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EXHIBIT (d)(1)
EXECUTION COPY
____________________________________________________
AGREEMENT AND PLAN OF MERGER
by and among
SIEMENS CORPORATION,
SIGMA ACQUISITION CORP.
and
ACUSON CORPORATION
dated as of September 26, 2000
________________________________________________________
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ARTICLE I THE OFFER............................................... 1
Section 1.1 The Offer.............................................. 1
Section 1.2 Company Actions........................................ 3
Section 1.3 Stockholder Lists...................................... 4
Section 1.4 Directors; Section 14(f)............................... 5
ARTICLE II THE MERGER.............................................. 6
Section 2.1 The Merger............................................. 6
Section 2.2 Effective Time of the Merger........................... 6
Section 2.3 Effects of the Merger.................................. 6
Section 2.4 Closing................................................ 6
ARTICLE III THE SURVIVING AND PARENT CORPORATIONS................... 6
Section 3.1 Certificate of Incorporation........................... 6
Section 3.2 Bylaws................................................. 7
Section 3.3 Directors.............................................. 7
Section 3.4 Officers............................................... 7
ARTICLE IV EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; SURRENDER OF CERTIFICATES................. 7
Section 4.1 Conversion of Company Common Stock in the Merger....... 7
Section 4.2 Conversion of Subsidiary Shares........................ 7
Section 4.3 Surrender and Exchange of Certificates................. 8
Section 4.4 Tax Withholding........................................ 9
Section 4.5 Closing of the Company's Transfer Books................ 9
Section 4.6 Option Plans; Restricted Stock......................... 9
Section 4.7 Dissenting Shares...................................... 10
Section 4.8 Further Assurances..................................... 10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......... 10
Section 5.1 Organization and Qualification......................... 11
Section 5.2 Capitalization......................................... 11
Section 5.3 Subsidiaries........................................... 12
Section 5.4 Authority; Non-Contravention; Approvals................ 13
Section 5.5 Reports and Financial Statements....................... 14
Section 5.6 Absence of Undisclosed Liabilities; Affiliate
Transactions........................................... 15
Section 5.7 Absence of Certain Changes or Events................... 15
Section 5.8 Litigation............................................. 16
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Section 5.9 Information Supplied................................... 16
Section 5.10 No Violation of Law.................................... 16
Section 5.11 Compliance with Agreements............................. 17
Section 5.12 Taxes.................................................. 17
Section 5.13 Employee Benefit Plans; ERISA.......................... 19
Section 5.14 Labor Controversies.................................... 20
Section 5.15 Environmental Matters.................................. 20
Section 5.16 Title to Assets........................................ 21
Section 5.17 Intellectual Property; Software........................ 21
Section 5.18 Brokers and Finders.................................... 22
Section 5.19 Opinion of Company Financial Advisor................... 22
Section 5.20 Vote Required.......................................... 22
Section 5.21 Insurance.............................................. 23
Section 5.22 Contracts.............................................. 23
Section 5.23 Accounts Receivable.................................... 24
Section 5.24 Product Warranty....................................... 24
Section 5.25 Product Liability...................................... 24
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY. 24
Section 6.1 Organization and Qualification......................... 24
Section 6.2 Authority; Non-Contravention; Approvals................ 24
Section 6.3 Information Supplied................................... 25
Section 6.4 Financing.............................................. 25
Section 6.5 Subsidiary............................................. 26
Section 6.6 Brokers and Finders.................................... 26
ARTICLE VII COVENANTS OF THE PARTIES................................ 26
Section 7.1 Mutual Covenants....................................... 26
Section 7.2 Conduct of the Company's Business...................... 28
ARTICLE VIII ADDITIONAL AGREEMENTS OF THE PARTIES.................... 30
Section 8.1 Access to Information.................................. 30
Section 8.2 Acquisition Proposals.................................. 31
Section 8.3 Expenses and Fees...................................... 32
Section 8.4 Directors' and Officers' Indemnification............... 32
Section 8.5 Employee Benefits...................................... 33
Section 8.6 Litigation............................................. 34
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ARTICLE IX CONDITIONS.............................................. 34
Section 9.1 Conditions to Each Party's Obligation to Effect
the Merger............................................. 34
ARTICLE X TERMINATION, AMENDMENT AND WAIVER....................... 35
Section 10.1 Termination............................................ 35
Section 10.2 Effect of Termination.................................. 37
Section 10.3 Amendment.............................................. 37
Section 10.4 Extension; Waiver...................................... 38
ARTICLE XI GENERAL PROVISIONS...................................... 38
Section 11.1 Non-Survival of Representations and Warranties......... 38
Section 11.2 Notices................................................ 38
Section 11.4 Third Party Beneficiaries.............................. 39
Section 11.5 Severability........................................... 39
Section 11.6 Assignment............................................. 40
Section 11.7 Enforcement............................................ 40
Section 11.8 Counterparts........................................... 40
Section 11.9 Entire Agreement....................................... 40
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Acquisition Proposal.............. 31
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Agreement......................... 1
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Antitrust Division................ 26
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Closing........................... 6
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Closing Date...................... 6
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Code.............................. 9
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Common Stock Price................ 1
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Company........................... 1
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Company Certificates.............. 8
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Company Common Stock.............. 1
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Company Disclosure Schedule....... 10
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Company Financial Advisor......... 4
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Company Financial Statements...... 14
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Company Intellectual Property
Rights........................... 21
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Company Material Adverse Effect... 11
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Company Permits................... 17
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Company Plan...................... 20
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Company Preferred Stock........... 11
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Company Regulatory Approvals...... 14
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Company Rights.................... 11
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Company Rights Agreement.......... 11
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Company SEC Reports............... 14
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Company Stock Plans............... 9
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Company Stockholders' Approval.... 23
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Company Subsidiary................ 12
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Confidentiality Agreement......... 30
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Contract.......................... 23
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DGCL.............................. 3
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Dissenting Shares................. 10
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Dissenting Stockholder............ 10
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Effective Time.................... 6
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environment....................... 21
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Environmental Event............... 20
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Environmental Law................. 20
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ERISA............................. 20
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ERISA Affiliate................... 20
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ESPP.............................. 10
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ESPP Date......................... 10
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Exchange Act...................... 1
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Extended Outside Date............. 36
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FTC............................... 26
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GAAP.............................. 14
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Governmental Authority............ 14
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HSR Act........................... 13
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Independent Directors............. 5
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Initial Expiration Date........... 2
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IRS............................... 17
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Liens............................. 12
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Merger............................ 1
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Merger Filing..................... 6
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Minimum Condition................. 1
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Offer............................. 1
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Offer Documents................... 3
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Option Payment.................... 9
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Options........................... 9
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Outside Date...................... 36
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Parent............................ 1
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Parent Representatives............ 30
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Parent Required Statutory 25
Approvals........................
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Paying Agent...................... 8
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Pension Plan...................... 20
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Permitted Lien.................... 15
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Proxy Statement................... 27
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release........................... 21
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Schedule 14D-9.................... 3
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Schedule TO....................... 2
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SEC............................... 2
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Securities Act.................... 12
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Stock Rights...................... 11
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Stockholders Meeting.............. 27
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subsidiary........................ 12
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Subsidiary........................ 1
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Subsidiary Common Stock........... 7
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Superior Proposal................. 32
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Surviving Corporation............. 6
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Tax Return........................ 18
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Taxes............................. 18
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Violation......................... 17
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Welfare Plan...................... 20
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 26, 2000 (this
"Agreement"), is made and entered into by and among Siemens Corporation, a
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Delaware corporation ("Parent"), Sigma Acquisition Corp., a Delaware corporation
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and a wholly-owned subsidiary of Parent ("Subsidiary"), and Acuson Corporation,
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a Delaware corporation (the "Company").
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BACKGROUND
WHEREAS, the Boards of Directors of Parent, Subsidiary and the Company have
approved the acquisition of the Company by Parent upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent, Subsidiary and the
Company have agreed that, upon the terms and subject to the conditions set forth
in this Agreement, Subsidiary shall commence an offer (as amended or
supplemented in accordance with this Agreement, the "Offer") to purchase for
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cash all of the issued and outstanding shares of common stock, par value $.0001
per share, of the Company (the "Company Common Stock," which term as used herein
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shall include the associated Company Rights (as defined in Section 5.2(a)),
unless the context otherwise requires), at a price per share of $23.00, net to
the seller in cash (such price, or such higher price per share as may be paid in
the Offer, the "Common Stock Price");
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WHEREAS, the Boards of Directors of Parent, Subsidiary and the Company have
each approved the merger of Subsidiary with and into the Company (the "Merger"),
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upon the terms and subject to the conditions set forth in this Agreement,
whereby each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (as defined in Section 2.2), other than the shares
of Company Common Stock owned directly or indirectly by Parent, Subsidiary or
the Company and Dissenting Shares (as defined in Section 4.7), will be converted
into the right to receive the Common Stock Price;
WHEREAS, the Board of Directors of the Company has resolved to recommend
that the holders of shares of Company Common Stock tender their shares pursuant
to the Offer and has approved, adopted and declared advisable this Agreement and
the Merger; and
WHEREAS, Parent, Subsidiary and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
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(a) Subject to the provisions of this Agreement, and provided that this
Agreement shall not have been terminated in accordance with Section 10.1 and so
long as none of the events or circumstances set forth in Annex A hereto shall
have occurred and be continuing, not later than the seventh business day from
the date of public announcement of the execution of this Agreement (counting the
business day on which such announcement is made), Parent shall cause Subsidiary
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), the Offer at a price equal to the
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Common Stock Price for each share of Company Common Stock. The obligations of
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Subsidiary to consummate the Offer, and to accept for payment and to pay for any
shares of Company Common Stock tendered pursuant to the Offer and not withdrawn
prior to the expiration of the Offer shall be subject solely to those conditions
set forth in Annex A. It is agreed that the conditions to the Offer set forth in
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Annex A are for the benefit of Subsidiary and may be asserted by Subsidiary and
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Subsidiary expressly reserves the right, in its sole discretion, to waive any
such condition; provided, that without the prior written consent of the Company,
Subsidiary shall not waive the Minimum Condition (as defined in Annex A). The
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initial expiration date of the Offer (the "Initial Expiration Date") shall be
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the 20th business day following the commencement (within the meaning of Rule
14d-2 under the Exchange Act) of the Offer.
(b) Subsidiary expressly reserves the right, in its sole discretion, to
modify and make changes to the terms and conditions of the Offer; provided, that
without the prior written consent of the Company, no modification or change may
be made which (i) decreases the Common Stock Price (except as permitted by this
Agreement); (ii) changes the form of consideration payable in the Offer; (iii)
changes the Minimum Condition; (iv) limits the number of shares of Company
Common Stock sought pursuant to the Offer; (v) changes the conditions to the
Offer (other than conditions that are immaterial and administrative in nature)
in a manner adverse to the holders of the Company Common Stock; or (vi) imposes
additional conditions to the Offer other than conditions that are immaterial and
administrative in nature. Notwithstanding the foregoing, Subsidiary may, without
the consent of the Company (and, in the case of clauses (i) and (ii) below,
Subsidiary shall if the Company requests Subsidiary in writing to do so), (i)
extend and re- extend the Offer on one or more occasions for such period as may
be determined by Subsidiary in its sole discretion (each such extension period
not to exceed 10 business days at a time), if at the then-scheduled expiration
date of the Offer any of the conditions to Subsidiary's obligations to accept
for payment and pay for shares of Company Common Stock shall not be satisfied or
waived and (ii) extend and re-extend the Offer for any period required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer. Subsidiary
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also may extend the Offer on one occasion for an aggregate period of not more
than 10 business days if the Minimum Condition has been satisfied but less than
90% of the sum of (y) the total number of shares of outstanding Company Common
Stock plus (z) the total number of shares of Company Common Stock issuable on or
prior to the Outside Date (or the Extended Outside Date if the Outside Date has
been extended in accordance with Section 10.1(b)(iii)) upon the exercise of any
outstanding Options, warrants, conversion privileges or similar rights with
respect to Company Common Stock that are currently vested or that will vest on
or prior to the Outside Date or Extended Outside Date, as the case may be, has
been validly tendered and not properly withdrawn as of the Initial Expiration
Date; provided, however, that if Subsidiary elects to extend the Offer pursuant
to this sentence, then all conditions to the Offer set forth in Annex A shall be
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deemed to be irrevocably waived except to the extent that a breach by the
Company of any covenant in this Agreement or a failure of a representation or
warranty of the Company to be true and correct as of the date of this Agreement
has occurred in either case because of one or more willful and intentional acts
or omissions by the Company following the date of Subsidiary's election to
extend the Offer pursuant to this sentence, which would cause any of the
conditions to the Offer set forth in clauses (c)(i) and (c)(ii) of Annex A not
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to be satisfied. Subject to the terms and the conditions of the Offer and this
Agreement, as soon as practicable after expiration of the Offer, Subsidiary
shall accept for payment and pay for, and Parent shall cause Subsidiary to
accept for payment and pay for, all shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer. Notwithstanding the foregoing,
Subsidiary may in its sole discretion elect to provide for a subsequent offering
period pursuant to, and on the terms required by, Rule 14d-11 under the Exchange
Act.
(c) On the date of commencement of the Offer, Parent and Subsidiary shall
file with the SEC with respect to the Offer a Tender Offer Statement on Schedule
TO (together with all amendments and supplements thereto and including all
exhibits thereto, the "Schedule TO") which will comply in all
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material respects with the provisions of the Exchange Act and the rules and
regulations thereunder and other applicable United States federal securities
laws, and will contain the offer to purchase relating to the Offer and forms of
the related letter of transmittal and summary advertisement (such Schedule TO
and the documents included therein pursuant to which the Offer shall be made,
together with any supplements or amendments thereto and including the exhibits
thereto, are referred to herein collectively as the "Offer Documents"). Parent
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shall provide the Company and its counsel a reasonable opportunity to review and
comment upon the initial Offer Documents prior to the filing thereof with the
SEC. To the extent reasonably practicable under the circumstances, the Company
and its counsel shall be given a reasonable opportunity to review any amendments
and supplements to the initial Offer Documents prior to their filing with the
SEC or dissemination to the Company's stockholders. Parent shall advise the
Company and its counsel in writing of any comments (and provide a copy of any
comments furnished in writing) that Subsidiary, Parent or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt thereof. Each of the Company, Parent and Subsidiary shall
promptly correct any information provided by it for use in the Offer Documents
that shall have become false or misleading in any material respects and Parent
and Subsidiary further agree to take all steps necessary to cause the Schedule
TO as so corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to the stockholders of the Company, in each case,
as and to the extent required by applicable United States federal securities
laws.
Section 1.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer and represents
and warrants that (i) its Board of Directors, at a meeting duly called and held
on September 26, 2000, has duly and unanimously adopted resolutions declaring
the advisability of this Agreement and approving the Offer, the Merger, this
Agreement and the transactions contemplated hereby, determining that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's Stockholders accept
the Offer and tender their respective shares of Company Common Stock to
Subsidiary, and, if required, adopt this Agreement; (ii) the Company has taken
all necessary action to ensure that the restrictions contained in Section 203 of
the Delaware General Corporation Law (the "DGCL") applicable to an "interested
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stockholder" or a "business combination" (as defined in Section 203 of the DGCL)
will not apply to the Offer, the Merger, this Agreement or the transactions
contemplated hereby; and (iii) the Company has taken all necessary action to
render the Company Rights Agreement (as defined in Section 5.2) inapplicable to
the execution of this Agreement, the consummation of the Offer, the Merger and
the other transactions contemplated by this Agreement such that none of the
execution of this Agreement or the consummation of the Offer, the Merger or the
other transactions contemplated by this Agreement will result in the grant of
any rights to any person under the Company Rights Agreement or enable or require
any outstanding rights thereunder to be exercised, distributed or triggered.
Subject to Sections 7.1(d) and 8.2(b), the Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Company's Board
of Directors described in this Section 1.2(a). The Company shall use reasonable
efforts to cause all of its directors and executive officers to vote (in their
capacity as stockholders) in favor of the Merger. As of the date of this
Agreement, the Company has been advised by each of the directors and executive
officers listed on Schedule 1.2 that such person intends to tender all shares of
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Company Common Stock owned by such person pursuant to the Offer.
(b) The Company shall file with the SEC on the date of the commencement of
the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto and including the exhibits thereto,
the "Schedule 14D-9") which shall comply in all material respects with the
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provisions of the Exchange Act and the rules and regulations thereunder and
other applicable United States federal securities laws, and, subject to Sections
7.1(d) and 8.2(b), will contain the recommendations of the Company's Board of
Directors referred to in subsection (a) above,
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and shall disseminate the Schedule 14D-9 to the Company's stockholders. The
Company shall deliver the proposed forms of the Schedule 14D-9 to Parent and its
counsel as far in advance of the commencement of the Offer as is reasonably
practicable under the circumstances for review and comment by Parent and its
counsel. Parent and its counsel shall be given a reasonable opportunity to
review and comment on any amendments and supplements to the Schedule 14D-9 prior
to their filing with the SEC or dissemination to the Company's stockholders;
provided, however, that, if the Company shall have complied in all material
respects with its obligations under Section 8.2. of this Agreement, neither
Parent nor its counsel need be given an opportunity to review and comment on any
amendment or supplement to the Schedule 14D-9 prior to its being filed with the
SEC or disseminated to the Company's stockholders if the amendment or supplement
relates to any of the matters referred to in Section 8.2(b) (and such filing or
dissemination will not be a breach of Section 8.2(b)), but to the extent
reasonably practicable under the circumstances the Company will furnish Parent
with a copy of the amendment or supplement a reasonable period prior to filing
or dissemination. The Company shall provide Parent and its counsel in writing
any comments that the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after receipt thereof. Each of
the Company, Parent and Subsidiary shall promptly correct any information
provided by it for use in the Schedule 14D-9 that shall have become false or
misleading in any material respect and the Company further agrees to take all
steps necessary to cause such Schedule 14D-9 as so corrected to be filed with
the SEC and disseminated to the Company's stockholders, as and to the extent
required by applicable federal securities laws.
