEE ACCOMPANYING NOTES.
Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
SIX MONTHS ENDED
JUNE 30,
--------
2000 1999
---- ----
OPERATING ACTIVITIES
Net (loss) income ($12,796) $ 13,819
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:
Depreciation and amortization 7,493 4,479
Deferred income taxes (2,156) 260
Other, net (21) (335)
Asset impairment charge 3,722 --
Write-off of CVC inventory 15,322 --
Changes in operating assets and liabilities:
Accounts receivable (20,316) (4,848)
Inventories (9,136) (4,504)
Accounts payable 6,720 1,843
Accrued expenses and other current liabilities (4,376) 8,991
Recoverable income taxes (9,487) --
Other, net 1,472 (992)
Operating activities three months ended 12/31/99- CVC 638 --
-------- --------
Net cash (used in) provided by operating activities (22,921) 18,713
INVESTING ACTIVITIES
Capital expenditures (11,923) (8,685)
Proceeds from sale of property, plant and equipment 230 2,979
Proceeds from sale of leak detection business 3,000 --
Payment of net assets of businesses acquired (7,177) --
Net purchases of short-term investments (1,295) --
Investing activities three months ended 12/31/99- CVC (528) --
-------- --------
Net cash used in investing activities (17,693) (5,706)
FINANCING ACTIVITIES
Proceeds from stock issuance 11,886 60,718
Repayment of long-term debt, net (8,570) (1,345)
Net proceeds (repayments) from borrowings under line of credit 17,005 (4,146)
Other -- (151)
Financing activities three months ended 12/31/99- CVC 3,627 --
-------- --------
Net cash provided by financing activities 23,948 55,076
Effect of exchange rates on cash and cash equivalents 672 804
-------- --------
Net change in cash and cash equivalents (15,994) 68,887
Cash and cash equivalents at beginning of period 29,852 23,599
-------- --------
Cash and cash equivalents at end of period $ 13,858 $ 92,486
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SEE ACCOMPANYING NOTES
VEECO INSTRUMENTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. Operating results for the six months ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Earnings per share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of common and common equivalent shares outstanding during the period. The effect of common equivalent shares for the three months and six months ended June 30, 2000 was antidilutive, therefore dilutive earnings per share is not presented for such periods.
The following table sets forth the reconciliation of diluted weighted average shares outstanding:
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(In thousands) (In thousands)
Weighted average shares outstanding 23,463 20,530 23,253 20,161
Dilutive effect of stock options and warrants -- 656 -- 775
------ ------ ------ ------
Diluted weighted average shares outstanding 23,463 21,186 23,253 20,936
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NOTE 2 - CVC MERGER AND RELATED NON-RECURRING CHARGES
On May 5, 2000, a wholly-owned subsidiary of the Company merged with CVC, Inc. ("CVC") of Rochester, New York. As a result, CVC became a subsidiary of the Company. Under the terms of the agreement, CVC shareholders received 0.43 shares of Veeco Common Stock (approximately 5.4 million shares in total) for each share of CVC Common Stock outstanding. The merger was accounted for as a pooling of interests and, as a result, historical financial data has been restated to include CVC data. CVC provides cluster tool manufacturing equipment used in the production of evolving tape and disk drive recording head fabrication, optical
VEECO INSTRUMENTS INC. AND SUBSIDIARIES
NOTE 2 - CVC MERGER AND RELATED NON-RECURRING CHARGES (CONTINUED)
components, passive components, MRAM, bump metallization, and next generation logic devices.
In conjunction with the merger with CVC, Veeco incurred non-recurring charges of $33.0 million during the six months ended June 30, 2000. Of these charges, a $15.3 million non-cash charge related to a write-off of inventory (included in cost of sales), $14.0 million represented merger and reorganization costs (of which $9.2 million related to transaction costs and $4.8 million pertained to duplicate facility and personnel costs) and $3.7 million was for the write-down of long-lived assets. The Company implemented its reorganization plan in an effort to integrate CVC into the Company, consolidate duplicate manufacturing facilities and reduce other operating costs. The $4.8 million charge for duplicate facility and personnel costs principally related to the closing of the CVC Virginia facility and an approximate 200-person work force reduction, which includes both management and manufacturing employees principally located in Alexandria, Virginia, Rochester and Plainview, New York. For the six months ended June 30, 2000, approximately $1.0 million of termination benefits have been paid, which reflects the termination of approximately 200 employees. The write-down of long-lived assets to estimated net realizable value related primarily to leasehold improvements, machinery and equipment and intangible assets for CVC's Virginia facility. In addition, the $15.3 million non-cash write-off of inventory principally related to the CVC Virginia facility product line of ion beam etch and deposition equipment. The Company intends to integrate the technology from this product line into Veeco's existing ion beam etch and deposition products. Accordingly, the Company has determined that a portion of this product line's inventory is not useable in the future.
The following unaudited data summarizes the combined results (in thousands) of the operations of the Company and CVC as though the merger had occurred at the beginning of fiscal year 1997:
Year Ended
December 31,
1999 1998 1997
------------------------------------
Net sales:
Veeco $246,606 $214,985 $223,410
CVC 82,915 68,173 62,588
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Combined $329,521 $283,158 $285,998
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Net income:
Veeco $ 20,410 $ 13,373 $ 26,616
CVC 1,571 264 2,045
-------- -------- --------
Combined $ 21,981 $ 13,637 $ 28,661
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Prior to the merger, CVC's fiscal year end was September 30. Therefore, the second quarter and first half Consolidated Statements of Income for 1999 were derived from CVC's three months
VEECO INSTRUMENTS INC. AND SUBSIDIARIES
NOTE 2 - CVC MERGER AND RELATED NON-RECURRING CHARGES (CONTINUED)
and six months ended March 31, 1999, respectively. In addition, the December 31, 1999 Consolidated Balance Sheet was derived from CVC's September 30, 1999 balance sheet.
NOTE 3 - OTHER RECENT EVENTS
On March 23, 2000, the Company purchased certain atomic force microscope assets. The acquisition was accounted for using the purchase method of accounting. Results of operations prior to the acquisition are not material to the Consolidated Statements of Income for the three and six months ended June 30, 2000 and 1999.
On February 11, 2000, Veeco entered into a strategic alliance with Seagate Technology, Inc. ("Seagate") under which Veeco assumed production responsibility for Seagate's internal Slider Level Crown ("SLC") product line and acquired rights to commercialize such products for sale to third parties. The acquisition was accounted for using the purchase method of accounting. Results of operations prior to the acquisition are not material to the Consolidated Statements of Income for the three and six months ended June 30, 2000 and 1999.
On January 31, 2000, Monarch Labs, Inc. ("Monarch"), a developer and manufacturer of automated quasi-static test systems for the data storage industry, merged with a subsidiary of Veeco. Monarch was a privately held company located in Longmont, Colorado. Under the terms of the merger, Monarch shareholders received 282,224 shares of Veeco Common Stock. The merger was accounted for as a pooling of interests transaction, however, as Monarch's historical results of operations and financial position are not material in relation to those of Veeco, financial information prior to the merger is not restated.
NOTE 4 - INVENTORIES
Interim inventories have been determined by lower of cost (principally first-in, first-out) or market. Inventories consist of:
June 30, December 31,
2000 1999
------ ------
(In thousands)
Components and spare parts $54,410 $49,609
Work-in-progress 19,476 21,736
Finished goods 12,758 14,531
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$86,644 $85,876
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VEECO INSTRUMENTS INC. AND SUBSIDIARIES
NOTE 5 - BALANCE SHEET INFORMATION
June 30, December 31,
2000 1999
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(In thousands)
Allowance for doubtful accounts $ 2,902 $ 2,403
Accumulated depreciation and amortization
of property, plant and equipment $42,869 $34,115
Accumulated amortization of excess of cost
over net assets acquired $ 1,711 $ 1,335
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SHORT-TERM INVESTMENTS
The carrying amounts of available-for-sale securities approximate fair value. The following is a summary of available-for-sale securities:
June 30, December 31,
2000 1999
-------- -----------
(In thousands)
Commercial paper $14,704 $19,047
Municipal bonds 18,529 14,527
Floating rate bonds 7,933 9,029
Corporate bonds 6,839 6,071
Obligations of U.S. Government agencies 2,004 2,003
Other debt securities 2,180 211
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$52,189 $50,888
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All investments at June 30, 2000 have contractual maturities of one year or less. During the six months ended June 30, 2000, available-for-sale securities with fair values at the date of sale of approximately $27.3 million were sold.
VEECO INSTRUMENTS INC. AND SUBSIDIARIES
NOTE 6 - SEGMENT INFORMATION
The following represents the reportable product segments of the Company, in thousands:
Unallocated Non-
Process Industrial Corporate recurring
Metrology Equipment Measurement Amount Charges Total
--------- --------- ----------- ------ ------- -----
THREE MONTHS
ENDED
JUNE 30, 2000
Net sales $ 43,130 $ 47,638 $ 2,811 $ -- $ -- $ 93,579
Operating income (loss) 8,426 1,673 (565) (1,748) (33,000) (25,214)
THREE MONTHS
ENDED
JUNE 30, 1999
Net sales $ 25,464 $ 47,352 $ 4,276 $ -- $ -- $ 77,092
Operating income (loss) 4,693 8,434 (256) (1,022) -- 11,849
SIX MONTHS
ENDED
JUNE 30, 2000
Net sales 74,017 91,915 5,537 -- -- 171,469
Operating income
(loss) 13,802 1,293 (1,026) (2,667) (33,250) (21,848)
Total assets 99,507 170,308 11,368 79,551 -- 360,734
SIX MONTHS
ENDED
JUNE 30, 1999
Net sales 56,436 85,400 9,795 -- -- 151,631
Operating income
(loss) 11,406 13,232 (262) (2,429) -- 21,947
Total assets 67,874 124,261 15,731 92,328 -- 300,194
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NOTE 7 - COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) was ($15.7) million and ($13.6) million for the three and six months ended June 30, 2000, and $7.2 and $12.5 million for the three and six months ended June 30, 1999, respectively. Other comprehensive income is comprised of foreign currency translation adjustments, minimum pension liability and net unrealized holding gains and losses on available-for-sale securities.
VEECO INSTRUMENTS INC. AND SUBSIDIARIES
NOTE 8 - NEW STAFF ACCOUNTING BULLETIN
On December 3, 1999, the SEC staff issued Staff Accounting Bulletin No. 101, "Revenue Recognition" ("SAB 101"). The SEC Staff addresses several issues in SAB 101, including the timing for recognizing revenue derived from sales arrangements involving contractual customer acceptance provisions where installation of the product occurs after shipment and transfer of title. The Company's current policy is to recognize revenue at the time the customer takes title to the product, generally at the time of shipment. Applying the requirements of SAB No. 101 to the present selling arrangements used by the Company may result in a change in the Company's accounting policy for revenue recognition and the deferral of the recognition of revenue or a portion of the revenue derived from the sale until installation is complete and the product is accepted by the customer. Based on current SEC guidance, the effect of the change will be recognized as a cumulative effect of a change in accounting in the Company's fourth quarter ending December 31, 2000. Management is currently evaluating the impact of this change and believes that, in the period of adoption, the amount of revenue that will be deferred could be material.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS.
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
Net sales of $93.6 million for the three months ended June 30, 2000 represents an increase of 21% from the 1999 comparable period sales of $77.1 million, resulting principally from an increase in metrology sales. Sales in the U.S., Europe, Japan and Asia Pacific, accounted for 45%, 20%, 15% and 20%, respectively, of the Company's net sales for the three months ended June 30, 2000. Sales in the U.S. decreased 6% from the comparable 1999 period due to a 10% and 69% decrease in U.S. process equipment and industrial measurement sales, respectively, partially offset by a 21% increase in U.S. metrology sales. Sales in Europe, Japan and Asia Pacific increased 76%, 19% and 151%, respectively. The increase in Europe is a result of higher sales in both the process equipment and metrology segments, as well as Veeco's CVC subsidiary, which did not commence sales in Europe until the third quarter of 1999. The increase in Japan and Asia Pacific is principally due to an increase in metrology sales. The Company believes that there will continue to be quarter-to-quarter variations in the geographic concentration of sales.
Process equipment sales of $47.6 million for the three months ended June 30, 2000 remained relatively flat compared to the 1999 period. Metrology sales of $43.1 million for the three months ended June 30, 2000 represents an increase of approximately $17.7 million, or 69%, from the 1999 comparable period sales of $25.5 million, due primarily to sales of the Company's atomic force microscopes (AFM) to the semiconductor market and optical metrology products to the data storage market. Industrial measurement sales of $2.8 million for the three months ended June 30, 2000 represents a decrease of $1.5 million, or 34%, from the comparable 1999 period, principally due to the sale on January 17, 2000 of the Company's leak detection business.
