-----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, Dg3TSjpib3gFXWG2CsGDQfEHCi4jZgHungSBQ86yAmFuUPxCvG3GUVGfK50U1rHq olW5XBuOYiyt/rt0TFjyxg== 0000950110-01-000092.txt : 20010224 0000950110-01-000092.hdr.sgml : 20010224 ACCESSION NUMBER: 0000950110-01-000092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZYGO CORP CENTRAL INDEX KEY: 0000730716 STANDARD INDUSTRIAL CLASSIFICATION: 3827 IRS NUMBER: 060864500 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12944 FILM NUMBER: 1524374 BUSINESS ADDRESS: STREET 1: LAUREL BROOK RD CITY: MIDDLEFIELD STATE: CT ZIP: 06455 BUSINESS PHONE: 8603478506 MAIL ADDRESS: STREET 1: LAUREL BROOK ROAD CITY: MIDDLEFIELD STATE: CT ZIP: 06455 10-Q 1 0001.txt FORM 10-Q FORM 10-Q. QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 2000 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from_____________________________ to______________________Commission File Number 0-12944 Zygo Corporation - - - - - - - - - - - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 06-0864500 - - - - - - - - - - - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Laurel Brook Road, Middlefield, Connecticut 06455 - - - - - - - - - - - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (860) 347-8506 - - - - - - - - - - - -------------------------------------------------------------------------------- Registrant's telephone number, including area code N/A - - - - - - - - - - - -------------------------------------------------------------------------------- (Former name, former address, and former fiscal year, if changed from last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 14,860,144 Common Stock, $.10 Par Value, at January 29, 2001 PART I - FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED STATEMENTS OF EARNINGS (Thousands, except per share amounts)
For the Three Months For the Six Months Ended December 31, Ended December 31, -------------------- ------------------ 2000 1999 2000 1999 ------- ------- ------- ------- Net sales ........................................... $32,731 $22,362 $56,663 $40,965 Cost of good sold ................................... 19,120 12,515 33,083 23,522 ------- ------- ------- ------- Gross profit ............................... 13,611 9,847 23,580 17,443 Selling, general and administrative expenses ........ 6,254 5,001 11,645 9,351 Research, development and engineering expenses ...... 4,216 2,285 7,471 4,421 Amortization of goodwill and other intangibles ...... 200 403 399 806 ------- ------- ------- ------- Operating profit ........................... 2,941 2,158 4,065 2,865 ------- ------- ------- ------- Other income (expense): Interest income ............................ 268 255 551 555 Miscellaneous income (expense), net ........ (146) 11 174 70 ------- ------- ------- ------- 122 266 377 485 ------- ------- ------- ------- Earnings before income taxes and minority interest ................................ 3,063 2,424 4,442 3,350 Income tax expense .................................. 1,041 960 1,510 1,314 ------- ------- ------- ------- Earnings before minority interest ................... 2,022 1,464 2,932 2,036 Minority interest ................................... 117 73 210 73 ------- ------- ------- ------- Net earnings (note 4) ............................... $ 1,905 $ 1,391 $ 2,722 $ 1,963 ======= ======= ======= ======= Earnings per share: Basic (1) .................................. $ .13 $ .12 $ .19 $ .16 ======= ======= ======= ======= Diluted (1) ................................ $ .13 $ .11 $ .18 $ .15 ======= ======= ======= ======= Weighted average number of shares: Basic ...................................... 14,359 11,938 14,329 11,905 ======= ======= ======= ======= Diluted .................................... 15,123 13,219 15,166 13,083 ======= ======= ======= =======
(1) The difference between basic shares outstanding and diluted shares outstanding is the assumed conversion of common stock equivalents (stock options) in the amounts of 764,000 and 1,281,000 in the three months ended December 31, 2000 and 1999, respectively, and 837,000 and 1,178,000 in the six months ended December 31, 2000 and 1999, respectively. CONSOLIDATED BALANCE SHEETS As of December 31, 2000 and June 30, 2000 (Thousands, except share amounts)
December 31, June 30, ASSETS 2000 2000 - - - - - - - - - - - ------ ------------ -------- Current assets: Cash and cash equivalents ......................................... $ 9,350 $ 15,598 Marketable securities ............................................. 7,292 8,268 Receivables ....................................................... 22,031 20,138 Inventories: Raw materials and manufactured parts .......................... 11,805 7,034 Work in process ............................................... 6,051 3,471 Finished goods ................................................ 1,724 1,374 -------- -------- Total inventories ...................................... 19,580 11,879 -------- -------- Costs in excess of billings ....................................... 2,276 5,743 Income taxes receivable ........................................... 2,256 866 Prepaid expenses and taxes ........................................ 439 1,173 Deferred income taxes ............................................. 9,149 9,020 -------- -------- Total current assets ................................... 72,373 72,685 -------- -------- Property, plant and equipment, at cost ................................. 50,673 37,991 Less accumulated depreciation .......................................... 21,141 19,498 -------- -------- Net property, plant and equipment ................................. 29,532 18,493 -------- -------- Goodwill and other intangible assets, net .............................. 4,765 3,078 Other assets ........................................................... 436 906 -------- -------- Total assets ........................................... $107,106 $ 95,162 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - - - - - - - - - - - ------------------------------------ Current liabilities: Accounts payable .................................................. $ 10,595 $ 8,380 Accrued salary and wages .......................................... 2,695 3,485 Other accrued liabilities ......................................... 4,035 4,270 -------- -------- Total current liabilities .............................. 17,325 16,135 -------- -------- Long-term debt ......................................................... 5,079 84 Deferred income taxes .................................................. 262 271 Minority interest ...................................................... 654 443 Stockholders' equity: Common stock, $.10 par value per share: 40,000,000 shares authorized; 14,609,894 shares issued (14,441,231 at June 30, 2000)........................ 1,461 1,444 Additional paid-in capital ........................................ 71,339 68,304 Retained earnings (note 4) ........................................ 11,777 9,055 Currency translation effects ...................................... (399) (182) Net unrealized (loss) on marketable securities .................... (91) (91) -------- -------- 84,087 78,530 Less treasury stock, at cost; 207,600 shares ...................... 301 301 -------- -------- Total stockholders' equity ............................. 83,786 78,229 -------- -------- Total liabilities and stockholders' equity ............. $107,106 $ 95,162 ======== ========
CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended December 31, 2000 and 1999 (Thousands of dollars)