(c) UBS Warburg LLC (the "Company Financial Advisor") has rendered to the
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Company's Board of Directors its opinion to the effect that, as of the date of
this Agreement, the Common Stock Price to be received pursuant to the Offer and
the Merger by the holders of Company Common Stock is fair, from a financial
point of view, to such holders (other than Parent and its affiliates). The
Company has been informed that the Company Financial Advisor will permit the
inclusion of the opinion in its entirety and, subject to prior review and
consent by the Company Financial Advisor, a reference to the opinion in the
Schedule 14D-9 and the Proxy Statement (as defined in Section 7.1(d)).
Section 1.3 Stockholder Lists. In connection with the Offer, the Company
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shall promptly furnish to, or cause to be furnished to, Parent and Subsidiary
mailing labels, security position listings, a list of non-objecting beneficial
owners and any available listing or computer file containing the names and
addresses of the record holders of the shares of Company Common Stock as of a
recent date and of those persons becoming record holders subsequent to such date
(to the extent available), together with all other relevant information in the
Company's possession or control regarding the beneficial owners of shares of
Company Common Stock and shall furnish Parent and Subsidiary with such
additional information and assistance as Parent, Subsidiary or their respective
agents may reasonably request in communicating the Offer to the record and
beneficial holders of shares of Company Common Stock. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer and the Merger (including, without limitation, the solicitation of
stockholder votes), Parent and Subsidiary shall, and shall cause each of their
agents to, hold the information contained in any of such labels and lists in
confidence, use such information only in connection with the Offer and the
Merger, and, if this Agreement is terminated, will, upon request, deliver, and
will use their reasonable efforts to cause their agents to deliver to the
Company or destroy, all copies of such information or extracts therefrom then in
their possession or under their control.
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Section 1.4 Directors; Section 14(f).
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(a) Effective upon the acceptance for payment of and payment for shares of
Company Common Stock by Subsidiary or any of its affiliates pursuant to the
Offer, Parent shall be entitled to designate such number of directors of the
Board of Directors as determined by Parent, rounded up to the next whole number,
for election or appointment to the Board of Directors of the Company as will
give Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to the product of
(i) the total number of directors on the Board of Directors of the Company
(giving effect to the increase in the size of such Board pursuant to this
Section 1.4) and (ii) the percentage that the number of shares of Company Common
Stock beneficially owned by Subsidiary and Parent (including shares of Company
Common Stock so accepted for payment and purchased) bears to the number of
shares of Company Common Stock then outstanding. In furtherance thereof,
concurrently with such acceptance for payment and payment for such shares of
Company Common Stock the Company shall, upon request of Parent or Subsidiary and
in compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, promptly take all action necessary to increase the size of its Board
of Directors by such number as is necessary to enable such designees of Parent
and Subsidiary to be so elected or appointed to the Company's Board of
Directors, and, subject to applicable law, the Company shall cause such
designees of Parent and Subsidiary to be so elected or appointed. At such time,
the Company shall, if requested by Parent or Subsidiary and subject to
applicable law, cause persons designated by Parent and Subsidiary to constitute
at least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors; (ii) each board of directors (or similar body) of each subsidiary of
the Company; and (iii) each committee (or similar body) of each such board.
Subject to applicable law, the Company shall promptly take all action reasonably
requested by Parent in order to effect any such election or appointment,
including mailing to its stockholders the information required by Section 14(f)
of the Exchange Act and Rule 14(f)-1 promulgated thereunder as part of the
Schedule 14D-9 initially filed with the SEC and distributed to the stockholders
of the Company (or, at Parent's request, furnishing such information to Parent
for inclusion in the Offer Documents initially filed with the SEC and
distributed to the stockholders of the Company) as is necessary to enable
Subsidiary's designees to be elected to the Company's Board of Directors.
(b) Notwithstanding the foregoing, the Company shall use its best efforts
to ensure that, if Parent's and Subsidiary's designees are elected to the Board
of Directors of the Company, such Board of Directors shall have, at all times
prior to the Effective Time (as defined in Section 2.2 hereof), at least two
directors who are directors on the date of this Agreement and who are not
officers or affiliates of the Company (it being understood that for purposes of
this sentence, a director of the Company shall not be deemed an affiliate of the
Company solely as a result of his status as a director of the Company), Parent
or any of their respective subsidiaries (the "Independent Directors"); and
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provided further, that, (i) if the number of Independent Directors shall be
reduced below two for any reason whatsoever, the remaining Independent Director
may designate a person to fill such vacancy who is not an officer, employee or
affiliate of the Company, Parent, or any of their respective subsidiaries and
such person shall be deemed to be an Independent Director for purposes of this
Agreement; or (ii) if no Independent Directors then remain, the other directors
may designate two persons to fill such vacancies who shall not be officers or
affiliates of the Company, Parent or any of their respective subsidiaries, and
such persons shall be deemed to be Independent Directors for purposes of this
Agreement.
(c) Prior to the Effective Time and from and after the time that Parent's
and Subsidiary's designees constitute a majority of the Company's Board of
Directors, if applicable, (i) any amendment or any termination of this Agreement
by the Company, (ii) any extension of time for performance of any of the
obligations of Parent or Subsidiary hereunder for which the Company's consent or
approval is required, and any waiver by the Company of any condition, (iii) any
amendment to the Company's
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Certificate of Incorporation or Bylaws, (iv) any waiver of compliance with any
covenant of Parent or Subsidiary or any condition to any obligation of the
Company or of any of the Company's rights under this Agreement, and (v) any
amendment or withdrawal by the Company's Board of Directors of its
recommendation of the Merger pursuant to Section 7.1(d) may be effected only by
the action of a majority of the Independent Directors, which action shall be
deemed to constitute the action of the full Board of Directors of the Company
(and any committee specifically designated by the Board of Directors of the
Company) to approve the actions contemplated hereby and no other action on the
part of the Company, including any action by any other director of the Company
shall be required for such authorization; provided, that, if there shall be no
Independent Directors, such actions may be effected by majority vote of the
entire Board of Directors of the Company.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Subject to the terms and conditions of this
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Agreement, at the Effective Time (as defined in Section 2.2), in accordance with
this Agreement and the DGCL, Subsidiary shall be merged with and into the
Company and the separate existence of Subsidiary shall thereupon cease. The
Company in its capacity as the surviving corporation in the Merger is sometimes
referred to in this Agreement as the "Surviving Corporation."
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Section 2.2 Effective Time of the Merger. The Merger shall become effective
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(such time, the "Effective Time") upon the filing of a certificate of merger (in
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such form as required by and executed in accordance with the relevant provisions
of the DGCL) with the Secretary of State of the State of Delaware in accordance
with the DGCL (the "Merger Filing"). The Merger Filing shall be made
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simultaneously with or as soon as practicable following the Closing (as defined
in Section 2.4).
Section 2.3 Effects of the Merger. The Merger shall have the effects set
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forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing, at the Effective Time, except as otherwise provided in this
Agreement, all the property, rights, privileges, powers and franchises, and all
and every other interest, of Subsidiary and the Company shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Subsidiary and
the Company shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 2.4 Closing. Subject to the satisfaction or waiver of the
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conditions to the obligations of the parties to effect the Merger set forth
herein, the consummation of the Merger (the "Closing") will take place as
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promptly as practicable, but in no event later than 10:00 a.m. on the second
business day following the satisfaction or waiver of all the conditions (other
than conditions which, by their nature are to be satisfied at Closing, but
subject to the satisfaction or waiver of those conditions) to the obligations of
the parties to effect the Merger set forth herein (the "Closing Date"), at the
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offices of Clifford Chance Rogers & Wells LLP, 200 Park Avenue, New York, New
York, unless another time, date or place is agreed to by the parties hereto in
writing.
ARTICLE III
THE SURVIVING AND PARENT CORPORATIONS
Section 3.1 Certificate of Incorporation. The Certificate of Incorporation
----------------------------
of the Company as in effect immediately prior to the Effective Time shall be
amended in the Merger to be identical to the Certificate of Incorporation of
Subsidiary as in effect immediately prior to the Effective Time (except that
such Certificate of Incorporation shall be amended to provide that the name of
the Surviving Corporation shall be the name of the Company) and, as so amended,
shall be the Certificate of Incorporation of the Surviving Corporation
6
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after the Effective Time until thereafter amended in accordance with its terms
and the DGCL.
Section 3.2 Bylaws. The Bylaws of Subsidiary as in effect immediately prior
------
to the Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time and (subject to Section 8.4(a) hereof) thereafter may be amended
in accordance with their terms and as provided by the Certificate of
Incorporation of the Surviving Corporation and the DGCL.
Section 3.3 Directors. From and after the Effective Time, the directors of
---------
the Surviving Corporation shall be those individuals appointed by Parent in its
capacity as sole stockholder of the Surviving Corporation and such directors
shall serve in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
Section 3.4 Officers. From and after the Effective Time, the officers of
--------
the Surviving Corporation shall be those individuals appointed by Parent in its
capacity as sole stockholder of the Surviving Corporation and such officers
shall serve in accordance with the Bylaws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified or until
their earlier death, resignation or removal.
ARTICLE IV
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES
Section 4.1 Conversion of Company Common Stock in the Merger. At the
------------------------------------------------
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of Parent, Subsidiary or the Company:
(a) each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares canceled pursuant to Section
4.1(b) and any Dissenting Shares (as defined in Section 4.7)) shall be converted
into the right to receive the Common Stock Price, payable to the holder thereof,
in each case without interest, less any required withholding taxes, upon
surrender of the certificate formerly representing such share of the Company
Common Stock and such other documents as reasonably may be required in
accordance with Section 4.3. All such shares of Company Common Stock, when so
converted, no longer shall be outstanding and automatically shall be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Common Stock Price
per share therefor, without interest, upon the surrender of such certificate in
accordance with Section 4.3 or to perfect any rights of appraisal as a holder of
Dissenting Shares that such holder may have pursuant to the DGCL; and
(b) each share of capital stock of the Company, if any, owned by Parent or
Subsidiary or held in treasury by the Company or any subsidiary of the Company
immediately prior to the Effective Time automatically shall be canceled and
retired and shall cease to exist and no cash or other consideration shall be
delivered or deliverable in exchange therefor.
Section 4.2 Conversion of Subsidiary Shares. At the Effective Time, by
-------------------------------
virtue of the Merger and without any action on the part of Parent as the sole
stockholder of Subsidiary, each issued and outstanding share of common stock,
par value $.0001 per share, of Subsidiary ("Subsidiary Common Stock") that is
-----------------------
7
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issued and outstanding prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock, par value $.0001
per share, of the Surviving Corporation.
Section 4.3 Surrender and Exchange of Certificates.
--------------------------------------
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as paying agent in the
Merger (the "Paying Agent"), and prior to the Effective Time, Parent shall
------------
deposit, or cause the Surviving Corporation to deposit with the Paying Agent,
cash in the amount necessary for the payment of the aggregate merger
consideration as provided in Section 4.1 upon surrender of certificates formerly
representing shares of Company Common Stock in the manner provided in Section
4.3(b). Funds made available to the Paying Agent shall be invested by the Paying
Agent as directed by Parent (it being understood that any and all interest or
income earned on funds deposited with the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(b) Promptly after the Effective Time, Parent shall cause the Paying Agent
to mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Company Certificates") whose shares were converted
--------------------
into the right to receive the Common Stock Price pursuant to Section 4.1 (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Company Certificates shall pass, only upon actual
delivery of the Company Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify, and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for the Common Stock Price. Upon surrender of Company Certificates for
cancellation to the Paying Agent, together with a duly executed letter of
transmittal and such other documents as the Paying Agent shall reasonably
require, the holder of such Company Certificates shall be entitled to receive in
exchange therefor the Common Stock Price for each share of Company Common Stock
formerly represented thereby, in accordance with Section 4.1(a), and the Company
Certificates so surrendered shall be canceled. In the event of a transfer of
ownership of shares of Company Common Stock that is not registered in the
transfer records of the Company, a check representing the proper amount of
merger consideration may be issued to a transferee if the Company Certificate
representing such shares of Company Common Stock is presented to the Paying
Agent accompanied by all documents and endorsements required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as provided in this Section 4.3, each Company
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Common Stock Price for each
share of Company Common Stock represented thereby. No interest will be paid or
accrue on any amounts payable upon surrender of any Company Certificate.
(c) Promptly following the date which is six months after the Effective
Time, the Paying Agent shall deliver to Parent all cash and any documents in its
possession relating to the transactions described in this Agreement, and the
Paying Agent's duties shall terminate. Thereafter, each holder of a Company
Certificate may surrender such Company Certificate to the Surviving Corporation
or Parent and (subject to applicable abandoned property, escheat or other
similar laws) receive in exchange therefor the Common Stock Price, payable upon
due surrender of their Company Certificates without any interest thereon.
Notwithstanding the foregoing, none of the Paying Agent, Parent, Subsidiary, the
Company or the Surviving Corporation shall be liable to a holder of shares of
Company Common Stock for any amounts properly delivered to a public official
pursuant to any applicable abandoned property, escheat or other similar laws.
(d) If any Company Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such Company
Certificate to be lost, stolen or destroyed, the Paying Agent shall issue in
exchange for such lost, stolen or destroyed Company Certificate the Common
8
<PAGE>
Stock Price deliverable in respect thereof determined in accordance with this
Article IV; provided, however, that Parent or the Paying Agent may, in its
discretion, require the delivery of a reasonable indemnity or bond against any
claim that may be made against the Surviving Corporation with respect to such
Company Certificate or ownership thereof.
Section 4.4 Tax Withholding. Each of Parent and Surviving Corporation shall
---------------
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of shares of Company Common
Stock such amounts as Parent or Surviving Corporation is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any other provision of federal, state,
----
local or foreign tax law. To the extent that amounts are so withheld by Parent
or Surviving Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the former holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent.
Section 4.5 Closing of the Company's Transfer Books. At and after the
---------------------------------------
Effective Time, holders of Company Certificates shall cease to have any rights
as stockholders of the Company, except for the right to receive the Common Stock
Price pursuant to Section 4.1, without interest. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time shall thereafter be made. If, after the Effective Time, subject to the
terms and conditions of this Agreement, Company Certificates formerly
representing shares of Company Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Common Stock Price in
accordance with this Article IV.
Section 4.6 Option Plans; Restricted Stock.
------------------------------
(a) As of the Effective Time, each of the then outstanding stock options to
purchase Company Common Stock (the "Options") granted under any stock option or
-------
compensation plan or arrangement of the Company (the "Company Stock Plans"),
-------------------
whether or not then vested or exercisable, shall automatically be cancelled, and
each holder of any Option thereafter shall be entitled (subject to the
provisions set forth in this Section 4.6(a)) to be paid by the Surviving
Corporation with respect to each share subject to the Option an amount in cash
(subject to any applicable withholding taxes) equal to the excess, if any, of
the Common Stock Price over the applicable exercise price of such Option (the
"Option Payment"). The Surviving Corporation shall make each Option Payment to
--------------
the Option holder as of the date on which the applicable number of shares of
Common Stock subject to such Option would have otherwise vested, subject to the
conditions for vesting contained in the applicable Option award, notwithstanding
the cancellation of such Option. Notwithstanding the foregoing, the Surviving
Corporation shall make such Option Payment at the Effective Time with respect to
any outstanding and fully vested Options as of such date. Prior to the Effective
Time, the Company will use its reasonable best efforts to obtain all consents
and make all amendments, if any, to the terms of the Company Stock Plans that
are necessary to give effect to the provisions of this Section 4.6(a).
(b) Upon the consummation of the Merger, each holder of a restricted share
of Company Common Stock outstanding at the Effective Time shall be entitled to
receive the Common Stock Price payable with respect to such restricted share in
accordance with the restricted stock agreement or other agreement applicable to
such restricted share. The Surviving Corporation shall make such payment to the
holder, subject to the conditions for vesting contained in the applicable
restricted stock or other agreement, on the date on which the restricted share
was to have vested.