Veeco received $132.4 million of orders during the three months ended June 30, 2000, a 65% increase compared to $80.5 million of orders for the comparable 1999 period. Process equipment orders increased 62% to $83.6 million, due primarily to an increase in orders from both optical telecommunications and data storage customers. Veeco's Ion Tech subsidiary had an increase of $27.0 million or 227% in orders for Dense Wave Division Multiplexing (DWDM) related equipment. Etch and deposition equipment orders increased 12% to $44.6 million from $39.8 million for the comparable 1999 period. Metrology orders increased by 82% to $46.2 million, reflecting an increase in bookings for atomic force microscopes and optical metrology products. The Company's book/bill ratio for the second quarter of 2000 was 1.41.
In connection with the merger with CVC, the Company incurred non-recurring charges of $33.0 million, of which a $15.3 million non-cash charge or 16.4% of net sales related to the write-off of inventory, which has been included in cost of sales. As a result, gross profit for the three months ended June 30, 2000 of $26.7 million represents a decrease of $9.6 million from the comparable 1999 period. Gross profit, excluding non-recurring charges, as a percentage of net sales decreased to 44.9%, from 47.1% for the comparable 1999 period, principally due to a decline in the data storage process equipment area primarily attributable to the decrease in etch and deposition equipment
sales, pricing pressure and underutilized overhead structure. As a result of the merger with CVC, the Company closed CVC's Virginia facility, which was duplicative to its New York operations. This action will result in a lower overhead cost structure.
Research and development expenses of $14.1 million for the three months ended June 30, 2000 increased by approximately $4.2 million, or 42%, over the comparable period of 1999, due primarily to the increase in research and development for both process equipment and metrology products, as well as product development in the newly acquired metrology businesses of OptiMag, Monarch, the atomic force microscope business and the slider crown adjust product line.
Selling, general and administrative expenses of $19.2 million for the three months ended June 30, 2000 increased by approximately $4.3 million to 20.5% of net sales in 2000 from 19.3% in 1999. This increase is principally due to the expansion of direct sales and service presence in both Japan and the Asia Pacific regions, as well as the purchase of OptiMag, the slider crown adjust product line and the atomic force microscope business, which had no comparable operating spending in 1999 since they were accounted for using the purchase method of accounting.
In conjunction with the merger with CVC, Veeco incurred non-recurring charges of $33.0 million. Of these charges, a $15.3 million non-cash charge related to a write-off of inventory (included in cost of sales), $14.0 million represented merger and reorganization costs (of which $9.2 million related to transaction costs and $4.8 million pertained to duplicate facility and personnel costs) and $3.7 million was for the write-down of long-lived assets.
Income taxes for the three months ended June 30, 2000 amounted to a $9.8 million tax benefit, or 39% of loss before income taxes, as compared to $4.4 million of income tax expense, or 37% of income before income taxes, for the same period of 1999.
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
Net sales were $171.5 million for the six months ended June 30, 2000 representing an increase of approximately $19.8 million or 13% over the comparable 1999 period. The increase principally reflects growth in process equipment and metrology sales. Sales in the US, Europe, Japan and Asia Pacific accounted for 44%, 21%, 17% and 17%, respectively, of the Company's net sales for the six months ended June 30, 2000. Sales in the US and Japan remained relatively flat from the comparable 1999 period, while sales to Europe and Asia Pacific increased 72% and 36%, respectively. The increase in sales in Europe is due primarily to Veeco's CVC subsidiary, which did not commence sales to Europe until the third quarter of 1999, and an increase in sales of Veeco's metrology products. The increase in sales in Asia Pacific resulted from a 48% increase in metrology sales partially offset by a decline of 30% in process equipment sales.
Process equipment sales were $91.9 million for the six months ended June 30, 2000, an increase of approximately $6.5 million or 8% from the comparable 1999 period, due to an increase in sales of Ion Tech's DWDM related equipment, partially offset by a decline in etch and deposition sales. Metrology sales for the six months ended June 30, 2000 were $74.0
million, an increase of approximately $17.6 million or 31% compared to the comparable 1999 period, reflecting a 46% increase in optical metrology products from the newly acquired metrology businesses of OptiMag, Monarch and the slider crown adjust product line, as well as a 22% increase in the sales of atomic force microscopes. Industrial measurement sales for the six months ended June 30, 2000 were $5.5 million, a decrease of 43% from the comparable 1999 period principally due to the sale on January 17, 2000 of the Company's leak detection business.
Veeco received $243.6 million of orders for the six months ended June 30, 2000, a 40% increase compared to $174.1 million of orders in the comparable 1999 period. Process equipment orders increased 24% to $144.2 million, principally reflecting an increase in optical telecommunications bookings. Metrology orders increased 86% to $93.6 million, reflecting a 148% increase in optical metrology products, as well as an increase in atomic force microscopes. The book/bill ratio for the six months ended June 30, 2000 was 1.42.
In connection with the merger with CVC, the Company incurred non-recurring charges of $33.0 million, of which a $15.3 million non-cash charge or 8.9% of net sales related to the write-off of inventory, which has been included in cost of sales. As a result, gross profit for the six months ended June 30, 2000 of $61.3 million represents a decrease of $10.0 million from the comparable 1999 period. Gross profit, excluding the non-recurring charges, as a percentage of net sales decreased to 44.7% for 2000 from 47.0 % for the comparable 1999 period, principally due to a decline in the data storage process equipment area primarily attributable to the decrease in etch and deposition equipment sales, pricing pressure and underutilized overhead structure. As a result of the merger with CVC, the Company closed CVC's Virginia facility, which was duplicative to its New York operations. This action will result in a lower overhead cost structure.
Research and development expenses of $27.4 million for the six months ended June 30, 2000 increased by approximately $7.8 million, or 39%, over the comparable period of 1999, due primarily to the continued investment in new products and technology, particularly in the process equipment area.
Selling, general and administrative expenses were $36.3 million or 21.2% of net sales for the six months ended June 30, 2000, as compared to $29.9 million or 19.7% of net sales in 1999. This increase was principally due to the expansion of direct sales and service presence in both Japan and the Asia Pacific regions as well as the purchase of OptiMag, the slider crown adjust product line and the atomic force microscope business, which had no comparable operating spending in 1999 since they were accounted for using the purchase method of accounting.
In the six months ended June 30, 2000, the Company recorded $33.25 million of non-recurring charges. In addition to the $33.0 million charge in conjunction with the CVC merger, Veeco also recorded merger expenses of $0.25 million in the six months ended June 30, 2000 representing transaction and other costs related to the merger with Monarch Labs, Inc.
Income taxes for the six months ended June 30, 2000 amounted to an $8.5 million tax benefit, or 40% of loss before income taxes, as compared to $8.2 million of income tax expense, or 37% of income before income taxes, for the same period of 1999.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operations totaled $22.9 million for the six months ended June 30, 2000 compared to cash provided by operations of $18.7 million for the comparable 1999 period. This change in cash used in operations reflects a decrease in net income for the 2000 period of $26.6 million from the comparable 1999 period, along with the use of cash for changes in operating assets and liabilities. Accounts payable increased by $6.7 million, while increasing $1.8 million in the comparable 1999 period. The increase in accounts payable reflects the increase in volume for the six months ended June 30, 2000. Accrued expenses and other current liabilities decreased by $4.4 million during the six months ended June 30, 2000, while increasing $9.0 million during the comparable 1999 period. The decrease in accrued expenses and other current liabilities is due primarily to the payment of income taxes, offset by accrued merger and reorganization costs, primarily for CVC. Accounts receivable increased by $20.3 million during six months ended June 30, 2000, while increasing $4.8 million during the comparable 1999 period. The increase in accounts receivable in 2000 is due to the increased sales volume in 2000, as well as slower payment by certain data storage and international customers. Inventories increased by $9.1 million due to the increase in purchases of inventory related to increases in both metrology and optical telecommunications process equipment sales. As a result of the merger and reorganization costs incurred in connection with the CVC merger, the Company anticipates a refund of income taxes of approximately $9.5 million. Net cash used in operations for the six months ended June 30, 2000 also included operating activities for the three months ended December 31, 1999 related to CVC. Prior to the merger, CVC's fiscal year end was September 30.
Net cash used in investing activities for the six months ended June 30, 2000 totaled $17.7 million compared to $5.7 million for the comparable 1999 period. Cash used in 2000 consisted of $11.9 million of capital expenditures partially offset by $3.0 million of proceeds from the sale of the leak detection business. The Company also expended approximately $7.2 million for the purchase of assets of acquired businesses and approximately $1.3 million for the purchase of short-term investments in 2000. Net cash used in investing activities for the six months ended June 30, 2000 also included investing activities for the three months ended December 31, 1999 related to CVC. Prior to the merger, CVC's fiscal year end was September 30.
Net cash provided by financing activities for the six months ended June 30, 2000
totaled $23.9 million, compared to $55.1 million for the comparable 1999 period.
Cash provided by financing activities in 2000 consisted of $17.0 million of
proceeds from borrowings under the Company's revolving credit facilities, as
well as proceeds of $11.9 million from stock issuances upon exercise of stock
options, partially offset by $8.6 million of debt repayments. Net cash provided
by financing activities for the six months ended June 30, 2000 also included
financing activities for the three months ended December 31, 1999 related to
CVC. Prior to the merger, CVC's fiscal year end was September 30.
The Company has an unsecured $40.0 million Credit Facility (the "Credit Facility") which may be used for working capital, acquisitions and general corporate purposes. The Credit Facility bears interest at the prime rate of the lending banks, but such rate may be increased to a maximum rate of .25% above the prime rate in the event the Company's ratio of debt to cash flow exceeds a defined ratio. A LIBOR-based interest rate option is also provided. As of June 30, 2000, there was $10.0 million outstanding under the Credit Facility. In May 2000, this credit facility was amended to allow for the recently completed CVC merger. The Company's CVC subsidiary also has a $15.0 million line of credit. Maximum borrowings under this line are based upon certain financial criteria and are at an interest rate of prime. As of June 30, 2000, there was approximately $7.0 million outstanding under this line.
In connection with the atomic force microscope acquisition, the Company will be required to pay approximately $4.8 million of the purchase price to the seller, due in four equal quarterly installments, with the final payment due on March 23, 2001.
In connection with the OptiMag acquisition, the Company agreed to purchase approximately twenty-five percent of OptiMag's outstanding stock which it does not already own on October 15, 2000 for approximately $1.2 million. In addition, the Company will be required to pay consideration to the former shareholders of OptiMag based upon both future sales and the future appraised value of OptiMag. The consideration will be calculated based upon a predetermined percentage of OptiMag's sales for the period from January 1, 2000 to December 31, 2000, as well as the appraised fair market value of OptiMag, adjusted for certain items, as of December 31, 2000.
The Company believes that existing cash balances together with cash generated from operations and amounts available under the Company's credit facilities will be sufficient to meet the Company's projected working capital and other cash flow requirements for the next twelve months.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Veeco's investment portfolio consists of cash equivalents, corporate bonds, commercial paper, floating rate bonds, obligations of U.S. Government agencies and municipal bonds. These investments are considered available-for-sale securities; accordingly, the carrying amounts approximate fair value. Assuming June 30, 2000 variable debt and investment levels, a one-point change in interest rates would not have a material impact on net interest expense. Veeco's net sales to foreign customers represented approximately 55% and 56% of Veeco's total net sales for the three and six months ended June 30, 2000, respectively, and 42% and 49% for the three and six months ended June 30, 1999, respectively. The Company expects that net sales to foreign customers will continue to represent a large percentage of Veeco's total net sales. Veeco's net sales denominated in foreign currencies represented approximately 8% and 9% of Veeco's total net sales for the three and six months ended June 30, 2000, respectively, and 9% for both the three and six months ended June 30, 1999. The Company has not engaged in foreign currency hedging transactions. The aggregate foreign currency exchange loss included in determining consolidated results of operations was not material during the three and six months ended June 30, 2000 and 1999. The change in currency exchange rate that has the largest impact on translating Veeco's international operating profit is the Japanese yen. The Company estimates that a 10% change in foreign currency exchange rates would impact reported operating profit for the six months ended June 30, 2000 by approximately $1.1 million. The Company believes that this quantitative measure has inherent limitations because it does not take into account any governmental actions or changes in either customer purchasing patterns or financing and operating strategies.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of stockholders of the Company was held on May 5, 2000 to (a) approve the issuance of shares of the Company's common stock in connection with the merger of CVC, Inc. with a subsidiary of the Company and (b) to approve an amendment to the Company's certificate of incorporation to increase the authorized shares of common stock from 25,000,000 shares to 40,000,000 shares. As of the record date for the meeting, there were 18,137,390 shares of common stock outstanding, each of which was entitled to one vote with respect to each of the matters voted on at the meeting. The results of the voting were as follows:
BROKER
MATTER FOR AGAINST ABSTAINED NON-VOTES
------ ---------- ------- --------- ---------
(a) 12,137,626 408,015 299,376 133,263
(b) 12,131,134 532,766 309,080 5,300
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The annual meeting of stockholders of the Company was held on May 12, 2000. The matters voted on at the meeting were: (a) the election of two directors, (i) Edward H. Braun and (ii) Richard A. D'Amore; (b) the adoption of the Veeco Instruments Inc. 2000 Stock Option Plan; and (c) the appointment of Ernst & Young LLP as the Company's auditors for the fiscal year ending December 31, 2000. As of the record date for the meeting, there were 18,137,390 shares of common stock outstanding, each of which was entitled to one vote with respect to each of the matters voted on at the meeting. The results of the voting were as follows:
BROKER
MATTER FOR AGAINST ABSTAINED NON-VOTES
------ ---------- ------- --------- ---------
(a)(i) 13,435,618 104,244 -- --
(a)(ii) 13,435,618 104,244 -- --
(b) 7,931,572 918,177 24,410 4,665,703
(c) 13,509,240 29,942 680 --
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS:
(a) Exhibits
Unless otherwise indicated, each of the following exhibits has been previously filed with the Securities and Exchange Commission by the Company under File No. 0-16244.
