-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rm3cX7IB9+JoPvNFJpT9eb/SU9g7rWyxQUWmMhGhKvJqIyjjnHpbY20XIYmDtWWF gtOM0SHaPkToQWa8iJQEjA== 0000912057-02-027227.txt : 20020712 0000912057-02-027227.hdr.sgml : 20020712 20020712171548 ACCESSION NUMBER: 0000912057-02-027227 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20020711 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 20020712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VEECO INSTRUMENTS INC CENTRAL INDEX KEY: 0000103145 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 112989601 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16244 FILM NUMBER: 02702249 BUSINESS ADDRESS: STREET 1: TERMINAL DR CITY: PLAINVIEW STATE: NY ZIP: 11803 BUSINESS PHONE: 5163498300 FORMER COMPANY: FORMER CONFORMED NAME: VACUUM ELECTRONIC MANUFACTURING CORP DATE OF NAME CHANGE: 19700408 8-K 1 a2084384z8-k.txt 8-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- FORM 8-K CURRENT REPORT -------------------------- PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------- Date of Report (Date of earliest event reported): July 11, 2002 VEECO INSTRUMENTS INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 0-16244 11-2989601 - -------------------------- -------------- ------------------- (STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 100 SUNNYSIDE BOULEVARD, WOODBURY, NEW YORK 11797 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (516) 677-0200 Not applicable. -------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.) ================================================================================ Item 5. Other Events. On July 11, 2002, Veeco Instruments Inc., a Delaware corporation ("Veeco"), entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among Veeco, Venice Acquisition Corp., an Oregon corporation and wholly owned subsidiary of Veeco ("Acquisition"), and FEI Company ("FEI"), an Oregon corporation. Pursuant to the Merger Agreement, Acquisition will merge with and into FEI, with the result that FEI shall be the surviving corporation and shall become a wholly-owned subsidiary of Veeco (the "Merger"). As a result of the Merger, each share of FEI common stock issued and outstanding immediately prior to the effective time of the Merger shall be converted into the right to receive 1.355 shares of Veeco common stock. In addition, Veeco will assume all options or other rights to purchase capital stock of FEI outstanding under FEI's existing stock option plans, including FEI's stock purchase plans, and each such option or other right to purchase capital stock of FEI will be or will later become exercisable for shares of Veeco common stock rather than shares of FEI common stock, in a number adjusted to reflect the Exchange Ratio (as defined in the Merger Agreement) and at an exercise price adjusted to reflect the Exchange Ratio. The consummation of the Merger is subject to the approval of the stockholders of FEI and Veeco, receipt of necessary approvals under United States and applicable foreign antitrust laws, SEC clearance and other customary closing conditions. The Merger is intended to be a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. A copy of the Merger Agreement is attached as an exhibit to this Current Report on Form 8-K and is incorporated herein by reference. In connection with the execution of the Merger Agreement, Veeco and American Stock Transfer and Trust Company, as rights agent (the "Rights Agent"), amended the Rights Agreement, dated as of March 13, 2001, as amended, between Veeco and the Rights Agent. The terms of the amendment are set forth in Amendment No. 2 to Rights Agreement attached as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference. On July 12, 2002, Veeco and FEI issued a joint press release announcing that Veeco and FEI entered into the Merger Agreement. The joint press release is attached as an exhibit to this Current Report on Form 8-K and is incorporated herein by this reference. Attached as Exhibits to this Current Report on Form 8-K are certain other agreements that Veeco has entered into. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. c. Exhibits EXHIBIT NO. DESCRIPTION OF DOCUMENT 2.1 Agreement and Plan of Merger, dated as of July 11, 2002, among Veeco Instruments Inc., Venice Acquisition Corp. and FEI Company. 2.2 Voting Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and the stockholders of FEI Company listed on Schedule A attached thereto. 2 2.3 Voting Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and Philips Business Electronics International B.V. 2.4 Investor Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and Philips Business Electronics International B.V. 4.1 Amendment No. 2 to the Rights Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and American Stock Transfer and Trust Company. 10.1 Employment Agreement, dated as of July 11, 2002, between Vahe Sarkissian and Veeco Instruments Inc. 10.2 Employment Agreement, dated as of July 11, 2002, between Edward Braun and Veeco Instruments Inc. 99.1 Veeco Press Release, dated July 12, 2002. 3 SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: July 12, 2002 VEECO INSTRUMENTS INC. (Registrant) By: /s/ Gregory A. Robbins ------------------------------------------ Name: Gregory A. Robbins Title: Vice President and General Counsel 4 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF DOCUMENT 2.1 Agreement and Plan of Merger, dated as of July 11, 2002, among Veeco Instruments Inc., Venice Acquisition Corp. and FEI Company. 2.2 Voting Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and the stockholders of FEI Company listed on Schedule A attached thereto. 2.3 Voting Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and Philips Business Electronics International B.V. 2.4 Investor Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and Philips Business Electronics International B.V. 4.1 Amendment No. 2 to the Rights Agreement, dated as of July 11, 2002, between Veeco Instruments Inc. and American Stock Transfer and Trust Company. 10.1 Employment Agreement, dated as of July 11, 2002, between Vahe Sarkissian and Veeco Instruments Inc. 10.2 Employment Agreement, dated as of July 11, 2002, between Edward Braun and Veeco Instruments Inc. 99.1 Veeco Press Release, dated July 12, 2002. 5 EX-2.1 3 a2084384zex-2_1.txt EXHIBIT 2.1 Exhibit 2.1 AGREEMENT AND PLAN OF MERGER AMONG VEECO INSTRUMENTS INC., VENICE ACQUISITION CORP. AND FEI COMPANY July 11, 2002 TABLE OF CONTENTS
PAGE ---- I. DEFINITIONS.................................................................................1 1.01 CERTAIN DEFINITIONS................................................................2 II. THE MERGER.................................................................................13 2.01 THE MERGER........................................................................13 2.02 EFFECTIVE TIME OF THE MERGER......................................................13 2.03 CLOSING OF THE MERGER.............................................................13 2.04 EFFECTS OF THE MERGER.............................................................13 2.05 AMENDMENT OF VEECO'S CERTIFICATE OF INCORPORATION AND BYLAWS......................14 2.06 CONVERSION OF SHARES..............................................................14 2.07 CLOSING OF FEI'S TRANSFER BOOKS...................................................15 2.08 EXCHANGE OF CERTIFICATES..........................................................16 2.09 TAX CONSEQUENCES..................................................................17 2.10 SUBSEQUENT ACTION.................................................................17 III. REPRESENTATIONS AND WARRANTIES OF FEI......................................................17 3.01 CORPORATE ORGANIZATION............................................................17 3.02 CAPITALIZATION....................................................................18 3.03 AUTHORIZATION.....................................................................19 3.04 REPORTS...........................................................................19 3.05 NO UNDISCLOSED LIABILITIES........................................................20 3.06 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORIZATIONS..................................20 3.07 NO CONFLICTS......................................................................20 3.08 CONTRACTS.........................................................................21 3.09 LITIGATION........................................................................22 3.10 TAXES.............................................................................22 3.11 ABSENCE OF CERTAIN CHANGES........................................................22 3.12 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.............................................23 3.13 INTELLECTUAL PROPERTY RIGHTS......................................................25 3.14 ABSENCE OF LIENS; TITLE TO PROPERTY...............................................26 3.15 ENVIRONMENTAL MATTERS.............................................................27 3.16 BROKERS AND FINDERS...............................................................28 3.17 REORGANIZATION....................................................................28 3.18 BOARD APPROVAL....................................................................28 3.19 OPINION OF FEI'S BROKER...........................................................28 3.20 RESTRICTIONS ON BUSINESS ACTIVITIES...............................................28 3.21 STATE ANTI-TAKEOVER STATUTES......................................................28 3.22 OWNERSHIP OF VEECO STOCK..........................................................29 3.23 FORM S-4 REGISTRATION STATEMENT; JOINT PROXY STATEMENT............................29
IV. REPRESENTATIONS AND WARRANTIES OF VEECO AND ACQUISITION....................................29 4.01 CORPORATE ORGANIZATION............................................................29 4.02 CAPITALIZATION....................................................................30 4.03 AUTHORIZATION.....................................................................31 4.04 REPORTS...........................................................................31 4.05 NO UNDISCLOSED LIABILITIES........................................................31 4.06 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORIZATIONS..................................32 4.07 NO CONFLICTS......................................................................32 4.08 CONTRACTS.........................................................................33 4.09 LITIGATION........................................................................33 4.10 TAXES.............................................................................34 4.11 ABSENCE OF CERTAIN CHANGES........................................................34 4.12 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.............................................35 4.13 INTELLECTUAL PROPERTY RIGHTS......................................................37 4.14 ABSENCE OF LIENS; TITLE TO PROPERTY...............................................38 4.15 ENVIRONMENTAL MATTERS.............................................................39 4.16 BROKERS AND FINDERS...............................................................40 4.17 REORGANIZATION....................................................................40 4.18 BOARD APPROVAL....................................................................40 4.19 OPINION OF VEECO'S BROKER.........................................................40 4.20 RESTRICTIONS ON BUSINESS ACTIVITIES...............................................40 4.21 STATE ANTI-TAKEOVER STATUTES......................................................40 4.22 OWNERSHIP OF FEI STOCK............................................................41 4.23 FORM S-4 REGISTRATION STATEMENT; JOINT PROXY STATEMENT............................41 4.24 VEECO RIGHTS AGREEMENT............................................................41 V. COVENANTS..................................................................................41 5.01 ACCESS............................................................................41 5.02 CONDUCT OF THE BUSINESS OF THE PARTIES PENDING THE CLOSING DATE...................42 5.03 RESTRICTED CONDUCT................................................................43 5.04 CONSENTS..........................................................................45 5.05 STOCK OPTIONS.....................................................................46 5.06 ESPP..............................................................................47 5.07 EMPLOYEE MATTERS..................................................................47 5.08 INDEMNIFICATION OF OFFICERS AND DIRECTORS.........................................48 5.09 REGISTRATION STATEMENT ON FORM S-3................................................49 5.10 TAX MATTERS.......................................................................49 5.11 LETTERS OF THE PARTIES' ACCOUNTANTS...............................................50 5.12 LISTING...........................................................................51 5.13 BOARD OF DIRECTORS; COMMITTEES; OFFICERS; HEADQUARTERS............................51 5.14 NOTICE OF BREACH; DISCLOSURE......................................................51 5.15 PAYMENT OF INDEBTEDNESS BY AFFILIATES.............................................51 5.16 NO SOLICITATION -- FEI............................................................52
-ii- 5.17 NO SOLICITATION -- VEECO..........................................................53 5.18 BLUE SKY LAWS.....................................................................54 5.19 ADDITIONAL AGREEMENTS.............................................................54 5.20 DISCLOSURE........................................................................54 5.21 REGISTRATION STATEMENT; JOINT PROXY STATEMENT.....................................54 5.22 FEI STOCKHOLDERS' MEETING.........................................................56 5.23 VEECO STOCKHOLDERS' MEETING.......................................................56 5.24 SECTION 16 MATTERS................................................................57 5.25 ACQUISITION COMPLIANCE............................................................58 5.26 CONVEYANCE TAXES..................................................................58 VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES.....................................58 6.01 EFFECTIVENESS OF REGISTRATION STATEMENT...........................................58 6.02 STOCKHOLDER APPROVAL..............................................................58 6.03 LITIGATION........................................................................58 6.04 NO ORDER..........................................................................58 6.05 HSR ACT...........................................................................58 6.06 LISTING...........................................................................59 VII. CONDITIONS PRECEDENT TO VEECO'S AND ACQUISITION'S OBLIGATIONS..............................59 7.01 REPRESENTATIONS AND WARRANTIES....................................................59 7.02 PERFORMANCE OF COVENANTS..........................................................59 7.03 MATERIAL ADVERSE EFFECT...........................................................59 7.04 AGREEMENTS AND DOCUMENTS..........................................................59 VIII.CONDITIONS PRECEDENT TO FEI'S OBLIGATIONS...................................................59 8.01 REPRESENTATIONS AND WARRANTIES....................................................60 8.02 PERFORMANCE OF COVENANTS..........................................................60 8.03 MATERIAL ADVERSE EFFECT...........................................................60 8.04 DOCUMENTS.........................................................................60 IX. TERMINATION................................................................................60 9.01 TERMINATION.......................................................................60 9.02 EFFECT OF TERMINATION.............................................................62 9.03 EXPENSES; TERMINATION FEES........................................................62
-iii- X. MISCELLANEOUS..............................................................................64 10.01 SUCCESSORS........................................................................64 10.02 AMENDMENT.........................................................................64 10.03 WAIVER............................................................................64 10.04 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................................65 10.05 ENTIRE AGREEMENT; COUNTERPARTS....................................................65 10.06 GOVERNING LAW.....................................................................65 10.07 DISCLOSURE SCHEDULES..............................................................65 10.08 ATTORNEYS' FEES...................................................................66 10.09 ASSIGNMENT........................................................................66 10.10 NOTICES...........................................................................66 10.11 HEADINGS..........................................................................67 10.12 EXHIBITS AND SCHEDULES............................................................67 10.13 SEVERABILITY......................................................................67 10.14 NO THIRD-PARTY BENEFICIARIES......................................................67 SCHEDULES Schedule A FEI Stockholders Party to FEI Stockholder Voting Agreements Schedule B Veeco Stockholders Party to Veeco Stockholder Voting Agreements EXHIBITS Exhibit A FEI Stockholder Voting Agreements Exhibit B Veeco Stockholder Voting Agreements Exhibit C Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Veeco Instruments Inc. Exhibit D Articles of Merger Exhibit E Fourth Amended and Restated Bylaws of Veeco Instruments Inc.
-iv- AGREEMENT AND PLAN OF MERGER This AGREEMENT AND PLAN OF MERGER (this "MERGER AGREEMENT") is made as of July 11, 2002, by and among Veeco Instruments Inc., a Delaware corporation ("VEECO"), Venice Acquisition Corp., an Oregon corporation and a wholly owned subsidiary of Veeco ("ACQUISITION"), and FEI Company, an Oregon corporation ("FEI"). WHEREAS, upon the terms and subject to the conditions set forth herein and in accordance with the provisions of the Delaware General Corporation Law (the "DGCL") and the Oregon Business Corporation Act (the "OBCA"), Veeco, FEI and Acquisition are entering into a business combination pursuant to which Acquisition will merge with and into FEI, with the result that FEI shall be the surviving corporation and shall become a wholly owned subsidiary of Veeco (the "MERGER"), all upon the terms and conditions set forth herein. WHEREAS, the Boards of Directors of FEI, Veeco and Acquisition have (i) determined that the Merger is consistent with and in furtherance of their long-term business strategies and fair to, advisable and in the best interests of their respective stockholders; (ii) approved this Merger Agreement and all other agreements and transactions contemplated by this Merger Agreement; and (iii) in the case of the Board of Directors of FEI, determined to recommend that its stockholders vote to approve the Merger, and, in the case of the Board of Directors of Veeco, determined to recommend that its stockholders vote to approve the issuance of the Veeco Shares in the Merger. WHEREAS, Veeco has entered into those certain Voting Agreements in the forms attached hereto as EXHIBIT A (the "FEI STOCKHOLDER VOTING AGREEMENTS"), dated as of the date hereof, with the stockholders of FEI listed on SCHEDULE A to this Merger Agreement. Pursuant to the FEI Stockholder Voting Agreements, such stockholders of FEI have granted to Veeco irrevocable proxies to vote the shares of FEI Common Stock (as defined below) held by them in favor of approving the Merger, and against any alternative proposals, action, failure to act, or agreement that would result in a breach of any covenant, representation or agreement of FEI under this Merger Agreement. WHEREAS, FEI has entered into those certain Voting Agreements in the forms attached hereto as EXHIBIT B (the "VEECO STOCKHOLDER VOTING AGREEMENTS"), dated as of the date hereof, with the stockholders of Veeco listed on SCHEDULE B to this Merger Agreement. Pursuant to the Veeco Stockholder Voting Agreements, such stockholders of Veeco have granted to FEI irrevocable proxies to vote the Veeco Shares (as defined below) held by them in favor of approving the issuance of the Veeco Shares in the Merger, and against any alternative proposals, action, failure to act, or agreement that would result in a breach of any covenant, representation or agreement of Veeco under this Merger Agreement. WHEREAS, the Merger is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code (as defined below). NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: I. DEFINITIONS 1.01 CERTAIN DEFINITIONS. For purposes of this Merger Agreement, the following terms shall have the following meanings: "ACQUISITION" shall have the meaning set forth in the introductory paragraph of this Merger Agreement. "AFFILIATE" of any Person shall mean, with respect to any Person, an affiliate of such Person within the meaning of Rule 405 promulgated under the Securities Act. "ARTICLES OF MERGER" shall have the meaning set forth in Section 2.02. "ASSUMED PURCHASE RIGHT" shall have the meaning set forth in Section 5.06(a). "BENEFIT PLAN" shall mean, with respect to any Person, any employee benefit plan, program, policy, practice, agreement, contract or other arrangement providing benefits to any current or former employee, officer or director of such Person or any of its ERISA Affiliates or any beneficiary or dependent thereof that is sponsored or maintained by such Person or any of its ERISA Affiliates or to which such Person or any of its ERISA Affiliates contributes or is obligated to contribute, whether or not written, including any employee welfare benefit plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA), any employment or severance agreement, and any bonus, incentive, deferred compensation, vacation, stock purchase, stock option, severance, change of control or fringe benefit plan, program or policy. "BUSINESS DAY" shall mean any day other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. "CLOSING" shall have the meaning set forth in Section 2.03(a). "CLOSING DATE" shall have the meaning set forth in Section 2.03(a). "CLOSING PRICE PER SHARE" shall mean the closing price per Veeco Share as reported by the NASDAQ on the trading day immediately preceding the Closing Date. "CODE" shall mean the United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder or any successor statute thereto. "CONSENT" shall mean any approval, permit, consent, ratification, permission, waiver or authorization (including any License or governmental authorization). "CONSTITUENT CORPORATIONS" shall have the meaning set forth in Section 2.01. "CONTRACT" shall mean any agreement, arrangement, commitment, understanding, indemnity, indenture, instrument or lease, including any and all amendments, supplements, and modifications (whether oral or written) thereto, whether or not in writing. "CONTROLLED GROUP LIABILITY" shall mean any and all liabilities (a) under Title IV of ERISA, other than for payment of premiums to the PBGC (including without limitation on account of a -2- complete or partial withdrawal from, or unpaid contribution to, a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA), (b) under Section 302 of ERISA, (c) under Sections 412 and 4971 of the Code, (d) for violation of the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code or the group health requirements of Section 701 et seq. of ERISA, or the provisions of law enacted by the Health Insurance Portability and Accountability Act of 1996, and (e) under corresponding or similar provisions of foreign laws or regulations. "DGCL" shall have the meaning set forth in the first WHEREAS clause to this Merger Agreement. "EFFECTIVE TIME" shall have the meaning set forth in Section 2.02. "ENVIRONMENT" shall mean the soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins and wetlands), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource. "ENVIRONMENTAL LAWS" shall mean any foreign, state, federal or local laws, ordinances, codes, regulations, statutes and orders promulgated by any Governmental Authority relating to Hazardous Substances, pollution, natural resources, protection of the Environment or public health and safety, including, without limitation, laws and regulations relating to the use, treatment, storage, release, disposal or transportation of Hazardous Substances or the handling and disposal of medical and biological waste. "ENVIRONMENTAL PERMITS" shall have the meaning set forth in Section 3.15(a). "EQUITY SECURITIES" shall mean any (i) capital stock or any securities representing any other equity interest or (ii) any securities convertible into or exchangeable for capital stock or any other equity interest, or any other rights, warrants or options to acquire any of the foregoing securities. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. "ERISA AFFILIATE" shall mean with respect to any Person (a) any corporation that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which that Person is a member, (b) any trade or business (whether or not incorporated) that is a member of a group of trades or businesses under common control, within the meaning of Section 414(c) of the Code, of which that Person is a member, and (c) any member of an affiliated service group, within the meaning of Section 414(m) and (o) of the Code, of which that Person or any entity described in clause (a) or (b) is a member. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "EXCHANGE AGENT" shall have the meaning set forth in Section 2.08(a). "EXCHANGE FUND" shall have the meaning set forth in Section 2.08(a). -3- "EXCHANGE RATIO" shall have the meaning set forth in Section 2.06(a). "EXISTING POLICY" shall have the meaning set forth in Section 5.08(b). "FEI" shall have the meaning set forth in the introductory paragraph to this Merger Agreement. "FEI ACQUISITION PROPOSAL" shall mean any offer, proposal, inquiry or indication of interest (other than an offer, proposal, inquiry or indication of interest by Veeco) contemplating or otherwise relating to any FEI Acquisition Transaction. "FEI ACQUISITION TRANSACTION" shall mean any transaction or series of related transactions (other than the transactions contemplated by this Merger Agreement) involving: (a) any merger, reorganization, consolidation, share exchange, recapitalization, business combination, issuance of securities, purchase or acquisition of securities, tender offer, exchange offer or other similar transaction (i) in which FEI or any other Material FEI Entity is a constituent corporation, (ii) in which a Person or "group" (as defined and described under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of Persons directly or indirectly acquires beneficial or record ownership of securities representing more than 15% of the outstanding securities of any class of voting securities of FEI or another Material FEI Entity, or (iii) in which FEI or any other Material FEI Entity issues securities representing more than 15% of the outstanding securities of any class of voting securities of FEI or such Material FEI Entity; (b) any sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or assets (other than in the ordinary course of business) that constitute or account for 15% or more of the consolidated net revenues, net income or assets (measured by fair market value) of FEI and the other FEI Entities, on a consolidated basis; or (c) any liquidation or dissolution of FEI. "FEI AUTHORIZATIONS" shall have the meaning set forth in Section 3.06(b). "FEI BALANCE SHEET" shall have the meaning set forth in Section 3.05. "FEI BALANCE SHEET DATE" shall have the meaning set forth in Section 3.11. "FEI BENEFIT PLAN" shall mean any Benefit Plan maintained or contributed to by FEI, a Subsidiary of FEI or an ERISA Affiliate of either, or to which FEI, a Subsidiary of FEI or an ERISA Affiliate of either is required to contribute. "FEI BOARD RECOMMENDATION" shall have the meaning set forth in Section 5.22(b). "FEI'S BROKER" shall have the meaning set forth in Section 3.16. "FEI COMMON STOCK" shall mean the common stock of FEI, no par value per share. "FEI CONFIDENTIAL IP INFORMATION" shall have the meaning set forth in Section 3.13(f). -4- "FEI CONTRACT" shall have the meaning set forth in Section 3.08(a). "FEI CONVERTIBLE DEBT" shall have the meaning set forth in Section 3.02(b). "FEI DISCLOSURE SCHEDULE" shall mean the disclosure schedule that has been prepared by FEI in accordance with the requirements of Section 10.07 hereof and that has been delivered by FEI to Veeco on the date of this Merger Agreement. "FEI ENTITIES" shall mean FEI and each of its Subsidiaries. "FEI ESPP" shall have the meaning set forth in Section 5.06(a). "FEI FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.04. "FEI INSIDER" shall have the meaning set forth in Section 5.24. "FEI INTELLECTUAL PROPERTY" shall mean all Intellectual Property used in or necessary for the conduct of FEI's and its Subsidiaries' businesses as currently conducted. "FEI OPTIONS" shall have the meaning set forth in Section 3.02(b). "FEI-OWNED IP" shall have the meaning set forth in Section 3.13(c). "FEI RIGHTS AGREEMENT" shall mean any preferred stock rights agreement (commonly known as a "poison pill") entered into or put in place by FEI. "FEI SEC DOCUMENTS" shall mean each statement, report, form, schedule, registration statement (including the related prospectus in the form filed pursuant to Rule 424(b) of the Securities Act) and proxy statement or information statement, and all other filings filed with the SEC by FEI since January 1, 1999. "FEI STOCK CERTIFICATE" shall have the meaning set forth in Section 2.07. "FEI STOCKHOLDERS' MEETING" shall have the meaning set forth in Section 5.22(a). "FEI STOCKHOLDER VOTING AGREEMENTS" shall have the meaning set forth in the third WHEREAS clause to this Merger Agreement. "FEI TRIGGERING EVENT" shall be deemed to have occurred if: (i) the Board of Directors of FEI shall have failed to recommend that FEI's stockholders vote to approve the Merger, or shall have withdrawn or modified in a manner adverse to Veeco the FEI Board Recommendation; (ii) FEI shall have failed to include in the Joint Proxy Statement the FEI Board Recommendation; (iii) the Board of Directors of FEI shall have approved, endorsed or recommended any FEI Acquisition Transaction; (iv) FEI shall have entered into any letter of intent or similar document or any Contract providing for any FEI Acquisition Transaction; (v) FEI shall have failed to hold the FEI Stockholders' Meeting in accordance with Section 5.22; (vi) FEI shall have failed to prepare and mail to its stockholders the Joint Proxy Statement in accordance with Section 5.21; (vii) a tender or exchange offer relating to FEI's securities shall have been commenced by a Person unaffiliated with -5- Veeco, and FEI shall not have sent to its stockholders, pursuant to Rule 14e-2 promulgated under the Exchange Act, within ten business days after such tender or exchange offer is first published, sent, given or otherwise commenced, a statement disclosing that the Board of Directors of FEI recommends rejection of such tender or exchange offer; (viii) the Board of Directors of FEI shall have granted any approval or taken any other step to exempt any transaction (other than the Merger and the other transactions with Veeco and Acquisition contemplated by this Merger Agreement) from the requirements and provisions of Section 835 of the OBCA or other state anti-takeover statutes or regulations; (ix) FEI's Board of Directors shall have amended or resolved to amend the FEI Rights Agreement, if in effect, in a manner so as to render it inapplicable to any FEI Acquisition Transaction (other than with respect to the Merger and other transactions contemplated by this Merger Agreement) or (x) any of the FEI Entities shall have violated in a material manner any of the restrictions set forth in Section 5.16. "FOREIGN CONTINUING EMPLOYEES" shall have the meaning set forth in Section 5.07(d). "FORM S-4 REGISTRATION STATEMENT" shall mean the registration statement on Form S-4 to be filed with the SEC by Veeco in connection with the issuance of Veeco Shares in the Merger, as said registration statement may be amended from time to time prior to or after the time it is declared effective by the SEC. "GAAP" shall mean United States generally accepted accounting principles. "GOVERNMENTAL AUTHORITY" shall mean any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign. "HAZARDOUS SUBSTANCES" shall mean (i) any waste, substance or material that is prohibited, limited, or regulated by any Environmental Law, or that has been designated by any Governmental Authority to be radioactive, toxic, hazardous or otherwise a danger to health, reproduction or the environment; (ii) asbestos-containing material, (iii) medical and biological waste, (iv) polychlorinated biphenyls, and (v) petroleum products, including gasoline, fuel oil, crude oil and other various constituents of such products. "HAZARDOUS SUBSTANCE ACTIVITIES" shall mean the transportation, transfer, recycling, storage, use, treatment, manufacture, removal remediation, release, exposure of others to, sale or distribution of any Hazardous Substance or any product containing a Hazardous Substance. "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "INDEMNIFIED PERSONS" shall have the meaning set forth in Section 5.08(a). "INTELLECTUAL PROPERTY" means shall mean any or all of the following and all rights in, arising out of, or associated therewith: (i) all United States, international and foreign patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof; (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know how, technology, technical data and customer lists, and all documentation relating to any of the foregoing; (iii) all copyrights, copyrights -6- registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) all industrial designs and any registrations and applications therefor throughout the world; (v) all mask works and any registrations and applications therefor throughout the world (vi) all trade names, logos, URLs, common law trademarks and service marks, trademark and service mark registrations and applications therefor throughout the world; (vii) all databases and data collections and all rights therein throughout the world; (viii) all moral and economic rights of authors and inventors, however denominated, throughout the world; and (ix) any similar or equivalent rights to any of the foregoing throughout the world. "IRS" shall mean the Internal Revenue Service of the United States or any successor agency, and, to the extent relevant, the United States Department of the Treasury. "JOINT PROXY STATEMENT" shall mean the joint proxy statement/prospectus to be sent to FEI's stockholders in connection with the FEI Stockholders' Meeting and to Veeco's stockholders in connection with the Veeco Stockholders' Meeting. "KNOWLEDGE" shall mean, (i) with respect to an individual, the actual knowledge of such individual and (ii) with respect to any Person other than an individual, the actual knowledge of any officer or director of a corporate entity or other Person performing similar functions for any other type of non-individual Person. "LAW" shall mean any constitutional provision or any statute or other law, rule or regulation of any Governmental Authority and any decree, injunction, judgment, order, ruling, assessment or writ. "LEGAL PROCEEDING" shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other Governmental Authority or any arbitrator or arbitration panel. "LIEN" shall mean any lien, pledge, mortgage, deed of trust, security interest, attachment, claim, lease, charge, option, right of first refusal, easement, servitude, encroachment or other survey defect, transfer restriction or other encumbrance of any nature whatsoever, except for liens for Taxes not yet due and payable. "MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a material adverse effect on (i) the business, assets, financial condition, operations or results of operations of such Person and its Subsidiaries, taken as a whole or (ii) the ability of such Person to consummate the transactions contemplated by this Merger Agreement prior to the Termination Date; PROVIDED, HOWEVER, that, for purposes of clause (i) above, in no event shall any of the following, alone or in combination with one another, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or will be, a Material Adverse Effect: (A) any effect resulting from compliance with the express terms and conditions of this Agreement; (B) any effect resulting from the announcement or pendency of the Merger (provided that the exception in this clause (B) shall not apply to the use of the term "Material Adverse Effect" in Sections 7.01 and 8.01 with respect to the representations and warranties contained in Sections 3.03, 3.07, 3.08, 3.13(b), 4.03, 4.07, 4.08, and 4.13(b)); (C) any changes in the Person's stock price or trading volume (but excluding the reasons -7- for such changes in the stock price or trading volume); (D) any failure by the Person to meet published revenue or earnings projections (but excluding the reasons for failing to meet such projections); (E) any effect that results from changes affecting any of the industries in which the Person operates generally or the United States economy generally (including prevailing interest rate and stock market levels); (F) any effect that results primarily from changes affecting general worldwide economic or capital market conditions (which changes in each case do not disproportionately affect the Person in any material respect); or (G) stockholder class action litigation arising from allegations of a breach of fiduciary duty relating to this Agreement. "MATERIAL FEI ENTITY" shall mean any FEI Entity that is a "significant subsidiary" (as such term is defined in Regulation 210.1-02(w) of Regulation S-X of the SEC) of FEI. "MATERIAL VEECO ENTITY" shall mean any Veeco Entity that is a "significant subsidiary" (as such term is defined in Regulation 210.1-02(w) of Regulation S-X of the SEC) of Veeco. "MERGER" shall have the meaning set forth in the first WHEREAS clause to this Merger Agreement. "MERGER AGREEMENT" shall mean this Agreement and Plan of Merger, as amended, supplemented or otherwise modified from time to time. "MERGER CONSIDERATION" shall have the meaning set forth in Section 2.06(a). "NASDAQ" shall mean The NASDAQ Stock Market, Inc. "OBCA" shall have the meaning set forth in the first WHEREAS clause to this Merger Agreement. "PARTY(IES)" shall mean FEI or Veeco and all of their respective Subsidiaries, including Acquisition. "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any successor thereto. "PERSON" shall mean any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, or other entity or organization, whether or not a legal entity, and including, without limitation, any Governmental Authority. "PHILIPS" shall mean Philips Business Electronics International B.V. "QUALIFYING AMENDMENT" shall mean an amendment or supplement to the Joint Proxy Statement or Form S-4 Registration Statement (including by incorporation by reference) to the extent it contains (a) a change in the Veeco Board Recommendation or a change in the FEI Board Recommendation (as the case may be), (b) a statement of the reasons of the Board of Directors of Veeco or FEI (as the case may be) for making such change in the Veeco Board Recommendation or the FEI Board Recommendation (as the case may be) and (c) additional information reasonably related to the foregoing. -8- "REGULATORY LAW" shall mean the HSR Act, and all other federal, state and foreign, if any, statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws that are designed or intended to prohibit, restrict, or regulate (a) mergers, acquisitions or other business combinations, (b) foreign investment or (c) actions having the purpose or effect of monopolization or restraint of trade or lessening of competitions. "RELEASE" shall mean any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other releasing, whether intentional or unintentional. "REPRESENTATIVES" shall mean, with respect to any Person, its officers, directors, attorneys, accountants, advisors and other representatives. "REQUIRED FEI STOCKHOLDER VOTE" shall mean the affirmative vote of the holders of a majority of the shares of FEI Common Stock entitled to vote at the FEI Stockholders Meeting in which a quorum is present in conformance with the requirements of OBCA, FEI's articles of incorporation, charter documents and by-laws, and NASDAQ. "REQUIRED VEECO STOCKHOLDER VOTE" shall mean the affirmative vote of the holders of a majority of the outstanding Veeco Shares entitled to vote at the Veeco Stockholders Meeting in which a quorum is present in conformance with the requirements of DGCL, Veeco's certificate of incorporation, charter documents and by-laws, and NASDAQ. "SEC" shall mean the United States Securities and Exchange Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SUBSIDIARY" shall mean a Person shall be deemed to be a "Subsidiary" of another Person if such Person directly or indirectly owns, beneficially or of record, (a) an amount of voting securities or other interests in such Person that is sufficient to enable such Person to elect at least a majority of the members of such Person's Board of Directors or other governing body, or (b) at least 50% of the outstanding entity or financial interests of such Person. "SUPERIOR FEI PROPOSAL" shall mean an unsolicited, BONA FIDE, written offer made by a third party (other than by Veeco or by a Veeco Entity) with respect to a FEI Acquisition Transaction on terms that the Board of Directors of FEI determines in good faith make it more favorable to the stockholders of FEI for FEI to consummate such FEI Acquisition Transaction, than for FEI to consummate the Merger, after, among other relevant considerations, consultation with an independent financial advisor of nationally recognized reputation; PROVIDED, HOWEVER, that any such offer shall not be deemed to be a "Superior FEI Proposal" if any financing required to consummate the transaction contemplated by such offer is not committed and is not reasonably capable of being obtained by such third party. For purposes of this definition, the term "FEI Acquisition Transaction" shall have the meaning ascribed to such term in this Article I, except that references to "15%" therein shall be deemed to read "50%." "SUPERIOR VEECO PROPOSAL" shall mean an unsolicited, bona fide, written offer made by a third party (other than by FEI or by a FEI Entity) with respect to a Veeco Acquisition Transaction on terms that the Board of Directors of Veeco determines in good faith make it more favorable to the stockholders of Veeco for Veeco to consummate such Veeco Acquisition Transaction, than for -9- Veeco to consummate the Merger, after, among other relevant considerations, consultation with an independent financial advisor of nationally recognized reputation; provided, however, that any such offer shall not be deemed to be a "Superior Veeco Proposal" if any financing required to consummate the transaction contemplated by such offer is not committed and is not reasonably capable of being obtained by such third party. For purposes of this definition, the term "Veeco Acquisition Transaction" shall have the meaning ascribed to such term in this Article I, except that references to "15%" therein shall be deemed to read "50%." "SURVIVING CORPORATION" shall have the meaning set forth in Section 2.01. "TAX" or "TAXES" shall mean any and all taxes (whether Federal, state, local or municipal, and whether domestic or foreign), including, without limitation, income, profits, franchise, gross receipts, payroll, sales, employment, use, property, withholding, excise, occupation, value added, AD VALOREM, transfer and other taxes, duties or assessments of any nature whatsoever, together with any interest, penalties or additions to tax imposed with respect thereto. "TAX RETURNS" shall mean any returns (including any information returns), reports and forms required to be filed with any Governmental Authority in connection with the determination, assessment, collection or payment of any Taxes or in connection with the administration, implementation or enforcement of or compliance with any Law relating to any Tax. "TERMINATION DATE" shall have the meaning set forth in Section 9.01(b). "TERMINATION FEE" shall have the meaning set forth in Section 9.03(b). "THREATENED" shall mean: a claim, proceeding, dispute, action or other matter will be deemed to have been "Threatened" if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing) that would lead a prudent Person to conclude that such a claim, proceeding dispute, action or other matter is likely to be asserted, commenced, taken or otherwise pursued in the near future. "TRANSACTION EXPENSES" shall have the meaning set forth in Section 9.03(b). "U.S. CONTINUING EMPLOYEES" shall have the meaning set forth in Section 5.07(a). "VEECO" shall have the meaning set forth in the introductory paragraph of this Merger Agreement. "VEECO ACQUISITION PROPOSAL" shall mean any offer, proposal, inquiry or indication of interest (other than an offer, proposal, inquiry or indication of interest by FEI) contemplating or otherwise relating to any Veeco Acquisition Transaction. "VEECO ACQUISITION TRANSACTION" shall mean any transaction or series of related transactions (other than the transactions contemplated by this Merger Agreement) involving: (a) any merger, reorganization, consolidation, share exchange, recapitalization, business combination, issuance of securities, purchase or acquisition of securities, tender offer, exchange offer or other similar transaction (i) in which Veeco or any other Material Veeco Entity is -10- a constituent corporation, (ii) in which a Person or "group" (as defined and described under Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of Persons directly or indirectly acquires beneficial or record ownership of securities representing more than 15% of the outstanding securities of any class of voting securities of Veeco or another Material Veeco Entity, or (iii) in which Veeco or any other Material Veeco Entity issues securities representing more than 15% of the outstanding securities of any class of voting securities of Veeco or such Material Veeco Entity; (b) any sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or assets (other than in the ordinary course of business) that constitute or account for 15% or more of the consolidated net revenues, net income or assets (measured by fair market value) of Veeco and the other Veeco Entities, on a consolidated basis; or (c) any liquidation or dissolution of Veeco. "VEECO AUTHORIZATIONS" shall have the meaning set forth in Section 4.06(b). "VEECO BALANCE SHEET" shall have the meaning set forth in Section 4.05. "VEECO BALANCE SHEET DATE" shall have the meaning set forth in Section 4.11. "VEECO BENEFIT PLAN" shall mean any Benefit Plan maintained or contributed to by Veeco, a Subsidiary of Veeco or an ERISA Affiliate of either, or to which Veeco, a Subsidiary of Veeco or an ERISA Affiliate of either is required to contribute. "VEECO BENEFITS" shall have the meaning set forth in Section 5.07(a). "VEECO BOARD RECOMMENDATION" shall have the meaning set forth in Section 5.23(b). "VEECO'S BROKER" shall have the meaning set forth in Section 4.16. "VEECO CERTIFICATE OF INCORPORATION AMENDMENT" shall mean the Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Veeco, substantially in the form attached hereto as Exhibit C. "VEECO CONFIDENTIAL IP INFORMATION" shall have the meaning set forth in Section 4.13(f). "VEECO CONTRACT" shall have the meaning set forth in Section 4.08(a). "VEECO CONVERTIBLE DEBT" shall have the meaning set forth in Section 4.02(b). "VEECO DISCLOSURE SCHEDULE" shall mean the disclosure schedule that has been prepared by Veeco in accordance with the requirements of Section 10.07 hereof and that has been delivered by Veeco to FEI on the date of this Merger Agreement. "VEECO ENTITIES" shall mean Veeco and each of its Subsidiaries. "VEECO ESPP" shall have the meaning set forth in Section 5.06(b). -11- "VEECO FINANCIAL STATEMENTS" shall have the meaning set forth in Section 4.04. "VEECO INVESTOR AGREEMENT" shall mean that certain Investor Agreement, dated as of the date hereof, by and among Veeco, Philips and FEI. "VEECO INTELLECTUAL PROPERTY" shall mean all Intellectual Property used in or necessary for the conduct of Veeco's and its Subsidiaries' businesses as currently conducted. "VEECO OPTIONS" shall have the meaning set forth in Section 4.02(b). "VEECO-OWNED IP" shall have the meaning set forth in Section 4.13(c). "VEECO RIGHTS AGREEMENT" shall mean that certain Rights Agreement, dated as of March 13, 2001, between Veeco and American Stock Transfer and Trust Company, as amended. "VEECO SEC DOCUMENTS" shall mean each statement, report, form, schedule, registration statement (including the related prospectus in the form filed pursuant to Rule 424(b) of the Securities Act) and proxy statement or information statement, and all other filings filed with the SEC by Veeco since January 1, 1999. "VEECO SHARES" shall mean the common stock, $0.01 par value per share, of Veeco. "VEECO STOCKHOLDERS' MEETING" shall have the meaning set forth in Section 5.23(a). "VEECO STOCKHOLDER VOTING AGREEMENTS" shall have the meaning set forth in the fourth WHEREAS clause to this Merger Agreement. "VEECO TRIGGERING EVENT" shall be deemed to have occurred if: (i) the Board of Directors of Veeco shall have failed to recommend that Veeco's stockholders vote to approve the issuance of Veeco Shares in the Merger, or shall have withdrawn or modified in a manner adverse to FEI the Veeco Board Recommendation; (ii) Veeco shall have failed to include in the Joint Proxy Statement the Veeco Board Recommendation; (iii) the Board of Directors of Veeco shall have approved, endorsed or recommended any Veeco Acquisition Transaction; (iv) Veeco shall have entered into any letter of intent or similar document or any Contract providing for any Veeco Acquisition Transaction; (v) Veeco shall have failed to hold the Veeco Stockholders' Meeting in accordance with Section 5.23; (vi) Veeco shall have failed to prepare and mail to its stockholders the Joint Proxy Statement in accordance with Section 5.21; (vii) a tender or exchange offer relating to Veeco's securities shall have been commenced by a Person unaffiliated with FEI, and Veeco shall not have sent to its stockholders, pursuant to Rule 14e-2 promulgated under the Exchange Act, within ten business days after such tender or exchange offer is first published, sent, given or otherwise commenced, a statement disclosing that the Board of Directors of Veeco recommends rejection of such tender or exchange offer; (viii) the Board of Directors of Veeco shall have granted any approval or taken any other step to exempt any transaction (other than the Merger and the other transactions with FEI contemplated by this Merger Agreement) from the requirements and provisions of Section 203 of the DGCL or other state anti-takeover statutes or regulations; (ix) Veeco's Board of Directors shall have amended or resolved to amend the Veeco Rights Agreement in a manner so as to render it inapplicable to any Veeco Acquisition Transaction (other than with respect to the Merger and other -12- transactions contemplated by this Merger Agreement) or (x) any of the Veeco Entities shall have violated in a material manner any of the restrictions set forth in Section 5.17. "VOTING DEBT" shall mean any bonds, debentures, notes or other indebtedness having the right to vote on any matters on which holders of capital stock of the same issuer may vote. 1.02 The words "hereof," "herein," "hereby" and "hereunder," and words of like import, refer to this Merger Agreement as a whole and not to any particular Section hereof. References herein to any Section, Schedule or Exhibit refer to such Section of, or such Schedule or Exhibit to, this Merger Agreement, unless the context otherwise requires. All pronouns and any variations thereof refer to the masculine, feminine or neuter gender, singular or plural, as the context may require. The word "including," when used herein, means "including, without limitation." II. THE MERGER 2.01 THE MERGER. At the Effective Time of the Merger, Acquisition shall be merged with and into FEI. The separate existence of Acquisition shall thereupon cease and FEI shall continue its corporate existence as the surviving corporation (the "SURVIVING CORPORATION") under the Laws of the State of Oregon under its present name. FEI and Acquisition are sometimes referred to collectively herein as the "CONSTITUENT CORPORATIONS." 2.02 EFFECTIVE TIME OF THE MERGER. At the Closing, the parties hereto shall cause articles of merger substantially in the form of EXHIBIT D to be executed and filed with the Secretary of State of the State of Oregon, as provided in Section 481 of the OBCA (the "ARTICLES OF MERGER"), and shall take all such other and further actions as may be required by Law to make the Merger effective. The Merger shall become effective as of the date and time of the filing of the Articles of Merger. The date and time of such effectiveness are referred to herein as the "EFFECTIVE TIME." 2.03 CLOSING OF THE MERGER (a) Unless this Merger Agreement shall theretofore have been terminated pursuant to the provisions of Section 9.01 hereof, the closing of the Merger (the "Closing") shall take place as promptly as practicable, but no later than the second business day, following the day on which the last of the conditions (other than conditions which, by their nature, are to be satisfied at Closing, but subject to those conditions) set forth in Articles VI, VII and VIII hereof are fulfilled or waived (by the relevant party or parties), subject to applicable Laws (the "Closing Date"), at the offices of Kaye Scholer LLP, 425 Park Avenue, New York, New York 10022, unless another time, date or place is agreed to in writing by the parties hereto. (b) Subject to the provisions of this Merger Agreement, Veeco, Acquisition and FEI shall cause to be executed and filed at the Closing the Articles of Merger, and shall cause the Articles of Merger to be recorded in accordance with the provisions of the OBCA and shall take any and all other lawful actions and do any and all other lawful things to cause the Merger to become effective. 2.04 EFFECTS OF THE MERGER. At the Effective Time of the Merger: -13- (a) the separate existence of Acquisition shall cease and Acquisition shall be merged with and into FEI, which shall be the Surviving Corporation; (b) the Articles of Incorporation and By-Laws of Acquisition as in effect immediately prior to the Effective Time shall be the Articles of Incorporation and By-Laws of the Surviving Corporation, until each shall thereafter be amended in accordance with each of their terms and as provided by Law; (c) the directors and officers of the Surviving Corporation immediately after the Effective Time shall be the individuals set forth on SCHEDULE 2.04(C); (d) the Surviving Corporation shall possess all the rights, privileges, immunities and franchises, of a public as well as of a private nature, of each of the Constituent Corporations, and all property, real, personal, and mixed, and all debts due on whatever account, and all other choses in action, and all and every other interest of or belonging to or due to each of the Constituent Corporations shall be taken and deemed to be transferred to and vested in the Surviving Corporation without further act or deed; (e) the Surviving Corporation shall thenceforth be responsible and liable for all liabilities and obligations of each of the Constituent Corporations, and any claim existing or action or proceeding pending by or against either of the Constituent Corporations may be prosecuted as if the Merger had not taken place or the Surviving Corporation may be substituted in its place. Neither the rights of creditors nor Liens upon the property of either of the Constituent Corporations shall be impaired by the Merger; and (f) the FEI Convertible Debt shall become convertible solely into a number of Veeco Shares equal to the number of Veeco Shares that would have been issued if the FEI Convertible Debt had been converted into FEI Common Stock immediately prior to the Effective Time. 2.05 AMENDMENT OF VEECO'S CERTIFICATE OF INCORPORATION AND BYLAWS. (a) Immediately following the Effective Time, Article I of the Amended and Restated Certificate of Incorporation of Veeco shall be amended in its entirety to provide that "The name of the corporation is Veeco FEI Inc. (the "Corporation")." (b) Immediately following the Effective Time, the Bylaws of Veeco shall be amended and restated as set forth in EXHIBIT E. 2.06 CONVERSION OF SHARES. As of the Effective Time, by virtue of the Merger and without any further action on the part of Veeco, Acquisition, FEI or any holder of any Equity Securities of the Constituent Corporations: (a) Each share of FEI Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive 1.355 Veeco Shares (the "MERGER CONSIDERATION"). Accordingly, 1.355 is hereinafter referred to as the "EXCHANGE RATIO." -14- (b) Each share of common stock of Acquisition issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. (c) The Exchange Ratio shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Veeco Shares or FEI Common Stock), reorganization, recapitalization or other like change with respect to Veeco Shares or FEI Common Stock occurring after the date of this Merger Agreement and prior to the Effective Time or after the Effective Time if the record date with respect thereto is set after the date of this Merger Agreement and prior to the Effective Time. (d) No fraction of a Veeco Share will be issued in exchange for surrendered shares of FEI Common Stock, but in lieu thereof each holder of shares of FEI Common Stock who would otherwise be entitled to a fraction of a Veeco Share (after aggregating all fractional shares of Veeco Shares to be received by such holder) shall receive from Veeco an amount of cash (rounded to the nearest whole cent), without interest, equal to the product of (i) such fraction, multiplied by (ii) the Closing Price Per Share. (e) All FEI Common Stock, by virtue of the Merger and without any action on the part of the holders thereof, shall no longer be outstanding and shall be canceled and retired and shall cease to exist, and each holder of a FEI Stock Certificate shall thereafter cease to have any rights with respect to the shares of FEI Common Stock represented thereby, except the right to receive the Merger Consideration for such FEI Common Stock upon the surrender of such FEI Stock Certificate in accordance with this Section and Section 2.08 hereof. (f) If any shares of FEI Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture or other condition under any applicable restricted stock purchase agreement or other agreement with FEI or any other FEI Entity or under which FEI or any other FEI Entity has any rights, then the Veeco Shares issued in exchange for such shares of FEI Common Stock will also be unvested and subject to the same repurchase option, risk of forfeiture or other condition, and the certificates representing such Veeco Shares may accordingly be marked with appropriate legends. FEI shall use commercially reasonable efforts to ensure that, from and after the Effective Time, Veeco is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other agreement. 2.07 CLOSING OF FEI'S TRANSFER BOOKS. At the Effective Time, the stock transfer books of FEI shall be closed with respect to all shares of FEI Common Stock outstanding immediately prior to the Effective Time. No further transfer of any such shares of FEI Common Stock shall be made on such stock transfer books after the Effective Time. If, after the Effective Time, a valid certificate previously representing any shares of FEI Common Stock (a "FEI STOCK CERTIFICATE") is presented to the Exchange Agent or to the Surviving Corporation or Veeco, such FEI Stock Certificate shall be canceled, and shall be exchanged as provided in Section 2.08 hereof. -15- 2.08 EXCHANGE OF CERTIFICATES. (a) On or prior to the Closing Date, Veeco shall select a reputable bank or trust company to act as exchange agent in the Merger (the "EXCHANGE AGENT"). Promptly (but in no event more than three business days) after the Effective Time, Veeco shall deposit with the Exchange Agent (i) certificates representing the Veeco Shares issuable pursuant to this Article II and (ii) cash sufficient to make payments in lieu of fractional shares in accordance with Section 2.06(d) hereof. The Veeco Shares and cash amounts so deposited with the Exchange Agent, together with any dividends or distributions received by the Exchange Agent with respect to such shares, are referred to herein collectively as the "EXCHANGE FUND." (b) As soon as reasonably practicable after the Effective Time (but in no event more than three business days after the Effective Time), the Exchange Agent will mail to the record holders of FEI Stock Certificates: (i) a letter of transmittal in customary form and containing such provisions as Veeco may reasonably specify (including a provision confirming that delivery of FEI Stock Certificates shall be effected, and risk of loss and title to FEI Stock Certificates shall pass, only upon delivery of such FEI Stock Certificates to the Exchange Agent), and (ii) instructions for use in effecting the surrender of FEI Stock Certificates in exchange for certificates representing Veeco Shares as contemplated by this Article II. Upon surrender of a FEI Stock Certificate to the Exchange Agent for exchange, together with a duly executed letter of transmittal and such other documents as may be reasonably required by the Exchange Agent or Veeco, (1) the holder of such FEI Stock Certificates shall be entitled to receive in exchange therefor a certificate representing the number of whole Veeco Shares that such holder has the right to receive pursuant to the provisions of Section 2.06 hereof (and an appropriate amount of cash in lieu of any fractional Veeco Share otherwise issuable), and (2) the FEI Stock Certificate so surrendered shall be canceled. Until surrendered as contemplated by this Section 2.08, each FEI Stock Certificate shall be deemed, from and after the Effective Time, to represent only the right to receive Veeco Shares (and an appropriate amount of cash in lieu of any fractional Veeco Share otherwise issuable) as contemplated by this Article II. If any FEI Stock Certificate shall have been lost, stolen or destroyed, Veeco may, in its reasonable discretion and as a condition precedent to the issuance of any certificate representing Veeco Shares hereunder, require the owner of such lost, stolen or destroyed FEI Stock Certificate to provide an appropriate affidavit and to deliver a bond (in such sum as Veeco may reasonably direct) as indemnity against any claim that may be made against the Exchange Agent, Veeco or the Surviving Corporation with respect to such FEI Stock Certificate. (c) No dividends or other distributions declared or made with respect to Veeco Shares with a record date after the Effective Time shall be paid to the holder of any unsurrendered FEI Stock Certificate with respect to the Veeco Shares that such holder has the right to receive in the Merger until such holder surrenders such FEI Stock Certificate in accordance with this Section 2.08 (at which time such holder shall be entitled, subject to the effect of applicable escheat or similar Laws, to receive all such dividends and distributions, without interest). (d) Any portion of the Exchange Fund that remains undistributed to holders of FEI Stock Certificates as of the date that is 180 days after the Effective Time shall be delivered to Veeco upon demand, and any holders of FEI Stock Certificates who have not theretofore surrendered their FEI Stock Certificates in accordance with this Section 2.08 shall thereafter look -16- only to Veeco for satisfaction of their claims for Veeco Shares, cash in lieu of fractional Veeco Shares and any dividends or distributions with respect to Veeco Shares. (e) Each of the Exchange Agent, Veeco and the Surviving Corporation shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Merger Agreement to any holder or former holder of FEI Common Stock such amounts as may be required to be deducted or withheld therefrom under the Code or any provision of state, local or foreign Tax Law or under any other applicable Law. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Merger Agreement as having been paid to the Person to whom such amounts would otherwise have been paid. (f) Neither Veeco nor the Surviving Corporation shall be liable to any holder or former holder of FEI Common Stock or to any other Person with respect to any Veeco Shares (or dividends or distributions with respect thereto), or for any cash amounts, delivered to any public official pursuant to any applicable abandoned property Law, escheat Law or similar Law. 2.09 TAX CONSEQUENCES. For federal income tax purposes, the Merger is intended to constitute a reorganization within the meaning of Section 368 of the Code. The parties to this Merger Agreement hereby adopt this Merger Agreement as a "plan of reorganization" as described in Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations. 2.10 SUBSEQUENT ACTION. If, at any time after the Effective Time, Veeco or the Surviving Corporation shall determine or be advised that any deeds, bills of sale, assignments, assurances and any other actions or things are necessary, desirable or proper to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of the Constituent Corporations as a result of, or in connection with, the Merger, or to otherwise carry out the purposes of Merger, the officers and directors of Veeco and the Surviving Corporation shall be authorized (in the name and on behalf of Acquisition, in the name and on behalf of FEI or otherwise) to execute and deliver, in the name and on behalf of the Constituent Corporations or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of the Constituent Corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out the purposes of this Merger Agreement. III. REPRESENTATIONS AND WARRANTIES OF FEI FEI hereby represents and warrants to and covenants and agrees with Veeco and Acquisition that, except as set forth in the FEI Disclosure Schedule: 3.01 CORPORATE ORGANIZATION. (a) FEI is a corporation duly organized, validly existing and in good standing under the laws of the State of Oregon. FEI has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would -17- not, either individually or in the aggregate, have a Material Adverse Effect on FEI. True and complete copies of the Articles of Incorporation and By-Laws of FEI, as in effect as of the date of this Merger Agreement, have been filed by FEI as part of the FEI SEC Documents. (b) Each Subsidiary of FEI (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly qualified to do business and in good standing in all jurisdictions (whether federal, state or local or foreign) where its ownership or leasing of property or the conduct of its business requires it to be so qualified and (iii) has all requisite corporate power and authority to own or lease its properties and assets and to carry on its business as now conducted, in each case, except as would not have a Material Adverse Effect on FEI. Section 3.01(b) of the FEI Disclosure Schedule contains a complete and accurate list of each Subsidiary of FEI, indicating the jurisdiction of incorporation or organization of each such Subsidiary and FEI's percentage ownership interest therein (including each type of security held by FEI of each Subsidiary). 