(c) The Company shall take all actions as may be necessary to terminate, as
of the Closing Date, any long-term incentive plan, (to the extent permitted) any
employee stock purchase plan or any other similar equity based plan or portion
of such plan providing for equity-based compensation. Without
9
<PAGE>
limiting the generality of the foregoing, as of a date selected by Parent (which
date shall be the last day of a regular payroll period of the Company) (the
"ESPP Date"), all offering and purchase periods under way under the Company's
---------
Employee Stock Purchase Plan (the "ESPP") shall be terminated and no new
----
offering or purchasing periods shall be commenced. The rights of participants in
the ESPP with respect to any such offering or purchase periods shall be
determined by treating the ESPP Date as the last day of such offering and
purchase periods and by making such other pro-rata adjustments as may be
necessary to reflect the shortened offering and purchase periods but otherwise
treating such shortened offering and purchase periods as a fully effective and
completed offering and purchase periods for all purposes under such Plan. The
Company shall take all actions as may be necessary in order to freeze the rights
of the participants in the ESPP, effective as of the date of this Agreement, to
existing participants and (to the extent permissible under the ESPP) existing
participation levels.
Section 4.7 Dissenting Shares.
-----------------
(a) Notwithstanding any provision of this Agreement to the contrary, any
issued and outstanding shares of Company Common Stock ("Dissenting Shares") held
-----------------
by a Dissenting Stockholder (as defined below) shall not be converted into the
Common Stock Price but shall become the right to receive such consideration as
may be determined to be due to such Dissenting Stockholder pursuant to the DGCL;
provided, however, that each share of Company Common Stock outstanding
immediately prior to the Effective Time and held by a Dissenting Stockholder
who, after the Effective Time, withdraws his demand or fails to perfect or
otherwise loses his right of appraisal, pursuant to the DGCL, shall be deemed to
be converted as of the Effective Time into the right to receive the Common Stock
Price, without interest. As used in this Agreement, the term "Dissenting
----------
Stockholder" means any record holder or beneficial owner of shares of Company
------------
Common Stock who does not vote for the Merger and complies with all provisions
of the DGCL (including all provisions of Section 262 of the DGCL) concerning the
right of holders of Company Common Stock to dissent from the Merger and obtain
fair value for their shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to the applicable provisions of the DGCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the DGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to any such demands for appraisal, or settle, or
offer to settle, or otherwise negotiate any such demands.
Section 4.8 Further Assurances. At and after the Effective Time, the
------------------
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Subsidiary, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary that, except
as set forth in the disclosure schedule delivered by the Company to Parent and
dated on the date of this Agreement (the "Company Disclosure Schedule"):
---------------------------
10
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Section 5.1 Organization and Qualification. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
license, use, lease and operate its assets and properties and to carry on its
business as it is now being conducted. The Company is qualified to transact
business and is in good standing (with respect to jurisdictions that recognize
such concept) in each jurisdiction in which the properties owned, license, used,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified, would
not have a Company Material Adverse Effect. As used in this Agreement, a
"Company Material Adverse Effect" means a material adverse effect on the
-------------------------------
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. The Company has heretofore made available to
Parent and Subsidiary complete and correct copies of the Certificate of
Incorporation, Bylaws and minute books of the Company as in effect on the date
of this Agreement.
Section 5.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists solely of
50,000,000 shares of Company Common Stock and 10,000,000 shares of preferred
stock, par value $.0001 per share ("Company Preferred Stock"), of which
-----------------------
1,500,000 shares have been designated as Series A Preferred Stock. As of the
close of business on September 22, 2000, (i) 27,753,671 shares of Company Common
Stock were issued and outstanding (each, together with a preferred stock
purchase right (the "Company Rights") issued pursuant to the Amended and
--------------
Restated Rights Agreement dated as of June 8, 1998, by and between the Company
and Bank Boston, N.A., as rights agent (the "Company Rights Agreement"), all of
------------------------
which were duly and validly issued and are fully paid, nonassessable and free of
preemptive rights; (ii) no shares of Company Preferred Stock were issued and
outstanding; (iii) no shares of Company Common Stock or Company Preferred Stock
were held in the treasury of the Company; and (iv) 7,580,883 shares of Company
Common Stock were reserved for issuance upon exercise, conversion or exchange of
securities (the "Stock Rights") issued and outstanding pursuant to the Company
------------
Stock Plans. Since the close of business on September 22, 2000, except as
permitted by this Agreement, no shares of capital stock of the Company have been
issued except in connection with exercise, exchange or conversion of the
outstanding Stock Rights. Section 5.2 of the Company Disclosure Schedule
----------------------------------------------
completely and accurately sets forth as of the date of this Agreement (i) the
name and, for those Company Stock Plans not filed with the SEC, principal
features of each Company Stock Plan and each restricted stock, phantom stock and
other equity-based compensation plan of the Company; (ii) the names of each
holder of Options, restricted stock or other rights awarded or held pursuant to
any plan described in clause (i); and (iii) for each holder described in clause
(ii), the number of shares issuable upon exercise of the holder's Options, the
number of shares of restricted stock held, the other Stock Rights held, and in
each such instance the applicable exercise price, vesting schedule, restrictions
and other equivalent provisions, including any acceleration of vesting, lapse of
restriction or other change that will or may be triggered by the Merger or the
occurrence of any other event contemplated by this Agreement.
(b) No bonds, debentures, notes or other indebtedness of the Company having
the right to vote on any matters on which stockholders of the Company may vote
are authorized, issued or outstanding.
(c) As of the date of this Agreement, there are no outstanding
subscriptions, options, calls, contracts, scrip, commitments, understandings,
restrictions, arrangements, rights, or warrants, stock appreciation or other
rights (contingent or other) including phantom stock rights or preemptive
rights, or rights of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company or any subsidiary of the
Company to issue, deliver or sell, redeem or repurchase, or cause to be issued,
delivered or sold or repurchased, additional shares of the capital stock of the
Company or obligating the Company or any subsidiary of the Company to grant,
extend or enter into any such agreement or commitment and there is no commitment
of the Company or any subsidiary to
11
<PAGE>
distribute to holders of any class of its capital stock, any dividends,
distributions, evidences of indebtedness or assets. Except as permitted by this
Agreement, there are no voting trusts, proxies or other agreements or
understandings to which the Company or any subsidiary of the Company is a party
or is bound with respect to the voting of any shares of capital stock of the
Company and no shares of capital stock of the Company are subject to transfer
restrictions imposed by or with the knowledge, consent or approval of the
Company or other similar arrangements imposed by or with the knowledge, consent
or approval of the Company, except for restrictions on transfer imposed by the
Securities Act of 1933, as amended (the "Securities Act"), and state securities
--------------
laws. The Company Common Stock (including the associated Company Rights)
constitutes the only class of equity securities of Company or its subsidiaries
registered or required to be registered under the Exchange Act.
Section 5.3 Subsidiaries.
------------
(a) The only subsidiaries of the Company (each a "Company Subsidiary") are
------------------
those set forth in Section 5.3 of the Company Disclosure Schedule. Except for
----------------------------------------------
shares of, or ownership interests in, the Company Subsidiaries, the Company does
not own of record or beneficially, directly or indirectly (i) any shares of
outstanding capital stock or securities convertible into or exchangeable or
exercisable for capital stock of any other corporation or (ii) any participating
interest in any partnership, joint venture or other similar non-corporate
business enterprise. Each Company Subsidiary is a corporation, partnership or
limited liability company duly organized, validly existing and in good standing
(with respect to jurisdictions that recognize such concept) under the laws of
the jurisdiction of its incorporation or organization and has all requisite
corporate, partnership or limited liability company power and authority to own,
use, license, lease and operate its properties and assets and to carry on its
business as it is now being conducted. Each Company Subsidiary is duly qualified
as a foreign corporation to do business and is in good standing (with respect to
jurisdictions that recognize such concept), in each jurisdiction in which the
character of its properties and assets owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified, individually or in the aggregate, would not have a Company Material
Adverse Effect. The Company has heretofore made available to Parent and
Subsidiary complete and correct copies of the charter and bylaws (or other
comparable organizational documents) of all material Company Subsidiaries as in
effect on the date of this Agreement.
(b) All of the issued and outstanding shares of capital stock of or other
ownership interests in, each corporate subsidiary of the Company are validly
issued, fully paid, nonassessable and free of preemptive or similar rights and
(other than director qualifying shares and shares held by nominees of the
Company, all of which are listed in Section 5.3(b) of the Company Disclosure
----------------------------------------
Schedule) are owned directly or indirectly by the Company free and clear of any
--------
liens, claims, mortgages, pledges, charges, encumbrances, security interests or
adverse claims of any kind ("Liens"). There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions or arrangements relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any shares of
capital stock of or other ownership interest in any Company Subsidiary,
including any right of conversion or exchange under any outstanding security,
instrument or agreement. As used in this Agreement, the term "subsidiary" means
with respect to any party any corporation or other business entity (i) of which
such party or any other subsidiary of such party is a general partner or (ii) of
which of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions with respect to such corporation or other business entity are
at the time owned by such party and/or one or more subsidiaries.
12
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Section 5.4 Authority; Non-Contravention; Approvals.
---------------------------------------
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby,
subject, in the case of the consummation of the Merger, to the Company
Stockholders' Approval (as defined in Section 5.20), if required. This Agreement
and the consummation by the Company of the transactions contemplated hereby have
been approved by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby, except for the Company
Stockholders' Approval, if required. This Agreement has been duly executed and
delivered by the Company and assuming the due authorization, execution and
delivery hereof by Parent and Subsidiary, constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws, both state and federal,
affecting the enforcement of creditors' rights or remedies in general as from
time to time in effect or (ii) the exercise by courts of equity powers.
(b) Subject to obtaining the Company Stockholders' Approval, if required,
the execution, delivery and performance of this Agreement by the Company and the
consummation of the Offer, the Merger and the other transactions contemplated
hereby do not and will not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with or without notice
or lapse of time or both, would constitute a default) under, or result in the
termination of, or the loss of a benefit under or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any Lien, upon any of the properties or assets of the
Company or any of its subsidiaries under any of the terms, conditions or
provisions of (i) the respective certificates of incorporation or bylaws of the
Company or any Company Subsidiary (or, in the case of any Company Subsidiary
that is not a corporation, its comparable organizational documents); (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets; or (iii) any material note, bond, mortgage, indenture, deed of trust,
loan, credit agreement, license, franchise, permit, concession, contract, lease
or other material instrument, obligation or agreement of any kind to which the
Company or any Company Subsidiary is now a party or by which the Company or any
Company Subsidiary or any of their respective properties or assets may be bound
or affected; other than (in the case of clauses (ii) and (iii) above), such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of Liens that would not, individually or in the aggregate, have a
Company Material Adverse Effect. None of the Contracts (as defined in Section
5.22) described in Section 5.22(h) or (i) requires the consent of a third party
to enter into this Agreement or to consummate the transactions contemplated
hereby. Except for third party consents the failure of which to obtain would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the Company is not a party to any material contract
(excluding for purposes of this representation any Contract described in Section
5.22(h) or (i)) requiring the consent of a third party to enter into this
Agreement or to consummate the transactions contemplated hereby.
(c) Except for (i) the filings by the Company required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"); (ii) the competition filings required before the Bundeskartellamt; (iii)
---
the filing of the Schedule 14D-9 and the Proxy Statement, if required, with the
SEC and such other reports under and such other compliance with the Exchange Act
and the Securities Act and the rules and regulations thereunder as may be
required in connection with this Agreement and the transactions contemplated
hereby; (iv) the making of the Merger Filing with the Secretary of State of the
State of Delaware in connection with the Merger; and (v) compliance with the
rules and regulations of the New York Stock Exchange (the filings and approvals
referred to in clauses (i) through (v) are
13
<PAGE>
collectively referred to as the "Company Regulatory Approvals"), no declaration,
----------------------------
filing or registration with, or notice to, or authorization, consent, order or
approval of, any federal, state, local, municipal or foreign government, any
instrumentality, subdivision, court, administrative agency or commission or
other authority thereof, or any quasi-governmental or private body exercising
any regulatory, taxing, importing or other governmental or quasi-governmental
authority (a "Governmental Authority") is required to be obtained or made in
----------------------
connection with or as a result of the execution and delivery of this Agreement
by the Company or the consummation by the Company of the Merger and the other
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, individually or in the aggregate,
have a Company Material Adverse Effect.
Section 5.5 Reports and Financial Statements.
--------------------------------
(a) Since December 31, 1997, the Company has filed with the SEC all forms,
statements, reports and documents (including all exhibits, post-effective
amendments and supplements thereto) required to be filed by it under each of the
Securities Act, the Exchange Act and the respective rules and regulations
promulgated thereunder, all of which, as amended (if applicable), complied in
all material respects when filed with all applicable requirements of the
appropriate act and the rules and regulations thereunder. The Company has
previously delivered or made available (including via the SEC EDGAR System) to
Parent copies (including all exhibits, post-effective amendments and supplements
thereto) of its (i) Annual Reports on Form 10-K for the years ended December 31,
1997, 1998 and 1999, as filed with the SEC; (ii) proxy and information
statements relating to all meetings of its stockholders (whether annual or
special) from December 31, 1997 until the date hereof; and (iii) all other
reports, including quarterly reports, and registration statements filed by the
Company with the SEC since December 31, 1997 (other than registration statements
filed on Form S-8) (the documents referred to in clauses (i), (ii) and (iii)
being referred to as the "Company SEC Reports"). As of their respective dates,
-------------------
the Company SEC Reports did not or will not (as the case may be) contain any
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. None of the
Company Subsidiaries is required to file any forms, reports, schedules,
statements or other documents with the SEC.
(b) The audited consolidated financial statements of the Company included
in the Company's Annual Report on Form 10-K for the years ended December 31,
1997, 1998 and 1999 and the unaudited consolidated interim financial statements
included in the Company's Quarterly Report on Form 10-Q for the quarter ending
June 30, 2000 (collectively, the "Company Financial Statements") have been
----------------------------
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods and fairly
----
presented the consolidated financial position of the Company and the Company
Subsidiaries as of the dates thereof and the related consolidated statement of
operations, cash flows and stockholders' equity included in the Company SEC
Reports fairly presented the consolidated results of operations of the Company
and the Company Subsidiaries for the respective periods then ended (subject, in
the case of unaudited interim statements to normal year-end adjustments and the
absence of certain footnote disclosures).
(c) As of the date of this Agreement, except as set forth in the Company
SEC Reports filed prior to the date of this Agreement, neither the Company nor
any of its subsidiaries is a party to or bound by (i) any "material contract"
(as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or
(ii) any non-competition agreement or any other agreement or arrangement that
materially limits the Company or any of its subsidiaries or any of their
respective affiliates, or that would, after the Effective Time similarly
materially limit Parent or the Surviving Corporation or any successor thereto,
from engaging or competing in any line of business or in any geographic area
after giving effect to the Merger.
14
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Section 5.6 Absence of Undisclosed Liabilities; Affiliate Transactions.
----------------------------------------------------------
(a)Except as specifically disclosed in the Company SEC Reports filed since June
30, 2000 and prior to the date of this Agreement, at June 30, 2000 and from that
date to the date of this Agreement, neither the Company nor any of the Company
Subsidiaries had or has incurred any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except (i)
liabilities, obligations or contingencies (A) which are accrued or reserved
against in the Company Financial Statements or reflected in the notes thereto or
(B) which were incurred after June 30, 2000 in the ordinary course of business
and consistent with past practices; or (ii) liabilities, obligations or
contingencies which are of a nature not required to be reflected in the
consolidated financial statements of the Company and the Company Subsidiaries
prepared in accordance with GAAP consistently applied and which were incurred in
the ordinary course of business. (b) Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, there are no other
transactions, agreements, arrangements or understandings between the Company or
the Company Subsidiaries, on the one hand, and the Company's affiliates (other
than wholly-owned subsidiaries of the Company) or other Persons, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
promulgated under the Securities Act.
Section 5.7 Absence of Certain Changes or Events.
------------------------------------
(a) From June 30, 2000 to the date of this Agreement, neither the Company
nor any Company Subsidiary has (i) borrowed any amount or incurred any material
liabilities (absolute or contingent) except in the ordinary course of business;
(ii) declared, set aside or made any payment or distribution to stockholders,
other than regular semi-annual cash dividends, or purchased or redeemed any
shares of its capital stock or other securities; (iii) mortgaged, pledged or
subjected to Lien (other than (x) liens for current taxes, payments of which are
not yet due or delinquent and (y) imperfections or irregularities in title, if
any, as do not materially affect the use of the properties or assets subject
thereto or affected thereby, or otherwise materially impair the Company's
business operations, (each a "Permitted Lien")) any of its material assets,
--------------
tangible or intangible; (iv) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets
(it being understood that a license in the ordinary course of business of any
asset of the type referred to in this clause (iv) shall not be deemed a sale,
assignment or transfer of such asset); (v) made any changes in officer or
executive compensation other than in the ordinary course of business; (vi)
waived any rights of substantial value, other than in the ordinary course of
business; (vii) entered into any transaction, except in the ordinary course of
business consistent with past practice or as otherwise contemplated hereby;
(viii) changed, in any material way, its accounting principles, practices or
methods except as required by GAAP or the rules and regulations promulgated by
the SEC; or (ix) agreed, in writing or otherwise, to take any of the actions
listed in clauses (i) through (ix) above.