INCORPORATED BY REFERENCE
NUMBER EXHIBIT TO THE FOLLOWING DOCUMENTS
------ ------- --------------------------
3.1 Amendment to Certificate of Incorporation of *
Veeco Instruments Inc. dated May 5, 2000
3.2 Seconded Amended and Restated Bylaws of Veeco *
Instruments Inc. effective May 5, 2000
10.1 Amendment No. 4 to Credit Agreement, dated May *
4, 2000 between Veeco Instruments Inc., Fleet
Bank N.A. and The Chase Manhattan Bank.
10.2 Employment Agreement dated as of April 3, 2000 *
between Edward H. Braun and Veeco Instruments
Inc.
10.3 Employment Agreement dated as of February 29, Registration Statement on Form S-4
2000 between Christine B. Whitman and Veeco (File No. 33-32608), filed March 15, 2000,
Instruments Inc. Exhibit 10.3
10.4 Employment Agreement dated as of April 3, 2000 *
between John F. Rein, Jr. and Veeco Instruments
Inc.
10.5 Veeco Instruments Inc. 2000 Stock Option Plan Current Report on Form 8-K filed May 9, 2000,
Exhibit 10.1
10.6 CVC, Inc. 1999 Non-employee Directors' Stock Registration Statement on Form S-8 (File Number
Option Plan 333-36348) filed May 5, 2000, Exhibit 4.1
10.7 CVC, Inc. Amended and Restated 1997 Stock Registration Statement on Form S-8 (File Number
Option Plan 333-36348) filed May 5, 2000, Exhibit 4.2
21
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INCORPORATED BY REFERENCE
NUMBER EXHIBIT TO THE FOLLOWING DOCUMENTS
------ ------- --------------------------
10.8 Amended and Restated (1996) Stock Option Plan Registration Statement on Form S-8 (File Number
of CVC, Inc. (formerly, CVC Holdings, Inc.) 333-36348) filed May 5, 2000, Exhibit 4.3
10.9 Form of Commonwealth Scientific Corporation Registration Statement on Form S-8 (File Number
Non-Qualified Stock Option Agreement 333-36348) filed May 5, 2000, Exhibit 4.4
10.10 Stock Option Agreement between CVC, Inc. Registration Statement on Form S-8 (File Number
(formerly CVC Holdings, Inc.) and Christine B. 333-36348) filed May 5, 2000, Exhibit 4.14
Whitman, effective December 21, 1990
10.11 Union Agreement dated October 31, 1998 between CVC, Inc. Registration Statement on Form S-1
CVC Products, Inc. and Local 342, International (File Number 333-38057) filed November 3, 1999,
Union of Electronic, Electrical, Salaried, Exhibit 10.42
Machine & Furniture Workers, AFL-CIO
10.12 Loan Agreement dated March 31, 1998 between CVC CVC, Inc. Registration Statement on Form S-1
Products, Inc. and Manufacturers and Traders (File Number 333-38057), Exhibits 10.44, 10.45,
Trust Company, including amendments thereto 10.46 and 10.47
dated September 30, 1998, February 19, 1999 and
September 22, 1999
10.13 Amendment No. 5 to Credit Agreement, dated *
May 4, 2000 between Veeco Instruments Inc.,
Fleet Bank N.A. and The Chase Manhattan Bank
27.1 Financial Data Schedule of Veeco Instruments *
Inc. for the quarterly period ended June 30,
2000
27.2 Financial Data Schedule of Veeco Instruments *
Inc. for the quarterly period ended June 30,
1999 (restated)
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*Filed herewith.
(b) Reports on Form 8-K.
The Registrant filed a Current Report on Form 8-K on May 9, 2000 regarding a revised version its 2000 Stock Option Plan.
The Registrant filed a Current Report on From 8-K on May 12, 2000 regarding the completion of its merger with CVC, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By: /s/ EDWARD H. BRAUN
-----------------------
Edward H. Braun
Chairman and Chief Executive Officer
By: /s/ JOHN F. REIN, JR.
-----------------------
John F. Rein, Jr.
Executive Vice President, Finance,
Chief Financial Officer,
Treasurer and Secretary
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EXHIBIT INDEX
EXHIBITS:
3.1 Amendment to Certificate of Incorporation of Veeco Instruments Inc. dated
May 5, 2000
3.2 Seconded Amended and Restated Bylaws of Veeco Instruments Inc. effective
May 5, 2000
10.1 Amendment No. 4 to Credit Agreement, dated May 4, 2000 between Veeco
Instruments Inc., Fleet Bank N.A. and The Chase Manhattan Bank.
10.2 Employment Agreement dated as of April 3, 2000 between Edward H. Braun
and Veeco Instruments Inc.
10.4 Employment Agreement dated as of April 3, 2000 between John F. Rein, Jr.
and Veeco Instruments Inc.
10.13 Amendment No. 5 to Credit Agreement, dated May 4, 2000 between
Veeco Instruments Inc., Fleet Bank N.A. and The Chase Manhattan
Bank
27.1 Financial Data Schedule of Veeco Instruments Inc. for the quarterly
period ended June 30, 2000
27.2 Financial Data Schedule of Veeco Instruments Inc. for the quarterly
period ended June 30, 1999 (restated)
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Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
VEECO INSTRUMENTS INC.
It is hereby certified that:
1. The name of the corporation (the "Corporation") is Veeco Instruments Inc.
2. Article 4 of the amended and restated certificate of incorporation of the Corporation, as amended to date (the "Certificate of Incorporation"), is hereby amended to read in its entirety as follows:
"4. The corporation shall have authority to issue a total of 40,500,000 shares, to be divided into 40,000,000 shares of common stock with par value of $0.01 per share and 500,000 shares of preferred stock with par value of $0.01 per share."
3. The amendment of the Certificate of Incorporation effective hereby and
herein certified has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
Dated as of May 5, 2000
VEECO INSTRUMENTS INC.
By: /s/ GREGORY A. ROBBINS
----------------------------------
Gregory A. Robbins
Vice President and General Counsel
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Exhibit 3.2
SECOND AMENDED AND RESTATED BYLAWS
OF
VEECO INSTRUMENTS INC.
(the "Corporation")
1. MEETINGS OF STOCKHOLDERS.
1.1 ANNUAL MEETING. The annual meeting of stockholders shall be held at a place and time determined by the board of directors (the "Board").
1.2 SPECIAL MEETINGS. Special meetings of the stockholders may be called by resolution of the Board or by the chief executive officer of the Corporation and shall be called by the chief executive officer of the Corporation or secretary of the Corporation upon the written request (stating the purpose or purposes of the meeting) of a majority of the directors then in office or of the holders of 50% of the outstanding shares entitled to vote. Only business related to the purposes set forth in the notice of the meeting may be transacted at a special meeting.
1.3 PLACE AND TIME OF MEETINGS. Meetings of the stockholders may be held in or outside Delaware at the place and time specified by the Board, the chief executive officer of the Corporation or the directors or stockholders requesting the meeting (as applicable).
1.4 NOTICE OF MEETINGS; WAIVER OF NOTICE. Written notice of each meeting of stockholders shall be given to each stockholder entitled to vote at the meeting, except that (a) it shall not be necessary to give notice to any stockholder who submits a signed waiver of notice before or after the meeting, and (b) no notice of an adjourned meeting need be given except when required under Section 1.5 of these bylaws or by law. Each notice of a meeting shall be given, personally or by mail, not less than 10 nor more than 60 days before the meeting and shall state the time and place of the meeting, and unless it is the annual meeting, shall state at whose direction or request the meeting is called and the purposes for which it is called. If mailed, notice shall be considered given when mailed to a stockholder at his address on the Corporation's records. The attendance of any stockholder at a meeting, without protesting at the beginning of the meeting that the meeting is not lawfully called or convened, shall constitute a waiver of notice by him.
1.5 QUORUM. At any meeting of stockholders, the presence in person or by proxy of the holders of 50% of the shares entitled to vote shall constitute a quorum for the transaction of any business. In the absence of a quorum, a majority in voting interest of those present or, if no stockholders are present, any officer entitled to preside at or to act as secretary of the meeting, may adjourn the meeting until a quorum is present. At any adjourned meeting at which a quorum is present any action may be taken which might have been taken at the meeting as originally called. No notice of an adjourned meeting need be given if the time and place are announced at the meeting at which the adjournment is taken except that, if adjournment is for more than thirty days or if, after the adjournment, a new record date is fixed for the meeting, notice of the adjourned meeting shall be given pursuant to Section 1.4.
1.6 VOTING; PROXIES. Each stockholder of record shall be entitled to one vote for every share registered in his name. Corporate action to be taken by stockholder vote, other than the election of directors, shall be authorized by a majority of the votes cast at a meeting of stockholders, except as otherwise provided by law or by Section 1.8 of these bylaws. Directors shall be elected in the manner provided in Section 2.1 of these bylaws. Voting need not be by ballot unless ordered by the chairman of the meeting; however, all elections of directors shall be by written ballot, unless otherwise provided in the certificate of incorporation. Each stockholder entitled to vote at any meeting of stockholders or to express consent to or dissent from corporate action in writing without a meeting may authorize another person to act for him by proxy. Every proxy must be signed by the stockholder or his attorney-in-fact. No proxy shall be valid after three years from its date unless it provides otherwise.
1.7 LIST OF STOCKHOLDERS. Not less than 10 days prior to the date of any meeting of stockholders, the secretary of the Corporation shall prepare a complete list of stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. For a period of not less than 10 days prior to the meeting, the list shall be available during ordinary business hours for inspection by any stockholder for any purpose germane to the meeting. During this period, the list shall be kept either (a) at a place within the city where the meeting is to be held, if that place shall have been specified in the notice of the meeting, or (b) if not so specified, at the place where the meeting is to be held. The list shall also be available for inspection by stockholders at the time and place of the meeting.
1.8 ACTION BY CONSENT WITHOUT A MEETING. No action required or permitted to be taken at any meeting of stockholders may be taken by written consent without a meeting.
2. BOARD OF DIRECTORS.
2.1 NUMBER, QUALIFICATION, ELECTION AND TERM OF DIRECTORS. The business of the Corporation shall be managed by the Board, which shall consist of such number of directors as may be set from time to time by resolution of a majority of the Board or by the stockholders, but no decrease in the number of directors that constitutes the Board may shorten the term of any incumbent director. Unless otherwise provided in the certificate of incorporation, directors shall be elected at each annual meeting of stockholders and shall hold office until the next annual meeting of stockholders and until the election and qualification of their respective successors, subject to the provisions of Section 2.9. As used in these bylaws, the term "entire Board" means the total number of directors which the Corporation would have if there were no vacancies on the Board.
2.2 QUORUM AND MANNER OF ACTING. A majority of the entire Board shall constitute a quorum for the transaction of business at any meeting. Action of the Board shall be authorized by the vote of a majority of the directors present at the time of the vote if there is a quorum, unless otherwise provided by law or these bylaws. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum is present.
2.3 PLACE OF MEETINGS. Meetings of the Board may be held in or outside Delaware.
2.4 ANNUAL AND REGULAR MEETINGS. Annual meetings of the Board, for the
election of officers and consideration of other matters, shall be held either
(a) without notice immediately after the annual meeting of stockholders and at
the same place, or (b) at such time and place as the chairman of the board shall
determine, on notice as provided in Section 2.6 of these Bylaws. Regular
meetings of the Board may be held without notice at such times and places as the
Board determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 SPECIAL MEETINGS. Special meetings of the Board may be called by the chief executive officer of the Corporation or by a majority of the entire Board.
2.6 NOTICE OF MEETINGS; WAIVER OF NOTICE. Notice of the time and place of each special meeting of the Board, and of each annual meeting not held immediately after the annual meeting of stockholders and at the same place, shall be given to each director by mailing it to him at his residence or usual place of business at least three days before the meeting, or by delivering or telephoning or telecopying it to him at least two days before the meeting. Notice of a special meeting shall also state the purpose or purposes for which the meeting is called. Notice need not be given to any director who submits a signed waiver of notice before or after the meeting or who attends the meeting without protesting at the beginning of the meeting the transaction of any business because the meeting was not lawfully called or convened. Notice of any adjourned meeting need not be given, other than by announcement at the meeting at which the adjournment is taken.