3.02 CAPITALIZATION. (a) The authorized capital stock of FEI consists of 45,000,000 shares of FEI Common Stock, of which 32,393,766 were issued and outstanding as of June 30, 2002, and 500,000 shares of preferred stock, none of which are outstanding. All of the outstanding shares of FEI Common Stock have been duly authorized and validly issued and are fully paid and nonassessable, are free of preemptive rights, with no personal liability attaching to the ownership thereof, and were issued in conformity with applicable Laws. (b) As of June 30, 2002, 3,080,783 shares of FEI Common Stock (in the aggregate) were issuable upon the exercise of options previously granted, and 1,502,299 shares of FEI Common Stock (in the aggregate) were reserved for issuance upon the exercise of options available for grant, under FEI's stock option plans (collectively, the "FEI OPTIONS"), 3,533,926 shares of FEI Common Stock (in the aggregate) were issuable upon the conversion of FEI's outstanding $175 million 5.5% Convertible Subordinated Notes due August 15, 2008 (the "FEI CONVERTIBLE DEBT") and 391,645 shares of FEI Common Stock (in the aggregate) were reserved for issuance under the FEI ESPP. Except as set forth above, there are no outstanding Equity Securities, or other obligations to issue or grant any rights to acquire any Equity Securities, of FEI or any Contracts to restructure or recapitalize FEI. Other than in connection with the FEI Convertible Debt, there are no outstanding Contracts of FEI or any Subsidiary of FEI to repurchase, redeem or otherwise acquire any Equity Securities of FEI or any Subsidiary of FEI. From December 31, 2001 to the date of this Merger Agreement, no shares of FEI capital stock have been issued except pursuant to the exercise of FEI Options, the FEI Convertible Debt or under the FEI ESPP. As of June 30, 2002, no shares of FEI capital stock were reserved for issuance, except for 1,893,944 shares of FEI Common Stock reserved for issuance upon exercise of FEI Options, the FEI Convertible Debt and under the FEI ESPP. FEI has no issued or outstanding Voting Debt. (c) FEI owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each Subsidiary of FEI, free and clear of any Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Subsidiary of FEI has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of -18- any shares of capital stock or any other Equity Security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary. Section 3.02(c) of the FEI Disclosure Schedule sets forth a list of each material investment of FEI in the equity (or any security convertible or exchangeable into equity) of any Person other than its Subsidiaries. 3.03 AUTHORIZATION. FEI has full corporate power and authority to execute, deliver and perform this Merger Agreement and the Articles of Merger, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Merger Agreement, the Articles of Merger and all other documents and agreements to be delivered pursuant hereto and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of FEI, and no other corporate proceedings on the part of FEI (other than the Required FEI Stockholder Vote and the filing of the Articles of Merger) are necessary to authorize this Merger Agreement, the Articles of Merger and any such related documents or agreements or to consummate the transactions contemplated hereby. This Merger Agreement has been duly and validly executed and delivered by FEI and the Articles of Merger, when executed at the Closing, will be duly and validly executed and delivered by FEI. This Merger Agreement, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes a legal, valid and binding agreement of FEI, enforceable in accordance with its terms, and the Articles of Merger, when executed by FEI at the Closing, assuming the due authorization, execution and delivery by each of the other parties thereto, will be legal, valid and binding agreements of FEI, enforceable in accordance with their respective terms except as may be limited by applicable bankruptcy, moratorium, insolvency, reorganization, fraudulent conveyance or other Laws affecting the enforcement of creditors' rights generally or by general equitable principles. 3.04 REPORTS. All FEI SEC Documents were filed as and when required by the Exchange Act or the Securities Act, as applicable. All documents required to be filed as exhibits to the FEI SEC Documents have been so filed. The FEI SEC Documents include all statements, reports and documents required to be filed by FEI pursuant to the Exchange Act and the Securities Act. The FEI SEC Documents comply in all material respects with the requirements of the Exchange Act and the Securities Act, as applicable, and none of the FEI SEC Documents, as of their respective filing dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. None of FEI's Subsidiaries is required to file any statements, reports or documents with the SEC. The financial statements of FEI and its Subsidiaries, including the notes thereto, included in the FEI SEC Documents (the "FEI FINANCIAL STATEMENTS") complied in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto as of their respective dates (except as may be indicated in the notes thereto or, in the case of unaudited statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The FEI Financial Statements fairly present the consolidated financial condition, operating results and cash flows of FEI and its Subsidiaries at the dates and during the periods indicated therein in accordance with GAAP consistently applied (subject, in the case of unaudited statements, to normal year-end adjustments and additional footnote disclosures). There has been no material change in FEI's accounting policies except as described in the notes to the FEI Financial Statements. At all times since January 1, 1999, FEI has (i) filed as and -19- when due all documents required to be filed with NASDAQ, and (ii) otherwise timely performed all of FEI's obligations pursuant to the rules and regulations of NASDAQ. 3.05 NO UNDISCLOSED LIABILITIES. The FEI Entities do not have any obligations or liabilities of any nature (whether matured or unmatured, absolute, accrued, fixed or contingent) other than those (i) set forth or adequately provided for in the Balance Sheet of FEI and its Subsidiaries included in FEI's Annual Report on Form 10-K for the year ended December 31, 2001 (the "FEI Balance Sheet"), (ii) not required to be set forth on the FEI Balance Sheet under GAAP consistently applied, (iii) incurred in the ordinary course of business since the FEI Balance Sheet Date, and consistent with past practice or (iv) which, individually or in the aggregate, would not have a Material Adverse Effect on FEI. 3.06 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORIZATIONS. (a) Each of the FEI Entities has complied with, is not in violation of, and has not received any notices of violation with respect to, any federal, state, local or foreign statute, Law or regulation with respect to the conduct of its business, or the ownership or operation of its business, except for such violations or failures to comply as could not be reasonably expected to have a Material Adverse Effect on FEI. (b) Each of the FEI Entities has obtained each federal, state, county, local or foreign governmental Consent, approval, certificate, license, permit, grant, or other authorization of a Governmental Authority that is required for the operation of its business or the holding of any interest in its properties (collectively, the "FEI AUTHORIZATIONS"), and all of such FEI Authorizations are in full force and effect, except where the failure to obtain or have any of such FEI Authorizations could not reasonably be expected to have a Material Adverse Effect on FEI. 3.07 NO CONFLICTS. (a) The execution, delivery and performance by FEI of this Merger Agreement and the consummation of the transactions contemplated hereby will not (i) violate any provision of the Articles of Incorporation or By-Laws or other organizational documents of FEI or any other FEI Entity, (ii) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in or provide the basis for the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity, or trigger any repurchase obligation, of any debt or obligation pursuant to, or result in the creation or imposition of any Lien upon any property or assets of FEI or any other FEI Entity under, any material Contract to which FEI or any other FEI Entity is a party or by which any of their respective properties or assets are bound, or to which any of the property or assets of FEI or any other FEI Entity are subject, except for Contracts wherein the other party thereto has consented to the consummation of the Merger or irrevocably waived in writing its right to take any action contemplated in this clause (ii), (iii) violate any Law applicable to FEI or any other FEI Entity or (iv) violate or result in the revocation or suspension of any material license, permit, certificate, Consent or approval from a Governmental Authority that is necessary for the business and operations of FEI or any other FEI Entity. -20- (b) No filing or registration with, or permit, authorization, Consent or approval of, or notification or disclosure to, any Governmental Authority is required by FEI or any other FEI Entity in connection with the execution and delivery of this Merger Agreement or the consummation of the Merger and the other transactions contemplated hereby, except (i) in connection with the applicable requirements of the HSR Act or any other Regulatory Law and any other applicable anti-trust or competition approvals, (ii) in connection with the provisions of the Securities Act and the rules and regulations promulgated thereunder, and the Exchange Act and the rules and regulations promulgated thereunder, (iii) the filing of appropriate merger documents as required by the DGCL and OBCA, (iv) Consents, filings or exemptions in connection with compliance with the rules of NASDAQ, (v) such Consents, orders, registrations, declarations and filings as may be required under the laws of various states or (vi) such other Consents, filings and registrations the failure of which to obtain would not reasonably be expected to have a Material Adverse Effect on FEI. 3.08 CONTRACTS. (a) Neither FEI nor any of its Subsidiaries is a party to or is bound by any written contract, arrangement or commitment (i) with respect to the employment of any directors, officers or employees other than in the ordinary course of business consistent with past practice, (ii) which, upon the consummation or stockholder approval of the transactions contemplated by this Merger Agreement, will (either alone or upon the occurrence of any additional acts or events) result in any payment (whether of severance pay or otherwise) becoming due from FEI, Veeco, the Surviving Corporation or any of their respective Subsidiaries to any officer or employee thereof, (iii) which is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed, entirely or in part, after the date of this Merger Agreement, but which has not been previously filed with the SEC, (iv) which are of the type required to be disclosed under Item 404 of Regulation S-K of the SEC, but which has not been previously filed with the SEC, (v) which materially restricts the conduct of any line of business by FEI or any Subsidiary thereof or, upon consummation of the Merger, will materially restrict the ability of Veeco or the Surviving Corporation or any Subsidiary thereof to engage in any proposed line of business or (vi) which, upon the consummation or stockholder approval of the transactions contemplated by this Merger Agreement, will result in any of the Veeco Entities or any of the FEI Entities, granting any rights or licenses to any material Intellectual Property of any of the Veeco Entities or any of the FEI Entities, to any third party. Each contract, arrangement, commitment or understanding of the type described in this Section 3.08(a), whether or not set forth in the FEI Disclosure Schedule, is referred to herein as a "FEI CONTRACT". (b) (i) Each FEI Contract is valid and binding on FEI and any of its Subsidiaries that is a party thereto, as applicable, and is in full force and effect (except to the extent such contract has expired or terminated according to its terms), (ii) FEI and each of its Subsidiaries has in all material respects performed all obligations required to be performed by it to date under each FEI Contract, except where such noncompliance, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on FEI, and (iii) neither FEI nor any of its Subsidiaries, knows of, or has received notice of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of FEI or any of its Subsidiaries under any such FEI Contract, except where such default, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on FEI. -21- 3.09 LITIGATION. Except as disclosed in the FEI SEC Documents prior to the date hereof, (i) there is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of FEI, Threatened against FEI or any other FEI Entity or any of their respective properties or any of their respective officers or directors (in their capacities as such) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on FEI, and (ii) there is no judgment, decree or order against FEI or any other FEI Entity or, to the knowledge of FEI, any of their respective directors or officers (in their capacities as such) that could prevent, enjoin, alter or materially delay any of the transactions contemplated by this Merger Agreement, or that could reasonably be expected to have a Material Adverse Effect on FEI. 3.10 TAXES. FEI and each of the FEI Entities has filed or caused to be filed on a timely basis all Tax Returns that are or were required to be filed by FEI and/or any of the other FEI Entities, either separately or as part of an affiliated group of corporations, pursuant to the Laws of any Governmental Authority with taxing power over any of the FEI Entities or its assets and business. All Tax Returns filed by any of the FEI Entities are true, correct and complete. FEI and each of the FEI Entities has paid all Taxes that have become due by it pursuant to those Tax Returns or pursuant to any assessment received by any of the FEI Entities, except such Taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in the FEI Financial Statements. All Taxes that FEI or any of the FEI Entities is, or was, required by Law to withhold and collect have been duly withheld and collected and, to the extent required, have been paid to the appropriate Governmental Authority. There is no agreement, plan, arrangement or other contract covering any employee or independent contractor of FEI or any of the FEI Entities that would give rise to the payment of any amount that would not be deductible by Veeco or any of the Veeco Entities or the Surviving Corporation pursuant to Section 280G or Section 162(m) of the Code. FEI is not a "United States real property holding corporation," as defined in Section 897(c)(2) of the Code. The charges, accruals and reserves with respect to Taxes on the FEI Financial Statements with respect to each of the FEI Entities (excluding any provision for deferred income taxes established to reflect timing differences between book and tax income) for all tax periods (or portions thereof) ending on or before the Closing Date (including any period for which no Tax Return has yet been filed) are adequate. 3.11 ABSENCE OF CERTAIN CHANGES. Except as disclosed in or filed as an exhibit to the FEI SEC Documents prior to the date hereof, since December 31, 2001 (the "FEI Balance Sheet Date"), the FEI Entities have conducted their business in the ordinary course consistent with past practice and there has not occurred: (i) any change, event or condition (whether or not covered by insurance) that has resulted in, or might reasonably be expected to result in, a Material Adverse Effect to FEI; (ii) any acquisition, sale or transfer of any material asset of the FEI Entities other than in the ordinary course of business and consistent with past practice; (iii) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by FEI or any revaluation by FEI of any of its assets; (iv) any declaration, setting aside, or payment of a dividend or other distribution with respect to the shares of FEI Common Stock or any other FEI Equity Securities (excluding interest payments on the FEI Convertible Debt contemplated by the Indenture relating thereto), or any direct or indirect redemption, purchase or other acquisition by FEI of any of its shares of capital stock; (v) any material Contract entered into by any FEI Entity, other than in the ordinary course of business, or any material amendment or termination of, or default under, any material Contract to which any FEI Entity is a party or by which any of them is bound; or (vi) any -22- agreement by any FEI Entity to do any of the things described in the preceding clauses (i) through (v) (other than negotiations with Veeco and its Representatives regarding the transactions contemplated by this Merger Agreement). 3.12 EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) There does not now exist any and, to the knowledge of FEI, there are no existing circumstances that could reasonably be expected to result in, any Controlled Group Liability to FEI or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on FEI. No FEI Benefit Plan is (i) a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA, (ii) a "multiple employer plan" as defined in ERISA or the Code, or (iii) a "funded welfare plan" within the meaning of Section 419 of the Code. None of the FEI Benefit Plans provides for any welfare or other non-pension benefits to retired or former employees, except to the extent required by the continuation coverage requirements of Section 601 et. seq. of ERISA, Section 4980B of the Code or similar state law. (b) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on FEI, (i) each of the FEI Benefit Plans has been operated and administered in all material respects in accordance with applicable law and administrative rules and regulations of any Governmental Authority, including, but not limited to, ERISA and the Code, and (ii) there are no pending or, to the knowledge of FEI, Threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have been asserted or instituted, and, to the knowledge of FEI, no set of circumstances exists, that may reasonably give rise to a claim or lawsuit, against the FEI Benefit Plans, any fiduciaries thereof with respect to their duties to the FEI Benefit Plans or the assets of any of the trusts under any of the FEI Benefit Plans that could reasonably be expected to result in any material liability of FEI or any of its Subsidiaries to the PBGC, the U.S. Department of the Treasury, the U.S. Department of Labor, any FEI Benefit Plan, any participant in a FEI Benefit Plan, or any other party. There are no unpaid contributions due prior to the date hereof with respect to any FEI Benefit Plan that are required to have been made under its terms and provisions, any related insurance contract or any applicable law. (c) Neither FEI nor any Subsidiary of FEI is a party to any collective bargaining or other labor union contract applicable to individuals employed by FEI or any Subsidiary of FEI, and no collective bargaining agreement or other labor union contract is being negotiated by FEI or any Subsidiary of FEI. Except as would not reasonably be expected to have a Material Adverse Effect on FEI, (i) there is no labor dispute, strike, slowdown or work stoppage against FEI or any Subsidiary of FEI pending or, to the knowledge of FEI, Threatened against FEI or any Subsidiary of FEI and (ii) no unfair labor practice or labor charge or complaint has occurred with respect to FEI or any Subsidiary of FEI. (d) Neither the execution and delivery of this Merger Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will (i) result in any payment or benefit (including, without limitation, option acceleration, severance, unemployment compensation, "excess parachute payment" (within the meaning of Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming due to any director, consultant or any current or former employee of FEI or any Subsidiaries of FEI under any FEI consultant Benefit Plan or otherwise; (ii) increase any benefits otherwise payable under any FEI -23- Benefit Plan; (iii) result in any acceleration of the time of payment or vesting of any such benefits; (iv) require the funding of any trust or other funding vehicle; or (v) limit or prohibit the ability to amend, merge, terminate or receive a reversion of assets from any FEI Benefit Plan or related trust. (e) There has been no disallowance of a deduction, or reasonable expectation of a disallowance of a deduction, under Section 162(m) of the Code for employee compensation of any amount paid or payable by FEI or any Subsidiary of FEI that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on FEI. (f) Section 3.12(f) of the FEI Disclosure Schedule sets forth a list of each material FEI Benefit Plan. (g) FEI has heretofore made available to Veeco true and complete copies of each of the FEI Benefit Plans (and all related trust agreements, insurance contracts and other ancillary documents) and, to the extent applicable, (i)the actuarial report for such FEI Benefit Plan for each of the last two years, (ii)the most recent determination letter from the IRS for such FEI Benefit Plan, (iii)the summary plan description for such FEI Benefit Plan, and (iv)the Form 5500 for such FEI Benefit Plan for each of the last two years, and all schedules thereto. Since the date of the documents made available, there has not been any material change in the assets or liabilities of any of the FEI Benefit Plans or any change in their terms and operations that could reasonably be expected to affect or alter the tax status or materially affect the cost of maintaining such Plan, and none of the FEI Benefit Plans has been or will be amended prior to the Closing Date to the extent such amendment will materially affect the cost of maintaining such Plans. Each of the FEI Benefit Plans can be amended, modified or terminated by FEI or a Subsidiary of FEI within a period of 30 days, without payment of any additional compensation or amount or the additional vesting or acceleration of any such benefits, except to the extent that such vesting is required under the Code upon the complete or partial termination of any FEI Benefit Plan intended to be qualified within the meaning of Section 401(a) of the Code. (h) Each FEI Benefit Plan that is intended to be qualified under Section 401 of the Code has received a favorable determination letter from the IRS as to the qualification of such plan (or is a prototype plan entitled to rely on a favorable determination, opinion or advisory letter issued to the prototype sponsor), or has remaining a period of time under applicable Treasury regulations or IRS pronouncements in which to receive such a determination. For each FEI Benefit Plan that has received such a determination, such letter has not been modified, revoked or limited by the failure to satisfy any condition thereof or by a subsequent amendment thereto, or failure to amend such FEI Benefit Plan. (i) Except as, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on FEI, no individual who has been classified by FEI as a non-employee (such as an independent contractor, leased employee or consultant) would reasonably be expected to have a claim against FEI for eligibility to participate in any FEI Benefit Plan, if such individual is later reclassified as a FEI employee. (j) Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on FEI, all FEI Benefit Plans subject to the laws of any jurisdiction outside of the United States (i) have been maintained in accordance with all applicable -24- requirements, (ii) if they are intended to qualify for special tax treatment meet all requirements for such treatment, and (iii) if they are intended to be funded and/or book-reserved are fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions. 3.13 INTELLECTUAL PROPERTY RIGHTS. (a) FEI and its Subsidiaries own, or are licensed to use, all FEI Intellectual Property. To the knowledge of FEI, the business and operations of FEI and its Subsidiaries as they are currently conducted do not infringe on the rights of any third party where such infringement, individually or in the aggregate, would be reasonably expected to have a Material Adverse Effect on any Material FEI Entity or any material business or product offering of FEI or any of its Subsidiaries, and, to the extent material FEI Intellectual Property is licensed from a third party, FEI's use of such Intellectual Property is in accordance in all material respects with the applicable license pursuant to which FEI acquired the right to use such Intellectual Property. To the knowledge of FEI, no third party is challenging, infringing on or otherwise violating any right of FEI in the FEI Intellectual Property where such infringement, individually or in the aggregate, would be reasonably expected to have a Material Adverse Effect on any Material FEI Entity or any material business or product offering of FEI or any of its Subsidiaries. Neither FEI nor any of its Subsidiaries has received any written notice of any pending claim, order or proceeding with respect to any material FEI Intellectual Property, nor has FEI received any written demand from any other party to cease and desist from infringement of such other party's Intellectual Property. To the knowledge of FEI, no material Intellectual Property owned or licensed by FEI is being used or enforced by FEI or its Subsidiaries in a manner that would reasonably be expected to result in the abandonment, estoppel, cancellation or unenforceability of such Intellectual Property. (b) The execution, delivery and performance of this Agreement by FEI and the consummation by FEI of the transactions contemplated hereby will not (i) constitute a breach by FEI or its Subsidiaries of any material instrument or agreement governing any FEI Intellectual Property, (ii) pursuant to the terms of any material license or agreement relating to any FEI Intellectual Property, cause the material modification of any terms of any such license or agreement, including but not limited to the modification of the effective rate of any royalties or other payments provided for in any such license or agreement, (iii) cause the forfeiture or termination of any FEI Intellectual Property under the terms thereof, (iv) give rise to a right of forfeiture or termination of any FEI Intellectual Property under the terms thereof or (v) impair the right of FEI, its Subsidiaries or, to FEI's knowledge, Veeco to make, have made, offer for sale, use, sell, export or license any products or processes used by FEI, its Subsidiaries or, to FEI's knowledge, Veeco in the conduct of their business as it is currently configured, except in each case for those matters that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect on FEI. (c) Each item of material FEI Intellectual Property owned by FEI or a Subsidiary thereof (the "FEI-OWNED IP") (i) is free and clear of any Liens or filings required under the Uniform Commercial Code in effect in any jurisdiction; (ii) is not subject to any outstanding judicial order, decree, judgment or stipulation or to any agreement materially restricting the scope of FEI's or such Subsidiary's use thereof; and (iii) together with each item of material FEI Intellectual Property which FEI or such Subsidiary has a right to use or practice pursuant to one or more license or similar agreements, is not subject to any suits, actions, written claims or demands of any third party and no action or proceeding, whether judicial, administrative, has been instituted, is pending or, to FEI's -25- knowledge, Threatened, which challenges or affects the rights of FEI or such Subsidiary in the same manner. (d) Neither FEI nor any Subsidiary thereof has entered into any agreement to indemnify any third party against any claim of infringement, misappropriation or other violation of FEI Intellectual Property rights other than indemnification provisions contained in purchase orders, customer agreements or similar agreements arising in the ordinary course of business. (e) To the knowledge of FEI and its Subsidiaries, (a) all rights in all inventions and discoveries made, developed or conceived by any current or former officer, employee, independent contractor, consultant or any other agent of FEI or any Subsidiary thereof during the course of their employment (or other retention) by FEI or a Subsidiary thereof and material to the business of FEI or a Subsidiary thereof and which are the subject of one or more issued letters patent or applications for letters patent have been assigned in writing to FEI or a Subsidiary thereof; and (b) the policy of FEI or a Subsidiary thereof requires each employee of FEI or a Subsidiary thereof to sign documents confirming that he or she assign to FEI or a Subsidiary thereof all Intellectual Property rights made, written, developed or conceived by him or her during the course of his or her employment (or other retention) by FEI or a Subsidiary thereof and relating to the business of FEI or a Subsidiary thereof to the extent that ownership of any such Intellectual Property rights does not vest in FEI or a Subsidiary thereof by operation of Law. (f) FEI believes that FEI and its Subsidiaries have taken reasonable and practicable steps to protect and preserve the confidentiality of any material FEI Intellectual Property that it wishes to remain confidential ("FEI CONFIDENTIAL IP INFORMATION"). FEI believes that all use by FEI and its Subsidiaries of FEI Confidential IP Information not owned by FEI and its Subsidiaries has been and is pursuant to the terms of a written agreement between FEI or a Subsidiary thereof and the owner of such Confidential Information, or is otherwise lawful. 3.14 ABSENCE OF LIENS; TITLE TO PROPERTY. (a) For purposes of this Agreement, "FEI Real Property" means all interests in real property including, fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, privileges, hereditaments, appurtenances, rights to access and rights of way, and all fixtures, buildings, structures and other improvements thereon, owned or used by FEI, together with any additions thereto or replacements thereof. (b) Section 3.14(b) of the Disclosure Schedule contains the true and correct street address of all FEI Real Property owned by FEI (the "FEI Owned Real Property") and contains the true and correct street address of all FEI Real Property leased by FEI and exceeding 10,000 square feet of leased area, excluding, however, any FEI Owned Real Property or leased FEI Real Property identified in FEI's financial statements or the FEI SEC Documents (the "FEI Leased Real Property"). There is no other material real property that is owned or leased by FEI or used in or necessary for the conduct of business as presently conducted. (c) Except as would not reasonably be expected to have a Material Adverse Effect on FEI, all leases for material FEI Leased Real Property (the "FEI Leases") are in good standing, valid and effective in accordance with their respective terms, and neither FEI nor any of its -26- Subsidiaries, nor to FEI's knowledge, any other party to a FEI Lease, is in material breach, violation or default under, and neither FEI nor any of its Subsidiaries has received written notice that it has breached, violated or defaulted under, any of the terms or conditions of any FEI Lease. FEI has provided Veeco with true, complete and correct copies of each FEI Lease. (d) Except as would not reasonably be expected to have a Material Adverse Effect on FEI, the FEI Real Property and all present uses and operations of the FEI Real Property comply with all applicable Laws, Court Orders, Governmental Permits, restrictions of any Governmental Body having jurisdiction over any portion of the FEI Real Property (including, those relating to zoning, land use, safety, health, employment and employment practices and access by the handicapped), covenants, conditions, restrictions, easements, disposition agreements and similar matters affecting the FEI Real Property. Except as would not reasonably be expected to have a Material Adverse Effect on FEI, FEI has obtained all approvals of any Governmental Body (including, certificates of use and occupancy, licenses and permits) required in connection with the construction, ownership, use, and occupation of the FEI Real Property and operation of its business. (e) FEI and each of its Subsidiaries has good and valid title to, or, in the case of leased assets, valid leasehold interests in, all of its material tangible assets used in its business, free and clear of any Liens, except (i) Liens reflected in the FEI Financial Statements or the FEI SEC Documents; (ii) Liens for Taxes not yet due and payable; and (iii) Liens which are not material to FEI and its Subsidiaries taken as a whole. 3.15 ENVIRONMENTAL MATTERS. Except as disclosed in the FEI SEC Documents: (a) The FEI Entities have conducted all Hazardous Substance Activities relating to the business in compliance in all material respects with all applicable Environmental Laws. The Hazardous Substance Activities of the FEI Entities prior to the Closing have not resulted in the exposure of any person to a Hazardous Substance in a manner which could reasonably be expected to result in a Material Adverse Effect on FEI. The FEI Entities have obtained all material permits, licenses and approvals necessary or required under all applicable Environmental Laws for the ownership and operation of their business ("Environmental Permits"). All such Environmental Permits are valid and in full force and effect. The FEI Entities have not received written notice of any action to revoke or modify any of such Environmental Permits, and, to FEI's knowledge, the ownership and operation of the FEI Entities' business is and has been in material compliance with all terms and conditions thereof. The FEI Entities have not received notice of any pending or Threatened claim by any Governmental Authority or any other Person concerning potential liability of any of the FEI Entities under Environmental Laws in connection with the ownership or operation of its business. Except in compliance with Environmental Laws and in a manner that could not reasonably be expected to subject the FEI Entities to material liability, to the knowledge of the FEI Entities, no Hazardous Substances are present on any real property currently owned, operated, occupied, controlled or leased by the FEI Entities or were present on any other real property at the time it ceased to be owned, operated, occupied, controlled or leased by the FEI Entities. -27- (b) The FEI Entities have made all disclosures, including notice of a Release or Threatened Release of a Hazardous Substance, required of any FEI Entity under any Environmental Law. (c) No FEI Entity has received written notice, or otherwise obtained knowledge, of the existence of any circumstances or conditions that would reasonably be expected to result in any material environmental liability. (d) No FEI Entity has received written notice or otherwise obtained knowledge of any material liability with respect to any Hazardous Substance, which it has transported or arranged for the transportation of to premises not owned or operated by any FEI Entity. 3.16 BROKERS AND FINDERS. Except for Credit Suisse First Boston ("FEI'S BROKER"), no broker, finder, agent or similar intermediary has acted on FEI's behalf in connection with this Merger Agreement or the transactions contemplated hereby, and there are no brokerage commissions, finders' fees or similar fees or commissions payable in connection therewith based on any Contract with FEI or any action taken by FEI. FEI shall pay all fees and disbursements of FEI's Broker. 3.17 REORGANIZATION. Neither FEI nor any of its Subsidiaries has taken any action or has knowledge of any fact or circumstance that would reasonably be expected to cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code. 3.18 BOARD APPROVAL. The Board of Directors of FEI has unanimously (i) determined that the Merger is advisable, consistent with and in the furtherance of the long-term business strategy of FEI and fair to, and in the best interests of, FEI and its stockholders, (ii) approved this Merger Agreement, the Merger and the other transactions contemplated by this Merger Agreement and (iii) determined to recommend approval of the Merger by the stockholders of FEI. 3.19 OPINION OF FEI'S BROKER. The Board of Directors of FEI has received the opinion of FEI's Broker, dated the date of this Agreement, to the effect that, as of such date, the Exchange Ratio was fair, from a financial point of view, to the stockholders of FEI (other than Philips and its Affiliates). 3.20 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material agreement, judgment, injunction, order or decree binding upon FEI or any of its Subsidiaries which has or, to its knowledge, reasonably could be expected to have the effect of prohibiting or materially impairing any current or proposed future business practice of FEI or any of its Subsidiaries, any proposed acquisition of property by FEI or any of its Subsidiaries or the conduct of business by FEI or any of its Subsidiaries as currently conducted or as proposed to be conducted by FEI or any of its Subsidiaries. 3.21 STATE ANTI-TAKEOVER STATUTES. FEI has granted all approvals and taken all other steps necessary to exempt the FEI Stockholder Voting Agreements, the Merger and the other transactions contemplated hereby from the requirements and provisions of Section 835 of the OBCA and other state anti-takeover statutes or regulations to the extent applicable such that none of the provisions of such "business combination," "moratorium," "control share," or other state anti-takeover statute or regulation (a) applies to this Merger Agreement or any of the transactions contemplated hereby, (b) -28- prohibits or restricts FEI's ability to perform its obligations under this Merger Agreement or its ability to consummate the Merger and the other transactions contemplated hereby, (c) would have the effect of invalidating or voiding this Merger Agreement or any provisions hereof or (d) would subject FEI to any material impediment or condition in connection with the exercise of any of its rights under this Merger Agreement. 3.22 OWNERSHIP OF VEECO STOCK. As of the date of this Merger Agreement, neither FEI nor any of its Subsidiaries own any Veeco Shares. 3.23 FORM S-4 REGISTRATION STATEMENT; JOINT PROXY STATEMENT. None of the information to be supplied by FEI or its Subsidiaries in (i) the Form S-4 Registration Statement will, at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) the Joint Proxy Statement will, on the date of the mailing of the Joint Proxy Statement and any amendments or supplements thereto, at the time of each of the FEI Stockholders' Meeting and the Veeco Stockholders' Meeting, and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the FEI Stockholders Meeting or the Veeco Stockholders Meeting, which has become false or misleading. The Joint Proxy Statement will comply, as of its mailing date, as to form in all material respects with all applicable Laws, including the provisions of the Exchange Act, except that no representation is made by FEI with respect to information supplied by Veeco or Acquisition for inclusion therein. IV. REPRESENTATIONS AND WARRANTIES OF VEECO AND ACQUISITION Veeco and Acquisition, jointly and severally, hereby represent and warrant to and covenant and agree with FEI that, except as set forth in the Veeco Disclosure Schedule: 4.01 CORPORATE ORGANIZATION. (a) Veeco is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Veeco has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, either individually or in the aggregate, have a Material Adverse Effect on Veeco. True and complete copies of the Certificate of Incorporation and By-Laws of Veeco, as in effect as of the date of this Merger Agreement, have been filed by Veeco as part of the Veeco SEC Documents. (b) Each Subsidiary of Veeco (i) is duly organized and validly existing under the laws of its jurisdiction of organization, (ii) is duly qualified to do business and in good standing in all jurisdictions (whether federal, state or local or foreign) where its ownership or leasing of property or the conduct of its business requires it to be so qualified and (iii) has all requisite corporate power and authority to own or lease its properties and assets and to carry on its business as now conducted, in each case, except as would not have a Material Adverse Effect on Veeco. Section 4.01(b) of the -29- Veeco Disclosure Schedule contains a complete and accurate list of each Subsidiary of Veeco, indicating the jurisdiction of incorporation or organization of each such Subsidiary and Veeco's percentage ownership interest therein (including each type of security held by Veeco of each Subsidiary). (c) Acquisition is a wholly owned Subsidiary of Veeco and has conducted and will conduct no business or activity, nor has incurred or will incur any liability or obligation, other than hereunder or in accordance with the Merger. 4.02 CAPITALIZATION. (a) The authorized capital stock of Veeco consists of 60,000,000 Veeco Shares, of which 29,134,679 were issued and outstanding as of June 30, 2002, and 500,000 shares of preferred stock, none of which are outstanding. All of the outstanding Veeco Shares have been duly authorized and validly issued and are fully paid and nonassessable, are free of preemptive rights, with no personal liability attaching to the ownership thereof, and were issued in conformity with applicable Laws. (b) As of June 30, 2002, 6,122,330 Veeco Shares (in the aggregate) were issuable upon the exercise of options previously granted, and 878,286 Veeco Shares (in the aggregate) were reserved for issuance upon the exercise of options available for grant, under Veeco's stock option plans (collectively, the "VEECO OPTIONS"), 5,712,802 Veeco Shares (in the aggregate) were issuable upon the conversion of Veeco's outstanding $220 million 4.125% Convertible Subordinated Notes due December 21, 2008 (the "VEECO CONVERTIBLE DEBT") and 78,155 shares of Veeco Shares (in the aggregate) were reserved for issuance under the Veeco ESPP. Except as set forth above, there are no outstanding Equity Securities, or other obligations to issue or grant any rights to acquire any Equity Securities, of Veeco, or any Contracts to restructure or recapitalize Veeco. Other than in connection with the Veeco Convertible Debt, there are no outstanding Contracts of Veeco or any Subsidiary of Veeco to repurchase, redeem or otherwise acquire any Equity Securities of Veeco or any Subsidiary of Veeco. From December 31, 2001 to the date of this Merger Agreement, no shares of Veeco capital stock have been issued except pursuant to the exercise of Veeco Options, the Veeco Convertible Debt and under the Veeco ESPP. As of June 30, 2002, no shares of Veeco capital stock were reserved for issuance, except for 7,000,616 Veeco Shares reserved for issuance upon exercise of Veeco Options, the Veeco Convertible Debt and under the Veeco ESPP. Veeco has no issued or outstanding Voting Debt. (c) Veeco owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity ownership interests of each Subsidiary of Veeco, free and clear of any Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Subsidiary of Veeco has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other Equity Security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary. Section 4.02(c) of the Veeco Disclosure Schedule sets forth a list of each material investment of Veeco in the equity (or any security convertible or exchangeable into equity) of any Person other than its Subsidiaries. -30- 4.03 AUTHORIZATION. Veeco has full corporate power and authority to execute, deliver and perform this Merger Agreement and the Articles of Merger, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Merger Agreement, the Articles of Merger and all other documents and agreements to be delivered pursuant hereto and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Veeco, and no other corporate proceedings on the part of Veeco (other than the Required Veeco Stockholder Vote and the filing of the Articles of Merger) are necessary to authorize this Merger Agreement, the Articles of Merger and any such related documents or agreements or to consummate the transactions contemplated hereby. This Merger Agreement has been duly and validly executed and delivered by Veeco and the Articles of Merger, when executed at the Closing, will be duly and validly executed and delivered by Veeco. This Merger Agreement, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes a legal, valid and binding agreement of Veeco, enforceable in accordance with its terms, and the Articles of Merger, when executed by Veeco at the Closing, assuming the due authorization, execution and delivery by each of the other parties thereto, will be legal, valid and binding agreements of Veeco, enforceable in accordance with their respective terms except as may be limited by applicable bankruptcy, moratorium, insolvency, reorganization, fraudulent conveyance or other Laws affecting the enforcement of creditors' rights generally or by general equitable principles. 4.04 REPORTS. All Veeco SEC Documents were filed as and when required by the Exchange Act or the Securities Act, as applicable. All documents required to be filed as exhibits to the Veeco SEC Documents have been so filed. The Veeco SEC Documents include all statements, reports and documents required to be filed by Veeco pursuant to the Exchange Act and the Securities Act. The Veeco SEC Documents comply in all material respects with the requirements of the Exchange Act and the Securities Act, as applicable, and none of the Veeco SEC Documents, as of their respective filing dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. None of Veeco's Subsidiaries is required to file any statements, reports or documents with the SEC. The financial statements of Veeco and its Subsidiaries, including the notes thereto, included in the Veeco SEC Documents (the "VEECO FINANCIAL STATEMENTS") complied in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto as of their respective dates (except as may be indicated in the notes thereto or, in the case of unaudited statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Veeco Financial Statements fairly present the consolidated financial condition, operating results and cash flows of Veeco and its Subsidiaries at the dates and during the periods indicated therein in accordance with GAAP consistently applied (subject, in the case of unaudited statements, to normal year-end adjustments and additional footnote disclosures). There has been no material change in Veeco's accounting policies except as described in the notes to the Veeco Financial Statements. At all times since January 1, 1999, Veeco has (i) filed as and when due all documents required to be filed with NASDAQ, and (ii) otherwise timely performed all of Veeco's obligations pursuant to the rules and regulations of NASDAQ. 4.05 NO UNDISCLOSED LIABILITIES. The Veeco Entities do not have any obligations or liabilities of any nature (whether matured or unmatured, absolute, accrued, fixed or contingent) other than those (i) set forth or adequately provided for in the Balance Sheet of Veeco and its Subsidiaries -31- included in Veeco's Annual Report on Form 10-K for the year ended December 31, 2001 (the "Veeco Balance Sheet"), (ii) not required to be set forth on the Veeco Balance Sheet under GAAP consistently applied, (iii) incurred in the ordinary course of business since the Veeco Balance Sheet Date and consistent with past practice or (iv) which, individually or in the aggregate, would not have a Material Adverse Effect on Veeco. 4.06 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORIZATIONS. (a) Each of the Veeco Entities has complied with, is not in violation of, and has not received any notices of violation with respect to, any federal, state, local or foreign statute, Law or regulation with respect to the conduct of its business, or the ownership or operation of its business, except for such violations or failures to comply as could not be reasonably expected to have a Material Adverse Effect on Veeco. (b) Each of the Veeco Entities has obtained each federal, state, county, local or foreign governmental Consent, approval, certificate, license, permit, grant, or other authorization of a Governmental Authority that is required for the operation of its business or the holding of any interest in its properties (collectively, the "VEECO Authorizations"), and all of such Veeco Authorizations are in full force and effect, except where the failure to obtain or have any of such Veeco Authorizations could not reasonably be expected to have a Material Adverse Effect on Veeco. 4.07 NO CONFLICTS. (a) The execution, delivery and performance by Veeco and Acquisition of this Merger Agreement and the consummation of the transactions contemplated hereby will not (i) violate any provision of the Certificate of Incorporation or By-Laws or other organizational documents of Veeco or Acquisition or any other Veeco Entity, (ii) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in or provide the basis for the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity, or trigger any repurchase obligation, of any debt or obligation pursuant to, or result in the creation or imposition of any Lien upon any property or assets of Veeco or Acquisition or any other Veeco Entity under, any material Contract to which Veeco or Acquisition or any other Veeco Entity is a party or by which any of their respective properties or assets are bound, or to which any of the property or assets of Veeco or Acquisition or any other Veeco Entity are subject, except for Contracts wherein the other party thereto has consented to the consummation of the Merger or irrevocably waived in writing its right to take any action contemplated in this clause (ii), (iii) violate any Law applicable to Veeco or Acquisition or any other Veeco Entity or (iv) violate or result in the revocation or suspension of any material license, permit, certificate, Consent or approval from a Governmental Authority that is necessary for the business and operations of Veeco or Acquisition or any other Veeco Entity. (b) No filing or registration with, or permit, authorization, Consent or approval of, or notification or disclosure to, any Governmental Authority is required by Veeco or Acquisition or any other Veeco Entity in connection with the execution and delivery of this Merger Agreement or the consummation of the Merger and the other transactions contemplated hereby, except (i) in connection with the applicable requirements of the HSR Act or any -32- other Regulatory Law and any other applicable anti-trust or competition approvals, (ii) in connection with the provisions of the Securities Act and the rules and regulations promulgated thereunder, and the Exchange Act and the rules and regulations promulgated thereunder, (iii) the filing of appropriate merger documents as required by the DGCL and OBCA, (iv) Consents, filings or exemptions in connection with compliance with the rules of NASDAQ, (v) such Consents, orders, registrations, declarations and filings as may be required under the laws of various states or (vi) such other Consents, filings and registrations the failure of which to obtain would not reasonably be expected to have a Material Adverse Effect on Veeco. 4.08 CONTRACTS. (a) Neither Veeco nor any of its Subsidiaries is a party to or is bound by any written contract, arrangement or commitment (i) with respect to the employment of any directors, officers or employees other than in the ordinary course of business consistent with past practice, (ii) which, upon the consummation or stockholder approval of the transactions contemplated by this Merger Agreement, will (either alone or upon the occurrence of any additional acts or events) result in any payment (whether of severance pay or otherwise) becoming due from FEI, Veeco, the Surviving Corporation or any of their respective Subsidiaries to any officer or employee thereof, (iii) which is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed, entirely or in part, after the date of this Merger Agreement, but which has not been previously filed with the SEC, (iv) which are of the type required to be disclosed under Item 404 of Regulation S-K of the SEC, but which has not been previously filed with the SEC, (v) which materially restricts the conduct of any line of business by Veeco or any Subsidiary thereof or, upon consummation of the Merger, will materially restrict the ability of Veeco or the Surviving Corporation or any Subsidiary thereof to engage in any proposed line of business or (vi) which, upon the consummation or stockholder approval of the transactions contemplated by this Merger Agreement, will result in any of the FEI Entities or any of the Veeco Entities, granting any rights or licenses to any material Intellectual Property of any of the FEI Entities or any of the Veeco Entities, to any third party. Each contract, arrangement, commitment or understanding of the type described in this Section 4.08(a), whether or not set forth in the Veeco Disclosure Schedule, is referred to herein as a "VEECO CONTRACT". (b) (i) Each Veeco Contract is valid and binding on Veeco and any of its Subsidiaries that is a party thereto, as applicable, and is in full force and effect (except to the extent such contract has expired or terminated according to its terms), (ii) Veeco and each of its Subsidiaries has in all material respects performed all obligations required to be performed by it to date under each Veeco Contract, except where such noncompliance, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Veeco, and (iii) neither Veeco nor any of its Subsidiaries, knows of, or has received notice of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of Veeco or any of its Subsidiaries under any such Veeco Contract, except where such default, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Veeco. 4.09 LITIGATION. Except as disclosed in the Veeco SEC Documents prior to the date hereof, (i) there is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the knowledge of Veeco, -33- Threatened against Veeco or any other Veeco Entity or any of their respective properties or any of their respective officers or directors (in their capacities as such) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Veeco, and (ii) there is no judgment, decree or order against Veeco or any other Veeco Entity or, to the knowledge of Veeco, any of their respective directors or officers (in their capacities as such) that could prevent, enjoin, alter or materially delay any of the transactions contemplated by this Merger Agreement, or that could reasonably be expected to have a Material Adverse Effect on Veeco. 4.10 TAXES. Veeco and each of the Veeco Entities has filed or caused to be filed on a timely basis all Tax Returns that are or were required to be filed by Veeco and/or any of the other Veeco Entities, either separately or as part of an affiliated group of corporations, pursuant to the Laws of any Governmental Authority with taxing power over any of the Veeco Entities or its assets and business. All Tax Returns filed by any of the Veeco Entities are true, correct and complete. Veeco and each of the Veeco Entities has paid all Taxes that have become due by it pursuant to those Tax Returns or pursuant to any assessment received by any of the Veeco Entities, except such Taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in the Veeco Financial Statements. All Taxes that Veeco or any of the Veeco Entities is, or was, required by Law to withhold and collect have been duly withheld and collected and, to the extent required, have been paid to the appropriate Governmental Authority. There is no agreement, plan, arrangement or other contract covering any employee or independent contractor of Veeco or any of the Veeco Entities that would give rise to the payment of any amount that would not be deductible by Veeco or any of the Veeco Entities or the Surviving Corporation pursuant to Section 280G or Section 162(m) of the Code. Veeco is not a "United States real property holding corporation," as defined in Section 897(c)(2) of the Code. The charges, accruals and reserves with respect to Taxes on the Veeco Financial Statements with respect to each of the Veeco Entities (excluding any provision for deferred income taxes established to reflect timing differences between book and tax income) for all tax periods (or portions thereof) ending on or before the Closing Date (including any period for which no Tax Return has yet been filed) are adequate. 4.11 ABSENCE OF CERTAIN CHANGES. Except as disclosed in or filed as an exhibit to the Veeco SEC Documents prior to the date hereof, since December 31, 2001 (the "VEECO BALANCE SHEET DATE"), the Veeco Entities have conducted their business in the ordinary course consistent with past practice and there has not occurred: (i) any change, event or condition (whether or not covered by insurance) that has resulted in, or might reasonably be expected to result in, a Material Adverse Effect to Veeco; (ii) any acquisition, sale or transfer of any material asset of the Veeco Entities other than in the ordinary course of business and consistent with past practice; (iii) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by Veeco or any revaluation by Veeco of any of its assets; (iv) any declaration, setting aside, or payment of a dividend or other distribution with respect to the Veeco Shares or any other Veeco Equity Securities (excluding interest payments on the Veeco Convertible Debt contemplated by the Indenture relating thereto), or any direct or indirect redemption, purchase or other acquisition by Veeco of any of its shares of capital stock; (v) any material Contract entered into by any Veeco Entity, other than in the ordinary course of business, or any material amendment or termination of, or default under, any material Contract to which any Veeco Entity is a party or by which any of them is bound; or (vi) any agreement by any Veeco Entity to do any of the things described in the preceding clauses (i) through (v) (other than negotiations with FEI and its Representatives regarding the transactions contemplated by this Merger Agreement). -34- 4.12 EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (a) There does not now exist any and, to the knowledge of Veeco, there are no existing circumstances that could reasonably be expected to result in, any Controlled Group Liability to Veeco or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Veeco. No Veeco Benefit Plan is (i) a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA, (ii) a "multiple employer plan" as defined in ERISA or the Code, or (iii) a "funded welfare plan" within the meaning of Section 419 of the Code. None of the Veeco Benefit Plans provides for any welfare or other non-pension benefits to retired or former employees, except to the extent required by the continuation coverage requirements of Section 601 et. seq. of ERISA, Section 4980B of the Code or similar state law. (b) Except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Veeco, (i) each of the Veeco Benefit Plans has been operated and administered in all material respects in accordance with applicable law and administrative rules and regulations of any Governmental Authority, including, but not limited to, ERISA and the Code, and (ii) there are no pending or, to the knowledge of Veeco, Threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have been asserted or instituted, and, to the knowledge of Veeco, no set of circumstances exists, that may reasonably give rise to a claim or lawsuit, against the Veeco Benefit Plans, any fiduciaries thereof with respect to their duties to the Veeco Benefit Plans or the assets of any of the trusts under any of the Veeco Benefit Plans that could reasonably be expected to result in any material liability of Veeco or any of its Subsidiaries to the PBGC, the U.S. Department of the Treasury, the U.S. Department of Labor, any Veeco Benefit Plan, any participant in a Veeco Benefit Plan, or any other party. There are no unpaid contributions due prior to the date hereof with respect to any Veeco Benefit Plan that are required to have been made under its terms and provisions, any related insurance contract or any applicable law. (c) Neither Veeco nor any Subsidiary of Veeco is a party to any collective bargaining or other labor union contract applicable to individuals employed by Veeco or any Subsidiary of Veeco, and no collective bargaining agreement or other labor union contract is being negotiated by Veeco or any Subsidiary of Veeco. Except as would not reasonably be expected to have a Material Adverse Effect on Veeco, (i) there is no labor dispute, strike, slowdown or work stoppage against Veeco or any Subsidiary of Veeco pending or, to the knowledge of Veeco, Threatened against Veeco or any Subsidiary of Veeco and (ii) no unfair labor practice or labor charge or complaint has occurred with respect to Veeco or any Subsidiary of Veeco. (d) Neither the execution and delivery of this Merger Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will (i) result in any payment or benefit (including, without limitation, option acceleration, severance, unemployment compensation, "excess parachute payment" (within the meaning of Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming due to any director, consultant or any current or former employee of Veeco or any Subsidiaries of Veeco under any Veeco consultant Benefit Plan or otherwise; (ii) increase any benefits otherwise payable under any Veeco Benefit Plan; (iii) result in any acceleration of the time of payment or vesting of any such benefits; (iv) require the funding of any trust or other funding vehicle; or (v) limit or prohibit the -35- ability to amend, merge, terminate or receive a reversion of assets from any Veeco Benefit Plan or related trust. (e) There has been no disallowance of a deduction, or reasonable expectation of a disallowance of a deduction, under Section 162(m) of the Code for employee compensation of any amount paid or payable by Veeco or any Subsidiary of Veeco that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on Veeco. (f) Section 4.12(f) of the Veeco Disclosure Schedule sets forth a list of each material Veeco Benefit Plan. (g) Veeco has heretofore made available to FEI true and complete copies of each of the Veeco Benefit Plans (and all related trust agreements, insurance contracts and other ancillary documents) and, to the extent applicable, (i) the actuarial report for such Veeco Benefit Plan for each of the last two years, (ii) the most recent determination letter from the IRS for such Veeco Benefit Plan, (iii) the summary plan description for such Veeco Benefit Plan, and (iv) the Form 5500 for such Veeco Benefit Plan for each of the last two years, and all schedules thereto. Since the date of the documents made available, there has not been any material change in the assets or liabilities of any of the Veeco Benefit Plans or any change in their terms and operations that could reasonably be expected to affect or alter the tax status or materially affect the cost of maintaining such Plan, and none of the Veeco Benefit Plans has been or will be amended prior to the Closing Date to the extent such amendment will materially affect the cost of maintaining such Plans. Each of the Veeco Benefit Plans can be amended, modified or terminated by Veeco or a Subsidiary of Veeco within a period of 30 days, without payment of any additional compensation or amount or the additional vesting or acceleration of any such benefits, except to the extent that such vesting is required under the Code upon the complete or partial termination of any Veeco Benefit Plan intended to be qualified within the meaning of Section 401(a) of the Code. (h) Each Veeco Benefit Plan that is intended to be qualified under Section 401 of the Code has received a favorable determination letter from the IRS as to the qualification of such plan (or is a prototype plan entitled to rely on a favorable determination, opinion or advisory letter issued to the prototype sponsor), or has remaining a period of time under applicable Treasury regulations or IRS pronouncements in which to receive such a determination. For each Veeco Benefit Plan that has received such a determination, such letter has not been modified, revoked or limited by the failure to satisfy any condition thereof or by a subsequent amendment thereto, or failure to amend such Veeco Benefit Plan. (i) Except as, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Veeco, no individual who has been classified by Veeco as a non-employee (such as an independent contractor, leased employee or consultant) would reasonably be expected to have a claim against Veeco for eligibility to participate in any Veeco Benefit Plan, if such individual is later reclassified as a Veeco employee. (j) Except as, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect on Veeco, all Veeco Benefit Plans subject to the laws of any jurisdiction outside of the United States (i) have been maintained in accordance with all applicable requirements, (ii) if they are intended to qualify for special tax treatment meet all requirements for -36- such treatment, and (iii) if they are intended to be funded and/or book-reserved are fully funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions. 4.13 INTELLECTUAL PROPERTY RIGHTS. (a) Veeco and its Subsidiaries own, or are licensed to use, all Veeco Intellectual Property. To the knowledge of Veeco, the business and operations of Veeco and its Subsidiaries as they are currently conducted do not infringe on the rights of any third party where such infringement, individually or in the aggregate, would be reasonably expected to have a Material Adverse Effect on any Material Veeco Entity or any material business or product offering of Veeco or any of its Subsidiaries, and, to the extent material Veeco Intellectual Property is licensed from a third party, Veeco's use of such Intellectual Property is in accordance in all material respects with the applicable license pursuant to which Veeco acquired the right to use such Intellectual Property. To the knowledge of Veeco, no third party is challenging, infringing on or otherwise violating any right of Veeco in the Veeco Intellectual Property where such infringement, individually or in the aggregate, would be reasonably expected to have a Material Adverse Effect on any Material Veeco Entity or any material business or product offering of Veeco or any of its Subsidiaries. Since Neither Veeco nor any of its Subsidiaries has received any written notice of any pending claim, order or proceeding with respect to any material Veeco Intellectual Property, nor has Veeco received any written demand from any other party to cease and desist from infringement of such other party's Intellectual Property. To the knowledge of Veeco, no material Intellectual Property owned or licensed by Veeco is being used or enforced by Veeco or its Subsidiaries in a manner that would reasonably be expected to result in the abandonment, estoppel, cancellation or unenforceability of such Intellectual Property. (b) The execution, delivery and performance of this Agreement by Veeco and the consummation by Veeco of the transactions contemplated hereby will not (i) constitute a breach by Veeco or its Subsidiaries of any material instrument or agreement governing any Veeco Intellectual Property, (ii) pursuant to the terms of any material license or agreement relating to any Veeco Intellectual Property, cause the material modification of any terms of any such license or agreement, including but not limited to the modification of the effective rate of any royalties or other payments provided for in any such license or agreement, (iii) cause the forfeiture or termination of any Veeco Intellectual Property under the terms thereof, (iv) give rise to a right of forfeiture or termination of any Veeco Intellectual Property under the terms thereof or (v) impair the right of Veeco, its Subsidiaries or, to Veeco's knowledge, FEI to make, have made, offer for sale, use, sell, export or license any products or processes used by Veeco, its Subsidiaries or, to Veeco's knowledge, FEI in the conduct of their business as it is currently configured, except in each case for those matters that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect on Veeco. (c) Each item of material Veeco Intellectual Property owned by Veeco or a Subsidiary thereof (the "VEECO-OWNED IP") (i) is free and clear of any Liens or filings required under the Uniform Commercial Code in effect in any jurisdiction; (ii) is not subject to any outstanding judicial order, decree, judgment or stipulation or to any agreement materially restricting the scope of Veeco's or such Subsidiary's use thereof; and (iii) together with each item of material Veeco Intellectual Property which Veeco or such Subsidiary has a right to use or practice pursuant to one or more license or similar agreements, is not subject to any suits, actions, written claims or -37- demands of any third party and no action or proceeding, whether judicial, administrative, has been instituted, is pending or, to Veeco's knowledge, Threatened, which challenges or affects the rights of Veeco or such Subsidiary in the same manner. (d) Neither Veeco nor any Subsidiary thereof has entered into any agreement to indemnify any third party against any claim of infringement, misappropriation or other violation of Veeco Intellectual Property rights other than indemnification provisions contained in purchase orders, customer agreements or similar agreements arising in the ordinary course of business. (e) To the knowledge of Veeco and its Subsidiaries, (a) all rights in all inventions and discoveries made, developed or conceived by any current or former officer, employee, independent contractor, consultant or any other agent of Veeco or any Subsidiary thereof during the course of their employment (or other retention) by Veeco or a Subsidiary thereof and material to the business of Veeco or a Subsidiary thereof and which are the subject of one or more issued letters patent or applications for letters patent have been assigned in writing to Veeco or a Subsidiary thereof; and (b) the policy of Veeco or a Subsidiary thereof requires each employee of Veeco or a Subsidiary thereof to sign documents confirming that he or she assign to Veeco or a Subsidiary thereof all Intellectual Property rights made, written, developed or conceived by him or her during the course of his or her employment (or other retention) by Veeco or a Subsidiary thereof and relating to the business of Veeco or a Subsidiary thereof to the extent that ownership of any such Intellectual Property rights does not vest in Veeco or a Subsidiary thereof by operation of Law. (f) Veeco believes that Veeco and its Subsidiaries have taken reasonable and practicable steps to protect and preserve the confidentiality of any material Veeco Intellectual Property that it wishes to remain confidential ("VEECO CONFIDENTIAL IP INFORMATION"). Veeco believes that all use by Veeco and its Subsidiaries of Veeco Confidential IP Information not owned by Veeco and its Subsidiaries has been and is pursuant to the terms of a written agreement between Veeco or a Subsidiary thereof and the owner of such Confidential Information, or is otherwise lawful. 