2000 1999 ------- ------- Cash (used for) provided by operating activities: Net earnings (note 4) ................................................. $ 2,722 $ 1,963 Adjustments to reconcile net earnings to cash provided by (used for) operating activities: Depreciation and amortization .................................... 2,042 2,548 Deferred income taxes ............................................ (185) 0 Loss on disposal of assets ....................................... 0 54 Changes in operating accounts: Receivables .................................................. (1,893) (5,680) Costs in excess of billings .................................. 3,466 (866) Inventories .................................................. (7,701) 794 Prepaid expenses ............................................. 734 (314) Accounts payable and accrued expenses ........................ (360) 4,328 Minority interest ............................................ 210 73 ------- ------- Net cash (used for) provided by operating activities ............. (965) 2,900 ------- ------- Cash (used for) provided by investing activities: Additions to property, plant and equipment ............................ (12,682) (1,507) Sale (investment) in marketable securities ............................ 976 (248) Investment in other assets ............................................ (1,616) (295) Proceeds from maturity of marketable securities ....................... 0 250 ------- ------- Net cash (used for) investing activities .............................. (13,322) (1,800) ------- ------- Cash provided by (used for) financing activities: Issuance of long-term debt ............................................ 4,987 56 Exercise of employee stock options .................................... 3,052 532 Contributions from minority interest of consolidated subsidiaries ..... 0 90 ------- ------- Net cash provided by financing activities ........................ 8,039 678 ------- ------- Net (decrease) in cash and cash equivalents .................................... (6,248) 1,778 Cash and cash equivalents, beginning of year ................................... 15,598 13,022 ------- ------- Cash and cash equivalents, end of period ....................................... $ 9,350 $14,800 ======= =======
These interim financial statements should be read in conjunction with the financial statements and notes included in ZYGO's June 30, 2000 Annual Report on Form 10-K405 including items incorporated by reference therein. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: PRINCIPLES OF CONSOLIDATION The consolidated balance sheet at December 31, 2000, the consolidated statements of earnings for the three months and six months ended December 31, 2000 and 1999, and the consolidated statements of cash flows for the six months ended December 31, 2000 and 1999 are unaudited but, in our opinion, include all adjustments, consisting only of normal recurring accruals, necessary for a fair statement of the results of the interim periods. The consolidated statements include the accounts of Zygo Corporation and all consolidated subsidiaries, including a consolidated joint venture, which we entered into in October 1999. The minority interest represents the 40% of the joint venture not owned by us. The consolidated financial statements included here for the period ended December 31, 1999 have been restated to reflect the May 2000 acquisition of Firefly Technologies, Inc. which was accounted for as a pooling of interests. The results of operations for the period ended December 31, 2000 are not necessarily indicative of the results to be expected for the full fiscal year. NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statements of financial position and measure those instruments at fair value. In addition, SFAS No. 133 permits hedge accounting when certain conditions are met. SFAS No. 133, as amended by SFAS No. 137 and No. 138, is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. This statement will not have a significant impact on us, as we do not significantly utilize derivatives or hedges. In December 1999, the Securities and Exchange Commission, or SEC, issued Staff Accounting Bulletin No. 101, which summarizes views of the SEC staff in applying accounting principles generally accepted in the United States to revenue recognition in financial statements. Subsequently, the SEC issued SAB No. 101A and SAB No. 101B, "Amendment: Revenue Recognition in Financial Statements," that delays the implementation date of certain provisions of SAB No. 101. Management currently is evaluating the impact, if any, that this SAB will have on our results of operations or financial position and expects to adopt it in the fourth quarter of this fiscal year. In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB Opinion No. 25." The Interpretation answers questions dealing with APB No. 25 implementation practice issues. Interpretation No. 44 is being applied prospectively to new awards, modifications to outstanding awards, and changes in employee status on or after July 1, 2000, except as follows: (a) requirements related to the definition of an employee apply to new awards granted after December 15, 1998; (b) modifications that directly or indirectly reduce the exercise price of an award apply to modifications made after December 15, 1998; and (c) modifications to add a reload feature to an award apply to modifications made after January 12, 2000. Financial statements for periods prior to July 1, 2000 will not be affected. The adoption of Interpretation No. 44 did not have a material impact on our results of operations or financial position. In September 2000, the FASB's Emerging Issued Task Force released its discussion on EITF Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF No. 00-10 sets forth guidance on how a seller of goods should classify in the income statement (a) amounts billed to a customer for shipping and handling and (b) costs incurred for shipping and handling. The consensus guidance must be adopted by the fourth quarter of our fiscal year 2001. Management is in the process of evaluating this standard, but believes that any effect will generally be limited to the form and content of our financial statement disclosures. NOTE 3: SEGMENT INFORMATION Under the criteria established by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," we operate in three principal business segments globally. These segments are based on the markets served by us: Semiconductor; Industrial; and Telecommunications. The segment data is presented below in a manner consistent with our management's internal measurement of the business.
Three Months Ended December 31, 2000 (Thousands of dollars) Semiconductor Industrial Telecommunications Total ------------- ---------- ------------------ ----- Sales ............................. $20,713 $8,649 $3,369 $32,731 Gross Profit ...................... 8,868 3,330 1,413 13,611 Gross Profit as a % Sales ......... 43% 39% 42% 42% Six Months Ended December 31, 2000 (Thousands of dollars) Semiconductor Industrial Telecommunications Total ------------- ---------- ------------------ ----- Sales ............................. $35,803 $16,167 $4,693 $56,663 Gross Profit ...................... 15,094 6,471 2,015 23,580 Gross Profit as a % Sales ......... 42% 40% 43% 42%
Export sales by geographic area were as follows: Three Months Six Months Ended December 31, Ended December 31, ------------------ ------------------ 2000 1999 2000 1999 ------- ------- ------- ------- (Thousands of dollars) Far East: Japan ...................... $11,590 $ 4,412 $16,787 $ 8,012 Pac Rim .................... 2,279 2,679 4,329 5,309 ------- ------- ------- ------- Total Far East .................. 13,869 7,091 21,116 13,321 Europe and other ................ 3,122 3,211 5,304 4,915 ------- ------- ------- ------- Total ........................... $16,991 $10,302 $26,420 $18,236 ======= ======= ======= ======= NOTE 4: COMPREHENSIVE INCOME Comprehensive income totaled $1,983,000 and $2,505,000 in the three months and six months ended December 31, 2000, respectively, compared to comprehensive income of $1,292,000 and $1,902,000 in the comparable prior year periods. Comprehensive income is defined as net income plus non-stockholder direct adjustments to stockholders' equity which consist of foreign currency translation adjustments and adjustments for the net unrealized gains (losses) related to our marketable equity securities. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net sales of $32,731,000 for the three months and $56,663,000 for the six months ended December 31, 2000, increased by $10,369,000, or 46% and $15,698,000, or 38%, respectively from the net sales in the comparable prior year periods. Fiscal 2001 net sales in the semiconductor segment for the second quarter were $20,713,000, an increase of $5,623,000, or 37%, from the first quarter; net sales in the industrial segment were $8,649,000, an increase of $1,131,000, or 15%, from the first quarter; and net sales in the telecommunications segment were $3,369,000, an increase of $2,045,000, or 154%, from the first quarter. Gross profit for the three months and six months ended December 31, 2000, amounted to $13,611,000 and $23,580,000, respectively, an increase of $3,764,000 and $6,137,000 from the comparable prior year periods. The increases in gross profit dollars were primarily due to the increase in sales volume. Gross profit as a percentage of net sales for the quarter and six months ended December 31, 2000, both amounted to 42%, a decrease of two and one percent, from gross profit as a percentage of net sales of 44% and 43%, respectively, for the three- and six-month periods ended December 31, 1999. Selling, general and administrative expenses of $6,254,000 and $11,645,000, respectively, in the three months and six months ended December 31, 2000, increased by $1,253,000, or 25%, and $2,294,000 or 25%, respectively, from the same periods the year earlier, primarily as a result of an increased sales infrastructure, as well as increased spending on our telecommunications business. As a percentage of net sales, selling, general and administrative expenses in the three- and six-month periods ended December 31, 2000 were 19% and 21%, respectively, as compared to 22% and 23%, respectively, from the same prior year periods. Research, development and engineering expenses ("R&D") amounted to $4,216,000 or 13% of net sales and $7,471,000 or 13%, respectively, for the three- and six-month periods ended December 31, 2000. In the comparable three- and six-month periods in the prior year, R&D expenses totaled $2,285,000 or 10% and $4,421,000 or 11% of net sales, respectively. The investment in R&D primarily was due to increased expenditures related to original equipment manufacturer opportunities in the semiconductor area and also to the development of prototypes for major users in the optical module market. We recorded operating profit in the three months ended December 31, 2000 totaling $2,941,000, as compared to operating profit in the comparable prior year period of $2,158,000. Our operating profit in the six months ended December 31, 2000 was $4,065,000, as compared to $2,865,000 in the six months ended December 31, 1999. We recorded net income of $1,905,000 in the three months ended December 31, 2000; an increase of $514,000, or 37%, to the net income of $1,391,000 in the three months ended December 31, 1999. The net earnings on a per share basis were $.13 for the three months ended December 31, 2000, compared with $.11 in the comparable prior year period. We recorded net income of $2,722,000 or $.18 per share for the first half of fiscal 2001, as compared to $1,963,000 or $.15 per share in the comparable prior year period. The fully diluted weighted average number of shares outstanding for the three and six months ended December 31, 2000 were 15,123,000 and 15,166,000, respectively, as compared to 13,219,000 and 13,083,000 in the prior year periods. FINANCIAL CONDITION At December 31, 2000, working capital was $55,048,000, a decrease of $1,502,000 from the amount at June 30, 2000. At December 31, 2000, we had cash and cash equivalents of $9,350,000 and marketable securities of $7,292,000 for a total of $16,642,000, a decrease of $7,224,000 from June 30, 2000. Accounts receivable increased by $1,893,000 and inventories increased by $7,701,000. Accounts payable increased by $2,215,000 and accrued liabilities decreased by $1,025,000. On December 1, 2000, we borrowed $5,000,000 to finance the acquisition of an 87,000 square foot facility in Westborough, Massachusetts. The financing currently consists of a bridge loan, which is expected to be converted to a long-term note. As of December 31, 2000, there were no borrowings outstanding under our $3,000,000 bank line of credit. Unused amounts under the line of credit are available for short-term working capital needs. Our backlog at December 31, 2000 totaled $65,922,000, a record for us and an increase of $9,443,000 or 17% from September 30, 2000 and an increase of $33,935,000 or 106% from the backlog at December 31, 1999 of $31,987,000. Orders for the quarter totaled $42,174,000 and consisted of $18,142,000 or 43% in the semiconductor segment, $8,647,000 or 21% in the industrial segment, and $15,385,000 or 36% in the telecommunications segment. The increase in our backlog in the first half of this fiscal year was primarily due to increased demand for capital equipment in the industrial and semiconductor markets and the inroads that we are making in the telecommunications market. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We develop products in the United States and market our products in North America, and to a lesser extent in the Asia Pacific and Europe regions. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Because most of our revenues are currently denominated in U.S. dollars, a strengthening of the dollar could make our products less competitive in foreign markets. Our interest income and interest expense on our variable rate debt are sensitive to changes in the general level of U.S. interest rates, particularly since the majority of our investments and variable rate borrowings are relatively short-term instruments. Due to the short-term nature of our investments and variable rate borrowings, we do not believe that a material risk exposure exists. FORWARD LOOKING STATEMENTS This report contains forward looking statements, including, without limitation, statements concerning the future of the industry, product development, business strategy, continued acceptance and growth of our products and dependence on significant customers. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These uncertainties include, but are not limited to, general economic conditions, competitive conditions in markets served by us, most notably high technology markets such as semiconductor and telecommunications, and economic and political developments in countries where we conduct business. PART II ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders was held on November 15, 2000. The following matters were submitted to a vote of the Company's stockholders: Proposal No. 1 - Election of Board of Directors The following individuals, all of whom were Zygo Corporation directors immediately prior to the vote, were elected as a result of the following vote: For Against John Berg 10,631,133 47,077 Paul F. Forman 10,644,244 33,966 R. Clark Harris 10,640,302 37,908 Seymour E. Liebman 10,641,103 37,107 Robert G. McKelvey 10,503,757 174,453 J. Bruce Robinson 10,004,447 673,763 Patrick Tan 10,644,548 33,662 Robert B. Taylor 10,581,187 97,023 Carl A. Zanoni 10,582,001 96,209 Proposal No. 2 - Employee Stock Purchase Plan The Zygo Corporation Employee Stock Purchase Plan was adopted as a result of the following vote:. For 10,106,872 Against 559,283 Abstain 12,055 There were no other matters submitted to a vote of our stockholders. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27. Financial Data Schedule. (b) 99.1 Purchase and Sale Agreement for 20 Walkup Drive, Westborough, Massachusetts, dated October 27, 2000 between Zygo TeraOptix and Cathartes Holdings, LLC. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Zygo Corporation ---------------------------------- (Registrant) /s/ J. BRUCE ROBINSON ---------------------------------- J. Bruce Robinson President and Chief Executive Officer /s/ RICHARD M. DRESSLER ---------------------------------- Richard M. Dressler Vice President Finance, Treasurer, and Chief Financial Officer Date: January 31, 2001 EXHIBIT INDEX Exhibit Description Page - - - - - - - - - - - ------- ----------- ---- 27 Financial Data Schedule for the quarterly report on Form 10-Q for the period ended December 31, 2000. 99.1 Purchase and Sale Agreement for 20 Walkup Drive, Westborough, Massachusetts, dated October 27, 2000 between Zygo TeraOptix and Cathartes Holdings, LLC. EX-99.1 2 0002.txt PURCHASE AND SALE AGREEMENT EXHIBIT 99.1 ASSIGNMENT AGREEMENT BETWEEN CATHARTES HOLDINGS, L.L.C. AND ZYGO TERAOPTIX CONCERNING THE ASSIGNMENT OF A PURCHASE AND SALE AGREEMENT FOR 20 WALKUP DRIVE, WESTBOROUGH, MASSACHUSETTS ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT (this "Agreement") is entered into as of the Effective Date (defined below) by and between Cathartes Holdings, L.L.C., having an office at 85 Devonshire Street, Boston, Massachusettes 02109 (the "Assignor"), and Zygo TeraOptix, having an office at 100 Kuniholm Drive, Holliston, Massachusetts 01746 (the "Assignee"). RECITALS 1. Assignor is party to that certain Purchase and Sale Agreement by and between Chart Inc. successor by merger to Process Systems International, Inc. ("CHART") and Assignor dated as of the Effective Date described therein (the "Purchase Agreement" attached hereto as Exhibit A) with respect to certain real property and the improvements thereon known as 20 Walkup Drive, Westborough, Massachusetts (as more particularly described in the Purchase Agreement, the "Property"); and 2. Assignor desires to sell to Assignee, and Assignee desires to purchase from Assignor, all of Assignor's right title and interest in the Purchase Agreement, all on and subject to the terms and conditions set forth below. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.1 DEFINITIONS. For purposes of this Agreement, capitalized terms not otherwise defined herein have the meanings set forth below: "ASSIGNMENT PRICE" shall mean the purchase price for the Purchase Agreement as specified in SECTION 2.2. "ASSIGNOR REPRESENTATIONS" shall mean the representations and warranties of Assignor expressly set forth in SECTION 7.2. "BUSINESS DAY" shall mean any day of the week other than Saturday, Sunday, or a day on which banking institutions in Boston, Massachusetts are obligated or authorized by law or executive action to be closed to the transaction of normal banking business. "CHART" shall have the meaning set forth in Recital 1 above. "CLOSING" shall mean the consummation of the purchase and sale of the Property pursuant to the terms of the Purchase Agreement and this Agreement. "CONFIDENTIAL INFORMATION" shall mean (i) this agreement and the Purchase Agreement, (ii) all information that is confidential under the terms of the Purchase Agreement, and (iii) all other information concerning the Property as described in Section 4.1. "EFFECTIVE DATE" means the date underneath the signature of Assignor and Assignee on the signature page of this Agreement; provided, however, that if such dates are different, the latest of such dates shall be the Effective Date. "ESCROW AGENT" shall mean Hill & Barlow, a Professional Corporation. "HAZARDOUS MATERIALS" shall mean any substance that is or contains: (i) any "hazardous substance" as now or hereafter defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) or any regulations promulgated thereunder; (ii) any "hazardous waste" as now or hereafter defined in the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) or regulations promulgated thereunder; (iii) any substance regulated by the Toxic Substances Control Act (15 U.S.C. Section 2601 et. Seq.); (iv) oil, gasoline, diesel fuel or other petroleum hydrocarbons; (v) asbestos and asbestos containing materials, in any form, whether friable or nonfriable; (vi) polychlorinated biphenyls; (vii) radon gas; and (viii) any additional substances or materials that are now or hereafter classified or considered to be hazardous or toxic under any laws, ordinances, statutes, codes, rules, regulations, agreements, judgements, orders, and decrees now or hereafter enacted, promulgated, or amended, of the United States, the states, the counties, the cities or any other political subdivisions in which the Property is located and any other political subdivision, agency or instrumentality exercising jurisdiction over the owner of the Property, the Property or the use of the Property relating to pollution, the protection or regulation of human health, natural resources or the environment, or the emission, discharge, release or threatened release of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or waste into the environment (including ambient air, surface water, ground water or land or soil). "PERSON" shall mean any individual, estate, trust, partnership, limited liability company, limited liability partnership, corporation, governmental agency or other legal entity and any unincorporated association. "PROPERTY" has the meaning set forth in Recital 1 above. "PURCHASE AGREEMENT" has the meaning set forth in Recital 1. "REASSIGNMENT" means the automatic revesting, upon the occurrence of the event giving rise to Reassignment, in Assignor of all right, title and interest in and to the Purchase Agreement hereby assigned and with the purchaser's rights under such Agreement preserved by Assignee substantially as they are on the date hereof, Assignee also agreeing promptly to execute, acknowledge and deliver instruments reasonably requested by Assignor confirming the foregoing; provided, however, that in the case of any Reassignment occurring under clauses (3) or (4) of Section 2.3, Assignee shall have and retain the sole and exclusive right to recover all deposits paid under the Purchase Agreement and to sue in its own name to recover the deposits (the parties agreeing to cooperate in the enforcement of their respective rights). "REPRESENTATIVES" means the Persons defined in Section 4.1. "RESTRICTED PARTIES" shall mean the Assignee, its respective affiliates, and the employees, agents, officers, directors and direct and indirect owners of the Assignee, and their respective affiliates. ARTICLE 2 AGREEMENT: PURCHASE PRICE SECTION 2.1 AGREEMENT TO ASSIGN AND ASSUME. Subject to the terms and provisions hereof, Assignor assigns to Assignee all of the right, title and interest of Assignor in and to the Purchase Agreement, including all deposits and payments already made under the Purchase Agreement, with the power to enforce, in the Assignee's own name, any and all rights given to Assignor as purchaser thereunder or which may be deemed necessary to enforce the terms thereof, and Assignee assumes and agrees to perform the Purchase Agreement. SECTION 2.2. ASSIGNMENT PRICE. The assignment price for the Purchase Agreement ("Assignment Price") to be paid by Assignee is the sum of the following: (a) One Hundred Thousand Dollars ($100,000.00), paid to Assignor herewith reflecting the Deposit paid by Assignor under the Purchase Agreement which is hereby assigned to Assignee; (b) Two Hundred Thousand Dollars ($200,000.00), paid to the Escrow Agent herewith ("Assignment Deposit") and to be paid by the Escrow Agent as provided in Section 2.3; and (c) Nine Hundred and Sixty-One Thousand Dollars ($961,000.00) ("Purchase Deposit"), to be paid to the Escrow Agent five (5) Business Days prior to the Closing under the Purchase Agreement. At the Closing and payment in full of the Assignment Price to Assignor, Assignor shall be deemed to have assigned to Assignee all rights, if any, that Assignor has in any work product prepared by Assignor's surveyors, engineers, title companies and other consultants with respect to the Property. At or prior to the closing, the Assignor shall have paid all surveyors, engineers, title companies and other consultants for any and all work done with respect to the Property which was requested by the Assignor, even though the work was assigned to the Assignee. Assignor agrees to indemnify and hold harmless the Assignee from any and all claims by surveyors, engineers, title companies and other consultants hired by the Assignor to do work with respect to the Property. SECTION 2.3. PAYMENT OF DEPOSITS. The Assignment Deposit and the Purchase Deposit together with any interest earned thereon shall be held by the Escrow Agent pursuant to the Escrow Rider attached hereto as Exhibit B and shall be paid as follows: (1) at the Closing, upon recording of the deed for the Property conveying title under the Purchase Agreement, the Assignment Deposit and the Purchase Deposit shall be paid to the Assignor (as set forth in a writing signed by Assignee and Assignor); (2) Upon Assignee's Breach, Reassignment shall occur and the Assignment Deposit shall be paid to the Assignor and the Purchase Deposit, if received by the Escrow Agent, shall be paid to the Assignee (as set forth in a writing signed by Assignee and Assignor); (3) Upon Seller's Breach or upon Seller's refusal to proceed with the transaction due to the Assignment of the Purchase Agreement to the Assignee, Assignee shall give prompt written notice thereof to Assignor, and in such notice, it shall specify whether or not Assignee elects to pursue specific performance under the Purchase Agreement (and any failure to affirmatively so to elect to pursue specific performance, within five (5) days of the Assignee receiving notice of the Seller's breach or refusal to proceed, shall conclusively be deemed to be an election not to pursue specific performance). If Assignee elects (or is deemed to have elected) not to pursue specific performance, the Reassignment shall occur and the Assignment Deposit and, if then made, the Purchase Deposit shall be paid to Assignee (as set forth in a writing signed by Assignee and Assignor). If Assignee elects to pursue specific performance, then the Escrow Agent shall continue to hold the Assignment Deposit, pending a final judgment in the action for specific performance; and, the Escrow Agent shall return the Purchase Deposit, if then made, to the Assignee (as set forth in a writing signed by Assignee and Assignor). If Assignee elects to pursue specific performance, it will do so diligently and it will not settle or otherwise compromise such matter without Assignor's approval unless payment is made to Assignor of all payments due it as though the Closing occurred. If, however, final judgment in such matter is entered, then (a) if the judgment is for specific performance, the Assignment Deposit and Purchase Deposit shall be paid to Assignor, upon satisfaction of the judgment, (b) if specific performance is not ordered nor are damages recovered, then the Assignment Deposit and any Purchase Deposit shall be paid to Assignee, and (c) if specific performance is not ordered but damages are recovered, they shall first be paid to the Assignee in an amount equal to the sum of the deposits paid to the Seller under the Purchase Agreement, the Assignment Deposit and the costs incurred by the Assignee in pursuing specific performance, including legal fees; the remainder of the damages shall be paid to the Assignee and Assignor in proportion to the actual damages suffered by each party; and (4) Should the Closing fail to occur on account of the failure to occur of any conditions precedent to Closing set forth in the Purchase Agreement, which failure is not due to an Assignee's Breach, Reassignment shall occur and the Assignment Deposit and, if then made, the Purchase Deposit shall be paid to Assignee (as set forth in a writing signed by both Assignor and Assignee). Notwithstanding anything to the contrary in the Escrow Rider, except in the sole instance of the Assignee's failure to make the Purchase Deposit when the same is due as provided in Sections 2.2 and 3.1, the Escrow Agent shall only pay such funds to the Assignor or the Assignee respectively upon the written instructions of the other, each agreeing reasonably to give such instructions in accordance with the provisions of this Agreement. Nothing herein shall affect the Escrow Agent's right to pay such funds into court or as otherwise jointly instructed in writing by the Assignor and Assignee. "Assignee's Breach" means a material failure by Assignee to perform under the Purchase Agreement, and, in addition, shall include a failure to pay the Two Hundred Thousand Dollar ($200,000) deposit due under the Purchase Agreement at the end of the Study Period even though such failure may not be a material failure to perform under the Purchase Agreement. "Seller's Breach" means a material failure by CHART to perform under the Purchase Agreement. ARTICLE 3 SECTION 3.1. Should Assignee fail to make the Purchase Deposit when the same is due under Section 2.2, then notwithstanding anything herein to the contrary and without limiting Assignor's other rights and remedies, (1) a Reassignment shall occur, and (2) the Assignment Deposit shall belong and be paid over to Assignor by the Escrow Agent as liquidated damages, and these shall be the Assignor's sole and exclusive remedies at law and in equity for any breach by Assignee. ARTICLE 4 SECTION 4.1. CONFIDENTIALITY. Assignee will treat with the strictest possible confidentiality information that Assignor or its members, officers, employees or representatives, including, but not limited to, its attorneys and investment advisors (members, officers, employees and representatives of either party being referred to herein as the "Representatives") furnish to Assignee, whether furnished before of after the date of this Agreement (such information being collectively referred to also as "Confidential Information") The term "Confidential Information" shall not include information which (a) becomes generally available to the public other than as a result of a disclosure by Assignee or its Representatives in violation of this letter agreement or (b) is affirmatively shown to have been in the possession of Assignee on a non-confidential and proper basis prior to its dealings with Assignor. Assignee agrees that the Confidential Information shall be used by it solely for the purpose of performing under the Purchase Agreement or in connection with any other activities of Assignee or its affiliates; provided, however, that (a) Assignee may make any disclosure of such Confidential Information as required by law and after prompt notice to Assignor of such requirement affording Assignor the opportunity to contest the requirement and (b) any of the Confidential Information may be disclosed to Assignee's Representatives, who (i) need to know such information for the purpose of assisting Assignee in connection with performing under the Purchase Agreement (ii) shall have been informed by Assignee of the confidential nature of the Confidential Information, and (iii) shall have been directed to treat the Confidential Information confidentially, to use it only for the purpose described above, and to comply with the redelivery and destruction obligations set forth below. Assignee agrees not to make any disclosure or transmission to any Representative who will not act in accordance with the terms of this Agreement and be bound hereby. In connection with the use of Confidential Information by any broker, investment advisor or financial advisor, Assignee shall obtain, prior to Assignee's disclosure of the Confidential Information to it, such person's written agreement to the terms and conditions hereof, and Assignee shall deliver same to Assignor. Notwithstanding the foregoing, however, Assignee shall be responsible for any improper use of the Confidential Information by any of its Representatives. Upon any termination of this Agreement all Confidential Information shall be returned to Assignor. The provisions of this Section terminate upon the Closing but shall survive the termination of this Agreement. SECTION 4.2. COOPERATION. Prior to the Closing, Assignor shall cooperate as reasonably requested by Assignee in connection with Assignee's performance of the Purchase Agreement, provided that such cooperation shall be at no material expense or liability to Assignor. Assignee shall perform all such activities in accordance with the Purchase Agreement. Assignee shall indemnify, hold harmless and defend the Assignor and its Representatives against all loss, liability, claims, costs (including reasonable attorneys' fees), liens and damages resulting from or relating to any negligent or wrongful act of Assignee or any of its Representatives. The provisions of this Section shall survive the Closing or termination of this Agreement. SECTION 4.3. CERTAIN INFORMATION. Assignor has provided or made available to Assignee copies of certain information. Assignee understands and acknowledges that such information and any other information provided or made available to Assignee are without any representation or warranty, express or implied, as to the completeness or accuracy of the facts, presumptions, conclusions or other matters contained therein. Assignee has been expressly advised by Assignor to conduct an independent investigation and inspection of the Property utilizing experts as Assignee deems to be necessary for an independent assessment of all liability and risk with respect to the Property. Assignee acknowledges that it shall rely only on the Assignor Representations and upon Assignee's own investigations and inquiries with respect to all such liability and risk. ARTICLE 5 NON-CIRCUMVENTION SECTION 5.1 NON-CIRCUMVENTION: Assignee, on its own behalf and on behalf of all other Restricted Parties, covenants and agrees as follows: (i) for a period of five (5) years from the Effective Date, neither Assignee nor any other Restricted Party shall acquire or enter into any negotiations or agreement (other than through and under this Agreement) to acquire any interest, directly or indirectly, as owner, partner, tenant, ground lessee or ground lessor or as tenant under a master lease, option holder, through stock or other equity interest, investment of capital, lending of money or property, rendering of services, or otherwise, in connection the Property, unless and until Assignee has paid Assignor an amount equal to the Assignment