2.7 BOARD OR COMMITTEE ACTION WITHOUT A MEETING. Any action required or permitted to be taken by the Board or by any committee of the Board may be taken without a meeting if all of the members of the Board or of the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents by the members of the Board or the committee shall be filed with the minutes of the proceeding of the Board or of the committee.
2.8 PARTICIPATION IN BOARD OR COMMITTEE MEETINGS BY CONFERENCE TELEPHONE. Any or all members of the Board or of any committee of the Board may participate in a meeting of the Board or of the committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at the meeting.
2.9 RESIGNATION AND REMOVAL OF DIRECTORS. Any director may resign at any time by delivering his resignation in writing to the chief executive officer of the Corporation or secretary of the Corporation, to take effect at the time specified in the resignation; the acceptance of a resignation, unless required by its terms, shall not be necessary to make it effective. Any or all of the directors may be removed at any time, either with or without cause, by vote of the stockholders.
2.10 VACANCIES. Any vacancy in the Board, including one created by an increase in the number of directors, may be filled for the unexpired term by a majority vote of the remaining directors, though less than a quorum.
2.11 COMPENSATION. Directors who are not executive officers of the Corporation shall receive such compensation as the Board determines, together with reimbursement of their reasonable expenses in connection with the performance of their duties. Directors who are also executive officers of the Corporation shall receive no additional compensation for service as directors. A director may also be paid for serving the Corporation, its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
3.1 EXECUTIVE COMMITTEE. The Board, by resolution adopted by a majority of the entire Board, may designate an Executive Committee of one or more directors which shall have such powers and duties as the Board shall determine, except as limited by section 141(c) of the Delaware General Corporation Law or any other applicable law. The members of the Executive Committee shall serve at the pleasure of the Board. All action of the Executive Committee shall be reported to the Board at its next meeting.
3.2 OTHER COMMITTEES. The Board, by resolution adopted by a majority of the entire Board, may designate other committees of one or more directors, which shall serve at the Board's pleasure and have such powers and duties as the Board determines, except as limited by section 141(c) of the Delaware General Corporation Law or any other applicable law.
3.3 COMMITTEES. The following committees are hereby created, with the powers and duties hereinafter set forth.
(A) COMPENSATION COMMITTEE The Compensation Committee shall be comprised of three (3) or more directors (as set from time to time by resolution of a majority of the entire Board). The Compensation Committee shall fix the compensation of the chief executive officer and such other executive officers as it shall determine and administer any stock option, stock appreciation or other incentive compensation programs of the Corporation.
(B) AUDIT COMMITTEE. The Audit Committee shall be comprised of three (3)
or more directors (as set from time to time by resolution of the majority of the
entire Board) who are not employees of the Corporation. The Audit Committee
shall have full corporate power and authority to act in respect of any matter
which may develop or arise in connection with any audit or the maintenance of
internal accounting controls or any other matter relating to the Corporation's
financial affairs. The Audit Committee shall review, at least once each fiscal
year, the services performed and to be performed by the Corporation's
independent public accountants and the fees charged therefor, and, in connection
therewith, consider the effect of any nonaudit services on the independence of
such accountants. The Audit Committee shall also review with the Corporation's
independent public accountants and its internal audit department the general
scope of their respective audit coverages, the procedure and internal accounting
controls adopted by the Corporation and any significant matters encountered by
any of them.
(C) NOMINATING COMMITTEE. The Nominating Committee shall be comprised of three (3) or more directors (as set from time to time by resolution of a majority of the entire Board). The Nominating Committee shall provide to the Board its recommendations regarding individuals to be considered for election as directors of the Corporation at meetings of the stockholders of the Corporation and shall have such other powers and duties as may be determined by the Board from time to time.
3.4 RULES APPLICABLE TO COMMITTEES. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of a committee, the member or members present at a meeting of the committee and not disqualified, whether or not a quorum, may unanimously appoint another director to act at the meeting in place of the absent or disqualified member. All action of a committee shall be reported to the Board at its next meeting.
4. OFFICERS.
4.1 NUMBER. The executive officers of the Corporation shall be the chairman of the board and chief executive officer, the president, one or more vice presidents, a secretary and a treasurer. Any two or more offices may be held by the same person.
4.2 ELECTION; TERM OF OFFICE. The executive officers of the Corporation shall be elected annually by the Board, and each such officer shall hold office until the next annual meeting of the Board, and until the election of his successor, subject to the provisions of Section 4.4.
4.3 SUBORDINATE OFFICERS. The Board and the chief executive officer may appoint subordinate officers (including assistant secretaries and assistant treasurers), agents or employees, each of whom shall hold office for such period and have such powers and duties as the Board or the chief executive officer determines. The chief executive officer may delegate to any executive officer the power to appoint and define the powers and duties of any subordinate officers, agents or employees.
4.4 RESIGNATION AND REMOVAL OF OFFICERS. Any officer may resign at any time by delivering his resignation in writing to the chief executive officer or secretary of the Corporation, to take effect at the time specified in the resignation; the acceptance of a resignation, unless required by its terms, shall not be necessary to make it effective. Any officer appointed by the Board or appointed by an executive officer or by a committee may be removed by the Board either with or without cause, and in the case of an officer appointed by an executive officer or by a committee, by the officer or committee who appointed him or by the chief executive officer of the Corporation.
4.5 VACANCIES. A vacancy in any office may be filled for the unexpired term in the manner prescribed in Sections 4.2 and 4.3 of these bylaws for election or appointment to the office.
4.6 THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. The chairman of the board and chief executive officer of the
Corporation shall be the chief executive officer of the Corporation, and shall preside at all meetings of the Board and of the stockholders. The chief executive officer of the Corporation shall be in charge of the business and affairs of the Corporation and be its chief policy making officer, subject to the powers of the Board. During the absence or disability of the president of the Corporation, the chief executive officer of the Corporation shall exercise all of the powers and discharge all of the duties of the president of the Corporation. The chief executive officer of the Corporation shall also perform such other duties and may exercise such other powers as may from time to time be assigned to him by the Board.
4.7 THE PRESIDENT. The president shall be the chief operating officer of the Corporation. The president of the Corporation shall, subject to the control of the Board and the chief executive officer of the Corporation, have general supervision over the business of the Corporation and shall see that all orders and resolutions of the Board are carried into effect. The president of the Corporation shall also perform such other duties and may exercise such other powers as may from time to time be assigned to him by the chief executive officer of the Corporation.
4.8 VICE PRESIDENT. Each vice president of the Corporation shall have such powers and duties as the chief executive officer of the Corporation assigns to him.
4.9 THE TREASURER. The treasurer of the Corporation shall be the chief financial officer of the Corporation and shall be in charge of the Corporation's books and accounts. The treasurer shall also perform such other duties and may exercise such other powers as may from time to time be assigned to him by the chief executive officer of the Corporation.
4.10 THE SECRETARY. The secretary of the Corporation shall be the secretary of, and keep the minutes of, all meetings of the Board and of the stockholders, shall be responsible for giving notice of all meetings of stockholders and of the Board, and shall keep the seal and, when authorized by the Board, apply it to any instrument requiring it. Subject to the control of the Board, he shall have such powers and duties as the Board or the chief executive officer of the Corporation assigns to him. In the absence of the secretary of the Corporation from any meeting, the minutes shall be kept by the person appointed for that purpose by the presiding officer.
4.11 SALARIES. Subject to the provisions of Section 3.3(A) hereof, the chief executive officer may fix the officers' salaries.
5. SHARES.
5.1 CERTIFICATES. The Corporation's shares shall be represented by certificates in the form approved by the Board. Each certificate shall be signed by the chief executive officer, the president or a vice president and by the secretary or an assistant secretary, or the treasurer or an assistant treasurer, and shall be sealed with the Corporation's seal or a facsimile of the seal. Any or all of the signatures on the certificate may be a facsimile.
5.2 TRANSFERS. Shares shall be transferable only on the Corporation's books, upon surrender of the certificate for the shares, properly endorsed. The Board may require satisfactory surety before issuing a new certificate to replace a certificate claimed to have been lost or destroyed.
5.3 DETERMINATION OF STOCKHOLDERS OF RECORD. The Board may fix, in advance, a date as the record date for the determination of stockholders entitled to notice of or to vote at any meeting of the stockholders, or to express consent to or dissent from any proposal without a meeting, or to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action. The record date may not be more than 60 or less than 10 days before the date of the meeting or more than 60 days before any other action.
6. MISCELLANEOUS.
6.1 SEAL. The Board shall adopt a corporate seal, which shall be in the form of a circle and shall bear the Corporation's name and the year and state in which it was incorporated.
6.2 FISCAL YEAR. The Board may determine the Corporation's fiscal year. Until changed by the Board, the Corporation's fiscal year shall be the calendar year.
6.3 VOTING OF SHARES IN OTHER CORPORATIONS. Shares in other corporations which are held by the Corporation may be represented and voted by the chief executive officer, the president or a vice president of this Corporation or by proxy or proxies appointed by one of them. The Board may, however, appoint some other person to vote the shares.
6.4 AMENDMENTS. Bylaws may be amended, repealed or adopted by the stockholders or by a majority of the entire Board, but any bylaw adopted by the Board may be amended or repealed by the stockholders.
These Second Amended and Restated Bylaws became effective on May 5, 2000.
Exhibit 10.1
AMENDMENT NO. 4 TO CREDIT AGREEMENT
This Amendment No. 4 to Credit Agreement (this "Amendment") is made this 4th day of May, 2000 by and among:
VEECO INSTRUMENTS INC., a corporation organized under the laws of the State of Delaware (the "Borrower"); and
FLEET BANK, N.A., a national banking association organized under the laws of the United States ("Fleet") and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase", collectively with Fleet, the "Banks").
RECITALS:
(A) The Borrower and the Banks are parties to a Credit Agreement dated as of July 31, 1996, as amended by Amendment No. 1 to Credit Agreement, dated June 25, 1997, Amendment No. 2 to Credit Agreement, dated as of January 31, 1999 and Amendment No. 3 and Waiver to Credit Agreement, dated March 3, 2000 (the Credit Agreement as so amended being hereinafter referred to as the "Credit Agreement");
(B) The Borrower has requested, subject to the terms and conditions of this Amendment, to amend certain provisions of the Credit Agreement and the Banks are willing to amend such provisions of the Credit Agreement as set forth herein; and
(C) Any capitalized items not defined herein shall have the meanings ascribed thereto in the Credit Agreement,
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT.
This Amendment shall be deemed to be an amendment to the Credit Agreement and shall not be construed in any way as a replacement or substitute therefore. All of the terms and provisions of this Amendment are hereby incorporated by reference into the Credit Agreement as if such terms and provisions were set forth in full therein.
SECTION 1.1. The definition of the term "Permitted Acquisition" contained in Section 1.1 of the Credit Agreement is hereby amended and restated to provide in its entirety as follows:
"Permitted Acquisition" means (a) any Acquisition after January 31, 1999 but prior to May 5, 2000 by the Borrower or any of its Subsidiaries of any Person or of any division or line of business of any Person or any assets of any Person (each such Person, division, line of business or assets, an "Eligible Business"), including, but not limited to the Acquisition of CVC, Inc., and (b) any Acquisition after May 5, 2000 by the Borrower or any of its Subsidiaries of any Eligible Business,
provided, in the case of a Permitted Acquisition described in section (b) of this definition or the Acquisition of CVC, Inc., that (i) the Permitted Acquisition Purchase Price of such Permitted Acquisition, or aggregate PermittedAcquisition Purchase Price of all such Permitted Acquisitions during the term of this Agreement, does not exceed $100,000,000, in the aggregate, (ii) such Eligible Business is engaged generally in the same line of business as the Borrower and its Subsidiaries; (iii) the Permitted Acquisition Purchase Price (excluding the value of capital stock issued by the Borrower or any of its Subsidiaries) of all such Permitted Acquisitions does not exceed $40,000,000, (iv) no Default or Event of Default shall exist immediately before or after giving effect to such Permitted Acquisition or result from the consummation thereof, and (v) each of the following conditions shall have been satisfied:
(A) such Acquisition shall not be a "hostile" acquisition or other "hostile" transaction (I.E., such transaction shall have been approved by the Board of Directors or other appropriate governing body of the Eligible Business);
(B) such Eligible Business, if it is a Person, shall be incorporated in or organized under the laws of one of the States of the United States or, if such acquisition is of assets, the majority of such assets shall be located in the United States;
(C) if such Acquisition is a stock acquisition, such Acquisition shall be of greater than 50% of the issued and outstanding capital stock of such Eligible Business, whether by purchase or as a result of merger or consolidation (provided that the Borrower shall be the surviving corporation in any such merger or consolidation in which it is directly involved), and in any event shall consist of shares of capital stock with sufficient voting rights to entitle the Borrower to elect a majority of the directors of such Eligible Business and to control the outcome of any shareholder votes with respect to the shareholders of such Eligible Business;
(D) within 10 Banking Days following the Closing of such Acquisition, any new Subsidiary created in connection therewith or acquired thereby which is a Material Domestic Subsidiary shall become a Guarantor;
(E) if such Acquisition is an asset acquisition, any assets acquired shall be free of Liens, other than Permitted Liens, and, if such Acquisition is a stock acquisition, the assets of acquired company shall be free of Liens, other than Permitted Liens;
(F) not less than (I) five Banking Days prior to the closing of such Acquisition if the purchase price thereof is greater than or equal to $15,000,000 or (II) fifteen Banking Days following the closing of such Acquisition if the purchase price thereof is less than $15,000,000, the Banks shall have been provided PRO FORMA closing date financial statements which shall include consolidated balance sheets and income statements; which demonstrate that on a PRO FORMA basis after consummation of the Acquisition, the Borrower and its Subsidiaries shall be in compliance with the financial covenants contained in Article 9 hereof (such statements to include the Borrower's calculations demonstrating such covenant compliance); and
(G) within 30 days of the Closing of such Acquisition, the Banks shall have been provided such other documents, instruments or financial reports, as the Banks shall have reasonably requested.