4.14 ABSENCE OF LIENS; TITLE TO PROPERTY. (a) For purposes of this Agreement, "Veeco Real Property" means all interests in real property including, fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, privileges, hereditaments, appurtenances, rights to access and rights of way, and all fixtures, buildings, structures and other improvements thereon, owned or used by Veeco, together with any additions thereto or replacements thereof. (b) Section 4.14(b) of the Disclosure Schedule contains the true and correct street address of all Veeco Real Property owned by Veeco (the "Veeco Owned Real Property") and contains the true and correct street address of all Veeco Real Property leased by Veeco and exceeding 10,000 square feet of leased area, excluding, however, any Veeco Owned Real Property or leased Veeco Real Property identified in Veeco's financial statements or the Veeco SEC Documents (the "Veeco Leased Real Property"). There is no other material real property that is owned or leased by Veeco or used in or necessary for the conduct of business as presently conducted. -38- (c) Except as would not reasonably be expected to have a Material Adverse Effect on Veeco, all leases for material Veeco Leased Real Property (the "Veeco Leases") are in good standing, valid and effective in accordance with their respective terms, and neither Veeco nor any of its Subsidiaries, nor to Veeco's knowledge, any other party to a Veeco Lease, is in material breach, violation or default under, and neither Veeco nor any of its Subsidiaries has received written notice that it has breached, violated or defaulted under, any of the terms or conditions of any Veeco Lease. Veeco has provided FEI with true, complete and correct copies of each Veeco Lease. (d) Except as would not reasonably be expected to have a Material Adverse Effect on Veeco, the Veeco Real Property and all present uses and operations of the Veeco Real Property comply with all applicable Laws, Court Orders, Governmental Permits, restrictions of any Governmental Body having jurisdiction over any portion of the Veeco Real Property (including, those relating to zoning, land use, safety, health, employment and employment practices and access by the handicapped), covenants, conditions, restrictions, easements, disposition agreements and similar matters affecting the Veeco Real Property. Except as would not reasonably be expected to have a Material Adverse Effect on Veeco, Veeco has obtained all approvals of any Governmental Body (including, certificates of use and occupancy, licenses and permits) required in connection with the construction, ownership, use, and occupation of the Veeco Real Property and operation of its business. (e) Veeco and each of its Subsidiaries has good and valid title to, or, in the case of leased assets, valid leasehold interests in, all of its material tangible assets used in its business, free and clear of any Liens, except (i) Liens reflected in the Veeco Financial Statements or the Veeco SEC Documents; (ii) Liens for Taxes not yet due and payable; and (iii) Liens which are not material to Veeco and its Subsidiaries taken as a whole. 4.15 ENVIRONMENTAL MATTERS. Except as disclosed in the Veeco SEC Documents: (a) The Veeco Entities have conducted all Hazardous Substance Activities relating to the business in compliance in all material respects with all applicable Environmental Laws. The Hazardous Substance Activities of the Veeco Entities prior to the Closing have not resulted in the exposure of any person to a Hazardous Substance in a manner which could reasonably be expected to result in a Material Adverse Effect on Veeco. The Veeco Entities have obtained all material Environmental Permits. All such Environmental Permits are valid and in full force and effect. The Veeco Entities have not received written notice of any action to revoke or modify any of such Environmental Permits, and, to Veeco's knowledge the ownership and operation of the Veeco Entities' business is and has been in material compliance with all terms and conditions thereof. The Veeco Entities have not received notice of any pending or Threatened claim by any Governmental Authority or any other Person concerning potential liability of any of the Veeco Entities under Environmental Laws in connection with the ownership or operation of its business. Except in compliance with Environmental Laws and in a manner that could not reasonably be expected to subject the Veeco Entities to material liability, to the knowledge of the Veeco Entities, no Hazardous Substances are present on any real property currently owned, operated, occupied, controlled or leased by the Veeco Entities or were present on any other real property at the time it ceased to be owned, operated, occupied, controlled or leased by the Veeco Entities. -39- (b) The Veeco Entities have made all disclosures, including notice of a Release or Threatened Release of a Hazardous Substance, required of any Veeco Entity under any Environmental Law. (c) No Veeco Entity has received written notice, or otherwise obtained knowledge, of the existence of any circumstances or conditions that would reasonably be expected to result in any material environmental liability. (d) No Veeco Entity has received written notice or otherwise obtained knowledge of any material liability with respect to any Hazardous Substance, which it has transported or arranged for the transportation of to premises not owned or operated by any Veeco Entity. 4.16 BROKERS AND FINDERS. Except for Salomon Smith Barney Inc. ("VEECO'S BROKER"), no broker, finder, agent or similar intermediary has acted on Veeco's or Acquisition's behalf in connection with this Merger Agreement or the transactions contemplated hereby, and there are no brokerage commissions, finders' fees or similar fees or commissions payable in connection therewith based on any Contract with Veeco or Acquisition or any action taken by Veeco or Acquisition. Veeco shall pay all fees and disbursements of Veeco's Broker. 4.17 REORGANIZATION. Neither Veeco nor any of its Subsidiaries has taken any action or has knowledge of any fact or circumstance that would reasonably be expected to cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code. 4.18 BOARD APPROVAL. The Board of Directors of Veeco has unanimously (i) determined that the Merger is advisable, consistent with and in the furtherance of the long-term business strategy of Veeco and fair to, and in the best interests of, Veeco and its stockholders, (ii) approved this Merger Agreement, the Merger and the other transactions contemplated by this Merger Agreement and (iii) approved and determined to recommend that the stockholders of Veeco vote to approve the issuance of the Veeco Shares in the Merger. 4.19 OPINION OF VEECO'S BROKER. The Board of Directors of Veeco has received the opinion of Veeco's Broker, dated as of the date of this Merger Agreement, to the effect that, as of such date, the Exchange Ratio was fair, from a financial point of view, to Veeco. 4.20 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material agreement, judgment, injunction, order or decree binding upon Veeco or any of its Subsidiaries which has or, to its knowledge, reasonably could be expected to have the effect of prohibiting or materially impairing any current or proposed future business practice of Veeco or any of its Subsidiaries, any proposed acquisition of property by Veeco or any of its Subsidiaries or the conduct of business by Veeco or any of its Subsidiaries as currently conducted or as proposed to be conducted by Veeco or any of its Subsidiaries. 4.21 STATE ANTI-TAKEOVER STATUTES. Veeco has granted all approvals and taken all other steps necessary to exempt the Veeco Stockholder Voting Agreements, the Merger and the other transactions contemplated hereby from the requirements and provisions of Section 203 of the DGCL and other state anti-takeover statutes or regulations to the extent applicable such that none of the provisions of such "business combination," "moratorium," "control share," or other state anti-takeover statute or regulation (a) applies to this Merger Agreement or any of the transactions -40- contemplated hereby, (b) prohibits or restricts Veeco's ability to perform its obligations under this Merger Agreement or its ability to consummate the Merger and the other transactions contemplated hereby, (c) would have the effect of invalidating or voiding this Merger Agreement or any provisions hereof or (d) would subject Veeco to any material impediment or condition in connection with the exercise of any of its rights under this Merger Agreement. 4.22 OWNERSHIP OF FEI STOCK. As of the date of this Merger Agreement, neither Veeco nor any of its Subsidiaries own any shares of FEI Common Stock. 4.23 FORM S-4 REGISTRATION STATEMENT; JOINT PROXY STATEMENT. None of the information to be supplied by Veeco or its Subsidiaries in (i) the Form S-4 Registration Statement will, at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) the Joint Proxy Statement will, on the date of the mailing of the Joint Proxy Statement and any amendments or supplements thereto, at the time of each of the Veeco Stockholders' Meeting and the FEI Stockholders' Meeting, and at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the FEI Stockholders Meeting or the Veeco Stockholders Meeting, which has become false or misleading. The Joint Proxy Statement will comply, as of its mailing date, as to form in all material respects with all applicable Laws, including the provisions of the Exchange Act, except that no representation is made by Veeco with respect to information supplied by FEI for inclusion therein. 4.24 VEECO RIGHTS AGREEMENT. The Board of Directors of Veeco has amended (in the form provided to FEI) the Veeco Rights Agreement so that none of FEI or its Affiliates shall become an "Acquiring Person," and no "Distribution Date" or "Triggering Event" (as such terms are defined in the Veeco Rights Agreement) will occur as a result of the approval, execution or delivery of this Merger Agreement or the Veeco Stockholder Voting Agreements or the consummation of the transactions contemplated hereby and thereby. V. COVENANTS 5.01 ACCESS. Between the date hereof and the Closing Date, upon reasonable notice, FEI shall, and shall cause each of the other FEI Entities to, provide Veeco, Acquisition and each of their authorized Representatives with such reasonable access to the properties, books, records, Tax Returns, Contracts, information, documents and personnel of the FEI Entities as they relate to the FEI Entities' business during normal business hours as Veeco or Acquisition may reasonably request for the purpose of making such investigation of the business, properties, financial condition, operations and results of operations of the FEI Entities' business as Veeco or Acquisition may deem appropriate or necessary. Between the date hereof and the Closing Date, upon reasonable notice, Veeco shall, and shall cause each of the other Veeco Entities to, provide FEI and each of its authorized Representatives with such reasonable access to the properties, books, records, Tax Returns, Contracts, information, documents and personnel of the Veeco Entities as they relate to the Veeco Entities' business during normal business hours as FEI may reasonably request for the purpose of making such investigation of the business, properties, financial condition, operations and -41- results of operations of the Veeco Entities' business as FEI may deem appropriate or necessary. Notwithstanding anything to the contrary herein, if any party is prohibited from disclosing confidential information to another party by Law or by preexisting confidentiality obligations, then such party shall inform the other party of such prohibition and the parties shall work together to resolve any related due diligence matters without violating such Laws or confidentiality obligations, including using reasonable best efforts to obtain third party Consents to such disclosure, if appropriate. 5.02 CONDUCT OF THE BUSINESS OF THE PARTIES PENDING THE CLOSING DATE. During the period commencing with the execution and delivery of this Merger Agreement and continuing until the earlier to occur of the termination of this Merger Agreement pursuant to its terms and the Closing Date, except (i) as otherwise expressly permitted by this Merger Agreement, (ii) in the case of FEI as provided in SCHEDULE 5.02 of the FEI Disclosure Schedule and in the case of Veeco and Acquisition as provided in SCHEDULE 5.02 of the Veeco Disclosure Schedule, or (iii) to the extent that the other party shall otherwise consent in writing (which consent shall not be unreasonably withheld), each of FEI (which for the purposes of this Section 5.02 shall include FEI and each of its Subsidiaries) and Veeco (which for the purposes of this Section 5.02 shall include Veeco and each of its Subsidiaries), shall (a) carry on its respective businesses in the usual, regular and ordinary course consistent with past practice in all material respects, in substantially the same manner as heretofore conducted and in compliance with all applicable Laws, (b) shall use its reasonable commercial efforts to keep available the services of its present officers and key employees, consistent with past practice, preserve intact its present lines of business, maintain its rights and franchises and preserve its relationships with material customers, suppliers and others having business dealings with it to the end that its ongoing businesses shall not be impaired in any material respect on or after the Closing Date, (c) pay its debts and Taxes when due (unless being contested or disputed in good faith), (d) pay or perform other material obligations when due, (e) keep in force all insurance policies, and (f) otherwise ensure that its ongoing businesses shall not be impaired in any material respect on or after the Closing Date. Except as otherwise expressly permitted by this Merger Agreement, during the period commencing with the execution and delivery of this Merger Agreement and continuing until the earlier to occur of the termination of this Merger Agreement pursuant to its terms and the Closing Date, none of FEI, Veeco or Acquisition shall, without the prior consent of the other Parties (which consent shall not be unreasonably withheld), take any affirmative action, or fail to take any reasonable action within its control, as a result of which any of the changes or events listed in Section 3.11 or 4.11, as applicable, of this Merger Agreement is reasonably likely to occur. During the period commencing with the execution and delivery of this Merger Agreement and continuing until the earlier to occur of the termination of this Merger Agreement pursuant to its terms and the Closing Date, FEI shall confer with Veeco concerning operational matters of the FEI Entities of a material nature and otherwise report periodically to Veeco concerning the status of the FEI Entities' business, operations and finances. During the period commencing with the execution and delivery of this Merger Agreement and continuing until the earlier to occur of the termination of this Merger Agreement pursuant to its terms and the Closing Date, Veeco shall confer with FEI concerning operational matters of the Veeco Entities of a material nature and otherwise report periodically to FEI concerning the status of the Veeco Entities' business, operations and finances. In furtherance of the foregoing and subject to applicable Law, FEI and Veeco shall confer, as promptly as practicable, prior to taking any material actions or making any material management decisions with respect to the conduct of its business during the foregoing period. -42- 5.03 RESTRICTED CONDUCT. Without limiting Section 5.02, except as expressly contemplated by this Merger Agreement or as set forth on SCHEDULE 5.03 of the FEI Disclosure Schedule or of the Veeco Disclosure Schedule, during the period commencing with the execution and delivery of this Merger Agreement and continuing until the earlier to occur of the termination of this Merger Agreement pursuant to its terms and the Closing Date, neither FEI (which for the purposes of this Section 5.03 shall include FEI and each of its Subsidiaries) nor Veeco (which for the purposes of this Section 5.03 shall include Veeco and each of its Subsidiaries) shall do, cause or permit any of the following without the prior written consent of the other (which consent will not be unreasonably withheld or delayed): (a) CHARTER DOCUMENTS. Cause or permit any amendments to its Certificate of Incorporation or Articles of Incorporation or Bylaws or other governing documents; (b) DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock, or split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock except from former employees, directors and consultants in accordance with currently effective agreements providing for the repurchase of shares in connection with any termination of service to it or its Subsidiaries; or sell or otherwise issue any shares of its capital stock or securities exercisable or exchangeable for or convertible into shares of its capital stock, other than in accordance with or pursuant to existing option plans or upon the exercise or conversion of Veeco Options outstanding as of the date of this Merger Agreement, FEI Options outstanding as of the date of this Merger Agreement, the Veeco Convertible Debt, the FEI Convertible Debt, under the Veeco ESPP or under the FEI ESPP or other convertible or exchangeable securities outstanding as of the date of this Merger Agreement; (c) REORGANIZATION. Take or fail to take any action that would reasonably be expected to cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code. (d) NO ACQUISITIONS. Acquire or agree to acquire by merger or consolidation, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets which could be material to the acquiror (excluding the acquisition of assets used in the operations of its and its Subsidiaries' business in the ordinary course, which assets do not constitute a business unit, division or all or substantially all of the assets of the transferor); (e) ORDINARY COURSE. Other than in the ordinary course of business (i) enter into any new material line of business or (ii) incur or commit to any capital expenditures or any obligations or liabilities in connection therewith; (f) ISSUANCE OF SECURITIES. Issue, deliver, sell, pledge, dispose of, or otherwise encumber, or authorize or propose the issuance, delivery, sale, pledge, disposition or encumbrance of, any shares of its capital stock of any class, any Voting Debt or any securities convertible into or exercisable for, or any rights, warrants, calls, or options to acquire, any such shares or Voting Debt, -43- or enter into any commitment, arrangement, undertaking or agreement with respect to any of the foregoing, other than or in connection with (A) the issuance of shares upon the exercise of Veeco Options or FEI Options (as applicable) or the Veeco Convertible Debt or the FEI Convertible Debt (as applicable) in accordance with their present terms or pursuant to Veeco Options or FEI Options (as applicable) or other stock-based awards granted pursuant to clause (B) below, (B) the granting of Veeco Options or FEI Options (as applicable) or other stock-based awards, (excluding the granting of "reload" stock options (e.g. stock options that, pursuant to the terms thereof require a new grant of options to the holder upon the exercise of such initial options)), under Benefit Plans outstanding on the date hereof in the ordinary course of business and in individual and aggregate amounts consistent with past practice or (C) issuances, sales or deliveries by a wholly owned Subsidiary to its parent; (g) LIQUIDATION; DISSOLUTION. Adopt a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization; (h) CHANGES IN ACCOUNTING METHODS. Except as required by GAAP, make any change in accounting methods, principles or practices; (i) JOINT VENTURES. Enter into any material joint venture, partnership or similar arrangement; (j) NO DISPOSITIONS. Sell, lease or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of its assets (including capital stock of Subsidiaries) other than in the ordinary course of business consistent with past practice; (k) INVESTMENTS; INDEBTEDNESS. (A) Make any loans, advances or capital contributions to, or investments in, any other Person, other than (I) loans or investments in a Subsidiary or (II) in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material (provided that none of such transactions referred to in this Clause (II) presents a material risk of making it more difficult to obtain any Consent required in connection with the Merger under Regulatory Law) or (B) except in the ordinary course consistent with past practice, incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities, guarantee any debt securities of another Person, enter into any "keep well" or other agreement to maintain any financial statement condition of another Person (other than a wholly owned Subsidiary) or enter into any arrangement having the economic effect of any of the foregoing; (l) COMPENSATION. Except as required by Law or by the terms of any collective bargaining agreement or other agreement in effect as of the date of this Merger Agreement, increase the amount of compensation of, or pay any severance to (other than in the ordinary course consistent with past practice), any director, officer or (other than in the ordinary course consistent with past practice) key employee, or make any increase in or commitment to increase or accelerate the payment of any employee benefits, grant any additional stock options (except as permitted by Section 5.03(f)), adopt or amend or make any commitment to adopt or amend any Benefit Plan or fund or make any contribution to any Benefit Plan or any related trust or other funding vehicles, other than regularly scheduled contributions to trust funding qualified plans; and shall not accelerate the vesting of, or the lapsing of restrictions with respect to any stock option, and any option granted -44- or committed to be granted after the date of this Merger Agreement shall not accelerate as a result of approval or consummation of any transaction contemplated by this Merger Agreement; (m) INTELLECTUAL PROPERTY. Transfer or license to any Person or otherwise extend, amend or modify any rights to any intellectual property owned by it or its Subsidiaries, other than in the ordinary course of business or pursuant to any Contracts currently in place (that have been disclosed in writing to the other party hereto prior to the date of this Merger Agreement); (n) CERTAIN ACTIONS. Other than as expressly permitted by Section 5.16 in the case of FEI or 5.17 in the case of Veeco, take any action for the purpose of preventing, delaying or impeding the consummation of the Merger or the other transactions contemplated by this Merger Agreement; or (o) OTHER. Take, or agree in writing or otherwise to take, any of the actions described in Sections 5.03(a) through (n) above. 5.04 CONSENTS. (a) FEI, Veeco and Acquisition shall cooperate and use their respective reasonable best efforts to obtain, prior to the Effective Time, all licenses, permits, Consents, approvals, authorizations, qualifications and orders of Governmental Authorities, parties to the FEI Contracts and the Veeco Contracts and any other Persons as are necessary for consummation of the transactions contemplated by this Merger Agreement and for the Surviving Corporation to enjoy all rights under such FEI Contracts and Veeco Contracts after the consummation of the transactions contemplated by this Merger Agreement. (b) FEI and Veeco shall use their respective reasonable best efforts to file, as soon as practicable after the date of this Merger Agreement, all notices, reports and other documents required to be filed with any Governmental Authority with respect to the Merger and the other transactions contemplated by this Merger Agreement, and to submit promptly any additional information requested by any such Governmental Authority. Without limiting the generality of the foregoing, FEI and Veeco shall, promptly after the date of this Merger Agreement, prepare and file the notifications required under the HSR Act (within 20 days following the date of this Merger Agreement) and any applicable foreign antitrust Laws or regulations in connection with the Merger that are reasonably determined by the parties to apply. FEI and Veeco shall respond as promptly as practicable to (i) any inquiries or requests received from the Federal Trade Commission or the Department of Justice for additional information or documentation and (ii) any inquiries or requests received from any state attorney general, foreign antitrust authority or other Governmental Authority in connection with antitrust or related matters. Each of FEI and Veeco shall (1) give the other party prompt notice of the commencement or threat of commencement of any Legal Proceeding by or before any Governmental Authority with respect to the Merger or any of the other transactions contemplated by this Merger Agreement, (2) keep the other party informed as to the status of any such Legal Proceeding or threat, and (3) promptly inform the other party of any communication to or from the Federal Trade Commission, the Department of Justice or any other Governmental Authority regarding the Merger. Except as may be prohibited by any Governmental Authority or by any Law, FEI and Veeco will consult and cooperate with one another, and will consider in good faith the views of one another, in connection with any analysis, appearance, presentation, memorandum, -45- brief, argument, opinion or proposal made or submitted in connection with any Legal Proceeding under or relating to the HSR Act or any other foreign, federal or state antitrust or fair trade Law. In addition, except as may be prohibited by any Governmental Authority or by any Law, in connection with any Legal Proceeding under or relating to the HSR Act or any other foreign, federal or state antitrust or fair trade Law or any other similar Legal Proceeding, each of FEI and Veeco will permit authorized outside legal counsel of the other party, to the extent necessary for any joint defense or mutually agreed to by FEI's and Veeco's respective outside legal counsel, to be present at each meeting or conference relating to any such Legal Proceeding and to have access to and be consulted in connection with any document, briefing, opinion or proposal made or submitted to any Governmental Authority in connection with any such Legal Proceeding. Notwithstanding anything to the contrary in this Merger Agreement, neither Veeco nor FEI nor any of their respective Subsidiaries shall be required to hold separate (including by trust or otherwise) or to divest or agree to divest any of their respective businesses or assets, or to take or agree to take any action or agree to any limitation that would be reasonably likely to have a Material Adverse Effect on Veeco (assuming the Merger has been consummated) or would be reasonably likely to materially adversely impact the benefits expected to be derived by Veeco and FEI from consummation of the Merger, and neither Veeco nor FEI shall be required to agree to or effect any divestiture, hold separate any business or take any other action that is not conditional on the consummation of the Merger. 5.05 STOCK OPTIONS. (a) At the Effective Time, all rights with respect to FEI Common Stock under FEI Options then outstanding shall be converted into and become rights with respect to Veeco Shares, and Veeco shall assume each such FEI Option in accordance with the terms (as in effect as of the date of this Merger Agreement) of the stock option plan or other arrangement under which it was issued and the terms of the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each FEI Option assumed by Veeco may be exercised by the holder thereof solely for Veeco Shares, (ii) the number of Veeco Shares subject to each such FEI Option shall be equal to the product of (A) the number of shares of FEI Common Stock subject to such FEI Option immediately prior to the Effective Time multiplied by (B) the Exchange Ratio, rounding to the nearest whole share, (iii) the per share exercise price under each such FEI Option shall be adjusted by dividing (x) the per share exercise price under such FEI Option by (y) the Exchange Ratio and rounding to the nearest cent and (iv) any restriction on the exercise or transfer of any such FEI Option shall continue in full force and effect in accordance with its terms and the term, exercisability, vesting schedule and other provisions of or relating to such FEI Option shall otherwise remain unchanged. Veeco shall file with the SEC, no later than the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the Veeco Shares issuable with respect to FEI Options assumed by Veeco in accordance with this Section 5.05(a). (b) It is the intention of the parties that the FEI Options so assumed by Veeco shall qualify, to the maximum extent permissible following the Effective Time, as incentive stock options, as defined in Section 422 of the Code, to the extent the FEI Options so assumed qualified as incentive stock options prior to the Effective Time. (c) Prior to the Effective Time, FEI shall take all action that may be necessary (under the plans pursuant to which FEI Options are outstanding and otherwise) to effectuate the provisions of this Section 5.05 and to ensure that, from and after the Effective Time, holders of FEI -46- Options have no rights with respect thereto other than those specifically provided in this Section 5.05. 5.06 ESPP. (a) At the Effective Time, the FEI Employee Stock Purchase Plan (the "FEI ESPP") and each outstanding purchase right with respect to all open offering periods under the FEI ESPP (each an "ASSUMED PURCHASE RIGHT") shall be assumed by Veeco. Each Assumed Purchase Right shall continue to have, and be subject to, the terms and conditions set forth in the FEI ESPP and the documents governing the Assumed Purchase Right, except that the purchase price of Veeco Shares under each Assumed Purchase Right shall be the lower of (i) the quotient determined by dividing eighty-five percent (85%) of the fair market value of a share of FEI Common Stock on the offering date of each assumed offering period by the Exchange Ratio (with the purchase price rounded up to the nearest whole cent) or (ii) eighty-five percent (85%) of the fair market value of a Veeco Share on the applicable purchase date of each assumed offering period occurring after the Effective Time. Subject to Section 5.06(b), the Assumed Purchase Rights shall be exercised at such times following the Effective Time as set forth in the FEI ESPP, and each participant shall, accordingly, be issued Veeco Shares at such times. (b) Prior to the Effective Time, FEI shall take any and all action that may be necessary under the FEI ESPP (or otherwise) to ensure that (i) all offering periods under the FEI ESPP that are open at the Effective Time and are assumed by Veeco pursuant to Section 5.06(a), shall terminate, and the applicable purchase date for all Assumed Purchase Rights shall occur, on or before December 31, 2002, (ii) the FEI ESPP shall terminate on or before December 31, 2002, and (iii) the offering period scheduled to begin on or about September 1, 2002 shall be the last offering period to commence under the FEI ESPP (the "September Offering"), and the September Offering shall terminate, and the applicable purchase date shall occur, on December 31, 2002. Veeco agrees to implement or continue, as applicable, the September Offering and all Assumed Purchase Rights until the earlier of (i) December 31, 2002, or (ii) the date that the applicable offering period would have otherwise terminated, without additional corporate action, pursuant to the FEI ESPP. (c) Veeco agrees that the employees of FEI who become employees of Veeco or any Subsidiary of Veeco may participate in the employee stock purchase plan sponsored by Veeco (the "VEECO ESPP"), subject to the terms and conditions of the Veeco ESPP. 5.07 EMPLOYEE MATTERS. (a) Until the first anniversary of the Effective Time, Veeco shall, or shall cause a Subsidiary of Veeco to, (i) provide the employees of FEI who remain employed with Veeco or any Subsidiary of Veeco in the U.S. after the Effective Time (the "U.S. CONTINUING EMPLOYEES") with terms and conditions of employment that are substantially comparable in the aggregate to those provided to similarly situated employees of Veeco (the "VEECO BENEFITS") or (ii) continue to provide the U.S. Continuing Employees with terms and conditions of employment that are substantially comparable in the aggregate to those provided by FEI immediately prior to the Effective Time. Nothing contained herein shall be construed to limit the ability of Veeco or a Subsidiary of Veeco, following the Effective Time, to terminate the employment of any employee or to amend or terminate any Veeco or FEI Benefit Plan in accordance with its terms. -47- (b) Except to the extent necessary to avoid duplication of benefits, and, to the extent permitted under applicable law (after adoption of any amendments necessary to implement the following), Veeco shall provide the U.S. Continuing Employees with full credit, for purposes of eligibility and vesting under any employee benefit plans or arrangements maintained by Veeco or any Subsidiary of Veeco in which such employees are eligible to participate, for such employees' service with FEI to the same extent recognized by FEI immediately prior to the Effective Time. Veeco shall cause any and all pre-existing condition (or actively-at-work or similar) limitations, eligibility waiting periods and evidence of insurability requirements under any welfare plan to be waived with respect to the U.S. Continuing Employees and their eligible dependents and shall provide them with credit for any co-payments, deductibles and offsets (or similar payments) made prior to the Effective Time for purposes of satisfying any applicable deductible, out-of-pocket, or similar requirement under any employee benefit plans or arrangements maintained by Veeco or any Subsidiary of Veeco in which such employees are eligible to participate on and after the Effective Time. (c) Nothing herein expressed or implied shall confer upon any of the U.S. Continuing Employees or any other current or former employee or legal representative thereof, any rights or remedies, including, without limitation, any right to employment, or continued employment for any specified period, of any nature or kind whatsoever under or by reason of this Agreement. (d) Veeco shall provide employees of FEI who remain employed with Veeco or any Subsidiary of Veeco outside the U.S. after the Effective Time (the "FOREIGN CONTINUING EMPLOYEES") with terms and conditions of employment that are substantially similar to those provided by FEI or any Subsidiary of FEI immediately prior to the Effective Time as and to the extent required by applicable Law. (e) Until such time as that certain Employment Agreement, dated as of the date hereof, between Veeco and Vahe Sarkissian is terminated, Veeco will continue in effect the FEI Non-Qualified Deferred Compensation Plan on substantially the same terms and conditions as existing on the date of this Agreement (or will put in place a successor plan with substantially the same terms and conditions, which may permit participation by other employees of Veeco and its Subsidiaries); provided, however, that in no event shall the Company be required to make any contributions to such plan. 5.08 INDEMNIFICATION OF OFFICERS AND DIRECTORS. (a) From and after the Effective Time, Veeco will, and will cause the Surviving Corporation to, fulfill and honor in all respects the obligations of FEI pursuant to any indemnification agreements between FEI and its directors and officers immediately prior to the Effective Time (collectively, the "INDEMNIFIED PERSONS"), subject to applicable law. The Articles of Incorporation and Bylaws of the Surviving Corporation will contain provisions with respect to exculpation and indemnification that are at least as favorable to the Indemnified Persons as those provisions contained in the Articles of Incorporation and Bylaws of FEI as in effect on the date of this Merger Agreement, which provisions will not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of an Indemnified Person, unless such modification is required by law. -48- (b) From the Effective Time until the sixth anniversary of the Effective Time, the Surviving Corporation shall maintain in effect (and Veeco shall cause the Surviving Corporation to maintain in effect), for the benefit of the Indemnified Persons, with respect to acts or omissions occurring prior to the Effective Time, the existing policy of directors' and officers' liability insurance maintained by FEI as of the date of this Merger Agreement in the form disclosed by FEI to Veeco prior to the date of this Merger Agreement (the "EXISTING POLICY"); PROVIDED, HOWEVER, that (i) the Surviving Corporation may in its sole discretion determine to substitute for the Existing Policy a policy or policies of comparable coverage, and (ii) the Surviving Corporation shall not be required to pay annual premiums for the Existing Policy (or for any such substitute policies) in excess of 200% of the premium payable by FEI therefor as of the date of this Merger Agreement, in the aggregate. In the event any future annual premium for the Existing Policy (or any such substitute policies) exceeds 200% of the premium payable by FEI therefor as of the date of this Merger Agreement, in the aggregate, the Surviving Corporation shall be entitled to reduce the amount of coverage of the Existing Policy (or any such substitute policies) to the amount of coverage that can be obtained for a premium equal to 200% of the premium payable by FEI therefor as of the date of this Merger Agreement. (b) This Section 5.08 is intended to be for the benefit of, and shall be enforceable by the Indemnified Persons and their heirs and personal representatives and shall be binding on Veeco, the Surviving Corporation and their successors and assigns. In the event Veeco, the Surviving Corporation or their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving Person in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each case, proper provision shall be made so that the successor and assign of Veeco or the Surviving Corporation, as applicable, honor the obligations set forth in this Section 5.08. 5.09 REGISTRATION STATEMENT ON FORM S-3. Veeco shall file with the SEC, no later than the date on which the Merger becomes effective, a registration statement on Form S-3, relating to the resale of the FEI Convertible Debt and the common stock issuable upon conversion of the FEI Convertible Debt. 5.10 TAX MATTERS. (a) (i) Between the date hereof and the Closing Date, FEI shall file or cause to be filed on a timely basis all Tax Returns that are required to be filed by it or by any of the other FEI Entities, either separately or as part of an affiliated group of corporations, pursuant to the Laws of each Governmental Authority with taxing power over it or any of the other FEI Entities or any of the FEI Entities' assets and businesses. Each of such Tax Returns will be true, correct and complete in all material respects when filed. Neither FEI nor any FEI Entity shall (i) make any election or (ii) file any amended Tax Return reflecting any position, in the case of each of (i) and (ii) that could result in a material adverse Tax consequence to Veeco, Acquisition, FEI or any FEI Entity or Veeco Entity for any period beginning on or after the Effective Time. FEI shall timely file all required transfer Tax Returns and/or notices of the transfer of the FEI Entities' business, if any, with the appropriate Governmental Authority. Veeco shall cooperate with FEI in connection with the matters contemplated by this Section 5.10(a)(i), which cooperation shall include, without limitation, providing information and executing and delivering documents, in connection with FEI's or any of the FEI Entities' obligations under this Section 5.10(a)(i). -49- (ii) Between the date hereof and the Closing Date, Veeco shall file or cause to be filed on a timely basis all Tax Returns that are required to be filed by it or by any of the other Veeco Entities, either separately or as part of an affiliated group of corporations, pursuant to the Laws of each Governmental Authority with taxing power over it or any of the other Veeco Entities or any of the Veeco Entities' assets and businesses. Each of such Tax Returns will be true, correct and complete in all material respects when filed. Neither Veeco nor any Veeco Entity shall (i) make any election or (ii) file any amended Tax Return reflecting any position, in the case of each of (i) and (ii) that could result in a material adverse Tax consequence to Veeco, Acquisition, FEI or any FEI Entity or any Veeco Entity for any period beginning on or after the Effective Time. Veeco shall timely file all required transfer Tax Returns and/or notices of the transfer of the Veeco Entities' business, if any, with the appropriate Governmental Authority. FEI shall cooperate with Veeco in connection with the matters contemplated by this Section 5.10(a)(ii), which cooperation shall include, without limitation, providing information and executing and delivering documents, in connection with Veeco's or any of the Veeco Entities' obligations under this Section 5.10(a)(ii). (b) At or prior to the filing of the Form S-4 Registration Statement, FEI and Veeco shall execute and deliver to Kaye Scholer LLP, counsel to Veeco, and to Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to FEI, tax representation letters in form and substance satisfactory to such counsel. Further, Veeco, Acquisition and FEI shall execute and deliver to Kaye Scholer LLP and to Wilson Sonsini Goodrich & Rosati, Professional Corporation, tax representation letters substantially identical to the tax representation letters delivered pursuant to the immediately preceding sentence dated as of the Closing Date, and modified to reflect changes in law, if any, and such other matters as Kaye Scholer LLP and Wilson Sonsini Goodrich & Rosati, Professional Corporation, may reasonably request. Following delivery of the tax representation letters contemplated pursuant to the first sentence of this Section 5.10(b), each of Veeco and FEI shall use its reasonable best efforts to cause Kaye Scholer LLP to deliver to Veeco, and Wilson Sonsini Goodrich & Rosati, Professional Corporation, to deliver to FEI, a tax opinion with respect to such matters as are appropriate for description, and inclusion as exhibits, in the Form S-4 Registration Statement and the Joint Proxy Statement, such opinions to be substantially similar in substance. In rendering such opinions, each of such counsel shall be entitled to rely on the tax representation letters referred to in this Section 5.10(b). (c) None of Veeco, Acquisition or FEI will take any action prior or subsequent to the Effective Time that would reasonably be expected to cause the Merger to fail to qualify as a reorganization as described in Section 368(a) of the Code. 5.11 LETTERS OF THE PARTIES' ACCOUNTANTS. (a) FEI shall use all reasonable efforts to cause to be delivered to Veeco a letter of Deloitte & Touche LLP, independent public accountant for FEI, dated no more than two business days before the date on which the Form S-4 Registration Statement becomes effective (and reasonably satisfactory in form and substance to Veeco), that is customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Form S-4 Registration Statement. (b) Veeco shall use all reasonable efforts to cause to be delivered to FEI a letter of Ernst & Young LLP, independent public accountant for Veeco, dated no more than two business -50- days before the date on which the Form S-4 Registration Statement becomes effective (and reasonably satisfactory in form and substance to FEI), that is customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Form S-4 Registration Statement. 5.12 LISTING. Veeco shall cause the Veeco Shares being issued, and those being reserved for issuance, in the Merger to be approved for listing (subject to notice of issuance) on NASDAQ. 5.12 BOARD OF DIRECTORS; COMMITTEES; OFFICERS; HEADQUARTERS. (a) Veeco shall take all actions necessary such that, effective as of immediately following the Effective Time, Veeco's Board of Directors shall consist of thirteen (13) members, seven (7) of whom shall be nominated by Veeco from the current members of its board of directors, five (5) of whom shall be nominated by FEI from the current members of its board of directors, and one (1) of whom shall be nominated by Philips in accordance with the terms of the Veeco Investor Agreement. In addition, Veeco shall take all actions necessary such that, effective as of immediately following the Effective Time, two (2) of the Veeco nominees and two (2) of the FEI nominees shall serve as Class III directors for terms expiring at Veeco's 2003 Annual Meeting of the Stockholders, two (2) of the Veeco nominees and two (2) of the FEI nominees shall serve as Class I directors for terms expiring at Veeco's 2004 Annual Meeting of the Stockholders and three (3) of the Veeco nominees, one (1) of the FEI nominees and the Philips nominee shall serve as Class II directors for terms expiring at Veeco's 2005 Annual Meeting of the Stockholders. (b) Veeco shall cause, as of the Effective Time, the individuals set forth on SCHEDULE 5.13(B) to be appointed to the position(s) set forth opposite their respective names. (c) Prior to the Effective Time, Veeco shall use commercially reasonable efforts to enter into employment agreements, to be effective as of the Effective Time, with such senior officers of Veeco and FEI as are mutually agreed by Veeco and FEI, which employment agreements shall have terms acceptable to the board of directors of each of Veeco and FEI. (d) Following the Effective Time, the headquarters for Veeco FEI Inc. shall be located at the current headquarters of Veeco. 5.14 NOTICE OF BREACH; DISCLOSURE. Each party shall promptly notify the other of (i) any event, condition or circumstance of which such party becomes aware after the date hereof and prior to the Closing Date that would constitute a violation or breach of this Merger Agreement (or a breach of any representation or warranty contained herein) or, if the same were to continue to exist as of the Closing Date, would constitute the non-satisfaction of any of the conditions set forth in Article VI, VII or VIII hereof, as the case may be or (ii) any event, occurrence, transaction, or other item of which such party becomes aware which would have been required to have been disclosed on either the FEI Disclosure Schedule or the Veeco Disclosure Schedule or any statement delivered hereunder had such event, occurrence, transaction or item existed as of the date hereof. The disclosure of any matter as provided in this Section 5.14 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. 5.15 PAYMENT OF INDEBTEDNESS BY AFFILIATES. FEI shall use commercially reasonable efforts to cause all indebtedness owed to any FEI Entity by any FEI Affiliate to be paid in full prior to -51- Closing, other than as provided in Sections 3.02(b) and 3.08 of the FEI Disclosure Schedule, and advances of, or reimbursements for, expenses incurred or anticipated to be incurred by officers, directors and employees of the FEI Entities in the ordinary course of business and in compliance with the relevant FEI Entity's policy, if any, relating thereto. 5.16 NO SOLICITATION -- FEI. (a) During the period commencing with the execution of this Merger Agreement and continuing until the earlier to occur of the termination of this Merger Agreement pursuant to its terms and the Closing Date, FEI shall not directly or indirectly, and shall use reasonable best efforts to cause the other FEI Entities and their respective Representatives, employees and agents not directly or indirectly, to (i) solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any FEI Acquisition Proposal, (ii) furnish any information regarding any of the FEI Entities to any Person in connection with or in response to a FEI Acquisition Proposal or an inquiry or indication of interest that could reasonably be expected to lead to a FEI Acquisition Proposal, (iii) engage in discussions or negotiations with any Person with respect to any FEI Acquisition Proposal, (iv) approve, endorse or recommend any FEI Acquisition Proposal or (v) enter into any letter of intent or similar document or any Contract contemplating or otherwise relating to any FEI Acquisition Transaction; PROVIDED, HOWEVER, that prior to the approval of the Merger by the Required FEI Stockholder Vote, this Section 5.16(a) shall not prohibit FEI from engaging in discussions and taking such other actions as may be reasonably required for the purpose of becoming informed with respect to a BONA FIDE unsolicited written FEI Acquisition Proposal that is submitted to FEI (and not withdrawn) if the Board of Directors of FEI reasonably determines in good faith after due consideration that such FEI Acquisition Proposal would reasonably be likely to result in a Superior FEI Proposal and (1) neither FEI nor any Representative of any of the FEI Entities shall have violated any of the restrictions set forth in this Section 5.16, (2) the Board of Directors of FEI concludes in good faith that failure to take such action would be reasonably likely to result in a breach of the fiduciary obligations of the Board of Directors of FEI to FEI's stockholders under applicable Law, after consultation with its outside legal counsel, and (3) prior to any such discussion or other action FEI receives from such Person an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such Person by or on behalf of FEI. (b) FEI shall promptly advise Veeco of any FEI Acquisition Proposal (including the identity of the Person making or submitting such FEI Acquisition Proposal and the terms thereof) that is made or submitted by any Person after the date of this Merger Agreement. FEI shall keep Veeco reasonably informed with respect to the status of any such FEI Acquisition Proposal. (c) On the date hereof, FEI shall immediately cease and cause to be terminated any existing discussions with any Person that relate to any FEI Acquisition Proposal or FEI Acquisition Transaction. (d) FEI agrees not to release or permit the release of any Person from, or to waive or permit the waiver of any provision of, any confidentiality, "standstill" or similar agreement to which any of the FEI Entities is a party, and will use its best efforts to enforce or cause to be enforced each such agreement at the request of Veeco. FEI also will promptly request each Person that has executed, within 12 months prior to the date of this Merger Agreement, a confidentiality -52- agreement in connection with its consideration of a possible FEI Acquisition Transaction, to return all confidential information heretofore furnished to such Person by or on behalf of any of the FEI Entities. 5.17 NO SOLICITATION -- VEECO. (a) During the period commencing with the execution of this Merger Agreement and continuing until the earlier to occur of the termination of this Merger Agreement pursuant to its terms and the Closing Date, Veeco shall not directly or indirectly, and shall use reasonable best efforts to cause the other Veeco Entities and their respective Representatives, employees and agents not directly or indirectly, to (i) solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any Veeco Acquisition Proposal, (ii) furnish any information regarding any of the Veeco Entities to any Person in connection with or in response to a Veeco Acquisition Proposal or an inquiry or indication of interest that could reasonably be expected to lead to a Veeco Acquisition Proposal, (iii) engage in discussions or negotiations with any Person with respect to any Veeco Acquisition Proposal, (iv) approve, endorse or recommend any Veeco Acquisition Proposal or (v) enter into any letter of intent or similar document or any Contract contemplating or otherwise relating to any Veeco Acquisition Transaction; PROVIDED, HOWEVER, that prior to the approval of the issuance of the Veeco Shares in the Merger by the Required Veeco Stockholder Vote, this Section 5.17(a) shall not prohibit Veeco from engaging in discussions and taking such other actions as may be reasonably required for the purpose of becoming informed with respect to a BONA FIDE unsolicited written Veeco Acquisition Proposal that is submitted to Veeco (and not withdrawn) if the Board of Directors of Veeco reasonably determines in good faith after due consideration that such Veeco Acquisition Proposal would reasonably be likely to result in a Superior Veeco Proposal and (1) neither Veeco nor any Representative of any of the Veeco Entities shall have violated any of the restrictions set forth in this Section 5.17, (2) the Board of Directors of Veeco concludes in good faith that failure to take such action would be reasonably likely to result in a breach of the fiduciary obligations of the Board of Directors of Veeco to Veeco's stockholders under applicable Law, after consultation with its outside legal counsel, and (3) prior to any such discussion or other action Veeco receives from such Person an executed confidentiality agreement containing customary limitations on the use and disclosure of all nonpublic written and oral information furnished to such Person by or on behalf of Veeco. (b) Veeco shall promptly advise FEI of any Veeco Acquisition Proposal (including the identity of the Person making or submitting such Veeco Acquisition Proposal and the terms thereof) that is made or submitted by any Person after the date of this Merger Agreement. Veeco shall keep FEI reasonably informed with respect to the status of any such Veeco Acquisition Proposal. (c) On the date hereof, Veeco shall immediately cease and cause to be terminated any existing discussions with any Person that relate to any Veeco Acquisition Proposal or Veeco Acquisition Transaction. (d) Veeco agrees not to release or permit the release of any Person from, or to waive or permit the waiver of any provision of, any confidentiality, "standstill" or similar agreement to which any of the Veeco Entities is a party, and will use its best efforts to enforce or cause to be enforced each such agreement at the request of FEI. Veeco also will promptly request each Person -53- that has executed, within 12 months prior to the date of this Merger Agreement, a confidentiality agreement in connection with its consideration of a possible Veeco Acquisition Transaction, to return all confidential information heretofore furnished to such Person by or on behalf of any of the Veeco Entities. 5.18 BLUE SKY LAWS. Veeco shall take such steps as may be reasonably necessary to comply with the securities and blue sky laws of all jurisdictions which are applicable to the issuance of Veeco Shares in connection with the Merger. FEI shall use its reasonable efforts to assist Veeco as may be necessary to comply with the securities and blue sky laws of all jurisdictions which are applicable in connection with the issuance of Veeco Shares in connection with the Merger. 5.19 ADDITIONAL AGREEMENTS. Subject to Section 5.04(b), Veeco and FEI shall each use reasonable best efforts to take, or cause to be taken, all actions necessary to consummate the Merger and make effective the other transactions contemplated by this Merger Agreement, as promptly as practicable following the execution and delivery of this Merger Agreement. Without limiting the generality of the foregoing, but subject to Section 5.04(b), each party to this Merger Agreement (i) shall make all filings (if any) and give all notices (if any) required to be made and given by such party in connection with the Merger and the other transactions contemplated by this Merger Agreement, and (ii) shall use reasonable best efforts to lift any restraint, injunction or other legal bar to the Merger. Each of Veeco and FEI shall promptly deliver to the other a copy of each such filing made, each such notice given and each such Consent obtained by it following the date hereof. 5.20 DISCLOSURE. Veeco and FEI shall consult with each other before issuing any press release or otherwise making any public statement with respect to the Merger or any of the other transactions contemplated by this Merger Agreement. Without limiting the generality of the foregoing, neither Veeco nor FEI shall, and neither Veeco nor FEI shall permit any of its Representatives to, make any disclosure regarding the Merger or any of the other transactions contemplated by this Merger Agreement unless (a) the other party shall have approved such disclosure or (b) such party shall have been advised by its outside legal counsel that such disclosure is required by applicable Law. 5.21 REGISTRATION STATEMENT; JOINT PROXY STATEMENT. As promptly as practicable after the date of this Merger Agreement, Veeco and FEI shall prepare and cause to be filed with the SEC the Joint Proxy Statement and Veeco shall prepare and cause to be filed with the SEC the Form S-4 Registration Statement, in which the Joint Proxy Statement will be included as a prospectus. Each of Veeco and FEI shall use reasonable best efforts to cause the Form S-4 Registration Statement and the Joint Proxy Statement to comply with the rules and regulations promulgated by the SEC, to respond promptly to any comments of the SEC or its staff and to have the Form S-4 Registration Statement declared effective under the Securities Act as promptly as practicable after it is filed with the SEC. Each of Veeco and FEI shall, as promptly as practicable after receipt thereof, provide the other party with copies of any written comments and advise each other of any oral comments with respect to the Joint Proxy Statement or Form S-4 Registration Statement. Veeco will use reasonable best efforts to cause the Joint Proxy Statement to be mailed to Veeco's stockholders, and FEI will use reasonable best efforts to cause the Joint Proxy Statement to be mailed to FEI's stockholders, as promptly as practicable after the Form S-4 Registration Statement is declared effective under the Securities Act. FEI and Veeco shall promptly furnish to one another all information concerning the FEI Entities and FEI's stockholders and Veeco and Veeco's stockholders that may be required or -54- reasonably requested in connection with any action contemplated by this Section 5.21. If any event relating to any of the FEI Entities occurs, or if FEI becomes aware of any information, that should be disclosed in an amendment or supplement to the Form S-4 Registration Statement or the Joint Proxy Statement, then FEI shall promptly inform Veeco thereof and shall cooperate with Veeco in filing such amendment or supplement with the SEC and provide Veeco with a reasonable opportunity to comment on any such amendment or supplement prior to filing with the SEC and, if appropriate, shall cooperate with Veeco in mailing such amendment or supplement to the stockholders of FEI. If any event relating to any of the Veeco Entities occurs, or if Veeco becomes aware of any information, that should be disclosed in an amendment or supplement to the Form S-4 Registration Statement or the Joint Proxy Statement, then Veeco shall promptly inform FEI thereof and shall cooperate with FEI in filing such amendment or supplement with the SEC and provide FEI with a reasonable opportunity to comment on any such amendment or supplement prior to filing with the SEC and, if appropriate, cooperate with FEI in mailing such amendment or supplement to the stockholders of Veeco. Notwithstanding any other provision herein to the contrary, no amendment or supplement (including by incorporation by reference) to the Joint Proxy Statement or the Form S-4 Registration Statement shall be made without the approval of both Veeco and FEI, which approval shall not be unreasonably withheld or delayed; PROVIDED, that, with respect to documents filed by a party hereto that are incorporated by reference in the Form S-4 Registration Statement or Joint Proxy Statement, this right of approval shall apply only with respect to information relating to the other party or its business, financial condition, or results of operations; and PROVIDED, FURTHER, that Veeco, in connection with a change in the Veeco Board Recommendation (to the extent permitted by Section 5.23(c) hereof), and FEI, in connection with a change in the FEI Board Recommendation (to the extent permitted by Section 5.22(c) hereof), may amend or supplement the Joint Proxy Statement or Form S-4 Registration Statement (including by incorporation by reference) pursuant to a Qualifying Amendment to effect such a change, and in such event, this right of approval shall apply only with respect to information relating to the other party or its business, financial condition or results of operations, and shall be subject to the right of each party to have its Board of Directors' deliberations and conclusions be accurately described. Each party hereto will advise the other party, promptly after it receives notice thereof, of the time when the Form S-4 Registration Statement has become effective, the issuance of any stop order, the suspension of the qualification of the Veeco Shares issuable in connection with the Merger for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Joint Proxy Statement or Form S-4 Registration Statement. If, at any time prior to the Effective Time, any information relating to Veeco or FEI, or any of their respective Affiliates, officers or directors, is discovered by Veeco or FEI and such information should be set forth in an amendment or supplement to (i) the Form S-4 Registration Statement so that such document would not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading or (ii) the Joint Proxy Statement so that such document would not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the FEI Stockholders Meeting or the Veeco Stockholders Meeting, which has become false or misleading, the party hereto discovering such information shall promptly notify the other parties hereto and, to the extent required by Law, an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and disseminated to the stockholders of Veeco and FEI. -55- 5.22 FEI Stockholders' Meeting. (a) FEI shall take all action necessary under all applicable Laws to call, give notice of and hold a meeting of the holders of FEI Common Stock to vote on a proposal to approve the Merger (the "FEI STOCKHOLDERS' MEETING"). The FEI Stockholders' Meeting shall be held as promptly as practicable after the Form S-4 Registration Statement is declared effective under the Securities Act on a date or dates determined in accordance with the mutual agreement of FEI and Veeco, but in no event later than 45 days after the Form S-4 Registration Statement is declared effective under the Securities Act, unless a stop order shall have been issued by the SEC with respect to the Form S-4 Registration Statement or an injunction shall have been issued by a court of competent jurisdiction or other appropriate Governmental Authority to restrain or prohibit the consummation of the Merger. FEI shall ensure that all proxies solicited in connection with the FEI Stockholders' Meeting are solicited in compliance with all applicable Laws. (b) Subject to Section 5.22(c): (i) the Joint Proxy Statement shall include a statement to the effect that the Board of Directors of FEI recommends that FEI's stockholders vote to approve the Merger at the FEI Stockholders' Meeting (such recommendation of FEI's Board of Directors that FEI's stockholders vote to approve the Merger being referred to as the "FEI BOARD RECOMMENDATION"); and (ii) the FEI Board Recommendation shall not be withdrawn or modified in a manner adverse to Veeco, and no resolution by the Board of Directors of FEI or any committee thereof to withdraw or modify the FEI Board Recommendation in a manner adverse to Veeco shall be adopted. (c) Notwithstanding anything to the contrary contained in Section 5.22(b), at any time prior to the approval of the Merger by the Required FEI Stockholder Vote, the FEI Board Recommendation may be withdrawn or modified in a manner adverse to Veeco if: (i) a FEI Acquisition Proposal is made and is not withdrawn; (ii) FEI promptly provides Veeco prior written notice of any meeting of FEI's Board of Directors at which such Board of Directors will consider and determine whether such offer is a Superior FEI Proposal; (iii) FEI's Board of Directors determines in good faith that such offer constitutes a Superior FEI Proposal (after consultation with an independent financial advisor of nationally recognized reputation); (iv) FEI's Board of Directors determines in good faith, after consultation with FEI's outside legal counsel, that, in light of such Superior FEI Proposal, the failure to withdraw or modify the FEI Board Recommendation would be reasonably likely to result in a breach of the fiduciary obligations of FEI's Board of Directors to FEI's stockholders under applicable Law; and (v) neither FEI nor any of its Representatives shall have materially violated any of the restrictions set forth in Section 5.16. (d) FEI's obligation to call, give notice of and hold the FEI Stockholders' Meeting in accordance with Section 5.22(a) hereof shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission of any Superior FEI Proposal or other FEI Acquisition Proposal, or by any withdrawal or modification of the FEI Board Recommendation. 