(b) Since December 31, 1999, neither the Company nor any Company Subsidiary
has, except as specifically disclosed in the narrative portion of any Company
SEC Report (including in the notes to the financial statements contained
therein) filed between December 31, 1999 and the date of this Agreement,
suffered or experienced any change, event or development which, individually or
in the aggregate, constitutes or would reasonably be expected to have a Company
Material Adverse Effect; provided, however, that for purposes of this section
(and paragraph (c)(iii) of Annex A) only, none of the following, to the extent
-------
arising after the date of this Agreement, shall be deemed to constitute a
Company Material Adverse Effect and none of the following shall be taken into
account in determining whether a Company Material Adverse Effect has occurred or
is reasonably expected to occur: (i) any effect resulting from any material
fluctuations in currency prices; (ii) any effect relating to conditions
generally affecting companies operating in the ultrasound industry, in the same
general manner and to the same general extent; (iii) any effect resulting from
the announcement or pendency of the Offer or the Merger (including, without
limitation, any cancellations of or delays in customer orders or products
shipments,
15
<PAGE>
any disruption in supplier, distributor, partner or similar relationships or any
loss of employees); or (iv) any effect resulting from compliance with the terms
of, or the taking of any action required by, this Agreement. In addition, any
failure by the Company following the date of this Agreement to meet internal
projections or forecasts or published revenue or earnings predictions, in and of
itself, shall not be deemed to constitute a Company Material Adverse Effect (it
being understood that such failure may nonetheless be evidence of other events
that have resulted in the occurrence of a Company Material Adverse Effect).
Section 5.8 Litigation. Except as disclosed in the Company SEC Reports
----------
filed prior to the date of this Agreement, there are no claims, suits, actions,
investigations or proceedings pending or, to the best knowledge of the Company,
threatened, against the Company or any Company Subsidiary or relating to or
affecting their respective properties, assets or rights (including, without
limitation, any claim based on a theory of product liability), or any of their
respective directors or officers, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitration board or
tribunal that either alone or with other similar actions would reasonably by
expected to result in, individually or in the aggregate, liability to the
Company or any Company Subsidiary of more than $1,000,000 or a Company Material
Adverse Effect or to materially adversely affect the Company's ability to
perform its obligations under this Agreement. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, neither the Company nor
any Company Subsidiary is subject to any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or authority, or any arbitrator which would reasonably be expected to result in,
individually or in the aggregate, liability to the Company or any Company
Subsidiary of more than $1,000,000 or a Company Material Adverse Effect.
Section 5.9 Information Supplied.
--------------------
(a) Each of the Schedule 14D-9 and the other documents required to be filed
by the Company with the SEC in connection with the Offer, the Merger and the
other transactions contemplated hereby, including the Proxy Statement in
connection with the Merger, and the information supplied by the Company to
Parent for inclusion or incorporation by reference in the Offer Documents and
any other documents to be filed with the SEC or disseminated to stockholders in
connection with the Offer, will comply in all material respects with the
requirements of the Exchange Act and the Securities Act and the rules and
regulations promulgated thereunder, as the case may be, and will not, on the
date of its filing or dissemination, as the case may be, 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 were made, not misleading.
(b) Notwithstanding the foregoing, no representation or warranty is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied in writing by Parent or any of its subsidiaries
for inclusion or incorporation by reference therein.
Section 5.10 No Violation of Law. Neither the Company nor any of its
-------------------
subsidiaries is or, since December 31, 1997, has been in material default under
or in material violation of or has been charged with any material violation of,
any law, statute, order, rule, regulation, ordinance or judgment (including,
without limitation, any applicable environmental, labor, export control and
foreign corrupt practices law, ordinance, decree or regulation) of any
Governmental Authority to which the Company or any Company Subsidiary or any of
their respective assets or properties is or was subject, except for defaults or
violations which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. The Company and the Company
Subsidiaries have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals necessary
to conduct their businesses as presently conducted and to own their assets and
16
<PAGE>
properties (collectively, the "Company Permits"), except for such permits,
---------------
licenses, franchises, variances, exemptions, orders, authorizations, consents
and approvals the absence of which would not have, individually or in the
aggregate, a Company Material Adverse Effect. Correct and complete copies of
all material Company Permits have been provided or made available to Parent.
The Company and its subsidiaries are not in violation in any material respect of
the terms of any Company Permit, except for such violations which have not had
and would not reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect.
Section 5.11 Compliance with Agreements. Neither the Company nor any
--------------------------
Company Subsidiary is in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
or without lapse of time, notice or action by a third party, would result in a
default under, or the loss of a benefit under, or the right to terminate or
accelerate (each a "Violation") (a) the respective certificates of
---------
incorporation, bylaws or similar organizational instruments of the Company or
any of the Company Subsidiaries, or (b) any material contract, commitment,
agreement, indenture, mortgage, loan agreement or credit agreement, note, lease,
bond, license, deed of trust, approval or other material instrument to which the
Company or any of the Company Subsidiaries is a party or by which any of them is
bound or to which any of their material properties or material assets are
subject, other than, in the case of clause (b) of this Section 5.11, such
breaches, violations and defaults which have not had and would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 5.12 Taxes.
-----
(a) Each of the Company and the Company Subsidiaries has timely filed or
will timely file with the appropriate Governmental Authorities all Tax Returns
required to be filed by it for all periods ending on or prior to the Effective
Time, and all such Tax Returns are true, complete and correct in all material
respects. Each of the Company and the Company Subsidiaries has timely paid in
full all Taxes due with respect to such Tax Returns and has made adequate
provision for Taxes in accordance with GAAP.
(b) There is, with respect to the Company or any of the Company
Subsidiaries, no pending, or, to the knowledge of the Company, threatened
action, audit, proceeding or investigation involving (i) the assessment or
collection of Taxes or (ii) a claim for refund with respect to Taxes previously
paid.
(c) Neither the Company nor any of the Company Subsidiaries has received
notice that the Internal Revenue Service (the "IRS") or any other taxing
---
authority has asserted any deficiency or claim for Taxes, and no issue has been
raised by any taxing authority in any audit which would result in a proposed
deficiency of the Company or any Company Subsidiary for any period not so
examined, and all Tax deficiencies asserted or assessed against the Company or
any of the Company Subsidiaries have been paid or finally settled with no
remaining amounts owed.
(d) Neither the Company nor any Company Subsidiary has requested or
obtained an extension of the time within which to file any United States Federal
Tax Return which has not yet been filed.
(e) There are no outstanding waivers of any statute of limitation with
respect to the assessment or collection of any Tax of the Company or any of the
Company Subsidiaries.
(f) Neither the Company nor any of the Company Subsidiaries has received
any written notice from any taxing authority to the effect that it may be
subject to taxation by such taxing authority (other than with respect to Taxes
for which it already files Tax Returns).
17
<PAGE>
(g) All amounts that are required to be collected or withheld by the
Company or any of the Company Subsidiaries with respect to Taxes have been duly
collected or withheld, and all such amounts that are required to be remitted to
any taxing authority have been duly remitted, and the transactions contemplated
by this Agreement are not subject to Tax withholding pursuant to the provisions
of Section 3406 or Sections 1441 through 1446 of the Code or any other provision
of applicable law.
(h) There are no liens for Taxes upon the assets of the Company or any of
the Company Subsidiaries other than liens for Taxes not yet due.
(i) Neither the Company nor any Company Subsidiary has any liability for
the Taxes of any other person which is not included in the Company's
consolidated United States Federal Tax Return (i) under Section 1.1502-6 of the
Treasury regulations; (ii) as a transferee or successor; (iii) by contract; or
(iv) otherwise. Neither the Company nor any Company Subsidiary has agreed to
make nor is required to make any adjustment under Section 481 of the Code by
reason of a change in accounting method.
(j) Neither the Company nor any Company Subsidiary is a party to or bound
by any obligations under any tax sharing, tax allocation, tax indemnity or
similar agreement or arrangement with any person or entity which is not included
in the Company's consolidated United States Federal Tax Return.
(k) Neither the Company nor any Company Subsidiary has made any payments,
is obligated to make any payments, or is a party to any contract that could
require it to make any payments, that are not deductible as a result of the
provisions set forth in Section 280G of the Code or the proposed Treasury
regulations thereunder or would result in an excise tax liability with respect
to any such payment under Section 4999 of the Code.
(l) There are no material elections with respect to Taxes affecting the
Company and the Company Subsidiaries.
(m) The Company is not nor has it ever been a United States real property
holding corporation within the meaning of Section 897(c)(1)(A)(ii) of the Code.
(n) The information contained in the Tax Returns and Tax workpapers of the
Company and the Company Subsidiaries with respect to (i) the amount of unused
net operating losses and net capital losses, ownership changes pursuant to Code
Sections 382 and 383 and related matters, unused foreign tax credits, unused R&D
tax credits, unused business tax credits and any other unused tax credits, (ii)
the amount of tax credit that is potentially subject to recapture, (iii) the
amount of overall foreign losses potentially subject to recapture, if any, (iv)
the aggregate amount of ordinary losses on Section 1231(b) property potentially
subject to recapture, and (v) the adjusted bases of assets, copies of which have
been provided or made available to Parent, is complete and correct in all
material respects.
(o) For purposes of this Agreement, (i) the term "Taxes" means all taxes,
-----
including, without limitation, income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, license, payroll,
franchise, transfer and recording taxes, fees and charges, windfall profits,
severance, customs, import, export, employment or similar taxes, charges, fees,
levies or other assessments imposed by the United States, or any state, local or
foreign government or subdivision or agency thereof, whether computed on a
separate, consolidated, unitary, combined, or any other basis, and such term
shall include any interest, fines, penalties or additional amounts of any
interest in respect of any additions, fines or penalties attributable or imposed
or with respect to any such taxes, charges, fees, levies or other assessments,
and (ii) the term "Tax Return" means any return, report or other document
----------
required to be supplied to a taxing authority in connection with Taxes.
18
<PAGE>
Section 5.13 Employee Benefit Plans; ERISA.
-----------------------------
(a) With respect to each Company Plan, the Company has made available to
Parent a true, correct and complete copy of: (i) any plan documents, trust
agreements, insurance contracts and other funding vehicles, and amendments
thereto in effect as of the date of this Agreement; (ii) for the most recently
ended plan year, all IRS Form 5500 series forms (and any financial statements
and other schedules attached thereto) filed with respect to any Company Plan;
(iii) all summary plan descriptions and subsequent summaries of material
modifications with respect to each Company Plan in effect as of the date of this
Agreement for which such descriptions and modifications are required under
ERISA; and (iv) the most recent IRS determination letter for each Pension Plan
which is intended to be qualified under Section 401(a) of the Code.
(b) Neither the Company nor any of its ERISA Affiliates maintains or has,
within the previous six years, maintained a Pension Plan which is subject to
Section 412 of the Code or Title IV of ERISA.
(c) Neither the Company nor any of its ERISA Affiliates currently maintains
or has, within the previous six years, maintained or been obligated to
contribute to any multiemployer plan, as defined in Section 3(37) of ERISA.
(d) No Company Plan that is a "welfare benefit plan" as defined in Section
3(1) of ERISA provides for continuing benefits or coverage for any participant
or beneficiary or covered dependent or a participant after such participant's
termination of employment, except to the extent required by law.
(e) Neither the Company nor any of its ERISA Affiliates is bound by any
collective bargaining agreement or similar agreement to maintain or contribute
to any Company Plan.
(f) Each Company Plan (i) has been administered in material compliance with
its terms and is in material compliance with the applicable provisions of ERISA
and has been administered in material compliance with the applicable provisions
of ERISA, the Code and other applicable laws; (ii) which is intended to be a
qualified plan within the meaning of Section 401(a) of the Code has a favorable
determination from the IRS as to its qualified status or is within the remedial
amendment period for making any required changes and the Company is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter; and (iii) may, without liability, be amended, terminated
or otherwise discontinued, except as specifically prohibited by applicable law.
(g) With respect to each Company Plan, (i) there are no proceedings pending
or, to the knowledge of the Company, threatened by the IRS, the Department of
Labor, or any participant or beneficiary (other than claims for benefits in the
ordinary course) with respect to the design or operation of the Company Plans;
(ii) the Company has made or provided for all contributions required under the
material terms of such Company Plans and any applicable laws for all periods
through the date of this Agreement; and (iii) there have been no "prohibited
transactions" (as described in Section 4975 of the Code or in Part 4 of Subtitle
B of Title I of ERISA) for which a statutory, administrative, or regulatory
exemption is not available.
(h) Section 5.13(h) of the Company Disclosure Schedule contains a true and
--------------------------------------------------
complete list of all material employment contracts and other employee benefit
arrangements with "change of control" or similar provisions and all severance
agreements, in each case with executive officers or directors of the Company.
The consummation of the transactions contemplated by this Agreement in and of
themselves without regard to any other event, will not (i) entitle any employees
of the Company or any of its subsidiaries to severance pay, (ii) accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
19
<PAGE>
payable or trigger any other material obligation pursuant to, any of the Company
Plans, (iii) result in any payments under any of the Company Plans which would
not be deductible under Section 280G of the Code, or (iv) cause any payments
under any Company Plan to cease to be excluded from "applicable employee
remuneration" for purposes of Section 162(m) of the Code. Neither the Company
nor any of its subsidiaries has any obligations under non-qualified retirement
plans under ERISA.
(i) For purposes of this Section 5.13, (i) "Company Plan" means (x) each
------------
employee pension benefit plan (as such term is defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) ("Pension
----- -------
Plan"); (y) each employee welfare benefit plan (as such term is defined in
----
Section 3(1) of ERISA) ("Welfare Plan") maintained by the Company and any of its
------------
ERISA Affiliates, and (z) each stock option, stock purchase, stock appreciation
right and stock based plan and each material deferred compensation, employment,
severance, change in control, incentive and bonus plan or agreement maintained
by the Company for the benefit of current or former employees or current or
former directors of the Company whether written or oral, and whether or not
subject to ERISA; and (ii) "ERISA Affiliate" means any trade or business whether
---------------
or not incorporated, under common control with the Company within the meaning of
Section 414(b), (c), (m), or (o) of the Code or Section 4001(b) of ERISA.
Section 5.14 Labor Controversies. There are no material controversies
-------------------
pending or, to the knowledge of the Company, threatened between the Company or
its subsidiaries and any of their respective employees. The Company and its
subsidiaries are in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms, and conditions of
employment, and wages and hours and have not engaged in any unfair labor
practices. Neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its subsidiaries, nor does the Company know
of any activities or proceedings of any labor union to organize any such
employees. The Company has no knowledge of any strikes, slowdowns, work
stoppages, lockouts or threats thereof, by or with respect to any employees of
the Company or any of its subsidiaries. The Company has no knowledge of any
actions or events taken by it or its subsidiaries that would give rise to
obligations of the Company or any of its subsidiaries under the Workers
Adjustment and Retraining Notification Act, 29 U.S.C. (S) 2101, et seq.
-- ---
Section 5.15 Environmental Matters.
---------------------
(a) Each of the Company and the Company Subsidiaries conducts its business
and operations in compliance in all material respects with all material
applicable Environmental Laws (as defined below). Since January 1, 1997, none of
the Company or the Company Subsidiaries has received written notice of, or is
the subject of, any material claim, suit, inquiry, investigation, information
request, demand or notice based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or waste (collectively,
an "Environmental Event"). For purposes of this Agreement, the term
-------------------
"Environmental Law" means any foreign, federal, state or local law, statute,
-----------------
rule or regulation or the common law relating to the environment or occupational
health and safety, including without limitation, any statute, regulation or
order pertaining to (i) treatment, storage, disposal, generation or
transportation of industrial, toxic or hazardous substances or solid hazardous
waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous substances, or solid or hazardous waste,
including without limitation emissions, discharges, injections, spills, escapes
or dumping of pollutants, contaminants or chemicals; (v) the protection of
wildlife, marine sanctuaries and wetlands, including without limitation all
endangered and threatened species; (vi) underground and other storage tanks or
vessels, abandoned, disposed or discarded barrels, containers and other closed
receptacles; (vii) health and safety of employees and other persons; and (viii)
manufacture, processing, use, distribution,
20
<PAGE>
treatment, storage, disposal, transportation or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or oil or
petroleum products or solid or hazardous waste. As used above, the terms
"release" and "environment" shall have the meaning set forth in the federal
------- -----------
Comprehensive Environmental Compensation, Liability and Response Act of 1980.
(b) To the best knowledge of the current officers and directors of the
Company, no notice of any Environmental Event was given to any person or entity
that occupied any of the premises occupied by or used by the Company or any
Company Subsidiary prior to the date such premises were so occupied. Without
limiting the generality of the foregoing, neither the Company or any Company
Subsidiary has disposed of or placed on or in any property or facility used in
its business any waste materials or hazardous substances in violation of law.
(c) Complete and correct copies of all environmental reports,
investigations and audits conducted by or on behalf of the Company or any of the
Company Subsidiaries and, to the knowledge of the Company, conducted by or on
behalf of a third party (whether done at the initiative of the Company or
directed by a Governmental Authority or other third party) issued or conducted
during the past three years relating to premises currently or previously owned
or operated by the Company or any of the Company Subsidiaries or the results of
each such investigation or audit, have been provided or made available to
Parent. Section 5.15(c) of the Company Disclosure Schedule sets forth a complete
--------------------------------------------------
and correct list of all such reports, investigations and audits.