Price, and (ii) were Assignee, or any other Restricted Party to breach this covenant, the damage to Assignor would be irreparable, Assignor's remedies at law would be inadequate and, in addition to its remedies under this Agreement and at law, Assignor shall be entitled to obtain (and neither Assignee, nor any other Restricted Party shall oppose) equitable relief in the form of specific performance, temporary restraining orders, temporary or permanent injunctions or other appropriate equitable remedies, without having to post bond. Assignee further agrees that its breach of this covenant shall be a breach of M.G.L. c.93 and shall entitle Assignor to all damages and recoveries thereunder, to damages measured by the profits received by others with respect to the Property and to any other damages, including punitive damages, to which it may be entitled by law. The provisions of this Article 5 shall survive the Closing or termination of this Agreement. ARTICLE 6 PRE-CLOSING SECTION 6.1 NO CHANGE TO PURCHASE AGREEMENT WITHOUT CONSENT. Without the prior written consent of Assignor, Assignee shall not (1) amend or terminate the Purchase Agreement, (2) intentionally waive any material obligations of Seller under the Purchase Agreement, or (3) grant any consent under the Purchase Agreement. Assignee promptly shall provide Assignor with complete copies of any notice of default or other material correspondence received by Assignee or its Representatives from CHART or sent to CHART in connection with the Purchase Agreement or the Property. When seeking any consent from Assignor under this section, Assignee shall provide Assignor with a notice that sets forth the proposed action in reasonable detail and prominently states that such requested consent shall be deemed given unless disapproved with five Business Days; and, if Assignor does not notify Assignee in writing of its disapproval within five (5) Business Days of receipt of such notice, Assignor shall be deemed to have approved the action described in such notice. If Assignor disapproves such request, then Assignor's written notice shall specify the reasons for such disapproval. ARTICLE 7 REPRESENTATIONS, WARRANTIES AND COVENANTS SECTION 7.1. ASSIGNEE'S REPRESENTATIONS: Assignee warrants to Assignor as of the date hereof and, if applicable, as of the Closing, as follows: (a) EXPERIENCED ASSIGNEE. Assignee acknowledges that it is an experienced and sophisticated owner of commercial real estate such as the Property and that it has been given a full and complete opportunity to conduct such investigations, examinations, inspections and analyses of the Property and Purchase Agreement as Assignee, in its absolute discretion, has deemed appropriate. Assignee further acknowledges that, except for Assignor Representations, Assignee has not relied upon any statements, representations or warranties by Assignor or any agent of Assignor; (b) AS-IS SALE. Assignee agrees that the Assignment of the Purchase Agreement and Property subject thereto is being made strictly on an "as is, where is, with all faults" basis, with no right of set-off or reduction in the Purchase Price, and that, except for the Assignor Representations, such sale shall be without representation or warranty of any kind, express or implied, including any warranty of income potential, operating expenses, uses, merchantability or fitness for a particular purpose of the Property, and Assignor does hereby disclaim and renounce any such representation or warranty. Assignee specifically acknowledges Assignee is not relying on any representations or warranties of any kind whatsoever, express or implied, from Assignor, or any broker or other agents as to any matters concerning the Purchase Agreement or Property including: (1) the condition or safety of the Property or any improvements thereon, including plumbing, sewer, heating and electrical systems, roofing, air conditioning, if any, foundations, soils and geology, lot size, or suitability of the Property or its improvements for a particular purpose; (2) whether the appliances, if any, plumbing or utilities are in working order; (3) the habitability or suitability for occupancy of any structure and the quality of its construction; (4) the fitness of any personal property; (5) whether the improvements are structurally sound, in good condition, or in compliance with applicable city, county, state of federal statutes, codes or ordinances; (6) the condition of title to the Property; (7) the profitability or losses or expenses relating to the Property; (8) the legal or tax consequences of this agreement or the transactions contemplated hereby; (9) the possible presence of Hazardous Materials in, under or near the Property; (10) the value of the Property or the Purchase Agreement; or (11) the profitability or losses or expenses relating to the Property or the Purchase Agreement. Assignee understand the legal significance of the foregoing provisions and acknowledges that they are a material inducement to Assignor's willingness to enter into this agreement; (c) ORGANIZATION. Assignee is a corporation duly formed, validly existing and in good standing under the laws of Delaware. This Agreement constitutes the valid and legally binding obligation of Assignee, enforceable against Assignee in accordance with its terms; (d) NO ADVERSE PROCEEDINGS. There are no actions, suits or proceedings pending or, to the knowledge of Assignee, threatened against or affecting Assignee that, if determined adversely to Assignee, would adversely affect its ability to perform its obligations hereunder; (e) NO CONFLICTS. Neither the execution, delivery or performance of this Agreement nor compliance herewith (a) conflicts or will conflict with or results or will result in a breach of or constitutes or will constitute a default order under (1) the charter documents or by-laws of Assignee, (2) to the best of Assignee's knowledge, any law or any order, writ, injunction or decree of any court or governmental authority, or (3) any agreement or instrument to which Assignee is a party or by which it is bound or (b) results in the creation or imposition of any lien, charge or encumbrance upon its property pursuant to any such agreement or instrument; (f) AUTHORIZATION. No authorization, consent, approval of any governmental authority (including courts) is required for the execution and delivery by Assignee of this Agreement or the performance of its obligations hereunder; SECTION 7.2. ASSIGNOR'S REPRESENTATIONS. Assignor warrants and represents to Assignee as follows as of the date hereof and, if applicable, as of the Closing, as follows: (a) REPRESENTATIONS CONCERNING ASSIGNOR (i) ORGANIZATION. Assignor is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware. This Agreement constitutes the valid and legally binding obligation of Assignor, enforceable against Assignor in accordance with its terms; (ii) NO ADVERSE PROCEEDINGS. There are no actions, suits or proceedings pending or, to the knowledge of Assignor, threatened, against or affecting Assignor that, if determined adversely to Assignor, would adversely affect its ability to perform its obligations hereunder; (iii) AUTHORIZATION. Assignor has full right, power and authority and is duly authorized to enter into this Agreement, to perform each of the covenants on its part to be performed hereunder and to execute and deliver, and to perform its obligations under all documents required to be executed and delivered by it pursuant to this Agreement; (iv) NO CONFLICTS. Neither the execution, delivery or performance of this agreement nor compliance herewith (a) conflicts or will conflict with or results or will result in a breach of or constitutes or will constitute a default under (1) the charter documents or by-laws of Assignor, (2) to the best of Assignor's knowledge, any law or any order, writ, injunction or decree of any court or governmental authority, or (3) any agreement or instrument to which Assignor is a party or by which it is bound or (b) results in the creation or imposition of any lien, charge or encumbrance upon its property pursuant to any such agreement or instrument; and (v) APPROVALS. No authorization, consent, or approval of any governmental authority (including courts) is required for the execution and delivery by Assignor of this Agreement or the performance of its obligations hereunder; (b) REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASE AGREEMENT (i) TRUE COPY: ENTIRE AGREEMENT. A true, correct and complete copy of the Purchase Agreement, including all amendments is attached hereto as Exhibit A; (ii) FULL FORCE AND EFFECT. Assignor warrants that the Purchase Agreement is in full force and effect, as of the date hereof; (iii) NO PRIOR ASSIGNMENT. As of the date hereof, Assignor has not assigned its interest in and to the Purchase Agreement and owns such interest free and clear of all liens and encumbrances, and the Assignor agrees not to take any action with respect to the Purchase Agreement inconsistent with this Assignment, including without limitation purporting to alter or modify the terms of the Purchase Agreement; and (iv) ABSENCE OF DEFAULTS. Assignor is not in default under the Purchase Agreement and Assignor has not received any notice of any default under the Purchase Agreement. The Assignor warrants, to the best of Assignor's knowledge, Seller is not in default under the Purchase Agreement, and Assignor has not sent any notices to Seller indicating that the Seller is in default under the Purchase Agreement. The provisions of Section shall survive the Closing or termination of this Agreement. (ARTICLE 8 IS DELIBERATELY OMITTED) ARTICLE 9 COMMISSIONS SECTION 9.1 COMMISSIONS. Assignor and Assignee represent and warrant to each other that no brokerage fee or real estate commission is or shall be due or owing in connection with this Agreement, except for amounts, if any, due to (a) CB/Ellis, and (2) R.W. Holmes, which will both be paid for by Assignor, and Assignor and Assignee hereby indemnify and hold the other harmless from any and all claims of any other broker or agent on action or alleged action of the indemnifying party. The provisions of this paragraph shall survive the Closing or termination of this Agreement. ARTICLE 10 TERMINATION AND DEFAULT SECTION 10.1 TERMINATION WITHOUT DEFAULT. If the Closing of the Purchase Agreement is not consummated and the Purchase Agreement terminates because of the failure of any condition precedent to Assignee's obligations expressly set forth in the Purchase Agreement (not the result of any Seller's Breach), and provided that Assignee has performed or tendered performance of all of its material obligations under the Purchase Agreement, the Assignment Deposit and Purchase Deposit shall promptly be returned to Assignee (and Assignor and Assignee shall so instruct the Escrow Agent). SECTION 10.2 ASSIGNEE'S DEFAULT. If the sale of the Purchase Agreement as contemplated hereby is not consummated because of Assignee's Breach or if Assignee fails to make the Purchase Deposit when and as required hereunder, then: (a) there shall be a Reassignment; (b) the Assignment Deposit shall be retained by Assignor as liquidated damages, and this shall be Assignor's sole and exclusive remedy therefor at law or in equity; (c) if the Purchase Deposit has been paid to the Escrow Agent, it shall be returned to the Assignee; and (d) except for those obligations which expressly survive termination of this Agreement, Assignor and Assignee shall have no further obligations to each other. ASSIGNEE AND ASSIGNOR ACKNOWLEDGE THAT THE DAMAGES TO ASSIGNOR IN THE EVENT OF AN ASSIGNEE'S BREACH OR A BREACH OF THIS AGREEMENT BY ASSIGNEE WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT THE AMOUNT OF SUCH DEPOSITS REPRESENTS THE PARTIES' BEST AND MOST ACCURATE ESTIMATE OF THE DAMAGES THAT WOULD BE SUFFERED BY ASSIGNOR IF THE TRANSACTION SHOULD FAIL TO CLOSE AND THAT SUCH ESTIMATE IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT AND UNDER THE CIRCUMSTANCES THAT ASSIGNOR AND ASSIGNEE REASONABLY ANTICIPATE WOULD EXIST AT THE TIME OF SUCH BREACH. SECTION 10.3 BREACH OF REPRESENTATIONS. Assignor and Assignee agree, except in the case of willful and intentional fraud or willful and intentional misrepresentation that, following the Closing, each shall be liable for the direct, but not consequential or punitive, damages resulting from any material breach of its representations and warranties expressly set forth in Article 7 hereof; provided, however, that (i) the total liability of Assignor for all such breaches and any matters relating thereto shall not, in the aggregate, exceed Two Hundred Thousand Dollars ($500,000.00); (ii) the total liability of Assignee for all such breaches and any matters relating thereto shall not, in the aggregate, exceed Two Hundred Thousand Dollars ($200,000.00); (iii) such representations and warranties are personal to Assignor and Assignee and may not be assigned to or enforced by any other Person; and (iv) the representations and warranties of Assignor set forth in this Agreement herewith shall survive the Closing for a period of one hundred eighty (180) days, and no action or proceeding thereon shall be valid or enforceable, at law or in equity, if a legal proceeding is not commenced within that time. Notwithstanding the foregoing, Assignor shall have no liability for any such breach: (a) regarding which Assignee or its Representatives had actual knowledge prior to Closing; or (b) that was disclosed in this Agreement, the Purchase Agreement or other written information furnished in writing to Assignee. Assignee and Assignor further agree that no claim may or shall be made for any alleged breach of any representations or warranties made by Assignor or Assignee under or relating to this Agreement unless the amount of such claim or claims, individually or in the aggregate, exceeds $50,000 (at which point, subject to the above provisions, Assignor and Assignee shall be liable for all such damages caused thereby relating back to the first dollar of loss). ARTICLE 11 MISCELLANEOUS SECTION 11.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto with respect to the transactions contemplated herein, and it supercedes all prior discussions, understandings or agreements between the parties. All Exhibits attached hereto are a part of this Agreement and are incorporated herein by reference. SECTION 11.2 BINDING ON SUCCESSORS AND ASSIGNS. Subject to section 11.3, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 11.3 NON-ASSIGNMENT BY ASSIGNEE. Assignee shall not directly or indirectly assign this Agreement or any of its rights hereunder without the prior written consent of Assignor except as follows: upon prior written notice to Assignor, Assignee may designate a wholly owned subsidiary of Assignee or an affiliate of Assignee commonly owned and controlled by the same person(s) who own and control Assignee, to take title under the Purchase Agreement, provided that such designee agrees in writing with Assignor (in form reasonably satisfactory to Assignor) to be jointly, severally and directly liable to Assignor under this Agreement along with Assignee, who shall constitute to be jointly, severally and directly liable to Assignor hereunder. Any attempted assignment in violation hereof shall, at the election of Assignor, be of no force or effect and shall constitute a default by Assignee. The Assignor hereby consents to and acknowledges that ZTO Property Holdings, LLC will be taking title to the Property. SECTION 11.4 WAIVER. The excuse of the performance by a party of any obligation of the other party under this Agreement shall only be effective if evidenced by a written statement signed by the party so excusing or waiving. No delay in exercising any right or remedy shall constitute a waiver thereof, and no waiver by Assignor or Assignee of the breach of any covenant of this Agreement shall be construed as a waiver of any preceding or succeeding breach of the same or any other covenant or condition of this Agreement. SECTION 11.5 GOVERNING LAW This Agreement shall be construed and the rights and obligations of Assignor and Assignee hereunder determined in accordance with the internal laws of The Commonwealth of Massachusetts without regard to the principles of choice of law or conflicts of law. SECTION 11.