5.23 VEECO STOCKHOLDERS' MEETING. (a) Veeco shall take all action necessary under all applicable Laws to call, give notice of and hold a meeting of the holders of Veeco Shares to vote on the issuance of Veeco Shares in the Merger and the Veeco Certificate of Incorporation Amendment (the "VEECO STOCKHOLDERS' -56- MEETING"). The Veeco Stockholders' Meeting shall be held as promptly as practicable after the Form S-4 Registration Statement is declared effective under the Securities Act on a date determined in accordance with the mutual agreement of FEI and Veeco (but on a date no more than two business days after the FEI Stockholders' Meeting). Veeco shall ensure that all proxies solicited in connection with the Veeco Stockholders' Meeting are solicited in compliance with all applicable Laws. (b) Subject to Section 5.23(c): (i) the Joint Proxy Statement shall include a statement to the effect that the Board of Directors of Veeco recommends that Veeco's stockholders vote to approve the issuance of Veeco Shares in the Merger and the Veeco Certificate of Incorporation Amendment (such recommendation of Veeco's Board of Directors that Veeco's stockholders vote to approve the issuance of Veeco Shares in the Merger and the Veeco Certificate of Incorporation Amendment being referred to as the "VEECO BOARD RECOMMENDATION"); and (ii) the Veeco Board Recommendation shall not be withdrawn or modified in a manner adverse to FEI, and no resolution by the Board of Directors of Veeco or any committee thereof to withdraw or modify the Veeco Board Recommendation in a manner adverse to FEI shall be adopted. (c) Notwithstanding anything to the contrary contained in Section 5.23(b), at any time prior to the approval of the issuance of the Veeco Shares in the Merger and the Veeco Certificate of Incorporation Amendment by the Required Veeco Stockholder Vote, the Veeco Board Recommendation may be withdrawn or modified in a manner adverse to FEI if: (i) a Veeco Acquisition Proposal is made and is not withdrawn; (ii) Veeco promptly provides FEI prior written notice of any meeting of Veeco's Board of Directors at which such Board of Directors will consider and determine whether such offer is a Superior Veeco Proposal; (iii) Veeco's Board of Directors determines in good faith that such offer constitutes a Superior Veeco Proposal (after consultation with an independent financial advisor of nationally recognized reputation); (iv) Veeco's Board of Directors determines in good faith, after consultation with Veeco's outside legal counsel, that, in light of such Superior Veeco Proposal, the failure to withdraw or modify the Veeco Board Recommendation would be reasonably likely to result in a breach of the fiduciary obligations of Veeco's Board of Directors to Veeco's stockholders under applicable Law; and (v) neither Veeco nor any of its Representatives shall have materially violated any of the restrictions set forth in Section 5.17. (d) Veeco's obligation to call, give notice of and hold the Veeco Stockholders' Meeting in accordance with Section 5.23(a) hereof shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission of any Superior Veeco Proposal or other Veeco Acquisition Proposal, or by any withdrawal or modification of the Veeco Board Recommendation. 5.24 SECTION 16 MATTERS. Prior to the Effective Time, the Board of Directors of each of FEI and Veeco shall adopt a resolution consistent with the interpretative guidance of the SEC, if any, to the effect that (i) the assumption of FEI Options held by FEI Insiders (as defined below) pursuant to this Agreement, (ii) the acquisition or exercise of other rights to receive or purchase equity securities of FEI or Veeco pursuant to agreements entered into in connection with the execution and delivery of this Agreement, and (iii) the receipt by FEI Insiders of Veeco Shares in exchange for FEI Common Stock pursuant to the Merger, shall be exempt transactions for purposes of Section 16 of the Exchange Act by any officer or director (or any entity which may be deemed to be a "director by -57- deputization" as a result of its relationship with a director of FEI) of FEI who may become a covered person for purposes of Section 16 of the Exchange Act (a "FEI INSIDER"). 5.25 ACQUISITION COMPLIANCE. Veeco shall cause Acquisition to comply with all of Acquisition's obligations under or relating to this Merger Agreement. Acquisition shall not engage in any business that is not in connection with the Merger pursuant to this Merger Agreement. 5.26 CONVEYANCE TAXES. Veeco, Acquisition and FEI shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer or stamp taxes, any transfer, recording, registration or other fees or any similar taxes, which become payable in connection with the transactions contemplated by this Merger Agreement that are required or permitted to be filed on or before the Effective Time. All such taxes will be paid by the party bearing the legal responsibility for such payment. VI. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES The obligations of the parties to enter into and complete the Closing are conditioned upon the satisfaction or waiver in writing by the parties, on or before the Closing Date, of the following conditions: 6.01 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4 Registration Statement shall have become effective in accordance with the provisions of the Securities Act, and no stop order shall have been issued, and no proceeding for that purpose shall have been initiated or be Threatened, by the SEC with respect to the Form S-4 Registration Statement. 6.02 STOCKHOLDER APPROVAL. The Merger shall have been duly approved by the Required FEI Stockholder Vote and the issuance of Veeco Shares in the Merger and the Veeco Certificate of Incorporation Amendment shall have been duly approved by the Required Veeco Stockholder Vote. 6.03 LITIGATION. No suit, action or other Legal Proceeding by any Governmental Authority shall be pending in which it is sought to restrain or prohibit the consummation of the transactions contemplated hereby, and no injunction or final judgment shall have been entered on the Closing Date before any court or Governmental Authority restraining or prohibiting the consummation of the transactions contemplated hereby. 6.04 NO ORDER. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation or executive order (whether temporary, preliminary or permanent), which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger. 6.05 HSR ACT. (a) The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated, and (b) any similar waiting period under any applicable foreign antitrust Law or regulation to the consummation of the Merger shall have expired or been terminated, and any Consent required under any applicable foreign antitrust Law or regulation shall have been obtained, except where the failure for such waiting period to have expired or been terminated or for such Consent to have been obtained would not have a Material Adverse Effect on Veeco (following the Merger). -58- 6.06 LISTING. The Veeco Shares to be issued in the Merger and such other shares required to be reserved for issuance in connection with the Merger shall be approved for listing (subject to notice of issuance) on the Nasdaq National Market. VII. CONDITIONS PRECEDENT TO VEECO'S AND ACQUISITION'S OBLIGATIONS The obligations of Veeco and Acquisition to enter into and complete the Closing are conditioned upon the satisfaction or waiver in writing by Veeco (on behalf of Veeco and Acquisition), on or before the Closing Date, of all of the following conditions: 7.01 REPRESENTATIONS AND WARRANTIES. The representations and warranties of FEI contained in this Merger Agreement shall (i) be true and correct as of the date of this Merger Agreement, except where the failure to be so true and correct would not, in the aggregate, reasonably be expected to have a Material Adverse Effect on FEI and (ii) be true and correct as of the Closing Date with the same force and effect as if made on and as of the Closing Date (except to the extent expressly made as of an earlier date), except where the failure to be so true and correct would not, in the aggregate, reasonably be expected to have a Material Adverse Effect on FEI; PROVIDED, HOWEVER, that, for purposes of determining the accuracy of such representations and warranties as of the date of this Merger Agreement or as of the Closing Date, (i) all "Material Adverse Effect" qualifications and other materiality qualifications and any similar qualifications contained in such representations and warranties shall be disregarded and (ii) any update of or modification to the FEI Disclosure Schedule hereto made or purported to have been made after the date of this Merger Agreement shall be disregarded. 7.02 PERFORMANCE OF COVENANTS. FEI shall have performed and complied in all material respects with all of the agreements, covenants and conditions required by this Merger Agreement to be performed and complied with by it prior to or on the Closing Date. 7.03 MATERIAL ADVERSE EFFECT. There shall not have been any Material Adverse Effect with respect to FEI from the date hereof to the Closing Date. 7.04 AGREEMENTS AND DOCUMENTS. Veeco and Acquisition shall have received the following agreements and documents, each of which shall be in full force and effect: (a) a legal opinion of Kaye Scholer LLP, counsel to Veeco, dated as of the Closing Date and addressed to Veeco, to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code (it being understood that in rendering such opinion, Kaye Scholer LLP may rely upon tax representation letters, dated as of the Closing Date, and substantially identical to the tax representation letters referred to in Section 5.10(b), modified to reflect changes in law, if any, and such other matters as Kaye Scholer LLP and Wilson Sonsini Goodrich & Rosati, Professional Corporation, may reasonably request); and (b) a certificate, dated the Closing Date, executed on behalf of FEI by its Chief Executive Officer, confirming that the conditions set forth in Sections 7.01 and 7.02 hereof have been duly satisfied. VIII. CONDITIONS PRECEDENT TO FEI'S OBLIGATIONS. -59- FEI's obligation to enter into and complete the Closing is conditioned upon the satisfaction or waiver in writing by FEI, on or before the Closing Date, of all of the following conditions: 8.01 REPRESENTATIONS AND WARRANTIES. The representations and warranties of Veeco and Acquisition contained in this Merger Agreement shall (i) be true and correct as of the date of this Merger Agreement, except where the failure to be so true and correct would not, in the aggregate, reasonably be expected to have a Material Adverse Effect on Veeco and (ii) be true and correct as of the Closing Date with the same force and effect as if made on and as of the Closing Date (except to the extent expressly made as of an earlier date), except where the failure to be so true and correct would not, in the aggregate, reasonably be expected to have a Material Adverse Effect on Veeco; PROVIDED, HOWEVER, that, for purposes of determining the accuracy of such representations and warranties as of the date of this Merger Agreement or as of the Closing Date, (i) all "Material Adverse Effect" qualifications and other materiality qualifications and any similar qualifications contained in such representations and warranties shall be disregarded and (ii) any update of or modification to the Veeco Disclosure Schedule hereto made or purported to have been made after the date of this Merger Agreement shall be disregarded. 8.02 PERFORMANCE OF COVENANTS. Each of Veeco and Acquisition shall have performed and complied in all material respects with all of the agreements, covenants and conditions required by this Merger Agreement to be performed and complied with by them prior to or on the Closing Date. 8.03 MATERIAL ADVERSE EFFECT. There shall not have been any Material Adverse Effect with respect to Veeco from the date hereof to the Closing Date. 8.04 DOCUMENTS. FEI shall have received the following documents: (a) a legal opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to FEI, dated as of the Closing Date, to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code (it being understood that in rendering such opinion, Wilson Sonsini Goodrich & Rosati may rely upon tax representation letters dated as of the Closing Date, and substantially identical to the tax representation letters referred to in Section 5.10(b), modified to reflect changes in law, if any, and such other matters as Kaye Scholer LLP and Wilson Sonsini Goodrich & Rosati, Professional Corporation, may reasonably request); and (b) a certificate, dated the Closing Date, executed on behalf of Veeco by its Chief Executive Officer, confirming that the conditions set forth in Sections 8.01 and 8.02 hereof have been duly satisfied. IX. TERMINATION. 9.01 TERMINATION. This Merger Agreement may be terminated prior to the Effective Time (whether before or after approval of the Merger by FEI's stockholders and whether before or after approval of the issuance of Veeco Shares in the Merger by Veeco's stockholders): (a) by mutual written consent of Veeco and FEI; (b) by either Veeco or FEI if the Merger shall not have been consummated by December 31, 2002 (the "TERMINATION DATE") or, if later, the day following the last day of any cure -60- period under Section 9.01(h) or 9.01(i) (but in no event beyond January 30, 2002) (unless the failure to consummate the Merger is significantly attributable to a failure on the part of the party seeking to terminate this Merger Agreement to perform any material obligation required to be performed by such party at or prior to the Effective Time); (c) by either Veeco or FEI if a court of competent jurisdiction or other Governmental Authority shall have issued a final and nonappealable order, decree or ruling, or shall have taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger; (d) by either Veeco or FEI if (i) the FEI Stockholders' Meeting (including any adjournments and postponements thereof) shall have been held and completed and FEI's stockholders shall have taken a final vote on a proposal to approve the Merger, and (ii) the Merger shall not have been approved at such meeting by the Required FEI Stockholder Vote (and shall not have been adopted at any adjournment or postponement thereof); PROVIDED, HOWEVER, that (A) a party shall not be permitted to terminate this Merger Agreement pursuant to this Section 9.01(d) if the failure to obtain such stockholder approval is attributable to a failure on the part of such party to perform any material obligation required to be performed by such party at or prior to the Effective Time, and (B) FEI shall not be permitted to terminate this Merger Agreement pursuant to this Section 9.01(d) unless FEI shall have paid to Veeco any fee required to be paid to Veeco pursuant to Section 9.03(b); (e) by either Veeco or FEI if (i) the Veeco Stockholders' Meeting (including any adjournments and postponements thereof) shall have been held and completed and Veeco's stockholders shall have taken a final vote on the issuance of Veeco Shares in the Merger and the Veeco Certificate of Incorporation Amendment, and (ii) the issuance of Veeco Shares in the Merger or the Veeco Certificate of Incorporation Amendment shall not have been approved at such meeting (and shall not have been approved at any adjournment or postponement thereof) by the Required Veeco Stockholder Vote; PROVIDED, HOWEVER, that (A) a party shall not be permitted to terminate this Merger Agreement pursuant to this Section 9.01(e) if the failure to obtain such stockholder vote is attributable to a failure on the part of the party seeking to terminate this Merger Agreement to perform any material obligation required to be performed by such party at or prior to the Effective Time, and (B) Veeco shall not be permitted to terminate this Merger Agreement pursuant to this Section 9.01(e) unless Veeco shall have paid to FEI any fee required to be paid to FEI pursuant to Section 9.03(b); (f) by Veeco (at any time prior to the approval of the Merger by the Required FEI Stockholder Vote) if a FEI Triggering Event shall have occurred; (g) by FEI (at any time prior to the approval of the issuance of Veeco Shares in the Merger and the Veeco Certificate of Incorporation Amendment) by the Required Veeco Stockholder Vote) if a Veeco Triggering Event shall have occurred; (h) by Veeco if (i) any of FEI's representations and warranties contained in this Merger Agreement shall be inaccurate as of the date of this Merger Agreement, or shall have become inaccurate as of a date subsequent to the date of this Merger Agreement (as if made on such subsequent date, except to the extent expressly made as of an earlier date) and such breach has not -61- been cured within 30 days after notice thereof, such that the condition set forth in Section 7.01 would not be satisfied, or (ii) any of FEI's covenants or agreements contained in this Merger Agreement shall have been breached (and any such breach shall not have been cured within 30 days after notice thereof) such that the condition set forth in Section 7.02 would not be satisfied; or (i) by FEI if (i) any of Veeco's representations and warranties contained in this Merger Agreement shall be inaccurate as of the date of this Merger Agreement, or shall have become inaccurate as of a date subsequent to the date of this Merger Agreement (as if made on such subsequent date, except to the extent expressly made as of an earlier date) and such breach has not been cured within 30 days after notice thereof, such that the condition set forth in Section 8.01 would not be satisfied, or (ii) if any of Veeco's covenants or agreements contained in this Merger Agreement shall have been breached (and any such breach shall not have been cured within 30 days after notice thereof) such that the condition set forth in Section 8.02 would not be satisfied. 9.02 EFFECT OF TERMINATION. In the event of the termination of this Merger Agreement as provided in Section 9.01, this Merger Agreement shall be of no further force or effect; PROVIDED, HOWEVER, that (i) Sections 9.02 and 9.03 and Article X shall survive the termination of this Merger Agreement and shall remain in full force and effect, and (ii) the termination of this Merger Agreement shall not relieve any party from any liability for any willful breach of any representation, warranty or covenant contained in this Merger Agreement. 9.03 EXPENSES; TERMINATION FEES. (a) Except as set forth in this Section 9.03, all fees and expenses incurred in connection with this Merger Agreement and the transactions contemplated by this Merger Agreement shall be paid by the party incurring such expenses, whether or not the Merger is consummated; PROVIDED, HOWEVER, that Veeco and FEI shall share equally all fees and expenses, other than attorneys' fees, incurred in connection with (A) the filing, printing and mailing of the Form S-4 Registration Statement and the Joint Proxy Statement and any amendments or supplements thereto and (B) the filing by the parties hereto of the premerger notification and report forms relating to the Merger under the HSR Act and the filing of any notice or other document under any applicable foreign antitrust law or regulation. (b) Termination Fees. (i) In the event that this Merger Agreement is terminated by Veeco pursuant to Section 9.01(h) or FEI pursuant to Section 9.01(i), then the non-terminating Party shall make a nonrefundable cash payment to the other Party, within two business days after such termination, in an amount equal to the aggregate amount of all fees and reasonable, documented, out-of-pocket expenses (the "TRANSACTION EXPENSES") (including, with respect to fees, all attorneys' fees, accountants' fees, financial advisory fees and filing fees) that have been paid or that may become payable by or on behalf of that Party in connection with the preparation and negotiation of this Merger Agreement and otherwise in connection with the Merger (such cash payment shall not exceed, in the aggregate, five million dollars ($5,000,000)). (ii) In the event that this Merger Agreement is terminated by FEI or Veeco pursuant to Section 9.01(d) and at or prior to the time of such termination a FEI Acquisition Proposal -62- shall have been publicly disclosed, announced, commenced, submitted or made and not subsequently unconditionally withdrawn, FEI shall pay to Veeco within two business days after demand by Veeco an amount equal to Veeco's Transaction Expenses, by wire transfer of immediately available funds to an account designated in writing by Veeco. (iii) In the event that this Merger Agreement is terminated by FEI or Veeco pursuant to Section 9.01(e) and at or prior to the time of such termination a Veeco Acquisition Proposal shall have been publicly disclosed, announced, commenced, submitted or made and not subsequently unconditionally withdrawn, Veeco shall pay to FEI within two business days after demand by FEI an amount equal to FEI's Transaction Expenses, by wire transfer of immediately available funds to an account designated in writing by FEI. (iv) In the event that this Merger Agreement is terminated by FEI pursuant to Section 9.01(g) or by Veeco pursuant to Section 9.01(f), the non-terminating Party shall pay to the terminating party within two business days after such termination a fee equal to thirty million dollars ($30,000,000) by wire transfer of immediately available funds to an account designated in writing by the recipient (the "TERMINATION FEE"); PROVIDED, HOWEVER, that if this Merger Agreement is terminated (A) by FEI pursuant to Section 9.01(g) because an event specified in clause (x) of the definition of Veeco Triggering Event has occurred, the Termination Fee shall be payable only if within 12 months following the termination of this Merger Agreement, either a Veeco Acquisition Transaction is consummated, or Veeco enters into a letter of intent or Contract providing for a Veeco Acquisition Transaction and such Veeco Acquisition Transaction is consummated within 24 months following the termination of this Merger Agreement or (B) by Veeco pursuant to Section 9.01(f) because an event specified in clause (ix) of the definition of FEI Triggering Event has occurred, the Termination Fee shall be payable only if within 12 months following the termination of this Merger Agreement, either a FEI Acquisition Transaction is consummated, or FEI enters into a letter of intent or Contract providing for a FEI Acquisition Transaction and such FEI Acquisition Transaction is consummated within 24 months following the termination of this Merger Agreement. For purposes of this Section 9.03(b)(iv), the terms "FEI Acquisition Transaction" and "Veeco Acquisition Transaction" shall have the meanings ascribed to such terms in Article I, except that references to "15%" therein shall be deemed to read "40%." (v) In the event that this Merger Agreement is terminated by FEI or Veeco pursuant to Section 9.01(d) and (A) at or prior to the time of such termination a FEI Acquisition Proposal shall have been publicly disclosed, announced, commenced, submitted or made and not subsequently unconditionally withdrawn, and (B) within 12 months following the termination of this Merger Agreement, either a FEI Acquisition Transaction is consummated, or FEI enters into a letter of intent or Contract providing for a FEI Acquisition Transaction and such FEI Acquisition Transaction is consummated within 24 months following the termination of this Merger Agreement, FEI shall pay to Veeco within two business days after demand by Veeco a fee equal to the Termination Fee, by wire transfer of immediately available funds to an account designated in writing by Veeco. For purposes of this Section 9.03(b)(v), the term "FEI Acquisition Transaction" shall have the meaning ascribed to such term in Article I, except that references to "15%" therein shall be deemed to read "40%." (vi) In the event that this Merger Agreement is terminated by FEI or Veeco pursuant to Section 9.01(e) and (A) at or prior to the time of such termination a Veeco Acquisition -63- Proposal shall have been publicly disclosed, announced, commenced, submitted or made and not subsequently unconditionally withdrawn, and (B) within 12 months following the termination of this Merger Agreement, either a Veeco Acquisition Transaction is consummated, or Veeco enters into a letter of intent or Contract providing for a Veeco Acquisition Transaction and such Veeco Acquisition Transaction is consummated within 24 months following the termination of this Merger Agreement, Veeco shall pay to FEI within two business days after demand by Veeco a fee equal to the Termination Fee, by wire transfer of immediately available funds to an account designated in writing by FEI. For purposes of this Section 9.03(b)(vi), the term "Veeco Acquisition Transaction" shall have the meaning ascribed to such term in Article I, except that references to "15%" therein shall be deemed to read "40%." (vii) Notwithstanding anything to the contrary in this Section 9.03, in no event shall any party hereto be entitled under this Section 9.03(b) to receive (i) the Termination Fee or the Transaction Expenses more than once or (ii) the Transaction Expenses if such party has received the Termination Fee. In addition, if a party has received the Transaction Expenses and subsequently becomes entitled to receive the Termination Fee, such party shall receive the Termination Fee less any Transaction Expenses previously received. (viii) The Parties acknowledge that the agreements contained in this Section 9.03 are an integral part of the transaction contemplated by this Merger Agreement, and that, without these agreements, neither Party would have entered into this Merger Agreement. Accordingly, if either Party fails to pay in a timely manner the amounts due pursuant to this Section 9.03 and, in order to obtain such payment, either Party makes a claim that results in a judgment against either Party for the amounts set forth in this Section 9.03, such Party shall pay to the other its reasonable costs and expenses (including reasonable attorneys' fees and expenses) in connection with such suit, together with interest on the amounts set forth in this Section 9.03 at the prime rate of JP Morgan Chase in effect on the date such payment was required to be made. Payment of the fees described in this Section 9.03 shall not be in lieu of damages incurred in the event of breach of this Agreement. X. MISCELLANEOUS. 10.01 SUCCESSORS. This Merger Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 10.02 AMENDMENT. This Merger Agreement may be amended with the approval of the respective Boards of Directors of FEI and Veeco at any time (whether before or after approval of the Merger by the stockholders of FEI and whether before or after approval of the issuance of Veeco Shares in the Merger by Veeco's stockholders); PROVIDED, HOWEVER, that (i) after any such approval of the Merger by FEI's stockholders, no amendment shall be made which by Law requires further approval of the stockholders of FEI without the further approval of such stockholders, and (ii) after any such approval of the issuance of Veeco Shares in the Merger by Veeco's stockholders, no amendment shall be made which by Law or NASD regulation requires further approval of Veeco's stockholders without the further approval of such stockholders. This Merger Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 10.03 WAIVER. -64- (a) No failure on the part of any party to exercise any power, right, privilege or remedy under this Merger Agreement, and no delay on the part of any party in exercising any power, right, privilege or remedy under this Merger Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. (b) No party shall be deemed to have waived any claim arising out of this Merger Agreement, or any power, right, privilege or remedy under this Merger Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given. 10.04 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations and warranties contained in this Merger Agreement or in any certificate delivered pursuant to this Merger Agreement shall survive the Merger. 10.05 ENTIRE AGREEMENT; COUNTERPARTS. This Merger Agreement (together with the agreements, certificates and other documents referred to herein, the Schedules and Exhibits hereto and the FEI Disclosure Schedule and the Veeco Disclosure Schedule) constitutes the entire agreement among the parties with respect to its subject matter and supersedes all other prior and contemporaneous agreements and understandings, both written and oral, among or between any of the parties with respect to the subject matter hereof; PROVIDED, HOWEVER, that the certain Mutual Confidentiality Agreement dated February 28, 2002 between FEI and Veeco shall not be superseded and shall remain in full force and effect. This Merger Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. 10.06 GOVERNING LAW. THIS MERGER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAW DOCTRINES EXCEPT TO THE EXTENT THAT CERTAIN MATTERS ARE PREEMPTED BY FEDERAL LAW OR ARE GOVERNED BY THE LAW OF THE JURISDICTION OF ORGANIZATION OF THE RESPECTIVE PARTIES. 10.07 DISCLOSURE SCHEDULES. The FEI Disclosure Schedule shall be arranged in separate parts corresponding to the numbered and lettered Sections contained in Article III. Any matter or item disclosed pursuant to any Section of the FEI Disclosure Schedule shall be deemed to be disclosed only for purposes of disclosure under that Section; provided, that any matter or item disclosed in one Section of the FEI Disclosure Schedule will be deemed disclosed with respect to another Section of the FEI Disclosure Schedule if such disclosure is made in such a way as to make its relevance with respect to such other Section reasonably apparent. The Veeco Disclosure Schedule shall be arranged in separate parts corresponding to the numbered and lettered Sections contained in Article IV. Any matter or item disclosed pursuant to any Section of the Veeco Disclosure Schedule shall be deemed to be disclosed only for purposes of disclosure under that Section; provided, that any matter or item disclosed in one Section of the Veeco Disclosure Schedule -65- will be deemed disclosed with respect to another Section of the Veeco Disclosure Schedule if such disclosure is made in such a way as to make its relevance with respect to such other Section reasonably apparent. The inclusion of any information in the FEI Disclosure Schedule or Veeco Disclosure Schedule shall not be deemed to be an admission or acknowledgment, in and of itself, that such information is required by the terms hereof to be disclosed, is material, has or would have a Material Adverse Effect, or is outside the ordinary course of business. 10.08 ATTORNEYS' FEES. In any action at law or suit in equity to enforce this Merger Agreement or the rights of any of the parties hereunder, the prevailing party in such action or suit shall be entitled to receive a reasonable sum for its attorneys' fees and all other reasonable costs and expenses incurred in such action or suit. 10.09 ASSIGNMENT. Neither Veeco, Acquisition nor FEI may assign this Merger Agreement to any other Person without the prior written consent of the other parties hereto. 10.10 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) when transmitted by telecopy (transmission confirmed), (c) on the fifth business day following mailing by registered or certified mail (return receipt requested), or (d) on the next business day following deposit with an overnight delivery service of national reputation, to the parties at the following addresses and telecopy numbers (or at such other address or telecopy number for a party as may be specified by like notice): If to Veeco or Acquisition: c/o Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, New York 11797 Attention: Gregory Robbins Telephone: (516) 677-0200 Telecopy: (516) 677-0380 With a copy to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Rory A. Greiss, Esq. Telephone: (212) 836-8261 Telecopy: (212) 836-7152 If to FEI: FEI Company 7425 NW Evergreen Parkway Hillsboro, Oregon 97124 Attention: Bradley J. Thies Telephone: (503) 640-7500 -66- Telecopy: (503) 640-7570 With a copy to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304 Attention: Larry Sonsini, Esq. Telephone: (650) 493-9300 Telecopy: (650) 493-6811 10.11 HEADINGS. The headings contained in this Merger Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Merger Agreement. 10.12 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to this Merger Agreement are incorporated by reference herein and are made a part hereof as if they were fully set forth herein. References herein to "this Merger Agreement," "herein," "hereof" and phrases of like import are references to this Merger Agreement, together with the Exhibits and Schedules hereto, including the FEI Disclosure Schedule and the Veeco Disclosure Schedule. 10.13 SEVERABILITY. The invalidity of any term or terms of this Merger Agreement shall not affect any other term of this Merger Agreement, which shall remain in full force and effect. 10.14 NO THIRD-PARTY BENEFICIARIES. Other than the Indemnified Persons, there are no third party beneficiaries of this Merger Agreement or of the transactions contemplated hereby and nothing contained herein shall be deemed to confer upon anyone other than the parties hereto (and their permitted successors and assigns) and, with respect to the obligations of Veeco pursuant to Section 5.08 the Indemnified Persons, any right to insist upon or to enforce the performance of any of the obligations contained herein. Without limiting the foregoing, it is expressly understood and agreed that the provisions of Sections 5.05, 5.06, 5.07, 5.09 and 5.13 are statements of intent and no U.S. Continuing Employee, Foreign Continuing Employee or other Person (other than the parties hereto) shall have any rights or remedies, including rights of enforcement, with respect thereto and no U.S. Continuing Employee, Foreign Continuing Employee or other Person is or is intended to be a third-party beneficiary thereof. -67- IN WITNESS WHEREOF, the parties have executed this Merger Agreement as of the date first above written. VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI COMPANY By: /s/ Vahe A. Sarkissian -------------------------------------------- Name: Vahe A. Sarkissian Title: President and Chief Executive Officer VENICE ACQUISITION CORP. By: /s/ EDWARD H. BRAUN -------------------------------------------- Name: Edward H. Braun Title: President SCHEDULE A FEI Stockholders Party to FEI Stockholder Voting Agreements SCHEDULE B Veeco Stockholders Party to Veeco Stockholder Voting Agreements EXHIBIT A FEI Stockholder Voting Agreements (ATTACHED HERETO) VOTING AGREEMENT VOTING AGREEMENT, dated as of July 11, 2002 (this "AGREEMENT"), between Philips Business Electronics International B.V., a company incorporated under the laws of the Netherlands (the "STOCKHOLDER"), and Veeco Instruments Inc., a Delaware corporation (the "COMPANY" and, collectively with the Stockholder, the "PARTIES"). WHEREAS, as of the date of this Agreement, the Stockholder is the Beneficial Owner (as herein defined) of 8,264,821 shares of Common Stock, no par value (the "FLORENCE STOCK"), of FEI Company, an Oregon corporation ("FLORENCE"); and WHEREAS, the Company, Venice Acquisition Corp., an Oregon corporation ("ACQUISITION"), and Florence have entered into an Agreement and Plan of Merger, dated as of July 11, 2002 (the "MERGER AGREEMENT"), which provides that, among other things, on the terms and subject to the conditions set forth therein, Acquisition shall be merged with and into Florence (the "MERGER"), and each share of Florence Stock will be converted into the right to receive 1.355 shares of common stock, $0.01 par value per share (the "COMPANY STOCK"), of the Company; and WHEREAS, the Stockholder and the Company have entered into an Investor Agreement, dated as of July 11, 2002 (the "INVESTOR AGREEMENT") and the Amendment Agreement, dated as of July 11, 2002 (the "AMENDMENT AGREEMENT"); and WHEREAS, the Stockholder and the Company each desire to make certain covenants and agreements concerning the manner in which the Stockholder Florence Shares (as herein defined) will be voted in connection with the Merger and the Merger Agreement. NOW, THEREFORE, in consideration of the Company's execution and delivery to the Stockholder of the Investor Agreement and the Amendment Agreement and in consideration of the mutual covenants and agreements contained herein, the Stockholder and the Company agree as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION 1.01 As used in this Agreement, the following terms have the respective meanings ascribed to them in this Section. (a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a person or entity shall include securities Beneficially Owned by all other persons or entities with whom such person or entity would constitute a "group" within the meaning of Section 13(d) of the Exchange Act with respect to securities of the same issuer. (b) "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement. (c) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended. (d) "EXISTING FLORENCE SHARES" means all shares of Florence Common Stock Beneficially Owned by the Stockholder on the date of this Agreement, in each case, if and to the extent entitled to be voted. (e) "FEI ACQUISITION PROPOSAL" has the meaning set forth in the Merger Agreement. (f) "FEI ACQUISITION TRANSACTION" has the meaning set forth in the Merger Agreement. (g) "NASDAQ" has the meaning set forth in the Merger Agreement. (h) "PROXY" means a proxy in the form of Exhibit A attached to this Agreement. (i) "STOCKHOLDER FLORENCE SHARES" means the Existing Florence Shares and any shares of Florence Stock and/or other equity securities of, or equity interests in, Florence acquired by the Stockholder in any capacity after the date of this Agreement and prior to the termination of this Agreement, whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution, split-up, recapitalization, combination, exchange of shares or the like, gift, bequest, inheritance or as a successor in interest in any capacity or otherwise Beneficially Owned by the Stockholder, in each case, if and to the extent entitled to be voted. (j) "SUPERIOR FEI PROPOSAL" has the meaning set forth in the Merger Agreement. (k) "TRANSFER" means any direct or indirect sale, transfer, pledge, assignment or other disposition of, or entry into any contract, option or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of, any Stockholder Florence Shares by the Stockholder (in each of the foregoing, whether voluntary or involuntary, by operation of law or otherwise). -2- (l) "TRANSFEREE" any person or entity to whom a Transfer is made. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.01 RECIPROCAL REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and warrants to the other as follows: (a) Such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Such Party has all power and authority necessary to enable it to enter into this Agreement and to carry out the transactions contemplated by this Agreement and (in the case of the Stockholder) the Proxy. This Agreement and (in the case of the Stockholder) the Proxy have been duly and validly authorized, executed and delivered by such Party and constitutes such Party's legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement or, in the case of the Stockholder, the Proxy, nor the consummation of the transactions contemplated by this Agreement or the Proxy will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) such Party's certificate of incorporation or similar organizational, governing or constating documents, (ii) any agreement or instrument to which such Party is a party or by which it is bound, or (iii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement or, in the case of the Stockholder, the Proxy, (ii) the performance by such Party of its obligations under this Agreement and the Proxy, or (iii) the consummation by such Party of the transactions contemplated by this Agreement and the Proxy. 2.02 STOCKHOLDER REPRESENTATIONS AND WARRANTIES. The Stockholder hereby represents and warrants to the Company as follows: (a) The Stockholder is the record and Beneficial Owner of 8,264,821 Existing Florence Shares. On the date of this Agreement, such Existing Shares constitute all of the shares of Florence Stock owned of record or Beneficially Owned by the Stockholder. (b) The Stockholder owns the Existing Florence Shares free and clear of any liens, claims, security interests, proxies, voting trusts or agreements, restrictions, -3- qualifications, limitations, understandings or arrangements which would in any way restrict or impair the Stockholder's right to vote Stockholder Florence Shares in its sole discretion, or could require the Stockholder to sell or transfer any Stockholder Florence Shares (whether upon default on a loan or otherwise) before the Effective Time. (c) The Stockholder has sufficient voting power and sufficient power to issue instructions and sufficient power to agree to the matters set forth in this Agreement with respect to the Stockholder Florence Shares. ARTICLE III AGREEMENTS IN RESPECT OF THE STOCKHOLDER FLORENCE SHARES 3.01 VOTE FOR MERGER. (a) The Stockholder shall cause the Stockholder Florence Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Florence called to vote upon the Merger and the Merger Agreement, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval with respect to the Merger and the Merger Agreement is sought, and shall cause the Stockholder Florence Shares to be voted or consented in favor of the Merger; PROVIDED that nothing set forth in this Section 3.01(a) or in the Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or cause to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (b) In order to effectuate the voting arrangements contemplated by Sections 3.01(a) and 3.02, contemporaneously with the execution and delivery by the Parties of this Agreement, and as a condition to such execution and delivery by the Company, the Stockholder is delivering to the Company the Proxy, duly executed by or on behalf of the Stockholder; PROVIDED that nothing set forth in this Section 3.01(b) or in the Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or cause to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.02 VOTE AGAINST CERTAIN MATTERS. Prior to the Effective Time, the Stockholder shall cause the Stockholder Florence Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Florence called, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval is sought, and shall cause the Stockholder Florence Shares to be voted or consented against any proposal or transaction involving Florence or any of its subsidiaries that would prevent or nullify the Merger or the Merger Agreement (any such proposal or transaction, a "PARTICULAR MATTER"); PROVIDED that nothing set forth -4- in this Section 3.02 or such Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or cause to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.03 TRANSFERS; OTHER VOTING ARRANGEMENTS. (a) The Stockholder may not Transfer any Stockholder Florence Shares except (i) to a Transferee that both (A) agrees, prior to the consummation of such Transfer, to become bound by this Agreement and the Proxy and subject to the terms, conditions and restrictions hereof and thereof in the same manner as the Stockholder, by executing and delivering to the Company a writing to such effect in form and substance satisfactory to the Company, and (B) enters into, prior to the consummation of such Transfer, a "standstill" agreement with respect to each of Florence and the Company, each of which "standstill" agreements (I) shall be identical in substance to Section 4.01(a) of the Investor Agreement and otherwise in form and substance satisfactory to Florence or the Company, as the case may be, and (II) shall be effective only for the period between the consummation of such Transfer and the Effective Time, or (ii) to a Transferee that has made a Superior FEI Proposal in the FEI Acquisition Transaction contemplated by such Superior FEI Proposal. (b) The Stockholder shall not, directly or indirectly, enter into any voting arrangement, whether by proxy, voting arrangement, voting agreement, voting trust or otherwise with respect to any Stockholder Florence Shares, other than this Agreement and the Proxy; PROVIDED that nothing set forth in this Section 3.03 or in the Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or grant a proxy causing to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (c) The Stockholder shall not, directly or indirectly, take any action that would or could reasonably be expected to invalidate or in any way limit the enforceability by the Proxyholders (as defined in the Proxy) of the Proxy. (d) Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict any employee of the Stockholder from acting in his or her capacity as a director or officer of Florence (it being understood that this Agreement shall apply to the Stockholder solely in the Stockholder's capacity as a stockholder of Florence). No conduct or action taken by any employee of the Stockholder who is also a director or officer of Florence, in his capacity as such, shall be deemed to constitute a breach of any provision of this Agreement. 3.04 CONFIDENTIALITY. Prior to the first public announcement by the Company and Florence of the Merger Agreement, the Merger and the other transactions contemplated thereby, the Stockholder shall not, and shall cause its Affiliates (as defined in the Merger Agreement) and its and their respective employees, counsel, advisors and -5- representatives ("REPRESENTATIVES") not to, disclose to any person or entity any information concerning the Merger Agreement, the Merger or the other transactions contemplated thereby, or the discussions concerning the same, PROVIDED, that such information may be disclosed to employees, counsel, advisors and representatives of the Stockholder and its Affiliates who have been advised of the foregoing obligations, and PROVIDED, FURTHER, that nothing set forth in this Section 3.04 is intended or shall be construed to restrict or impair the ability of the Stockholder or its Affiliates to comply with their respective reporting obligations under applicable laws and stock exchange regulations, in which event the Stockholder shall give prior notice of such disclosure to the Company as promptly as practicable so as to enable the Company to seek a protective order from a court of competent jurisdiction with respect thereto or similar relief in connection therewith. 3.05 DISCLOSURE. Each Party acknowledges that the other Party is or may be obligated to disclose in governmental and stock exchange (including NASDAQ) filings the Stockholder's identity, facts concerning the Stockholder's ownership of Florence Stock and the nature of the commitments, arrangements and understandings set forth in this Agreement, the Proxy, the Investor Agreement, the Amendment Agreement and any other agreements executed and delivered in connection with the Merger, together with such other information as may be required by applicable laws and stock exchange regulations. No Party shall issue any press release naming the other Party or any of the other Party's Affiliates unless such press release has been approved by such other Party, which approval shall not be unreasonably withheld, delayed or conditioned. 3.06 NO SOLICITATION. Subject to Section 3.03(d), the Stockholder shall not, and shall cause Koninklijke Philips Electronics N.V. ("PHILIPS") and each other direct and indirect subsidiary of Philips not to, take any action to solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any FEI Acquisition Proposal, or engage in discussions or negotiations with any person or entity (other than with Florence and the Company or any of their Affiliates or Representatives) with respect to any FEI Acquisition Proposal, (other than any Superior FEI Proposal or related FEI Acquisition Transaction) or disclose any nonpublic information relating to Florence or any subsidiary of Florence. The Stockholder shall advise Florence and the Company of any FEI Acquisition Proposal (including the identity of the person or entity making or submitting such FEI Acquisition Proposal and the terms thereof) that is made or submitted by any person or entity after the date of this Agreement, reasonably promptly following its receipt thereof. The Stockholder shall keep Florence and the Company reasonably informed with respect to the status of any such FEI Acquisition Proposal. The Stockholder shall, and shall cause Philips and each other direct and indirect subsidiary of Philips to, immediately cease and cause to be terminated any discussions now pending with any person or entity that relate to any FEI Acquisition Proposal or FEI Acquisition Transaction, other than discussions or negotiations with Florence and the Company or their Affiliates or Representatives. -6- ARTICLE IV MISCELLANEOUS 4.01 TERMINATION OF AGREEMENT. The provisions of this Agreement and the Proxy shall automatically terminate upon, and be of no further force or effect after, the earliest to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, and (iii) the execution and delivery by any party to the Merger Agreement of any amendment thereto which would cause each share of Florence Stock to be converted into the right to receive fewer than 1.355 shares of Company Stock (as adjusted for any stock splits, reverse stock splits, stock dividends or similar events). 4.02 ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire agreement among the parties relating to the transactions which are the subject of this Agreement, and all prior and contemporaneous negotiations, understandings and agreements among the parties (whether written or oral) with regard to the subject matter of this Agreement are superseded by this Agreement, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement. 4.03 CAPTIONS. The captions of the articles and paragraphs of this Agreement are for reference only, and do not affect the meaning or interpretation of this Agreement. 4.04 BINDING AGREEMENT; ASSIGNMENT. (a) The Stockholder agrees that this Agreement and the obligations hereunder shall attach to the Stockholder Florence Shares and shall be binding upon any person to which record or Beneficial Ownership of such Stockholder Florence Shares shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's successors, partners or Transferees (for value or otherwise) and any other successors in interest. Notwithstanding any transfer of Florence Stock, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. (b) Notwithstanding anything to the contrary set forth herein, except in accordance with Section 3.03(a), no Party may assign any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other Party; PROVIDED that the Company may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly-owned subsidiary of the Company, but no such assignment shall relieve the Company of its obligations hereunder if such assignee does not perform such obligations. 4.05 NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Agreement must be in writing and will be deemed given when -7- delivered in person or sent by facsimile (with proof of receipt at the number to which it is required to be sent), or on the third business day after the day on which mailed by first class mail from within the United States of America, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent): If to the Company: Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, New York 11797 Attention: Gregory A. Robbins Telephone: (516) 677-0200 Telecopier: (516) 677-9125 with a copy to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Rory A. Greiss Telephone: (212) 836-8261 Telecopier: (212) 836-7152 and a copy to: FEI Company 7425 N.W. Evergreen Parkway Hillsboro, Oregon 97124-5830 Attention: Bradley J. Thies Telephone: (503) 640-7500 Telecopier: (503) 640-7509 and a copy to: Wilson Sonsini Goodrich & Rosati, Professional Corporation 650 Page Mill Road Palo Alto, California 94304 Attention: Larry W. Sonsini Telephone: (650) 493-9300 Telecopier: (650) 493-6811 If to the Stockholder: c/o Philips Semiconductors -8- Legal Department Building B460-1 Prof. Holstlaan 4 5656AA Eindhoven The Netherlands Attention: Guido Dierick Telephone: +31 (40) 272-2041 Telecopier: +31 (40) 272-4005 with a copy to: Sullivan & Cromwell 1870 Embarcadero Road Palo Alto, California 94303 Attention: Matthew G. Hurd Telephone: (650) 461-5600 Telecopier: (650) 461-5700 4.06 GOVERNING LAW. THIS AGREEMENT AND THE PROXY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAWS DOCTRINES. 4.07 AMENDMENTS. Prior to the Effective Time, this Agreement may be amended only by a document in writing signed by each of the Parties. 4.08 COUNTERPARTS. This Agreement may be executed in two or more counterparts, some of which may contain the signatures of some, but not all, the parties hereto. Each of those counterparts will be deemed an original, but all of them together will constitute one and the same Agreement. 4.09 SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid or unenforceable, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 4.10 ENFORCEMENT. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement and the Proxy were -9- not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and the Proxy and to enforce specifically the terms and provisions of this Agreement and the Proxy in any Federal court located in the State of Delaware or in a Delaware state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the Parties hereto (i) consents to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in any action or proceeding relating to or arising out of this Agreement (including, with respect to the Stockholder, the Proxy) or any of the transactions contemplated hereby, (ii) agrees that such Party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that such Party will not seek to change the venue of any such action or proceeding or otherwise to move any such action or proceeding to another court, whether because of inconvenience of the forum or otherwise (PROVIDED that nothing in this Section will prevent a party from removing an action or proceeding from a Delaware state court to a Federal court located in the State of Delaware), (iv) agrees that such Party will not bring any action relating to this Agreement or the Proxy or any of the transactions contemplated hereby or thereby in any court other than a Federal court sitting in the State of Delaware or a Delaware state court and (v) waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or the Proxy or any of the transactions contemplated hereby or thereby. 4.11 FURTHER ASSURANCES. From time to time, at the Company's request and without further consideration, the Stockholder shall execute and deliver such additional documents and take all such further lawful action as may be necessary or appropriate to effect the full and prompt performance of the Stockholder's obligations pursuant to this Agreement and the validity and enforceability of the Proxy. (Signature page follows) -10- IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. PHILIPS BUSINESS ELECTRONICS INTERNATIONAL B.V. By: ----------------------------------------------------------- Name: J.C. Lobbezoo Title: Member Management Board By: ----------------------------------------------------------- Name: A.P.M. van der Poel Title: Member Management Board VEECO INSTRUMENTS INC. By: ----------------------------------------------------------- Name: Title: -11- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS ss. 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder Florence Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of Florence (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder Florence Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder Florence Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FLORENCE STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. PHILIPS BUSINESS ELECTRONICS INTERNATIONAL B.V. By: ----------------------------------------------------- Name: Title: By: ----------------------------------------------------- Name: Title: Dated: July 11, 2002 -2- VOTING AGREEMENT VOTING AGREEMENT, dated as of July 11, 2002 (this "AGREEMENT"), among each of the individuals listed on SCHEDULE A to this Agreement (each, an "FEI STOCKHOLDER" and collectively, the "FEI STOCKHOLDERS"), and Veeco Instruments Inc., a Delaware corporation (the "COMPANY" and, collectively with the FEI Stockholders, the "PARTIES"). Capitalized terms used in this Agreement but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. WHEREAS, FEI Company, an Oregon corporation ("FEI"), Venice Acquisition Corp., an Oregon corporation and a wholly owned subsidiary of the Company ("ACQUISITION"), and the Company have entered into an Agreement and Plan of Merger, dated as of July 11, 2002 (the "MERGER AGREEMENT"), which provides that, among other things, on the terms and subject to the conditions set forth therein, Acquisition shall be merged with and into FEI (the "MERGER"), and each share of FEI Common Stock will be converted into the right to receive 1.355 shares of common stock, $0.01 par value per share (the "COMPANY STOCK"), of the Company; WHEREAS, each FEI Stockholder owns the number of Existing FEI Shares (as defined herein) set forth opposite such FEI Stockholder's name on SCHEDULE A hereto and the FEI Stockholders collectively own in the aggregate 607,648 Existing FEI Shares; WHEREAS, this Agreement is the FEI Stockholders Voting Agreement contemplated by and referred to in the third "WHEREAS" clause to the Merger Agreement; and WHEREAS, as a condition to the willingness of the Company to enter into the Merger Agreement, the Company has requested that the FEI Stockholders enter into this Agreement. NOW, THEREFORE, to induce the Company to enter into, and in consideration of its entering into, the Merger Agreement, and in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement, intending to be legally bound, hereby agree as follows: -2- ARTICLE I DEFINITIONS AND CONSTRUCTION 1.01 As used in this Agreement, the following terms have the respective meanings ascribed to them in this Section. (a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a person or entity shall include securities Beneficially Owned by all other persons or entities with whom such person or entity would constitute a "group" within the meaning of Section 13(d) of the Exchange Act with respect to securities of the same issuer. (b) "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement. (c) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended. (d) "EXISTING FEI SHARES" means all shares of FEI Common Stock Beneficially Owned by such FEI Stockholder on the date of this Agreement, in each case, if and to the extent entitled to be voted. (e) "FEI ACQUISITION PROPOSAL" has the meaning set forth in the Merger Agreement. (f) "FEI ACQUISITION TRANSACTION" has the meaning set forth in the Merger Agreement. (g) "NASDAQ" has the meaning set forth in the Merger Agreement. (h) "PROXY" means a proxy in the form of EXHIBIT A attached to this Agreement. (i) "STOCKHOLDER FEI SHARES" means the Existing FEI Shares and any shares of FEI Common Stock and/or other equity securities of, or equity interests in, FEI acquired by such FEI Stockholder in any capacity after the date of this Agreement and prior to the termination of this Agreement, whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution, split-up, recapitalization, combination, exchange of shares or the like, gift, bequest, inheritance or as a successor in interest in -3- any capacity or otherwise Beneficially Owned by such FEI Stockholder, in each case, if and to the extent entitled to be voted. (j) "TRANSFER" means any direct or indirect sale, transfer, pledge, assignment or other disposition of, or entry into any contract, option or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of, any Stockholder FEI Shares by such FEI Stockholder (in each of the foregoing, whether voluntary or involuntary, by operation of law or otherwise). (k) "TRANSFEREE" any person or entity to whom a Transfer is made. (l) "SUPERIOR FEI PROPOSAL" has the meaning set forth in the Merger Agreement. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.01 FEI STOCKHOLDER REPRESENTATIONS AND WARRANTIES. Each FEI Stockholder represents and warrants to the Company as follows: (a) Such FEI Stockholder has all power and authority necessary to enable it to enter into this Agreement and the Proxy and to carry out the transactions contemplated hereby and thereby. This Agreement and the Proxy have been duly executed and delivered by such FEI Stockholder and each constitutes a legal, valid and binding obligation, enforceable against such FEI Stockholder in accordance with its terms. (b) Neither the execution and delivery of this Agreement or the Proxy, nor the consummation of the transactions contemplated by this Agreement, the Proxy or by any document to be delivered in accordance herewith or therewith will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) any agreement or instrument to which such FEI Stockholder is a party or by which it is bound, or (ii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement or the Proxy, (ii) the performance by such FEI Stockholder of its obligations under this Agreement and the Proxy, or (iii) the consummation by such FEI Stockholder of the transactions contemplated by this Agreement and the Proxy. -4- (d) Such FEI Stockholder is the record and Beneficial Owner of the number of Existing FEI Shares set forth opposite such FEI Stockholder's name on SCHEDULE A hereto. On the date of this Agreement, such Existing FEI Shares constitute all of the shares of FEI Common Stock owned of record or Beneficially Owned by such FEI Stockholder. (e) Such FEI Stockholder owns the number of Existing FEI Shares set forth opposite such FEI Stockholder's name on SCHEDULE A hereto, free and clear of any liens, claims, security interests, proxies, voting trusts or agreements, restrictions, qualifications, limitations, understandings or arrangements which would in any way restrict or impair such FEI Stockholder's right to vote such Existing FEI Shares in its sole discretion, or could require such FEI Stockholder to sell or transfer any of such Existing FEI Shares (whether upon default on a loan or otherwise) before the Effective Time. (f) Such FEI Stockholder has sufficient voting power and sufficient power to issue instructions and sufficient power to agree to the matters set forth in this Agreement with respect to all of such FEI Stockholder's Existing FEI Shares. (g) The obligations of such FEI Stockholder under this Agreement shall survive the death, disability or incapacity of such FEI Stockholder. 2.02 COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the FEI Stockholders as follows: (a) The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Company has all power and authority necessary to enable it to enter into this Agreement and to carry out the transactions contemplated hereby. This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) the Company's certificate of incorporation or similar organizational or governing documents, (ii) any agreement or instrument to which the Company is a party or by which it is bound, or (iii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement, (ii) the performance by the Company of its obligations under this Agreement, or (iii) the consummation by the Company of the transactions contemplated by this Agreement. -5- ARTICLE III AGREEMENTS IN RESPECT OF THE STOCKHOLDER FEI SHARES 3.01 VOTE FOR MERGER. (a) Such FEI Stockholder shall cause its Stockholder FEI Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of FEI called to vote upon the Merger, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval with respect to the Merger is sought, and shall cause such Stockholder FEI Shares to be voted or consented in favor of approving the Merger; PROVIDED that nothing set forth in this Section 3.01(a) or in the Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (b) In order to effectuate the voting arrangements contemplated by Sections 3.01(a) and 3.02, contemporaneously with the execution and delivery by the FEI Stockholders and the Company of this Agreement, and as a condition to such execution and delivery by the Company, such FEI Stockholder is delivering to the Company the Proxy, duly executed by or on behalf of such FEI Stockholder; PROVIDED that nothing set forth in this Section 3.01(b) or in the Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.02 VOTE AGAINST CERTAIN MATTERS. Prior to the Effective Time, such FEI Stockholder shall cause its Stockholder FEI Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of FEI called, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval is sought, and shall cause its Stockholder FEI Shares to be voted or consented against any proposal or transaction involving FEI or any of its subsidiaries that would prevent or nullify the Merger or the Merger Agreement (any such proposal or transaction, a "PARTICULAR MATTER"); PROVIDED that nothing set forth in this Section 3.02 or such Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.03 TRANSFERS; OTHER VOTING ARRANGEMENTS. (a) Such FEI Stockholder may not Transfer any Stockholder FEI Shares except to a Transferee that has made a Superior FEI Proposal in the FEI Acquisition Transaction contemplated by such Superior FEI Proposal. -6- (b) Such FEI Stockholder shall not, directly or indirectly, enter into any voting arrangement, whether by proxy, voting arrangement, voting agreement, voting trust or otherwise with respect to any of its Stockholder FEI Shares, other than this Agreement and the Proxy; PROVIDED that nothing set forth in this Section 3.03 or in the Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or grant a proxy causing to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (c) Such FEI Stockholder shall not, directly or indirectly, take any action that would or could reasonably be expected to invalidate or in any way limit the enforceability by the Proxyholders (as defined in the Proxy) of the Proxy. (d) Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict such FEI Stockholder from acting in his or her capacity as a director or officer of FEI (it being understood that this Agreement shall apply to such FEI Stockholder solely in such FEI Stockholder's capacity as a stockholder of FEI). No conduct or action taken by such FEI Stockholder, if such FEI Stockholder is also a director or officer of FEI (in his or her capacity as such), shall be deemed to constitute a breach of any provision of this Agreement. 3.04 Confidentiality. Prior to the first public announcement by the Company and FEI of the Merger Agreement, the Merger and the other transactions contemplated thereby, such FEI Stockholder shall not disclose to any person or entity any information concerning the Merger Agreement, the Merger or the other transactions contemplated thereby, or the discussions concerning the same, PROVIDED, that nothing set forth in this Section 3.04 is intended or shall be construed to restrict or impair the ability of such FEI Stockholder to comply with its reporting obligations under applicable laws and stock exchange (including NASDAQ) regulations, in which event such FEI Stockholder shall give prior notice of such disclosure to the Company as promptly as practicable so as to enable the Company to seek a protective order from a court of competent jurisdiction with respect thereto or similar relief in connection therewith. 3.05 DISCLOSURE. Such FEI Stockholder acknowledges that the Company and/or FEI may be obligated to disclose in governmental and stock exchange (including NASDAQ) filings such FEI Stockholder's identity, facts concerning such FEI Stockholder's ownership of Stockholder FEI Shares and the nature of the commitments, arrangements and understandings set forth in this Agreement, the Proxy, and any other agreements executed and delivered in connection with the Merger, together with such other information as may be required by applicable laws and stock exchange (including NASDAQ) regulations. 3.06 NO SOLICITATION. Subject to Section 3.03(d), such FEI Stockholder shall not solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any FEI Acquisition Proposal, or engage in discussions or negotiations -7- with any person or entity (other than with FEI and the Company or any of their Affiliates or Representatives) with respect to any FEI Acquisition Proposal, other than any Superior FEI Proposal or related FEI Acquisition Transaction. Such FEI Stockholder shall promptly advise FEI and the Company of any FEI Acquisition Proposal (including the identity of the person or entity making or submitting such FEI Acquisition Proposal and the terms thereof) that is made or submitted by any person or entity after the date of this Agreement. Such FEI Stockholder shall keep FEI and the Company reasonably informed with respect to the status of any such FEI Acquisition Proposal. Such FEI Stockholder shall immediately cease and cause to be terminated any existing discussions with any person or entity that relate to any FEI Acquisition Proposal or FEI Acquisition Transaction, other than discussions or negotiations with FEI and the Company or their Affiliates or Representatives. ARTICLE IV MISCELLANEOUS 4.01 TERMINATION OF AGREEMENT. The provisions of this Agreement and the Proxy shall automatically terminate upon, and be of no further force or effect after, the earliest to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, and (iii) the execution and delivery by any party to the Merger Agreement of any amendment thereto which would cause each share of FEI Stock to be converted into the right to receive fewer than 1.355 shares of Company Stock (as adjusted for any stock splits, reverse stock splits, stock dividends or similar events). 