Section 5.16 Title to Assets. The Company and each of the Company
---------------
Subsidiaries has good and valid title to all of its owned material assets and
material properties as reflected in the most recent balance sheet included in
the Company Financial Statements, except for properties and assets that have
been disposed of in the ordinary course of business since the date of such
balance sheet, free and clear of all Liens, except Permitted Liens. Any material
property or material assets held or used under license or lease by the Company
or any of the Company Subsidiaries are held by them under valid, subsisting and
enforceable licenses or leases with such exceptions as are not material and do
not interfere with the use made of the property and assets. The Company and each
of the Company Subsidiaries own or have sufficient right to use all material
assets and material properties necessary to conduct their businesses in the
manner in which they are currently conducted.
Section 5.17 Intellectual Property; Software.
-------------------------------
(a) (i) Each of the Company and the Company Subsidiaries owns, or possesses
adequate licenses or other valid rights to use, all existing United States and
foreign patents, trademarks, trade names, service marks, copyrights, trade
secrets, know-how, software, databases and intellectual property rights and all
applications therefor that are material to its business as currently conducted
(the "Company Intellectual Property Rights"); (ii) all Company Intellectual
------------------------------------
Property Rights are either owned by the Company or its subsidiaries free and
clear of all Liens (other than Permitted Liens) or are used pursuant to a
license agreement or are otherwise being validly used; (iii) each such license
agreement is valid and enforceable and in full force and effect; (iv) neither
the Company nor any of the Company Subsidiaries is in default thereunder in any
material respect, and to the knowledge of the Company, no corresponding licensor
is in default thereunder in any material respect; (v) none of the Company
Intellectual Property Rights materially infringes any material right of any
person; (vi) there is no pending or, to the knowledge of the Company, threatened
litigation, adversarial proceeding, administrative action or other challenge or
claim relating to any Company Intellectual Property Rights; (vii) there is no
outstanding order of a Governmental Authority relating to any Company
Intellectual Property Rights; (viii) to the knowledge of Company, there is
currently no infringement by any person of any Company Intellectual Property
Rights; and (ix) the Company Intellectual Property Rights owned, used or
possessed by the Company and the
21
<PAGE>
Company Subsidiaries is sufficient and adequate to conduct the business of the
Company and the Company Subsidiaries in all material respects as such business
is currently conducted.
(b) The Company and the Company Subsidiaries have taken reasonable steps to
protect, maintain and safeguard the Company Intellectual Property Rights,
including any Company Intellectual Property Rights for which improper or
unauthorized disclosure would impair its value or validity, and have executed
and required nondisclosure agreements and made any required filings and
registrations in connection with the foregoing.
(c) The conduct of the business of the Company and the Company Subsidiaries
as now conducted does not, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
contemplated hereby will not result in the loss or impairment of any Company
Intellectual Property Rights.
(d) Except in the ordinary course of business, neither the Company nor any
Company Subsidiary has licensed (or otherwise entered into any agreement
permitting) any Person to use or market any material Company Intellectual
Property Rights.
(e) The hardware and software of the Company and the Company Subsidiaries
has, in all material respects, (i) accurately and consistently processed date
information during the transition from 1999 to the year 2000, including, but not
limited to accepting input, providing date output and performing calculations on
dates or portions of dates, and (ii) functioned accurately and without
interruption during the transition from 1999 to the year 2000, without any
change in operations associated with the advent of the new century. There are no
disputes concerning the functionality of any software products of the Company or
any Company Subsidiary which, individually or in the aggregate, are or would be
material to the Company or such Company Subsidiary.
(f) To the knowledge of the Company, no employee of the Company or any of
the Company Subsidiaries is in material violation or material breach of any term
of any employment contract, patent disclosure agreement or any other contract or
agreement with the Company or any other party, which is a breach or violation of
provisions relating to the nondisclosure or confidentiality of intellectual
property rights or of noncompete covenants designed to protect intellectual
property rights.
Section 5.18 Brokers and Finders. No agent, broker, investment banker,
-------------------
financial advisor or other firm or person is entitled to any brokerage,
finder's, financial advisor's or other similar fee or commission for which
Parent or any of its subsidiaries could become liable in connection with the
transactions contemplated by this Agreement as a result of any action taken by
or on behalf of the Company or any of its subsidiaries, other than the Company
Financial Advisor, whose fees and expenses will be paid by the Company pursuant
to the Company's engagement letter with the Company Financial Advisor, a correct
and complete copy of which has been delivered to Parent.
Section 5.19 Opinion of Company Financial Advisor. The Company Financial
------------------------------------
Advisor has rendered an opinion to the Board of Directors of the Company, dated
the date of this Agreement, to the effect that, as of such date, the Common
Stock Price is fair from a financial point of view to the holders of Company
Common Stock (other than Parent and its affiliates). A correct and complete copy
of that opinion (to the extent reduced to or confirmed in writing) will be
delivered to Parent for informational purposes only upon request by the Company.
Section 5.20 Vote Required. If a vote of the stockholders of the Company is
-------------
required by the DGCL or the Certificate of Incorporation or Bylaws or the
Company in connection with the adoption of this Agreement, the affirmative vote
of holders of a majority of the shares of Company Common Stock
22
<PAGE>
outstanding on the record date for any meeting of the stockholders of the
Company held in order to adopt this Agreement (the "Company Stockholders'
---------------------
Approval") is the only vote of the holders of any class or series of the
--------
Company capital stock or debt instruments necessary to adopt this Agreement.
Section 5.21 Insurance. The Company and the Company Subsidiaries maintain
---------
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are
customary for companies of similar size in the Company's industry, and also
maintain all policies of insurance which are required by their material
commercial contracts, in such amounts as specified in the respective contracts.
The Company has made available to Parent summaries of all of the Company's
material insurance policies in effect as of the date of this Agreement. All such
policies are in full force and effect, all premiums due and payable thereon have
been paid, and no notice of cancellation or termination has been received with
respect to any such policy. The insurance policies referred to in this Section
5.21 will remain in full force and effect and will not in any way be affected by
or terminate by reason of, any of the transactions contemplated hereby.
Section 5.22 Contracts. Section 5.22 of the Company Disclosure Schedule
--------- -----------------------------------------------
lists, under the relevant heading, all oral or written executory contracts,
agreements, arrangements, guarantees, licenses, leases and commitments (each, a
"Contract") other than Contracts heretofore filed as an exhibit to any Company
--------
SEC Reports filed prior to the date of this Agreement, that exist as of the date
hereof to which the Company or any Company Subsidiary is a party or by which the
Company or such Company Subsidiary is bound and which fall within any of the
following categories: (a) material Contracts not entered into in the ordinary
course of the Company's and the Company Subsidiaries' businesses which require
payments by the Company or any Company Subsidiaries in excess of $1,000,000; (b)
material joint venture and partnership agreements that cannot be terminated by
the Company by providing notice of 90 days or less and without liability to the
Company or any Company Subsidiary; (c) Contracts which contain requirements for
payments by the Company or any Company Subsidiary in excess of $1,000,000; (d)
Contracts relating to any outstanding commitment for capital expenditures in
excess of $1,000,000; (e) indentures, mortgages, promissory notes, loan
agreements or guarantees of borrowed money, letters of credit or other
agreements or instruments of the Company or the Company Subsidiaries or
commitments for the borrowing or the lending by the Company or any Company
Subsidiary of amounts in excess of $250,000 in the aggregate or providing for
the creation of any Lien (other than money purchase or similar Liens) upon any
of the assets or properties of the Company or any Company Subsidiary with an
aggregate value in excess of $250,000; (f) Contracts providing for "earn-outs"
or other similar contingent payments by the Company or any Company Subsidiary
involving more than $250,000 per contract over the terms of all such Contracts;
(g) Contracts associated with off balance sheet financing in excess of
$1,000,000 in the aggregate, including but not limited to arrangements for the
sale of receivables; (h) exclusive distribution Contracts entered into by the
Company or any Company Subsidiary; (i) supply Contracts providing for payments
by the Company or any Company Subsidiary in excess of $1,000,000; and (j) stock
purchase agreements, asset purchase agreements or other acquisition or
divestiture agreements where the consideration payable by the Company or any
Company Subsidiary in any individual transaction exceeds $2,000,000; and each
other agreement which is material to the Company, irrespective of amount.
All material Contracts to which the Company or any of the Company
Subsidiaries is a party or by which it or such subsidiary is bound are valid and
binding obligations of the Company or the Company Subsidiary and, to the
knowledge of the Company, the valid and binding obligation of each other party
thereto except as may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws, both state and federal, affecting the enforcement
of creditors' rights or remedies in general as from time to time in effect or
the exercise by courts of equity powers and except such Contracts which, if not
so valid and binding, have not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Neither
the Company nor, to the knowledge of the Company, any
23
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other party thereto is in violation of or in default in respect of, nor has
there occurred an event or condition which with the passage of time or giving of
notice (or both) would constitute a default under or permit the termination of,
any such material Contract except such violations or defaults under or
terminations which have not had and would not be reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 5.23 Accounts Receivable. All accounts receivable of the Company
-------------------
and the Company Subsidiaries shown in the Company Financial Statements have
arisen from bona fide transactions by the Company or the Company Subsidiaries in
---- ----
the ordinary course of business consistent with past practice.
Section 5.24 Product Warranty. Each product manufactured, sold, leased, or
----------------
delivered by the Company or any of the Company Subsidiaries has been in
conformity in all material respects with all applicable contractual commitments
and all express and implied warranties, and neither the Company nor any of the
Company Subsidiaries has any liabilities or obligations for replacement or
repair thereof or other damages in connection therewith, subject only to the
reserve for product warranty claims set forth on the face of the Company
Financial Statements, as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company.
Section 5.25 Product Liability. Except as set forth in the Company SEC
-----------------
Reports filed prior to the date of this Agreement, neither the Company nor any
of the Company Subsidiaries has any material liabilities or material obligations
arising out of any injury to persons or property as a result of the ownership,
possession or use of any product manufactured, sold, leased or delivered by the
Company or any of the Company Subsidiaries.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the Company that:
Section 6.1 Organization and Qualification. Each of Parent and Subsidiary
------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, license, use or lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and Subsidiary is qualified to transact business and is in good standing
in each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing could not
reasonably be expected to prevent or delay the consummation of the Offer or the
Merger.
Section 6.2 Authority; Non-Contravention; Approvals.
---------------------------------------
(a) Parent and Subsidiary each has all requisite corporate power and
authority to enter into this Agreement and to consummate the Offer, the Merger
and the other transactions contemplated hereby. This Agreement has been approved
by the Boards of Directors of Parent and Subsidiary and the sole stockholder of
Subsidiary, and no other corporate proceedings on the part of Parent or
Subsidiary are necessary to authorize the execution and delivery of this
Agreement or the consummation by Parent and Subsidiary of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and Subsidiary, and constitutes a valid and legally binding agreement
of each of Parent and Subsidiary enforceable against each of them in accordance
with its terms.
(b) The execution, delivery and performance of this Agreement by each of
Parent and Subsidiary and the consummation of the Offer, the Merger and the
other transactions contemplated hereby do not and
24
<PAGE>
will not violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with, or without notice or lapse of
time or both, would constitute a default) under, or result in the termination of
or a loss of a benefit under, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the properties or assets of Parent or
Subsidiary under any of the terms, conditions or provisions of (i) the
respective certificates of incorporation or bylaws of Parent or any of its
subsidiaries; (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or Governmental
Authority applicable to Parent or any of its subsidiaries or any of their
respective properties or assets; or (iii) any note, bond, mortgage, indenture,
deed of trust, loan, credit agreement, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Parent or any of its subsidiaries is now a party or by which Parent or any
of its subsidiaries or any of their respective properties or assets may be bound
or affected; other than (in the case of clauses (ii) and (iii) above), such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of Liens that could not reasonably be expected to prevent or delay the
consummation of the Offer or the Merger.
(c) Except for (i) the filings by Parent required by the HSR Act; (ii) the
competition filing required by the Bundeskartellamt; (iii) publication after
consummation of the Offer of an "ad hoc" disclosure pursuant to Section 15 of
the German Securities Trading Act; (iv) the filing of the Offer Documents with
the SEC and such other reports under and such compliance with the Exchange Act
and the Securities Act and the rules and regulations thereunder as may be
required in connection with this Agreement and the other transactions
contemplated thereby; (v) the making of the Merger Filing with the Secretary of
State of the State of Delaware in connection with the Merger; (vi) the filing of
reports with the U.S. Department of Commerce regarding foreign direct investment
in the United States; (vii) compliance with the rules and regulations of New
York Stock Exchange; and (viii) compliance with state securities or Blue Sky
Laws, (the filings and approvals referred to in clauses (i) through (vi) are
collectively referred to as the "Parent Required Statutory Approvals"), no
-----------------------------------
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by Parent or Subsidiary or the
consummation by Parent or Subsidiary of the transactions contemplated hereby,
and to the knowledge of the executive officers of Parent and Parent's Medical
Engineering Group, no statute, rule, regulation, executive order, decree,
ruling, judgment, decision, order or injunction of any court or Governmental
Authority is in effect or is proposed which would make the consummation of the
Merger illegal other than the laws referred to in clauses (i) through (viii) of
this sentence.
Section 6.3 Information Supplied.
--------------------
(a) Each of the Offer Documents and the other documents required to be
filed by Parent with the SEC in connection with the Offer, the Merger and the
other transactions contemplated hereby, and the written information supplied by
Parent to the Company for inclusion in the Schedule 14D-9, will comply as to
form, in all material respects, with the requirements of the Exchange Act and
the Securities Act, as the case may be, and will not, on the date of its filing
or dissemination, as the case may be, 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 were made, not misleading.
(b) Notwithstanding the foregoing, no representation or warranty is made by
Parent or Subsidiary with respect to statements made or incorporated by
reference therein based on information supplied in writing by the Company for
inclusion or incorporation by reference therein.
Section 6.4 Financing. Parent has and will have at each of (i) the time of
---------
acceptance for purchase by Subsidiary of the shares of Company Common Stock
pursuant to the Offer and (ii) the Effective Time,
25
<PAGE>
and will make available to Subsidiary (or cause to be made available), the funds
necessary to consummate the Offer and the Merger on the terms contemplated by
this Agreement.
Section 6.5 Subsidiary. Subsidiary was formed solely for the purposes of
----------
engaging in the transactions contemplated hereby, and has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
Section 6.6 Brokers and Finders. No agent, broker, investment banker,
-------------------
financial advisor or other firm or person is entitled to any brokerage,
finder's, financial advisor's or other similar fee or commission for which the
Company or any of its subsidiaries could become liable in connection with the
transactions contemplated by this Agreement as a result of any action taken by
or on behalf of Parent or any of its subsidiaries, other than Deutsche Bank AG
and Deutsche Banc Alex. Brown, whose fees and expenses will be paid by Siemens
AG.
ARTICLE VII
COVENANTS OF THE PARTIES
Section 7.1 Mutual Covenants.
----------------
(a) General. Subject to the terms and conditions of this Agreement, each of
the parties shall (and shall cause its respective subsidiaries to) use its
reasonable best efforts to take all actions and to do all things necessary,
proper or advisable to consummate the Offer and the Merger and the other
transactions contemplated by this Agreement as promptly as possible, including,
without limitation, using its reasonable best efforts to (i) prepare, execute
and deliver such instruments and take or cause to be taken such actions as any
other party shall reasonably request, and (ii) after consultation with the other
parties, obtain any consent, waiver, approval or authorization from any third
party reasonably requested by such other party in order to maintain in full
force and effect any of the Company's contracts, permits, licenses or other
rights following the Offer, the Merger and the other transactions contemplated
hereby.
(b) HSR Act. Without limiting the generality of anything contained in
-------
Section 7.1(a) or elsewhere in this Agreement, each of the parties undertakes
and agrees to file as soon as practicable, (with the expectation of filing
within seven business days after the date hereof), a Notification and Report
Form under the HSR Act with the United States Federal Trade Commission (the
"FTC") and the United States Department of Justice, Antitrust Division (the
---
"Antitrust Division"), the Bundeskartellamt and other applicable antitrust or
------------------
competition laws, rules or regulations. Each of the parties shall (i) respond as
promptly as practicable to any inquiries received from the FTC, the Antitrust
Division, the Bundeskartellamt or other applicable Governmental Authorities for
additional information or documentation and to all inquiries and requests
received from any State Attorney General or other Governmental Authority in
connection with antitrust matters; and (ii) take all commercially reasonable
steps to avoid any extension of the waiting period under the HSR Act and under
other applicable antitrust or competition laws, rules and regulations; and (iii)
refrain from entering into any agreement with the FTC, the Antitrust Division,
the Bundeskartellamt or other applicable Governmental Authorities not to
consummate the transactions contemplated by this Agreement, except with the
prior written consent of the other parties hereto. Parent shall use its
reasonable best efforts to avoid or eliminate impediments under any antitrust,
competition, or trade regulation law that may be asserted by the FTC, the
Antitrust Division, any State Attorney General, the Bundeskartellamt or any
other Governmental Authority with respect to the Offer or the Merger so as to
enable the Closing to occur as soon as reasonably possible; provided, however,
that nothing in this Agreement shall require Parent or any of its affiliates to
divest or hold separate, or to agree to any material restrictions with respect
to the operation of, any business, division or operating unit of Parent or any
of its affiliates. Each of the parties or its counsel shall
26
<PAGE>
promptly notify the other party or its counsel of any written or oral
communication to that party or counsel from the FTC, the Antitrust Division, any
State Attorney General, the Bundeskartellamt or any other Governmental Authority
and permit the other party or its counsel to review in advance any proposed
written communication to any of the foregoing.