ARTICLE 2. CONDITIONS TO EFFECTIVENESS.
SECTION 2.1 The amendment to the Credit Agreement described herein shall become effective on the date the Banks shall have received a counterpart of this Amendment duly executed by the Borrower and each Guarantor.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Banks that:
SECTION 3.1. After giving effect to this Amendment, each and every one of the representations and warranties set forth in the Credit Agreement is true in all material respects as of the date hereof with respect to the Borrower and, where applicable, the Guarantors with the same effect as though made on the date hereof (unless such representation or warranty is limited by its terms to an earlier date), and is hereby incorporated herein in full by reference as if fully restated herein in its entirety.
SECTION 3.2. After giving effect to this Amendment, no Default or Event of Default, as defined in the Credit Agreement, now exists.
SECTION 3.3. No representation, warranty or statement by the Borrower or the Guarantors contained herein or in any other document to be furnished by the Borrower or the Guarantors in connection herewith contains, or at the time of delivery shall contain, any untrue statement of material fact, or omits or at the time of delivery shall omit to state a material fact necessary to make such representation, warranty or statement not misleading.
SECTION 3.4. Each of the Facility Documents, other than the Security Agreements and the Pledge Agreements, continues to be in full force and effect and, with respect to the Guarantees, secure all payment and other obligations of the Borrower under the Credit Agreement.
ARTICLE 4. MISCELLANEOUS.
This Amendment shall be governed by and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, each of the undersigned has executed or caused to be duly executed this Amendment as of the date first above written.
VEECO INSTRUMENTS INC.
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
FLEET BANK, N.A.
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name: Christopher Mendelsohn
Title: Vice President
|
THE CHASE MANHATTAN BANK
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name: Carolyn B. Lattanzi
Title: Vice President
|
The undersigned, not parties to the Credit Agreement but as Guarantors under Guarantees executed in favor of the Bank, each hereby accept and agree to the terms of the foregoing Amendment.
WYKO CORPORATION
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
SLOAN TECHNOLOGY CORP.
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
VEECO INDUSTRIAL MEASUREMENT, LLC
By: Veeco Instruments Inc.,
its Sole Member
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
VEECO METROLOGY, LLC
By: Veeco Instruments Inc.,
its Sole Member
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
ION TECH, INC.
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
TULAKES REAL ESTATE INVESTMENTS, INC.
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
VEECO MINNEAPOLIS TECHNOLOGY
CENTER INC.
By: /s/ AUTHORIZED SIGNATORY
-----------------------------
Name:
Title:
|
Exhibit 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") dated as of April 3, 2000, is by and between Edward H. Braun (the "Executive") and Veeco Instruments Inc., a Delaware corporation (the "Company").
The Company and the Executive hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive, and the Executive hereby accepts employment by the Company, upon the terms and conditions hereinafter set forth.
2. TERM. Subject to the provisions for earlier termination as provided herein, the employment of the Executive hereunder will be for the period commencing on the date of this Agreement (the "Effective Date") and ending on the third anniversary of such date. Effective on the first anniversary of the date hereof and on each successive anniversary date thereafter, the term shall automatically be extended by an additional one year unless, no later than 90 days prior to any such anniversary date, either the Company or the Executive gives written notice to the other that the term will not be extended, in which case the Executive's employment hereunder shall terminate upon the expiration of the then-current term. The period of the Executive's employment under this Agreement, as it may be terminated or extended from time to time as provided herein, is referred to hereafter as the "Employment Period."
3. DUTIES AND RESPONSIBILITIES. The Executive will be employed by the Company in the position set forth on ANNEX A hereto. The Executive will faithfully perform the duties and responsibilities of such office, as they may be assigned from time to time by the Board of Directors of the Company (the "Board") or the Board's designee as specified on ANNEX A. In addition, during the Employment Period, the Company will use its best efforts to ensure the Executive is a member of the Board.
4. TIME TO BE DEVOTED TO EMPLOYMENT. Except for vacation in accordance with the Company's policy in effect from time to time and absences due to temporary illness, the Executive shall devote full time, attention and energy during the Employment Period to the business of the Company. During the Employment Period, the Executive will not be engaged in any other business activity which, in the reasonable judgment of the Board or its designee, conflicts with the duties of the Executive hereunder, whether or not such activity is pursued for gain, profit or other pecuniary advantage.
5. COMPENSATION; REIMBURSEMENT.
(a) BASE SALARY. The Company will pay to the Executive an annual base salary of not less than the amount specified as the Initial Base Salary on ANNEX A, payable in accordance with the Company's normal payroll policy. The Executive's base salary shall be reviewed annually by the Compensation Committee of the Board (the "Committee") and shall be subject to increase at the option and sole discretion of the Committee.
(b) BONUS. The Executive shall be eligible to receive, at the sole discretion of the Committee, an annual cash bonus, with a maximum target as specified on ANNEX A, based on the Company's annual business plan as approved by the Board.
(c) BENEFITS; STOCK OPTIONS. In addition to the salary and cash bonus referred to
above, the Executive shall be entitled during the Employment Period to participate in such employee benefit plans or programs of the Company, and shall be entitled to such other fringe benefits, as are from time to time made available by the Company generally to employees of the Executive's position, tenure, salary, and other qualifications. Without limiting the generality of the foregoing, the Executive shall be eligible for such awards, if any, under the Company's stock option plan as shall be granted to the Executive by the Committee or other appropriate designee of the Board acting in its sole discretion. During the Employment Period, the Company will pay the Executive a monthly car allowance in an amount not less than that previously paid by the Company to Executive. Except to the extent provided herein, the Executive acknowledges and agrees that the Company does not guarantee the adoption or continuance of any particular employee benefit plan or program or other fringe benefit during the Employment Period, and participation by the Executive in any such plan or program shall be subject to the rules and regulations applicable thereto.
(d) EXPENSES. The Company will reimburse the Executive, in accordance with the practices in effect from time to time for other officers or staff personnel of the Company, for all reasonable and necessary traveling expenses and other disbursements incurred by the Executive for or on behalf of the Company in the performance of the Executive's duties hereunder, upon presentation by the Executive to the Company of appropriate vouchers or documentation.
(e) CERTAIN POST-EMPLOYMENT BENEFITS. For a period of five years after the termination of the Employment Period, the Executive shall be entitled to participate in all group health and insurance programs and all other benefits, fringe benefits and perquisites available generally to senior executives of the company (including in the case of health programs, continued coverage for the Executive's spouse and eligible dependents). In the event that the Executive's participation in any such plan or program is prohibited by operation of law or by the terms of such plan or program as in effect immediately preceding the date of termination of the Employment Period, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive would have been entitled to receive under such plans and programs.
6. DEATH; DISABILITY. If the Executive dies or is incapacitated or disabled by accident, sickness or otherwise, so as to render the Executive mentally or physically incapable of performing the services required to be performed by the Executive under this Agreement for a period that would entitle the Executive to qualify for long-term disability benefits under the Company's then-current long-term disability insurance program or, in the absence of such a program, for a period of 90 consecutive days or longer (such condition being herein referred to as a "Disability"), then (i) in the case of the Executive's death, the Executive's employment shall be deemed to terminate on the date of the Executive's death or (ii) in the case of a Disability, the Company, at its option, may terminate the employment of the Executive under this Agreement immediately upon giving the Executive notice to that effect. Disability shall be determined by the Board or the Board's designee. In the case of a Disability, until the Company shall have terminated the Executive's employment hereunder in accordance with the foregoing, the Executive shall be entitled to receive compensation provided for herein notwithstanding any such physical or mental disability.
7. TERMINATION FOR CAUSE. The Company may, with the approval of a majority of the Board, terminate the employment of the Executive hereunder at any time during the Employment Period for "cause" (such termination being hereinafter called a "Termination for Cause") by giving the Executive
notice of such termination, upon the giving of which such termination will take effect immediately. For purposes of this Agreement, "cause" means (i) the Executive's willful and substantial misconduct, (ii) the Executive's repeated, after written notice from the Company, neglect of duties or failure to act which can reasonably be expected to affect materially and adversely the business or affairs of the Company or any subsidiary or affiliate thereof, (iii) the Executive's material breach of any of the agreements contained in Sections 12, 13, 14 or 15 hereof, (iv) the commission by the Executive of any material fraudulent act with respect to the business and affairs of the Company or any subsidiary or affiliate thereof or (v) the Executive's conviction of (or plea of NOLO CONTENDERE to) a crime constituting a felony.
8. TERMINATION WITHOUT CAUSE. The Company may terminate the employment of the Executive hereunder at any time without "cause" (such termination being hereinafter called a "Termination Without Cause") by giving the Executive notice of such termination, upon the giving of which such termination will take effect on the date specified on such notice which shall not be later than 30 days from the date such notice is given.
9. GOOD REASON. For purposes of this Agreement, termination for "Good Reason" shall mean termination by the Executive of his employment with the Company hereunder based on:
(i) any diminution in the Executive's position, title, responsibilities, authority or reporting responsibilities;
(ii) a relocation of the Executive's primary place of work by more than 50 miles from its then current location;
(iii) the Executive is not at any time during the Employment Period a member of the Board; or
(iv) the breach by the Company of any of its material obligations under this Agreement.
10. VOLUNTARY TERMINATION. Any termination of the employment of the Executive hereunder, otherwise than as a result of death or Disability, a Termination For Cause, a Termination Without Cause or a termination for Good Reason will be deemed to be a "Voluntary Termination." A Voluntary Termination will be deemed to be effective immediately upon such termination or, at the Company's option, up to 30 days following a notice of voluntary termination given by the Executive.
11. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE, VOLUNTARY TERMINATION. Upon a Termination for Cause or a Voluntary Termination, neither the Executive nor the Executive's beneficiaries or estate will have any further rights or claims against the Company under this Agreement except the right to receive (i) the unpaid portion of the base salary provided for in Section 5(a) hereof, computed on a PRO RATA basis to the date of termination, (ii) payment of his previously accrued but unpaid rights that are then payable in accordance with the terms of any incentive compensation, stock option, retirement, employee welfare or other employee benefit plans or programs of the Company in which the Executive is then participating in accordance with Sections 5(b) and 5(c) hereof, (iii) reimbursement for any expenses for which the
Executive shall not have theretofore been reimbursed as provided in Section 5(d) hereof and (iv) the benefits provided in Section 5(e) hereof.
(b) TERMINATION WITHOUT CAUSE; TERMINATION FOR GOOD REASON. Upon a Termination Without Cause or a termination for Good Reason, (i) the Executive shall be entitled to receive the same payments and other rights as provided for in Section 11(a) hereof, (ii) the Executive shall be entitled to receive a severance payment in the form a cash lump sum, paid within 15 days of the date of termination, with the amount of such payment to be the aggregate amount of the Executive's base salary as in effect immediately prior to such termination payable over the period of months specified in ANNEX A, (iii) any options to purchase shares of the Company's stock which were granted to the Executive after the date hereof and which are held by the Executive as of such date of termination that were not vested and exercisable as of such date shall become immediately and fully vested and exercisable as of such date and (iv) the Executive shall retain the right to exercise such options to purchase shares of the Company's stock until the earlier of (a) 12 months following the date of such termination and (b) the expiration of the original full term of each such option.
(c) TERMINATION UPON DEATH OR DISABILITY. In the event Executive's employment is terminated hereunder on account of death or Disability, (i) the Executive shall be entitled to receive the same payments and other rights as provided for in Section 11(a) hereof, (ii) the Executive shall be entitled to receive a severance payment in the form a cash lump sum, paid within 15 days of the date of termination, with the amount of such payment to be the aggregate amount of the Executive's base salary as in effect immediately prior to such termination payable over 12 months.