4.02 ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire agreement among the parties relating to the transactions which are the subject of this Agreement, and all prior and contemporaneous negotiations, understandings and agreements among the parties (whether written or oral) with regard to the subject matter of this Agreement are superseded by this Agreement, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement. 4.03 CAPTIONS. The captions of the articles and paragraphs of this Agreement are for reference only, and do not affect the meaning or interpretation of this Agreement. 4.04 BINDING AGREEMENT; ASSIGNMENT. (a) Such FEI Stockholder agrees that this Agreement and the obligations hereunder shall attach to its Stockholder FEI Shares and shall be binding upon any person to which record or Beneficial Ownership of such Stockholder FEI Shares shall pass, whether by operation of law or otherwise, including, without limitation, -8- such FEI Stockholder's successors, partners or Transferees (for value or otherwise) and any other successors in interest. Notwithstanding any transfer of FEI Common Stock, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. (b) Notwithstanding anything to the contrary set forth herein, except in accordance with Section 3.03(a) hereto, no party hereto may assign any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other parties hereto; PROVIDED that the Company may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly owned subsidiary of the Company, but no such assignment shall relieve the Company of its obligations hereunder if such assignee does not perform such obligations. 4.05 NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Agreement must be in writing and will be deemed given when delivered in person or sent by facsimile (with proof of receipt at the number to which it is required to be sent), or on the third business day after the day on which mailed by first class mail from within the United States of America, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent): If to the Company to: Veeco Instruments Inc. Corporate Headquarters 100 Sunnyside Boulevard Woodbury, NY 11797 Attention: Greg Robbins Telephone: (516) 677-0200 Telecopier: (516) 677-9125 with a copy to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Rory A. Greiss, Esq. Telephone: (212) 836-8261 Telecopier: (212) 836-7152 If to such FEI Stockholder: Address set forth on the signature page hereto -9- 4.06 GOVERNING LAW. THIS AGREEMENT AND THE PROXY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAWS DOCTRINES. 4.07 AMENDMENTS. Prior to the Effective Time, this Agreement may be amended only by a document in writing signed by each of the parties hereto. 4.08 COUNTERPARTS. This Agreement may be executed in two or more counterparts, some of which may contain the signatures of some, but not all, the parties hereto. Each of those counterparts will be deemed an original, but all of them together will constitute one and the same Agreement. 4.09 SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid or unenforceable, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 4.10 ENFORCEMENT. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement and the Proxy were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and the Proxy and to enforce specifically the terms and provisions of this Agreement and the Proxy in any Federal court located in the State of Delaware or in a Delaware state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the Parties hereto (i) consents to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in any action or proceeding relating to or arising out of this Agreement (including, with respect to the Stockholder, the Proxy) or any of the transactions contemplated hereby, (ii) agrees that such Party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that such Party will not seek to change the venue of any such action or proceeding or otherwise to move any such action or proceeding to another court, whether because of inconvenience of the forum or otherwise (PROVIDED that nothing in this Section will prevent a party from removing an action or proceeding from a Delaware state court to a Federal court located in the State of Delaware), (iv) agrees that such Party will not bring any action relating to this Agreement or the Proxy or any of the transactions contemplated hereby or thereby in any court other than a Federal court sitting in the State -10- of Delaware or a Delaware state court and (v) waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or the Proxy or any of the transactions contemplated hereby or thereby. 4.11 FURTHER ASSURANCES. From time to time, at the Company's request and without further consideration, such FEI Stockholder shall execute and deliver such additional documents and take all such further lawful action as may be necessary or appropriate to effect the full and prompt performance of such FEI Stockholder's obligations pursuant to this Agreement and the validity and enforceability of the Proxy. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -11- IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: -------------------------------- Name: Title: FEI STOCKHOLDER By: -------------------------------- Name: Title: Address for Notice: ------------------------------------ ------------------------------------ ------------------------------------ ------------------------------------ Facsimile No.: ---------------------- -12- SCHEDULE A FEI STOCKHOLDER NO. OF EXISTING FEI SHARES HELD - ---------------------------------- ------------------------------------ Name -13- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS ss. 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: ------------------------------------------------- Name: Title: Dated: ------------------------------------------------- EXHIBIT B Veeco Stockholder Voting Agreements (ATTACHED HERETO) VOTING AGREEMENT VOTING AGREEMENT, dated as of July 11, 2002 (this "AGREEMENT"), among each of the individuals listed on SCHEDULE A to this Agreement (each, a "VEECO STOCKHOLDER" and collectively, the "VEECO STOCKHOLDERS"), and FEI Company, an Oregon corporation (the "COMPANY" and, collectively with the Veeco Stockholders, the "PARTIES"). Capitalized terms used in this Agreement but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. WHEREAS, Veeco Instruments Inc. ("VEECO"), Venice Acquisition Corp., an Oregon corporation and a wholly owned subsidiary of Veeco ("ACQUISITION"), and the Company have entered into an Agreement and Plan of Merger, dated as of July 11, 2002 (the "MERGER AGREEMENT"), which provides that, among other things, on the terms and subject to the conditions set forth therein, Acquisition shall be merged with and into the Company (the "MERGER"), and each share of FEI Common Stock will be converted into the right to receive 1.355 shares of Veeco common stock, $0.01 par value per share (the "VEECO Stock"); WHEREAS, each Veeco Stockholder owns the number of Existing Veeco Shares (as defined herein) set forth opposite such Veeco Stockholder's name on SCHEDULE A hereto and the Veeco Stockholders collectively own in the aggregate 119,290 Existing Veeco Shares; WHEREAS, this Agreement is a Veeco Stockholders Voting Agreement contemplated by and referred to in the third "WHEREAS" clause to the Merger Agreement; and WHEREAS, as a condition to the willingness of the Company to enter into the Merger Agreement, the Company has requested that the Veeco Stockholders enter into this Agreement. NOW, THEREFORE, to induce the Company to enter into, and in consideration of its entering into, the Merger Agreement, and in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION -2- 1.01 As used in this Agreement, the following terms have the respective meanings ascribed to them in this Section. (a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a person or entity shall include securities Beneficially Owned by all other persons or entities with whom such person or entity would constitute a "group" within the meaning of Section 13(d) of the Exchange Act with respect to securities of the same issuer. (b) "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement. (c) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended. (d) "EXISTING VEECO SHARES" means all shares of Veeco Stock Beneficially Owned by such Veeco Stockholder on the date of this Agreement, in each case, if and to the extent entitled to be voted. (e) "NASDAQ" has the meaning set forth in the Merger Agreement. (f) "PROXY" means a proxy in the form of EXHIBIT A attached to this Agreement. (g) "STOCKHOLDER VEECO SHARES" means the Existing Veeco Shares and any shares of Veeco Stock and/or other equity securities of, or equity interests in, Veeco acquired by such Veeco Stockholder in any capacity after the date of this Agreement and prior to the termination of this Agreement, whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution, split-up, recapitalization, combination, exchange of shares or the like, gift, bequest, inheritance or as a successor in interest in any capacity or otherwise Beneficially Owned by such Veeco Stockholder, in each case, if and to the extent entitled to be voted. (h) "TRANSFER" means any direct or indirect sale, transfer, pledge, assignment or other disposition of, or entry into any contract, option or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of, any Stockholder Veeco Shares by such Veeco Stockholder (in each of the foregoing, whether voluntary or involuntary, by operation of law or otherwise). (i) "TRANSFEREE" any person or entity to whom a Transfer is made. (j) "SUPERIOR VEECO PROPOSAL" has the meaning set forth in the Merger Agreement. -3- (k) "VEECO ACQUISITION PROPOSAL" has the meaning set forth in the Merger Agreement. (l) "VEECO ACQUISITION TRANSACTION" has the meaning set forth in the Merger Agreement. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.01 VEECO STOCKHOLDER REPRESENTATIONS AND WARRANTIES. Each Veeco Stockholder represents and warrants to the Company as follows: (a) Such Veeco Stockholder has all power and authority necessary to enable it to enter into this Agreement and the Proxy and to carry out the transactions contemplated hereby and thereby. This Agreement and the Proxy have been duly executed and delivered by such Veeco Stockholder and each constitutes a legal, valid and binding obligation, enforceable against such Veeco Stockholder in accordance with its terms. (b) Neither the execution and delivery of this Agreement or the Proxy, nor the consummation of the transactions contemplated by this Agreement, the Proxy or by any document to be delivered in accordance herewith or therewith will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) any agreement or instrument to which such Veeco Stockholder is a party or by which it is bound, or (ii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement or the Proxy, (ii) the performance by such Veeco Stockholder of its obligations under this Agreement and the Proxy, or (iii) the consummation by such Veeco Stockholder of the transactions contemplated by this Agreement and the Proxy. (d) Such Veeco Stockholder is the record and Beneficial Owner of the number of Existing Veeco Shares set forth opposite such Veeco Stockholder's name on SCHEDULE A hereto. On the date of this Agreement, such Existing Veeco Shares constitute all of the shares of Veeco Stock owned of record or Beneficially Owned by such Veeco Stockholder. -4- (e) Such Veeco Stockholder owns the number of Existing Veeco Shares set forth opposite such Veeco Stockholder's name on SCHEDULE A hereto, free and clear of any liens, claims, security interests, proxies, voting trusts or agreements, restrictions, qualifications, limitations, understandings or arrangements which would in any way restrict or impair such Veeco Stockholder's right to vote such Existing Veeco Shares in its sole discretion, or could require such Veeco Stockholder to sell or transfer any of such Existing Veeco Shares (whether upon default on a loan or otherwise) before the Effective Time. (f) Such Veeco Stockholder has sufficient voting power and sufficient power to issue instructions and sufficient power to agree to the matters set forth in this Agreement with respect to all of such Veeco Stockholder's Existing Veeco Shares. (g) The obligations of such Veeco Stockholder under this Agreement shall survive the death, disability or incapacity of such Veeco Stockholder. 2.02 COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the Veeco Stockholders as follows: (a) The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Company has all power and authority necessary to enable it to enter into this Agreement and to carry out the transactions contemplated hereby. This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) the Company's articles of incorporation or similar organizational or governing documents, (ii) any agreement or instrument to which the Company is a party or by which it is bound, or (iii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement, (ii) the performance by the Company of its obligations under this Agreement, or (iii) the consummation by the Company of the transactions contemplated by this Agreement. -5- ARTICLE III AGREEMENTS IN RESPECT OF THE STOCKHOLDER VEECO SHARES 3.01 VOTE FOR MERGER. (a) Such Veeco Stockholder shall cause its Stockholder Veeco Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Veeco called to vote upon the issuance of Veeco Stock in the Merger or approval of the Veeco Certificate of Incorporation Amendment, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval with respect to the issuance of Veeco Stock in the Merger or the Veeco Certificate of Incorporation Amendment is sought, and shall cause such Stockholder Veeco Shares to be voted or consented in favor of approving the issuance of Veeco Stock in the Merger and the Veeco Certificate of Incorporation Amendment; PROVIDED that nothing set forth in this Section 3.01(a) or in the Proxy is intended or shall be construed to restrict or impair the right of such Veeco Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. (b) In order to effectuate the voting arrangements contemplated by Sections 3.01(a) and 3.02, contemporaneously with the execution and delivery by the Veeco Stockholders and the Company of this Agreement, and as a condition to such execution and delivery by the Company, such Veeco Stockholder is delivering to the Company the Proxy, duly executed by or on behalf of such Veeco Stockholder; PROVIDED that nothing set forth in this Section 3.01(b) or in the Proxy is intended or shall be construed to restrict or impair the right of such Veeco Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. 3.02 VOTE AGAINST CERTAIN MATTERS. Prior to the Effective Time, such Veeco Stockholder shall cause its Stockholder Veeco Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Veeco called, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval is sought, and shall cause its Stockholder Veeco Shares to be voted or consented against any proposal or transaction involving Veeco or any of its subsidiaries that would prevent or nullify the Merger or the Merger Agreement (any such proposal or transaction, a "PARTICULAR MATTER"); PROVIDED that nothing set forth in this Section 3.02 or such Proxy is intended or shall be construed to restrict or impair the right of such Veeco Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. -6- 3.03 TRANSFERS; OTHER VOTING ARRANGEMENTS. (a) Such Veeco Stockholder may not Transfer any Stockholder Veeco Shares except to a Transferee that has made a Superior Veeco Proposal in the Veeco Acquisition Transaction contemplated by such Superior Veeco Proposal. (b) Such Veeco Stockholder shall not, directly or indirectly, enter into any voting arrangement, whether by proxy, voting arrangement, voting agreement, voting trust or otherwise with respect to any of its Stockholder Veeco Shares, other than this Agreement and the Proxy; PROVIDED that nothing set forth in this Section 3.03 or in the Proxy is intended or shall be construed to restrict or impair the right of such Veeco Stockholder to vote or consent (or grant a proxy causing to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. (c) Such Veeco Stockholder shall not, directly or indirectly, take any action that would or could reasonably be expected to invalidate or in any way limit the enforceability by the Proxyholders (as defined in the Proxy) of the Proxy. (d) Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict such Veeco Stockholder from acting in his or her capacity as a director or officer of Veeco (it being understood that this Agreement shall apply to such Veeco Stockholder solely in such Veeco Stockholder's capacity as a stockholder of Veeco). No conduct or action taken by such Veeco Stockholder, if such Veeco Stockholder is also a director or officer of Veeco (in his or her capacity as such), shall be deemed to constitute a breach of any provision of this Agreement. 3.04 Confidentiality. Prior to the first public announcement by the Company and Veeco of the Merger Agreement, the Merger and the other transactions contemplated thereby, such Veeco Stockholder shall not disclose to any person or entity any information concerning the Merger Agreement, the Merger or the other transactions contemplated thereby, or the discussions concerning the same, PROVIDED, that nothing set forth in this Section 3.04 is intended or shall be construed to restrict or impair the ability of such Veeco Stockholder to comply with its reporting obligations under applicable laws and stock exchange (including NASDAQ) regulations, in which event such Veeco Stockholder shall give prior notice of such disclosure to the Company as promptly as practicable so as to enable the Company to seek a protective order from a court of competent jurisdiction with respect thereto or similar relief in connection therewith. 3.05 DISCLOSURE. Such Veeco Stockholder acknowledges that the Company may be obligated to disclose in governmental and stock exchange (including NASDAQ) filings such Veeco Stockholder's identity, facts concerning such Veeco Stockholder's ownership of Stockholder Veeco Shares and the nature of the commitments, arrangements and understandings set forth in this Agreement, the Proxy, and any other agreements executed and delivered in connection with the Merger, together -7- with such other information as may be required by applicable laws and stock exchange (including NASDAQ) regulations. 3.06 NO SOLICITATION. Subject to Section 3.03(d), such Veeco Stockholder shall not solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any Veeco Acquisition Proposal, or engage in discussions or negotiations with any person or entity (other than with Veeco and the Company or any of their Affiliates or Representatives) with respect to any Veeco Acquisition Proposal, other than any Superior Veeco Proposal or related Veeco Acquisition Transaction. Such Veeco Stockholder shall promptly advise Veeco and the Company of any Veeco Acquisition Proposal (including the identity of the person or entity making or submitting such Veeco Acquisition Proposal and the terms thereof) that is made or submitted by any person or entity after the date of this Agreement. Such Veeco Stockholder shall keep Veeco and the Company reasonably informed with respect to the status of any such Veeco Acquisition Proposal. Such Veeco Stockholder shall immediately cease and cause to be terminated any existing discussions with any person or entity that relate to any Veeco Acquisition Proposal or Veeco Acquisition Transaction, other than discussions or negotiations with Veeco and the Company or their Affiliates or Representatives. ARTICLE IV MISCELLANEOUS 4.01 TERMINATION OF AGREEMENT. The provisions of this Agreement and the Proxy shall automatically terminate upon, and be of no further force or effect after, the earliest to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, and (iii) the execution and delivery by any party to the Merger Agreement of any amendment thereto which would cause each share of FEI Common Stock to be converted into the right to receive greater than 1.355 shares of Veeco Stock (as adjusted for any stock splits, reverse stock splits, stock dividends or similar events). 4.02 ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire agreement among the parties relating to the transactions which are the subject of this Agreement, and all prior and contemporaneous negotiations, understandings and agreements among the parties (whether written or oral) with regard to the subject matter of this Agreement are superseded by this Agreement, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement. -8- 4.03 CAPTIONS. The captions of the articles and paragraphs of this Agreement are for reference only, and do not affect the meaning or interpretation of this Agreement. 4.04 BINDING AGREEMENT; ASSIGNMENT. (a) Such Veeco Stockholder agrees that this Agreement and the obligations hereunder shall attach to its Stockholder Veeco Shares and shall be binding upon any person to which record or Beneficial Ownership of such Stockholder Veeco Shares shall pass, whether by operation of law or otherwise, including, without limitation, such Veeco Stockholder's successors, partners or Transferees (for value or otherwise) and any other successors in interest. Notwithstanding any transfer of Veeco Stock, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. (b) Notwithstanding anything to the contrary set forth herein, except in accordance with Section 3.03(a) hereto, no party hereto may assign any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other parties hereto; PROVIDED that the Company may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly owned subsidiary of the Company, but no such assignment shall relieve the Company of its obligations hereunder if such assignee does not perform such obligations. 4.05 NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Agreement must be in writing and will be deemed given when delivered in person or sent by facsimile (with proof of receipt at the number to which it is required to be sent), or on the third business day after the day on which mailed by first class mail from within the United States of America, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent): If to the Company to: FEI Company Corporate Headquarters 7451 NW Evergreen Parkway Hillsboro, OR 97124 Attention: Bradley J. Thies Telephone: (503) 640-7500 Telecopier: (503) 640-7570 -9- with a copy to: Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304-1050 Attention: Larry W. Sonsini, Esq. Telephone: (650) 493-9300 Telecopier: (650) 493-6811 If to such Veeco Stockholder: Address set forth on Schedule A hereto 4.06 GOVERNING LAW. THIS AGREEMENT AND THE PROXY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAWS DOCTRINES. 4.07 AMENDMENTS. Prior to the Effective Time, this Agreement may be amended only by a document in writing signed by each of the parties hereto. 4.08 COUNTERPARTS. This Agreement may be executed in two or more counterparts, some of which may contain the signatures of some, but not all, the parties hereto. Each of those counterparts will be deemed an original, but all of them together will constitute one and the same Agreement. 4.09 SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid or unenforceable, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 4.10 ENFORCEMENT. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement and the Proxy were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and the Proxy and to enforce specifically the terms and provisions of this Agreement and the Proxy in any Federal court located in the State of Delaware or in a Delaware state court, this being in addition to any other remedy to -10- which they are entitled at law or in equity. In addition, each of the Parties hereto (i) consents to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in any action or proceeding relating to or arising out of this Agreement (including, with respect to the Stockholder, the Proxy) or any of the transactions contemplated hereby, (ii) agrees that such Party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that such Party will not seek to change the venue of any such action or proceeding or otherwise to move any such action or proceeding to another court, whether because of inconvenience of the forum or otherwise (PROVIDED that nothing in this Section will prevent a party from removing an action or proceeding from a Delaware state court to a Federal court located in the State of Delaware), (iv) agrees that such Party will not bring any action relating to this Agreement or the Proxy or any of the transactions contemplated hereby or thereby in any court other than a Federal court sitting in the State of Delaware or a Delaware state court and (v) waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or the Proxy or any of the transactions contemplated hereby or thereby. 4.11 FURTHER ASSURANCES. From time to time, at the Company's request and without further consideration, such Veeco Stockholder shall execute and deliver such additional documents and take all such further lawful action as may be necessary or appropriate to effect the full and prompt performance of such Veeco Stockholder's obligations pursuant to this Agreement and the validity and enforceability of the Proxy. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] -11- IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" FEI COMPANY By: -------------------------------- Name: Title: VEECO STOCKHOLDER By: -------------------------------- Name: Title: Address for Notice: ------------------------------------ ------------------------------------ ------------------------------------ ------------------------------------ Facsimile No.: ---------------------- -12- SCHEDULE A VEECO STOCKHOLDER NO. OF EXISTING VEECO SHARES HELD - -------------------------------- --------------------------------------- Name -13- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints FEI Company, an Oregon corporation ("FEI"), and each of FEI's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of Section 212 of the Delaware General Corporation Law, with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder Veeco Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of Veeco (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the issuance of Veeco Stock in the Merger and approval of the Veeco Certificate of Incorporation Amendment; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder Veeco Shares with respect to any Superior Veeco Proposal or related Veeco Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder Veeco Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI COMMON STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE GREATER THAN 1.355 SHARES OF VEECO STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. VEECO STOCKHOLDER By: ----------------------------------------------- Name: Title: Dated: ----------------------------------------------- VOTING AGREEMENT VOTING AGREEMENT, dated as of July 11, 2002 (this "AGREEMENT"), between Chorus, L.P., a Minnesota limited partnership (the "VEECO STOCKHOLDER") and FEI Company, an Oregon corporation (the "COMPANY" and, collectively with the Veeco Stockholder, the "PARTIES"). Capitalized terms used in this Agreement but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. WHEREAS, Veeco Instruments Inc. ("VEECO"), Venice Acquisition Corp., an Oregon corporation and a wholly owned subsidiary of Veeco ("ACQUISITION"), and the Company have entered into an Agreement and Plan of Merger, dated as of July 11, 2002 (the "MERGER AGREEMENT"), which provides that, among other things, on the terms and subject to the conditions set forth therein, Acquisition shall be merged with and into the Company (the "MERGER"), and each share of FEI Common Stock will be converted into the right to receive 1.355 shares of common stock, $0.01 par value per share (the "VEECO STOCK"), of Veeco; WHEREAS, on the date hereof, the Veeco Stockholder Beneficially Owns 3,605,969 shares of Veeco Stock; WHEREAS, this Agreement is a Veeco Stockholders Voting Agreement contemplated by and referred to in the third "WHEREAS" clause to the Merger Agreement; and WHEREAS, as a condition to the willingness of the Company to enter into the Merger Agreement, the Company has requested that the Veeco Stockholder enter into this Agreement. NOW, THEREFORE, to induce the Company to enter into, and in consideration of its entering into, the Merger Agreement, and in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION 1.01 As used in this Agreement, the following terms have the respective meanings ascribed to them in this Section. (a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a person or entity shall include securities Beneficially Owned by all other persons or entities with whom such person or entity would constitute a "group" within the meaning of Section 13(d) of the Exchange Act with respect to securities of the same issuer. (b) "ESCROW SHARES" means the 206,625 shares of Veeco Stock owned of record and Beneficially Owned by the Veeco Stockholder, which are subject to that certain Escrow Agreement, dated as of September 17, 2001, among Veeco, Paul E. Colombo, certain former stockholders of Applied Epi, Inc. and The Bank of Cherry Creek, N.A. (c) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended. (d) "EXISTING VEECO SHARES" means all shares of Veeco Stock Beneficially Owned by the Veeco Stockholder on the Record Date, if and to the extent entitled to be voted. (e) "PROXY" means a proxy in the form of EXHIBIT A attached to this Agreement. (f) "RECORD DATE" means the record date established by the Veeco Board of Directors with respect to the Veeco Stockholders' Meeting. (g) "STOCKHOLDER VEECO SHARES" means the Existing Veeco Shares and any shares of Veeco Stock and/or other equity securities of, or equity interests in, Veeco acquired by the Veeco Stockholder in any capacity after the date of this Agreement and Beneficially Owned by the Veeco Stockholder on the Record Date, whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution, split-up, recapitalization, combination, exchange of shares or the like, gift, bequest, inheritance or as a successor in interest in any capacity or otherwise Beneficially Owned by the Veeco Stockholder, in each case, if and to the extent entitled to be voted. (h) "TRANSFER" means any direct or indirect sale, transfer, pledge, assignment or other disposition of, or entry into any contract, option or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of, any Stockholder Veeco Shares by the Veeco Stockholder (in each of the foregoing, whether voluntary or involuntary, by operation of law or otherwise). (i) "TRANSFEREE" any person or entity to whom a Transfer is made. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.01 VEECO STOCKHOLDER REPRESENTATIONS AND WARRANTIES. The Veeco Stockholder represents and warrants to the Company as follows: (a) The Veeco Stockholder has all power and authority necessary to enable it to enter into this Agreement and the Proxy and to carry out the transactions contemplated hereby and thereby. This Agreement and the Proxy have been duly executed and delivered by the Veeco Stockholder and each constitutes a legal, valid and binding obligation, enforceable against the Veeco Stockholder in accordance with its terms. (b) Neither the execution and delivery of this Agreement or the Proxy, nor the consummation of the transactions contemplated by this Agreement, the Proxy or by any document to be delivered in accordance herewith or therewith will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i)any agreement or instrument to which the Veeco Stockholder is a party or by which it is bound, or (ii)any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) As of the date hereof, the Veeco Stockholder is the record owner and Beneficial Owner of 3,605,969 shares of Veeco Stock, and such shares constitute all of the shares of Veeco Stock owned of record by the Veeco Stockholder. (d) Other than that certain Escrow Agreement, dated as of September 17, 2001, among Veeco, Paul E. Colombo, certain former stockholders of Applied Epi, Inc. and The Bank of Cherry Creek, N.A., the Veeco Stockholder owns the 3,605,969 shares of Veeco Stock free and clear of any liens, claims, security interests, proxies, voting trusts or agreements, restrictions, qualifications, limitations, understandings or arrangements that would in any way restrict or impair the Veeco Stockholder's right to vote such shares of Veeco Stock in its sole discretion, or could require the Veeco Stockholder to sell or transfer any of such shares of Veeco Stock (whether upon default on a loan or otherwise) before the Effective Time. (e) The Veeco Stockholder has sufficient voting power and sufficient power to issue instructions and sufficient power to agree to the matters set forth in this Agreement with respect to all of the shares of Veeco Stock owned by the Veeco Stockholder. 2.02 COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the Veeco Stockholder as follows: (a) The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Company has all power and authority necessary to enable it to enter into this Agreement and to carry out the transactions contemplated hereby. This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) the Company's articles of incorporation or similar organizational or governing documents, (ii)any agreement or instrument to which the Company is a party or by which it is bound, or (iii)any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement, (ii) the performance by the Company of its obligations under this Agreement, or (iii) the consummation by the Company of the transactions contemplated by this Agreement. ARTICLE III AGREEMENTS IN RESPECT OF THE STOCKHOLDER VEECO SHARES 3.01 VOTE FOR MERGER. (a) The Veeco Stockholder shall cause its Stockholder Veeco Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Veeco called to vote upon the issuance of Veeco Stock in the Merger or approval of the Veeco Certificate of Incorporation Amendment, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval with respect to the issuance of Veeco Stock in the Merger or the Veeco Certificate of Incorporation Amendment is sought, and shall cause such Stockholder Veeco Shares to be voted or consented in favor of approving the issuance of Veeco Stock in the Merger and the Veeco Certificate of Incorporation Amendment; PROVIDED that nothing set forth in this Section 3.01(a) or in the Proxy is intended or shall be construed to restrict or impair the right of the Veeco Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. (b) In order to effectuate the voting arrangements contemplated by Sections 3.01(a) and 3.02, contemporaneously with the execution and delivery by the Veeco Stockholder and the Company of this Agreement, and as a condition to such execution and delivery by the Company, the Veeco Stockholder is delivering to the Company the Proxy, duly executed by or on behalf of the Veeco Stockholder; PROVIDED that nothing set forth in this Section 3.01(b) or in the Proxy is intended or shall be construed to restrict or impair the right of the Veeco Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. 3.02 VOTE AGAINST CERTAIN MATTERS. Prior to the Effective Time, the Veeco Stockholder shall cause its Stockholder Veeco Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Veeco called, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval is sought, and shall cause its Stockholder Veeco Shares to be voted or consented against any proposal or transaction involving Veeco or any of its subsidiaries that would prevent or nullify the Merger or the Merger Agreement (any such proposal or transaction, a "PARTICULAR MATTER"); PROVIDED that nothing set forth in this Section 3.02 or such Proxy is intended or shall be construed to restrict or impair the right of the Veeco Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. 3.03 TRANSFERS; OTHER VOTING ARRANGEMENTS. (a) The Veeco Stockholder may not Transfer any Escrow Shares except to a Transferee that has made a Superior Veeco Proposal in the Veeco Acquisition Transaction contemplated by such Superior Veeco Proposal. (b) The Veeco Stockholder shall not, directly or indirectly, enter into any voting arrangement, whether by proxy, voting arrangement, voting agreement, voting trust or otherwise with respect to any of its Stockholder Veeco Shares, other than this Agreement and the Proxy unless such arrangement, proxy agreement, trust or other instrument provides for the voting of Stockholder Veeco Shares in accordance with the terms of this Agreement; PROVIDED that nothing set forth in this Section 3.03 or in the Proxy is intended or shall be construed to restrict or impair the right of the Veeco Stockholder to vote or consent (or grant a proxy causing to be voted or consented) any of its Stockholder Veeco Shares in favor of any Superior Veeco Proposal or related Veeco Acquisition Transaction. (c) The Veeco Stockholder shall not, directly or indirectly, take any action that would or could reasonably be expected to invalidate or in any way limit the enforceability by the Proxyholders (as defined in the Proxy) of the Proxy. (d) Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict the Veeco Stockholder from directly or indirectly selling, transferring, pledging, assigning or otherwise disposing of or entering into any contract, option, or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of any Veeco Stock held by the Veeco Stockholder, except the Escrow Shares, all without the attachment of, or any obligation to be bound by, any provisions of this Agreement. 3.04 CONFIDENTIALITY. Prior to the first public announcement by the Company and Veeco of the Merger Agreement, the Merger and the other transactions contemplated thereby, the Veeco Stockholder shall not disclose to any person or entity any information concerning the Merger Agreement, the Merger or the other transactions contemplated thereby, or the discussions concerning the same, PROVIDED, that nothing set forth in this Section 3.04 is intended or shall be construed to restrict or impair the ability of the Veeco Stockholder to comply with its reporting obligations under applicable laws and stock exchange (including NASDAQ) regulations, in which event the Veeco Stockholder shall give prior notice of such disclosure to the Company as promptly as practicable so as to enable the Company to seek a protective order from a court of competent jurisdiction with respect thereto or similar relief in connection therewith. 3.05 DISCLOSURE. The Veeco Stockholder acknowledges that Veeco and/or the Company may be obligated to disclose in governmental and stock exchange (including NASDAQ) filings the Veeco Stockholder's identity, facts concerning the Veeco Stockholder's ownership of Stockholder Veeco Shares and the nature of the commitments, arrangements and understandings set forth in this Agreement, the Proxy, and any other agreements executed and delivered in connection with the Merger, together with such other information as may be required by applicable laws and stock exchange (including NASDAQ) regulations. 3.06 NO SOLICITATION. Subject to Section 3.03(d), the Veeco Stockholder shall not solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any Veeco Acquisition Proposal, or engage in discussions or negotiations with any person or entity (other than with Veeco and the Company or any of their Affiliates or Representatives) with respect to any Veeco Acquisition Proposal, other than any Superior Veeco Proposal or related Veeco Acquisition Transaction. The Veeco Stockholder shall promptly advise Veeco and the Company of any Veeco Acquisition Proposal (including the identity of the person or entity making or submitting such Veeco Acquisition Proposal and the terms thereof) that is made or submitted by any person or entity after the date of this Agreement. The Veeco Stockholder shall keep Veeco and the Company reasonably informed with respect to the status of any such Veeco Acquisition Proposal. The Veeco Stockholder shall immediately cease and cause to be terminated any existing discussions with any person or entity that relate to any Veeco Acquisition Proposal or Veeco Acquisition Transaction, other than discussions or negotiations with Veeco and the Company or their Affiliates or Representatives. ARTICLE IV MISCELLANEOUS 4.01 TERMINATION OF AGREEMENT. The provisions of this Agreement and the Proxy shall automatically terminate upon, and be of no further force or effect after, the earliest to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, and (iii) the execution and delivery by any party to the Merger Agreement of any amendment thereto which would cause each share of FEI Common Stock to be converted into the right to receive greater than 1.355 shares of Veeco Stock (as adjusted for any stock splits, reverse stock splits, stock dividends or similar events). 4.02 ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire agreement among the parties relating to the transactions which are the subject of this Agreement, and all prior and contemporaneous negotiations, understandings and agreements among the parties (whether written or oral) with regard to the subject matter of this Agreement are superseded by this Agreement, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement. 4.03 CAPTIONS. The captions of the articles and paragraphs of this Agreement are for reference only, and do not affect the meaning or interpretation of this Agreement. 4.04 BINDING AGREEMENT; ASSIGNMENT. (a) The Veeco Stockholder agrees that this Agreement and the obligations hereunder shall attach to the Escrow Shares and shall be binding upon any person to which record or Beneficial Ownership of such Escrow Shares shall pass, whether by operation of law or otherwise, including, without limitation, the Veeco Stockholder's successors, partners or Transferees (for value or otherwise) and any other successors in interest. Notwithstanding any transfer of any of the Escrow Shares, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. (b) Notwithstanding anything to the contrary set forth herein, except in accordance with Section 3.03(a) hereto, no party hereto may assign any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other parties hereto; PROVIDED that the Company may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly owned subsidiary of the Company, but no such assignment shall relieve the Company of its obligations hereunder if such assignee does not perform such obligations. 4.05 NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Agreement must be in writing and will be deemed given when delivered in person or sent by facsimile (with proof of receipt at the number to which it is required to be sent), or on the third business day after the day on which mailed by first class mail from within the United States of America, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent): If to the Company to: FEI Company Corporate Headquarters 7451 NW Evergreen Parkway Hillsboro, OR 97124 Attention: Bradley J. Thies Telephone: (503) 640-7500 Telecopier: (503) 640-7570 with a copy to: Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304-1050 Attention: Larry W. Sonsini, Esq. Telephone: (650) 493-9300 Telecopier: (650) 493-6811 If to the Veeco Stockholder: Paul E. Colombo 4900 Constellation Drive St. Paul, MN 55127 Telephone: (651) 482-0800 Telecopier: (651) 482-0600 with a copy to: Robins, Kaplan, Miller & Ciresi L.L.P. 2800 LaSalle Plaza 800 LaSalle Avenue Minneapolis, MN 55402-2015 Attention: John R. Houston, Esq. Telephone: (612) 349-8285 Telecopier: (612) 339-4181 4.06 GOVERNING LAW. THIS AGREEMENT AND THE PROXY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAWS DOCTRINES. 4.07 AMENDMENTS. Prior to the Effective Time, this Agreement may be amended only by a document in writing signed by each of the parties hereto. 4.08 COUNTERPARTS. This Agreement may be executed in two or more counterparts, some of which may contain the signatures of some, but not all, the parties hereto. Each of those counterparts will be deemed an original, but all of them together will constitute one and the same Agreement. 4.09 SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid or unenforceable, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 4.10 ENFORCEMENT. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement and the Proxy were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and the Proxy and to enforce specifically the terms and provisions of this Agreement and the Proxy in any Federal court located in the State of Minnesota or in a Minnesota state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the Parties hereto (i) consents to the personal jurisdiction of any Federal court located in the State of Minnesota or any Minnesota state court in any action or proceeding relating to or arising out of this Agreement (including, with respect to the Stockholder, the Proxy) or any of the transactions contemplated hereby, (ii) agrees that such Party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that such Party will not seek to change the venue of any such action or proceeding or otherwise to move any such action or proceeding to another court, whether because of inconvenience of the forum or otherwise (PROVIDED that nothing in this Section will prevent a party from removing an action or proceeding from a Minnesota state court to a Federal court located in the State of Minnesota), (iv) agrees that such Party will not bring any action relating to this Agreement or the Proxy or any of the transactions contemplated hereby or thereby in any court other than a Federal court sitting in the State of Minnesota or a Minnesota state court and (v) waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or the Proxy or any of the transactions contemplated hereby or thereby. 4.11 FURTHER ASSURANCES. From time to time, at the Company's request and without further consideration, the Veeco Stockholder shall execute and deliver such additional documents and take all such further lawful action as may be necessary or appropriate to effect the full and prompt performance of the Veeco Stockholder's obligations pursuant to this Agreement and the validity and enforceability of the Proxy. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" FEI COMPANY By: -------------------------------- Vahe A. Sarkissian President and Chief Executive Officer VEECO STOCKHOLDER CHORUS, L.P., BY ITS GENERAL PARTNER CHORUS MANAGEMENT, INC. By: -------------------------------- Name: Paul E. Colombo Title: President EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July __, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints FEI Company, an Oregon corporation ("FEI"), and each of FEI's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of Section 212 of the Delaware General Corporation Law, with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder Veeco Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of Veeco (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the issuance of Veeco Stock in the Merger and approval of the Veeco Certificate of Incorporation Amendment; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder Veeco Shares with respect to any Superior Veeco Proposal or related Veeco Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder Veeco Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder other than the transferees under Section 3.03(d). THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI COMMON STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE GREATER THAN 1.355 SHARES OF VEECO STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. VEECO STOCKHOLDER By: ------------------------------------------------ Name: Title: Dated: ------------------------------------------------ EXHIBIT C Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Veeco Instruments Inc. (ATTACHED HERETO) -2- CERTIFICATE OF AMENDMENT OF THE 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. The Certificate of Incorporation of the Corporation was filed with the Secretary of State on the 8th day of August, 1989. The Amended and Restated Certificate of Incorporation was filed with the Secretary of State on December 1, 1994. Certificates of Amendment were filed with the Secretary of State on each of November 20, 1989, January 17, 1990, January 19, 1990, March 25, 1992, May 3, 1994, June 2, 1997, July 25, 1997 and May 5, 2000. 3. Article 4 of the Amended and Restated Certificate of Incorporation of the Corporation, as amended to date, is hereby amended to read in its entirety as follows: "4. The corporation shall have authority to issue a total of ___________ shares, to be divided into ___________ 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." 4. The amendment to the Amended and Restated 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. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed by its duly authorized officer, who acknowledges and affirms under the penalties of perjury that this certificate is the act and deed of the Corporation and that the facts stated herein are true this __ day of _______, 2002. VEECO INSTRUMENTS INC. By: -------------------------- Name: Title: EXHIBIT D Articles of Merger (ATTACHED HERETO) STATE OF OREGON CORPORATION DIVISION 151 PUBLIC SERVICE BUILDING 255 CAPITOL STREET NE SALEM, OR 97310-1237 REGISTRY NUMBER OF SURVIVING CORPORATION: ________________ ARTICLES OF MERGER OF VENICE ACQUISITION CORP. WITH AND INTO FEI COMPANY These Articles of Merger are filed pursuant to ORS 60.481 and ORS 60.494 by FEI Company, an Oregon corporation ("FEI"), to be the surviving corporation in the merger of Venice Acquisition Corp., an Oregon corporation ("Acquisition Corp."), with and into FEI (the "Merger"). PLAN OF MERGER. The plan of merger is attached hereto as EXHIBIT A and is incorporated herein by reference. SHAREHOLDER APPROVAL. The Merger required the approval of the shareholders of FEI and Acquisition Corp. Pursuant to ORS 60.487(5) and FEI's Second Amended and Restated Articles of Incorporation, the holders of outstanding shares of FEI's common stock were entitled to vote on the Merger. Pursuant to ORS 60.487(5) and Acquisition Corp.'s Articles of Incorporation, the holders of outstanding shares of Acquisition Corp.'s common stock were entitled to vote on the Merger. With respect to the foregoing, the shareholders of FEI and Acquisition Corp. approved the Merger, respectively, as follows: (a) _______ shares of FEI common stock were outstanding and entitled to vote on the Merger; _____ shares of common stock voted for the Merger and ____shares voted against the Merger. (b) _______ shares of Acquisition Corp. common stock were outstanding and entitled to vote on the Merger; _____ shares of common stock voted for the Merger and ____shares voted against the Merger. EFFECTIVE DATE. The Merger shall be effective upon filing of the Articles of Merger with the Secretary of State of the state of Oregon. Dated: _____, 2002 FEI COMPANY By: ----------------------------- Name: --------------------------- Title: -------------------------- VENICE ACQUISITION CORP. By: ----------------------------- Name: --------------------------- Title: -------------------------- EXHIBIT A AGREEMENT AND PLAN OF MERGER AMONG VEECO INSTRUMENTS INC., VENICE ACQUISITION CORP. AND FEI COMPANY EXHIBIT E Fourth Amended and Restated Bylaws of Veeco Instruments Inc. (ATTACHED HERETO) FOURTH AMENDED AND RESTATED BYLAWS OF VEECO INSTRUMENTS INC. (THE "CORPORATION") EFFECTIVE ______ __, 2002 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 president or chief executive officer and shall be called by the president, chief executive officer or secretary 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 1.6 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 NATURE OF BUSINESS AT MEETINGS OF STOCKHOLDERS. No business may be transacted at an annual or special meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board (or any duly authorized committee thereof), (b) otherwise properly brought before the meeting by or at the direction of the Board (or any duly authorized committee thereof) or (c) otherwise properly brought before the meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 1.5 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 1.5. In addition to any other applicable requirements, for business to be properly brought before an annual or special meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the secretary of the Corporation. To be timely, a stockholder's notice to the secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; PROVIDED, HOWEVER, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting, not less than ninety (90) days nor more than one hundred and twenty (120) days prior to such special meeting. To be in proper written form, a stockholder's notice to the secretary must set forth as to each matter such stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the meeting to bring such business before the meeting. At the same time or prior to the submission of any stockholder proposal of business to be conducted at an annual or special meeting that, if approved, could not be implemented by the Corporation without notifying or obtaining the consent or approval of any federal, state, municipal or other regulatory body, the proponent stockholder or stockholders shall submit to the secretary of the Corporation an analysis, satisfactory to the Board, demonstrating that the proposal will have no material detrimental effect on the business and operations of the Corporation after making the requisite notices or obtaining the requisite consents or approvals and after giving effect to the potential responses thereto. No business shall be conducted at a meeting of stockholders except business brought before the meeting in accordance with the procedures set forth in this Section 1.5; PROVIDED, HOWEVER, that, once business has been properly brought before the meeting in accordance with such procedures, nothing in this Section 1.5 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of the meeting determines that business was not properly brought before the meeting in accordance with such procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. 1.6 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 2 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. 1.7 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 1.9 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. 1.8 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. 1.9 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. The Board shall consist of not less than three nor more than fifteen members, the exact number of which shall be determined from time to time by resolution adopted by a majority vote of the directors then serving, but no decrease in the number of directors that constitutes the Board may shorten the term of any incumbent director. Subject to the rights of the holders of any series of preferred stock to elect additional directors under specified circumstances, the directors shall be divided into three (3) classes designated as Class I, Class II and Class III, respectively, as nearly equal in size as possible. Unless otherwise provided in the certificate of incorporation, directors shall be elected 3 at each annual meeting of stockholders and shall hold office for a full term of three (3) years to succeed the directors of the class whose terms expire at such annual meeting. Each director shall also serve until the election and qualification of their respective successors, subject to the provisions of Section 2.10. 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 NOMINATION OF DIRECTORS. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right of holders of preferred stock of the Corporation, if any, to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.2 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 2.2. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the secretary of the Corporation. To be timely, a stockholder's notice to the secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than ninety (90) days nor more than one hundred and twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; PROVIDED, HOWEVER, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not less than ninety (90) days nor more than one hundred and twenty (120) days prior to such special meeting. To be in proper written form, a stockholder's notice to the secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings 4 between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.2. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. 2.3 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. 2.4 PLACE OF MEETINGS. Meetings of the Board may be held in or outside Delaware. 2.5 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 2.7 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 is a legal holiday, the meeting shall be held on the next business day. 2.6 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. 2.7 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 5 any adjourned meeting need not be given, other than by announcement at the meeting at which the adjournment is taken. 2.8 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. 2.9 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. 2.10 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, but only for cause, by vote of the stockholders at a meeting duly called for such purpose. 2.11 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. 2.12 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. 6 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 chairman, 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, by vote of a majority of the entire 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 7 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; provided, that, the chairman and president and chief executive officer may only be removed by a two-thirds vote of the members of the Board other than the officer proposed to be removed (if such officer is a member of the Board). 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. The chairman shall preside at all meetings of the Board and of the stockholders and shall have the powers and duties commensurate with chairmen of publicly-traded entities. The chairman shall manage the board-level governance of the Corporation. The chairman shall work with the chief executive officer of the Corporation to plan and develop the strategy for the Corporation and to set goals and financial performance measures of the Corporation. The chairman shall co-chair the Corporation's Integration Steering Committee and the Corporation's Strategic Review Board and 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 AND CHIEF EXECUTIVE OFFICER. The president and chief executive officer of the Corporation shall be the chief executive officer of the Corporation and shall be responsible for the general and active management of the business of the Corporation and for seeing that all orders and resolutions of the Board are carried into effect. The chief executive officer's role shall be to run the Corporation and he shall be responsible for its operating results. He shall also be the chief external representative of the Corporation. The chief executive officer shall have general powers of supervision over the business of the Corporation. The officers of the Corporation shall report to the chief executive officer and the chief executive officer shall report to the Board. The chief executive officer shall work with the chairman to plan and develop the strategy for the Corporation and the setting of goals and financial performance measures. The chief executive officer shall co-chair the Corporation's Integration Steering Committee and the Corporation's Strategic Review Board and shall also 8 perform such other duties and may exercise such other powers as may from time to time be assigned to him by the Board. 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 or 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. 9 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. The affirmative vote of a majority of the entire Board shall be required to adopt, amend, alter or repeal the Corporation's Bylaws (other than Sections 4.4, 4.6 and 4.7, which shall require the affirmative vote of two-thirds of the entire Board). The Corporation's Bylaws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least two-thirds of the voting power of the shares entitled to vote at an election of directors, at a meeting duly called for such purpose. * * * * 10 EX-2.2 4 a2084384zex-2_2.txt EXHIBIT 2.2 EXHIBIT 2.2 VOTING AGREEMENT VOTING AGREEMENT, dated as of July 11, 2002 (this "AGREEMENT"), among each of the individuals listed on SCHEDULE A to this Agreement (each, an "FEI STOCKHOLDER" and collectively, the "FEI STOCKHOLDERS"), and Veeco Instruments Inc., a Delaware corporation (the "COMPANY" and, collectively with the FEI Stockholders, the "PARTIES"). Capitalized terms used in this Agreement but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. WHEREAS, FEI Company, an Oregon corporation ("FEI"), Venice Acquisition Corp., an Oregon corporation and a wholly owned subsidiary of the Company ("ACQUISITION"), and the Company have entered into an Agreement and Plan of Merger, dated as of July 11, 2002 (the "MERGER AGREEMENT"), which provides that, among other things, on the terms and subject to the conditions set forth therein, Acquisition shall be merged with and into FEI (the "MERGER"), and each share of FEI Common Stock will be converted into the right to receive 1.355 shares of common stock, $0.01 par value per share (the "COMPANY STOCK"), of the Company; WHEREAS, each FEI Stockholder owns the number of Existing FEI Shares (as defined herein) set forth opposite such FEI Stockholder's name on SCHEDULE A hereto and the FEI Stockholders collectively own in the aggregate 607,648 Existing FEI Shares; WHEREAS, this Agreement is the FEI Stockholders Voting Agreement contemplated by and referred to in the third "WHEREAS" clause to the Merger Agreement; and WHEREAS, as a condition to the willingness of the Company to enter into the Merger Agreement, the Company has requested that the FEI Stockholders enter into this Agreement. 4 NOW, THEREFORE, to induce the Company to enter into, and in consideration of its entering into, the Merger Agreement, and in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties to this Agreement, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION 1.01 As used in this Agreement, the following terms have the respective meanings ascribed to them in this Section. (a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a person or entity shall include securities Beneficially Owned by all other persons or entities with whom such person or entity would constitute a "group" within the meaning of Section 13(d) of the Exchange Act with respect to securities of the same issuer. (b) "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement. (c) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended. (d) "EXISTING FEI SHARES" means all shares of FEI Common Stock Beneficially Owned by such FEI Stockholder on the date of this Agreement, in each case, if and to the extent entitled to be voted. (e) "FEI ACQUISITION PROPOSAL" has the meaning set forth in the Merger Agreement. (f) "FEI ACQUISITION TRANSACTION" has the meaning set forth in the Merger Agreement. (g) "NASDAQ" has the meaning set forth in the Merger Agreement. (h) "PROXY" means a proxy in the form of EXHIBIT A attached to this Agreement. (i) "STOCKHOLDER FEI SHARES" means the Existing FEI Shares and any shares of FEI Common Stock and/or other equity securities of, or equity interests in, FEI acquired by such FEI Stockholder in any capacity after the date of this Agreement and prior to the termination of this Agreement, whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution, split-up, recapitalization, combination, exchange of shares or the like, gift, bequest, inheritance or as a successor in interest in any capacity or otherwise Beneficially Owned by such FEI Stockholder, in each case, if and to the extent entitled to be voted. (j) "TRANSFER" means any direct or indirect sale, transfer, pledge, assignment or other disposition of, or entry into any contract, option or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of, any Stockholder FEI Shares by such FEI Stockholder (in each of the foregoing, whether voluntary or involuntary, by operation of law or otherwise). (k) "TRANSFEREE" any person or entity to whom a Transfer is made. (l) "SUPERIOR FEI PROPOSAL" has the meaning set forth in the Merger Agreement. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.01 FEI STOCKHOLDER REPRESENTATIONS AND WARRANTIES. Each FEI Stockholder represents and warrants to the Company as follows: (a) Such FEI Stockholder has all power and authority necessary to enable it to enter into this Agreement and the Proxy and to carry out the transactions contemplated hereby and thereby. This Agreement and the Proxy have been duly executed and delivered by such FEI Stockholder and each constitutes a legal, valid and binding obligation, enforceable against such FEI Stockholder in accordance with its terms. (b) Neither the execution and delivery of this Agreement or the Proxy, nor the consummation of the transactions contemplated by this Agreement, the Proxy or by any document to be delivered in accordance herewith or therewith will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) any agreement or instrument to which such FEI Stockholder is a party or by which it is bound, or (ii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement or the Proxy, (ii) the performance by such FEI Stockholder of its obligations under this Agreement and the Proxy, or (iii) the consummation by such FEI Stockholder of the transactions contemplated by this Agreement and the Proxy. (d) Such FEI Stockholder is the record and Beneficial Owner of the number of Existing FEI Shares set forth opposite such FEI Stockholder's name on SCHEDULE A hereto. On the date of this Agreement, such Existing FEI Shares constitute all of the shares of FEI Common Stock owned of record or Beneficially Owned by such FEI Stockholder. (e) Such FEI Stockholder owns the number of Existing FEI Shares set forth opposite such FEI Stockholder's name on SCHEDULE A hereto, free and clear of any liens, claims, security interests, proxies, voting trusts or agreements, restrictions, qualifications, limitations, understandings or arrangements which would in any way restrict or impair such FEI Stockholder's right to vote such Existing FEI Shares in its sole discretion, or could require such FEI Stockholder to sell or transfer any of such Existing FEI Shares (whether upon default on a loan or otherwise) before the Effective Time. (f) Such FEI Stockholder has sufficient voting power and sufficient power to issue instructions and sufficient power to agree to the matters set forth in this Agreement with respect to all of such FEI Stockholder's Existing FEI Shares. (g) The obligations of such FEI Stockholder under this Agreement shall survive the death, disability or incapacity of such FEI Stockholder. 