(c) Other Governmental Matters. Without limiting the generality of anything
--------------------------
contained in Section 7.1(a) or Section 7.1(b) or elsewhere in this Agreement,
and subject to the terms and conditions of this Agreement, each of the parties
hereto shall (and shall cause its subsidiaries to) use its reasonable best
efforts to take any additional action that may be necessary, proper or advisable
to (i) obtain from any Governmental Authority any consent, license, permit,
waiver, approval, authorization (including, without limitation, SEC "no-action"
letters) required or appropriate to be obtained by either Parent or the Company
or any of their subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Offer and the Merger and
the other transactions contemplated hereby; (ii) make all necessary filings, and
thereafter make any required submissions with respect to the Offer and the
Merger and the other transactions contemplated hereby required under the
Securities Act and the Exchange Act and the rules and regulations thereunder,
and any other applicable federal or state securities or other laws; and (iii)
effect all other necessary registrations, filings and submissions. Each of the
parties shall (and shall cause each of their respective subsidiaries to)
cooperate and use reasonable best efforts vigorously to contest and resist any
action, including legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order whether temporary, preliminary or permanent that is in effect and
restricts, prevents, prohibits or otherwise bars the consummation of the Offer
or the Merger or any other transaction contemplated hereby.
(d) Recommendation of the Company's Board of Directors; Stockholder
---------------------------------------------------------------
Approval; Preparation of Proxy Statement.
----------------------------------------
(i) Subject to Section 8.2, the Company's Board of Directors shall not
withdraw or modify in any manner adverse to Parent its recommendations to the
Company's stockholders described in Section 1.2(a), and as long as the Company's
Board of Directors shall not have withdrawn or modified in any manner adverse to
Parent its recommendation to the Company's stockholders described in Section
1.2(a) in accordance with Section 8.2(b), the Company shall use its reasonable
best efforts to solicit the acceptance of the Offer and, if required, the
Company Stockholders' Approval.
(ii) If the Company Stockholders' Approval is required by law to
consummate the Merger, the Company shall, in accordance with applicable law, its
Certificate of Incorporation and Bylaws, as promptly as practicable following
the expiration of the Offer duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders Meeting") for the purpose of
--------------------
obtaining such approval. Subject to the fiduciary duties of the Company's Board
of Directors under applicable law, the Company shall, through its Board of
Directors, recommend to its stockholders that the Company Stockholders' Approval
be given. Notwithstanding the foregoing, if Parent or Subsidiary shall acquire
90% or more of the then outstanding shares of Company Common Stock pursuant to
the Offer or otherwise, the parties shall take all necessary and appropriate
actions to cause the Merger, pursuant to the terms thereof, to become effective
as soon as practicable after such acquisition without a meeting of the
stockholders of the Company and otherwise in accordance with Section 253 of the
DGCL (including, without limitation, adoption by the board of directors of
Subsidiary of a short-form plan of merger in accordance with the DGCL and
consistent with the terms of the Merger).
(iii) If the Company Stockholders' Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary proxy statement (as amended and supplemented, the
"Proxy Statement") with the SEC and shall use its best
---------------
27
<PAGE>
efforts to respond to any comments of the SEC or its staff, and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company shall notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and shall supply Parent with copies of all correspondence between the Company or
any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the Stockholders Meeting there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall
promptly prepare, and, after consultation with Parent and mail to its
stockholders such an amendment or supplement. Parent shall cooperate with the
Company in the preparation of the Proxy Statement or any amendment or supplement
thereto and shall furnish the Company with all information required to be
included therein with respect to Parent or Subsidiary. Parent and its counsel
shall be given a reasonable opportunity to review and comment upon the Proxy
Statement and related proxy materials and any such correspondence with the SEC
or its staff or any proposed amendment or supplement to the Proxy Statement
prior to its filing with the SEC or dissemination to the Company's stockholders
and the Company shall not transmit any such material to which Parent reasonably
objects.
(iv) Parent agrees to cause all shares of Company Common Stock
purchased pursuant to the Offer and all other shares of the Company Common Stock
owned by Parent or Subsidiary to be voted in favor of the Merger.
(v) Without limiting the generality of the foregoing, each of the
parties shall correct promptly any information provided by it to be used
specifically in the Proxy Statement, if required, that shall have become false
or misleading in any material respect and shall take all steps necessary to file
with the SEC and have declared effective or cleared by the SEC any amendment or
supplement to the Proxy Statement so as to correct the same and to cause the
Proxy Statement as so corrected to be disseminated to the stockholders of the
Company, in each case to the extent required by applicable law.
(e) Notification of Certain Matters. Each of the parties agrees to (and to
-------------------------------
cause their respective subsidiaries to) use reasonable best efforts to give
prompt notice to each other of, and to remedy, (i) the occurrence or failure to
occur of any event which occurrence or failure to occur would be likely to cause
any of such party's representations or warranties in this Agreement to be untrue
or inaccurate in any material respect at the Effective Time, and (ii) any
material failure on the part of the notifying party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 7.1(e) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
(f) Public Statements. Unless otherwise required by applicable law or by
-----------------
obligations pursuant to any listing agreement with or rules of any securities
exchange, (i) the initial press release with respect to the Offer, the Merger
and the other transactions contemplated by this Agreement shall require the
prior mutual agreement and approval of both Parent and the Company and (ii) any
subsequent press releases or other public statements with respect to the Offer
or the Merger or the other transactions contemplated by this Agreement shall
require prior consultation between Parent and the Company.
Section 7.2 Conduct of the Company's Business. During the period from the
---------------------------------
date of this Agreement and continuing until the earlier of (i) the Effective
Time; (ii) the date designees of Parent or Subsidiary constitute a majority of
the members of the Board of Directors of the Company or (iii) termination of
this Agreement pursuant to its terms, the Company covenants and agrees that
unless Parent shall otherwise consent in writing (such consent not to be
unreasonably withheld or delayed) or as set forth in Section 7.2 of the Company
--------------------------
Disclosure Schedule or as otherwise expressly contemplated or
-------------------
28
<PAGE>
permitted by this Agreement and except as required in order to comply with the
current terms of any Contract provided or made available to Parent on or prior
to the date of this Agreement:
(a) the business of the Company and the Company Subsidiaries shall be
conducted only in, and the Company and the Company Subsidiaries shall not take
any action except in, the ordinary course of business consistent with past
practice and the Company shall use reasonable best efforts to preserve intact
its and its subsidiaries present business organizations and goodwill and keep
available the services of its and its subsidiaries officers and key employees;
(b) neither the Company nor any Company Subsidiary shall, directly or
indirectly, do any of the following: (i) sell, pledge, lease, dispose of or
encumber (or permit any subsidiary to sell pledge, lease dispose of or encumber)
any property or assets, except for sales, leases or other dispositions of
inventory and immaterial assets and encumbrances and pledges in the ordinary
course of business consistent with past practice; (ii) except as contemplated
hereby, amend or propose to amend its certificate or articles of incorporation
or by-laws (or comparable organizational documents); (iii) split, combine, or
reclassify any shares of its capital stock, or declare, set aside or pay any
dividend on or make any other distributions (whether in cash, stock, property or
otherwise) with respect to such shares (except for any dividends paid by a
wholly- owned direct or indirect Company Subsidiary to such Company Subsidiary's
parent); (iv) redeem, purchase, acquire or offer to acquire (or permit any
subsidiary to redeem, purchase, acquire, or offer to acquire) any shares of its
capital stock except in connection with the termination of the employment of any
employee in a manner consistent with past practice; or (v) enter into any
contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this paragraph (b);
(c) neither the Company nor any Company Subsidiary shall (i) issue, sell,
pledge or dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or securities convertible or exchangeable for, or any
options, warrants or rights of any kind to acquire any shares of, its capital
stock of any class whether pursuant to the Company Stock Plans or otherwise;
provided that the Company may issue shares of Company Common Stock upon exercise
of Options that are outstanding on the date hereof and are exercised in
accordance with their respective terms as in effect on the date hereof; (ii)
acquire or agree to acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof (except an existing wholly-owned subsidiary); (iii) except in the
ordinary course of business, consistent with past practice, make any loans,
advances or capital contributions to, or investments in, any other person, other
than by the Company or a wholly owned subsidiary of the Company to the Company
or any wholly owned subsidiary of the Company; (iv) except in the ordinary
course of business, consistent with past practice, pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise); (v) enter into or modify any material lease, contract,
agreement or commitment (including, without limitation, any such contract,
lease, agreement or commitment of a nature that would be required to be filed as
an exhibit to Form 10-K under the Exchange Act), other than contracts for sale,
lease or rent of the Company's or the Company Subsidiaries' products in the
ordinary course of business consistent with past practice or supply contracts in
the ordinary course of business consistent with the practice of the Company
during the 12 months preceding the date of this Agreement; (vi) terminate
modify, assign, waive, release or relinquish any material contract rights or
amend any material rights or claims; (vii) settle or compromise any claim,
action, suit or proceeding pending or threatened against the Company, or, if the
Company may be liable or obligated to provide indemnification against the
Company's directors or officers, before any court, governmental agency or
arbitrator, except in the ordinary course of business; provided that nothing
shall require any action that might impair or otherwise affect the obligation of
any insurance carrier under any insurance policy maintained by the Company;
(viii) sell, assign or transfer any patents, trademarks, trade names,
copyrights, trade secrets or other intangible assets (it being understood that a
license in the ordinary course of business of any asset of the type referred to
in this clause (ix) shall not be deemed a sale, assignment or transfer of such
assets); (ix) make any change in officer or executive
29
<PAGE>
compensation other than in the ordinary course of business; (x) change, in any
material way, its accounting principles, practices or methods except as required
by GAAP or the rules and regulations promulgated by the SEC; or (xi) agree, in
writing or otherwise, to take any of the actions listed in clauses (i) through
(x) above;
(d) neither the Company nor any Company Subsidiary shall take any action
that would knowingly make any representation or warranty of the Company
hereunder, untrue or inaccurate in any respect at, or as of any time prior to,
the Effective Time, or omit to take any action necessary to prevent any such
representation or warranty from being untrue or inaccurate in any such time;
(e) each of the Company and the Company Subsidiaries shall use its
reasonable best efforts, to the extent not prohibited by the foregoing
provisions of this Section 7.2, to maintain its relationships with its
customers, licensors, licensees, distributors and others having business
dealings with them, and if requested by Parent, the Company shall schedule, and
the management of the Company shall participate in, meetings of representatives
of Parent with employees of the Company or any Company Subsidiary; and
(f) the Company shall cause its management to consult with Parent regarding
the Company's cash position and borrowing needs and the Company shall reasonably
cooperate with Parent in seeking to operate the business in a way that avoids or
minimizes the need to incur borrowings under its existing credit facilities;
provided, however, that nothing in this sentence shall require the Company or
its management to take any action that in the reasonable opinion of the
Company's management would be contrary to the best interests of the Company.
ARTICLE VIII
ADDITIONAL AGREEMENTS OF THE PARTIES.
Section 8.1 Access to Information.
---------------------
(a) The Company and the Company Subsidiaries shall and shall cause its and
their officers, directors, employees, representatives and agents to, afford to
Parent and Subsidiary and each of their accountants, counsel, financial
advisors, employees, agents, officers and directors and other representatives
(the "Parent Representatives") reasonable access during normal business hours
----------------------
with reasonable notice throughout the period from the date hereof through the
Effective Time to all of the Company's properties, books, contracts, commitments
and records (including, but not limited to, Tax Returns and records) and, during
such period, shall furnish promptly to Parent or the Parent Representatives (i)
a copy of each report, schedule and other document filed by the Company pursuant
to the requirements of federal or state securities laws or filed by the Company
with the SEC in connection with the transactions contemplated by this Agreement,
and (ii) such other information concerning the Company's business, properties
and personnel as Parent shall reasonably request. Except as required by law,
Parent and its subsidiaries shall hold and shall use their reasonable best
efforts to cause the Parent Representatives to hold in strict confidence all
nonpublic documents and confidential information furnished to Parent, Subsidiary
and any Parent Representative in connection with the transactions contemplated
by this Agreement in accordance with the confidentiality agreement dated as of
May 5, 2000 between the Company and Parent (the "Confidentiality Agreement").
-------------------------
(b) No investigation pursuant to this Section 8.1 shall affect, add to or
subtract from any representations or warranties of the parties hereto or the
conditions to the obligations of the parties hereto to effect the Merger.
30
<PAGE>
Section 8.2 Acquisition Proposals
---------------------
(a) Without limiting any of its other obligations under this Agreement, the
Company agrees that none of the officers or directors of the Company or any of
the Company Subsidiaries shall, and that it shall direct and use its reasonable
best efforts to cause the Company and the Company Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of the Company Subsidiaries) not to, directly
or indirectly, (i) initiate, solicit, knowingly encourage or facilitate
(including by way of furnishing information) any inquiries or the making of any
proposal or offer (including without limitation an offer to stockholders of the
Company) for a transaction to effect, a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving it or any of the Company Subsidiaries that, if
consummated would result in the stockholders of the Company immediately prior to
the consummation of such transaction beneficially owning less than 80% of the
voting power of the Company immediately after the consummation of such
transaction, or any purchase or sale of 50% or more of the consolidated assets
(including without limitation stock of the Company Subsidiaries) of the Company
and the Company Subsidiaries, taken as a whole, or any purchase or sale of, or
tender or exchange offer for, the equity securities of the Company that, if
consummated, would result in any person (or the stockholders of such person)
beneficially owning securities representing 20% or more of the total voting
power of the Company (or of the surviving parent entity in such transaction) or
any of the material Company Subsidiaries (any such proposal, offer or
transaction, other than a proposal or offer made by Parent or an affiliate
thereof, being hereinafter referred to as an "Acquisition Proposal"); (ii) have
--------------------
any discussion with or provide any confidential information or data to any
person relating to an Acquisition Proposal, or knowingly facilitate any effort
or attempt to make or implement an Acquisition Proposal; (iii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal; or (iv) approve or recommend, or propose to approve or recommend, or
execute or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar agreement or
propose publicly or agree to do any of the foregoing related to any Acquisition
Proposal.
(b) Notwithstanding anything in this Agreement to the contrary, the Company
or its Board of Directors shall be permitted at any time prior to the time of
the Stockholders' Meeting (i) to the extent applicable, (y) to comply with Rule
14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal and (z) to make disclosure to the Company's stockholders
that, in the good faith judgment of the Company's Board of Directors after
consultation with outside counsel, is required under applicable law; (ii) to
withdraw or change the recommendation of the Company's Board of Directors in
respect of the Offer, the Merger or this Agreement or to approve or recommend or
to propose publicly to approve or recommend any Acquisition Proposal; (iii) to
engage in any discussions or negotiations with, or provide any information to,
any person in response to an unsolicited bona fide written Acquisition Proposal
---- ----
by any such person; or (iv) to enter into any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement, with respect to a Superior Proposal (as defined below), if
and only to the extent that, in any such case referred to in clause (ii), (iii)
or (iv), (A)(x) in the case of clause (ii) above, it has received an unsolicited
bona fide written Acquisition Proposal from a third party and the
---- ----
Company's Board of Directors concludes in good faith that such Acquisition
Proposal constitutes a Superior Proposal and (y) in the case of clause (iii)
above, the Company's Board of Directors concludes in good faith that such
Acquisition Proposal reasonably could be expected (without any change in the
amount or type of consideration offered) to constitute a Superior Proposal, (B)
in the case of clause (ii), (iii) and (iv) above, the Board of Directors, after
consultation with outside counsel, determines in good faith that taking such
action is necessary in order for the Board of Directors to comply with its
fiduciary duties under applicable law, (C) prior to the Company's Board of
Directors taking or authorizing any action described in clause (ii) or clause
(iv) above, Parent shall have been afforded the right for at least three
business days to amend the terms of the Offer in response to such Acquisition
Proposal, (D) prior to providing any information or data to any
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person, the Board of Directors receives from such person an executed
confidentiality agreement having provisions that are customary in such
agreements, as advised by counsel, and no less restrictive of such person than
the Confidentiality Agreement, and (E) prior to providing any information or
data to any person or entering into discussions or negotiations with any person,
the Company notifies Parent promptly of such inquiries, proposals or offers
received by, any such information requested from, or any such discussions or
negotiations sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
person and the material terms and conditions of any inquiries, proposals or
offers.
(c) The Company agrees that it will, and will cause its officers, directors
and representatives to, immediately cease and cause to be terminated any
activities, discussions or negotiations existing as of the date of this
Agreement with any parties conducted heretofore with respect to any Acquisition
Proposal. The Company shall promptly request each person that within the past 13
months has executed a confidentiality agreement in connection with its
consideration of a possible Acquisition Proposal to return (or, if required
under the provisions of the confidentiality agreement, destroy) all confidential
information previously furnished to such Person. The Company will promptly
inform its directors, officers, key employees, agents and representatives of the
obligations undertaken in this Section 8.2.