12. NONDISCLOSURE OF INFORMATION. The Executive will not, at any time during or after the Employment Period, disclose to any person, firm, corporation or other business entity, except as required by law, any non-public information concerning the business, products, clients or affairs of the Company or any subsidiary or affiliate thereof for any reason or purpose whatsoever, nor will the Executive make use of any of such non-public information for personal purposes or for the benefit of any person, firm, corporation or other business entity except the Company or any subsidiary or affiliate thereof.
13. COMPANY RIGHT TO INVENTIONS. The Executive will promptly disclose, grant and assign to the Company, for its sole use and benefit, any and all inventions, improvements, technical information and suggestions relating in any way to the business of the Company which the Executive may develop or acquire during the Employment Period (whether or not during usual working hours), together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or upon any such invention, improvement or technical information. In connection therewith:
(i) the Executive shall, without charge, but at the expense of the Company, promptly at all times hereafter execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the opinion of the Company to vest title to any such inventions, improvements, technical information, patent applications, patents, copyrights or reissues thereof in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world; and
(ii) the Executive shall render to the Company, at its expense (including a reasonable
payment for the time involved in case the Executive is not then in its employ), all such assistance as it may require in the prosecution of applications for said patents, copyrights or reissues thereof, in the prosecution or defense of interferences which may be declared involving any said applications, patents or copyrights and in any litigation in which the Company may be involved relating to any such patents, inventions, improvements or technical information.
14. NON-COMPETITION.
(a) Executive hereby agrees that, for the duration of Executive's employment with the Company and for a period of two (2) years thereafter, Executive will not, without the prior written consent of the Company, directly or indirectly, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be employed by, associated with, or in any manner connected with, lend Executive's name to, lend Executive's credit to or render services or advice to, any business whose products or activities compete in whole or in part with the former, current or currently contemplated products or activities of the Company or any of its subsidiaries, in any state of the United States or in any country in which the Company or any of its subsidiaries sells products or conducts business; PROVIDED, HOWEVER, that Executive may purchase or otherwise acquire up to (but not more than) one percent of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended. Executive agrees that this covenant is reasonable with respect to its duration, geographical area, and scope.
(b) In the event of a breach by Executive of any covenant set forth in this
Section 14, the term of such covenant will be extended by the period of the
duration of such breach.
(c) For the period following the termination of Executive's employment with the Company during which the provisions of this Section 14 apply, Executive will, within ten days after accepting any employment, advise the Company of the identity of any employer of Executive. The Company may serve notice upon each such employer that Executive is bound by this Agreement and furnish each such employer with a copy of this Agreement or relevant portions hereof.
15. NON-SOLICITATION.
(a) Executive hereby agrees that, for the duration of Executive's employment with the Company and for a period of two (2) years thereafter:
(i) Executive will not, directly or indirectly, either for himself or any other person: (A) induce or attempt to induce any employee of the Company or any of its subsidiaries to leave the employ of the Company or such subsidiary, (B) in any way interfere with the relationship between the Company and its subsidiaries and any employee of the Company or any of its subsidiaries, (C) employ, or otherwise engage as an employee, independent contractor or otherwise, any current or former employee of the Company or any of its subsidiaries, other than such former employees who have not worked for the Company or any of its subsidiaries for more than one year or (D) induce or attempt to induce any customer, supplier, licensee or business relation of the
Company or any of its subsidiaries to cease doing business with the Company or such subsidiary, or in any way interfere with the relationship between the Company and its subsidiaries and any customer, supplier, licensee or business relation of the Company or any of its subsidiaries; and
(ii) Executive will not, directly or indirectly, either for himself or any other person, solicit the business of any person known to Executive to be a customer of the Company or any of its subsidiaries, whether or not Executive had personal contact with such person, with respect to products or activities which compete in whole or in part with the former, current or currently contemplated products or activities of the Company and its subsidiaries or the products or activities of the Company and its subsidiaries in existence or contemplated at the time of termination of Executive's employment.
(b) In the event of a breach by Executive of any covenant set forth in this
Section 15, the term of such covenant will be extended by the period of the
duration of such breach.
16. SEVERABILITY. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforceable to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, to the extent that a restriction contained in this Agreement is more restrictive than permitted by the laws of any jurisdiction where this Agreement may be subject to review and interpretation, the terms of such restriction, for the purpose only of the operation of such restriction in such jurisdiction, will be the maximum restriction allowed by the laws of such jurisdiction and such restriction will be deemed to have been revised accordingly herein. Likewise, any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.
17. INJUNCTIVE RELIEF; SURVIVAL. (a) A breach of the obligations imposed on Executive in Sections 12, 13, 14, and 15 hereof may not be one which is capable of being easily measured by monetary damages and, consequently, Executive specifically agrees that such sections may be enforced by injunctive relief. Further, Executive specifically agrees that, in addition to such injunctive relief, and not in lieu of it, the Company may also bring suit for damages incurred by the Company as a result of a breach of Executive's obligations under such sections.
(b) Notwithstanding anything contained in this Agreement to the contrary, the provisions of Sections 12, 13, 14 and 15 hereof will survive the expiration or other termination of this Agreement until, by their terms, such provisions are no longer operative.
18. NOTICES. Notices and other communications hereunder will be in writing and will be delivered personally or sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows:
IF TO THE COMPANY, TO: IF TO THE EXECUTIVE, TO: ---------------------- ------------------------ Veeco Instruments Inc. the address specified in ANNEX A Terminal Drive Plainview, New York 11803 Attention: General Counsel |
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement will be deemed to have been given on the date of delivery, if personally delivered; on the business day after the date when sent, if sent by air courier; and on the third business day after the date when sent, if sent by mail, in each case addressed to such party as provided in this Section 18 or in accordance with the latest unrevoked direction from such party.
19. GOVERNING LAW. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflicts of laws principles thereof.
20. WAIVER OF BREACH. The waiver by either party of a breach of any provision of this Agreement by the other party must be in writing and will not operate, or be construed as, a waiver of any subsequent breach by such other party.
21. ENTIRE AGREEMENT; AMENDMENTS. This Agreement (including ANNEX A) contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings among the parties with respect thereof. The amount of severance pay provided under this Agreement, if any, may serve to offset or reduce any severance, termination or similar payments the Company may be required to pay the Executive under federal, state and local laws or any separate severance policy or plan of the Company. This Agreement may be amended only by an agreement in writing signed by the parties hereto.
22. HEADINGS. The section headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.
23. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its nature and the parties hereto shall not, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; PROVIDED, that the provisions hereof will inure to the benefit of, and be binding upon, the respective heirs, legal representatives and successors of the Executive and each successor of the Company, whether by merger, consolidation, transfer of all or substantially all of its assets or otherwise.
24. RELEASE. Receipt of the benefits described in Section 11(b) or 11(c) is conditioned upon the prior execution by Executive of a general release and waiver of claims against the Company in a form satisfactory to the Company; provided, however, that in the case of termination on account of death, such general release and waiver of claims may be provided by the Executive's personal representative or in another manner reasonably satisfactory to the Company.
25. ARBITRATION. Except as provided below and as provided in Section 17, any dispute or claim arising under this Agreement or the relationship of the parties hereunder shall be submitted to final and binding arbitration to be conducted by the American Arbitration Association in Nassau County, New York in accordance with its Employment Dispute Procedures. Arbitration proceedings hereunder may be commenced by written notice from either party hereto to the other party. Such proceedings and evidence shall be confidential. The arbitrator shall have the power and the authority to make such decisions and awards as he shall deem appropriate, including granting compensatory damages and costs to the prevailing party (including attorneys' fees and fees of the arbitrator, but excluding punitive, exemplary, consequential and special damages), and the granting or issuance of such mandatory directions, prohibitions, orders, restraints and other injunctions (other than any of the foregoing that would reestablish the employment relation formerly existing between Executive and the Company) that he may deem necessary or advisable directed to or against any of the parties, including a direction or order requiring specific performance of any covenant, agreement or provision of this Agreement as a result of a breach or threatened breach thereof. Unless otherwise directed by the arbitrator, the cost of such arbitration shall be borne equally by the parties. Any decision and award of the arbitrator shall be final, binding and conclusive upon all of the parties hereto and said decision and award may be entered as a final judgment in any court of competent jurisdiction. It is expressly agreed that arbitration as provided herein shall be the exclusive means for determination of all matters as above provided and neither of the parties hereto shall institute any action or proceeding in any court of law or equity, state or federal, other than respecting enforcement of the arbitrator's award hereunder. The foregoing sentence shall be a bona fide defense in any action or proceeding instituted contrary to this section. Notwithstanding the foregoing, nothing contained herein shall prevent or restrain in any manner the Company from instituting an action or claim in any court, or such other forum as may be appropriate (a) to protect the Company's proprietary or confidential business information or trade secrets or to enforce any agreement relating thereto, (b) to enforce or protect the Company's patent, copyright, trademark or other intellectual property rights, (c) to redress claims of product disparagement or trade libel, or (d) to protect the Company's reasonable business expectations or relations with third parties.
* * * * *
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.
VEECO INSTRUMENTS INC. EXECUTIVE
By: /s/ AUTHORIZED SIGNATORY /s/ EDWARD H. BRAUN
--------------------------------- -------------------------------
Name: Edward H. Braun
Title:
|
ANNEX A
TO
EMPLOYMENT AGREEMENT
Name of Executive: Edward H. Braun
Position: Chairman of the Board and
Chief Executive Officer
Board of Directors' Initial Designee
to whom Executive Shall Report: None, reports to full Board
Initial Base Salary: $470,000
Target Bonus: 100% of Base Salary
Number of months used to calculate
lump sum severance payment in the
event of a Termination Without
Cause or for Good Reason: 24 months
Executive's address for notices: One Malcoms Landing
Northport, NY 11768
|
Exhibit 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") dated as of April 3, 2000, is by and between John F. Rein, Jr. (the "Executive") and Veeco Instruments Inc., a Delaware corporation (the "Company").
The Company and the Executive hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive, and the Executive hereby accepts employment by the Company, upon the terms and conditions hereinafter set forth.
2. TERM. Subject to the provisions for earlier termination as provided herein, the employment of the Executive hereunder will be for the period commencing on the date of this Agreement (the "Effective Date") and ending on the third anniversary of such date. Effective on the first anniversary of the date hereof and on each successive anniversary date thereafter, the term shall automatically be extended by an additional one year unless, no later than 90 days prior to any such anniversary date, either the Company or the Executive gives written notice to the other that the term will not be extended, in which case the Executive's employment hereunder shall terminate upon the expiration of the then-current term. The period of the Executive's employment under this Agreement, as it may be terminated or extended from time to time as provided herein, is referred to hereafter as the "Employment Period."
3. DUTIES AND RESPONSIBILITIES. The Executive will be employed by the Company in the position set forth on ANNEX A hereto. The Executive will faithfully perform the duties and responsibilities of such office, as they may be assigned from time to time by the Board of Directors of the Company (the "Board") or the Board's designee as specified on ANNEX A.
4. TIME TO BE DEVOTED TO EMPLOYMENT. Except for vacation in accordance with the Company's policy in effect from time to time and absences due to temporary illness, the Executive shall devote full time, attention and energy during the Employment Period to the business of the Company. During the Employment Period, the Executive will not be engaged in any other business activity which, in the reasonable judgment of the Board or its designee, conflicts with the duties of the Executive hereunder, whether or not such activity is pursued for gain, profit or other pecuniary advantage.
5. COMPENSATION; REIMBURSEMENT.
(a) BASE SALARY. The Company will pay to the Executive an annual base salary of not less than the amount specified as the Initial Base Salary on ANNEX A, payable in accordance with the Company's normal payroll policy. The Executive's base salary shall be reviewed annually by the Compensation Committee of the Board (the "Committee") or its designee and shall be subject to increase at the option and sole discretion of the Committee or such designee.
(b) BONUS. The Executive shall be eligible to receive, at the sole discretion of the Committee or its designee, an annual cash bonus, with a maximum target as specified on ANNEX A, based on the Company's annual business plan as approved by the Board.
(c) BENEFITS; STOCK OPTIONS. In addition to the salary and cash bonus referred to above, the Executive shall be entitled during the Employment Period to participate in such employee benefit
plans or programs of the Company, and shall be entitled to such other fringe benefits, as are from time to time made available by the Company generally to employees of the Executive's position, tenure, salary, and other qualifications. Without limiting the generality of the foregoing, the Executive shall be eligible for such awards, if any, under the Company's stock option plan as shall be granted to the Executive by the Committee or other appropriate designee of the Board acting in its sole discretion. During the Employment Period, the Company will pay the Executive a monthly car allowance in an amount not less than that previously paid by the Company to Executive. Except to the extent provided herein, the Executive acknowledges and agrees that the Company does not guarantee the adoption or continuance of any particular employee benefit plan or program or other fringe benefit during the Employment Period, and participation by the Executive in any such plan or program shall be subject to the rules and regulations applicable thereto.