2.02 COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the FEI Stockholders as follows: (a) The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Company has all power and authority necessary to enable it to enter into this Agreement and to carry out the transactions contemplated hereby. This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) the Company's certificate of incorporation or similar organizational or governing documents, (ii) any agreement or instrument to which the Company is a party or by which it is bound, or (iii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement, (ii) the performance by the Company of its obligations under this Agreement, or (iii) the consummation by the Company of the transactions contemplated by this Agreement. ARTICLE III AGREEMENTS IN RESPECT OF THE STOCKHOLDER FEI SHARES 3.01 VOTE FOR MERGER. (a) Such FEI Stockholder shall cause its Stockholder FEI Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of FEI called to vote upon the Merger, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval with respect to the Merger is sought, and shall cause such Stockholder FEI Shares to be voted or consented in favor of approving the Merger; PROVIDED that nothing set forth in this Section 3.01(a) or in the Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (b) In order to effectuate the voting arrangements contemplated by Sections 3.01(a) and 3.02, contemporaneously with the execution and delivery by the FEI Stockholders and the Company of this Agreement, and as a condition to such execution and delivery by the Company, such FEI Stockholder is delivering to the Company the Proxy, duly executed by or on behalf of such FEI Stockholder; PROVIDED that nothing set forth in this Section 3.01(b) or in the Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.02 VOTE AGAINST CERTAIN MATTERS. Prior to the Effective Time, such FEI Stockholder shall cause its Stockholder FEI Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of FEI called, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval is sought, and shall cause its Stockholder FEI Shares to be voted or consented against any proposal or transaction involving FEI or any of its subsidiaries that would prevent or nullify the Merger or the Merger Agreement (any such proposal or transaction, a "PARTICULAR MATTER"); PROVIDED that nothing set forth in this Section 3.02 or such Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or cause to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.03 TRANSFERS; OTHER VOTING ARRANGEMENTS. (a) Such FEI Stockholder may not Transfer any Stockholder FEI Shares except to a Transferee that has made a Superior FEI Proposal in the FEI Acquisition Transaction contemplated by such Superior FEI Proposal. (b) Such FEI Stockholder shall not, directly or indirectly, enter into any voting arrangement, whether by proxy, voting arrangement, voting agreement, voting trust or otherwise with respect to any of its Stockholder FEI Shares, other than this Agreement and the Proxy; PROVIDED that nothing set forth in this Section 3.03 or in the Proxy is intended or shall be construed to restrict or impair the right of such FEI Stockholder to vote or consent (or grant a proxy causing to be voted or consented) any of its Stockholder FEI Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (c) Such FEI Stockholder shall not, directly or indirectly, take any action that would or could reasonably be expected to invalidate or in any way limit the enforceability by the Proxyholders (as defined in the Proxy) of the Proxy. (d) Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict such FEI Stockholder from acting in his or her capacity as a director or officer of FEI (it being understood that this Agreement shall apply to such FEI Stockholder solely in such FEI Stockholder's capacity as a stockholder of FEI). No conduct or action taken by such FEI Stockholder, if such FEI Stockholder is also a director or officer of FEI (in his or her capacity as such), shall be deemed to constitute a breach of any provision of this Agreement. 3.04 Confidentiality. Prior to the first public announcement by the Company and FEI of the Merger Agreement, the Merger and the other transactions contemplated thereby, such FEI Stockholder shall not disclose to any person or entity any information concerning the Merger Agreement, the Merger or the other transactions contemplated thereby, or the discussions concerning the same, PROVIDED, that nothing set forth in this Section 3.04 is intended or shall be construed to restrict or impair the ability of such FEI Stockholder to comply with its reporting obligations under applicable laws and stock exchange (including NASDAQ) regulations, in which event such FEI Stockholder shall give prior notice of such disclosure to the Company as promptly as practicable so as to enable the Company to seek a protective order from a court of competent jurisdiction with respect thereto or similar relief in connection therewith. 3.05 DISCLOSURE. Such FEI Stockholder acknowledges that the Company and/or FEI may be obligated to disclose in governmental and stock exchange (including NASDAQ) filings such FEI Stockholder's identity, facts concerning such FEI Stockholder's ownership of Stockholder FEI Shares and the nature of the commitments, arrangements and understandings set forth in this Agreement, the Proxy, and any other agreements executed and delivered in connection with the Merger, together with such other information as may be required by applicable laws and stock exchange (including NASDAQ) regulations. 3.06 NO SOLICITATION. Subject to Section 3.03(d), such FEI Stockholder shall not solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any FEI Acquisition Proposal, or engage in discussions or negotiations with any person or entity (other than with FEI and the Company or any of their Affiliates or Representatives) with respect to any FEI Acquisition Proposal, other than any Superior FEI Proposal or related FEI Acquisition Transaction. Such FEI Stockholder shall promptly advise FEI and the Company of any FEI Acquisition Proposal (including the identity of the person or entity making or submitting such FEI Acquisition Proposal and the terms thereof) that is made or submitted by any person or entity after the date of this Agreement. Such FEI Stockholder shall keep FEI and the Company reasonably informed with respect to the status of any such FEI Acquisition Proposal. Such FEI Stockholder shall immediately cease and cause to be terminated any existing discussions with any person or entity that relate to any FEI Acquisition Proposal or FEI Acquisition Transaction, other than discussions or negotiations with FEI and the Company or their Affiliates or Representatives. ARTICLE IV MISCELLANEOUS 4.01 TERMINATION OF AGREEMENT. The provisions of this Agreement and the Proxy shall automatically terminate upon, and be of no further force or effect after, the earliest to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, and (iii) the execution and delivery by any party to the Merger Agreement of any amendment thereto which would cause each share of FEI Stock to be converted into the right to receive fewer than 1.355 shares of Company Stock (as adjusted for any stock splits, reverse stock splits, stock dividends or similar events). 4.02 ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire agreement among the parties relating to the transactions which are the subject of this Agreement, and all prior and contemporaneous negotiations, understandings and agreements among the parties (whether written or oral) with regard to the subject matter of this Agreement are superseded by this Agreement, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement. 4.03 CAPTIONS. The captions of the articles and paragraphs of this Agreement are for reference only, and do not affect the meaning or interpretation of this Agreement. 4.04 BINDING AGREEMENT; ASSIGNMENT. (a) Such FEI Stockholder agrees that this Agreement and the obligations hereunder shall attach to its Stockholder FEI Shares and shall be binding upon any person to which record or Beneficial Ownership of such Stockholder FEI Shares shall pass, whether by operation of law or otherwise, including, without limitation, such FEI Stockholder's successors, partners or Transferees (for value or otherwise) and any other successors in interest. Notwithstanding any transfer of FEI Common Stock, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. (b) Notwithstanding anything to the contrary set forth herein, except in accordance with Section 3.03(a) hereto, no party hereto may assign any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other parties hereto; PROVIDED that the Company may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly owned subsidiary of the Company, but no such assignment shall relieve the Company of its obligations hereunder if such assignee does not perform such obligations. 4.05 NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Agreement must be in writing and will be deemed given when delivered in person or sent by facsimile (with proof of receipt at the number to which it is required to be sent), or on the third business day after the day on which mailed by first class mail from within the United States of America, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent): If to the Company to: Veeco Instruments Inc. Corporate Headquarters 100 Sunnyside Boulevard Woodbury, NY 11797 Attention: Greg Robbins Telephone: (516) 677-0200 Telecopier: (516) 677-9125 with a copy to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Rory A. Greiss, Esq. Telephone: (212) 836-8261 Telecopier: (212) 836-7152 If to such FEI Stockholder: Address set forth on the signature page hereto 4.06 GOVERNING LAW. THIS AGREEMENT AND THE PROXY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAWS DOCTRINES. 4.07 AMENDMENTS. Prior to the Effective Time, this Agreement may be amended only by a document in writing signed by each of the parties hereto. 4.08 COUNTERPARTS. This Agreement may be executed in two or more counterparts, some of which may contain the signatures of some, but not all, the parties hereto. Each of those counterparts will be deemed an original, but all of them together will constitute one and the same Agreement. 4.09 SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid or unenforceable, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 4.10 ENFORCEMENT. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement and the Proxy were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and the Proxy and to enforce specifically the terms and provisions of this Agreement and the Proxy in any Federal court located in the State of Delaware or in a Delaware state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the Parties hereto (i) consents to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in any action or proceeding relating to or arising out of this Agreement (including, with respect to the Stockholder, the Proxy) or any of the transactions contemplated hereby, (ii) agrees that such Party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that such Party will not seek to change the venue of any such action or proceeding or otherwise to move any such action or proceeding to another court, whether because of inconvenience of the forum or otherwise (PROVIDED that nothing in this Section will prevent a party from removing an action or proceeding from a Delaware state court to a Federal court located in the State of Delaware), (iv) agrees that such Party will not bring any action relating to this Agreement or the Proxy or any of the transactions contemplated hereby or thereby in any court other than a Federal court sitting in the State of Delaware or a Delaware state court and (v) waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or the Proxy or any of the transactions contemplated hereby or thereby. 4.11 FURTHER ASSURANCES. From time to time, at the Company's request and without further consideration, such FEI Stockholder shall execute and deliver such additional documents and take all such further lawful action as may be necessary or appropriate to effect the full and prompt performance of such FEI Stockholder's obligations pursuant to this Agreement and the validity and enforceability of the Proxy. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Vahe A. Sarkissian -------------------------------- Name: Vahe A. Sarkissian Title: President and Chief Executive Officer Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Don VanLuvanee -------------------------------- Name: Don VanLuvanee Title: Director Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Wilf Corrigan -------------------------------- Name: Wilf Corrigan Title: Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Gerhard H. Parker -------------------------------- Name: Gerhard H. Parker Title: Director Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Michael Epzstein -------------------------------- Name: Michael Epzstein Title: Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ William W. Lattin -------------------------------- Name: William W. Lattin Title: Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ William Curran -------------------------------- Name: William Curran Title: Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Bradley J. Thies -------------------------------- Name: Bradley J. Thies Title: Vice President and General Counsel Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ John A. Doherty -------------------------------- Name: John A. Doherty Title: Senior Vice President Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Steven Berger -------------------------------- Name: Steven Berger Title: C.T.O. Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Steve Loughlin -------------------------------- Name: Steve Loughlin Title: Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun --------------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Rob H.J. Fasteanau -------------------------------- Name: Rob H.J. Fasteanau Title: Senior Vice President Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun ------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ Jim Higgs -------------------------------- Name: Jim Higgs Title: Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly authorized and signed as of the date in the first paragraph of this Agreement. THE "COMPANY" VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun ------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI STOCKHOLDER By: /s/ John Lindquist -------------------------------- Name: John Lindquist Title: Senior Vice President Address for Notice: ____________________________________ ____________________________________ ____________________________________ ____________________________________ Facsimile No.:______________________ SCHEDULE A
FEI STOCKHOLDER NO. OF EXISTING FEI SHARES HELD Vahe Sarkissian 377,624 Brad Thies 3,000 Steven Berger 13,042 John Doherty 98,479 Michel Epzstein 37 Rob Fasteanau 0 Jim Higgs 60,152 John Lindquist 1,328 Steve Loughlin 568 Don VanLuvanee 17,667 Mike Attardo 10,667 Jan Lobbezoo 0 BillCurran 0 Bill Lattin 13,833 Gerry Parker 11,251 Wilf Corrigan 0
EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Vahe A. Sarkissian -------------------------------------------- Name: Vahe A. Sarkissian Title: President and Chief Executive Officer Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Don VanLuvanee -------------------------------------------- Name: Don VanLuvanee Title: Director Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Wilf Corrigan -------------------------------------------- Name: Wilf Corrigan Title: Dated: July 9, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Gerhard H. Parker -------------------------------------------- Name: Gerhard H. Parker Title: Director Dated: July 10, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ William W. Lattin -------------------------------------------- Name: William W. Lattin Title: Dated: July 10, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ William Curran -------------------------------------------- Name: William Curran Title: Dated: July 10, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Bradley J. Thies -------------------------------------------- Name: Bradley J. Thies Title: Vice President and General Counsel Dated: July 10, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Michael Epzstein -------------------------------------------- Name: Michael Epzstein Title: Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ John A. Doherty -------------------------------------------- Name: John A. Doherty Title: Senior Vice President Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Steven Berger -------------------------------------------- Name: Steven Berger Title: C.T.O. Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Steve Loughlin -------------------------------------------- Name: Steve Loughlin Title: Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Rob H.J. Fasteanau -------------------------------------------- Name: Rob H.J. Fasteanau Title: Senior Vice President Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ Jim Higgs -------------------------------------------- Name: Jim Higgs Title: Dated: July 11, 2002 -------------------------------------------- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section 60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder FEI Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of FEI (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder FEI Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder FEI Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FEI STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. FEI STOCKHOLDER By: /s/ John Lindquist -------------------------------------------- Name: John Lindquist Title: Senior Vice President Dated: July 11, 2002 -------------------------------------------- EX-2.3 5 a2084384zex-2_3.txt EXHIBIT 2.3 EXHIBIT 2.3 VOTING AGREEMENT VOTING AGREEMENT, dated as of July 11, 2002 (this "AGREEMENT"), between Philips Business Electronics International B.V., a company incorporated under the laws of the Netherlands (the "STOCKHOLDER"), and Veeco Instruments Inc., a Delaware corporation (the "COMPANY" and, collectively with the Stockholder, the "Parties"). WHEREAS, as of the date of this Agreement, the Stockholder is the Beneficial Owner (as herein defined) of 8,264,821 shares of Common Stock, no par value (the "FLORENCE STOCK"), of FEI Company, an Oregon corporation ("FLORENCE"); and WHEREAS, the Company, Venice Acquisition Corp., an Oregon corporation ("ACQUISITION"), and Florence have entered into an Agreement and Plan of Merger, dated as of July 11, 2002 (the "MERGER AGREEMENT"), which provides that, among other things, on the terms and subject to the conditions set forth therein, Acquisition shall be merged with and into Florence (the "MERGER"), and each share of Florence Stock will be converted into the right to receive 1.355 shares of common stock, $0.01 par value per share (the "COMPANY Stock"), of the Company; and WHEREAS, the Stockholder and the Company have entered into an Investor Agreement, dated as of July 11, 2002 (the "INVESTOR AGREEMENT") and the Amendment Agreement, dated as of July 11, 2002 (the "AMENDMENT AGREEMENT"); and WHEREAS, the Stockholder and the Company each desire to make certain covenants and agreements concerning the manner in which the Stockholder Florence Shares (as herein defined) will be voted in connection with the Merger and the Merger Agreement. NOW, THEREFORE, in consideration of the Company's execution and delivery to the Stockholder of the Investor Agreement and the Amendment Agreement and in consideration of the mutual covenants and agreements contained herein, the Stockholder and the Company agree as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION 1.01 As used in this Agreement, the following terms have the respective meanings ascribed to them in this Section. (a) "BENEFICIALLY OWN" or "BENEFICIAL OWNERSHIP" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a person or entity shall include securities Beneficially Owned by all other persons or entities with whom such person or entity would constitute a "group" within the meaning of Section 13(d) of the Exchange Act with respect to securities of the same issuer. (b) "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement. (c) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended. (d) "EXISTING FLORENCE SHARES" means all shares of Florence Common Stock Beneficially Owned by the Stockholder on the date of this Agreement, in each case, if and to the extent entitled to be voted. (e) "FEI ACQUISITION PROPOSAL" has the meaning set forth in the Merger Agreement. (f) "FEI ACQUISITION TRANSACTION" has the meaning set forth in the Merger Agreement. (g) "NASDAQ" has the meaning set forth in the Merger Agreement. (h) "PROXY" means a proxy in the form of Exhibit A attached to this Agreement. (i) "STOCKHOLDER FLORENCE SHARES" means the Existing Florence Shares and any shares of Florence Stock and/or other equity securities of, or equity interests in, Florence acquired by the Stockholder in any capacity after the date of this Agreement and prior to the termination of this Agreement, whether upon the exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities, or by means of purchase, dividend, distribution, split-up, recapitalization, combination, exchange of shares or the like, gift, bequest, inheritance or as a successor in interest in any capacity or otherwise Beneficially Owned by the Stockholder, in each case, if and to the extent entitled to be voted. (j) "SUPERIOR FEI PROPOSAL" has the meaning set forth in the Merger Agreement. (k) "TRANSFER" means any direct or indirect sale, transfer, pledge, assignment or other disposition of, or entry into any contract, option or other arrangement with respect to the sale, transfer, pledge, assignment or other disposition of, any Stockholder Florence Shares by the Stockholder (in each of the foregoing, whether voluntary or involuntary, by operation of law or otherwise). -2- (l) "TRANSFEREE" any person or entity to whom a Transfer is made. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.01 RECIPROCAL REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and warrants to the other as follows: (a) Such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. Such Party has all power and authority necessary to enable it to enter into this Agreement and to carry out the transactions contemplated by this Agreement and (in the case of the Stockholder) the Proxy. This Agreement and (in the case of the Stockholder) the Proxy have been duly and validly authorized, executed and delivered by such Party and constitutes such Party's legal, valid and binding obligation, enforceable against it in accordance with its terms. (b) Neither the execution and delivery of this Agreement or, in the case of the Stockholder, the Proxy, nor the consummation of the transactions contemplated by this Agreement or the Proxy will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under (i) such Party's certificate of incorporation or similar organizational, governing or constating documents, (ii) any agreement or instrument to which such Party is a party or by which it is bound, or (iii) any law, or any order, rule or regulation of any court or governmental authority or other regulatory organization having jurisdiction over it. (c) Except as set forth in the Merger Agreement and the schedules thereto, no governmental filings, authorizations, approvals or consents, or other governmental action, is required for (i) the execution and delivery of this Agreement or, in the case of the Stockholder, the Proxy, (ii) the performance by such Party of its obligations under this Agreement and the Proxy, or (iii) the consummation by such Party of the transactions contemplated by this Agreement and the Proxy. 2.02 STOCKHOLDER REPRESENTATIONS AND WARRANTIES. The Stockholder hereby represents and warrants to the Company as follows: (a) The Stockholder is the record and Beneficial Owner of 8,264,821 Existing Florence Shares. On the date of this Agreement, such Existing Shares constitute all of the shares of Florence Stock owned of record or Beneficially Owned by the Stockholder. (b) The Stockholder owns the Existing Florence Shares free and clear of any liens, claims, security interests, proxies, voting trusts or agreements, restrictions, -3- qualifications, limitations, understandings or arrangements which would in any way restrict or impair the Stockholder's right to vote Stockholder Florence Shares in its sole discretion, or could require the Stockholder to sell or transfer any Stockholder Florence Shares (whether upon default on a loan or otherwise) before the Effective Time. (c) The Stockholder has sufficient voting power and sufficient power to issue instructions and sufficient power to agree to the matters set forth in this Agreement with respect to the Stockholder Florence Shares. ARTICLE III AGREEMENTS IN RESPECT OF THE STOCKHOLDER FLORENCE SHARES 3.01 VOTE FOR MERGER. (a) The Stockholder shall cause the Stockholder Florence Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Florence called to vote upon the Merger and the Merger Agreement, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval with respect to the Merger and the Merger Agreement is sought, and shall cause the Stockholder Florence Shares to be voted or consented in favor of the Merger; PROVIDED that nothing set forth in this Section 3.01(a) or in the Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or cause to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (b) In order to effectuate the voting arrangements contemplated by Sections 3.01(a) and 3.02, contemporaneously with the execution and delivery by the Parties of this Agreement, and as a condition to such execution and delivery by the Company, the Stockholder is delivering to the Company the Proxy, duly executed by or on behalf of the Stockholder; PROVIDED that nothing set forth in this Section 3.01(b) or in the Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or cause to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.02 VOTE AGAINST CERTAIN MATTERS. Prior to the Effective Time, the Stockholder shall cause the Stockholder Florence Shares to be counted as present for purposes of establishing a quorum at any meeting of stockholders of Florence called, or at any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other approval is sought, and shall cause the Stockholder Florence Shares to be voted or consented against any proposal or transaction involving Florence or any of its subsidiaries that would prevent or nullify the Merger or the Merger Agreement (any such proposal or transaction, a "PARTICULAR MATTER"); PROVIDED that nothing set forth -4- in this Section 3.02 or such Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or cause to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. 3.03 TRANSFERS; OTHER VOTING ARRANGEMENTS. (a) The Stockholder may not Transfer any Stockholder Florence Shares except (i) to a Transferee that both (A) agrees, prior to the consummation of such Transfer, to become bound by this Agreement and the Proxy and subject to the terms, conditions and restrictions hereof and thereof in the same manner as the Stockholder, by executing and delivering to the Company a writing to such effect in form and substance satisfactory to the Company, and (B) enters into, prior to the consummation of such Transfer, a "standstill" agreement with respect to each of Florence and the Company, each of which "standstill" agreements (I) shall be identical in substance to Section 4.01(a) of the Investor Agreement and otherwise in form and substance satisfactory to Florence or the Company, as the case may be, and (II) shall be effective only for the period between the consummation of such Transfer and the Effective Time, or (ii) to a Transferee that has made a Superior FEI Proposal in the FEI Acquisition Transaction contemplated by such Superior FEI Proposal. (b) The Stockholder shall not, directly or indirectly, enter into any voting arrangement, whether by proxy, voting arrangement, voting agreement, voting trust or otherwise with respect to any Stockholder Florence Shares, other than this Agreement and the Proxy; PROVIDED that nothing set forth in this Section 3.03 or in the Proxy is intended or shall be construed to restrict or impair the right of the Stockholder to vote or consent (or grant a proxy causing to be voted or consented) any Stockholder Florence Shares in favor of any Superior FEI Proposal or related FEI Acquisition Transaction. (c) The Stockholder shall not, directly or indirectly, take any action that would or could reasonably be expected to invalidate or in any way limit the enforceability by the Proxyholders (as defined in the Proxy) of the Proxy. (d) Notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement shall limit or restrict any employee of the Stockholder from acting in his or her capacity as a director or officer of Florence (it being understood that this Agreement shall apply to the Stockholder solely in the Stockholder's capacity as a stockholder of Florence). No conduct or action taken by any employee of the Stockholder who is also a director or officer of Florence, in his capacity as such, shall be deemed to constitute a breach of any provision of this Agreement. 3.04 CONFIDENTIALITY. Prior to the first public announcement by the Company and Florence of the Merger Agreement, the Merger and the other transactions contemplated thereby, the Stockholder shall not, and shall cause its Affiliates (as defined in the Merger Agreement) and its and their respective employees, counsel, advisors and -5- representatives ("REPRESENTATIVES") not to, disclose to any person or entity any information concerning the Merger Agreement, the Merger or the other transactions contemplated thereby, or the discussions concerning the same, PROVIDED, that such information may be disclosed to employees, counsel, advisors and representatives of the Stockholder and its Affiliates who have been advised of the foregoing obligations, and PROVIDED, FURTHER, that nothing set forth in this Section 3.04 is intended or shall be construed to restrict or impair the ability of the Stockholder or its Affiliates to comply with their respective reporting obligations under applicable laws and stock exchange regulations, in which event the Stockholder shall give prior notice of such disclosure to the Company as promptly as practicable so as to enable the Company to seek a protective order from a court of competent jurisdiction with respect thereto or similar relief in connection therewith. 3.05 DISCLOSURE. Each Party acknowledges that the other Party is or may be obligated to disclose in governmental and stock exchange (including NASDAQ) filings the Stockholder's identity, facts concerning the Stockholder's ownership of Florence Stock and the nature of the commitments, arrangements and understandings set forth in this Agreement, the Proxy, the Investor Agreement, the Amendment Agreement and any other agreements executed and delivered in connection with the Merger, together with such other information as may be required by applicable laws and stock exchange regulations. No Party shall issue any press release naming the other Party or any of the other Party's Affiliates unless such press release has been approved by such other Party, which approval shall not be unreasonably withheld, delayed or conditioned. 3.06 NO SOLICITATION. Subject to Section 3.03(d), the Stockholder shall not, and shall cause Koninklijke Philips Electronics N.V. ("PHILIPS") and each other direct and indirect subsidiary of Philips not to, take any action to solicit, initiate, encourage, induce or facilitate the making, submission or announcement of any FEI Acquisition Proposal, or engage in discussions or negotiations with any person or entity (other than with Florence and the Company or any of their Affiliates or Representatives) with respect to any FEI Acquisition Proposal, (other than any Superior FEI Proposal or related FEI Acquisition Transaction) or disclose any nonpublic information relating to Florence or any subsidiary of Florence. The Stockholder shall advise Florence and the Company of any FEI Acquisition Proposal (including the identity of the person or entity making or submitting such FEI Acquisition Proposal and the terms thereof) that is made or submitted by any person or entity after the date of this Agreement, reasonably promptly following its receipt thereof. The Stockholder shall keep Florence and the Company reasonably informed with respect to the status of any such FEI Acquisition Proposal. The Stockholder shall, and shall cause Philips and each other direct and indirect subsidiary of Philips to, immediately cease and cause to be terminated any discussions now pending with any person or entity that relate to any FEI Acquisition Proposal or FEI Acquisition Transaction, other than discussions or negotiations with Florence and the Company or their Affiliates or Representatives. -6- ARTICLE IV MISCELLANEOUS 4.01 TERMINATION OF AGREEMENT. The provisions of this Agreement and the Proxy shall automatically terminate upon, and be of no further force or effect after, the earliest to occur of (i) the termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, and (iii) the execution and delivery by any party to the Merger Agreement of any amendment thereto which would cause each share of Florence Stock to be converted into the right to receive fewer than 1.355 shares of Company Stock (as adjusted for any stock splits, reverse stock splits, stock dividends or similar events). 4.02 ENTIRE AGREEMENT. This Agreement and the Proxy contain the entire agreement among the parties relating to the transactions which are the subject of this Agreement, and all prior and contemporaneous negotiations, understandings and agreements among the parties (whether written or oral) with regard to the subject matter of this Agreement are superseded by this Agreement, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement. 4.03 CAPTIONS. The captions of the articles and paragraphs of this Agreement are for reference only, and do not affect the meaning or interpretation of this Agreement. 4.04 BINDING AGREEMENT; ASSIGNMENT. (a) The Stockholder agrees that this Agreement and the obligations hereunder shall attach to the Stockholder Florence Shares and shall be binding upon any person to which record or Beneficial Ownership of such Stockholder Florence Shares shall pass, whether by operation of law or otherwise, including, without limitation, the Stockholder's successors, partners or Transferees (for value or otherwise) and any other successors in interest. Notwithstanding any transfer of Florence Stock, the transferor shall remain liable for the performance of all obligations under this Agreement of the transferor. (b) Notwithstanding anything to the contrary set forth herein, except in accordance with Section 3.03(a), no Party may assign any of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent of the other Party; PROVIDED that the Company may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect wholly-owned subsidiary of the Company, but no such assignment shall relieve the Company of its obligations hereunder if such assignee does not perform such obligations. 4.05 NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Agreement must be in writing and will be deemed given when -7- delivered in person or sent by facsimile (with proof of receipt at the number to which it is required to be sent), or on the third business day after the day on which mailed by first class mail from within the United States of America, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent): If to the Company: Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, New York 11797 Attention: Gregory A. Robbins Telephone: (516) 677-0200 Telecopier: (516) 677-9125 with a copy to: Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Attention: Rory A. Greiss Telephone: (212) 836-8261 Telecopier: (212) 836-7152 and a copy to: FEI Company 7425 N.W. Evergreen Parkway Hillsboro, Oregon 97124-5830 Attention: Bradley J. Thies Telephone: (503) 640-7500 Telecopier: (503) 640-7509 and a copy to: Wilson Sonsini Goodrich & Rosati, Professional Corporation 650 Page Mill Road Palo Alto, California 94304 Attention: Larry W. Sonsini Telephone: (650) 493-9300 Telecopier: (650) 493-6811 If to the Stockholder: c/o Philips Semiconductors -8- Legal Department Building B460-1 Prof. Holstlaan 4 5656AA Eindhoven The Netherlands Attention: Guido Dierick Telephone: +31 (40) 272-2041 Telecopier: +31 (40) 272-4005 with a copy to: Sullivan & Cromwell 1870 Embarcadero Road Palo Alto, California 94303 Attention: Matthew G. Hurd Telephone: (650) 461-5600 Telecopier: (650) 461-5700 4.06 GOVERNING LAW. THIS AGREEMENT AND THE PROXY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON APPLICABLE TO AGREEMENTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAWS DOCTRINES. 4.07 AMENDMENTS. Prior to the Effective Time, this Agreement may be amended only by a document in writing signed by each of the Parties. 4.08 COUNTERPARTS. This Agreement may be executed in two or more counterparts, some of which may contain the signatures of some, but not all, the parties hereto. Each of those counterparts will be deemed an original, but all of them together will constitute one and the same Agreement. 4.09 SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid or unenforceable, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 4.10 ENFORCEMENT. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement and the Proxy were -9- not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and the Proxy and to enforce specifically the terms and provisions of this Agreement and the Proxy in any Federal court located in the State of Delaware or in a Delaware state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the Parties hereto (i) consents to the personal jurisdiction of any Federal court located in the State of Delaware or any Delaware state court in any action or proceeding relating to or arising out of this Agreement (including, with respect to the Stockholder, the Proxy) or any of the transactions contemplated hereby, (ii) agrees that such Party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that such Party will not seek to change the venue of any such action or proceeding or otherwise to move any such action or proceeding to another court, whether because of inconvenience of the forum or otherwise (PROVIDED that nothing in this Section will prevent a party from removing an action or proceeding from a Delaware state court to a Federal court located in the State of Delaware), (iv) agrees that such Party will not bring any action relating to this Agreement or the Proxy or any of the transactions contemplated hereby or thereby in any court other than a Federal court sitting in the State of Delaware or a Delaware state court and (v) waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or the Proxy or any of the transactions contemplated hereby or thereby. 4.11 FURTHER ASSURANCES. From time to time, at the Company's request and without further consideration, the Stockholder shall execute and deliver such additional documents and take all such further lawful action as may be necessary or appropriate to effect the full and prompt performance of the Stockholder's obligations pursuant to this Agreement and the validity and enforceability of the Proxy. (Signature page follows) -10- IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. PHILIPS BUSINESS ELECTRONICS INTERNATIONAL B.V. By: /s/ J.C. Lobbezoo ------------------------------------------------------- Name: J.C. Lobbezoo Title: Member Management Board By: /s/ A.P.M. van der Poel -------------------------------------------------------- Name: A.P.M. van der Poel Title: Member Management Board VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun ----------------------------------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President -11- EXHIBIT A PROXY Reference is hereby made to that certain Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT"), of which this Proxy (this "PROXY") forms a part. Capitalized terms used but not defined in this Proxy have the respective meanings ascribed to such terms in the Voting Agreement. This Proxy is being delivered by the undersigned Stockholder (the "GRANTING STOCKHOLDER") pursuant to Section 3.01(b) of the Voting Agreement. The undersigned Granting Stockholder hereby appoints Veeco Instruments Inc., a Delaware corporation ("VEECO"), and each of Veeco's officers and other designees (each such person or entity, a "PROXYHOLDER") as the Granting Stockholder's attorney-in-fact and proxy pursuant to the provisions of ORS Section60.231 (2001), with full power of substitution, in the Granting Stockholder's name, place and stead, to vote and otherwise act (by written consent or otherwise) with respect to all of the Stockholder Florence Shares which the Granting Stockholder is entitled to vote at any meeting of the stockholders of Florence (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise FOR AND IN FAVOR OF the Merger; PROVIDED, HOWEVER, that nothing set forth in this Proxy is intended or shall be construed to grant to any Proxyholder the right to vote or otherwise act (by written consent or otherwise) with respect to any Stockholder Florence Shares with respect to any Superior FEI Proposal or related FEI Acquisition Transaction. The Granting Stockholder hereby revokes all other proxies and powers of attorney with respect to any Stockholder Florence Shares that the Granting Stockholder may have heretofore granted, and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the Granting Stockholder purporting to grant the specific voting powers specified herein. Any obligation of the Granting Stockholder under this Proxy shall be binding upon the successors and assigns of the Granting Stockholder. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE UNTIL THE EARLIEST TO OCCUR OF (I) THE TERMINATION OF THE MERGER AGREEMENT IN ACCORDANCE WITH ITS TERMS, (II) THE EFFECTIVE TIME OF THE MERGER, AND (III) THE EXECUTION AND DELIVERY BY ANY PARTY TO THE MERGER AGREEMENT OF ANY AMENDMENT THERETO WHICH WOULD CAUSE EACH SHARE OF FLORENCE STOCK TO BE CONVERTED INTO THE RIGHT TO RECEIVE FEWER THAN 1.355 SHARES OF COMPANY STOCK (AS ADJUSTED FOR ANY STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR EVENTS). THIS PROXY WILL AUTOMATICALLY TERMINATE AND WILL BE AUTOMATICALLY REVOKED, AND THE INTEREST WITH WHICH THIS PROXY IS COUPLED WILL BE AUTOMATICALLY EXTINGUISHED, UPON THE EARLIEST TO OCCUR OF THE EVENTS SPECIFIED IN THE PREVIOUS SENTENCE. PHILIPS BUSINESS ELECTRONICS INTERNATIONAL B.V. By: /s/ J.C. Lobbezoo ------------------------------------------------------ Name: J.C. Lobbezoo Title: Member Management Board By: /s/ A.P.M. van der Poel ------------------------------------------------------ Name: A.P.M. van der Poel Title: Member Management Board Dated: July 11, 2002 -2- EX-2.4 6 a2084384zex-2_4.txt EXHIBIT 2.4 EXHIBIT 2.4 INVESTOR AGREEMENT INVESTOR AGREEMENT, dated as of July 11, 2002 (this "AGREEMENT"), between Philips Business Electronics International B.V., a company incorporated under the laws of the Netherlands (the "STOCKHOLDER"), Veeco Instruments Inc., a Delaware corporation (the "COMPANY") and FEI Company, an Oregon corporation ("FLORENCE"), solely with respect to Section 2.03(c). WHEREAS, as of the date of this Agreement, the Stockholder is the Beneficial Owner of 8,264,821 shares (the "STOCKHOLDER FLORENCE SHARES") of Common Stock, no par value (the "FLORENCE STOCK"), of Florence; and WHEREAS, the Company, Venice Acquisition Corp., an Oregon corporation ("Acquisition"), and Florence have entered into an Agreement and Plan of Merger, dated as of July 11, 2002 (the "MERGER AGREEMENT"), which provides that, on the terms and subject to the conditions set forth therein, Acquisition shall be merged with and into Florence (the "MERGER"), and each share of Florence Stock will be converted into the right to receive shares of common stock, $0.01 par value per share, of the Company (the "COMPANY COMMON STOCK"); and WHEREAS, the Stockholder and the Company have entered into the Voting Agreement, dated as of July 11, 2002 (the "VOTING AGREEMENT") and the Amendment Agreement, dated the date hereof (the "AMENDMENT AGREEMENT"); and WHEREAS, the Stockholder and the Company each desire to make certain covenants and agreements concerning, among other things, the registration from time to time of Stockholder Company Shares (as herein defined) under the Securities Act (as herein defined). NOW, THEREFORE, in consideration of the Stockholder's execution and delivery to the Company of the Voting Agreement and the Amendment Agreement and in consideration of the mutual covenants and agreements contained herein, the Stockholder and the Company agree as follows: ARTICLE I DEFINITIONS AND CONSTRUCTION 1.01 As used in this Agreement, the following terms have the respective meanings ascribed to them in this Section. (a) "AFFILIATE," with respect to any particular Person (as defined below), means any other Person which directly or indirectly through one or more intermediaries controls or is controlled by or is under direct or indirect common control with such Person; PROVIDED, HOWEVER, that for purposes of Article IV of this Agreement, the Stockholder and its Affiliates, on the one hand, and the Company and its Affiliates, on the other, shall not be deemed to be "Affiliates" of one another. (b) "BASE SECURITIES" means the Initial Shares, collectively with the Option Shares and any other shares of Company Common Stock of which the Stockholder or any of its Affiliates at any time becomes the beneficial owner. (c) "BENEFICIAL OWNER" has the meaning set forth in Rule 13d-3 under the Securities Act and the Commission's interpretive guidance issued in connection therewith; and each of "BENEFICIALLY OWN," "BENEFICIALLY OWNED" AND "BENEFICIAL OWNERSHIP" has a meaning correlative to the foregoing. (d) "BOARD APPROVAL" means the affirmative vote of a majority of the Disinterested Directors of the Company or a unanimous written consent of the Board of Directors of the Company duly obtained in accordance with the applicable provisions of the Company's certificate of incorporation, bylaws and applicable law. (e) "CHANGE IN CONTROL OF THE COMPANY" means any of the following: (i) a merger, consolidation or other business combination or transaction to which the Company is a party if the stockholders of the Company immediately prior to the effective date of such merger, consolidation or other business combination or transaction, as a result of such share ownership, have beneficial ownership of voting securities representing less than 50% of the Total Current Voting Power of the surviving entity following such merger, consolidation or other business combination or transaction; (ii) an acquisition by any person, entity or 13D Group (other than the Stockholder, or its Affiliates, or any 13D Group of which the Stockholder or its Affiliates is a member) of direct or indirect beneficial ownership of Voting Stock of the Company representing 50% or more of the Total Current Voting Power of the Company; (iii) a sale of all or substantially all of the assets of the Company; (iv) a liquidation or dissolution of the Company; (v) the institution of any proceeding by or against the Company under the provisions of any insolvency or bankruptcy law, which is not dismissed within 90 days, the appointment of a receiver of a material portion of the assets or property of the Company or the issuance of an order for an execution on a material portion of the property of the Company pursuant to a judgment that is not dismissed within 90 days; or (vi) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in the preceding clauses)) cease for any reason to constitute a majority of the Board of Directors of the Company then in office. -2- (f) "COMMISSION" means the United States Securities and Exchange Commission, or any other United States federal agency at the time administering the Securities Act or the Exchange Act, as applicable, whichever is the relevant statute. (g) "CONTROL," when used with respect to any particular Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing. (h) "DISINTERESTED DIRECTOR" means a member of the Board of Directors of the Company who is not (i) an employee, former employee or consultant of the Stockholder or any of its Affiliates; (ii) a member of the Board of Directors of the Stockholder or any of its Affiliates; or (iii) the holder of more than five percent of the voting stock of the Stockholder or any of its Affiliates. (i) "EFFECTIVE TIME" has the meaning specified in the Merger Agreement. (j) "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as it may be amended from time to time, and the rules and regulations from time to time promulgated thereunder. (k) "FLORENCE STOCK OPTIONS" means, collectively, (i) all options to purchase Florence Stock that were outstanding on February 21, 1997 and exercised subsequent to September 30, 2000 (collectively, the "1997 OPTIONS"), (ii) all options to purchase Florence Stock that were granted on September 18, 1998 in replacement of stock options outstanding on February 21, 1997, and still outstanding on September 30, 2000 (collectively, the "1998 OPTIONS"), and (iii) all options to purchase Florence Stock that have been or shall be granted in replacement of, in exchange for or in substitution for the 1997 Options or the 1998 Options. (l) "INITIAL SHARES" means the total number of shares of Company Common Stock issued to the Stockholder upon conversion of the Stockholder Florence Shares. (m) "KPENV ENTITIES" means, collectively, Koninklijke Philips Electronics N.V., a company incorporated under the laws of the Netherlands, and each entity controlled by Koninklijke Philips Electronics N.V. (n) "MINIMUM NUMBER" means a number of Stockholder Company Shares equal to the quotient of (i) the Initial Shares DIVIDED BY (ii) three. (o) "NASDAQ" means the Nasdaq Stock Market, Inc. (p) "OPTION SHARES" means securities issuable pursuant to Section 2.03. -3- (q) "PERSON" means any corporation, association, partnership, organization, group (as such term is used in Rule 13d-5 under the Exchange Act), business, individual, government or political subdivision thereof, governmental agency or other entity. (r) "REGISTERED SHARES" means the Stockholder Company Shares registered by the Company in any Registration for resale by the Stockholder; PROVIDED that any Registered Share shall cease to be deemed a Registered Share after it has been initially transferred by the Stockholder, in a public offering or otherwise. (s) "RIGHTS" means any and all Rights, stockholder protection rights, stock purchase rights or "poison pill rights" issued in accordance with the Rights Plan. (t) "RIGHTS PLAN" means, collectively, the Rights Agreement, dated as of March 13, 2001, between the Company and American Stock Transfer and Trust Company, as Rights Agent, and any stockholder protection rights plan or "poison pill" adopted by or entered into by the Company and/or its successors by way of merger. (u) "SECURITIES ACT" means the United States Securities Act of 1933 as it may be amended from time to time, and the rules and regulations promulgated from time to time thereunder. (v) "STANDSTILL LIMIT" means a number of shares of Voting Stock equal to the sum of (i) the number of Initial Shares, PLUS (ii) the number of Option Shares, PLUS (iii) 1% of the total number of shares of Company Common Stock from time to time outstanding, calculated on a primary basis. (w) "STANDSTILL PERIOD" means the period beginning upon the execution and delivery of the Merger Agreement by the parties thereto and ending on the occurrence of a Standstill Termination Event. (x) "STANDSTILL TERMINATION EVENT" means the earliest to occur of the following: (i) the termination (prior to the Effective Time) of the Merger Agreement in accordance with its terms, (ii) a Change in Control of the Company (other than the Merger and other than any Change in Control of the Company involving any KPENV Entity or a 13D Group of which any KPENV Entity is a member), (iii) the date on which the KPENV Entities cease to beneficially own at least 7.5% of the Total Current Voting Power, and (iv) the date of the 2005 Stockholders Meeting. (y) "STOCK OPTIONS" means, collectively, (i) the Florence Stock Options, (ii) all options to purchase securities that have been or shall be granted in replacement of, in exchange for, or in substitution for the Florence Stock Options, and (iii) all options to purchase securities that have been or shall be granted in replacement of, in exchange for, or in substitution for the options described in Section 2.03 hereof. -4- (z) "STOCKHOLDER COMPANY SHARES" means the Base Securities, collectively with (i) the Rights associated therewith, and (ii) any securities received as a distribution or dividend thereon. (aa) "TOTAL CURRENT VOTING POWER" means, with respect to the Company, at the time of determination of Total Current Voting Power, the total number of votes that may be cast in the election of members of the board of directors of the Company if all securities entitled to vote in the election of such directors are present and voted. (bb) "UNREGISTERED OFFERING" has the meaning specified in Section 3.08. (cc) "VOTING STOCK" means shares of the Company Common Stock and any other securities of the Company having the power to vote in the election of members of the Board of Directors of the Company. (dd) "WRITTEN APPROVAL" means receipt of a certificate signed by the Chief Executive Officer of the Company setting forth a resolution adopted by a majority of the Disinterested Directors which provides consent to the matter for which Written Approval is required. (ee) "13D GROUP" means any group of persons formed for the purpose of acquiring, holding, voting or disposing of Voting Stock which would be required under Section 13(d) of the Exchange Act, and the rules and regulations promulgated thereunder, to file a statement on Schedule 13D pursuant to Rule 13d-1(a) of the rules and regulations promulgated under the Exchange Act or a Schedule 13G pursuant to Rule 13d-1(c) of the rules and regulations promulgated under the Exchange Act. (ff) "2005 STOCKHOLDERS MEETING" means the regular scheduled annual meeting of the stockholders of the Company to be held in 2005. 1.02 HEADINGS. The descriptive headings of the several sections and paragraphs of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 1.03 ADJUSTMENTS. All references in this Agreement to percentages or numbers of shares, including but not limited to such references in the definition of "Standstill Limit," shall be subject to adjustment for Company reorganizations, stock splits, stock dividends, reverse stock splits and similar events during the term of this Agreement. ARTICLE II INVESTMENT IN THE COMPANY -5- 2.01 REPRESENTATIONS AND WARRANTY. The Company hereby represents and warrants to the Stockholder that it has amended its current Rights Plan to provide that the Rights shall not be exercisable as a consequence of the beneficial ownership by the KPENV Entities of (a) the Initial Shares, (b) the Option Shares, or (c) a number of shares of Company Common Stock in addition to the Initial Shares and the Option Shares equal to or less than 1% of the total number of shares of Company Common Stock from time to time outstanding, calculated on a primary basis. 2.02 COVENANTS. The Company hereby agrees that the Rights shall not be exercisable as a consequence of the beneficial ownership by the KPENV Entities of (a) the Initial Shares, (b) the Option Shares, or (c) a number of shares of Company Common Stock in addition to the Initial Shares and the Option Shares equal to or less than 1% of the total number of shares of Company Common Stock from time to time outstanding, calculated on a primary basis. 2.03 STOCK OPTIONS. (a) The Company shall, at the sole option of the Stockholder, transfer to the Stockholder, no later than 30 calendar days following the close of the calendar quarter of the Company in which the Effective Time occurs and against payment by the Stockholder to the Company of the aggregate par value thereof, (i) a number of shares of Company Common Stock equal to the product of (A) 122.22%, MULTIPLIED BY (B) the product of (I) the number of shares of Florence Stock issued and Stock Options "cashed out" prior to the Effective Time during such quarter upon exercise of the Stock Options, MULTIPLIED BY (II) the Exchange Ratio, as defined in the Merger Agreement, and (ii) a number of shares of Company Common Stock equal to the product of (A) 122.22%, MULTIPLIED BY (B) the number of shares of Company Common Stock issued and Stock Options "cashed out" at or after the Effective Time during such quarter upon exercise of the Stock Options. (b) The Company shall, at the sole option of the Stockholder, transfer to the Stockholder, no later than 30 calendar days following the close of each calendar quarter following the calendar quarter of the Company in which the Effective Time occurs and against payment by the Stockholder to the Company of the aggregate par value (if any) thereof, a number of securities equal to the product of (i) 122.22%, MULTIPLIED BY (ii) the number of securities issued and Stock Options "cashed out" during such quarter upon exercise of the Stock Options. (c) The Combination Agreement, dated November 15, 1996, between Florence and the Stockholder is hereby amended, effective as of the Effective Time, to delete Sections 2.1 and 5.18 therefrom. The Agreement, effective as of December 31, 2000, among Florence, the Stockholder and Koninklijke Philips Electronics N.V. is hereby amended, effective as of the Effective Time, to delete Section 4 therefrom. (d) This Section 2.03 shall not entitle the Stockholder to purchase a number of shares of Company Common Stock greater than the product of (A) the -6- difference of (I) 331,866 MINUS (II) the number of shares of Florence Stock issued after the date hereof and prior to the Effective Time pursuant to Sections 2.1 and 5.18 of the Combination Agreement referred to in Section 2.03(c) and/or Section 4 of the Agreement referred to in the last sentence of Section 2.03(c), MULTIPLIED BY (B) the Exchange Ratio (as defined in the Merger Agreement). For all purposes of this Section 2.03, "cashed out" means cancelled in exchange for a cash payment. 2.04 BOARD REPRESENTATION. For the period of time beginning on the first calendar day following the Effective Time (the "DIRECTOR DATE") and terminating on the earlier of (i) the first date on which the KPENV Entities cease to beneficially own at least 7.5% of the Total Current Voting Power, and (ii) the date of the 2005 Stockholders Meeting (such period, the "DIRECTOR PERIOD"), the Stockholder shall be entitled to request that the Company include, as a nominee or designee of the Company's board of directors recommended by said board of directors, one person designated by the Stockholder and reasonably satisfactory to the Company's board of directors (any such person, a "STOCKHOLDER NOMINEE"). At, or as promptly as practicable after (but in no event prior to), the Director Date, the Company shall cause one Stockholder Nominee to be elected or appointed as a director of the Company to serve in Class II for a term expiring at the 2005 Stockholders Meeting. During the Director Period, (i) promptly following the death, incapacity, resignation or removal from the Company's board of directors of any Stockholder Nominee, the Company shall cause another Stockholder Nominee to be elected or appointed as a director to fill the vacancy thereby created, and (ii) the Company shall take all such actions as may be reasonably necessary to ensure that one director of the Company is a Stockholder Nominee. Following the Director Period, (i) the Company may request that the Stockholder Nominee then on the Company's board of directors resign as a director of the Company, and (ii) promptly following the Stockholder's receipt of such a request, the Stockholder shall cause such Stockholder Nominee to resign immediately and relinquish all rights and privileges as a member of the Company's board of directors. ARTICLE III AGREEMENTS IN RESPECT OF THE STOCKHOLDER COMPANY SHARES 3.01 DEMAND REGISTRATIONS. (a) At any time following the Effective Time, to and including the date on which the Stockholder shall have received a written opinion of legal counsel reasonably satisfactory to the Stockholder and the Company and addressed to the Company and the Stockholder stating that the Stockholder Company Shares may be publicly offered for sale in the United States by the Stockholder without restriction as to manner of sale and amount of securities sold and without registration under the Securities Act (such period, the "DEMAND PERIOD"), the Stockholder shall have the right on two occasions to require the Company to file a registration statement under the Securities Act -7- in respect of all or a portion of the Stockholder Company Shares held by it. As promptly as practicable, but in no event later than 60 days after the Company receives a written request from the Stockholder demanding that the Company so register the number of Stockholder Company Shares specified in such request, which number shall not be less than the Minimum Number, the Company shall file with the Commission and thereafter use its reasonable best efforts to cause to be declared effective promptly a registration statement (a "DEMAND REGISTRATION") providing for the registration of such number of Stockholder Company Shares as the Stockholder shall have demanded be registered. (b) Anything in this Agreement to the contrary notwithstanding, the Company shall not be required to file or otherwise effect any Demand Registration during the period between the 16th day of each of March, June, September and December and 48 hours following public release by the Company (by means of a press release, 10-Q filing or other public announcement) of its earnings for the quarter in which such 16th day occurs. In addition, anything in this Agreement to the contrary notwithstanding, the Company shall be entitled to postpone and delay the filing or effectiveness of a Demand Registration and, following the effectiveness of any Demand Registration, may suspend the performance of its obligations under Section 3.04 with respect to such Demand Registration (the "SECTION 3.04 OBLIGATIONS"), in any such case for a reasonable period of time (each, a "BLACKOUT PERIOD"), if at any time that the Company shall determine that any such filing or the offering of any Registered Shares would, in the good faith judgment of the Board of Directors of the Company, require disclosure of (to the extent such a transaction has not been previously publicly disclosed), impede, delay or otherwise interfere with any pending or contemplated securities offering, sale, financing, acquisition, corporate reorganization or other similar transaction involving the Company, at any time that the Company shall determine that any such filing or the offering of any Registered Shares would, in the good faith judgment of the Board of Directors of the Company, after receipt of advice from the Company's investment bank or outside financial advisor, adversely affect any pending or contemplated offering or sale of any class of securities by the Company, or at any time that the Company shall determine that any such filing or the offering of any Registered Shares would, in the good faith judgment of the Board of Directors of the Company, after receipt of advice from the Company's outside legal counsel, require disclosure of material nonpublic information (other than information relating to an event described in clause (ii) or (iii) of this sentence) which, if disclosed at such time, would be materially harmful to the interests of the Company and its stockholders; PROVIDED that in the case of a Blackout Period pursuant to clause (i) or (ii) above, the Blackout Period shall earlier terminate upon the completion or abandonment of the relevant securities offering or sale, financing, acquisition, corporate reorganization or other similar transaction; and PROVIDED, FURTHER, that in the case of a Blackout Period pursuant to clause (iii) above, the Blackout Period shall earlier terminate upon public disclosure by the Company or public admission by the Company of such material nonpublic information or such time as such material nonpublic information shall be publicly disclosed without breach of the last sentence of this subsection (b); and PROVIDED, FURTHER, that in the case of any Blackout Period, the Company shall furnish to the Stockholder a certificate of the Secretary of the Company -8- stating that an event permitting a Blackout Period has occurred and attaching a certified copy of a resolution of the Board of Directors of the Company to such effect. Notwithstanding anything herein to the contrary, the Company shall not postpone or delay the filing or effectiveness of any Demand Registration and shall not suspend the performance of the Section 3.04 Obligations pursuant to the second sentence of this Section 3.01(b) for an aggregate of more than 30 days in the case of the first Demand Registration to which the Stockholder is entitled or for an aggregate of more than 90 days in the case of the second Demand Registration to which the Stockholder is entitled. Upon notice by the Company to the Stockholder of any such determination, the Stockholder covenants that it shall keep the fact of any such notice strictly confidential, and promptly halt any offer, sale, trading or transfer by it or any of its Affiliates of any Registered Shares for the duration of the Blackout Period set forth in such notice (or until such Blackout Period shall be earlier terminated in writing by the Company) and promptly halt any use, publication, dissemination or distribution of the Demand Registration, each prospectus included therein, and any amendment or supplement thereto by it and any of its Affiliates for the duration of the Blackout Period set forth in such notice (or until such Blackout Period shall be earlier terminated in writing by the Company). After the expiration of any Blackout Period and without further request from the Stockholder, the Company shall effect the filing of the relevant Demand Registration (if not already filed) and shall use its reasonable best efforts to cause any such Demand Registration to be declared effective (if not already effective) as promptly as practicable unless the Stockholder shall have, prior to the effective date of such Demand Registration, withdrawn in writing its initial request. (c) Any request by the Stockholder for a Demand Registration which is subsequently withdrawn prior to the related registration statement becoming effective shall not constitute a Demand Registration for purposes of determining the number of Demand Registrations to which the Stockholder is entitled if the out-of-pocket expenses incurred by the Company through the date of such request in connection with such registration statement are reimbursed. 3.02 PIGGY-BACK REGISTRATIONS. (a) If, at any time following the Effective Time, the Company proposes to register any shares of the Company Common Stock under the Securities Act on a registration statement on Form S-1, Form S-2 or Form S-3 (or any equivalent general registration form then in effect) for purposes of a primary offering, secondary offering or combined offering of the Company Common Stock, the Company shall, at least 14 days prior to the date when any such registration statement is filed with the Commission, give prompt written notice to the Stockholder of its intention to do so. Such notice shall specify, at a minimum, the number of shares of the Company Common Stock so proposed to be registered, the proposed date of filing of such registration statement, any proposed means of distribution of such shares, any proposed managing underwriter or underwriters of such shares and a good faith estimate by the Company of the proposed maximum offering price thereof, as such price is proposed to appear on the -9- facing page of such registration statement. Upon the written direction of the Stockholder, given within seven days following the receipt by the Stockholder of any such written notice (which direction shall specify the number of Stockholder Company Shares intended to be disposed of by the Stockholder), the Company shall include in such registration statement (a "PIGGY-BACK REGISTRATION" and, collectively with a Demand Registration, a "REGISTRATION"), subject to the provisions of this Section 3.02, such number of Stockholder Company Shares as shall be set forth in such notice. (b) In the event that the Company proposes to register shares of the Company Common Stock in connection with an underwritten offering and any managing underwriter thereof reasonably and in good faith shall have advised the Company, any holder of shares of the Company Common Stock intending to offer such shares in a secondary offering or combined offering (each, an "OTHER HOLDER") and the Stockholder in writing that, in its opinion, including in the registration statement some or all of the Stockholder Company Shares sought to be registered by the Stockholder is reasonably likely to adversely affect the price per share that the Company or any Other Holder will derive from such registration or that the number of shares sought to be registered (including any shares sought to be registered at the request of the Company and any Other Holder and those sought to be registered by the Stockholder) is a greater number of shares than can reasonably be sold, the Company shall include in such registration statement such number of shares as the Company, any Other Holder and the Stockholder are so advised can be sold in such offering without such an effect (the "MAXIMUM NUMBER"), as follows and in the following order of priority: FIRST, such number of shares as the Company intended to be registered and sold by the Company, and (ii) SECOND, in the case of a secondary offering or a combined offering and if and to the extent that the number of shares to be registered under clause (i) is less than the Maximum Number, such number of shares as the Stockholder and any Other Holder shall have intended to register which, when added to the number of shares to be registered under clause (i), is less than or equal to the Maximum Number; PROVIDED that if such number exceeds the Maximum Number, the shares of the Stockholder and such Other Holders will be excluded on a PRO RATA basis. No securities (issued or unissued) other than those registered and included in the underwritten offering shall be offered for sale or other disposition by the holders of Stockholder Company Shares in a transaction which would require registration under the Securities Act until the expiration of 180 days after the effective date of the registration statement in which the Registered Shares were included. (c) No Piggy-Back Registration effected under this Section 3.02 shall be deemed to have been effected pursuant to Section 3.01 hereof or shall release the Company of its obligations to effect any Demand Registration upon request as provided under Section 3.01 hereof. 