(d) Nothing in this Section 8.2 shall (i) permit the Company to terminate
this Agreement (except as specifically provided in Article VIII hereof) or (ii)
affect any other obligation of the Company. The Company shall not submit to the
vote of its stockholders any Acquisition Proposal other than the Merger.
(e) As used in this Agreement, "Superior Proposal" means a bona fide
----------------- ---- ----
written proposal made by a person other than Parent or an affiliate of Parent
which the Company's Board of Directors concludes in good faith (following
receipt of the advice of its financial advisors and after consultation with
outside legal counsel), taking into account, among other things, all legal,
financial, regulatory and other aspects of the proposal and the person making
the proposal, (i) would, if consummated, result in a transaction that is more
favorable to the Company's stockholders (in their capacities as stockholders),
from a financial point of view, than the transactions contemplated by this
Agreement and (ii) is probable of completion.
(f) The Company shall (i) notify Parent promptly (and in any event within
one business day) after receipt of any Acquisition Proposal (or any indication
that any person is considering marking an Acquisition Proposal) or any request
for non-public information relating to the Company or any of its Subsidiaries or
for access to the properties, books or records of the Company or any of its
subsidiaries by any person that may be considering making, or has made, an
Acquisition Proposal, (ii) notify Parent promptly of any material change to any
such Acquisition Proposal, indication or request and (iii) upon reasonable
request by Parent, provide Parent with all material information about any such
Acquisition Proposal, indication or request.
Section 8.3 Expenses and Fees. Whether or not the Merger is consummated,
-----------------
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except that the expenses incurred in connection with the filing,
printing and mailing of the Proxy Statement and the Offer Documents shall be
borne equally by Parent and the Company.
Section 8.4 Directors' and Officers' Indemnification.
----------------------------------------
(a) Parent agrees that all rights to indemnification now existing in favor
of any current or former director or officer of the Company as provided in the
Company's Certificate of Incorporation or Bylaws or in a written agreement
between any such person and the Company in effect on the date hereof shall
survive the Merger and shall continue in full force and effect until the
expiration of all applicable statutes
32
<PAGE>
of limitation. Parent also agrees to (or to cause the Surviving Corporation to)
indemnify all current and former directors and officers of the Company to the
fullest extent the Company would be permitted by Delaware Law to indemnify them
with respect to all acts and omissions arising out of such individuals' service
as officers or directors of the Company or any of its subsidiaries or as
trustees, fiduciaries or administrators of any plan for the benefit of employees
occurring prior to the Effective Time. Without limitation of the foregoing, in
the event any such person is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including, without
limitation, the transactions contemplated by this Agreement, occurring prior to,
and including, the Effective Time, Parent will (or will cause the Surviving
Corporation to) pay such person's reasonable legal and other expenses of counsel
selected by such person and reasonably acceptable to Parent (including the cost
of any investigation, preparation and settlement) incurred in connection
therewith promptly after statements therefor are received by Parent; provided,
however, that neither Parent nor the Surviving Corporation shall, in connection
with any one such action or proceeding or separate but substantially similar
actions or proceedings arising out of the same general allegations, be liable
for reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all indemnified persons (it being
understood, however, that if any indemnified person or counsel for any
indemnified person determines in good faith that there is, under applicable
standards of professional conduct, a conflict on any significant issue between
two or more indemnified persons, then each such indemnified person may engage
separate counsel at the expense of Parent and the Surviving Corporation). Parent
shall be entitled to participate in the defense of any such action or
proceeding, and counsel selected by the indemnified person shall, to the extent
consistent with their professional responsibilities, cooperate with Parent and
any counsel designated by Parent (it being understood that no indemnified person
shall be liable for any settlement effected without his express written
consent). Parent shall pay all reasonable fees and expenses, including
attorneys' fees, that may be incurred by any indemnified person in enforcing the
indemnity and other obligations provided for in this Section.
(b) Parent agrees that the Company and, from and after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company; provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous to such
persons; and provided, further, that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof; and if the Surviving
Corporation is unable to obtain the insurance required by this Section, it shall
obtain as much comparable insurance as possible for an annual premium equal to
such maximum amount.
Section 8.5 Employee Benefits.
-----------------
(a) Following the Effective Time, Parent shall honor, and cause the
Surviving Corporation to honor, each Company Plan and the related funding
arrangements of such Company Plan in accordance with its terms and shall
interpret such Company Plan in accordance with the past practice of the Company.
Without limiting the generality of the foregoing, Parent shall honor, and cause
the Surviving Corporation to honor, all vacation, personal and sick days accrued
by employees of the Company and its subsidiaries under any plans, policies,
programs and arrangements of the Company and its ERISA Affiliates immediately
prior to the Effective Time. From the Effective Time until December 31, 2001,
Parent shall provide, and cause the Surviving Corporation to provide, employee
benefits under employee benefit plans to the employees and former employees of
the Company and its subsidiaries that are in the aggregate no less favorable
than those provided to such persons pursuant to Company Plans on the date of
this Agreement (excluding equity and equity-based compensation); provided,
however, that the provisions of this Section 8.5(a) will not prohibit Parent or
the Surviving Corporation from requiring normal and
33
<PAGE>
customary employee contributions with respect to medical and other similar
employee benefit plans. Nothing herein shall prohibit any changes to any Company
Plan that are (i) required by law (including, without limitation, any applicable
qualification requirements of Section 401(a) of the Code); (ii) necessary as a
technical matter to reflect the transactions contemplated hereby; or (iii)
required for the Surviving Corporation to provide for or permit investment in
its securities or Parent's securities. Furthermore, nothing herein shall require
Parent to continue any particular Company Plan or prevent the amendment or
termination thereof (subject to the maintenance, in the aggregate, of the
benefits as provided in this Section 8.5(a) and to the obligation to provide
benefits as provided above).
(b) With respect to any employee benefit plans in which any employees of
the Company or its subsidiaries first become eligible to participate, on or
after the Effective Time, and in which the Company employees did not participate
prior to the Effective Time, Parent shall: (i) waive all pre- existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the employees of the Company and its
subsidiaries under any such new plans in which such employees may be eligible to
participate after the Effective Time, except to the extent such pre-existing
conditions, exclusions or waiting periods would apply under the analogous
Company Plan; (ii) provide each employee of the Company and its subsidiaries
with credit for any co-payments and deductibles paid prior to the Effective Time
(to the same extent such credit was given under the analogous Company Plan prior
to the Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements under any such new plan in which such employees may be eligible to
participate after the Effective Time; (iii) recognize all service of such
employees for all purposes (including, without limitation, purposes of
eligibility to participate, vesting, and, except with respect to grandfathered
provisions contained in Parent's health plans applicable to employees hired
prior to September 30, 1991, entitlement to benefits, and, except with respect
to defined benefit pension plans, benefit accrual) in any such new plan in which
such employees may be eligible to participate after the Effective Time, and (iv)
with respect to flexible spending accounts, provide each employee of the Company
and its subsidiaries with a credit for any salary reduction contributions made
thereto and a debit for any expenses incurred thereunder with respect to the
plan year in which the Effective Time occurs; provided, that the foregoing shall
not apply to the extent it would result in duplication of benefits.
Section 8.6 Litigation. The Company shall give Parent the opportunity to
----------
participate in the defense or settlement of any shareholder litigation against
the Company and its directors relating to the Offer, the Merger and the other
transactions contemplated by this Agreement until the consummation of the Offer,
and thereafter, Parent shall direct the defense of such litigation and shall
give the Company and its directors an opportunity to participate in such
litigation; provided, however, that no settlement shall be agreed to prior to
the consummation of the Offer without Parent's consent, which consent shall not
be unreasonably withheld or delayed; and provided further that no settlement
requiring a payment or an admission of any wrongdoing by a director shall be
agreed to without such director's consent.
ARTICLE IX
CONDITIONS
Section 9.1 Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, at or prior to the Effective Time, of
each of the following conditions:
(a) if required by the DGCL, this Agreement shall have been duly adopted by
the requisite affirmative vote of the stockholders of the Company in accordance
with applicable law and the Certificate of Incorporation and Bylaws of the
Company;
34
<PAGE>
(b) no statute, rule, regulation, executive order, decree, ruling,
judgment, decision, order or injunction shall have been enacted, entered,
promulgated, issued or enforced by any court or other Governmental Authority
which is in effect and has the effect of prohibiting, restraining or enjoining
the consummation of the Merger except to the extent the prohibition, restraint
or injunction (i) arises under any antitrust, competition or similar laws, rules
or regulations of a jurisdiction outside of the United States or Germany or (ii)
(A) arises under other laws, rules or regulations of a jurisdiction outside of
the United States or Germany, (B) relates to or arises out of the failure to
obtain or make any consent, registration, approval, permit, authorization or
notice and (C) would not reasonably be expected to result in (1) a Company
Material Adverse Effect; (2) the imposition on the Company or any of its
subsidiaries or Parent or any of its affiliates of fines, penalties or other
charges, the assessment against any such person of damages, or the incurrence by
any such person of any other loss, liability or injury, in an aggregate amount
in excess of $8,000,000; (3) any other material non-financial liability or
disability (x) of the Company or its material subsidiaries; (y) of Parent or any
material corporate affiliate of Parent or any material business unit of Parent
or any such material corporate affiliate; or (z) of any immaterial corporate
affiliate of Parent or of immaterial business unit of Parent or any such
immaterial corporate affiliate to the extent such liability or disability is
material to Parent and its affiliates taken as a whole; or (4) any material
liability, exposure or disability, or any criminal liability of or to any
officer or director of Parent or any of its corporate affiliates (including the
Surviving Corporation); and
(c) Subsidiary shall have accepted for payment and paid for shares of
Company Common Stock pursuant to the Offer, provided that Parent and Subsidiary
may not assert this condition if the failure to accept such shares of Company
Common Stock for payment was in breach of this Agreement or related to a breach
of this Agreement by Parent or Subsidiary.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated and the Merger
-----------
may be abandoned at any time before the Effective Time, whether before or after
approval of this Agreement and the Merger by the stockholders of the Company (if
required by applicable law):
(a) by mutual written consent, duly authorized by the Boards of Directors
of Parent and, subject to Section 1.4(c), the Company;
(b) by either the Company or Parent if (i) any statute, rule, regulation,
executive order, decree, ruling, judgment, decision, order or injunction of or
by any court or other Governmental Authority of competent jurisdiction which
makes the consummation of the Merger illegal shall be in effect and shall have
become final and nonapppealable except to the extent such illegality (A) arises
under any antitrust, competition or similar laws, rules or regulations of a
jurisdiction outside of the United States or Germany, or (B) arises under other
laws, rules or regulations of a jurisdiction outside of the United States or
Germany, and (in the case of this clause (B) only) either (1) would not
reasonably be expected to result (in the case of a termination by Parent) in (w)
a Company Material Adverse Effect; (x) the imposition on the Company or any of
its subsidiaries or Parent or any of its affiliates of fines, penalties or other
charges, the assessment against any such person of damages, or the incurrence by
any such person of any other loss, liability or injury, in an aggregate amount
in excess of $8,000,000; (y) any other material non-financial liability or
disability (I) of the Company or its material subsidiaries; (II) of Parent or
any material corporate affiliate of Parent or any material business unit of
Parent or any such material corporate affiliate; or (III) of any immaterial
corporate affiliate of Parent or of any immaterial business unit of Parent or
any such immaterial corporate affiliate to the extent such liability or
disability is material to Parent and its affiliates taken as a whole; or (z) any
material liability, exposure or disability, or any
35
<PAGE>
criminal liability of or to any officer or director of Parent or any of its
corporate affiliates (including the Surviving Corporation) or (2) would not
reasonably be expected to result (in the case of a termination by the Company)
in any material liability, exposure or disability or any criminal liability of
or to any officer or director of the Company or any of its subsidiaries; (ii)
the Offer (as extended and re-extended in accordance with Section 1.1) shall
have expired without the acceptance for payment of shares of Company Common
Stock thereunder; or (iii) the purchase of the shares of Company Common Stock
pursuant to the Offer (as extended and re- extended in accordance with Section
1.1) shall not have occurred on or prior to the close of business on December
31, 2000 (the "Outside Date") (provided that if on the Outside Date, the
------------
conditions set forth in either clause (ii) or clause (iii) of the first
paragraph of Annex A, or any other condition relating to antitrust or
-------
competition law clearance with respect to the Offer or the Merger, has not been
satisfied, then the Outside Date may be extended by either the Company or Parent
until March 31, 2001 (the "Extended Outside Date"); unless, in the case of any
----------------------
of clause (i), clause (ii) or clause (iii) above, such event has been caused by
a breach of this Agreement by the party seeking such termination;
(c) by Parent, if before the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company or any committee
thereof shall (i) have recommended an Acquisition Proposal or failed to publicly
announce its recommendation against an Acquisition Proposal within five business
days after the first public announcement of the Acquisition Proposal; (ii) have
withdrawn, modified in a manner adverse to Parent or amended in a manner adverse
to Parent its approval or recommendation of the Offer, this Agreement or the
Merger or failed to reaffirm its approval or recommendation of the Offer or the
Merger or the adoption of the Agreement upon Parent's reasonable written
request; (iii) have executed a letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar agreement
providing for consummation of an Acquisition Proposal with a third party; or
(iv) have resolved to do any of the foregoing;
(d) by Parent, if before the purchase of shares of Company Common Stock
pursuant to the Offer, (i) any of the Company's representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or (except for the representation contained in Section 5.7(b)) shall
have become inaccurate as of a date subsequent to the date of this Agreement (as
if made on such subsequent date) such that the condition set forth in clause
(c)(i) of Annex A would not be satisfied or (ii) any of the Company's covenants
-------
contained in this Agreement shall have been breached such that the condition set
forth in clause (c)(i) of Annex A would not be satisfied if, in either case the
-------
Company shall have failed to cure such breach within 30 days after written
notice of the breach; provided, however, that if an inaccuracy in the Company's
representations and warranties or a breach of a covenant by the Company is not
curable by the Company prior to the Outside Date or the Extended Outside Date,
whichever is applicable, no 30 day notice shall be required;
(e) by the Company prior to the acceptance for purchase of shares pursuant
to the Offer if (i) there shall have been a breach in any material respect of
any representation or warranty in this Agreement of Parent or Subsidiary, (ii)
Parent or Subsidiary shall have failed to commence the Offer within the time
required under this Agreement, or (iii) Parent or Subsidiary shall not have
performed or complied with any other material covenant or material agreement
contained in this Agreement, which breach, in the case of both clause (i) and
clause (ii) above, shall not have been cured prior to 20 business days following
notice of such breach to Parent and Subsidiary by the Company; or
(f) by the Company at any time after the Initial Expiration Date and prior
to the acceptance for purchase of shares pursuant to the Offer, if (i) at any
time after the date of this Agreement, a third party shall have disclosed,
announced, submitted or made a Superior Proposal, and (ii) the Company's Board
of Directors has determined in good faith after consultation with outside
counsel that termination of this Agreement by the Company is necessary in order
for the Company's Board of Directors to comply with
36
<PAGE>
its fiduciary duties; provided, however, that the Company must give Parent two -
business days prior written notice of the Company's intention to terminate this
Agreement pursuant to this clause (f).
Section 10.2 Effect of Termination.
---------------------
(a) In the event of termination of this Agreement by either Parent or the
Company pursuant to the provisions of Section 10.1, this Agreement shall
forthwith become void and there shall be no liability or further obligation on
the part of the Company, Parent, Subsidiary or their respective officers or
directors (except for obligations in this Section 10.2(a), in the second
sentence of Section 8.1(a) and in Sections 8.3 and this Section 10.2, all of
which shall survive the termination). Nothing in this Section 10.2 shall relieve
any party hereto from liability for any willful and intentional breach of any
covenant or other agreement of such party contained in this Agreement.
(b) Parent and the Company agree that (i) if Parent shall terminate this
Agreement pursuant to Section 10.1(c) or if the Company shall terminate this
Agreement pursuant to Section 10.1(f), or (ii) if (A) this Agreement shall have
been terminated pursuant to Sections 10.1(b)(ii), 10.1(b)(iii) or 10.1(d), (B)
if the termination was pursuant to Section 10.1(b)(ii) or Section 10.1(b)(iii),
between the date of this Agreement and the termination of this Agreement, a
third party (other than Parent or an affiliate of Parent) shall have publicly
announced an Acquisition Proposal that is pending on the date of termination of
this Agreement, (C) if the termination was pursuant to Section 10.1(d), between
the date of this Agreement and the date of termination, an Acquisition Proposal
was received by the Company (whether or not publicly announced) and the
Acquisition Proposal was not withdrawn, by bona fide action of the third party
who made the Acquisition Proposal, and (D) within 270 days after the termination
of this Agreement, either (1) the Company enters into a definitive acquisition
agreement providing for an Acquisition Proposal or (2) an Acquisition Proposal
is consummated, then the Company shall pay to Parent a fee equal to $27,500,000
(it being understood that for purposes of this Section 10.2(b), all references
in the definition of "Acquisition Proposal" to "20%" and "80%" shall be deemed
to be "50%").
(c) Any payment required to be made pursuant to Section 10.2(b) shall be
made to Parent not later than three business days after the termination of this
Agreement or in the case of any payment required to be made by the Company under
Section 10.2(b)(ii), three business days after the execution of the definitive
agreement referred to therein, as applicable. All payments under this Section
10.2 shall be made by wire transfer of immediately available funds to an account
designated by the party entitled to receive payment.