(d) EXPENSES. The Company will reimburse the Executive, in accordance with the practices in effect from time to time for other officers or staff personnel of the Company, for all reasonable and necessary traveling expenses and other disbursements incurred by the Executive for or on behalf of the Company in the performance of the Executive's duties hereunder, upon presentation by the Executive to the Company of appropriate vouchers or documentation.
6. DEATH; DISABILITY. If the Executive dies or is incapacitated or disabled by accident, sickness or otherwise, so as to render the Executive mentally or physically incapable of performing the services required to be performed by the Executive under this Agreement for a period that would entitle the Executive to qualify for long-term disability benefits under the Company's then-current long-term disability insurance program or, in the absence of such a program, for a period of 90 consecutive days or longer (such condition being herein referred to as a "Disability"), then (i) in the case of the Executive's death, the Executive's employment shall be deemed to terminate on the date of the Executive's death or (ii) in the case of a Disability, the Company, at its option, may terminate the employment of the Executive under this Agreement immediately upon giving the Executive notice to that effect. Disability shall be determined by the Board or the Board's designee. In the case of a Disability, until the Company shall have terminated the Executive's employment hereunder in accordance with the foregoing, the Executive shall be entitled to receive compensation provided for herein notwithstanding any such physical or mental disability.
7. TERMINATION FOR CAUSE. The Company may, with the approval of a majority of the Board, terminate the employment of the Executive hereunder at any time during the Employment Period for "cause" (such termination being hereinafter called a "Termination for Cause") by giving the Executive notice of such termination, upon the giving of which such termination will take effect immediately. For purposes of this Agreement, "cause" means (i) the Executive's willful and substantial misconduct, (ii) the Executive's repeated, after written notice from the Company, neglect of duties or failure to act which can reasonably be expected to affect materially and adversely the business or affairs of the Company or any subsidiary or affiliate thereof, (iii) the Executive's material breach of any of the agreements contained in Sections 12, 13, 14 or 15 hereof, (iv) the commission by the Executive of any material fraudulent act with respect to the business and affairs of the Company or any subsidiary or affiliate thereof or (v) the Executive's conviction of (or plea of NOLO CONTENDERE to) a crime constituting a felony.
8. TERMINATION WITHOUT CAUSE. The Company may terminate the employment of the Executive hereunder at any time without "cause" (such termination being hereinafter called a "Termination
Without Cause") by giving the Executive notice of such termination, upon the giving of which such termination will take effect on the date specified on such notice which shall not be later than 30 days from the date such notice is given.
9. GOOD REASON. For purposes of this Agreement, termination for "Good Reason" shall mean termination by the Executive of his employment with the Company hereunder based on:
(i) any diminution in the Executive's position, title, responsibilities, authority or reporting responsibilities;
(ii) a relocation of the Executive's primary place of work by more than 50 miles from its then current location; or
(iii) the breach by the Company of any of its material obligations under this Agreement.
10. VOLUNTARY TERMINATION. Any termination of the employment of the Executive hereunder, otherwise than as a result of death or Disability, a Termination For Cause, a Termination Without Cause or a termination for Good Reason will be deemed to be a "Voluntary Termination." A Voluntary Termination will be deemed to be effective immediately upon such termination or, at the Company's option, up to 30 days following a notice of voluntary termination given by the Executive.
11. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE, VOLUNTARY TERMINATION. Upon a
Termination for Cause or a Voluntary Termination, neither the Executive nor
the Executive's beneficiaries or estate will have any further rights or
claims against the Company under this Agreement except the right to receive
(i) the unpaid portion of the base salary provided for in Section 5(a)
hereof, computed on a PRO RATA basis to the date of termination, (ii) payment
of his previously accrued but unpaid rights that are then payable in
accordance with the terms of any incentive compensation, stock option,
retirement, employee welfare or other employee benefit plans or programs of
the Company in which the Executive is then participating in accordance with
Sections 5(b) and 5(c) hereof and (iii) reimbursement for any expenses for
which the Executive shall not have theretofore been reimbursed as provided in
Section 5(d) hereof.
(b) TERMINATION WITHOUT CAUSE; TERMINATION FOR GOOD REASON. Upon a Termination Without Cause or a termination for Good Reason, (i) the Executive shall be entitled to receive the same payments and other rights as provided for in Section 11(a) hereof, (ii) the Executive shall be entitled to receive a severance payment in the form a cash lump sum, paid within 15 days of the date of termination, with the amount of such payment to be the aggregate amount of the Executive's base salary as in effect immediately prior to such termination payable over the period of months specified in ANNEX A, (iii) any options to purchase shares of the Company's stock which were granted to the Executive after the date hereof and which are held by the Executive as of such date of termination that were not vested and exercisable as of such date shall become immediately and fully vested and exercisable as of such date, (iv) the Executive shall retain the right to exercise such options to purchase shares of the Company's stock until the earlier of (a) 12 months following the date of such termination and (b) the expiration of the original full
term of each such option, and (v) the Executive will be entitled to receive the benefits provided in Section 11(d).
(c) TERMINATION UPON DEATH OR DISABILITY. In the event Executive's employment is terminated hereunder on account of death or Disability, (i) the Executive shall be entitled to receive the same payments and other rights as provided for in Section 11(a) hereof, (ii) the Executive shall be entitled to receive a severance payment in the form a cash lump sum, paid within 15 days of the date of termination, with the amount of such payment to be the aggregate amount of the Executive's base salary as in effect immediately prior to such termination payable over 12 months.
(d) CERTAIN BENEFITS FOLLOWING A TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. Following a Termination Without Cause or a termination for Good Reason, the Executive may elect to continue group life, medical and dental coverage for the period used to calculate the severance payment set forth on ANNEX A. The Executive's contribution amount will be at the normal employee contribution rate and will be deducted from severance amounts otherwise payable to Executive hereunder. The period of extended medical and dental coverage described above shall be deemed to be a part of any continuation of coverage as may be mandated by federal or state law, including such continuation as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the regulations thereunder. Should Executive commence participation in the benefits program of a subsequent employer, then any extended life and dental coverage provided under this Section shall cease as of that time. To the extent permitted under COBRA, health coverage will also cease at such time. In such case, the Executive will be entitled to a refund of a portion of any prepaid premium upon the Company's receipt of the Executive's written notice of subsequent coverage.
12. NONDISCLOSURE OF INFORMATION. The Executive will not, at any time during or after the Employment Period, disclose to any person, firm, corporation or other business entity, except as required by law, any non-public information concerning the business, products, clients or affairs of the Company or any subsidiary or affiliate thereof for any reason or purpose whatsoever, nor will the Executive make use of any of such non-public information for personal purposes or for the benefit of any person, firm, corporation or other business entity except the Company or any subsidiary or affiliate thereof.
13. COMPANY RIGHT TO INVENTIONS. The Executive will promptly disclose, grant and assign to the Company, for its sole use and benefit, any and all inventions, improvements, technical information and suggestions relating in any way to the business of the Company which the Executive may develop or acquire during the Employment Period (whether or not during usual working hours), together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or upon any such invention, improvement or technical information. In connection therewith:
(i) the Executive shall, without charge, but at the expense of the Company, promptly at all times hereafter execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the opinion of the Company to vest title to any such inventions, improvements, technical information, patent applications, patents, copyrights or reissues thereof in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world; and
(ii) the Executive shall render to the Company, at its expense (including a reasonable payment for the time involved in case the Executive is not then in its employ), all such assistance as it may require in the prosecution of applications for said patents, copyrights or reissues thereof, in the prosecution or defense of interferences which may be declared involving any said applications, patents or copyrights and in any litigation in which the Company may be involved relating to any such patents, inventions, improvements or technical information.
14. NON-COMPETITION.
(a) Executive hereby agrees that, for the duration of Executive's employment with the Company and for a period of two (2) years thereafter, Executive will not, without the prior written consent of the Company, directly or indirectly, engage or invest in, own, manage, operate, finance, control or participate in the ownership, management, operation, financing or control of, be employed by, associated with, or in any manner connected with, lend Executive's name to, lend Executive's credit to or render services or advice to, any business whose products or activities compete in whole or in part with the former, current or currently contemplated products or activities of the Company or any of its subsidiaries, in any state of the United States or in any country in which the Company or any of its subsidiaries sells products or conducts business; PROVIDED, HOWEVER, that Executive may purchase or otherwise acquire up to (but not more than) one percent of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended. Executive agrees that this covenant is reasonable with respect to its duration, geographical area, and scope.
(b) In the event of a breach by Executive of any covenant set forth in this Section 14, the term of such covenant will be extended by the period of the duration of such breach.
(c) For the period following the termination of Executive's employment with the Company during which the provisions of this Section 14 apply, Executive will, within ten days after accepting any employment, advise the Company of the identity of any employer of Executive. The Company may serve notice upon each such employer that Executive is bound by this Agreement and furnish each such employer with a copy of this Agreement or relevant portions hereof.
15. NON-SOLICITATION.
(a) Executive hereby agrees that, for the duration of Executive's employment with the Company and for a period of two (2) years thereafter:
(i) Executive will not, directly or indirectly, either for himself or any other person: (A) induce or attempt to induce any employee of the Company or any of its subsidiaries to leave the employ of the Company or such subsidiary, (B) in any way interfere with the relationship between the Company and its subsidiaries and any employee of the Company or any of its subsidiaries, (C) employ, or otherwise engage as an employee, independent contractor or otherwise, any current or former employee of the Company or any of its subsidiaries, other than such former employees who have not worked for the Company or any of its subsidiaries for more than one year, or
(D) induce or attempt to induce any customer, supplier, licensee or business relation of the Company or any of its subsidiaries to cease doing business with the Company or such subsidiary, or in any way interfere with the relationship between the Company and its subsidiaries and any customer, supplier, licensee or business relation of the Company or any of its subsidiaries; and
(ii) Executive will not, directly or indirectly, either for himself or any other person, solicit the business of any person known to Executive to be a customer of the Company or any of its subsidiaries, whether or not Executive had personal contact with such person, with respect to products or activities which compete in whole or in part with the former, current or currently contemplated products or activities of the Company and its subsidiaries or the products or activities of the Company and its subsidiaries in existence or contemplated at the time of termination of Executive's employment.
(b) In the event of a breach by Executive of any covenant set forth in this Section 15, the term of such covenant will be extended by the period of the duration of such breach.
16. SEVERABILITY. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforceable to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, to the extent that a restriction contained in this Agreement is more restrictive than permitted by the laws of any jurisdiction where this Agreement may be subject to review and interpretation, the terms of such restriction, for the purpose only of the operation of such restriction in such jurisdiction, will be the maximum restriction allowed by the laws of such jurisdiction and such restriction will be deemed to have been revised accordingly herein. Likewise, any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.
17. INJUNCTIVE RELIEF; SURVIVAL. (a) A breach of the obligations imposed on Executive in Sections 12, 13, 14, and 15 hereof may not be one which is capable of being easily measured by monetary damages and, consequently, Executive specifically agrees that such sections may be enforced by injunctive relief. Further, Executive specifically agrees that, in addition to such injunctive relief, and not in lieu of it, the Company may also bring suit for damages incurred by the Company as a result of a breach of Executive's obligations under such sections.
(b) Notwithstanding anything contained in this Agreement to the contrary, the provisions of Sections 12, 13, 14 and 15 hereof will survive the expiration or other termination of this Agreement until, by their terms, such provisions are no longer operative.
18. NOTICES. Notices and other communications hereunder will be in writing and will be delivered personally or sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows:
IF TO THE COMPANY, TO: IF TO THE EXECUTIVE, TO: Veeco Instruments Inc. the address specified in ANNEX A Terminal Drive Plainview, New York 11803 Attention: General Counsel |
All notices and other communications given to any party hereto in accordance with the provisions of this Agreement will be deemed to have been given on the date of delivery, if personally delivered; on the business day after the date when sent, if sent by air courier; and on the third business day after the date when sent, if sent by mail, in each case addressed to such party as provided in this Section 18 or in accordance with the latest unrevoked direction from such party.
19. GOVERNING LAW. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflicts of laws principles thereof.
20. WAIVER OF BREACH. The waiver by either party of a breach of any provision of this Agreement by the other party must be in writing and will not operate, or be construed as, a waiver of any subsequent breach by such other party.
21. ENTIRE AGREEMENT; AMENDMENTS. This Agreement (including ANNEX A) contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings among the parties with respect thereof. The amount of severance pay provided under this Agreement, if any, may serve to offset or reduce any severance, termination or similar payments the Company may be required to pay the Executive under federal, state and local laws or any separate severance policy or plan of the Company. This Agreement may be amended only by an agreement in writing signed by the parties hereto.
22. HEADINGS. The section headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.
23. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its nature and the parties hereto shall not, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; PROVIDED, that the provisions hereof will inure to the benefit of, and be binding upon, the respective heirs, legal representatives and successors of the Executive and each successor of the Company, whether by merger, consolidation, transfer of all or substantially all of its assets or otherwise.