3.03 ADDITIONAL AGREEMENT. Anything in this Agreement to the contrary notwithstanding, following the expiration of the Demand Period, the Company shall no longer be obligated to file or maintain a registration statement with respect to the Stockholder Company Shares pursuant to this Agreement. -10- 3.04 REGISTRATION PROCEDURES. (a) In connection with each Registration, and in accordance with the intended method or methods of distribution of the Registered Shares as described in such Registration, the Company shall, as soon as reasonably practicable (and, in any event, subject to the terms of this Agreement, including, without limitation, Section 3.01(a), at or before the time required by applicable laws and regulations): (i) prepare and file with the Commission as provided herein a registration statement with respect to such Registered Shares on a registration form appropriate for such registration and use its reasonable best efforts to cause such registration statement to become effective promptly; PROVIDED that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the Stockholder and the managing underwriter or underwriters (if the Demand Registration pertains to an underwritten offering) draft copies of all such documents proposed to be filed at least three days prior to such filing, which documents will be subject to the reasonable review of the Stockholder, the managing underwriter or underwriters (if the Demand Registration pertains to an underwritten offering), and their respective agents and representatives. In the event that the Company proposes to include in any Registration information concerning or relating to the Stockholder to which the Stockholder shall reasonably object, the Company and the Stockholder shall cause their respective senior executives to discuss the Stockholder's objection and to negotiate in good faith an appropriate resolution of such objection. The Company shall not be deemed to be in breach of the second sentence of Section 3.01(a) as the result of the parties' failure to conclude such discussions during the 60 day period referred to therein. (ii) upon request by the Stockholder, furnish without charge to the Stockholder and the managing underwriter or underwriters, if any, thereof, a reasonable number of copies of the Registration and each amendment and supplement thereto (in each case including all exhibits thereto), each prospectus included in such Registration (including each preliminary prospectus) and any amendments or supplements thereto and any documents incorporated therein by reference; (iii) use its reasonable best efforts to keep such Registration effective for at least 90 days (the "EFFECTIVE PERIOD"); prepare and file with the Commission such amendments, post-effective amendments and supplements to the Registration and the prospectus as may be necessary to maintain the effectiveness of the Registration for the Effective Period and to cause the prospectus (and any amendments or supplements thereto) to be filed pursuant to Rules 424 and 430A under the Securities Act and/or any successor rules that may be adopted by the Commission, as such rules may be amended from time to time; and comply with the provisions of the Securities Act with respect to the disposition of all Registered Shares covered by such Registration during the applicable period in accordance with the intended method or methods of distribution thereof, as specified in writing by the Stockholder; -11- (iv) make available for inspection by the Stockholder or by any underwriter, attorney, accountant or other agent retained by the Stockholder (collectively, the "INSPECTORS"), upon reasonable request during normal business hours, financial and other records and pertinent corporate documents of the Company, provide the Inspectors with opportunities to discuss the business of the Company with its officers, and provide opportunities to discuss the business of the Company with the independent public accountants who have certified its most recent annual financial statements, in each case to the extent but only to the extent reasonably necessary to enable the Stockholder or any underwriter retained by the Stockholder to conduct a "reasonable investigation" for purposes of Section 11(a) of the Securities Act. The Stockholder agrees, and the Stockholder shall cause each Inspector to agree, that records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Stockholder or any Inspector, or used by the Stockholder or an Inspector for a purpose other than as described in the preceding sentence unless (1) the disclosure of such records is necessary to avoid or correct a misstatement of a material fact or omission to state a material fact in the Registration, (2) the disclosure of such records is required by any court or governmental body with jurisdiction over the Stockholder or such Inspector, or (3) all of the information contained in such records has been made generally available to the public without any fault on the part of the Inspector. The Stockholder agrees that it will, upon learning that disclosure of such records is sought in a court of competent jurisdiction or by any governmental body, promptly give prior notice to the Company and allow the Company, at its expense, to undertake appropriate action (and the Stockholder shall cooperate with and assist the Company as requested in taking such action) to prevent disclosure of those records deemed confidential; (v) promptly notify the Stockholder and the managing underwriter or underwriters, if any, thereof, after becoming aware thereof, (1) when the Registration or any related prospectus or any amendment or supplement has been filed, and, with respect to the Registration or any post-effective amendment, when the same has become effective, (2) of any request by the Commission for amendments or supplements to the Registration or the related prospectus or for additional information, (3) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration or the initiation of any proceedings for that purpose, (4) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registered Shares for sale in any jurisdiction or the initiation of any proceeding for such purpose, or after becoming aware thereof, within the Effective Period, of the happening of any event which makes any statement in the Registration or any post-effective amendment thereto, prospectus or any amendment or supplement thereto, or any document incorporated therein by reference untrue in any material respect or which requires the making of any changes in the Registration or post-effective amendment thereto or prospectus or amendment or supplement thereto so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, in the light of the circumstances under which they were made) not misleading; -12- (vi) during the Effective Period, use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration or any post-effective amendment thereto; (vii) use its reasonable best efforts to register or qualify the Registered Shares for offer and sale under such securities or "blue sky" laws of such states or other U.S. jurisdictions as the Stockholder and the managing underwriter or underwriters, if any, thereof shall reasonably request in writing; PROVIDED that the Company shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction where it would not otherwise be required to qualify but for the requirements of this Section 3.04(a)(vii), or (2) consent to general service of process in any such jurisdiction; (viii) use its reasonable best efforts to cause the Registered Shares to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary by virtue of the markets on which the Registered Shares are listed or quoted to enable the Stockholder to consummate the disposition of such Registered Shares; (ix) cooperate with the Stockholder and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing such Registered Shares to be sold, which certificates shall not bear any restrictive legends except as required by law; and enable such Registered Shares to be in such denominations and registered in such names as the managing underwriter or underwriters may request in writing at least two business days prior to any sale of the Registered Shares to the underwriters; (x) enter into such agreements (including, if the offering is an underwritten offering, an underwriting agreement) containing such provisions as are customary in transactions of such kind and are not materially inconsistent with the terms of this Agreement, and take such other actions as are reasonably necessary in connection therewith in order to expedite or facilitate the disposition of such Registered Shares; and (1) obtain an opinion or opinions of legal counsel to the Company (which counsel may be internal counsel for the Company unless the managing underwriter or underwriters shall otherwise reasonably request) in customary form and covering matters of the type customarily covered by such opinions, addressed to such managing underwriter or underwriters, if any, and to the Stockholder and dated the date of the closing of the sale of the Registered Shares relating thereto; and (2) obtain a "comfort" letter or letters from the independent certified public accountants who have certified the Company's most recent audited financial statements that are incorporated by reference in the Registration which is addressed to the Stockholder and the managing underwriter or underwriters, if any, and is dated the date of the prospectus used in connection with the offering of such Registered Shares and/or the date of the closing of the sale of such Registered Shares relating thereto, such letter or letters to be in customary form and covering such matters of the type customarily covered by "comfort" letters of such type; -13- (xi) comply with all applicable rules and regulations of the Commission and make available to its security holders an earnings statement, as soon as reasonably practicable but in no event later than 18 months after the effective date of the registration statement, which earnings statement shall cover a period of at least 12 months, beginning with the first full calendar month after the effective date of such registration statement and shall satisfy the provisions of Section 11(a) of the Securities Act and may be prepared in accordance with Rule 158 under the Securities Act; and (xii) take all other steps reasonably necessary to effect the registration, offering and sale of the Registered Shares covered by a registration statement contemplated hereby and enter into any other customary agreements and take such other actions (including making appropriate "Section 16" executives of the Company available for participation in "roadshows") as are reasonably required in order to expedite or facilitate the disposition of such Registered Shares. (b) In the event that the Company would be required, pursuant to Section 3.04(a)(v)(5), to notify the Stockholder and the managing underwriter or underwriters, if any, thereof, the Company shall, subject to the provisions of Section 3.01(b) hereof, as promptly as practicable, prepare and furnish to the Stockholder and such managing underwriter or underwriters a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of Registered Shares, such prospectus shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Stockholder agrees that, upon receipt of any notice from the Company pursuant to Section 3.04(a)(v)(5), the Stockholder shall, and shall use its reasonable best efforts to cause, any sales or placement agent or agents for the Registered Shares and the underwriters, if any, thereof, to forthwith discontinue disposition of Registered Shares until such Person shall have received copies of such amended or supplemented prospectus and, if so directed by the Company, to destroy or to deliver to the Company all copies, other than permanent file copies, then in its possession of the prospectus (prior to such amendment or supplement) covering such Registered Shares as soon as practicable after the Stockholder's receipt of such notice. (c) It shall be a condition to the obligations of the Company to take any action pursuant to Sections 3.01 and 3.02 that the Stockholder shall furnish, at least five days prior to the effectiveness of the registration statement, to the Company in writing such information regarding the Stockholder, the Registered Shares and the Stockholder's intended method of distribution of the Registered Shares as the Company may from time to time reasonably request in writing. The Stockholder shall notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by the Stockholder to the Company or of the occurrence of any event, in either case as a result of which any prospectus relating to the Registered Shares contains or would contain an untrue statement of a material fact regarding the Stockholder or its intended method of distribution of such Registered Shares or omits to -14- state any material fact regarding the Stockholder or its intended method of distribution of such Registered Shares required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and promptly furnish to the Company any additional information required to correct and update any previously furnished information or required so that such prospectus shall not contain, with respect to the Stockholder or the distribution of the Registered Shares, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3.05 REGISTRATION EXPENSES. Except as set forth in the last sentence of this Section 3.05, the Company agrees to bear and to pay, or cause to be paid, promptly upon request being made therefor all expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation: (a) all Commission and any National Association of Securities Dealers registration and filing fees and expenses, (b) all fees and expenses in connection with the qualification of the Registered Shares for offering and sale under state securities or "blue sky" laws referred to in Section 3.04(a)(vi) hereof, including reasonable fees and disbursements of counsel for any underwriter in connection with such qualifications, (c) all expenses relating to the preparation, printing, distribution and reproduction of the Registration, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the certificates representing the Registered Shares and all other documents relating hereto, (d) internal expenses (including, without limitation, all salaries and expenses of the Company's officers and employees performing legal or accounting duties), (e) fees, disbursements and expenses of the Company's counsel and its other advisors and experts and independent certified public accountants of the Company (including the expenses of any opinions or "comfort" letters required by or incident to such performance and compliance), and (f) the fees and expenses incurred in connection with the quotation of the Registered Shares on Nasdaq and any stock exchange on which the Company Common Stock shall at such time be listed or quoted (collectively, the "REGISTRATION EXPENSES"). To the extent that any Registration Expenses are incurred, assumed or paid by the Stockholder and the underwriters, if any, thereof, the Company shall reimburse such Person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor. Notwithstanding the foregoing, the Stockholder shall pay or cause to be paid, as appropriate, (i) all agency fees and commissions and underwriting discounts and commissions directly attributable to the sale of the Registered Shares by or on behalf of the Stockholder, and (ii) the fees, disbursements and expenses of its counsel in connection with the offering and sale of the Registered Shares. 3.06 INDEMNIFICATION; CONTRIBUTION. (a) INDEMNIFICATION BY THE COMPANY. The Company shall, and it hereby agrees to, indemnify and hold harmless the Stockholder, and each Person who participates as a placement or sales agent or as an underwriter in any offering or sale of -15- the Registered Shares, against any losses, claims, damages or liabilities to which the Stockholder or such agent or underwriter may become subject, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company shall, and it hereby agrees to, reimburse the Stockholder or any such agent or underwriter for any legal or other out-of-pocket expenses reasonably incurred by them in connection with investigating or defending any such action, proceeding or claim; PROVIDED that the Company shall not be liable to any such Person in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration, or preliminary or final prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Company by the Stockholder or any agent, underwriter or representative of the Stockholder expressly for use therein, or by the Stockholder's failure to furnish the Company, upon request, with the information with respect to the Stockholder, or any agent, underwriter or representative of the Stockholder, or the Stockholder's intended method of distribution, that is the subject of the untrue statement or omission. The foregoing indemnity is subject to the condition that, insofar as it relates to any such untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or the amended prospectus filed with the Commission pursuant to Rule 424(b), as amended from time to time (the "FINAL PROSPECTUS"), such indemnity shall not inure to the benefit of (i) the Stockholder if a copy of the Final Prospectus was not furnished by the Stockholder to the person asserting the loss, liability, claim or damage at or prior to the time such action as required by the Securities Act and such Final Prospectus would have cured the defect giving rise to the loss, liability, claim or damage, or (ii) any underwriter or agent if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action as required by the Securities Act and the Final Prospectus would have cured the defect giving rise to the loss, liability, claim or damage. (b) INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder shall, and it hereby agrees to, indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, insofar as such losses, claims, damages or liabilities (including any amounts paid in settlement as provided herein), or actions or proceedings in respect thereof, arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Registration, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, -16- in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by the Stockholder expressly for use therein. (c) INDEMNIFICATION BY THE UNDERWRITER(S). The Company may require, as a condition to entering into any underwriting agreement, that such underwriting agreement provide in substance that the underwriters named in such underwriting agreement shall, severally and not jointly, indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, insofar as such losses, claims, damages or liabilities (including any amounts paid in settlement as provided herein), or actions or proceedings in respect thereof, arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Registration, or any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such underwriter or underwriters expressly for use therein. (d) NOTICE OF CLAIMS, ETC. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action or proceeding for which indemnification under subsection (a) or (b) may be requested, such indemnified party shall, without regard to whether a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of, or as contemplated by, this Section 3.06, notify such indemnifying party in writing of the commencement of such action or proceeding; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party in respect of such action or proceeding on account of the indemnification provisions of or contemplated by Section 3.06(a) or 3.06(b) hereof unless the indemnifying party was materially prejudiced by such failure of the indemnified party to give such notice, and in no event shall such omission relieve the indemnifying party from any other liability it may have to such indemnified party. In case any such action or proceeding shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall determine, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal or any other expenses subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation (unless such indemnified party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to the defenses available to such -17- indemnifying party, in which event the indemnified party shall have the right to control its defense and shall be reimbursed by the indemnifying party for the expenses incurred in connection with retaining separate counsel). If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel for each indemnified party with respect to such claim. The indemnifying party will not be subject to any liability for any settlement made without its consent, which consent shall not be unreasonably withheld or delayed. No indemnifying party will consent to entry of any judgment or enter into any settlement agreement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. (e) CONTRIBUTION. The Stockholder and the Company agree that if, for any reason, the indemnification provisions contemplated by Section 3.06(a) or 3.06(b) hereof are unavailable to or are insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative fault of, and benefits derived by, the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.06(e) were determined (i) by PRO RATA allocation; or (ii) by any other method of allocation which does not take account of the equitable considerations referred to in this Section 3.06(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above shall be deemed to include (subject to the limitations set forth in Section 3.06(d) hereof) any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action, proceeding or claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation with respect to an issue for which contribution has been requested. (f) BENEFICIARIES OF INDEMNIFICATION. The obligations of the Company under this Section 3.06 shall be in addition to any liability that it may otherwise have and shall extend, upon the same terms and conditions, to each officer, director, partner and any other Affiliate of the Stockholder and each agent and underwriter of the Registered Shares and each Person, if any, who controls the Stockholder or any such agent or underwriter within the meaning of the Securities Act, each of whom is an intended third -18- party beneficiary of the covenants set forth in this Section 3.06; and the obligations of the Stockholder and any agents or underwriters contemplated by this Section 3.06 shall be in addition to any liability that the Stockholder or its respective agent or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director and Affiliate of the Company (including any Person who, with his consent, is named in any registration statement as about to become a director of the Company) and to each Person, if any, who controls the Company within the meaning of the Securities Act, each of whom is an intended third party beneficiary of the covenants set forth in this Section 3.06. The indemnity, contribution and expense reimbursement obligations set forth in this Section 3.06 shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any indemnified party. (g) UNDERWRITING AGREEMENT CONTROLS. In the event of any conflict between the indemnification and contribution terms as herein set forth and as set forth in any underwriting agreement entered into pursuant hereto, the underwriting agreement shall control. 3.07 UNDERWRITERS. (a) If any of the Registered Shares are to be sold pursuant to an underwritten offering, the investment banker or bankers and the managing underwriter or underwriters thereof shall be selected by the Company except in the case of a Demand Registration, in which case the managing underwriter or underwriters shall be selected by the Stockholder from a group of not fewer than three investment banks of recognized international standing designated by the Company. (b) At the request of the managing underwriter or underwriters in connection with any underwritten offering in which Registered Shares are to be offered, the Stockholder shall enter into a customary "lock-up" agreement pursuant to which it will agree to not effect any sale or distribution of Registered Shares for a period of no more than 180 days beginning on the effective date of any such registration (except as part of such registration). 3.08 UNREGISTERED OFFERINGS. The Stockholder and the Company hereby agree that, in the event that the Company or one or more of its stockholders (including the Stockholder) proposes to make an underwritten offering of Company Common Stock (a) that is exempt from, or not subject to, the registration requirements of the Securities Act by virtue of Regulation S thereunder, and (b) with respect to which such stockholder(s) requests the cooperation and participation of the Company or the management of the Company in performing due diligence and marketing such offering to potential investors (such an offering, an "UNREGISTERED OFFERING"), the relevant notice provisions of Section 3.01 or 3.02 will apply and the required notice will state that the offering is proposed to be made pursuant to Regulation S. In that event, the parties agree to proceed with such an offering on an unregistered basis in good faith as and to the extent provided herein with respect to a registered offering and that the provisions of this -19- Agreement will apply MUTATIS MUTANDIS to such Unregistered Offering, including, without limitation, provisions relating to Blackout Periods, Piggy-Back Registrations, allocations of securities included in an offering, the Company's obligations with respect to an offering (including indemnification provisions and procedures), selection of underwriters, expenses associated with an offering and indemnification and contribution. An Unregistered Offering in which the only securities being sold are the Stockholder Company Shares shall be deemed to constitute one Demand Registration. 3.09 AGREEMENT OF THE STOCKHOLDER. The Stockholder agrees not to, and it shall cause its Affiliates not to, make any sale, transfer or other disposition of shares of the Company Common Stock except in compliance with the registration requirements of the Securities Act and the rules and regulations thereunder or in accordance with the terms of this Agreement. 3.10 LEGENDS. (a) Stop transfer restrictions will be given to the Company's transfer agent(s) with respect to the Stockholder Company Shares and there will be placed on the certificates or instruments representing the Stockholder Company Shares, and on any certificate or instrument delivered in substitution therefor, legends stating in substance: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO SUCH REGISTRATION OR IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN STANDSTILL AND OTHER RESTRICTIONS SET FORTH IN AN INVESTOR AGREEMENT, DATED JULY 11, 2002 BETWEEN THE HOLDER OF THE SHARES AND THE COMPANY. A COPY OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY. (b) The Company hereby agrees that it will cause stop transfer restrictions to be released with respect to any Stockholder Company Shares that are transferred pursuant to an effective registration statement under the Securities Act, pursuant to Rule 144 or 145 under the Securities Act, in accordance with the requirements of Rule 903 or 904 of Regulation S under the Securities Act, or pursuant to another exemption from the registration requirements of the Securities Act -20- and, in any such case, otherwise in accordance with this Agreement; PROVIDED that in the case of any transfer pursuant to clause (ii) or (iii) above, the request for transfer is accompanied by a written statement signed by the Stockholder and, if the Company so requests, a written opinion of counsel in customary form, confirming compliance with the requirements of the relevant exemption from registration; and PROVIDED, FURTHER, that in the case of any transfer pursuant to clauses (ii), (iii) or (iv) above, other than any transfer by the Stockholder to one or more of its Affiliates, or among such Affiliates, or by any such Affiliates to the Stockholder, the Company shall have received a written opinion of legal counsel reasonably satisfactory to the Company. The Company further agrees that it will cause the legends described in subsection (a) of this Section 3.10 to be removed in the event of any transfer as provided in clause (i), (ii) or (iii) above (other than a transfer to an Affiliate of the Stockholder). 3.11 PUBLIC INFORMATION. The Company covenants to make available "adequate current public information" concerning the Company within the meaning of Rule 144(c) under the Securities Act. ARTICLE IV STANDSTILL AND OTHER OBLIGATIONS 4.01 THE STOCKHOLDER'S STANDSTILL OBLIGATIONS. During the Standstill Period, the Stockholder shall not, and shall not permit any KPENV Entity to, without first obtaining Written Approval: (a) Beneficially own or acquire beneficial ownership of Voting Stock or authorize or make a tender offer, exchange offer or other offer to acquire Voting Stock, if the number of shares of Voting Stock beneficially owned by the KPENV Entities exceeds (or would exceed following such an acquisition) the Standstill Limit; (b) "SOLICIT" or engage in any "SOLICITATION" of "PROXIES" with respect to any Voting Stock (italicized terms in this Section 4.01(b) having the respective meanings ascribed to them in Rule 14a-1 under the Exchange Act); (c) Deposit any Voting Stock in a voting trust or subject any Voting Stock to any arrangement or agreement with any third party with respect to the voting of such Voting Stock; (d) Join a 13D Group (other than a group comprised solely of KPENV Entities); (e) Publicly announce any intention to seek amendment or rescission of the provisions of this Section 4.01 or make any proposal to amend or rescind, support any proposal to amend or rescind, or publicly comment on any proposal to amend or -21- rescind, the Rights Plan, in the case of each of the foregoing, that has not received Board Approval; or (f) Publicly announce any intention or desire to (i) acquire the Company or all or a material portion of assets of the Company (including, without limitation, upon expiration of the Standstill Period), (ii) engage in a transaction that would result in a Change of Control of the Company (including, without limitation, upon expiration of the Standstill Period), (iii) increase beyond the Standstill Limit the KPENV Entities' beneficial ownership of the Company's equity securities (including, without limitation, upon expiration of the Standstill Period), or (iv) take any other action that would otherwise be prohibited under this Section 4.01. 4.02 STOCKHOLDER REPORTING OBLIGATIONS. The Stockholder shall promptly (and in no case later than five business days of such event) notify the Company of any acquisition by any KPENV Entity of Voting Stock other than such an acquisition from the Company. Such notice shall specify the amount of Voting Stock beneficially owned by the KPENV Entities as of the date of the notice. Notwithstanding any provision of this Section 4.02 to the contrary, the provisions of this Section 4.02 may be satisfied by the delivery by the Stockholder to the Company of any Schedule 13D or Schedule 13G filed by the Stockholder with the Commission in connection with such acquisition. 4.03 QUORUM OBLIGATION. During the Standstill Period, if and to the extent the Company makes a telephonic request therefor (which request shall be directed to Mr. Guido Dierick at +31 (40) 272-2041 or to Mr. Dierick's successor as General Counsel to the KPENV Entities' global semiconductors business) the Stockholder, as the holder of shares of Voting Stock, shall be present (and shall cause any of its Affiliates holding Voting Stock to be so present), in person or by proxy, at any meeting of stockholders of the Company as to which such a request is made so that all such shares of Voting Stock may be counted for purposes of determining the presence of a quorum at such meetings. ARTICLE V MISCELLANEOUS 5.01 TERM OF AGREEMENT; TERMINATION. The term of this Agreement shall commence on the date hereof and such term and this Agreement shall automatically terminate upon the earliest to occur of: (a) the termination (prior to the Effective Time) of the Merger Agreement in accordance with its terms, (b) the expiration of the Demand Period, and (c) when all of the Stockholder Company Shares have been sold by the Stockholder either pursuant to a registration statement or pursuant to a transaction or transactions exempt from the registration provisions of the Securities Act. -22- 5.02 SPECIFIC PERFORMANCE AND OTHER EQUITABLE RIGHTS. Each of the parties hereto recognizes and acknowledges that a breach by a party or by any assignee thereof of any covenants or other commitments contained in this Agreement will cause the other party to sustain injury for which it would not have an adequate remedy at law for money damages. Therefore, each of the parties hereto agrees that in the event of any such breach, the aggrieved party shall be entitled to the remedy of specific performance of such covenants or commitments and preliminary and permanent injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity, and the parties hereto further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief. 5.03 NOTICES. All notices, requests, demands and other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended or delivered by overnight courier, registered or certified mail, return receipt requested, or if sent by telecopier, upon receipt of oral confirmation that such transmission has been received, to the Person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such Person: (a) if to the Company, addressed as follows: Gregory A. Robbins c/o Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, New York 11797 Telephone: (516) 677-0200 Telecopier: (516) 677-9125 with a copy to: Rory A. Greiss c/o Kaye Scholer LLP 425 Park Avenue New York, New York 10022 Telephone: (212) 836-8261 Telecopier: (212) 836-7152 (b) if to Florence, addressed as follows: Bradley J. Thies c/o FEI Company 7425 N.W. Evergreen Parkway Hillsboro, Oregon 97124-5830 -23- Telephone: (503) 640-7500 Telecopier: (503) 640-7509 with a copy to: Larry W. Sonsini c/o Wilson Sonsini Goodrich & Rosati, Professional Corporation 650 Page Mill Road Palo Alto, California 94304 Telephone: (650) 493-9300 Telecopier: (650) 493-6811 (c) if to the Stockholder, addressed as follows: Guido Dierick c/o Philips Semiconductors Legal Department Building B460-1 Prof. Holstlaan 4 5656AA Eindhoven The Netherlands Telephone: +31 (40) 272-2041 Telecopier: +31 (40) 272-4005 with a copy to: Matthew G. Hurd c/o Sullivan & Cromwell 1870 Embarcadero Road Palo Alto, California 94303 Telephone: (650) 461-5600 Telecopier: (650) 461-5700, or to such other address as the relevant party may from time to time advise by notice in writing given pursuant to this Section 5.03. The date of receipt of any such notice, request, consent, agreement or approval shall be deemed to be the date of delivery thereof. 5.04 PARTIES IN INTEREST. This Agreement shall inure to the benefit of and be binding upon the parties named herein and their respective successors, assigns, officers, directors, partners, agents, underwriters and controlling Persons. Except as provided in Section 3.06 and Section 5.08, nothing in this Agreement, express or implied, is intended to confer upon any Person other than the parties hereto, or their successors or assigns, any rights or remedies under or by reason of this Agreement. -24- 5.05 SURVIVAL. The several indemnities, agreements, representations, warranties and each other provision set forth in this Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any party, any director or officer of such party, or any controlling Person of any of the foregoing, and shall survive the consummation of the Merger and the transfer of any Registered Shares by the Stockholder, and the indemnification and contribution provisions set forth in Section 3.06 hereof shall survive termination of this Agreement. 5.06 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 5.07 ASSIGNMENT. No party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other parties hereto, which consent shall not be unreasonably withheld, delayed or conditioned, and any such purported assignment shall be null and void. 5.08 OTHER AGREEMENTS. The Company will not enter into any agreement with respect to its securities which is in conflict with the rights granted in this Agreement. 5.09 GOVERNING LAW; JURISDICTION; VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable New York principles of conflicts of law). The parties hereto unconditionally and irrevocably agree and consent to the exclusive jurisdiction of, and service of process and venue in, the United States District Court and the courts of the State of New York located in the County of New York, State of New York, and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby and further agree not to commence any such action, suit or proceeding except in any such court. Each party irrevocably waives any objections or immunities to jurisdiction to which it may otherwise be entitled or become entitled (including sovereign immunity, immunity to pre-judgment attachment, post-judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or relating to this Agreement or the transactions contemplated hereby which is instituted in any such court. 5.10 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings among the parties with respect to its subject matter. This Agreement may be amended and the observance of any term of this -25- Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by each of the parties, which shall be binding on all of the parties. 5.11 FURTHER ASSURANCES. Each party shall provide (at the expense of the requesting party) such further documents or instruments reasonably requested by any other party as may be necessary or desirable to effect the purpose and intention of this Agreement and carry out its provisions, whether before or after its termination. 5.12 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to a party under this Agreement shall impair any such right, power or remedy nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. 5.13 EXPENSES. Except as otherwise specifically provided herein, the Company and the Stockholder shall each bear their own expenses incurred with respect to this Agreement and the transactions contemplated hereby. 5.14 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (Signature page follows) -26- IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. PHILIPS BUSINESS ELECTRONICS INTERNATIONAL B.V. By: /s/ J.C. Lobbezoo -------------------------------------------------------------- Name: J.C. Lobbezoo Title: Member Management Board By: /s/ A.P.M. van der Poel -------------------------------------------------------------- Name: A.P.M. van der Poel Title: Member Management Board VEECO INSTRUMENTS INC. By: /s/ Edward H. Braun -------------------------------------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President FEI COMPANY By: /s/ Vahe A. Sarkissian ------------------------------------------------------------- Name: Vahe A. Sarkissian Title: President and Chief Executive Officer -27- EX-4.1 7 a2084384zex-4_1.txt EXHIBIT 4.1 EXHIBIT 4.1 AMENDMENT NO. 2 TO RIGHTS AGREEMENT This AMENDMENT NO. 2 (this "Amendment No. 2") is being entered into as of July 11, 2002, between Veeco Instruments Inc., a Delaware corporation (the "Company"), and American Stock Transfer and Trust Company, a New York banking corporation, as rights agent (the "Rights Agent"). WHEREAS, the Company and the Rights Agent are parties to a Rights Agreement, dated as of March 13, 2001, between the Company and the Rights Agent, as previously amended pursuant to the Amendment to Rights Agreement dated as of September 6, 2001 (the "Rights Agreement"); WHEREAS, simultaneously with the execution of this Amendment No. 2, the Company is entering into an Agreement and Plan of Merger (the "FEI Merger Agreement") by and among the Company, Venice Acquisition Corp., an Oregon corporation and a wholly-owned subsidiary of the Company ("Acquisition") and FEI Company, an Oregon corporation ("FEI"), pursuant to which Acquisition will merge with and into FEI with the result that FEI will be the surviving corporation and shall become a wholly-owned subsidiary of the Company (the "FEI Merger"); WHEREAS, pursuant to the FEI Merger, Philips Business Electronics International B.V. ("Philips"), a significant stockholder of FEI, will receive approximately 11,198,832 shares of common stock and other securities of the Company, representing approximately 15% of the shares of common stock of the Company expected to be outstanding as of the Effective Time (as defined in the FEI Merger Agreement); WHEREAS, simultaneously with the execution of this Amendment No. 2, the Company is entering into that certain Investor Agreement dated the date hereof between the Company, Philips and FEI; and WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company and the Rights Agent may supplement or amend the Rights Agreement in accordance with the provisions of Section 27 thereof. The Company now desires to amend the Rights Agreement as set forth in this Amendment No. 2 and deems such amendments to be necessary and desirable. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Rights Agreement. NOW THEREFORE, in consideration of the premises and the mutual agreement herein set forth, the parties hereby agree as follows: 1. AMENDMENT OF SECTION 1(a). Section 1(a) of the Rights Agreement is hereby amended to add the following sentence at the end thereof: "Notwithstanding anything in this Agreement to the contrary, (A) for so long as none of the KPENV Entities that have reported or 1 are required to report ownership on Schedule 13G or Schedule 13D under the Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement or (B) (I) if any of the KPENV Entities that have reported or are required to report ownership on Schedule 13G or Schedule 13D under the Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement and (II) the Board of Directors of the Company in its sole discretion adopts a resolution approving such action (which resolution may be adopted prior to, upon or not later than 15 days following such time as a majority of the Board of Directors of the Company becomes aware of the taking of any such action by any KPENV Entity), none of the KPENV Entities shall be deemed to be an Acquiring Person solely as a consequence of: (i) the execution of the FEI Merger Agreement; (ii) the beneficial ownership by the KPENV Entities of Common Stock or other securities of the Company acquired directly as a result of the FEI Merger; (iii) the beneficial ownership by the KPENV Entities of the Philips Option Shares; (iv) the acquisition by, or beneficial ownership of, the KPENV Entities of a number of shares of Common Stock, in addition to the shares described in clauses (ii) and (iii), that is equal to or less than one percent (1%) of the total number of shares of Common Stock from time to time outstanding, calculated on a primary basis; and/or (v) the transfer of shares of Common Stock received pursuant to (ii), (iii) or (iv) above by and among the KPENV Entities." 2. AMENDMENT OF SECTION 1(kk). Section 1(kk) of the Rights Agreement is hereby amended to add the following proviso at the end thereof: "; PROVIDED FURTHER, HOWEVER, that (A) for so long as none of the KPENV Entities that have reported or are required to report ownership on Schedule 13G or Schedule 13D under the Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement or (B)(I) if any of the KPENV Entities that have reported or are required to report ownership on Schedule 13G or Schedule 13D under the Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement and (II) the Board of Directors of 2 the Company in its sole discretion adopts a resolution approving such action (which resolution may be adopted prior to, upon or not later than 15 days following such time as a majority of the Board of Directors of the Company becomes aware of the taking of any such action by any KPENV Entity), no Triggering Event shall result solely by virtue of: (i) the execution of the FEI Merger Agreement; (ii) the beneficial ownership by the KPENV Entities of Common Stock or other securities of the Company acquired directly as a result of the FEI Merger; (iii) the beneficial ownership by the KPENV Entities of the Philips Option Shares; (iv) the acquisition by, or beneficial ownership of, the KPENV Entities of a number of shares of Common Stock, in addition to the shares described in clauses (ii) and (iii), that is equal to or less than one percent (1%) of the total number of shares of Common Stock from time to time outstanding, calculated on a primary basis; and/or (v) the transfer of shares of Common Stock received pursuant to (ii), (iii) or (iv) above by and among the KPENV Entities." 3. AMENDMENT OF SECTION 1. Section 1 of the Rights Agreement is hereby amended to add the following subparagraphs at the end thereof: (pp) "Acquisition" shall mean Venice Acquisition Corp., an Oregon corporation and a wholly-owned subsidiary of the Company. (qq) "FEI" shall mean FEI Company, an Oregon corporation. (rr) "FEI Merger" shall mean the merger of Acquisition with and into FEI pursuant to the FEI Merger Agreement with the result that FEI will be the surviving corporation and shall become a wholly-owned subsidiary of the Company. (ss) "FEI Merger Agreement" shall have the meaning set forth in Section 36 hereof. (tt) "Investor Agreement"shall mean that certain Investor Agreement, dated as of the date hereof, by and between the Company, Philips Business Electronics International B.V. and FEI. (uu) "KPENV Entities" shall mean, collectively, Koninklijke Philips Electronics N.V., a company incorporated under the laws of the Netherlands, and each entity controlled by Koninklijke Philips Electronics N.V. 3 (vv) "Philips Option Shares" shall mean securities issuable to Philips pursuant to Section 2.03 of the Investor Agreement. 4. AMENDMENT OF SECTION 3(a). Section 3(a) of the Rights Agreement is hereby amended to add the following sentence at the end thereof: "Notwithstanding anything in this Agreement to the contrary,(A) for so long as none of the KPENV Entities that have reported or are required to report ownership on Schedule 13G or Schedule 13D under the Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement or (B)(I) if any of the KPENV Entities that have reported or are required to report ownership on Schedule 13G or Schedule 13D under the Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement and (II) the Board of Directors of the Company in its sole discretion adopts a resolution approving such action (which resolution may be adopted prior to, upon or not later than 15 days following such time as a majority of the Board of Directors of the Company becomes aware of the taking of any such action by any KPENV Entity), a Distribution Date shall not be deemed to have occurred solely by virtue of: (i) the execution of the FEI Merger Agreement; (ii) the beneficial ownership by the KPENV Entities of Common Stock or other securities of the Company acquired directly as a result of the FEI Merger; (iii) the beneficial ownership by the KPENV Entities of the Philips Option Shares; (iv) the acquisition by, or beneficial ownership of, the KPENV Entities of a number of shares of Common Stock, in addition to the shares described in clauses (ii) and (iii), that is equal to or less than one percent (1%) of the total number of shares of Common Stock from time to time outstanding, calculated on a primary basis; and/or (v) the transfer of shares of Common Stock received pursuant to (ii), (iii) or (iv) above by and among the KPENV Entities." 5. AMENDMENT OF SECTION 7(a). Section 7(a) of the Rights Agreement is hereby amended to add the following sentence at the end thereof: "Notwithstanding anything in this Agreement to the contrary,(A) for so long as none of the KPENV Entities that have reported or are required to report ownership on Schedule 13G or Schedule 13D under the 4 Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement or (B)(I) if any of the KPENV Entities that have reported or are required to report ownership on Schedule 13G or Schedule 13D under the Exchange Act (or any comparable or successor report) takes, or states any intention or desire to take, any action prohibited under any of clauses (a) through (f) of Section 4.01 of the Investor Agreement and (II) the Board of Directors of the Company in its sole discretion adopts a resolution approving such action (which resolution may be adopted prior to, upon or not later than 15 days following such time as a majority of the Board of Directors of the Company becomes aware of the taking of any such action by any KPENV Entity), none of the following shall be deemed to be events that cause the Rights to become exercisable pursuant to the provisions of this Section 7 or otherwise: (i) the execution of the FEI Merger Agreement; (ii) the beneficial ownership by the KPENV Entities of Common Stock or other securities of the Company acquired directly as a result of the FEI Merger; (iii) the beneficial ownership by the KPENV Entities of the Philips Option Shares; (iv) the acquisition by, or beneficial ownership of, the KPENV Entities of a number of shares of Common Stock, in addition to the shares described in clauses (ii) and (iii), that is equal to or less than one percent (1%) of the total number of shares of Common Stock from time to time outstanding, calculated on a primary basis; and/or (v) the transfer of shares of Common Stock received pursuant to (ii), (iii) or (iv) above by and among the KPENV Entities." 6. ADDITION OF SECTION 36. The Rights Agreement is hereby amended to add the following new Section 36: "Section 36. MERGER WITH FEI The Company, Acquisition and FEI have entered into an Agreement and Plan of Merger, dated as of July 11, 2002, as it may be amended from time to time (the "FEI Merger Agreement"). Notwithstanding anything in this Agreement to the contrary, if the FEI Merger Agreement shall be terminated for any reason, then, effective as of the time of such termination, the following provisions which were added to this Agreement by Amendment No. 2 to Rights Agreement, dated as of July 11, 2002, shall be deemed repealed and deleted without any further action on the part of the Company or the Rights Agent: (1) the last sentence of Section 1(a) hereof, (2) the proviso at the end of Section 1(kk) hereof, (3) subsections (pp), (qq), (rr), (ss), (tt), (uu) and (vv) of Section 1 hereof, (4) the last sentence of Section 3(a) hereof and (5) the last sentence of Section 7(a) hereof." 7. EFFECTIVENESS. This Amendment No. 2 shall be deemed effective as of the date first written above. Except as amended hereby, the Rights Agreement shall remain in full force 5 and effect and shall be otherwise unaffected hereby. 8. MISCELLANEOUS. This Amendment No. 2 shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state without giving effect to the principles of conflict of laws thereof. This Amendment No. 2 may be executed in any number of counterparts, each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. If any term or other provision of this Amendment No. 2 is determined to be invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other terms and provisions of this Amendment No. 2 shall nevertheless remain in full force and effect and upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, this Amendment No. 2 and such term or other provision shall be deemed to have been amended so as to effect the original intent of the parties as closely as possible in a manner acceptable to the board of directors of the Company. 6 IN WITNESS WHEREOF, this Amendment No. 2 to Rights Agreement is executed under seal as of the date first set forth above. VEECO INSTRUMENTS INC. By: /s/ Greg Robbins ------------------------------------------- Name: Greg Robbins Title: Vice President and General Counsel AMERICAN STOCK TRANSFER AND TRUST COMPANY By: /s/ Herbert J. Lemmer ------------------------------------------- Name: Herbert J. Lemmer Title: Vice President and General Counsel EX-10.1 8 a2084384zex-10_1.txt EXHIBIT 10.1 EXHIBIT 10.1 VEECO INSTRUMENTS INC. VAHE SARKISSIAN EMPLOYMENT AGREEMENT This Agreement is made by and between Veeco Instruments Inc., a Delaware corporation (the "Company"), and Vahe Sarkissian ("Executive") as of July 11, 2002. This Agreement is contingent upon and shall become effective only upon the Closing of the Merger (as defined in the Merger Agreement referred to below). The terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Merger Agreement. The period of Executive's employment under this Agreement is referred to herein as the "Employment Term." RECITALS WHEREAS, the Company, Venice Acquisition Corp., an Oregon corporation and a wholly-owned subsidiary of the Company ("Acquisition"), and Florence Company, an Oregon corporation ("Florence") are parties to an Agreement and Plan of Merger, dated July 11, 2002 (the "Merger Agreement"), pursuant to which, at the Effective Time, Acquisition will merge with and into Florence, with the result that Florence will be the surviving corporation and will become a wholly-owned subsidiary of the Company; WHEREAS, Executive previously entered into an employment agreement with Florence on May 14, 1998 and an Executive Severance Agreement with Florence on February 1, 2002 (the "Original Agreements"); and WHEREAS, Executive agrees to enter into this Agreement which will replace and supersede the Original Agreements in their entirety. NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein and for other good and valuable consideration, the receipt of and sufficiency of which are hereby acknowledged, Company and the Executive agree as follows: 1. DUTIES AND SCOPE OF EMPLOYMENT. (a) POSITIONS AND DUTIES. Executive will serve as the Company's Chairman of the Board and Chief Strategy Officer. Executive will have the powers and duties commensurate with chairmen of publicly-traded entities, will preside at all meetings of the board of directors of the Company (the "Board") and at all meetings of the stockholders and will have such other powers and duties as the Board assigns to him. Executive will manage the board-level governance of the Company. Executive will work with the Chief Executive Officer to plan and develop strategy for the Company, to set goals and financial performance measures for the Company and to integrate Florence with the Company. Executive will co-chair the Company Integration Steering Committee and the Company's Strategic Review Board. (b) OBLIGATIONS. During the Employment Term, Executive will devote Executive's full business efforts and time to the Company. During the Employment Term, Executive agrees not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Board (which approval will not be unreasonably withheld); PROVIDED, HOWEVER, that Executive may, without the approval of the Board, serve in any capacity with any civic, educational or charitable organization, or with any company listed on EXHIBIT A (but in all cases subject to Section 12). (c) AT-WILL EMPLOYMENT. Executive and the Company agree that Executive's employment with the Company constitutes "at-will" employment. Executive and the Company acknowledge that this employment relationship may be terminated at any time, upon written notice to the other party, with or without good cause or for any or no cause, at the option either of the Company or Executive; PROVIDED, HOWEVER, that no termination of the Executive's employment by the Company shall be effective without the affirmative vote of at least two-thirds (?) of the members of the Board (other than Executive). As described in this Agreement, Executive may be entitled to severance benefits depending upon the circumstances of Executive's termination of employment. 2. COMPENSATION. (a) BASE SALARY. During the Employment Term, the Company will pay Executive as compensation for Executive's services a base salary at the annualized rate of $600,000 (the "Base Salary"). The Base Salary will be paid through payroll periods that are consistent with the Company's normal payroll practices. The Executive's Base Salary will be reviewed annually by the Compensation Committee of the Board (the "Committee") and will be subject to increase (but not decrease) at the option and sole discretion of the Committee. (b) BONUSES. For each fiscal year of the Company during the Employment Term, Executive will be eligible to receive a target bonus of up to 100% of Executive's then Base Salary based upon the achievement of performance criteria specified by Committee. The actual amount of the bonus payable for any year will depend upon the extent to which the applicable performance criteria have been satisfied. Any bonus that actually is earned will be paid as soon as practicable (but no later than 2 1/2 months) after the end of the fiscal year for which the bonus is earned, but only if Executive was employed with the Company through the end of the fiscal year. (c) EMPLOYEE BENEFITS. During the Employment Term (i) Executive will be eligible to participate in such employee benefit plans or programs of the Company as are generally made available by the Company to its executive officers, and shall be entitled to such other fringe benefits, as are from time to time made available by the Company to the Chief Executive Officer of the Company, as such plans, policies and arrangements and terms may exist from time to time; (ii) Executive shall be permitted to participate in the Florence Non-Qualified Deferred Compensation Plan (or in a successor plan with substantially the same terms and conditions, which plan may permit the participation of other officers and employees of the Company); and (iii) the Company will pay the Executive a monthly car allowance in an amount equal to the amount paid to the Chief Executive Officer. -2- (d) BUSINESS EXPENSES. The Company will reimburse Executive, in accordance with the practices in effect from time to time for other officers or staff personnel of the Company, for all reasonable 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 (including travel to and from the Executive's residence in California and the Company's headquarters and other locations), upon presentation by the Executive to the Company of appropriate documentation. (e) STOCK OPTIONS. At least once during each fiscal year of the Company during the Employment Term, the Committee will consider granting Executive an option or options to purchase shares of the Company's common stock ("Shares") at a per Share exercise price equal to no more than the fair market value per Share on the grant date(s) of the option(s). The number and terms and conditions of any options granted to Executive will be determined at the discretion of the Committee, but in no event shall the number of stock options, or the terms and conditions of such stock options, be less favorable than the stock options granted to the Chief Executive Officer of the Company. (f) VACATION. Executive will be entitled to paid vacation of four weeks per year in accordance with the Company's vacation policy, with the timing and duration of specific vacations mutually and reasonably agreed to by the parties hereto. (g) LOAN. Company acknowledges that Florence and Executive have recently amended Executive's Non-Negotiable Promissory Note dated June 25, 1998 (in the principal amount of $1,115,530) to provide for: (i) an extension of the due date of all amounts owed pursuant to such note to June 24, 2005 and (ii) the adjustment of the interest rate payable under such note to the current market rate of 5.75% per annum. 3. COMPENSATION UPON TERMINATION. (a) Notwithstanding anything to the contrary in this Agreement, if Executive's employment with the Company terminates for any reason (including, death or Disability), other than pursuant to a termination of Executive's employment for Cause or a resignation by the Executive without Good Reason, then Executive (or if applicable, his estate) shall be entitled to the following benefits: (i) BASE SALARY. As severance pay and in lieu of any other compensation for periods subsequent to the date of termination, the Company shall pay Executive, in a single payment after employment has ended and eight days have passed following execution of the Release of Claims without revocation (the "Payment Date"), an amount in cash equal to the product of three times Executive's Base Salary at the rate in effect immediately prior to the date of termination. (ii) BONUS. Executive shall be entitled to receive an amount equal to 100% of the Executive's target bonus for the year in which termination occurs as set forth in Section 2(b) (less amounts previously paid). The amount payable pursuant to this Section 3(a)(ii) shall be paid on the Payment Date. (iii) STOCK OPTIONS AND RESTRICTED STOCK. All outstanding stock options held by Executive under all stock option and stock incentive plans of the Company (including plans of Florence existing prior to the Merger) shall become immediately exercisable in full (except with -3- respect to any plan intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code")) and shall remain exercisable until the earlier of (i) three years after termination of employment and (ii) the option expiration date as set forth in the applicable option agreement. All vesting requirements and repurchase rights of the Company under all outstanding restricted stock awards held by the Executive shall immediately terminate. (iv) The additional benefits set forth in Sections 5 and 6. (b) In the event that Executive desires to terminate his employment pursuant to this Section 3 for Good Reason, Executive shall, prior to such termination, meet with the Board to discuss his intention to terminate for Good Reason and the basis for such termination (and the Board shall meet with Executive within ten days of Executive's request for a meeting). If the Company has not, within ten days following such meeting with the Board, cured the situation to Executive's reasonable satisfaction, then Executive shall have the right to terminate this Agreement and receive the benefits set forth in this Section 3. Notwithstanding the foregoing, if Executive terminates his employment for Good Reason under this Section 3 and the Company does not agree that Executive had the right to terminate for Good Reason under this Section 3, the Company shall be entitled to seek resolution of the disagreement pursuant to Section 14 hereof. 4. OTHER TERMINATION. If Executive's employment with the Company terminates pursuant to a termination of Executive's employment for Cause or a resignation by the Executive (except as permitted herein for Good Reason), then (a) the vesting of all the Executive's outstanding stock options and restricted stock awards will terminate immediately, (b) all payments of compensation by the Company to Executive hereunder will terminate immediately (except as to amounts already earned and as otherwise provided in Sections 5 and 6), and (c) Executive will only be eligible for severance benefits in accordance with the Company's established policies as then in effect, if any. 5. GOLDEN PARACHUTE EXCISE TAX GROSS-UP. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Executive constitute "parachute payments" within the meaning of Section 280G of the Code and will be subject to the excise tax imposed by Section 4999 of the Code (whether in connection with the Merger or otherwise), then the Executive shall receive (a) a payment from the Company sufficient to pay such excise tax, and (b) an additional payment from the Company sufficient to pay the excise tax and federal and state income taxes arising from the payments made by the Company to Executive pursuant to this sentence. Unless the Company and the Executive otherwise agree in writing, the determination of Executive's excise tax liability and the amount required to be paid under this Section 5 shall be made in writing by the accounting firm that is the Company's auditors or such other accounting firm that is mutually acceptable to the Company and the Executive (the "Accountants"). In the event that the excise tax incurred by Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and Employee agree to promptly make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate to ensure that the net economic effect to Employee under this Section 5, on an after-tax basis, is as if the Code Section 4999 excise tax did not apply to Executive. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations of the Code for which there is a "substantial authority" tax reporting position. The Company and the Executive shall furnish to the Accountants such information and documents as the -4- Accountants may reasonably request in order to make a determination under this Section 5. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5. 6. OTHER POST-EMPLOYMENT BENEFITS. In addition to the benefits provided elsewhere in this Agreement, for a period of five years after the termination of Executive's employment with the Company (by the Company or Executive for any reason), at the Company's expense, 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 employment, the Company shall arrange to provide the Executive, at the Company's expense, with benefits substantially similar to those which the Executive would have been entitled to receive under such plans and programs. 7. DEFINITIONS. (a) GOOD REASON. "Good Reason" means: (i) The assignment to Executive of a different title, job or responsibilities that results in a substantial decrease in the level of responsibility of Executive with respect to the Company's business; (ii) A reduction by the Company in Executive's Base Salary, other than a salary reduction that is part of a salary reduction affecting Company employees generally; (iii) A significant reduction by the Company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans; (iv) The Company's material breach of its obligations under this Agreement; (v) The Company requiring Executive to travel on Company business to an extent substantially inconsistent with his duties as Chairman and Chief Strategy Officer; or (vi) The Company's movement of its headquarters outside the continental United States. (b) CAUSE. "Cause" means (i) the willful and continued failure by Executive to perform substantially Executive's reasonably assigned duties with the Company (other than any such failure resulting from Executive's incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Executive by the Board, which specifically identifies the manner in which the Board believes that Executive has not substantially performed Executive's duties or (ii) the willful engaging by Executive in illegal conduct which is materially and demonstrably injurious to the Company. For this purpose, no act, or failure to act, on Executive's part shall be considered "willful" unless done, or omitted to be done, by Executive without reasonable belief that Executive's action or omission was in, or not opposed to, the best interests of -5- the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board shall be conclusively presumed to be done, or omitted to be done, by Executive in the best interests of the Company. (c) DISABILITY. "Disability" means Executive's absence from Executive's full-time duties with the Company for 180 consecutive days as a result of Executive's incapacity due to physical or mental illness, unless within 30 days after notice of termination by the Company following such absence Executive shall have returned to the full-time performance of Executive's duties. 8. CONFIDENTIAL INFORMATION AGREEMENT. Executive agrees to enter into the Company's standard Confidential Information and Invention Assignment Agreement (the "Confidential Information Agreement") in the form attached as EXHIBIT B. 9. ASSIGNMENT. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive's death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, "successor" means any Person which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. The Company may not assign or transfer this Agreement without the prior written consent of Executive. Any other attempted assignment, transfer, conveyance or other disposition of Executive's right to compensation or other benefits will be null and void. 10. NOTICES. All notices, requests, demands and other communications called for hereunder shall be in writing and shall be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing: If to the Company: Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, New York 11797 Telephone: (516) 677-0200 Telecopier: (516) 677-9125 ATTN: General Counsel If to Executive: Vahe Sarkissian at the last residential address known by the Company. -6- 11. SEVERABILITY. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. 12. NON-COMPETE/NON-SOLICIT. (a) During the Employment Term and ending on the second anniversary of Executive's termination of employment with the Company (the "Non-Compete Period"), Executive shall not, other than on behalf of the Company, directly or indirectly, without the prior written consent of the Company, engage anywhere in the Geographic Area in (whether as an employee, agent, consultant, advisor, independent contractor, proprietor, partner, officer, director or otherwise), have any ownership interest in (except for passive ownership of one percent (1%) or less of any entity (other than the Company) whose securities have been registered under the Securities Act of 1933 or Section 12 of the Exchange Act), or participate in the financing, operation, management or control of, any firm, partnership, corporation, entity or business that engages or participates in a "competing business purpose." The term "competing business purpose" shall mean the designing, manufacturing, marketing and servicing of products that deposit or etch materials on a substrate or that provide critical measurements of certain features utilized in data storage and semiconductor devices. (b) During the Employment Term and ending on the third anniversary of Executive's termination of employment with the Company, Executive shall not, directly or indirectly, without the prior written consent of Company, solicit, encourage or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any employee of the Company or any of its Subsidiaries to terminate his or her employment with the Company. During the Non-Compete Period, Executive shall not, directly or indirectly, without the prior written consent of Company, solicit, encourage or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any customer, supplier or other business contact of the Company or any of its Subsidiaries to terminate his, her or its relationship with the Company or any of its Subsidiaries. (c) The Geographic Area shall mean (i) the United States, or (ii) anywhere in the world outside the United States the Company or any of its Subsidiaries conducts business. (d) The covenants contained in this Section 12 shall be construed as a series of separate covenants, one for each county, city, state, country or any similar subdivision in any Geographic Area. Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in the preceding paragraphs. If, in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of this Section 12 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws. (e) Executive acknowledges that the nature of the Company's business is such that if Executive was to become employed by, or substantially involved in, the business of a competitor of -7- the Company soon following the termination of Executive's employment with the Company, it would be very difficult for Executive not to rely on or use the Company's trade secrets and confidential information. Executive has agreed to enter into this Agreement to avoid the inevitable disclosure of the Company's trade secrets and confidential information. (f) Executive also acknowledges that the limitations of time, geography, and scope of activity agreed to in this Agreement are reasonable because, among other things, (i) the Company is engaged in a highly competitive industry, (ii) Executive has unique access to, and will continue to have access to, the trade secrets and know how of the Company, including without limitation the plans and strategy (and in particular the competitive strategy) of the Company, and (iii) in the event Executive's employment with the Company ended, Executive would be able to obtain suitable and satisfactory employment without violation of this Agreement. 13. ENTIRE AGREEMENT. This Agreement, including the Confidential Information Agreement, any outstanding stock option or restricted stock agreements between Florence and Executive and any loan documents between Florence and Executive, represents the entire agreement and understanding between the Company and Executive concerning Executive's employment relationship with the Company, and supersedes and replaces any and all prior agreements and understandings concerning Executive's employment relationship with the Company entered into prior to the date hereof, including the Original Agreements. 14. ARBITRATION. (a) GENERAL. In consideration of Executive's service to the Company, its promise to arbitrate all employment related disputes and Executive's receipt of the compensation, pay raises and other benefits paid to Executive by the Company, at present and in the future, Executive agrees that any and all controversies, claims, or disputes with anyone (including the Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such or otherwise) arising out of, relating to, or resulting from Executive's service to the Company under this Agreement or otherwise or the termination of Executive's service with the Company, including any breach of this Agreement, shall be subject to binding arbitration pursuant to New York law. Disputes which Executive agrees to arbitrate, and thereby agrees to waive any right to a trial by jury, include any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, claims of harassment, discrimination or wrongful termination and any statutory claims. Executive further understands that this Agreement to arbitrate also applies to any disputes that the Company may have with Executive. (b) PROCEDURE. Executive agrees that any arbitration will be administered by the American Arbitration Association ("AAA") and that a neutral arbitrator will be selected in a manner consistent with its National Rules for the Resolution of Employment Disputes (the "Rules"). The arbitration proceedings will allow for discovery according to the rules set forth in the Rules. Executive agrees that the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. Executive agrees that the arbitrator shall issue a written decision on the merits. Executive also agrees that the arbitrator shall have the power -8- to award any remedies, including attorneys' fees and costs, available under applicable law. Notwithstanding the foregoing, the arbitrator will not have the authority to disregard or refuse to enforce any lawful Company policy, and the arbitrator shall not order or require the Company to adopt a policy not otherwise required by law, which the Company has not adopted. Executive understands the Company will pay for any administrative or hearing fees charged by the arbitrator or AAA except that Executive shall pay the first $200.00 of any filing fees associated with any arbitration Executive initiates. Executive agrees that the arbitrator shall administer and conduct any arbitration in a manner consistent with the Rules. (c) REMEDY. Except as provided by the Rules, arbitration shall be the sole, exclusive and final remedy for any dispute between Executive and the Company. Accordingly, except as provided for by the Rules, neither Executive nor the Company will be permitted to pursue court action regarding claims that are subject to arbitration. (d) AVAILABILITY OF INJUNCTIVE RELIEF. In addition to any right under the Rules to petition a court for provisional relief, Executive agrees that any party may also petition a court for injunctive relief where either party alleges or claims a violation of this Agreement or the Confidential Information Agreement or any other agreement regarding trade secrets, confidential information, nonsolicitation or invention assignment. In the event either party seeks injunctive relief, the prevailing party shall be entitled to recover reasonable costs and attorneys' fees. (e) ADMINISTRATIVE RELIEF. Executive understands that this Agreement does not prohibit Executive from pursuing an administrative claim with a local, state or federal administrative body such as the Equal Employment Opportunity Commission, the applicable state discrimination board or the workers' compensation board. This Agreement does, however, preclude Executive from pursuing court action regarding any such claim. (f) VOLUNTARY NATURE OF AGREEMENT. Executive acknowledges and agrees that Executive is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive further acknowledges and agrees that Executive has carefully read this Agreement and that Executive has asked any questions needed for Executive to understand the terms, consequences and binding effect of this Agreement and fully understand it, including that Executive is waiving Executive's right to a jury trial. Finally, Executive agrees that Executive has been provided an opportunity to seek the advice of an attorney of Executive's choice before signing this Agreement, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement. 15. NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This Agreement may be changed or terminated only in writing (signed by Executive and the Company). 16. WITHHOLDING. The Company is authorized to withhold, or cause to be withheld, from any payment or benefit under this Agreement the full amount of any applicable withholding taxes. 17. GOOD REASON AND CHANGE OF CONTROL DEFINITIONS. The Executive hereby agrees that the Merger and the new terms of Executive's employment with the Company pursuant to this Agreement will not constitute a "Change of Control" or "Good Reason" under the Original Agreements or "Good Reason" under this Agreement. -9- 18. GOVERNING LAW. This Agreement will be governed by the laws of the State of New York (with the exception of its conflict of laws provisions). [SIGNATURE PAGE TO FOLLOW] -10- IN WITNESS WHEREOF, the undersigned have executed this Agreement on the respective dates set forth below: VAHE SARKISSIAN /s/ Vahe A. Sarkissian Date: July 11, 2002 - -------------------------------- VEECO INSTRUMENTS INC. /s/ Edward H. Braun Date: July 11, 2002 - -------------------------------- Name: Edward H. Braun Title: Chairman, Chief Executive Officer and President SIGNATURE PAGE TO VAHE SARKISSIAN EMPLOYMENT AGREEMENT -11- EXHIBIT A LIST OF COMPANIES THAT EXECUTIVE IS INVOLVED WITH OR HAS AN INTEREST Accurel - A diagnostic laboratory services company Cetec An enterprise software company Abaca - A management software and services company EXHIBIT B CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT EMPLOYEE CONFIDENTIALITY AND INVENTIONS AGREEMENT EMPLOYEE CONFIDENTIALITY AND INVENTIONS AGREEMENT dated as of ________________, between VEECO INSTRUMENTS INC., on behalf of itself and its subsidiaries (collectively, "Employer"), and _____________________ ("Employee"). In consideration of Employee's employment and/or continued employment by Employer, the payment of Employee's compensation by Employer, and Employer's entrusting to Employee of confidential information relating to its business, Employee agrees to and accepts the conditions of employment hereinafter set forth. 1. CONFIDENTIALITY. During the term of Employee's employment with Employer and for five years thereafter, Employee will not use or disclose to any individual or entity any Confidential Information (as defined below) except (i) in the performance of Employee's duties for Employer, (ii) as authorized in writing by Employer, or (iii) as required by law or legal process, provided, that, prior written notice of such required disclosure is provided to Employer and, provided, further, that, all reasonable efforts to preserve the confidentiality of such information shall be made. As used herein, "CONFIDENTIAL INFORMATION" shall mean information that (i) is used or potentially useful in Employer's business, (ii) Employer treats as proprietary, private or confidential, and (iii) is not generally known to the public. "Confidential Information" includes, without limitation to, information relating to Employer's products or services, processing, manufacturing, selling, customer lists, call lists, customer data, memoranda, notes, records, technical data, sketches, plans, drawings, chemical formulae, trade secrets, composition of products, research and development data, sources of supply and material, operating and cost data, financial information, and information contained in manuals or memoranda. "Confidential Information" also includes proprietary and/or confidential information of Employer's customers, suppliers and trading partners who may share such information with Employer pursuant to a confidentiality agreement or otherwise. The Employee agrees to treat all such customer, supplier or trading partner information as "Confidential Information" hereunder. 2. INVENTIONS. a. Attached as APPENDIX A hereto is a compete and accurate list of each invention, discovery, idea, improvement or application (each, an "Invention") whether or not patentable, conceived, developed, created or made by Employee, either alone or with others, prior to employment with Employer. Except as set forth on APPENDIX A, Employee has no unpatented Inventions which are to be withheld from this Agreement and all present or future Inventions of Employee are subject to assignment to Employer hereunder. b. Employee shall promptly advise Employer, in writing, of each Invention, whether or not patentable, which is in any way or manner related to the business of Employer or resulting from or was suggested by any work done for Employer and which is conceived, developed, created or made by Employee, alone or with others, (i) during his or her employment with Employer or (ii) within two years after the termination of Employee's employment with Employer but which is based on Employer's trade secrets or Confidential Information (each, an "Employer Related Invention"). Each Employer Related Invention shall become the sole and exclusive property of Employer. Employee agrees to disclose the same promptly to Employer, to execute all documents requested by Employer for vesting in it the entire right, title and interest in and to the same, to execute all documents requested by Employer for filing and prosecuting such applications for patents, copyrights and/or trademarks as Employer, in its sole discretion may desire to prosecute, and to give Employer all the assistance it reasonably requires, including the giving of testimony in any suit, action or proceeding, in order to obtain, maintain and protect Employer's right therein and thereto. c. The assignment of inventions contained herein shall not apply to an invention that the Employee develops entirely on his or her own time without using the Employer's equipment, supplies, facilities or trade secret information except for those inventions that either: (1) relate at the time of conception or reduction to practice of the invention to the Employer's business, or actual or demonstrably anticipated research or development of the Employer; or (2) result from any work performed by the Employee for the Employer. With respect to Employees at Employer's facilities located within the State of California, the foregoing provisions of this paragraph 2(c) are intended to reflect the limitations on the assignment of inventions imposed by California Labor Code Section 2870(a). 3. EMPLOYMENT AT-WILL. Employee acknowledge that his or her employment by Employer is not for any specified period of time and that it can be terminated by either Employee or Employer at any time. In other words, this is an "employment at will." 4. TERMINATION OF EMPLOYMENT. In the event of termination of employment by either party, this Agreement will remain in effect. Upon termination, Employee will immediately deliver to Employer all property belonging to Employer then in the Employee's possession or control, including all Documents (as defined herein) embodying Confidential Information. As used herein, DOCUMENTS" shall mean originals or copies of files, memoranda, correspondence, notes, photographs, slides, overheads, audio or video tapes, cassettes, or disks, and records maintained on computer or other electronic media. 5. INDEPENDENT OBLIGATIONS. Employee acknowledges and agrees that the obligations and covenants under this Agreement are intended to be, and shall be construed as, agreements separate and independent from other terms and provisions of his or her employment. The existence of any claim or cause of action by Employee against Employer, whether predicated on Employee's employment or otherwise, shall not constitute a defense to the enforcement by Employer of said covenants. 6. SPECIFIC PERFORMANCE. Employee acknowledges that a breach or threatened breach of the covenants and agreements contained herein cannot reasonably or adequately be compensated in damages and that such breach will cause Employer irreparable loss or damage. Accordingly, in addition to and not in limitation of any and all other rights and remedies at law or in equity, Employer shall be entitled to injunctive or other equitable relief restraining Employee and any business, firm, partnership, individual, corporation or entity participating therein from committing or continuing such breach. 2 7. ARBITRATION OF DISPUTES; WAIVER OF JURY TRIAL. a. Any claim or controversy arising out of Employee's employment or the cessation thereof, including any claim relating to this Agreement, shall be settled solely by binding arbitration, in accordance with the rules of the American Arbitration Association. In such arbitration, each party shall bear its own legal fees and related costs, except that the parties shall share equally the fee of the arbitrator, provided that Employee's portion of the arbitrator's fee shall not exceed the amount of the filing fee for commencing an action in the court of general jurisdiction in the judicial district in which Employee's place of employment is located. b. The decision or award of the arbitrator shall be final and binding upon the parties. The arbitrator shall have the power to award any type of legal and/or equitable relief available in a court of competent jurisdiction, including, but not limited to, the costs of arbitration and attorney's fees, to the extent such damages are available under law. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. c. To the extent that any claim between the parties is found not to be subject to arbitration, such claim shall be decided by a judge sitting without a jury, to ensure rapid adjudication of those claims and proper application of existing law. d. Any such arbitration or judicial proceeding shall be brought in the judicial district in which Employee's place of employment is located. 8. SEVERABILITY. It is agreed that the invalidity or unenforceability of any paragraph or provision (or any part thereof) of this Agreement shall not affect the validity or enforceability of any one or more of the other paragraphs or provisions (or other parts thereof). Should any provision of this Agreement be declared illegal or unenforceable by any court of competent jurisdiction, arbitrator or other forum and cannot be modified to be enforceable (which the parties expressly authorize such court, arbitrator or other forum to do), such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect. 9. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its choice or conflict of laws provisions. 10. SECTION HEADINGS. Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 3 THUS, the parties knowingly and voluntarily execute this Agreement as of the dates set forth below. EMPLOYER: EMPLOYEE: VEECO INSTRUMENTS INC. By: Signature: --------------------------------- --------------------------- Title: Printed Name: ------------------------------ ------------------------ Date: Date: ------------------------------- -------------------------------- 4 APPENDIX A TO EMPLOYEE CONFIDENTIALITY AND INVENTIONS AGREEMENT INVENTIONS PRIOR TO EMPLOYMENT WITH EMPLOYER Brief Description Right, Title or Interest of Inventions (1) and Date Acquired - ----------------- ----------------- (1) "None" unless otherwise indicated. 5 EX-10.2 9 a2084384zex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.2 VEECO INSTRUMENTS INC. EDWARD H. BRAUN EMPLOYMENT AGREEMENT This Agreement is made by and between Veeco Instruments Inc., a Delaware corporation (the "Company"), and Edward H. Braun ("Executive") as of July 11, 2002. This Agreement is contingent upon and shall become effective only upon the Closing of the Merger (as defined in the Merger Agreement referred to below). The terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Merger Agreement. The period of Executive's employment under this Agreement is referred to herein as the "Employment Term." RECITALS WHEREAS, the Company, Venice Acquisition Corp., an Oregon corporation and a wholly-owned subsidiary of the Company ("Acquisition"), and Florence Company, an Oregon corporation ("Florence"), are parties to an Agreement and Plan of Merger, dated July 11, 2002 (the "Merger Agreement"), pursuant to which, at the Effective Time, Acquisition will merge with and into Florence, with the result that Florence will be the surviving corporation and will become a wholly-owned subsidiary of the Company; WHEREAS, Executive previously entered into an employment agreement with the Company on April 3, 2000 (the "Original Agreement"); WHEREAS, Executive agrees to enter into this Agreement which will replace and supersede the Original Agreement in its entirety. NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein and for other good and valuable consideration, the receipt of and sufficiency of which are hereby acknowledged, Company and the Executive agree as follows: 1. DUTIES AND SCOPE OF EMPLOYMENT. (a) POSITIONS AND DUTIES. Executive will serve as the Company's President and Chief Executive Officer and hereby agrees and acknowledges that he will no longer serve as Chairman of the Board of the Company. Executive shall lead the Company as its President and Chief Executive Officer and shall report solely and directly to the Board of Directors of the Company (the "Board"). All other employees of the Company shall report to Executive or his designee and not directly to the Board. Executive will be responsible for the general and active management of the business of the Company and for seeing that all orders and resolutions of the Board are carried into effect. Executive's role will be to run the Company and he will be responsible for its operating results and will have general powers of supervision over the business of the Company. Executive shall be the chief external representative of the Company. Executive will work with the Chairman to plan and develop strategy for the Company, to set goals and financial performance measures for the Company and to integrate Florence with the Company. In addition, Executive will co-chair the Company Integration Steering Committee and the Company's Strategic Review Board and have such other powers and duties as the Board assigns to him. (b) OBLIGATIONS. During the Employment Term, Executive will devote Executive's full business efforts and time to the Company. During the Employment Term, Executive agrees not to actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the Board (which approval will not be unreasonably withheld); provided, however, that Executive may, without the approval of the Board, serve in any capacity with any civic, educational or charitable organization, or with any company listed on Exhibit A (but in all cases subject to Section 12). (c) AT-WILL EMPLOYMENT. Executive and the Company agree that Executive's employment with the Company constitutes "at-will" employment. Executive and the Company acknowledge that this employment relationship may be terminated at any time, upon written notice to the other party, with or without good cause or for any or no cause, at the option either of the Company or Executive; provided, however, that no termination of the Executive's employment by the Company shall be effective without the affirmative vote of at least two-thirds (2/3) of the members of the Board (other than Executive). As described in this Agreement, Executive may be entitled to severance benefits depending upon the circumstances of Executive's termination of employment. 2. COMPENSATION. (a) BASE SALARY. During the Employment Term, the Company will pay Executive as compensation for Executive's services a base salary at the annualized rate of $600,000 (the "Base Salary"). The Base Salary will be paid through payroll periods that are consistent with the Company's normal payroll practices. The Executive's Base Salary will be reviewed annually by the Compensation Committee of the Board (the "Committee") and will be subject to increase (but not decrease) at the option and sole discretion of the Committee. (b) BONUSES. For each fiscal year of the Company during the Employment Term, Executive will be eligible to receive a target bonus of up to 100% of Executive's then Base Salary based upon the achievement of performance criteria specified by Committee. The actual amount of the bonus payable for any year will depend upon the extent to which the applicable performance criteria have been satisfied. Any bonus that actually is earned will be paid as soon as practicable (but no later than 2 1/2 months) after the end of the fiscal year for which the bonus is earned, but only if Executive was employed with the Company through the end of the fiscal year. (c) EMPLOYEE BENEFITS. During the Employment Term, Executive will be eligible to participate in such employee benefit plans or programs of the Company as are generally made available by the Company to its executive officers, and shall be entitled to such other fringe benefits, as are from time to time made available by the Company to the Chairman of the Company, as such plans, policies and arrangements and terms may exist from time to time. During the Employment Term, the Company will pay the Executive a monthly car allowance in an amount not less than the monthly car allowance currently paid to Executive. (d) BUSINESS EXPENSES. The Company will reimburse Executive, in accordance with the practices in effect from time to time for other officers or staff personnel of the Company, for all -2- reasonable 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 documentation. (e) STOCK OPTIONS. At least once during each fiscal year of the Company during the Employment Term, the Committee will consider granting Executive an option or options to purchase shares of the Company's common stock ("Shares") at a per Share exercise price equal to no more than the fair market value per Share on the grant date(s) of the option(s). The number and terms and conditions of any options granted to Executive will be determined at the discretion of the Committee, but in no event shall the number of stock options, or the terms and conditions of such stock options, be less favorable than the stock options granted to the Chairman of the Company. (f) VACATION. Executive will be entitled to paid vacation of four weeks per year in accordance with the Company's vacation policy, with the timing and duration of specific vacations mutually and reasonably agreed to by the parties hereto. 3. COMPENSATION UPON TERMINATION. (a) Notwithstanding anything to the contrary in this Agreement, if Executive's employment with the Company terminates for any reason (including, death or Disability), other than pursuant to a termination of Executive's employment for Cause or a resignation by the Executive without Good Reason, then Executive (or if applicable, his estate) shall be entitled to the following benefits: (i) BASE SALARY. As severance pay and in lieu of any other compensation for periods subsequent to the date of termination, the Company shall pay Executive, in a single payment after employment has ended and eight days have passed following execution of the Release of Claims without revocation (the "Payment Date"), an amount in cash equal to the product of three times Executive's Base Salary at the rate in effect immediately prior to the date of termination. (ii) BONUS. Executive shall be entitled to receive an amount equal to 100% of the Executive's target bonus for the year in which termination occurs as set forth in Section 2(b) (less amounts previously paid). The amount payable pursuant to this Section 3(a)(ii) shall be paid on the Payment Date. (iii) STOCK OPTIONS AND RESTRICTED STOCK. All outstanding stock options held by Executive under all stock option and stock incentive plans of the Company shall become immediately exercisable in full (except with respect to any plan intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code")) and shall remain exercisable until the earlier of (i) three years after termination of employment and (ii) the option expiration date as set forth in the applicable option agreement. All vesting requirements and repurchase rights of the Company under all outstanding restricted stock awards held by the Executive shall immediately terminate. (iv) The additional benefits set forth in Sections 5 and 6. (b) In the event that Executive desires to terminate his employment pursuant to this Section 3 for Good Reason, Executive shall, prior to such termination, meet with the Board to discuss his intention to terminate for Good Reason and the basis for such termination (and the Board -3- shall meet with Executive within ten days of Executive's request for a meeting). If the Company has not, within ten days following such meeting with the Board, cured the situation to Executive's reasonable satisfaction, then Executive shall have the right to terminate this Agreement and receive the benefits set forth in this Section 3. Notwithstanding the foregoing, if Executive terminates his employment for Good Reason under this Section 3 and the Company does not agree that Executive had the right to terminate for Good Reason under this Section 3, the Company shall be entitled to seek resolution of the disagreement pursuant to Section 14 hereof. 4. OTHER TERMINATION. If Executive's employment with the Company terminates pursuant to a termination of Executive's employment for Cause or a resignation by the Executive (except as permitted herein for Good Reason), then (a) the vesting of all the Executive's outstanding stock options and restricted stock awards will terminate immediately, (b) all payments of compensation by the Company to Executive hereunder will terminate immediately (except as to amounts already earned and as otherwise provided in Sections 5 and 6), and (c) Executive will only be eligible for severance benefits in accordance with the Company's established policies as then in effect, if any. 5. GOLDEN PARACHUTE EXCISE TAX GROSS-UP. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Executive constitute "parachute payments" within the meaning of Section 280G of the Code and will be subject to the excise tax imposed by Section 4999 of the Code (whether in connection with the Merger or otherwise), then the Executive shall receive (a) a payment from the Company sufficient to pay such excise tax, and (b) an additional payment from the Company sufficient to pay the excise tax and federal and state income taxes arising from the payments made by the Company to Executive pursuant to this sentence. Unless the Company and the Executive otherwise agree in writing, the determination of Executive's excise tax liability and the amount required to be paid under this Section 5 shall be made in writing by the accounting firm that is the Company's auditors or such other accounting firm that is mutually acceptable to the Company and the Executive (the "Accountants"). In the event that the excise tax incurred by Employee is determined by the Internal Revenue Service to be greater or lesser than the amount so determined by the Accountants, the Company and Employee agree to promptly make such additional payment, including interest and any tax penalties, to the other party as the Accountants reasonably determine is appropriate to ensure that the net economic effect to Employee under this Section 5, on an after-tax basis, is as if the Code Section 4999 excise tax did not apply to Executive. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on interpretations of the Code for which there is a "substantial authority" tax reporting position. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5. 6. OTHER POST-EMPLOYMENT BENEFITS. In addition to the benefits provided elsewhere in this Agreement, for a period of five years after the termination of Executive's employment with the Company (by the Company or Executive for any reason), at the Company's expense, 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 -4- termination of employment, the Company shall arrange to provide the Executive, at the Company's expense, with benefits substantially similar to those which the Executive would have been entitled to receive under such plans and programs. 7. DEFINITIONS. (a) GOOD REASON. "Good Reason" means: (i) The assignment to Executive of a different title, job or responsibilities that results in a substantial decrease in the level of responsibility of Executive with respect to the Company's business; (ii) A reduction by the Company in Executive's Base Salary, other than a salary reduction that is part of a salary reduction affecting Company employees generally; (iii) A significant reduction by the Company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans; (iv) The Company's material breach of its obligations under this Agreement; (v) The Company requiring Executive to travel on Company business to an extent substantially inconsistent with his duties as Chief Executive Officer; or (vi) The Company's movement of its headquarters outside the continental United States. (b) CAUSE. "Cause" means (i) the willful and continued failure by Executive to perform substantially Executive's reasonably assigned duties with the Company (other than any such failure resulting from Executive's incapacity due to physical or mental illness) after a demand for substantial performance is delivered to Executive by the Board, which specifically identifies the manner in which the Board believes that Executive has not substantially performed Executive's duties or (ii) the willful engaging by Executive in illegal conduct which is materially and demonstrably injurious to the Company. For this purpose, no act, or failure to act, on Executive's part shall be considered "willful" unless done, or omitted to be done, by Executive without reasonable belief that Executive's action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board shall be conclusively presumed to be done, or omitted to be done, by Executive in the best interests of the Company. (c) DISABILITY. "Disability" means Executive's absence from Executive's full-time duties with the Company for 180 consecutive days as a result of Executive's incapacity due to physical or mental illness, unless within 30 days after notice of termination by the Company following such absence Executive shall have returned to the full-time performance of Executive's duties. 8. CONFIDENTIAL INFORMATION AGREEMENT. Executive agrees to enter into the Company's standard Confidential Information and Invention Assignment Agreement (the "Confidential Information Agreement") in the form attached as Exhibit B. -5- 9. ASSIGNMENT. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive's death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, "successor" means any Person which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. The Company may not assign or transfer this Agreement without the prior written consent of Executive. Any other attempted assignment, transfer, conveyance or other disposition of Executive's right to compensation or other benefits will be null and void. 10. NOTICES. All notices, requests, demands and other communications called for hereunder shall be in writing and shall be deemed given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent by a well established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing: If to the Company: Veeco Instruments Inc. 100 Sunnyside Boulevard Woodbury, New York 11797 Telephone: (516) 677-0200 Telecopier: (516) 677-9125 ATTN: General Counsel If to Executive: Edward H. Braun at the last residential address known by the Company. 11. SEVERABILITY. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. 12. NON-COMPETE/NON-SOLICIT. (a) During the Employment Term and ending on the second anniversary of Executive's termination of employment with the Company (the "Non-Compete Period"), Executive shall not, other than on behalf of the Company, directly or indirectly, without the prior written consent of the Company, engage anywhere in the Geographic Area in (whether as an employee, agent, consultant, advisor, independent contractor, proprietor, partner, officer, director or otherwise), have any ownership interest in (except for passive ownership of one percent (1%) or less of any entity (other than the Company) whose securities have been registered under the Securities Act of 1933 or Section 12 of the Exchange Act), or participate in the financing, operation, management or control of, any firm, partnership, corporation, entity or business that engages or participates in a "competing business purpose." The term "competing business purpose" shall mean the [designing, manufacturing, marketing and servicing of products that deposit or etch materials on a substrate or -6- that provide critical measurements of certain features utilized in data storage and semiconductor devices]. (b) During the Employment Term and ending on the third anniversary of Executive's termination of employment with the Company, Executive shall not, directly or indirectly, without the prior written consent of Company, solicit, encourage or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any employee of the Company or any of its Subsidiaries to terminate his or her employment with the Company. During the Non-Compete Period, Executive shall not, directly or indirectly, without the prior written consent of Company, solicit, encourage or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any customer, supplier or other business contact of the Company or any of its Subsidiaries to terminate his, her or its relationship with the Company or any of its Subsidiaries. (c) The Geographic Area shall mean (i) the United States, or (ii) anywhere in the world outside the United States the Company or any of its Subsidiaries conducts business. (d) The covenants contained in this Section 12 shall be construed as a series of separate covenants, one for each county, city, state, country, or any similar subdivision in any Geographic Area. Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in the preceding paragraphs. If, in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of this Section 12 are deemed to exceed the time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable laws. (e) Executive acknowledges that the nature of the Company's business is such that if Executive was to become employed by, or substantially involved in, the business of a competitor of the Company soon following the termination of Executive's employment with the Company, it would be very difficult for Executive not to rely on or use the Company's trade secrets and confidential information. Executive has agreed to enter into this Agreement to avoid the inevitable disclosure of the Company's trade secrets and confidential information. (f) Executive also acknowledges that the limitations of time, geography, and scope of activity agreed to in this Agreement are reasonable because, among other things, (i) the Company is engaged in a highly competitive industry, (ii) Executive has unique access to, and will continue to have access to, the trade secrets and know how of the Company, including without limitation the plans and strategy (and in particular the competitive strategy) of the Company, and (iii) in the event Executive's employment with the Company ended, Executive would be able to obtain suitable and satisfactory employment without violation of this Agreement. 13. ENTIRE AGREEMENT. This Agreement, including the Confidential Information Agreement and any outstanding stock option or restricted stock agreements between the Company and Executive, represents the entire agreement and understanding between the Company and Executive concerning Executive's employment relationship with the Company, and supersedes and replaces -7- any and all prior agreements and understandings concerning Executive's employment relationship with the Company entered into prior to the date hereof, including the Original Agreement. 14. ARBITRATION. (a) GENERAL. In consideration of Executive's service to the Company, its promise to arbitrate all employment related disputes and Executive's receipt of the compensation, pay raises and other benefits paid to Executive by the Company, at present and in the future, Executive agrees that any and all controversies, claims, or disputes with anyone (including the Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such or otherwise) arising out of, relating to, or resulting from Executive's service to the Company under this Agreement or otherwise or the termination of Executive's service with the Company, including any breach of this Agreement, shall be subject to binding arbitration pursuant to New York law. Disputes which Executive agrees to arbitrate, and thereby agrees to waive any right to a trial by jury, include any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, claims of harassment, discrimination or wrongful termination and any statutory claims. Executive further understands that this Agreement to arbitrate also applies to any disputes that the Company may have with Executive. (b) PROCEDURE. Executive agrees that any arbitration will be administered by the American Arbitration Association ("AAA") and that a neutral arbitrator will be selected in a manner consistent with its National Rules for the Resolution of Employment Disputes (the "Rules"). The arbitration proceedings will allow for discovery according to the rules set forth in the Rules. Executive agrees that the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. Executive agrees that the arbitrator shall issue a written decision on the merits. Executive also agrees that the arbitrator shall have the power to award any remedies, including attorneys' fees and costs, available under applicable law. Notwithstanding the foregoing, the arbitrator will not have the authority to disregard or refuse to enforce any lawful Company policy, and the arbitrator shall not order or require the Company to adopt a policy not otherwise required by law, which the Company has not adopted. Executive understands the Company will pay for any administrative or hearing fees charged by the arbitrator or AAA except that Executive shall pay the first $200.00 of any filing fees associated with any arbitration Executive initiates. Executive agrees that the arbitrator shall administer and conduct any arbitration in a manner consistent with the Rules. (c) REMEDY. Except as provided by the Rules, arbitration shall be the sole, exclusive and final remedy for any dispute between Executive and the Company. Accordingly, except as provided for by the Rules, neither Executive nor the Company will be permitted to pursue court action regarding claims that are subject to arbitration. (d) AVAILABILITY OF INJUNCTIVE RELIEF. In addition to any right under the Rules to petition a court for provisional relief, Executive agrees that any party may also petition a court for injunctive relief where either party alleges or claims a violation of this Agreement or the Confidential Information Agreement or any other agreement regarding trade secrets, confidential -8- information, nonsolicitation or invention assignment. In the event either party seeks injunctive relief, the prevailing party shall be entitled to recover reasonable costs and attorneys' fees. (e) ADMINISTRATIVE RELIEF. Executive understands that this Agreement does not prohibit Executive from pursuing an administrative claim with a local, state or federal administrative body such as the Equal Employment Opportunity Commission, the applicable state discrimination board or the workers' compensation board. This Agreement does, however, preclude Executive from pursuing court action regarding any such claim. (f) VOLUNTARY NATURE OF AGREEMENT. Executive acknowledges and agrees that Executive is executing this Agreement voluntarily and without any duress or undue influence by the Company or anyone else. Executive further acknowledges and agrees that Executive has carefully read this Agreement and that Executive has asked any questions needed for Executive to understand the terms, consequences and binding effect of this Agreement and fully understand it, including that Executive is waiving Executive's right to a jury trial. Finally, Executive agrees that Executive has been provided an opportunity to seek the advice of an attorney of Executive's choice before signing this Agreement, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.. 15. NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This Agreement may be changed or terminated only in writing (signed by Executive and the Company). 16. WITHHOLDING. The Company is authorized to withhold, or cause to be withheld, from any payment or benefit under this Agreement the full amount of any applicable withholding taxes. 17. GOOD REASON DEFINITIONS. The Executive hereby agrees that the Merger and the new terms of Executive's employment with the Company pursuant to this Agreement will not constitute "Good Reason" under this Agreement or the Original Agreement. 18. GOVERNING LAW. This Agreement will be governed by the laws of the State of New York (with the exception of its conflict of laws provisions). [SIGNATURE PAGE TO FOLLOW] -9- IN WITNESS WHEREOF, the undersigned have executed this Agreement on the respective dates set forth below: EDWARD H. BRAUN /s/ Edward H. Braun Date: July 11, 2002 - -------------------------------------- VEECO INSTRUMENTS INC. /s/ John F. Rein, Jr. Date: July 11, 2002 - -------------------------------------- Name: John F. Rein, Jr. Title: Executive Vice President and Chief Financial Officer SIGNATURE PAGE TO EDWARD BRAUN EMPLOYMENT AGREEMENT EXHIBIT A Executive is a member of the Board of Directors or other committees of Semiconductor Equipment and Materials International (SEMI) and International Disk Drive Equipment and Materials Association (IDEMA), two industry trade groups, and may serve in similar capacities with other organizations. Executive is also a member of the Board of Directors of kSARIA Corporation, a manufacturer of automation products for fiber optic assembly. EXHIBIT B CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT EMPLOYEE CONFIDENTIALITY AND INVENTIONS AGREEMENT EMPLOYEE CONFIDENTIALITY AND INVENTIONS AGREEMENT dated as of ________________, between VEECO INSTRUMENTS INC., on behalf of itself and its subsidiaries (collectively, "Employer"), and _____________________ ("Employee"). In consideration of Employee's employment and/or continued employment by Employer, the payment of Employee's compensation by Employer, and Employer's entrusting to Employee of confidential information relating to its business, Employee agrees to and accepts the conditions of employment hereinafter set forth. 1. CONFIDENTIALITY. During the term of Employee's employment with Employer and for five years thereafter, Employee will not use or disclose to any individual or entity any Confidential Information (as defined below) except (i) in the performance of Employee's duties for Employer, (ii) as authorized in writing by Employer, or (iii) as required by law or legal process, provided, that, prior written notice of such required disclosure is provided to Employer and, provided, further, that, all reasonable efforts to preserve the confidentiality of such information shall be made. As used herein, "CONFIDENTIAL INFORMATION" shall mean information that (i) is used or potentially useful in Employer's business, (ii) Employer treats as proprietary, private or confidential, and (iii) is not generally known to the public. "Confidential Information" includes, without limitation to, information relating to Employer's products or services, processing, manufacturing, selling, customer lists, call lists, customer data, memoranda, notes, records, technical data, sketches, plans, drawings, chemical formulae, trade secrets, composition of products, research and development data, sources of supply and material, operating and cost data, financial information, and information contained in manuals or memoranda. "Confidential Information" also includes proprietary and/or confidential information of Employer's customers, suppliers and trading partners who may share such information with Employer pursuant to a confidentiality agreement or otherwise. The Employee agrees to treat all such customer, supplier or trading partner information as "Confidential Information" hereunder. 2. INVENTIONS. a. Attached as APPENDIX A hereto is a compete and accurate list of each invention, discovery, idea, improvement or application (each, an "Invention") whether or not patentable, conceived, developed, created or made by Employee, either alone or with others, prior to employment with Employer. Except as set forth on APPENDIX A, Employee has no unpatented Inventions which are to be withheld from this Agreement and all present or future Inventions of Employee are subject to assignment to Employer hereunder. b. Employee shall promptly advise Employer, in writing, of each Invention, whether or not patentable, which is in any way or manner related to the business of Employer or resulting from or was suggested by any work done for Employer and which is conceived, developed, created or made by Employee, alone or with others, (i) during his or her employment with Employer or (ii) within two years after the termination of Employee's employment with Employer but which is based on Employer's trade secrets or Confidential Information (each, an "Employer Related Invention"). Each Employer Related Invention shall become the sole and exclusive property of Employer. Employee agrees to disclose the same promptly to Employer, to execute all documents requested by Employer for vesting in it the entire right, title and interest in and to the same, to execute all documents requested by Employer for filing and prosecuting such applications for patents, copyrights and/or trademarks as Employer, in its sole discretion may desire to prosecute, and to give Employer all the assistance it reasonably requires, including the giving of testimony in any suit, action or proceeding, in order to obtain, maintain and protect Employer's right therein and thereto. c. The assignment of inventions contained herein shall not apply to an invention that the Employee develops entirely on his or her own time without using the Employer's equipment, supplies, facilities or trade secret information except for those inventions that either: (1) relate at the time of conception or reduction to practice of the invention to the Employer's business, or actual or demonstrably anticipated research or development of the Employer; or (2) result from any work performed by the Employee for the Employer. With respect to Employees at Employer's facilities located within the State of California, the foregoing provisions of this paragraph 2(c) are intended to reflect the limitations on the assignment of inventions imposed by California Labor Code Section 2870(a). 3. EMPLOYMENT AT-WILL. Employee acknowledge that his or her employment by Employer is not for any specified period of time and that it can be terminated by either Employee or Employer at any time. In other words, this is an "employment at will." 4. TERMINATION OF EMPLOYMENT. In the event of termination of employment by either party, this Agreement will remain in effect. Upon termination, Employee will immediately deliver to Employer all property belonging to Employer then in the Employee's possession or control, including all Documents (as defined herein) embodying Confidential Information. As used herein, DOCUMENTS" shall mean originals or copies of files, memoranda, correspondence, notes, photographs, slides, overheads, audio or video tapes, cassettes, or disks, and records maintained on computer or other electronic media. 5. INDEPENDENT OBLIGATIONS. Employee acknowledges and agrees that the obligations and covenants under this Agreement are intended to be, and shall be construed as, agreements separate and independent from other terms and provisions of his or her employment. The existence of any claim or cause of action by Employee against Employer, whether predicated on Employee's employment or otherwise, shall not constitute a defense to the enforcement by Employer of said covenants. 6. SPECIFIC PERFORMANCE. Employee acknowledges that a breach or threatened breach of the covenants and agreements contained herein cannot reasonably or adequately be compensated in damages and that such breach will cause Employer irreparable loss or damage. Accordingly, in addition to and not in limitation of any and all other rights and remedies at law or in equity, Employer shall be entitled to injunctive or other equitable relief restraining Employee and any business, firm, partnership, individual, corporation or entity participating therein from committing or continuing such breach. 2 7. ARBITRATION OF DISPUTES; WAIVER OF JURY TRIAL. a. Any claim or controversy arising out of Employee's employment or the cessation thereof, including any claim relating to this Agreement, shall be settled solely by binding arbitration, in accordance with the rules of the American Arbitration Association. In such arbitration, each party shall bear its own legal fees and related costs, except that the parties shall share equally the fee of the arbitrator, provided that Employee's portion of the arbitrator's fee shall not exceed the amount of the filing fee for commencing an action in the court of general jurisdiction in the judicial district in which Employee's place of employment is located. b. The decision or award of the arbitrator shall be final and binding upon the parties. The arbitrator shall have the power to award any type of legal and/or equitable relief available in a court of competent jurisdiction, including, but not limited to, the costs of arbitration and attorney's fees, to the extent such damages are available under law. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. c. To the extent that any claim between the parties is found not to be subject to arbitration, such claim shall be decided by a judge sitting without a jury, to ensure rapid adjudication of those claims and proper application of existing law. d. Any such arbitration or judicial proceeding shall be brought in the judicial district in which Employee's place of employment is located. 8. SEVERABILITY. It is agreed that the invalidity or unenforceability of any paragraph or provision (or any part thereof) of this Agreement shall not affect the validity or enforceability of any one or more of the other paragraphs or provisions (or other parts thereof). Should any provision of this Agreement be declared illegal or unenforceable by any court of competent jurisdiction, arbitrator or other forum and cannot be modified to be enforceable (which the parties expressly authorize such court, arbitrator or other forum to do), such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect. 9. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its choice or conflict of laws provisions. 10. SECTION HEADINGS. Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Agreement. 3 THUS, the parties knowingly and voluntarily execute this Agreement as of the dates set forth below. EMPLOYER: EMPLOYEE: VEECO INSTRUMENTS INC. By: Signature: --------------------------------- --------------------------- Title: Printed Name: ------------------------------ ------------------------ Date: Date: ------------------------------- -------------------------------- 4 APPENDIX A TO EMPLOYEE CONFIDENTIALITY AND INVENTIONS AGREEMENT INVENTIONS PRIOR TO EMPLOYMENT WITH EMPLOYER Brief Description Right, Title or Interest of Inventions (1) and Date Acquired - ----------------- ----------------- (1) "None" unless otherwise indicated. 5 EX-99.1 10 a2084384zex-99_1.txt EX-99.1 Filed by Veeco Instruments Inc. Filed pursuant to Rules 165 and 425 promulgated under the Securities Act of 1933, as amended, and deemed filed pursuant to Rule 14a-12 promulgated under the Securities Exchange Act of 1934, as amended. Subject Company: Veeco Instruments Inc. Commission File No.: 0-16244 On July 12th, 2002, Veeco and FEI jointly issued the following joint press release. [LOGO APPEARS HERE] [LOGO APPEARS HERE] VEECO FEI COMPANY - -------------------------------------------------------------------------------- Veeco Instruments Inc., 100 Sunnyside Blvd., Woodbury, NY 11797 Tel. 516-677-0200 FAX 516-677-0380 FEI Company , 7451 NW Evergreen Parkway, Hillsboro, Oregon, 97124 Tel: 503-640-7500 Fax: 503-640-7509 FOR IMMEDIATE RELEASE ALL FINANCIAL MEDIA: DARREN BRANDT, FEI COMPANY FINANCIAL CONTACT: SLOANE PR, 212-446-1861 VEECO FINANCIAL CECILIA WILKINSON, PONDELWILKINSON CONTACT: DEBRA WASSER, VP OF IR & CORP. MS&L 310-207-9300 COMMUNICATIONS, 516-677-0200, X1472 FEI COMPANY TRADE CONTACT: DAN ZENKA, VEECO TRADE CONTACT: FRAN BRENNEN, CORPORATE COMMUNICATIONS MANAGER, DIRECTOR OF MARKETING COMMUNICATIONS, 503-640-7500 516-677-0200 X1222 VEECO INSTRUMENTS AND FEI COMPANY ANNOUNCE SIGNING OF DEFINITIVE MERGER AGREEMENT - CREATES THE 3RD LARGEST U.S. METROLOGY COMPANY AND THE LEADER IN THE FASTEST GROWING 3D METROLOGY SEGMENT - COMBINES COMPLEMENTARY TECHNOLOGIES SERVING SIMILAR MARKETS WITH NO OVERLAPPING PRODUCTS, CREATING MARKET EXPANSION OPPORTUNITIES - IMPROVES PROFITABILITY THROUGH EXPANDED GROSS MARGINS AND COST SYNERGIES - JOINS COMPANIES WITH STRONG REVENUE AND PROFIT GROWTH TRACK RECORD WOODBURY, NY AND HILLSBORO, OR/JULY 12, 2002--Veeco Instruments Inc. (Nasdaq:VECO) and FEI Company (Nasdaq: FEIC) today announced the signing of a definitive merger agreement to combine the companies into a world leader in 3D metrology and process equipment. FEI will become a wholly owned subsidiary of Veeco, and Veeco will be renamed Veeco FEI Inc. The company will continue to trade on the Nasdaq market under the ticker symbol VECO. Pursuant to the agreement, unanimously approved by the Boards of Directors of both companies, FEI stockholders will receive 1.355 shares of Veeco common stock for each share of FEI they own. Based upon FEI's approximately 32 million diluted shares outstanding, the FEI stockholders will receive approximately 44 million Veeco FEI shares with a current value of approximately $1 billion. The merger, which will be accounted for using the purchase method, is intended to be tax-free to FEI stockholders, and is expected to close during the fourth quarter of 2002 following approval of each company's stockholders, certain regulatory approvals and other customary closing conditions. (more) VEECO FEI MERGER AGREEMENT 2 The transaction is expected to be accretive to Veeco's current 2003 analyst consensus estimates on a pro-forma basis. The transaction is expected to be dilutive to Veeco on a GAAP basis when including the expected impact of purchase accounting on amortization expense, in-process R&D write-off, inventory capitalization and SAB 101 deferred revenue recognition. Veeco FEI management will provide further information on the expected impact of purchase accounting on the combined company's financial statements upon completion of the merger. Veeco and FEI managements currently anticipate operating synergies of approximately $8-10 million on an annualized basis resulting from integration of the companies' sales and support networks, supplier management, and manufacturing and administrative efficiencies. Vahe A. Sarkissian, FEI's Chairman, President and Chief Executive Officer, will become Chairman of the Board and Chief Strategy Officer of Veeco FEI; Edward H. Braun, Veeco's Chairman, President and Chief Executive Officer, will remain Chief Executive Officer and President. Veeco FEI's Board of Directors will have 13 members, seven of whom are current members of Veeco's Board (including Mr. Braun), five of whom are current members of FEI's Board (including Mr. Sarkissian), and one of whom will be designated by Philips Business Electronics International B.V., a significant stockholder of FEI. John F. Rein, Jr., Veeco's Executive Vice President and Chief Financial Officer will retain his position as CFO of the combined company. Veeco FEI's corporate headquarters will be located in Woodbury, NY, the current Veeco headquarters, and FEI's current headquarters in Hillsboro, Oregon will remain a significant facility for Veeco FEI as a center of research and development and manufacturing. Veeco FEI will have approximately 2,900 employees at its key facilities in North America, Europe, Japan and the Asia-Pacific region. In discussing the planned merger, Mr. Sarkissian said, "We believe this merger has compelling strategic value. Together, we join the ranks of top tier companies with the critical mass to create more value for our customers and stockholders. We intend to leverage our enriched technology portfolio to accelerate growth by delivering broader product offerings to our customers and building new markets. Additionally, our combined channels should also enhance growth opportunities and achieve new operating efficiencies. The new Veeco FEI will be far better (more) VEECO FEI MERGER AGREEMENT 3 positioned to capitalize on the economic upturn, with a combined management team that has a proven track record of building companies with strong revenue and profit growth." Mr. Braun commented: "The combination of Veeco and FEI creates a leading metrology and process equipment company, providing solutions for growth opportunities in semiconductor, data storage, telecom/wireless and scientific research markets. Based on combined 2001 sales of $825 million, together we become the sixth largest U.S. semiconductor equipment company and the third largest U.S. supplier of metrology equipment. We believe that FEI is an excellent partner for Veeco, with leadership in complementary technology products, a track record of profitability, a solid balance sheet, and a strong management team. The merger should benefit our customers through an enhanced Veeco FEI technology portfolio, a stronger research and development effort and improved global support." Each company expects to meet guidance provided for the second quarter of 2002. Veeco's previous guidance for the second quarter of 2002 was: revenues of between $75-80 million, bookings greater than $70 million, and pro-forma earnings per share approximating break-even (excluding amortization expense). FEI's previous guidance for the second quarter of 2002 was: revenues of approximately $80 million, bookings of approximately $75 million and cash earnings per share of approximately $0.15. Veeco and FEI are currently expected to report their second quarter results separately on July 29th. INVESTOR CONFERENCE CALL The Chief Executive Officers of Veeco and FEI will host a conference call at 10:00 am EDT (7:00 am PDT) today, Friday, July 12th to discuss the merger. Investors and other interested parties may listen to the call live by calling 800-314-7867(domestic/toll-free) or 719-867-0640 (international callers) or through an audio web cast at either WWW.VEECO.COM or WWW.FEICO.COM. An audio replay of the call will be available at 888-203-1112 or 719-457-0820 (confirmation code 491789) as well as archived for future reference on both websites until July 26th. Additionally, a PowerPoint presentation illustrating the points made on the conference call will be available in the investor relations section of each website. (more) VEECO FEI MERGER AGREEMENT 4 SEC FILINGS In connection with their proposed merger, Veeco and FEI will be jointly preparing a proxy statement/registration statement on Form S-4 containing a prospectus relating to the shares to be issued to FEI stockholders and will be filing such joint proxy statement/registration statement on Form S-4 containing a prospectus relating to the shares to be issued to FEI stockholders with the SEC as soon as practicable. Investors and security holders are urged to read this document when it becomes available because it will contain important information about the proposed merger. Investors and security holders may obtain copies of this document, when it has been filed with the SEC, as well as other SEC filings of Veeco and FEI, free of charge from the SEC's website at WWW.SEC.GOV as well as from the applicable company by directing a request to Investor Relations for Veeco, at (516) 677-0200, Ext. 1403 and to Investor Relations for FEI, at (503) 640-7500 Ext. 7527. Veeco and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the Veeco and FEI stockholders with respect to the Veeco/FEI transaction. Information regarding such individuals is included in Veeco's proxy statement dated April 9, 2002 relating to its 2002 annual meeting of stockholders, available free of charge from the SEC and Veeco as indicated above. FEI and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the FEI and Veeco stockholders with respect to the Veeco/FEI transaction. Information regarding such individuals is included in FEI's proxy statement dated April 17, 2002 relating to its 2002 annual meeting of stockholders, available free of charge from the SEC and FEI as indicated above. Veeco and FEI will each be filing with the SEC, within a few days, current reports on Form 8-K containing the full text of their merger agreement. These filings will be available free of charge from the SEC and the applicable company as identified above. ABOUT VEECO Veeco, with 2001 revenues of $449 million, is a worldwide leader in process equipment and metrology tools for the telecommunications/ wireless, data storage, semiconductor and research (more) VEECO FEI MERGER AGREEMENT 5 markets. Manufacturing and engineering facilities are located in New York, California, Colorado, Arizona and Minnesota. Global sales and service offices are located throughout the United States, Europe, Japan and Asia Pacific. Additional information on Veeco can be found at www.veeco.com. ABOUT FEI FEI, with 2001 revenues of $376 million, is the 3D innovator and leading supplier of Structural Process Management(TM) solutions to semiconductor, data storage, structural biology and industrial companies. FEI's industry leading Dual-Beam(TM) and single column focused ion and electron beam products allow advanced three-dimensional metrology, device editing, trimming, and structural analysis for management of sub-micron structures. Headquartered in Hillsboro, Oregon, FEI has additional development and manufacturing operations located in Peabody, Massachusetts; Sunnyvale, California; Eindhoven, The Netherlands; and Brno, Czech Republic. Additional information on FEI can be found at WWW.FEICO.COM. SAFE HARBOR STATEMENT Statements in this news release that are not historical fact and that relate to future plans or events are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements about prospects for future growth, the success of the proposed merger, product revenues, market acceptance of technology and improved economic conditions. These statements are subject to risks and uncertainties. Factors that could materially affect the companies' outlook include, but are not limited to, the companies' ability to successfully consummate the merger and to achieve the anticipated benefits of the merger, downturns in the semiconductor manufacturing market, lower than expected customer orders, cancellation of customer orders, increased competition and new product offerings from competitors, failure of the company to introduce products as planned, failure of the company's products and technology to find acceptance with customers, as well as business conditions and growth in the electronics industry and general economy, both domestic and foreign. Additional factors that could materially decrease revenues prospects and market acceptance internationally include fluctuations in interest and exchange rates (including changes in relevant foreign currency exchange rates between time of sale and time of payment) and changes in trade policies and tariff regulations. Moreover, there is no certainty that economic conditions will improve in the near future. These and other factors that could cause actual results to differ materially from the forward-looking statements are included in the companies' filings with the Securities and Exchange Commission. ### -----END PRIVACY-ENHANCED MESSAGE-----