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts and it shall be sufficient that the signature of each party appear on one or more such counterparts. All counterparts shall collectively constitute a single agreement. A facsimile signature to this Agreement shall be sufficient to prove the execution hereby by any Person. SECTION 11.7 NOTICES. All notices or other communications required or provided to be sent by either party shall be in writing and shall be sent by: (i) by United States Postal Service, certified mail, return receipt requested, (ii) by any nationally known overnight delivery service for next day delivery or (iii) delivered in person. All notices shall be deemed to have been given upon receipt. All notices shall be addressed to the parties at the addresses below: To Assignor: Cathartes Holdings, L.L.C. 85 Devonshire Street Boston, Massachusetts 02109 Attn: Mr. David DePree And with a copy to: Hill & Barlow One International Place Boston, Massachusetts 02110 Attn: Daniel A. Taylor, Esq. and John L. Sullivan, Esq. To Assignee: Zygo TeraOptix 100 Kuniholm Drive Holliston, MA 01746 Attn: John Berg With a copy to: LeClair & LeClair, P.C. 24 Lexington Street Waltham, Massachusetts 02452 Attn: L. Richard LeClaire, III Any address or name specified above may be changed by notice given to the addressee by the other party in accordance with this section. The inability to deliver notice because of a changed address of which no notice was given as provided above, or because of rejection or other refusal to accept any notice, shall be deemed to be the receipt of the notice as of the date of such inability to deliver or rejection or refusal to accept. Any notice to be given by any party hereto may be given by the counsel for such party. SECTION 11.8 ATTORNEYS' FEES. In the event of a judicial or administrative proceeding or action by one party against the other party with respect to the interpretation or enforcement of this Agreement, the prevailing party shall be entitled to recover reasonable costs and expenses including reasonable attorneys' fees and expenses, whether at the investigative, pretrial, trial or appellate level. The prevailing party shall be determined by the court based upon an assessment of which party's major arguments or position prevailed. SECTION 11.9 TIME PERIODS. Any reference in this Agreement to the time for the performance of obligations or elapsed time shall mean consecutive calendar days, months, or years, as applicable. In the event the time for performance of any obligation hereunder expires on a day that is not a Business Day, the time for performance shall be extended to the next Business Day. SECTION 11.10 MODIFICATION OF AGREEMENT. No modification of this Agreement shall be deemed effective unless in writing and signed by both Assignor and Assignee. SECTION 11.11 FURTHER INSTRUMENTS. Each party, promptly upon the request of the other, shall execute and have acknowledged and delivered to the other or to Escrow Agent, as may be appropriate, any and all further instruments reasonably requested or appropriate to evidence or give effect to the provisions of this Agreement and that are consistent with the provisions of this Agreement. SECTION 11.12 DESCRIPTIVE HEADINGS; WORD MEANING. The descriptive headings of the paragraphs of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any provisions of this Agreement. Words such as "herein", "hereinafter", "hereof" and "hereunder" when used in reference to this Agreement, refer to this Agreement as a whole and not merely to a subdivision in which such words appear, unless the context otherwise requires. The singular shall include the plural and the masculine gender shall include the feminine and neuter, and vice versa, unless the context otherwise requires. The word "including" shall not be restrictive and shall be interpreted as if followed by the words "without limitation." SECTION 11.13 TIME OF THE ESSENCE. Time is of the essence of this Agreement and all covenants and deadlines hereunder. Without limiting the foregoing, Assignee and Assignor hereby confirm their intention and agreement that time shall be of the essence of each and every provision of this Agreement, notwithstanding any subsequent modification or extension of any date or time period that is provided for under this Agreement. The agreement of Assignee and Assignor that time is of the essence of each and every provision of this Agreement shall not be waived or modified by any conduct of the parties, and the agreement of Assignee and Assignor that time is of the essence of each and every provision of this Agreement may only be modified or waived by the express written agreement of Assignee and Assignor that time shall not be of the essence with respect to a particular date or time period, or any modification or extension thereof, that is provided under this Agreement. SECTION 11.14 CONSTRUCTION OF AGREEMENT. This Agreement shall not be construed more strictly against one party than against the other merely by virtue of the fact that it may have been prepared primarily by counsel for one of the parties, it being recognized that both Assignee and Assignor have contributed substantially and materially to the preparation of this Agreement. SECTION 11.15 LIMITATIONS ON LIABILITY. Notwithstanding anything to the contrary in this Agreement, and subject to any additional limitations on Assignor's liability set forth elsewhere in this Agreement, Assignor's liability hereunder shall be limited to its interest in the Purchase Agreement, in no event shall any member, manager, owner, officer, director or agent of Assignor or Assignee have any personal liability hereunder or otherwise except for willful and intentional fraud or willful and intentional misrepresentation. SECTION 11.16 SEVERABILITY. The parties hereto intend and believe that each provision in this Agreement comports with all applicable local, state and federal laws and judicial decisions. If, however, any provision in this Agreement is found by a court of law to be in violation of any applicable local, state, or federal law, statute, ordinance, administrative or judicial decision, or public policy, or if in any other respect such a court declares any such provision to be illegal, invalid, unlawful, void or unenforceable as written, then it is the intent of all parties hereto that, consistent with and with a view towards preserving the economic and legal arrangements among the parties hereto as expressed in this Agreement, such provision shall be given force and effect to the fullest possible extent, and that the remainder of this Agreement shall be construed as if such illegal, invalid, unlawful, void, or unenforceable provision were not contained herein, and that the rights, obligations, and interests of the parties under the remainder of this Agreement shall continue in full force and effect. SECTION 11.17 NO IMPLIED AGREEMENT. Neither Assignor nor Assignee shall have any obligations in connection with the transaction contemplated by this Agreement unless both Assignor and Assignee, each acting in its sole discretion, elects to execute and deliver this Agreement to the other party. No correspondence, course of dealing or submission of drafts or final versions of this Agreement between Assignor and Assignee shall be deemed to create any binding obligations in connection with the transaction contemplated hereby, and no contract or obligation on the part of Assignor or Assignee shall arise unless and until this Agreement is fully executed by both Assignor and Assignee. Once executed and delivered by Assignor and Assignee, this Agreement shall be binding upon them notwithstanding the failure of Escrow Agent or any broker or other Person to execute this Agreement. SECTION 11.18 NOTICE TO SELLER. At Assignee's request, Assignor is herewith giving the notice attached as Exhibit C to Chart under the Purchase Agreement. (The balance of this page has been intentionally left blank. Signature pages follow.) IN WITNESS WHEREOF, Assignor and Assignee hereto executed this Agreement as of the date first written above. Assignor: CATHARTES HOLDINGS, L.L.C. By: /s/ RUBEN P. MORENO ------------------------------- Name: Ruben P. Moreno Title: Manager Date: October 27, 2000 Assignee: ZYGO TERAOPTIX By: /s/ JOHN S. BERG ------------------------------- Name: John S. Berg Title: President Date: October 27, 2000 The Escrow Provisions of this Agreement are Agreed to: Hill & Barlow By: /s/ JOHN L. SULLIVAN ------------------------------ Name: John L. Sullivan Title: Attorney Date: October 27, 2000 EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheet and the consolidated statement of earnings and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-2000 JUN-30-2001 9,350 7,292 22,257 226 19,580 72,373 50,673 21,141 107,106 17,325 0 0 0 1,461 82,325 107,106 56,663 56,663 33,083 33,083 19,515 0 0 4,442 1,510 2,932 0 (210) 0 2,722 .19 .18
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