24. RELEASE. Receipt of the benefits described in Section 11(b) or 11(c) is conditioned upon the prior execution by Executive of a general release and waiver of claims against the Company in a form satisfactory to the Company; provided, however, that in the case of termination on account of death, such general release and waiver of claims may be provided by the Executive's personal representative or in another manner reasonably satisfactory to the Company.
25. ARBITRATION. Except as provided below and as provided in Section 17, any dispute or claim arising under this Agreement or the relationship of the parties hereunder shall be submitted to final and binding arbitration to be conducted by the American Arbitration Association in Nassau County, New York in accordance with its Employment Dispute Procedures. Arbitration proceedings hereunder may be commenced by written notice from either party hereto to the other party. Such proceedings and evidence shall be confidential. The arbitrator shall have the power and the authority to make such decisions and awards as he shall deem appropriate, including granting compensatory damages and costs to the prevailing party (including attorneys' fees and fees of the arbitrator, but excluding punitive, exemplary, consequential and special damages), and the granting or issuance of such mandatory directions, prohibitions, orders, restraints and other injunctions (other than any of the foregoing that would reestablish the employment relation formerly existing between Executive and the Company) that he may deem necessary or advisable directed to or against any of the parties, including a direction or order requiring specific performance of any covenant, agreement or provision of this Agreement as a result of a breach or threatened breach thereof. Unless otherwise directed by the arbitrator, the cost of such arbitration shall be borne equally by the parties. Any decision and award of the arbitrator shall be final, binding and conclusive upon all of the parties hereto and said decision and award may be entered as a final judgment in any court of competent jurisdiction. It is expressly agreed that arbitration as provided herein shall be the exclusive means for determination of all matters as above provided and neither of the parties hereto shall institute any action or proceeding in any court of law or equity, state or federal, other than respecting enforcement of the arbitrator's award hereunder. The foregoing sentence shall be a bona fide defense in any action or proceeding instituted contrary to this section. Notwithstanding the foregoing, nothing contained herein shall prevent or restrain in any manner the Company from instituting an action or claim in any court, or such other forum as may be appropriate (a) to protect the Company's proprietary or confidential business information or trade secrets or to enforce any agreement relating thereto, (b) to enforce or protect the Company's patent, copyright, trademark or other intellectual property rights, (c) to redress claims of product disparagement or trade libel, or (d) to protect the Company's reasonable business expectations or relations with third parties.
* * * * *
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.
VEECO INSTRUMENTS INC. EXECUTIVE
By: /S/ AUTHORIZED SIGNATORY /S/ JOHN F. REIN, JR.
-------------------------- ---------------------
Name: John F. Rein, Jr.
Title:
|
ANNEX A
TO
EMPLOYMENT AGREEMENT
Name of Executive: John F. Rein, Jr.
Position: Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
Board of Directors' Initial Designee to whom
Executive Shall Report: Chief Executive Officer
Initial Base Salary: $275,000
Target Bonus: 80% of Base Salary
Number of months used to calculate lump
sum severance payment in the event of a
Termination Without Cause or for Good
Reason: 24 months
Executive's address for notices: 8 Wright Road
Rockville Center, NY 11570
|
EXHIBIT 10.13
AMENDMENT NO. 5 TO CREDIT AGREEMENT
This Amendment No. 5 to Credit Agreement (this "Amendment") is made as of this 4th day of May, 2000 by and among:
VEECO INSTRUMENTS INC., a corporation organized under the laws of the State of Delaware (the "Borrower"); and
FLEET BANK, N.A., a national banking association organized under the laws of the United States ("Fleet") and THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase", collectively with Fleet, the "Banks").
RECITALS:
(A) The Borrower and the Banks are parties to a Credit Agreement dated as of July 31, 1996, as amended by Amendment No. 1 to Credit Agreement, dated June 25, 1997, Amendment No. 2 to Credit Agreement, dated as of January 31, 1999 and Amendment No. 3 and Waiver to Credit Agreement, dated March 3, 2000 and Amendment No. 4 to Credit Agreement, dated May 4, 2000 (the Credit Agreement as so amended being hereinafter referred to as the "Credit Agreement");
(B) The Borrower has requested, subject to the terms and conditions of this Amendment, to amend certain provisions of the Credit Agreement and the Banks are willing to amend such provisions of the Credit Agreement as set forth herein; and
(C) Any capitalized items not defined herein shall have the meanings ascribed thereto in the Credit Agreement,
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT.
This Amendment shall be deemed to be an amendment to the Credit Agreement and shall not be construed in any way as a replacement or substitute therefore. All of the terms and provisions of this Amendment are hereby incorporated by reference into the Credit Agreement as if such terms and provisions were set forth in full therein.
SECTION 1.1. Section 7.10 of the Credit Agreement is hereby amended and restated to provide in its entirety as follows:
SECTION 7.10. SUBSIDIARIES. Within 10 Banking Days of their becoming Material Domestic Subsidiaries, cause all such Material Domestic Subsidiaries to become Guarantors hereunder and to deliver to the Banks executed Guarantees and, if the Aggregate Outstandings plus the aggregate principal balance of all Term Loans shall have at any time equaled or exceeded $25,000,000, deliver to the Banks an executed Pledge Agreement relating to the capital stock of each Domestic Subsidiary that is or that
becomes a Material Domestic Subsidiary to the Collateral Agent, together with the Certificates evidencing the capital stock of each such Material Domestic Subsidiary.
SECTION 1.2. Article 7 of the Credit Agreement is hereby amended by inserting a new Section 7.12 at the end thereof which provides in its entirety as follows:
Section 7.12. CVC INDEBTEDNESS. Cause the revolving credit facility under the Loan Agreement dated March 31, 1998, as amended, between CVC Products, Inc. and Manufacturers and Traders Trust Company to be terminated on or before November 4, 2000.
SECTION 1.3. Section 8.2 of the Credit Agreement is hereby amended by deleting clause (l) thereof in its entirety and substituting in its place the following:
"(l) Liens securing Indebtedness, to the extent permitted pursuant to
Section 8.1(i) and other than Liens that are permitted pursuant to
subparagraphs (a) through (k) of this Section 8.2, provided that (x)
the Liens attach solely to the assets of the Borrower or the Subsidiary
which is the obligor with respect to such Indebtedness; (y) such Liens
do not secure any Indebtedness other than the Indebtedness permitted
pursuant to Section 8.1(i) and (z) such Liens, without including, for
purposes of this subparagraph (z) only, the Liens securing Indebtedness
existing at the time of the acquisition of CVC, Inc. and its
Subsidiaries, as more fully described on Schedule 8.2(l) (the "CVC
Liens"), do not secure greater than $10,000,000, in the aggregate, of
the assets of the Borrower or such Subsidiary which is the obligor;
provided further that such Liens, other than the CVC Liens, are
terminated or released within six months of the Closing Date of such
Permitted Acquisition."
SECTION 1.4. Schedule 8.2(l) attached hereto shall be deemed to be Schedule 8.2(l) to the Credit Agreement.
SECTION 1.5. Article 9 of the Credit Agreement is hereby amended by inserting the following sentence at the end thereof:
Compliance with each of the foregoing covenants, other than the covenant set forth in Section 9.3, shall be determined without giving effect to the one-time charge against earnings of $33,000,000 taken by the Company in connection with the acquisition of CVC, Inc.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Banks that:
SECTION 2.1. After giving effect to this Amendment, each and every one of the representations and warranties set forth in the Credit Agreement is true in all material respects as of the date hereof with respect to the Borrower and, where applicable, the Guarantors with the same
effect as though made on the date hereof (unless such representation or warranty is limited by its terms to an earlier date), and is hereby incorporated herein in full by reference as if fully restated herein in its entirety.
SECTION 2.2. After giving effect to this Amendment, no Default or Event of Default, as defined in the Credit Agreement, now exists.
SECTION 2.3. No representation, warranty or statement by the Borrower or the Guarantors contained herein or in any other document to be furnished by the Borrower or the Guarantors in connection herewith contains, or at the time of delivery shall contain, any untrue statement of material fact, or omits or at the time of delivery shall omit to state a material fact necessary to make such representation, warranty or statement not misleading.
SECTION 2.4. Each of the Facility Documents, other than the Security Agreements and the Pledge Agreements, continues to be in full force and effect and, with respect to the Guarantees, secure all payment and other obligations of the Borrower under the Credit Agreement.
ARTICLE 3. MISCELLANEOUS.
This Amendment shall be governed by and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, each of the undersigned has executed or caused to be duly executed this Amendment as of the date first above written.
VEECO INSTRUMENTS INC.
By: /s/ AUTHORIZED SIGNATORY
----------------------------
Name:
Title:
|
FLEET BANK, N.A.
By: /s/ AUTHORIZED SIGNATORY
---------------------------
Name: Christopher Mendelsohn
Title: Vice President
|
THE CHASE MANHATTAN BANK
By: /s/ AUTHORIZED SIGNATORY
--------------------------
Name: Carolyn B. Lattanzi
Title: Vice President
|
The undersigned, not parties to the Credit Agreement but as Guarantors under Guarantees executed in favor of the Bank, each hereby accept and agree to the terms of the foregoing Amendment.
WYKO CORPORATION
By: /s/ AUTHORIZED SIGNATORY
--------------------------
Name:
Title:
|
SLOAN TECHNOLOGY CORP.
By: /s/ AUTHORIZED SIGNATORY
---------------------------
Name:
Title:
|
VEECO INDUSTRIAL MEASUREMENT, LLC
By: Veeco Instruments Inc., its
Sole Member
By: /s/ AUTHORIZED SIGNATORY
--------------------------
Name:
Title:
|
VEECO METROLOGY, LLC
By: Veeco Instruments Inc., its
Sole Member
By: /s/ AUTHORIZED SIGNATORY
-------------------------
Name:
Title:
|
ION TECH, INC.
By: /s/ AUTHORIZED SIGNATORY
--------------------------
Name:
Title:
|
TULAKES REAL ESTATE INVESTMENTS,
INC.
By: /s/ AUTHORIZED SIGNATORY
---------------------------
Name:
Title:
|
VEECO MINNEAPOLIS TECHNOLOGY
CENTER INC.
By: /s/ AUTHORIZED SIGNATORY
---------------------------
Name:
Title:
|
CVC, INC.
By: /s/ AUTHORIZED SIGNATORY
--------------------------
Name:
Title:
|
CVC PRODUCTS, INC.
By: /s/ AUTHORIZED SIGNATORY
-------------------------
Name:
Title:
|
COMMONWEALTH SCIENTIFIC
CORPORATION
By: /s/ AUTHORIZED SIGNATORY
-------------------------
Name:
Title:
|
SCHEDULE 8.2(l)
Liens on the assets of CVC, Inc. and/or its Subsidiaries which Liens existed at the time of the acquisition of CVC, Inc. by the Borrower.
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2000, WHICH ARE CONTAINED IN OUR 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 2000 |
| PERIOD END | JUN 30 2000 |
| CASH | 13,858 |
| SECURITIES | 52,189 |
| RECEIVABLES | 99,345 |
| ALLOWANCES | 2,902 |
| INVENTORY | 86,644 |
| CURRENT ASSETS | 276,668 |
| PP&E | 105,899 |
| DEPRECIATION | 42,869 |
| TOTAL ASSETS | 360,734 |
| CURRENT LIABILITIES | 94,172 |
| BONDS | 33,815 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 235 |
| OTHER SE | 245,484 |
| TOTAL LIABILITY AND EQUITY | 360,734 |
| SALES | 93,579 |
| TOTAL REVENUES | 93,579 |
| CGS | 66,857 |
| TOTAL COSTS | 51,875 |
| OTHER EXPENSES | 61 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | (136) |
| INCOME PRETAX | (25,078) |
| INCOME TAX | (9,815) |
| INCOME CONTINUING | 0 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (15,263) |
| EPS BASIC | (.65) |
| EPS DILUTED | (.65) |
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 1999, WHICH ARE CONTAINED IN OUR 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| RESTATED: |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 1999 |
| PERIOD END | JUN 30 1999 |
| CASH | 92,486 |
| SECURITIES | 0 |
| RECEIVABLES | 56,443 |
| ALLOWANCES | 2,131 |
| INVENTORY | 78,752 |
| CURRENT ASSETS | 236,272 |
| PP&E | 80,966 |
| DEPRECIATION | 25,890 |
| TOTAL ASSETS | 300,194 |
| CURRENT LIABILITIES | 74,898 |
| BONDS | 29,778 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 211 |
| OTHER SE | 201,577 |
| TOTAL LIABILITY AND EQUITY | 300,194 |
| SALES | 77,092 |
| TOTAL REVENUES | 77,092 |
| CGS | 40,808 |
| TOTAL COSTS | 24,902 |
| OTHER EXPENSES | (467) |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | (236) |
| INCOME PRETAX | 12,085 |
| INCOME TAX | 4,432 |
| INCOME CONTINUING | 0 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 7,653 |
| EPS BASIC | .37 |
| EPS DILUTED | .36 |