(d) The Company and Parent agree that any payment required to be made
pursuant to Section 10.2(b) shall represent liquidated damages and not a
penalty. The provisions of this Section 10.2 shall not be the exclusive remedy
for any breach of any representation, warranty, covenant or agreement contained
in this Agreement.
Section 10.3 Amendment. This Agreement may not be amended except by action
---------
taken by the parties' respective Boards of Directors or duly authorized
committees thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law and Section
1.4(c). Subject to Section 1.4(c) and applicable law, such amendment may take
place at any time prior to the Closing Date and whether before or after the
Company Stockholders' Approval is obtained; provided, however, that after the
Company Stockholders' Approval is obtained, no amendment may be made which would
reduce the amount or change the kind of consideration to be received by the
holders of Company Common Stock upon consummation of the Merger or alter or
change any of the terms and conditions of this Agreement if such alteration or
change would adversely effect the holders of any class or series of securities
of the Company.
37
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Section 10.4 Extension; Waiver. At any time prior to the Effective Time,
-----------------
subject to Section 1.4(c), any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (c) waive compliance by the party with any of the agreements or
conditions contained herein. Any agreement on the part of any party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such rights.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations and Warranties. None of the
----------------------------------------------
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, and after the Effective Time, none of the Company, Parent, Subsidiary or
their respective officers or directors shall have any further obligation with
respect thereto except for the representations, warranties or agreements that by
their terms apply or are to be performed in whole in part after the Effective
Time.
Section 11.2 Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail, postage prepaid return receipt requested) or sent
via facsimile to the parties at the following addresses:
If to Parent or Subsidiary, to:
Siemens Corporation
153 East 53rd Street
New York, New York 10022-4611
Telecopier: (212) 258-4490
Attention: E. Robert Lupone, Esq.
with a copy to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Telecopier: (212) 878-8375
Attention: John A. Healy, Esq.
and
Siemens Aktiengesellschaft
Medical Engineering
Henkestr. 127
Postfach 32 40
91050 Erlangen
Telecopier: (011) 49 (9131) 84-3754
Attention: Prof. Dr. Erich Reinhardt
and
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Siemens Aktiengesellschaft
Legal Services Erlangen
Werner-von-Siemens-Strafe 50
91052 Erlangen
Telecopier: (011) 49 (9131)72-8667
Attention: Robert Kirschbaum
If to the Company, to:
Acuson Corporation
1220 Charleston Road
Mountain View, California 94039
Telecopier: (650) 943-7206
Attention: Samuel H. Maslak
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Telecopier: (650) 849-7400
Attention: Keith A. Flaum, Esq.
or at such other address as any party hereto shall have designated by notice in
writing to the other parties hereto. Notices shall be deemed duly received (a)
on the date of delivery if delivered personally, (b) two business days after
delivery if delivered by telecopy or facsimile (if confirmed by receipt) or (c)
on the tenth business day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid.
Section 11.3 Governing Law. This Agreement shall be governed in all
-------------
respects including validity, interpretation and effect, by the laws of the State
of Delaware applicable to contracts executed and to be performed wholly within
such state.
Section 11.4 Third Party Beneficiaries. This Agreement shall be binding
-------------------------
upon and inure solely to the benefit of each party hereto, and except as set
forth in this Agreement, nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement; provided that the provisions of
Section 8.4 hereof are for the benefit of, and shall be enforceable by, each of
the current and former directors and officers of the Company.
Section 11.5 Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
39
<PAGE>
Section 11.6 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties. Any assignment in violation of the
preceding sentence shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
Section 11.7 Enforcement. The parties agree that irreparable damage would
-----------
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 11.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 11.9 Entire Agreement. This Agreement (including Annex A and the
----------------
documents and instruments referred to herein) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and
supersede all prior agreements and understandings, both oral and written, among
the parties with respect to the subject matter of this Agreement. No
representations, warranty, promise, inducement or statement of intention has
been made by any party that is not embodied in this Agreement or such other
documents, and none of the parties shall be bound by, or be liable for, any
alleged representation, warranty, promise, inducement or statement of intention
not embodied herein or therein.
[SIGNATURE PAGE FOLLOWS]
40
<PAGE>
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement and Plan of Merger to be signed by their respective officers as of the
date first written above.
SIEMENS CORPORATION
By: /s/ Michael W. Schiefen
-----------------------
Name: Michael W. Schiefen
Title: Vice President
By: /s/ E. Robert Lupone
--------------------
Name: E. Robert Lupone
Title: Vice President, General Counsel
and Secretary
SIGMA ACQUISITION CORP.
By: /s/ Michael W. Schiefen
-----------------------
Name: Michael W. Schiefen
Title: President
By: /s/ E. Robert Lupone
--------------------
Name: E. Robert Lupone
Title: Vice President
ACUSON CORPORATION
By: /s/ Samuel H. Maslak
--------------------
Name: Samuel H. Maslak
Title: Chairman of the Board and
Chief Executive Officer
41
<PAGE>
ANNEX A
to
Agreement and Plan of Merger
----------------------------
Conditions to the Offer. Notwithstanding any other provision of the Offer
-----------------------
or the Agreement, in addition to (and except as set forth in the proviso to the
third sentence of Section 1.1(b) of the Agreement, not in limitation of)
Subsidiary's rights pursuant to the Agreement to extend and amend the Offer in
accordance with the Agreement, and subject to any applicable rules and
regulations of the SEC (including Rule 14e-1(c) under the Exchange Act) relating
to Subsidiary's obligation to pay for or return tendered shares of Company
Common Stock after termination of the Offer, Subsidiary shall not be required to
accept for payment or pay for and may delay the acceptance for payment of or,
subject to Rule 14e-1(c) of the Exchange Act, the payment for, any tendered
shares of Company Common Stock not theretofore accepted for payment or paid for,
and Subsidiary may amend the Offer (subject to Section 1.1 of the Agreement) if
(i) a number of shares of Company Common Stock that, together with any shares of
Company Common Stock owned by Parent or any affiliate of Parent, represents at
least a majority of the sum of (y) the total number of shares of outstanding
Company Common Stock plus (z) the total number of shares of Company Common Stock
issuable on or prior to the Outside Date (or the Extended Outside Date if the
Outside Date has been extended in accordance with Section 10.1(b)(iii)) upon the
exercise of any outstanding Options, warrants, conversion privileges or similar
rights with respect to Company Common Stock that are currently vested or that
will vest on or prior to the Outside Date or Extended Outside Date, as the case
may be, shall not have been validly tendered prior to the expiration of the
Offer and not withdrawn or otherwise acquired by Parent or any of its affiliates
prior to the expiration of the Offer ("Minimum Condition"); (ii) any applicable
-----------------
waiting period under the HSR Act shall not have expired or been terminated;
(iii) the approval period with respect to the Bundeskartellamt shall not have
been terminated; or (iv) at any time on or after the date of the Agreement and
prior to the time of acceptance of such shares of Company Common Stock for
payment pursuant to the Offer or the payment therefor, any of the following
conditions has occurred and continues to exist through the time of acceptance
for payment or payment:
(a) there shall be pending any suit, action, or proceeding that is
reasonably likely to succeed, brought by a Governmental Authority against Parent
or any affiliate of Parent or the Company or any affiliate of the Company (other
than any suit, action or proceeding relating to antitrust, competition or other
similar laws, rules or regulations of a jurisdiction outside of the United
States or Germany), (i) challenging the acquisition by Parent or Subsidiary of
the shares of Company Common Stock, seeking to make illegal, materially delay,
make materially more costly or otherwise directly or indirectly restrain or
prohibit the making or consummation of the Offer and the Merger or the
performance of any of the other transactions contemplated by this Agreement or
seeking to obtain from the Company, Parent or Subsidiary any damages or
penalties, that in any case referred to in this clause (i) for which the
standard in the preamble to this paragraph is met is reasonably likely to result
in consequences that are materially adverse to Parent, the Company or their
respective material affiliates; (ii) seeking to prohibit or materially limit the
ownership or operation by the Company, Parent or any of their respective
subsidiaries or affiliates of any of the businesses or assets of the Company,
Parent or any of their respective subsidiaries or affiliates, or to compel the
Company, Parent or any of their respective subsidiaries or affiliates to dispose
of or hold separate all or any material portion of the businesses or assets of
the Company or Parent, as a result of the Offer, the Merger or any of the other
transactions contemplated by this Agreement; (iii) seeking to impose material
limitations on the ability of Parent or Subsidiary to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock
accepted for payment pursuant to the Offer including, without limitation, the
right to vote the shares of Company Common Stock accepted for payment by it on
all matters properly presented to the stockholders of the Company; (iv) seeking
to prohibit Parent or any of its subsidiaries or affiliates from effectively
controlling in any material respect the business or operations of the Company or
its subsidiaries; (v)
<PAGE>
requiring divestiture by Subsidiary or any of its affiliates of any shares of
Company Common Stock; or (vi) which otherwise is reasonably likely to have a
Company Material Adverse Effect;
(b) there shall be any statute, rule, regulation, executive order, decree,
ruling, judgment, decision, order or injunction (including with respect to
competition or antitrust matters) enacted, entered, promulgated, issued or
enforced, or any statute, rule, regulation, executive order, decree, ruling,
judgment, decision, order or injunction which has been proposed by the relevant
legislative or regulatory body and is reasonably likely to be enacted, entered,
promulgated, issued or enforced with respect to or deemed applicable to, (i)
Parent, the Company or any of their respective subsidiaries or affiliates or
(ii) the Offer or the Merger or any of the other transactions contemplated by
this Agreement, by any court or other Governmental Authority, other than
applicable waiting periods under the HSR Act as specified in the introductory
paragraph above or the approval period applicable to the Bundeskartellamt and
other than any statute, rule, regulation, executive order, decree, ruling,
judgment, decision, order or injunction of any court or other Governmental
Authority relating to antitrust, competition or other similar laws, rules or
regulations of a jurisdiction outside of the United States or Germany, in any
case, that have resulted or would reasonably be expected to result, directly or
indirectly, in any of the consequences referred to in clauses (i) though (vi) of
paragraph (a) above;
(c) (i) the representations and warranties of the Company contained in the
Agreement shall not be true and correct (without giving effect in any such
representation or warranty (other than in Section 5.7(b)) to any Company
Material Adverse Effect standard, qualification or exception contained therein
but after giving effect to any other materiality standard, qualification or
exception contained therein) at the date hereof and as of the consummation of
the Offer with the same effect as if made at and as of the consummation of the
Offer (except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date) except where the failure of
such representations and warranties to be true and correct would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect; provided, however, that for purposes of this clause (i), none of
the following, to the extent arising after the date of the Agreement, shall be
deemed to constitute a Company Material Adverse Effect and none of the following
shall be taken into account in determining whether a Company Material Adverse
Effect has occurred or is reasonably likely to occur: (A) any effect resulting
from the announcement or pendency of the Offer or the Merger (including, without
limitation, any cancellations of or delays in customer orders or shipments, any
disruption in supplier, distributor, partner or similar relationships or any
loss of employees); (B) any effect resulting from compliance with the terms of,
or the taking of any action required by, the Agreement; or (C) any effect
resulting from the matters disclosed in Section 5.7(b) of the Company Disclosure
----------------------------------------
Schedule; (ii) the Company shall have failed to perform or comply in all
--------
material respects with its covenants and obligations contained in the Agreement,
which failure to perform has not been cured within ten business days after the
giving of written notice to the Company; or (iii) there shall have occurred
since the date of the Agreement any events or changes which, individually or in
the aggregate, constitute or would reasonably be expected to have a Company
Material Adverse Effect; provided, however, that for purposes of this section
only, none of the following, to the extent arising after the date of the
Agreement, shall be deemed to constitute a Company Material Adverse Effect, and
none of the following shall be taken into account in determining whether a
Company Material Adverse Effect has occurred or is reasonably likely to occur:
(a) any effect resulting from any material fluctuations in currency prices; (b)
any effect relating to conditions generally affecting companies operating in the
ultrasound industry, in the same general manner and to the same general extent;
(c) any effect resulting from the announcement or pendency of the Offer or the
Merger (including, without limitation, any cancellations of or delays in
customer orders or product shipments, any disruption in supplier, distributor,
partner or similar relationships or any loss of employees); (d) any effect
resulting from compliance with the terms of, or the taking of any action
required by, the Agreement; or (e) any effect resulting from the matters
disclosed in Section 5.7(b) of the Company Disclosure Schedule. In addition, any
-------------------------------------------------
failure by the
2
<PAGE>
Company following the date of the Agreement to meet internal projections or
forecasts or published revenue or earnings predictions, in and of itself, shall
not be deemed to constitute a Company Material Adverse Effect (it being
understood that such failure may nonetheless be evidence of other events that
have resulted in the occurrence of a Company Material Adverse Effect);
(d) the Board of Directors of the Company or any committee thereof shall
(i) have recommended an Acquisition Proposal or failed to publicly announce its
recommendation against an Acquisition Proposal within five business days after
the first public announcement of the Acquisition Proposal; (ii) have withdrawn,
modified in a manner adverse to Parent or amended in a manner adverse to Parent
its approval or recommendation of the Offer, this Agreement or the Merger or
failed to reaffirm its approval or recommendation of the Offer or the Merger or
the adoption of the Agreement upon Parent's reasonable written request; (iii)
have executed a letter of intent, agreement in principle, merger agreement,
acquisition agreement, option agreement or other similar agreement providing for
consummation of an Acquisition Proposal with a third party; or (iv) have
resolved to do any of the foregoing;
(e) the Agreement shall have been terminated in accordance with its terms,
or any event shall have occurred which gives Parent or Subsidiary the right to
terminate the Agreement or not consummate the Merger;
(f) there shall have occurred and be continuing (i) any general suspension
of trading in, or limitation in prices for securities on any national securities
exchange or in the over-the-counter market (other than as a result of market
circuit-breakers or other similar procedures); (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory); (iii) a commencement of war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States, which has a significant adverse effect on the
functioning of financial markets in the United States; or (iv) in the case of
any of the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(g) there shall not have been obtained any third party non-governmental
consent that is required to be obtained in connection with the Offer or the
Merger that (i) is not listed in Section 5.4(b) of the Company Disclosure
----------------------------------------
Schedule and (ii) does not arise solely by reason of a contract or other
--------
agreement entered into after the date of the Agreement with the express written
consent of Parent, unless the failure to obtain such consent, individually or in
the aggregate with other such failures, would not reasonably be expected to
result in (A) a Company Material Adverse Effect; (B) the imposition on the
Company or any of its subsidiaries or Parent or any of its affiliates of fines,
penalties or other charges, the assessment against any such person of damages,
or the incurrence by any such person of any other loss, liability or injury, in
an aggregate amount in excess of $8,000,000; (C) any other material
non-financial liability or disability (1) of the Company or its material
subsidiaries; (2) of Parent or any material corporate affiliate of Parent or any
material business unit of Parent or any such material corporate affiliate; or
(3) of any immaterial corporate affiliate of Parent or of any immaterial
business unit of Parent or any such immaterial corporate affiliate to the extent
such liability or disability is material to Parent and its affiliates taken as a
whole; or (D) any material liability, exposure or disability, or any criminal
liability of or to any officer or director of Parent or any of its corporate
affiliates (including the Surviving Corporation);
(h) (i) any consent, registration, approval, permit, authorization or
notice required to be obtained or made by the Company, Parent or Subsidiary or
any of their respective affiliates from or with any Governmental Authority
(other than with respect to any U.S. or foreign antitrust, competition or other
similar law, rule or regulation) in connection with the execution, delivery and
performance of the Agreement, the making or consummation of the Offer or the
consummation of the Merger shall not have been obtained or made, unless the
failure to obtain or make any such consent, registration, approval, permit,
authorization or notice, individually or in the aggregate, would not reasonably
be expected to
3
<PAGE>
result in (A) a Company Material Adverse Effect; (B) the imposition on the
Company or any of its subsidiaries or Parent or any of its affiliates of fines,
penalties or other charges, the assessment against any such person of damages,
or the incurrence by any such person of any other loss, liability or injury, in
an aggregate amount in excess of $8,000,000; (C) any other material non-
financial liability or disability (1) of the Company or its material
subsidiaries; (2) of Parent or any material corporate affiliate of Parent or any
material business unit of Parent or any such material corporate affiliate; or
(3) of any immaterial corporate affiliate of Parent or of any immaterial
business unit of Parent or any such immaterial corporate affiliate to the extent
such liability or disability is material to Parent and its affiliates taken as a
whole; or (D) any material liability, exposure or disability, or any criminal
liability of or to any officer or director of Parent or any of its corporate
affiliates (including the Surviving Corporation); or
(i) it shall have been publicly disclosed that any Person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than 20% of the then-outstanding shares of Company Common
Stock, through the acquisition of stock, the formation of a group or otherwise.
Subject to the provisions of Section 1.1 of the Agreement, the foregoing
conditions are solely for the benefit of Parent and Subsidiary and may be waived
by either Parent or Subsidiary, in whole or in part at any time and from time to
time, in the sole discretion of Parent and Subsidiary. The failure by Parent
and Subsidiary at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
4
